<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Rule 14a-11(c) or 14a-12
HUDSON FOODS, INC.
(Name of Registrant as Specified in Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
(a) Class A Common Stock, par value $.01 per share, of Hudson Foods,
Inc. ("Hudson Class A Common Stock");
(b) Class B Common Stock, par value $.01 per share, of Hudson Foods,
Inc. ("Hudson Class B Common Stock").
2) Aggregate number of securities to which transaction applies: 30,648,075
(Assumes the exercise of all currently outstanding options to purchase
shares of Hudson Common Stock issued by Hudson)
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): $22.33125
(0.6 multiplied by $23.21875, the average of the bid and asked prices
of Class A Common Stock, par value $.10 per share, of Tyson Foods Inc.
as reported by the Nasdaq National Market on September 29, 1997, plus
$8.40 in cash)
4) Proposed maximum aggregate value of transaction: $684,409,847
5) Total fee paid: $136,882
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
a.Amount previously paid:
b.Form, Schedule or Registration Statement No.:
c.Filing Party:
d.Date Filed:
<PAGE>
[LOGO OF HUDSON APPEARS HERE]
December 10, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the special meeting of stockholders of
Hudson Foods, Inc. ("Hudson"), which will be held on Friday, January 9, 1998,
at 8:00 a.m., local time, at the Continuing Education Center, East and Center
Streets, Fayetteville, Arkansas. At the special meeting, you will be asked to
vote on a proposal to approve and adopt the merger agreement between Hudson
and Tyson Foods, Inc. ("Tyson"), which provides for the merger of Hudson into
Tyson.
In the merger, each outstanding share of Hudson Class A Common Stock and
each outstanding share of Hudson Class B Common Stock will be converted into
the right to receive (i) $8.40 in cash and (ii) six-tenths (0.6) of a share of
Class A Common Stock of Tyson. If the merger is approved and consummated,
Hudson will be merged with and into HFI Acquisition Sub Inc., a wholly owned
subsidiary of Tyson, which will continue as the surviving corporation and
remain a wholly owned subsidiary of Tyson.
THE BOARD OF DIRECTORS OF HUDSON BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF ITS STOCKHOLDERS AND HAS, BY A UNANIMOUS VOTE OF THOSE DIRECTORS
PRESENT, APPROVED THE MERGER AGREEMENT AND THE MERGER AND RECOMMENDS THAT YOU
VOTE TO APPROVE AND ADOPT THE MERGER AGREEMENT.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") has acted as
financial advisor to the Hudson Board of Directors in connection with the
merger and has advised it that the consideration to be paid by Tyson in the
merger is, based upon and subject to certain matters stated therein, fair to
the public stockholders of Hudson from a financial point of view. A copy of
the written opinion of DLJ rendered to the Board of Directors in connection
with the merger, which sets forth a description of the assumptions made,
matters considered and limitations on the review undertaken, is included as an
annex to the attached Proxy Statement/Prospectus.
As Hudson's largest stockholder and the holder of approximately 65% of the
voting power of Hudson's common stock, I have entered into a stock voting
agreement in connection with the merger agreement. I have agreed to vote all
of the shares of Hudson which I own for the approval and adoption of the
merger agreement and the merger. However, under the stock voting agreement, my
obligation to vote for the approval and adoption of the merger agreement and
the merger will be terminated under certain circumstances, including if the
Board of Directors of Hudson determines in good faith and in the exercise of
reasonable judgment (based on the advice of independent financial advisors and
legal counsel), that a written, unsolicited proposal or offer which is made by
another party for a business combination or similar transaction with Hudson is
more favorable to Hudson and its stockholders than the merger with Tyson.
The enclosed Notice of Meeting of Stockholders and Proxy
Statement/Prospectus contains a discussion of the background of, reasons for
and terms of the merger. I urge you to read this material carefully. Whether
or not you plan to attend the special meeting, please complete, sign and date
the accompanying proxy card and return it in the enclosed postage prepaid
envelope as soon as possible. If you attend the special meeting, you may vote
in person if you wish, even if you have previously returned your proxy card.
Your prompt cooperation will be greatly appreciated.
Thank you, and I look forward to seeing you at the special meeting.
Very truly yours,
/s/ James T. Hudson
James T. Hudson
Chairman
<PAGE>
HUDSON FOODS, INC.
1225 HUDSON ROAD
ROGERS, ARKANSAS 72756
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 9, 1998
----------------
TO THE STOCKHOLDERS OF
HUDSON FOODS, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Hudson
Foods, Inc. ("Hudson") will be held on Friday, January 9, 1998, at 8:00 a.m.,
local time, at the Continuing Education Center, East and Center Streets,
Fayetteville, Arkansas (together with any and all adjournments, postponements,
or continuations thereof, the "Special Meeting"), for the following purposes:
(1) To consider and vote upon a proposal to approve and adopt an Agreement
and Plan of Merger (the "Merger Agreement") providing for the merger of Hudson
with and into HFI Acquisition Sub Inc. ("Merger Sub"), a wholly owned
subsidiary of Tyson Foods, Inc. ("Tyson"), pursuant to which and subject to
the terms and conditions of the Merger Agreement, (a) each outstanding share
of Class A Common Stock, par value $.01 per share, of Hudson ("Hudson Class A
Common Stock") and each outstanding share of Class B Common Stock, par value
$.01 per share, of Hudson ("Hudson Class B Common Stock" and, together with
Hudson Class A Common Stock, "Hudson Common Stock") will be converted into the
right to receive (i) $8.40 in cash, without interest thereon, and (ii) six-
tenths (0.6) of a validly issued, fully paid and nonassessable share of Class
A Common Stock, par value $.10 per share, of Tyson and (b) Merger Sub will
continue as the surviving corporation and be a wholly owned subsidiary of
Tyson, all as more fully described in the accompanying Proxy
Statement/Prospectus.
(2) To transact such other business as may properly come before the Special
Meeting.
Only stockholders of record at the close of business on November 28, 1997
(the "Record Date") are entitled to notice of the Special Meeting and to vote
thereat. Approval and adoption of the Merger Agreement will require the
affirmative vote of a majority of the votes entitled to be cast at the Special
Meeting by the holders of the outstanding shares of Hudson Common Stock,
voting as a single class. At the close of business on the Record Date, James
T. Hudson, Chairman and the principal stockholder of Hudson, owned 65,028
shares of Hudson Class A Common Stock and 7,650,000 shares of Hudson Class B
Common Stock, or approximately 65% of the voting power of the Hudson Common
Stock. Pursuant to the Stock Voting Agreement between Tyson and Mr. Hudson
entered into in connection with the Merger Agreement (the "Voting Agreement"),
Mr. Hudson has agreed to vote all of the shares of Hudson Common Stock owned
by him for the approval and adoption of the Merger Agreement. The Voting
Agreement will terminate on the earlier to occur of the effective time of the
Merger and the termination of the Merger Agreement in accordance with its
terms. As a result, provided Mr. Hudson complies with his obligations under
the Voting Agreement and the Voting Agreement is not terminated in accordance
with its terms, the approval and adoption of the Merger Agreement are assured
and will not require the affirmative vote of any other stockholder of Hudson.
THE HUDSON BOARD, BY THE UNANIMOUS VOTE OF THOSE PRESENT, RECOMMENDS THAT
THE STOCKHOLDERS OF HUDSON VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT THE
MERGER AGREEMENT AT THE SPECIAL MEETING.
Your vote is important. Please complete the accompanying proxy and return it
promptly in the enclosed business reply envelope.
/s/ Tommy D. Reynolds
Tommy D. Reynolds
Secretary
December 10, 1997
<PAGE>
HUDSON FOODS, INC.
PROXY STATEMENT
----------------
TYSON FOODS, INC.
PROSPECTUS
----------------
This Proxy Statement/Prospectus ("Proxy Statement/Prospectus") is being
furnished to the holders of Class A Common Stock, par value $.01 per share
("Hudson Class A Common Stock"), of Hudson Foods, Inc., a Delaware corporation
("Hudson"), and Class B Common Stock, par value $.01 per share ("Hudson Class
B Common Stock" and, together with Hudson Class A Common Stock, "Hudson Common
Stock"), of Hudson in connection with the solicitation of proxies by the Board
of Directors of Hudson (the "Hudson Board") for use at a Special Meeting of
Stockholders of Hudson to be held at the Continuing Education Center, East and
Center Streets, Fayetteville, Arkansas, on Friday, January 9, 1998, at 8:00
a.m., local time (together with any and all adjournments, postponements or
continuations thereof, the "Special Meeting").
This Proxy Statement/Prospectus relates to the Agreement and Plan of Merger
dated as of September 4, 1997 (the "Merger Agreement") among Tyson Foods,
Inc., a Delaware corporation ("Tyson"), HFI Acquisition Sub Inc., a Delaware
corporation and newly formed, wholly owned subsidiary of Tyson ("Merger Sub"),
and Hudson, which provides for the merger (the "Merger") of Hudson with and
into Merger Sub, with Merger Sub continuing as the surviving corporation (the
"Surviving Corporation") and a wholly owned subsidiary of Tyson. Upon the
terms and subject to the conditions set forth in the Merger Agreement, each
share of Hudson Common Stock outstanding immediately prior to the effective
time (the "Effective Time") of the Merger (other than shares owned by Hudson,
which will be cancelled, and shares held by stockholders exercising appraisal
rights under Section 262 of the General Corporation Law of the State of
Delaware) will be converted into the right to receive (i) $8.40 in cash,
without interest thereon, and (ii) six-tenths (0.6) of a validly issued, fully
paid and nonassessable share of Class A Common Stock, par value $.10 per share
("Tyson Class A Common Stock"), of Tyson (collectively, the "Per Share Merger
Consideration"). Cash will be paid in lieu of any fractional shares of Tyson
Class A Common Stock.
The consummation of the Merger is subject to certain customary closing
conditions including: (i) the approval and adoption of the Merger Agreement by
a majority of the votes cast by the stockholders of Hudson entitled to vote
thereon at the Special Meeting; and (ii) the receipt of certain regulatory
approvals, including, without limitation, expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"). SEE "RISK FACTORS" COMMENCING ON PAGE
14 FOR A DESCRIPTION OF CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY
STOCKHOLDERS BEFORE VOTING. A copy of the Merger Agreement is attached hereto
as Annex I.
Approval and adoption of the Merger Agreement will require the affirmative
vote of a majority of the votes entitled to be cast at the Special Meeting by
the holders of the outstanding shares of Hudson Common Stock, voting as a
single class. At the close of business on the Record Date (as defined herein),
James T. Hudson, Chairman and the principal stockholder of Hudson, owned
65,028 shares of Hudson Class A Common Stock and 7,650,000 shares of Hudson
Class B Common Stock, or approximately 65% of the voting power of the Hudson
Common Stock. Pursuant to the Stock Voting Agreement between Tyson and Mr.
Hudson entered into in connection with the Merger Agreement (the "Voting
Agreement"), Mr. Hudson has agreed to vote all of the shares of Hudson Common
Stock owned by him for the approval and adoption of the Merger Agreement. The
Voting Agreement will terminate on the earlier to occur of the Effective Time
and the termination of the Merger Agreement in accordance with its terms. As a
result, provided Mr. Hudson complies with his obligations under the Voting
Agreement and the Voting Agreement is not terminated in accordance with its
terms, the approval and adoption of the Merger Agreement are assured and will
not require the affirmative vote of any other stockholder of Hudson.
<PAGE>
This Proxy Statement/Prospectus also constitutes the Prospectus of Tyson
filed as part of a Registration Statement on Form S-4 (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
shares of Tyson Class A Common Stock to be issued in the Merger. This Proxy
Statement also constitutes a prospectus for resales by James T. Hudson (in
such capacity, the "Selling Stockholder") of shares of Tyson Class A Common
Stock received by him in the Merger. See "SELLING STOCKHOLDER."
Tyson Class A Common Stock is listed for trading under the symbol "TSN" on
the New York Stock Exchange ("NYSE"). Prior to October 17, 1997, Tyson Class A
Common Stock was listed for trading under the symbol "TYSNA" on the Nasdaq
National Market. Hudson Class A Common Stock is listed for trading under the
symbol "HFI" on the NYSE. On September 3, 1997, the last trading day prior to
the execution of the Merger Agreement, the last reported sale price of Tyson
Class A Common Stock, as reported by the Nasdaq National Market, was $21 3/8
per share and the last reported sale price of Hudson Class A Common Stock, as
reported on the NYSE Composite Transactions Tape, was $17 3/16 per share. On
December 9, 1997, the last trading day prior to the date of this Proxy
Statement/Prospectus, the last reported sale price of Tyson Class A Common
Stock, as reported on the NYSE Composite Transaction Tape, was $19 5/8 per
share and the last reported sale price of Hudson Class A Common Stock, as
reported on the NYSE Composite Transactions Tape, was $19 3/4 per share.
This Proxy Statement/Prospectus and the accompanying forms of proxy are
first being mailed to stockholders of Hudson on or about December 10, 1997.
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 PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Proxy Statement/Prospectus is December 10, 1997.
ii
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS WITH RESPECT TO THE MATTERS DESCRIBED IN THIS PROXY
STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE
HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY EITHER HUDSON OR TYSON. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES, NOR DOES IT CONSTITUTE THE SOLICITATION OF
A PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY
OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF HUDSON OR TYSON SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
ALL INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS WITH RESPECT TO
HUDSON HAS BEEN PROVIDED BY HUDSON. ALL INFORMATION CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS WITH RESPECT TO TYSON AND MERGER SUB HAS BEEN PROVIDED BY
TYSON.
AVAILABLE INFORMATION
Tyson and Hudson are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the SEC. Such reports, proxy statements and other information may be inspected
and copied at the public reference facilities maintained by the SEC at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the following Regional Offices of the SEC: Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, 13th
Floor, New York, New York 10048. The SEC also maintains a Web site at
http://www.sec.gov that contains reports, proxy statements and other
information. Copies of such materials relating to Hudson and Tyson can be
inspected at the NYSE, 20 Broad Street, New York, New York 10005.
This Proxy Statement/Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. Reference is made to the
Registration Statement and the exhibits thereto for further information.
Statements contained or incorporated by reference herein concerning the
provisions of any agreement or other document filed as an exhibit to the
Registration Statement or otherwise filed with the SEC are not necessarily
complete and reference is hereby made to the copy thereof so filed for more
detailed information, each such statement being qualified in its entirety by
such reference.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS THAT ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF SUCH DOCUMENTS (OTHER
THAN EXHIBITS THERETO WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
HEREIN) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL
OWNER OF SHARES OF HUDSON COMMON STOCK TO WHOM THIS PROXY STATEMENT/PROSPECTUS
IS DELIVERED, UPON WRITTEN OR ORAL REQUEST, IN THE CASE OF DOCUMENTS RELATING
TO HUDSON, TO HUDSON FOODS, INC., 1225 HUDSON ROAD, ROGERS, ARKANSAS 72756,
ATTENTION: SECRETARY, TELEPHONE NUMBER (501) 636-1100, AND, IN THE CASE OF
DOCUMENTS RELATING TO TYSON, TO TYSON FOODS, INC., 2210 WEST OAKLAWN DRIVE,
SPRINGDALE, ARKANSAS 72762, ATTENTION: SECRETARY, TELEPHONE NUMBER (501) 290-
4000. IN ORDER TO ENSURE DELIVERY OF DOCUMENTS PRIOR TO THE SPECIAL MEETING,
ANY REQUEST THEREFOR SHOULD BE MADE NOT LATER THAN JANUARY 2, 1998.
iii
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents heretofore filed with the SEC pursuant to the
Exchange Act are incorporated herein by reference:
(1) Hudson's Annual Report on Form 10-K for the year ended September 27,
1997; and
(2) Tyson's Annual Report on Form 10-K for the year ended September 27,
1997.
All reports and other documents filed by either Hudson or Tyson pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Proxy Statement/Prospectus and prior to the date of the Special
Meeting shall be deemed to be incorporated by reference herein and to be a
part hereof from the dates of filing of such reports and documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement/Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document which also is incorporated
or deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
----------------
CERTAIN STATEMENTS IN THIS PROXY STATEMENT/PROSPECTUS (INCLUDING THE
DOCUMENTS INCORPORATED BY REFERENCE HEREIN) CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS OF HUDSON, TYSON OR THE SURVIVING CORPORATION TO
BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. WHEN USED IN THIS
PROXY STATEMENT/PROSPECTUS, THE WORDS "ESTIMATE," "PROJECT," "INTEND,"
"EXPECT" AND SIMILAR EXPRESSIONS, WHEN USED IN CONNECTION WITH HUDSON, TYSON
OR THE SURVIVING CORPORATION, INCLUDING THEIR RESPECTIVE MANAGEMENTS, ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING
STATEMENTS WERE BASED ON VARIOUS FACTORS AND WERE DERIVED UTILIZING NUMEROUS
IMPORTANT ASSUMPTIONS AND OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS.
IMPORTANT ASSUMPTIONS AND OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS WITH
RESPECT TO HUDSON, TYSON OR THE SURVIVING CORPORATION INCLUDE, BUT ARE NOT
LIMITED TO: (I) FLUCTUATIONS IN THE COST AND AVAILABILITY OF RAW MATERIALS,
SUCH AS FEED GRAIN COSTS IN RELATION TO HISTORICAL LEVELS; (II) CHANGES IN THE
AVAILABILITY AND RELATIVE COSTS OF LABOR AND/OR CONTRACT GROWERS; (III) MARKET
CONDITIONS FOR FINISHED PRODUCTS, INCLUDING THE SUPPLY AND PRICING OF
ALTERNATIVE PROTEINS, ALL OF WHICH MAY IMPACT TYSON'S OR THE SURVIVING
CORPORATION'S PRICING ; (IV) EFFECTIVENESS OF ADVERTISING AND MARKETING
PROGRAMS; (V) THE ABILITY OF TYSON OR THE SURVIVING CORPORATION TO MAKE
EFFECTIVE ACQUISITIONS AND TO SUCCESSFULLY INTEGRATE NEWLY ACQUIRED BUSINESSES
INTO EXISTING OPERATIONS; (VI) RISKS ASSOCIATED WITH LEVERAGE, INCLUDING COST
INCREASES DUE TO RISING INTEREST RATES; (VII) CHANGES IN REGULATIONS AND LAWS,
INCLUDING CHANGES IN ACCOUNTING STANDARDS, ENVIRONMENTAL LAWS, OCCUPATIONAL,
HEALTH AND SAFETY LAWS, AND LAWS REGULATING FISHING AND SEAFOOD PROCESSING
ACTIVITIES; (VIII) ACCESS TO FOREIGN MARKETS TOGETHER WITH FOREIGN ECONOMIC
CONDITIONS, INCLUDING CURRENCY FLUCTUATIONS; AND (IX) THE EFFECT OF, OR
CHANGES IN, GENERAL ECONOMIC CONDITIONS. OTHER FACTORS AND ASSUMPTIONS NOT
IDENTIFIED ABOVE WERE ALSO INVOLVED IN THE DERIVATION OF THESE FORWARD-LOOKING
STATEMENTS, AND THE FAILURE OF SUCH OTHER ASSUMPTIONS TO BE REALIZED AS WELL
AS OTHER FACTORS MAY ALSO CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED. NONE OF HUDSON, TYSON OR THE SURVIVING CORPORATION ASSUMES ANY
OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL
RESULTS, CHANGES IN ASSUMPTIONS OR CHANGES IN OTHER FACTORS AFFECTING SUCH
FORWARD-LOOKING STATEMENTS.
iv
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..................................................... iii
INCORPORATION OF DOCUMENTS BY REFERENCE................................... iv
SUMMARY................................................................... 1
The Companies............................................................ 1
The Special Meeting...................................................... 1
Risk Factors............................................................. 2
Recent Developments...................................................... 2
The Merger and the Merger Agreement...................................... 3
Certain U.S. Federal Income Tax Considerations........................... 6
Other Agreements......................................................... 7
Selected Consolidated Financial Data of Tyson Foods, Inc. ............... 8
Selected Consolidated Financial Data of Hudson Foods, Inc. .............. 9
Selected Unaudited Pro Forma Combined Financial Data of Tyson Foods,
Inc. ................................................................... 10
Comparative Per Share Data of Hudson and Tyson........................... 11
Market Prices and Dividends Paid......................................... 12
Comparison of Rights of Holders of Hudson Common Stock and Tyson Common
Stock................................................................... 13
RISK FACTORS.............................................................. 14
THE SPECIAL MEETING....................................................... 15
Purpose.................................................................. 15
Record Date; Voting Rights; Required Vote................................ 15
Stock Ownership of Management............................................ 15
Quorum................................................................... 16
Proxies.................................................................. 16
Solicitation of Proxies.................................................. 16
Appraisal Rights......................................................... 17
THE MERGER................................................................ 18
General.................................................................. 18
Background of and Reasons for the Merger................................. 18
Recommendation of the Hudson Board of Directors.......................... 20
Opinion of Financial Advisor to Hudson................................... 21
Certain Transactions; Conflicts of Interest of Certain Persons in the
Merger.................................................................. 24
Ownership Interest of Hudson Stockholders After the Merger............... 25
Treatment of Stock Options............................................... 25
Stock Exchange Listing................................................... 25
Delisting and Deregistration of Hudson Common Stock...................... 25
Accounting Treatment..................................................... 25
Governmental and Regulatory Approvals.................................... 26
Procedures for Exchange of Hudson Common Stock Certificates.............. 26
Resales of Tyson Class A Common Stock.................................... 27
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS............................ 29
Additional Considerations................................................ 30
Backup Withholding....................................................... 30
CERTAIN PROVISIONS OF THE MERGER AGREEMENT................................ 31
Certain Representations and Warranties................................... 31
Conduct of Business by Hudson Pending the Merger......................... 31
Employee Benefits........................................................ 32
No Solicitation.......................................................... 32
Third-Party Standstill Agreements........................................ 33
Indemnification and Insurance............................................ 33
Conditions to Consummation of the Merger................................. 33
Termination.............................................................. 34
Fees and Expenses........................................................ 35
Amendment and Modification............................................... 35
Waiver................................................................... 36
OTHER AGREEMENTS.......................................................... 37
Voting Agreement......................................................... 37
Registration Rights Agreement............................................ 38
Consulting Agreements.................................................... 38
APPRAISAL RIGHTS.......................................................... 40
Provisions of the Merger Agreement....................................... 40
Appraisal Procedures..................................................... 40
PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS......................... 43
SELLING STOCKHOLDER....................................................... 48
DESCRIPTION OF TYSON CAPITAL STOCK........................................ 49
Common Stock............................................................. 49
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
COMPARISON OF THE RIGHTS OF HOLDERS OF HUDSON COMMON STOCK AND TYSON
COMMON STOCK............................................................ 50
Dividend Rights......................................................... 50
Voting Rights........................................................... 50
Directors............................................................... 50
Call of Special Meetings................................................ 51
Action by Stockholders Without a Meeting................................ 51
Stockholder Proposals................................................... 51
Amendment to Certificate of Incorporation............................... 52
Amendment to By-Laws.................................................... 52
Approval of Mergers and Asset Sales..................................... 52
Rights of Appraisal..................................................... 52
Limitation of Liability................................................. 53
Indemnification of Officers and Directors............................... 53
State Anti-takeover Statute............................................. 53
Liquidation Rights...................................................... 54
INDEPENDENT PUBLIC ACCOUNTANTS........................................... 55
LEGAL OPINIONS........................................................... 55
</TABLE>
LIST OF ANNEXES
<TABLE>
<C> <S>
ANNEX I AGREEMENT AND PLAN OF MERGER
ANNEX II OPINION OF DONALDSON LUFKIN & JENRETTE SECURITIES CORPORATION
ANNEX III SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
</TABLE>
vi
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Proxy Statement/Prospectus. Reference is
made to, and this summary is qualified in its entirety by, the more detailed
information contained or incorporated by reference in this Proxy
Statement/Prospectus and the Annexes hereto. As used herein, unless the
context otherwise clearly requires: "Hudson" refers to Hudson Foods, Inc. and
its consolidated subsidiaries and "Tyson" refers to Tyson Foods, Inc. and its
consolidated subsidiaries. Capitalized terms not defined in this Proxy
Statement/Prospectus have the respective meanings specified in the Merger
Agreement.
----------------
STOCKHOLDERS OF HUDSON ARE URGED TO READ THIS PROXY STATEMENT/PROSPECTUS AND
THE ANNEXES HERETO IN THEIR ENTIRETY AND SHOULD CONSIDER CAREFULLY THE
INFORMATION SET FORTH BELOW UNDER THE CAPTION "RISK FACTORS."
----------------
THE COMPANIES
Tyson. Tyson and its various subsidiaries produce, market and distribute a
variety of food products consisting of value-enhanced poultry, fresh and
frozen poultry, value-enhanced seafood products, fresh and frozen seafood
products, prepared foods and other products such as flour and corn tortillas
and chips. Additionally, Tyson has live swine, animal feed and pet food
ingredient operations. Tyson's integrated operations consist of breeding and
rearing chickens, and harvesting seafood, as well as the processing, further-
processing and marketing of these food products. Tyson's products are marketed
and sold to national and regional grocery chains, regional grocery
wholesalers, clubs and warehouse stores, military commissaries, industrial
food processing companies, national and regional chain restaurants or their
distributors, international export companies and domestic distributors who
service restaurants, foodservice operations such as plant and school
cafeterias, convenience stores, hospitals and other vendors. Tyson commenced
business in 1935, was incorporated in Arkansas in 1947, and was reincorporated
in Delaware in 1986. Tyson's principal executive offices are located at 2210
West Oaklawn Drive, Springdale, Arkansas 72762 and its telephone number is
(501) 290-4000. For further information concerning Tyson, see "AVAILABLE
INFORMATION" and "INCORPORATION OF DOCUMENTS BY REFERENCE."
Hudson. Hudson is a producer of further-processed poultry and meat products
and a fully integrated producer of commodity-type poultry products. As a fully
integrated poultry producer, Hudson controls the breeding, hatching, growing,
processing, packaging, marketing and distribution of its poultry product
lines. Hudson's products are produced at plants in several U.S. locations and
sold domestically and internationally. According to industry statistics,
Hudson was the fifth largest poultry company, ranked by annual sales dollars,
out of 57 companies that were surveyed. Hudson's principal executive offices
are located at 1225 Hudson Road, Rogers, Arkansas 72756 and its telephone
number is (501) 636-1100. For further information concerning Hudson, see
"AVAILABLE INFORMATION" and "INCORPORATION OF DOCUMENTS BY REFERENCE."
Merger Sub. Merger Sub was incorporated in Delaware on September 2, 1997
solely for the purpose of consummating the Merger and the other transactions
contemplated by the Merger Agreement and has engaged in no other business
activities. Merger Sub's principal executive offices are located at 2210 West
Oaklawn Drive, Springdale, Arkansas 72762 and its telephone number is (501)
290-4000.
THE SPECIAL MEETING
Purpose. The Special Meeting will be held at the Continuing Education
Center, East and Center Streets, Fayetteville, Arkansas, on Friday, January 9,
1998, at 8:00 a.m., local time, to consider and vote upon a proposal to
approve and adopt the Merger Agreement, which provides for the Merger of
Hudson with and into Merger Sub, with Merger Sub continuing as the Surviving
Corporation and a wholly owned subsidiary of Tyson. The stockholders of Hudson
will also consider and take action upon any other business which may properly
be brought before the Special Meeting. See "THE SPECIAL MEETING--Purpose."
<PAGE>
Record Date. Only holders of record of Hudson Common Stock at the close of
business on November 28, 1997 (the "Record Date") are entitled to receive
notice of and to vote at the Special Meeting. At the close of business on the
Record Date, there were 20,967,054 shares of Hudson Class A Common Stock
outstanding, each of which entitles the registered holder thereof to one vote,
and 9,602,372 shares of Hudson Class B Common Stock outstanding, each of which
entitles the registered holder thereof to ten votes. See "SPECIAL MEETING--
Record Date; Voting Rights; Required Vote."
Required Vote. Approval and adoption of the Merger Agreement will require
the affirmative vote of a majority of the votes entitled to be cast at the
Special Meeting by the holders of the outstanding shares of Hudson Common
Stock, voting as a single class. An abstention will not be counted as a vote
cast and will have the effect of a vote against approval and adoption of the
Merger Agreement. Brokers who hold shares of Hudson Class A Common Stock as
nominees will not have discretionary authority to vote such shares in the
absence of instructions from the beneficial owners thereof. Broker non-votes
will not be counted as votes cast and will have the effect of votes against
approval and adoption of the Merger Agreement.
Stock Ownership of Management. At the close of business on the Record Date,
directors and executive officers of Hudson and their affiliates were the
beneficial owners of an aggregate of 11,133,444 shares of Hudson Class A
Common Stock and 9,600,000 shares of Hudson Class B Common Stock, or 83% of
the voting power of the Hudson Common Stock then outstanding. James T. Hudson,
Chairman of Hudson and the owner of Hudson Common Stock having on the Record
Date approximately 65% of the voting power of Hudson Common Stock then
outstanding, has entered into the Voting Agreement pursuant to which, among
other things, Mr. Hudson has agreed to vote all of the shares of Hudson Common
Stock owned by him for the approval and adoption of the Merger Agreement. The
Voting Agreement will terminate on the earlier to occur of the Effective Time
and the termination of the Merger Agreement in accordance with its terms. See
"OTHER AGREEMENTS--Voting Agreement" and "CERTAIN PROVISIONS OF THE MERGER
AGREEMENT--Termination." As a result, provided Mr. Hudson complies with his
obligations under the Voting Agreement and the Voting Agreement is not
terminated in accordance with its terms, the approval and adoption of the
Merger Agreement are assured and will not require the affirmative vote of any
other stockholder of Hudson. See "THE SPECIAL MEETING--Stock Ownership of
Management."
RISK FACTORS
In considering whether to approve and adopt the Merger Agreement,
stockholders of Hudson should consider that: (i) the number of shares of Tyson
Class A Common Stock to be received as part of the Per Share Merger
Consideration is fixed and will not be adjusted in the event of any increase
or decrease in the price of either Tyson Class A Common Stock or Hudson Common
Stock; (ii) there can be no assurance that Tyson will be able to integrate the
operations of Tyson and Hudson successfully; (iii) certain directors and
executive officers of Hudson, as well as others, have interests in the Merger
in addition to their interests as stockholders of Hudson; and (iv) the
principal stockholder of Tyson has, and following the Merger will continue to
have, the ability to elect the entire Tyson Board of Directors without the
vote of any other stockholder of Tyson. See "RISK FACTORS."
RECENT DEVELOPMENTS
On July, 22, 1997, the United States Department of Labor-Occupational Safety
and Health Administration ("OSHA") issued Hudson four (4) citations with
penalties totaling $332,500 for alleged violations of OSHA regulations at
Hudson's Noel, Missouri poultry processing facility. The citations followed a
six (6) month investigation of the facility which stemmed from allegations
filed with OSHA by a local union. Hudson has filed a notice of contest with
the OSHA Review Commission. Hudson recorded an expense of $332,500 in fiscal
1997 for the penalties associated with these alleged violations.
On July 28, 1997, Hudson received notice from the United States Department
of Justice ("DOJ") that it was prepared to bring action against Hudson for
alleged violation of the Clean Water Act at Hudson's Berlin, Maryland poultry
processing facility. The DOJ alleged that over the past five years. Hudson had
repeatedly
2
<PAGE>
discharged pollutants in quantities in excess of its National Pollutant
Discharge Elimination System ("NPDES") permit, violated monitoring and
sampling requirements of its NPDES permit and failed to provide notice of
NPDES violations. On September 19, 1997, Hudson entered into an agreement in
principle with the DOJ for settlement of these claims. While denying all
liability, Hudson agreed to the entry of a consent decree which provides for
payments to the United States totaling $4 million and additional expenditures
by the Company for supplemental environmental projects in the amount of 2
million. The settlement remains subject to final approval by senior
governmental officials and the federal courts. Hudson recorded a special
charge of $4 million in fiscal 1997 associated with this payment to the United
States.
In August 1997, Hudson was requested by the United States Department of
Agriculture (the "USDA") to recall three days' production of raw ground beef
products processed at its Columbus, Nebraska plant. The recall was requested
because of concerns that such production might be subject to a form of E. coli
bacterial contamination. It was recognized by the USDA that the contamination
most likely originated at a Hudson supplier and not at Hudson's state-of-the-
art Nebraska facility. Subsequently, because of the concern of the USDA that,
through the industry accepted practice of rework, the E. coli contamination
could have spread to a number of additional days of production, as a
precaution, the recall was expanded at the request of the USDA to include all
Hudson production of raw ground beef products. Because of the extent of the
production affected by the precautionary recall, Hudson determined to close
its Columbus, Nebraska plant pending further review. Following the
announcement of the expanded recall, although it acknowledged there was no
evidence that any contaminated product had been delivered to it and although
aware that the recall was a precautionary measure, Hudson's primary customer
for frozen beef patties publicly announced that it had decided not to purchase
additional beef products in the future from Hudson and took steps to terminate
its approved supplier agreement with Hudson for the purchase of a substantial
part of the Columbus, Nebraska plant's production. Each of Hudson and its
primary customer for frozen beef patties has indicated to the other that it
may have claims arising out of this series of events. Hudson sold its
Columbus, Nebraska plant and related assets in October 1997.
In September 1997, Hudson learned that the United States Attorney for the
District of Nebraska had begun an investigation into the recall of beef
production from Hudson's Columbus, Nebraska facility. Hudson is cooperating
with this investigation.
On September 12, 1997, the Marvin Asnes Trust, which purports to be a
stockholder of Hudson (the "Asnes Trust"), filed a stockholder derivative
action against the directors of Hudson in the United States District Court for
the Southern District of Florida in which Hudson was named as a nominal
defendant. Among other remedies, the Asnes Trust is seeking unspecified
damages. The action is related to the August 1997 recall of raw ground beef
products by Hudson. See "THE MERGER--Background of the Merger." The derivative
complaint alleges that the Hudson directors breached their fiduciary duties as
directors and officers of Hudson by, among other things, failing to adequately
exercise quality control standards and procedures at Hudson's Columbus,
Nebraska beef processing facility. Hudson and the officers and directors of
Hudson believe these allegations are without merit and the officers and
directors of Hudson intend to vigorously defend against this action. Hudson is
only a nominal defendant in this action; as a result, regardless of the
outcome, Hudson does not expect that the action will have any adverse impact
on its financial condition, future operating results or liquidity.
On November 3, 1997, Todd Allen McDonald brought an action against Hudson on
his own behalf (amended November 21, 1997 to add eight additional plaintiffs)
and purportedly on behalf of others similarly situated in the Chancery Court
of Pulaski County, Arkansas, alleging among other things that Hudson was
negligent and failed to exercise ordinary care at its Columbus, Nebraska plant
and seeking, among other remedies, unspecified damages. A similar action was
brought by Todd Allen McDonald on his own behalf on October 8, 1997 and was
voluntarily dismissed on October 22, 1997. Hudson believes these allegations
are without merit and intends to vigorously defend against this action. Hudson
does not currently expect that the action will have any material adverse
impact on its financial condition, future operating results or liquidity.
THE MERGER AND THE MERGER AGREEMENT
General. At the Effective Time of the Merger, Hudson will be merged with and
into Merger Sub, with Merger Sub continuing as the Surviving Corporation and a
wholly owned subsidiary of Tyson. As a result of the
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<PAGE>
Merger, the separate corporate existence of Hudson will cease and Merger Sub
will succeed to all the rights and be responsible for all the obligations of
Hudson in accordance with the General Corporation Law of the State of Delaware
(the "DGCL"). Upon the terms and subject to the conditions set forth in the
Merger Agreement, at the Effective Time, each share of Hudson Common Stock
outstanding immediately prior to the Effective Time (other than shares owned
by Hudson, which will be cancelled, and shares held by stockholders exercising
appraisal rights under Section 262 of the DGCL) will be converted into the
right to receive the Per Share Merger Consideration. Cash will be paid in lieu
of any fractional shares of Tyson Class A Common Stock. See "THE MERGER--
General."
The Merger will become effective upon the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware unless the Certificate of
Merger provides for a later date of effectiveness. The filing of the
Certificate of Merger will occur as soon as practicable following the
satisfaction or waiver of the conditions set forth in the Merger Agreement.
See "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Conditions to Consummation of
the Merger."
Recommendation of the Hudson Board of Directors. The Hudson Board, by the
unanimous vote of those present, has determined that the Merger is fair to and
in the best interests of Hudson and its stockholders and has approved the
Merger Agreement. THE HUDSON BOARD, BY A UNANIMOUS VOTE OF THOSE PRESENT,
RECOMMENDS THAT THE STOCKHOLDERS OF HUDSON VOTE "FOR" THE PROPOSAL TO APPROVE
AND ADOPT THE MERGER AGREEMENT AT THE SPECIAL MEETING. See "THE MERGER--
Recommendation of the Hudson Board of Directors."
Opinion of Financial Advisor to Hudson. Donaldson Lufkin & Jenrette
Securities Corporation ("DLJ") has acted as financial advisor to Hudson in
connection with the Merger. At the meeting of the Hudson Board on September 4,
1997, DLJ made a presentation to the Hudson Board and delivered its oral
opinion to the Hudson Board to the effect that as of September 4, 1997 and
based on and subject to certain assumptions, limitations and qualifications,
the Per Share Merger Consideration was fair to the holders of Hudson Common
Stock, other than the holders thereof who are affiliates of Hudson (the
"Hudson Public Stockholders"), from a financial point of view. On December 8,
1997, DLJ issued a written opinion confirming such oral opinion (the "DLJ
Opinion"). The full text of the DLJ Opinion, which sets forth a description of
the assumptions made, procedures followed, other matters considered and limits
of the review by DLJ, is attached hereto as Annex II and should be read
carefully in its entirety. A description of the DLJ Opinion is set forth under
the caption "THE MERGER--Opinion of Financial Advisor to Hudson."
Certain Transactions; Conflicts of Interest of Certain Persons in the
Merger. Certain directors and executive officers of Hudson, as well as others,
have interests in the Merger in addition to their interests as stockholders of
Hudson, including with respect to: (i) certain consulting agreements entered
into in connection with the Merger Agreement, (ii) the accelerated vesting of
options to purchase Hudson Common Stock, (iii) certain indemnification rights
and (iv) certain registration rights with respect to shares of Tyson Class A
Common Stock received in the Merger. See "THE MERGER--Certain Transactions;
Conflicts of Interest of Certain Persons in the Merger" and "OTHER
AGREEMENTS."
In connection with the Merger Agreement, Tyson entered into Consulting
Agreements, each dated as of September 4, 1997 (collectively, the "Consulting
Agreements"), with each of James T. Hudson, Michael T. Hudson and Charles B.
Jurgensmeyer (each a "Consultant"). James T. Hudson is a director and Chairman
of Hudson. Michael T. Hudson is a director of Hudson and its President and
Chief Executive Officer. Charles B. Jurgensmeyer is a director of Hudson and
its Chief Financial Officer and Executive Vice President. The term of each
Consultant's engagement under his Consulting Agreement will commence at the
Effective Time. Under the terms of the Consulting Agreements, Messrs. J.
Hudson, M. Hudson and Jurgensmeyer have agreed to provide consulting services
to Tyson and not to compete with Tyson in its business, and will, in
consideration therefor, receive fees of $1,200,000, $350,000 and $350,000 per
annum, respectively, for terms of five, ten and ten years, respectively. Under
the Consulting Agreements, Tyson will also (i) reimburse (x) James T. Hudson
for business expenses in an aggregate amount up to $800,000 per annum and (y)
each other Consultant for reasonable and necessary business expenses and (ii)
provide certain additional benefits to each Consultant. See "OTHER
AGREEMENTS--Consulting Agreements."
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<PAGE>
Ownership Interest of Hudson Stockholders After the Merger. Based on the
number of shares of Hudson Common Stock outstanding on the Record Date, upon
consummation of the Merger there will be approximately 128,957,264 shares of
Tyson Class A Common Stock outstanding at the Effective Time, of which the
stockholders of Hudson will own approximately 14.2% (approximately 14.1% on a
fully diluted basis assuming the exercise of all currently outstanding options
to purchase shares of Tyson Class A Common Stock), representing approximately
1.6% of the voting power of Tyson Common Stock (approximately 1.6% on a fully
diluted basis).
Governmental and Regulatory Approvals. The consummation of the Merger is
conditioned upon the expiration or termination of the applicable waiting
period under the HSR Act. On September 18, 1997, Hudson and Tyson filed
notifications and report forms under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division"). The applicable waiting period under the HSR Act
expired on October 18, 1997; however, notwithstanding the expiration of the
waiting period under the HSR Act, the FTC, the Antitrust Division, a state or
a private person or entity could seek under federal or state antitrust laws,
among other things, to enjoin or rescind the Merger. See "THE MERGER--
Governmental and Regulatory Approvals."
Conditions to Consummation of the Merger. The respective obligations of
Hudson, Tyson and Merger Sub to effect the Merger are subject to the
satisfaction or waiver of certain customary closing conditions including, but
not limited to the approval of the Merger Agreement and the transactions
contemplated thereby by the requisite vote of the stockholders of Hudson. See
"CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Conditions to Consummation of the
Merger."
Termination of the Merger Agreement; Fees and Expenses. The Merger Agreement
may be terminated at any time prior to the Effective Time, whether before or
after approval by the stockholders of Hudson: (i) by mutual written consent of
Hudson and Tyson; (ii) by either Tyson or Hudson if (a) the Merger has not
been consummated on or before February 28, 1998 or (b) the stockholders of
Hudson do not approve the Merger Agreement by the requisite vote at the
Special Meeting, in each case, subject to certain limitations; (iii) by Tyson
if (a) there has been a breach of any of Hudson's representations or
warranties, covenants or agreements as set forth in the Merger Agreement,
subject to certain conditions, or (b) the Hudson Board fails to recommend the
approval of the Merger Agreement and the Merger to the stockholders of Hudson
(or withdraws, modifies or amends such recommendation in a manner adverse to
Tyson); (iv) by either Tyson or Hudson, if any permanent injunction, order,
decree or ruling by any governmental entity of competent jurisdiction
preventing the consummation of the Merger becomes final and nonappealable;
provided, however, that the party seeking to terminate the Merger Agreement
will have used reasonable best efforts to remove such injunction or overturn
such action, subject to the proviso that Hudson will not, without Tyson's
prior written consent, and Tyson will not be required to, divest or hold
separate or otherwise take or commit to take any other similar action with
respect to any assets, businesses or product lines of Tyson, Hudson or any of
their respective subsidiaries; (v) by Hudson if the Hudson Board reasonably
determines that a proposal for an Acquisition Transaction (as defined herein)
constitutes a Superior Proposal (as defined herein); or (vi) by Hudson if
there has been a breach of any of Tyson's representations or warranties,
covenants or agreements as set forth in the Merger Agreement, subject to
certain conditions. See "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--
Termination." In the event the Merger Agreement is terminated because (a) the
Hudson Board fails to recommend the approval of the Merger Agreement and the
Merger to the stockholders of Hudson (or withdraws, modifies, or amends such
recommendation in a manner adverse to Tyson) or (b) the Hudson Board
reasonably determines that a proposal for an Acquisition Transaction
constitutes a Superior Proposal, Hudson will be obligated to pay Tyson (A) a
termination fee of $22.5 million plus (B) an amount equal to $5 million in
respect of Tyson's expenses in connection with the Merger Agreement. If the
Merger Agreement is terminated by Tyson or Hudson because the Merger has not
been consummated by February 28, 1998 and at the time of such termination all
conditions to the consummation of the Merger have been satisfied or waived
other than the applicable waiting period under the HSR Act having expired or
been terminated, then Tyson will be obligated to pay Hudson $10 million;
5
<PAGE>
provided that Tyson will be obligated to pay Hudson an additional $5 million
if, in addition, certain other conditions are met. See "CERTAIN PROVISIONS OF
THE MERGER AGREEMENT--Fees and Expenses."
No Solicitation. Hudson has agreed in the Merger Agreement that, prior to
the Effective Time, neither it nor any of its subsidiaries or affiliates will,
directly or indirectly, solicit or initiate any Acquisition Transaction, or
negotiate or discuss any Acquisition Transaction, except that Hudson may, in
response to an unsolicited Superior Proposal of a third party, furnish
information to, negotiate or otherwise engage in discussions with such third
party if the Hudson Board determines in good faith, based upon the advice of
outside counsel, that such action is required for the Hudson Board to comply
with its fiduciary duties under applicable law. See "CERTAIN PROVISIONS OF THE
MERGER AGREEMENT--No Solicitation."
Accounting Treatment. The Merger will be accounted for under the "purchase"
method in accordance with generally accepted accounting principles ("GAAP").
Therefore, the aggregate consideration paid by Tyson in the Merger will be
allocated to Hudson's assets and liabilities based upon their fair market
values with any excess being treated as excess of investment over net assets
acquired. The assets and liabilities and results of operations of Hudson will
be consolidated with the assets and liabilities and results of operations of
Tyson subsequent to the consummation of the Merger.
Appraisal Rights. Under Section 262 of the DGCL, the stockholders of Hudson
are entitled to appraisal rights with respect to the approval and adoption of
the Merger Agreement. See "APPRAISAL RIGHTS" and the complete text of Section
262 of the DGCL which is attached hereto as Annex III.
Securities Law Considerations. All shares of Tyson Class A Common Stock to
be issued in the Merger will be freely transferable, except that shares
received by any person who may be deemed to be an "affiliate" (as used in
paragraphs (c) and (d) of Rule 145 under the Securities Act ("Rule 145"),
including, without limitation, directors and certain executive officers) of
Hudson for purposes of such Rule 145 may not be resold except in transactions
permitted by Rule 145 or as otherwise permitted under the Securities Act. See
"THE MERGER--Resales of Tyson Class A Common Stock." Pursuant to the
Registration Rights Agreement (as defined herein) to be entered into at the
Effective Time between Tyson and James T. Hudson, Chairman and the principal
stockholder of Hudson, Mr. Hudson will, among other things, be entitled to
cause Tyson to register under the Securities Act the resale of shares of Tyson
Class A Common Stock received by him in the Merger. See "OTHER AGREEMENTS--
Registration Rights Agreement." In order to reduce the administrative burden
on Tyson resulting from its obligations under the Registration Rights
Agreement, Tyson has registered the offer and sale of shares of Tyson Class A
Common Stock received by Mr. Hudson in the Merger pursuant to the Registration
Statement relating to this Proxy Statement/Prospectus.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
No ruling has been (or will be) sought from the Internal Revenue Service
(the "IRS") as to the anticipated U.S. federal income tax consequences of the
Merger. It is a condition to the consummation of the Merger that Hudson
receive an opinion from its counsel, Davis Polk & Wardwell, and that Tyson
receive an opinion from its counsel, Skadden, Arps, Slate, Meagher & Flom LLP,
substantially to the effect that, based upon certain facts, representations
and assumptions, the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"). However, Hudson is entitled to waive the condition to
consummation of the Merger that it receive such an opinion from Davis Polk &
Wardwell, and Tyson is entitled to waive the condition to consummation of the
Merger that it receive such an opinion from Skadden, Arps, Slate, Meagher &
Flom LLP. In the event that both Tyson and Hudson waive such conditions,
Hudson will recirculate revised proxy materials and resolicit the vote of its
stockholders. The issuance of such opinions is conditioned on, among other
things, the receipt by such tax counsel of representation letters from each of
Tyson and Merger Sub, Hudson and one or more stockholders of Hudson, in each
case, in form and substance reasonably satisfactory to each such counsel.
Assuming the Merger qualifies as a reorganization within the meaning of
Section 368(a) of the Code, no gain or loss will be recognized for U.S.
federal income tax purposes by Hudson, Tyson or Merger Sub as a result of the
Merger, and a holder of Hudson Common Stock
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<PAGE>
will recognize gain, but not loss, for U.S. federal income tax purposes with
respect to the exchange of Hudson Common Stock for Tyson Class A Common Stock
and cash (but only to the extent that such holder's gain on the exchange does
not exceed the cash received). See "CERTAIN U.S. FEDERAL INCOME TAX
CONSIDERATIONS" and "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Conditions to
Consummation of the Merger."
OTHER AGREEMENTS
In connection with the Merger and the transactions contemplated by the
Merger Agreement, certain agreements were or will be entered into by various
parties, including the Voting Agreement, the Registration Rights Agreement and
three Consulting Agreements, each of which may affect the rights of such
parties and the holders of shares of Hudson Common Stock. See "OTHER
AGREEMENTS."
Voting Agreement. Pursuant to the Voting Agreement, James T. Hudson,
Chairman and the principal stockholder of Hudson, has agreed to vote, with
respect to all of the shares of Hudson Common Stock owned by him, for the
approval and adoption of the Merger Agreement and the transactions
contemplated thereby. The Voting Agreement will terminate on the earlier to
occur of the Effective Time and the termination of the Merger Agreement in
accordance with its terms. The Merger Agreement may be terminated by Tyson or
Hudson under certain circumstances, including (i) by either Tyson or Hudson if
the Merger has not been consummated on or before February 28, 1997 and (ii) by
Hudson if the Board of Directors of Hudson reasonably determines that a
proposal has been made for an Acquisition Transaction which constitutes a
Superior Proposal. In addition, under the Voting Agreement, Mr. Hudson has
agreed not to transfer the shares of Hudson Common Stock held by him, except
to certain Permitted Transferees (as defined in the Voting Agreement).
Moreover, Mr. Hudson has agreed in the Voting Agreement that, prior to the
Effective Time, neither he nor any of his agents or representatives will,
directly or indirectly, solicit or initiate any Acquisition Transaction, or
negotiate or discuss any Acquisition Transaction. See "OTHER AGREEMENTS --
Voting Agreement." As of the Record Date, Mr. Hudson owned 65,028 shares of
Hudson Class A Common Stock and 7,650,000 shares of Hudson Class B Common
Stock, representing approximately 65% of the voting power of the Hudson Common
Stock then outstanding.
Registration Rights Agreement. Pursuant to the Registration Rights Agreement
to be entered into at the Effective Time between Tyson and James T. Hudson,
Mr. Hudson will, among other things, be entitled to cause Tyson to register
under the Securities Act the resale of shares of Tyson Class A Common Stock
received by him in the Merger. See "OTHER AGREEMENTS--Registration Rights
Agreement."
Consulting Agreements. In connection with the Merger Agreement, Tyson
entered into Consulting Agreements with each of James T. Hudson, Michael T.
Hudson and Charles B. Jurgensmeyer. See "OTHER AGREEMENTS--Consulting
Agreements."
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SELECTED CONSOLIDATED FINANCIAL DATA OF TYSON FOODS, INC.
The following selected consolidated historical financial information of
Tyson with respect to each year in the five-year period ended September 27,
1997 is derived from the consolidated financial statements of Tyson. The
balance sheet data for each of the two years in the period ended September 27,
1997 and the income statement and cash flow data for each of the three years
in the period ended September 27, 1997 are included in documents incorporated
by reference in this Proxy Statement/Prospectus. The income statement and cash
flow data for the years 1994 and 1993 and balance sheet data for 1995, 1994
and 1993 have been derived from Tyson's audited consolidated financial
statements previously filed with the SEC but not incorporated herein by
reference. Such consolidated financial statements have been audited by Ernst &
Young LLP, independent auditors for Tyson. The selected consolidated
historical financial information should be read in conjunction with the
consolidated financial statements and the notes thereto of Tyson incorporated
by reference herein. See "AVAILABLE INFORMATION" and "INCORPORATION OF
DOCUMENTS BY REFERENCE."
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------
SEPTEMBER SEPTEMBER SEPTEMBER OCTOBER OCTOBER
27, 28, 30, 1, 2,
1997 1996 1995 1994 1993
--------- --------- --------- -------- --------
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................... $6,355.7 $6,453.8 $5,511.2 $5,110.3 $4,707.4
Cost of sales........... 5,318.0 5,505.7 4,423.1 4,149.1 3,796.5
Gross profit............ 1,037.7 948.1 1088.1 961.2 910.9
Operating expenses(1)... 637.8 678.5 616.4 766.0 535.4
Interest expense........ 110.4 132.9 114.9 86.1 72.8
Foreign currency
exchange............... -- 9.0 15.6 -- --
Other expense
(income)(2)............ (40.2) (4.9) (2.4) (9.5) (6.9)
Income before taxes on
income and minority
Interest............... 329.7 132.6 343.6 118.6 309.6
Provision for income
taxes.................. 143.9 49.0 131.0 120.7 129.3
Minority interest in net
loss of consolidated
subsidiary............. -- 3.3 6.6 -- --
Net income (loss)....... $ 185.8 $ 86.9 $ 219.2 $ (2.1) $ 180.3
OTHER DATA:
Capital expenditures.... $ 291.2 $ 214.0 $ 347.2 $ 232.1 $ 225.3
Depreciation and
amortization........... 230.4 239.3 204.9 188.3 176.5
Cash flow provided by
(used for) :
Operating activities... 541.0 173.3 291.3 50.2 308.4
Investing activities... (135.9) (222.4) (731.0) (310.2) (302.7)
Financing activities... (418.4) 52.1 451.4 265.5 (11.2)
PER SHARE DATA:(3)
Earnings (loss) per
share.................. $ 0.85 $ 0.40 $ 1.01 $ (0.01) $ 0 .81
Dividends per share:
Class A Common Stock... 0.095 0.0800 0.0533 0.0467 0.0267
Class B Common Stock... 0.086 0.0720 0.0445 0.0389 0.0222
Book value per share.... $ 7.60 $ 7.09 $ 6.76 $ 5.92 $ 6.16
Shares outstanding...... 213.4 217.4 217.2 217.8 221.0
Average shares
outstanding............ 218.2 218.1 217.7 221.7 222.5
BALANCE SHEET DATA
(AS OF PERIOD END):
Total assets............ $4,411.0 $4,544.1 $4,444.3 $3,668.0 $3,253.5
Long-term debt.......... 1,558.2 1,806.4 1,620.5 1,381.5 920.5
Shareholders' equity.... 1,621.5 1,541.7 1,467.7 1,289.4 1,360.7
</TABLE>
- --------
(1) Fiscal year ended October 1, 1994 includes $213.9 write down of excess of
investment over net assets acquired and certain long-lived assets related
to Tyson's Seafood Division.
(2) Fiscal year ended September 27, 1997 includes a $41 million pre-tax gain
($4 million after-tax) from the sale of the beef division assets.
(3) Reflects a three-for-two stock split, which became effective at the close
of business on February 15, 1997.
8
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA OF HUDSON FOODS, INC.
The following selected consolidated historical financial information of
Hudson with respect to each year in the five-year period ended September 27,
1997 is derived from the consolidated financial statements of Hudson. The
balance sheet data for each of the two years in the period ended September 27,
1997 and the income statement and cash flow data for each of the three years
in the period ended September 27, 1997 are included in documents incorporated
by reference in this Proxy Statement/Prospectus. The income statement and cash
flow data for the years 1994 and 1993 and balance sheet data for 1995, 1994
and 1993 have been derived from Hudson's audited consolidated financial
statements previously filed with the SEC but not incorporated herein by
reference. Such consolidated financial statements have been audited by Coopers
& Lybrand L.L.P., independent accountants for Hudson. The selected
consolidated historical financial information should be read in conjunction
with the consolidated financial statements and the notes thereto of Hudson
incorporated by reference herein. See "AVAILABLE INFORMATION" and
"INCORPORATION OF DOCUMENTS BY REFERENCE."
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------------------------
SEPTEMBER SEPTEMBER SEPTEMBER OCTOBER OCTOBER
27, 28, 30, 1, 2,
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales.................. $1,665,105 $1,378,474 $1,200,512 $1,040,840 $920,545
Cost of sales.......... 1,490,550 1,211,556 1,023,959 885,248 802,002
Gross profit........... 174,555 166,918 176,553 155,592 118,543
Selling................ 111,632 94,805 82,945 78,698 63,926
General and
administrative........ 32,527 32,240 29,211 25,755 20,695
International
reorganization........ 24,195 -- -- -- --
Other special
charges(1)............ 28,292 -- -- -- --
Operating income
(loss)................ (22,091) 39,873 64,397 51,139 33,922
Interest, net.......... 13,364 5,789 1,845 6,152 7,975
Interest on tax
settlement............ -- -- 4,500 -- --
Other, net............. (.881) (4,246) (2,190) -- 530
Income (loss) before
income taxes.......... (34,574) 38,330 60,242 44,987 25,417
Income tax expense
(benefit)............. (13,329) 15,332 24,484 17,995 9,512
Net income (loss)...... $ (21,245) $ 22,998 $ 35,758 $ 26,992 $ 15,905
PER SHARE DATA:
Primary earnings (loss)
per share............. $ (0.70) $ 0.76 $ 1.21 $ 1.08 $ 0.67
Fully diluted earnings
(loss) per share...... (0.70) 0.76 1.21 1.08 0.67
Dividends declared per
Class A common share.. .080 .080 .080 .080 .080
Dividends declared per
Class B common share.. .067 .067 .067 .067 .067
Stockholders' equity
per share............. 9.98 10.82 10.14 8.30 7.17
OTHER DATA:
Working capital........ $ 212,956 $ 213,889 $ 180,458 $ 100,096 $103,811
Capital expenditures... 66,735 139,387 73,314 49,161 21,453
Depreciation and
amortization.......... 33,009 26,703 25,137 22,279 22,943
BALANCE SHEET DATA (AS
OF PERIOD END):
Total assets........... $ 887,026 $ 774,742 $ 623,541 $ 473,180 $416,503
Total debt............. 372,992 249,665 151,015 97,078 94,070
Stockholders' equity... 304,109 325,920 304,349 209,189 173,902
</TABLE>
- --------
(1) In August 1997, Hudson recalled all raw ground beef products processed at
its Columbus, Nebraska facility. See "THE MERGER--Background of and
Reasons for the Merger." In the fourth quarter of fiscal year 1997, Hudson
recorded a special operating charge of $12.5 million, representing costs
expected to be incurred during the recall of such products. In addition,
Hudson recorded a special charge of $4 million, representing cash payments
to be made to the United States as the result of an agreement between
Hudson and the Department of Justice for claims of violations of the Clean
Water Act.
9
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA OF TYSON FOODS, INC.
The following table sets forth certain unaudited pro forma combined data
which are presented to reflect the pro forma effect of the Merger. The
unaudited pro forma statement of income data gives effect to the Merger as if
it had occurred on September 29, 1996. The unaudited pro forma balance sheet
data gives effect to the Merger as if it had occurred on September 27, 1997.
The unaudited pro forma combined data set forth below (i) have been derived
from, and should be read in conjunction with, the Pro Forma Combined Condensed
Financial Statements and the notes thereto included elsewhere in this Proxy
Statement/Prospectus and (ii) should be read in conjunction with the
historical financial statements of Hudson and Tyson incorporated by reference
herein.
TYSON FOODS, INC.
SUMMARY PRO FORMA COMBINED DATA (UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<S> <C>
STATEMENT OF INCOME DATA FOR YEAR ENDED SEPTEMBER 27, 1997:
Sales......................................................... $8,020.8
Cost of sales................................................. 6,811.9
Operating income.............................................. 365.8
Interest expense.............................................. 141.3
Income before taxes on income................................. 265.6
Net income.................................................... 142.7
BALANCE SHEET DATA AS OF SEPTEMBER 27, 1997:
Cash and cash equivalents..................................... $ 26.4
Working capital............................................... 1,018.2
Total assets.................................................. 5,695.2
Long-term debt................................................ 2,084.9
Shareholders' equity.......................................... 2,014.6
OPERATING DATA:
Gross margin.................................................. 15.1%
</TABLE>
See Notes included in "PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS."
10
<PAGE>
COMPARATIVE PER SHARE DATA OF HUDSON AND TYSON
Set forth below is comparative per share data for Tyson (on a historical and
pro forma basis) and for Hudson (on a historical and equivalent pro forma per
share basis). Historical information for Hudson and Tyson has been derived
from their respective selected financial data included elsewhere herein. Pro
forma information for Tyson was derived from the unaudited pro forma combined
condensed financial statements of Tyson as of and for the year ended September
27, 1997 included elsewhere in this Proxy Statement/Prospectus. Pro forma
equivalent information for Hudson was calculated by multiplying the pro forma
per share amounts for Tyson by the exchange ratio of Tyson Class A Stock for
Hudson Common Stock. Equivalent market value per share data for Hudson was
calculated by multiplying the market value per share of Tyson Class A Stock by
the exchange ratio of Tyson Class A Stock for Hudson Common Stock.
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 27, 1997
-----------------------------
PRO
TYSON HISTORICAL(1) FORMA(2)
- ----- ------------ -------
<S> <C> <C>
Cash dividends per share......................... $.095 $.095
Earnings per share............................... .85 .60
Book value per share............................. 7.60 8.69
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 27, 1997
-----------------------------------------
TYSON HUDSON
PRO EXCHANGE PRO FORMA
HUDSON HISTORICAL FORMA(2) RATIO(3) EQUIVALENT(2)
- ------ ---------- ------- -------- ------------
<S> <C> <C> <C> <C>
Cash dividends per share............. $.08 $.095 .6000 $.05
Earnings (loss) per share............ (.70) .60 .6000 .36
Book value per share................. 9.98 8.69 .6000 5.21
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 3, 1997
------------------------------------------
HUDSON TYSON
MARKET MARKET EXCHANGE HUDSON
VALUE VALUE RATIO(3) EQUIVALENT
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Market value per share............. $17.1875 $21.3750 .6000 $12.8250
Cash consideration per share(4).................................... 8.4000
--------
Total ........................................................... $21.2250
========
</TABLE>
- --------
(1) Reflects a three-for-two stock split, which became effective at the close
of business on February 15, 1997.
(2) Assumes the exercise of all outstanding options to purchase shares of
Hudson Class A Common Stock.
(3) Computed by multiplying $21.3750, the last reported sale price of Tyson
Class A Common Stock on the Nasdaq National Market on September 3, 1997,
by 0.6.
(4) In addition to six-tenths (0.6) of a share of Tyson Class A Common Stock
received in the Merger, each Hudson stockholder will receive a cash
payment of $8.40 per share of Hudson Common Stock.
11
<PAGE>
MARKET PRICES AND DIVIDENDS PAID
Hudson Class A Common Stock is traded on the NYSE under the symbol "HFI".
Tyson Class A Common Stock is traded on the NYSE under the symbol "TSN". Prior
to October 17, 1997, Tyson Class A Common Stock was traded on the Nasdaq
National Market under the symbol "TYSNA". The following table sets forth: (i)
for all periods indicated, the range of high and low sale prices of Hudson
Class A Common Stock as reported on the NYSE Composite Transactions Tape; (ii)
for periods prior to October 17, 1997, the high and low bid prices of Tyson
Class A Common Stock as reported by the Nasdaq National Market; (iii) for
periods from and after October 17, 1997, the high and low sale prices of Tyson
Class A Common Stock as reported on the NYSE Composite Transactions Tape; and
(iv) the dividends paid by Hudson and Tyson, respectively, during each of the
periods indicated.
<TABLE>
<CAPTION>
HUDSON CLASS A COMMON TYSON CLASS A COMMON
STOCK(1) STOCK (2)
------------------------ ------------------------
FISCAL YEAR HIGH LOW DIVIDEND HIGH LOW DIVIDEND
- ----------- ------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1996
First Quarter.............. $17.500 $13.625 $.02 $18.083 $15.167 $.0200
Second Quarter............. 18.125 12.750 .02 17.750 13.833 .0200
Third Quarter.............. 15.125 11.500 .02 18.417 14.583 .0200
Fourth Quarter............. 14.500 12.125 .02 18.583 15.833 .0200
1997
First Quarter.............. $19.000 $14.250 $.02 $23.083 $17.791 $.0200
Second Quarter............. 21.250 15.500 .02 23.625 19.375 .0250
Third Quarter.............. 17.375 14.000 .02 21.563 17.750 .0250
Fourth Quarter............. 21.625 14.188 .02 23.750 18.875 .0250
1998
First Quarter (through
December 9, 1997)......... 21.625 18.125 -- 24.250 17.688 .0250
</TABLE>
- --------
(1) Hudson price and dividend information reflect a three-for-two stock split,
which became effective at the close of business on March 27, 1995.
(2) Tyson price and dividend information reflect a three-for-two stock split,
which became effective at the close of business on February 15, 1997.
Set forth below are the last reported sale prices of Hudson Class A Common
Stock and Tyson Class A Common Stock on September 3, 1997, the last trading
day prior to the execution of the Merger Agreement, as reported on the NYSE
Composite Transactions Tape and the Nasdaq National Market, respectively, and
the equivalent pro forma sale price of Hudson Class A Common Stock on such
date, as determined by multiplying such last reported sale price of Tyson
Class A Common Stock by 0.6 and adding $8.40:
<TABLE>
<S> <C>
Hudson Class A Common Stock..................................... $17.1875
Tyson Class A Common Stock...................................... 21.3750
Hudson Equivalent............................................... 21.2250
</TABLE>
On December 9, 1997, the last trading day prior to the date of this Proxy
Statement/Prospectus, the last reported sale prices of Hudson Class A Common
Stock and Tyson Class A Common Stock, as reported on the NYSE Composite
Transactions Tape, were $19 3/4 per share and $19 5/8 per share, respectively.
On August 22, 1997, the Board of Directors of Tyson declared its regular
quarterly dividend payable on or about December 15, 1997 to holders of record
of Tyson Class A Common Stock on December 1, 1997. On November 14, 1997, the
Board of Directors of Tyson declared its regular quarterly dividends payable
on or about March 8, 1998 to holders of record of Tyson Class A Common Stock
on March 1, 1998. Tyson has paid
12
<PAGE>
uninterrupted quarterly dividends on its common stock since 1977. On January
10, 1997, the Board of Directors of Tyson increased the annual dividend rate
on Tyson Class A Common Stock to $.10 per share and fixed an annual dividend
rate of $.09 per share for the Tyson Class B Common Stock, effective with the
quarterly dividend paid on March 15, 1997. Tyson has continued to pay
quarterly dividends at the same rates.
The present and future ability of Tyson to pay dividends on the Tyson Class
A Common Stock and the Tyson Class B Common Stock (as defined herein) is
subject to conditions existing at the time, including earnings, capital
requirements and general business conditions.
On August 19, 1997, the Board of Directors of Hudson declared its regular
quarterly dividend of $0.02 per share for Hudson Class A Common Stock and
$0.0167 per share for Hudson Class B Common Stock payable on or about
September 24, 1997 to holders of record on September 10, 1997. Hudson has paid
quarterly dividends on its common stock since 1987.
The number of shares of Tyson Class A Common Stock to be received by holders
of Hudson Common Stock in the Merger as part of the Per Share Merger
Consideration is fixed at six-tenths (0.6) of a share of Tyson Class A Common
Stock for each share of Hudson Common Stock. Such number will not be adjusted
in the event of any increase or decrease in the price of either Tyson Class A
Common Stock or Hudson Common Stock. The price of Tyson Class A Common Stock
may vary at the Effective Time from its price at the date of this Proxy
Statement/Prospectus and at the date of the Special Meeting. Stockholders of
Hudson are urged to obtain current market quotations for Tyson Class A Common
Stock and Hudson Class A Common Stock. See "RISK FACTORS."
COMPARISON OF RIGHTS OF HOLDERS OF HUDSON COMMON STOCK AND TYSON COMMON STOCK
See "COMPARISON OF THE RIGHTS OF HOLDERS OF HUDSON COMMON STOCK AND TYSON
COMMON STOCK" for a summary of the material differences between the rights of
holders of Hudson Common Stock and the rights of holders of Tyson Class A
Common Stock.
13
<PAGE>
RISK FACTORS
In considering whether to approve and adopt the Merger Agreement, in
addition to the other matters set forth or incorporated by reference in this
Proxy Statement/Prospectus, the stockholders of Hudson should consider the
following matters.
FIXED EXCHANGE RATIO DESPITE CHANGE IN RELATIVE STOCK PRICES. The number of
shares of Tyson Class A Common Stock to be received by holders of Hudson
Common Stock in the Merger as part of the Per Share Merger Consideration is
fixed at six-tenths (0.6) of a share of Tyson Class A Common Stock for each
share of Hudson Common Stock. Such number will not be adjusted in the event of
any increase or decrease in the price of either Tyson Class A Common Stock or
Hudson Common Stock. The price of Tyson Class A Common Stock may vary at the
Effective Time from its price at the date of this Proxy Statement/Prospectus
and at the date of the Special Meeting. Such variation may be the result of
changes in the business, operations or prospects of Tyson or Hudson, market
assessments of the likelihood that the Merger will be consummated and the
timing thereof, regulatory considerations, general market and economic
conditions and other factors. Because the Effective Time may occur at a date
later than the date of the Special Meeting, there can be no assurance that the
price of Tyson Class A Common Stock on the date of the Special Meeting will be
indicative of its price at the Effective Time. The Effective Time will occur
as soon as practicable following the Special Meeting and the satisfaction or
waiver of the other conditions set forth in the Merger Agreement. Stockholders
of Hudson are urged to obtain current market quotations for Tyson Class A
Common Stock and Hudson Class A Common Stock.
CHALLENGES OF BUSINESS INTEGRATION. The full benefits of a business
combination of Tyson and Hudson will require the integration of each company's
administrative, finance, sales and marketing organizations, the coordination
of each company's sales efforts, and the implementation of appropriate
operations, financial and management systems and controls in order to capture
the efficiencies and cost reductions that are expected to result from the
Merger. This will require substantial attention from Tyson's management team.
The diversion of management attention, as well as any other difficulties which
may be encountered in the transition and integration process, could have an
adverse impact on the revenue and operating results of Tyson. There can be no
assurance that Tyson will be able to integrate the operations of Tyson and
Hudson successfully.
CONFLICTS OF INTEREST OF CERTAIN PERSONS IN THE MERGER. In considering the
recommendation of the approval and adoption of the Merger Agreement by the
Hudson Board, the stockholders of Hudson should be aware that certain
directors and executive officers of Hudson, as well as others, have interests
in the Merger in addition to their interests as stockholders of Hudson; and
that such interests, together with other relevant factors, were considered by
the Hudson Board in recommending the approval and adoption of the Merger
Agreement and the consummation of the transactions contemplated thereby to the
stockholders of Hudson. See "THE MERGER -- Certain Transactions; Interests of
Certain Persons in the Merger."
CONTROLLING STOCKHOLDER. As of September 27, 1997, Don Tyson, Senior
Chairman of the Board of Directors of Tyson, and the Tyson Limited
Partnership, of which Mr. Tyson is managing general partner, collectively
owned, directly or indirectly, approximately 554,924 shares of Tyson Class A
Common Stock and 102,598,560 shares of Tyson Class B Common Stock,
representing approximately 90% of the voting power of Tyson Common Stock (as
defined herein). Following the Merger, such shares of Tyson Common Stock will
represent approximately 89% of the voting power of Tyson Common Stock,
assuming the issuance of 18,388,845 shares of Tyson Class A Common Stock in
the Merger. Consequently, Mr. Tyson, individually and in his capacity as
managing general partner of the Tyson Limited Partnership, has, and following
the Merger will continue to have, the ability to elect the entire Tyson Board
of Directors without the vote of any other stockholder of Tyson. Moreover, Mr.
Tyson's voting power with respect to Tyson Common Stock will have the effect
of precluding, absent the support of Mr. Tyson, a proxy contest, a business
combination involving Tyson or a tender offer for Tyson Common Stock that, in
each case, could give stockholders the opportunity to realize a premium over
the then-prevailing market price for their shares of Tyson Common Stock.
14
<PAGE>
THE SPECIAL MEETING
PURPOSE
This Proxy Statement/Prospectus is being furnished to the holders of Hudson
Common Stock in connection with the solicitation of proxies by the Hudson
Board for use at the Special Meeting.
At the Special Meeting, the stockholders of Hudson will consider and vote
upon a proposal to approve and adopt the Merger Agreement, which provides for
the Merger of Hudson with and into Merger Sub, with Merger Sub continuing as
the Surviving Corporation and a wholly owned subsidiary of Tyson. The
stockholders of Hudson will also consider and take action upon any other
business which may properly be brought before the Special Meeting.
The Hudson Board has, by a unanimous vote of those present, determined that
the Merger is fair to and in the best interests of Hudson and its stockholders
and has approved the Merger Agreement. THE HUDSON BOARD, BY A UNANIMOUS VOTE
OF THOSE PRESENT, HAS RECOMMENDED THAT THE STOCKHOLDERS OF HUDSON VOTE "FOR"
THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT AT THE SPECIAL MEETING.
See "THE MERGER -- Hudson's Reasons for the Merger; Recommendation of the
Hudson Board of Directors." For a discussion of the interests that certain
directors and executive officers of Hudson have with respect to the Merger, in
addition to their interests as stockholders of Hudson generally, see "THE
MERGER--Certain Transactions; Conflicts of Interest of Certain Persons in the
Merger." Such interests, together with other relevant factors, were considered
by the Hudson Board in making its recommendation and approving the Merger
Agreement.
RECORD DATE; VOTING RIGHTS; REQUIRED VOTE
Only holders of record of Hudson Common Stock at the close of business on
the Record Date, November 28, 1997, are entitled to receive notice of and to
vote at the Special Meeting. At the close of business on the Record Date,
there were 20,967,054 shares of Hudson Class A Common Stock outstanding, each
of which entitles the registered holder thereof to one vote, and 9,602,372
shares of Hudson Class B Common Stock outstanding, each of which entitles the
registered holder thereof to ten votes.
Approval and adoption of the Merger Agreement will require the affirmative
vote of a majority of the votes entitled to be cast at the Special Meeting by
the holders of the outstanding shares of Hudson Common Stock, voting as a
single class. An abstention will not be counted as a vote cast. Brokers who
hold shares of Hudson Class A Common Stock as nominees will not have
discretionary authority to vote such shares in the absence of instructions
from the beneficial owners thereof. Broker non-votes will not be counted as
votes cast.
STOCK OWNERSHIP OF MANAGEMENT
At the close of business on the Record Date, directors and executive
officers of Hudson and their affiliates were the beneficial owners of an
aggregate of 11,133,444 shares of Hudson Class A Common Stock and 9,600,000
shares of Hudson Class B Common Stock, or 83% of the voting power of the
Hudson Common Stock then outstanding.
At the close of business on the Record Date, James T. Hudson, Chairman and
the principal stockholder of Hudson, owned 65,028 shares of Hudson Class A
Common Stock and 7,650,000 shares of Hudson Class B Common Stock, or
approximately 65% of the voting power of the Hudson Common Stock. Pursuant to
the Voting Agreement, Mr. Hudson has agreed to vote all of the shares of
Hudson Common Stock owned by him for the approval and adoption of the Merger
Agreement. The Voting Agreement will terminate on the earlier to occur of the
Effective Time and the termination of the Merger Agreement in accordance with
its terms. See "OTHER AGREEMENTS--Voting Agreement" and "CERTAIN PROVISIONS OF
THE MERGER AGREEMENT--Termination." As a result, provided Mr. Hudson complies
with his obligations under the
15
<PAGE>
Voting Agreement and the Voting Agreement is not terminated in accordance with
its terms, the approval and adoption of the Merger Agreement are assured and
will not require the affirmative vote of any other stockholder of Hudson.
QUORUM
The presence, in person or by properly executed proxy, of the holders of a
majority of the votes represented by the issued and outstanding shares of
Hudson Common Stock, considered as a single class, is necessary to constitute
a quorum at the Special Meeting.
Shares of Hudson Common Stock represented by proxies which are marked
"abstain" will be counted as shares present for purposes of determining the
presence of a quorum on all matters, as will shares of Hudson Class A Common
Stock that are represented by proxies that are executed by any broker,
fiduciary or other nominee on behalf of the beneficial owner(s) thereof
regardless of whether authority to vote is withheld by such broker, fiduciary
or nominee on one or more matters.
In the event that a quorum is not present at the Special Meeting, it is
expected that such meeting will be adjourned or postponed to solicit
additional proxies.
PROXIES
All shares of Hudson Common Stock represented by properly executed proxies
in the enclosed form which are received in time for the Special Meeting and
have not been revoked will be voted in accordance with the instructions
indicated in such proxies. If no instructions are indicated, such shares will
be voted FOR approval and adoption of the Merger Agreement.
An abstention will have the effect of a vote against approval and adoption
of the Merger Agreement. Brokers who hold shares of Hudson Class A Common
Stock as nominees will not have discretionary authority to vote such shares in
the absence of instructions from the beneficial owners thereof. Any shares
which are not voted because the nominee-broker lacks such discretionary
authority will be counted for purposes of determining a quorum at the Special
Meeting, but will have the effect of votes cast against the approval and
adoption of the Merger Agreement.
Hudson does not know of any matter not described in the Notice of Special
Meeting that is expected to come before the Special Meeting. If, however, any
other matters are properly presented for action at the Special Meeting, the
persons named in the enclosed form of proxy and acting thereunder will have
the discretion to vote on such matters in accordance with their best judgment,
unless such authority is withheld.
Any proxy in the enclosed form may be revoked by the stockholder executing
it at any time prior to its exercise by giving written notice thereof to the
Secretary of Hudson, by signing and returning a later dated proxy or by voting
in person at the Special Meeting. No such revocation shall be effective,
however, until such notice of revocation has been received by Hudson at or
prior to the Special Meeting. Attendance at the Special Meeting will not in
and of itself constitute the revocation of a proxy.
SOLICITATION OF PROXIES
Proxies are being solicited hereby on behalf of the Hudson Board. Except as
otherwise provided in the Merger Agreement, the entire cost of proxy
solicitation for the Special Meeting, including the reasonable expenses of
brokers, fiduciaries and other nominees in forwarding solicitation material to
beneficial owners, will be borne by Hudson. In addition to the use of the
mail, solicitation may be made by telephone or otherwise by officers and
regular employees of Hudson. Such officers and regular employees will not be
additionally compensated for such solicitation, but may be reimbursed for out-
of-pocket expenses incurred in connection therewith. If undertaken, the
expense of such solicitation would be nominal.
16
<PAGE>
APPRAISAL RIGHTS
Holders of Hudson Common Stock have the right to demand judicial appraisal
of, and obtain a cash payment for, the "fair value" of their shares of Hudson
Common Stock (exclusive of any element of value arising from the
accomplishment or expectation of the Merger), pursuant to Section 262 of the
DGCL. In order to exercise such rights, such holder of Hudson Common Stock
must not vote in favor of the Merger and must comply with the procedural
requirements of Section 262 of the DGCL. The full text of Section 262 of the
DGCL is attached hereto as Annex III, and any stockholder desiring to exercise
dissenters' rights of appraisal in connection with the Merger is urged to
consult with legal counsel prior to taking any action in order to ensure that
the stockholder complies with the applicable statutory provisions. Failure to
take any of the steps required under Section 262 of the DGCL on a timely basis
may result in the loss of appraisal rights. See "THE MERGER-- Appraisal
Rights" and Annex III hereto.
STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR PROXY
CARDS. A TRANSMITTAL FORM WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK
CERTIFICATES WILL BE MAILED TO STOCKHOLDERS SHORTLY AFTER THE EFFECTIVE TIME.
17
<PAGE>
THE MERGER
The description of the Merger and the Merger Agreement contained in this
Proxy Statement/Prospectus does not purport to be complete and is qualified in
its entirety by reference to the Merger Agreement, a copy of which is attached
hereto as Annex I and incorporated herein by reference.
GENERAL
At the Effective Time of the Merger, Hudson will be merged with and into
Merger Sub, with Merger Sub continuing as the Surviving Corporation and a
wholly owned subsidiary of Tyson. As a result of the Merger, the separate
corporate existence of Hudson will cease and Merger Sub will succeed to all
the rights and be responsible for all the obligations of Hudson in accordance
with the DGCL. Upon the terms and subject to the conditions set forth in the
Merger Agreement, at the Effective Time, each share of Hudson Common Stock
outstanding immediately prior to the Effective Time (other than shares owned
by Hudson, which will be cancelled, and shares held by stockholders exercising
appraisal rights under Section 262 of the DGCL) will be converted into the
right to receive the Per Share Merger Consideration. Cash will be paid in lieu
of any fractional shares of Tyson Class A Common Stock.
The Merger will become effective upon the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware unless the Certificate of
Merger provides for a later date of effectiveness. The filing of the
Certificate of Merger will occur as soon as practicable following the
satisfaction or waiver of the conditions set forth in the Merger Agreement.
See "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Conditions to Consummation of
the Merger."
BACKGROUND OF AND REASONS FOR THE MERGER
On a number of occasions during the last twelve years, Tyson and Hudson have
had discussions regarding a possible merger. None of those prior discussions
resulted in any agreement among the parties on price or any other essential
terms of a merger.
In late July 1997, Tyson's Chairman and Chief Executive Officer, Leland
Tollett, contacted Hudson's Chairman, James T. Hudson, to explore again the
possibilities of a merger. Messrs. Hudson and Tollett met, discussed in
general terms a merger of the companies and, in the context of those
discussions, talked about the price at which such a transaction could be
consummated. Several days after that meeting, Mr. Tollett telephoned Mr.
Hudson and advised him that Tyson could not justify a merger at the price
level suggested by Mr. Hudson, but that a price in a substantially lower range
might be feasible. Mr. Hudson declined to consider an offer in the lower price
range, and these discussions ended.
In August 1997, Hudson was requested by the USDA to recall three days'
production of raw ground beef products processed at its Columbus, Nebraska
plant. The recall was requested because of concerns that such production might
be subject to a form of E. coli bacterial contamination. It was recognized by
the USDA that the contamination most likely originated at a Hudson supplier
and not at Hudson's state-of-the-art Nebraska facility. Subsequently, because
of the concern of the USDA that through the industry accepted practice of
rework, the E. coli contamination could have spread to a number of additional
days of production, as a precaution, the recall was expanded at the request of
the USDA to include all Hudson production of raw ground beef products. Because
of the extent of the production affected by the precautionary recall, Hudson
determined to close its Columbus, Nebraska plant pending further review.
Following the announcement of the expanded recall, although it acknowledged
there was no evidence that any contaminated product had been delivered to it
and although aware that the recall was a precautionary measure, Hudson's
primary customer for frozen beef patties publicly announced that it had
decided not to purchase additional beef products in the future from Hudson and
took steps to terminate its approved supplier agreement with Hudson for the
purchase of a substantial part of the Columbus, Nebraska plant's production.
During the same period, Hudson was the subject of negative comments in the
media which, among other things, suggested erroneously that the entire
production had been recalled because it had
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been found to be contaminated, although there was no evidence that this was
indeed the case. There were also comments by representatives of the USDA
suggesting that Hudson records were deficient and suggesting that Hudson had
taken more time to respond to recall requests than was appropriate. Although
Hudson vigorously contests these statements and the right of the primary
purchaser of its Columbus, Nebraska production to terminate its supplier
agreement, the foregoing events had a significant effect on the public
perception of Hudson. See "SUMMARY--Recent Developments." As a result, Mr.
Hudson and other members of Hudson's senior management concluded that this
combination of events, including the adverse publicity, had negatively
affected the future of the Columbus, Nebraska plant as a supplier of beef
products, as well as the Hudson brand and consumer acceptance of Hudson
products.
In the wake of the raw ground beef products recall, and as its potential to
negatively impact Hudson's other operations became an even greater risk,
Hudson's senior management decided to explore merger discussions with Tyson.
Hudson's Chief Financial Officer, Charles B. Jurgensmeyer, contacted Tyson's
Chief Financial Officer, Wayne Britt, on August 25, 1997 to advise him that
Tyson should consider making an offer if it was still interested in acquiring
Hudson. This telephone call led to two meetings involving, at various times,
Messrs. Hudson, Jurgensmeyer and Michael T. Hudson, Hudson's President and
Chief Executive Officer, representing Hudson, and Messrs. Tollett and Britt,
representing Tyson.
At the first of these meetings on August 27, 1997, Hudson's representatives
said that, in light of the adverse publicity generated by the recall, Hudson
would consider a transaction with Tyson at a price that Hudson would consider
to be fair taking into account all relevant circumstances. In response,
representatives of Tyson indicated a willingness to offer $21 per share of
Hudson Common Stock. The parties also discussed the terms of agreements under
which Hudson's senior management would continue to consult with Tyson
following a merger and would agree not to compete with Tyson. The meeting
ended without any substantive agreement.
The second meeting took place on the morning of August 28, 1997. At that
meeting, Messrs. Tollett and Britt presented Messrs. J. Hudson, M. Hudson and
Jurgensmeyer with written outlines of the essential terms of a proposed
merger. Representatives of Tyson offered to acquire all of the outstanding
shares of Hudson Common Stock for $21 per share, payable half in shares of
Tyson Class A Common Stock and half in cash. In addition, Tyson's proposal
included terms for the previously discussed consulting and non-competition
agreements with Hudson's senior management for periods ranging from five to
ten years following the merger. Hudson's representatives agreed to present
Tyson's proposal to the Hudson Board.
The Hudson Board met in a special meeting on August 28, 1997 to discuss the
Tyson merger proposal presented earlier in the day. The essential terms of the
proposed transaction were described to the Hudson Board and discussed by its
members. The Hudson Board then authorized Hudson's management and its counsel
to negotiate with Tyson a definitive merger agreement and the other agreements
required to conclude the transaction. The Hudson Board also authorized
management to engage DLJ to review the terms of the Tyson offer and to report
to the Hudson Board regarding the fairness of such offer from a financial
point of view.
During the negotiation of the definitive agreements which followed the
Hudson Board meeting, Tyson revised its offer, at Hudson's request, to
increase the stock portion to sixty percent of total consideration and reduce
the cash portion to forty percent. During these negotiations, Tyson requested
that Mr. Hudson agree to vote his shares of Hudson Common Stock in favor of
the transaction. Mr. Hudson, however, was not willing to agree to an
arrangement that would prevent the Hudson Board from accepting a better offer,
if one were made. As a result, the parties negotiated a form of voting
agreement which would terminate if the merger agreement were terminated
(including if the merger agreement were terminated so that the Hudson Board
could accept a superior offer).
On the evening of September 3, 1997, the Hudson Board met informally with
Hudson's senior management and counsel to review the terms of the Merger
Agreement and related documents as negotiated with Tyson. The Hudson Board met
formally on the morning of September 4, 1997 and, by a unanimous vote of the
members present, approved and adopted the Merger Agreement and the Merger,
recommended submission of the Merger
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Agreement for approval and adoption by Hudson's stockholders and recommended
that the stockholders of Hudson vote "for" the proposal to approve and adopt
the Merger Agreement.
On September 4, 1997, Tyson, Merger Sub and Hudson entered into the Merger
Agreement.
RECOMMENDATION OF THE HUDSON BOARD OF DIRECTORS
THE HUDSON BOARD HAS DETERMINED THAT THE MERGER IS FAIR TO AND IN THE BEST
INTERESTS OF THE STOCKHOLDERS OF HUDSON AND RECOMMENDS THAT THE STOCKHOLDERS
OF HUDSON VOTE "FOR" THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT AT
THE SPECIAL MEETING.
The conclusions reached by the Hudson Board and its recommendation that the
Merger Agreement and the Merger be approved and adopted were based on the
Hudson Board's consideration of a variety of factors relating both to the
advisability of a sale of Hudson and the terms of the Tyson offer, including
the following material factors:
. The uncertainty created by the raw ground beef products recall and the
attendant adverse publicity; the fact that the evidence then available to
the Hudson Board suggested that the recall had caused potentially
irreparable damage to Hudson's reputation and its brand name; and the
fact that the cancellation of a major customer's contract to purchase
frozen beef patties received substantial media coverage that was damaging
to Hudson's image and, subsequently, another of Hudson's significant
customers indicated its intention to slow the scheduled introduction of
Hudson ham and turkey products into its franchisees' stores;
. The report and opinion of DLJ that, based on and subject to certain
assumptions, limitations and qualifications, the Per Share Merger
Consideration was fair to the Hudson Public Stockholders from a financial
point of view (see "--Opinion of Financial Advisor to Hudson");
. The Board's familiarity with Tyson, its lines of business and its
financial results;
. The similarities in the operations of the two companies, and their
proximity to one another, will potentially allow integration of the two
companies to proceed more smoothly than might be the case with other
merger partners. This is expected by the Hudson Board to have a less
disruptive effect on Hudson's employees. Additionally, efficiencies in
the integration process may positively impact Tyson's performance after
the Merger and benefit Hudson's stockholders through increases in the
value of shares of Tyson Class A Common Stock;
. The terms of the Merger Agreement provide the Hudson Board with the
flexibility to consider and accept an Acquisition Transaction which
constitutes a Superior Proposal (i.e., a bona fide, written and
unsolicited proposal or offer made by any person or group with respect to
a merger, consolidation or similar business combination involving Hudson
or any subsidiary of Hudson on terms which the Hudson Board determines,
in good faith, and in the exercise of reasonable judgment (based on the
advice of independent financial advisors and legal counsel), to be more
favorable to Hudson and its stockholders than the Merger (taking into
account the financing of such alternative transaction);
. The Per Share Merger Consideration represents a premium over the current,
and in the view of the Hudson Board, reasonably foreseeable future market
price for shares of Hudson Common Stock;
. The fact that, assuming the transaction qualifies as a reorganization
within the meaning of Section 368(a) of the Code, neither Hudson nor
Tyson would recognize any gain or loss as a result of the Merger, and
that stockholders of Hudson would recognize gain, but not loss, for U.S.
federal income tax purposes from the exchange of Hudson Common Stock for
Tyson Class A Common Stock and cash, but only to the extent that such
holders' gain on the exchange does not exceed the cash received;
. The ability of the stockholders of Hudson to participate in the enhanced
prospects of the combined company through ownership of Tyson Class A
Common Stock;
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. Mr. Hudson, under the terms of the Voting Agreement, is not obligated to
vote his shares of Hudson Common Stock in favor of the approval and
adoption of the Merger Agreement in the event that the Hudson Board
elects to terminate the Merger Agreement following its determination, in
accordance with the terms of the Merger Agreement, that an Acquisition
Transaction constitutes a Superior Proposal;
. The possibility that the FTC or the Antitrust Division might raise
objections to the Merger on antitrust grounds;
. The other terms and conditions of the Merger Agreement, including that
(i) Tyson could be entitled to be paid fees and expenses of $27.5 million
upon termination of the Merger Agreement under certain circumstances;
(ii) Hudson could be entitled to be paid up to $15 million if the Merger
has not been consummated on or before February 28, 1998, under certain
circumstances; and (iii) the consummation of the Merger is conditioned on
the absence of any material adverse changes in the respective businesses
of Tyson and Hudson; and
. The terms of the Consulting Agreements to be entered into between Tyson
and each of Messrs. J. Hudson, M. Hudson and Jurgensmeyer.
The Hudson Board concluded that these factors, considered as a whole,
supported a decision to approve and adopt the Merger Agreement and the Merger,
recommend submission of the Merger Agreement for approval and adoption by
Hudson's stockholders and recommend that the stockholders of Hudson vote "for"
the proposal to approve and adopt the Merger Agreement. The foregoing
discussion of the information and factors considered and given weight by the
Hudson Board is not intended to be exhaustive. In view of the variety of
factors considered in connection with its evaluation of the Merger Agreement
and the Merger, the Hudson Board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination. In addition, individual members of
the Hudson Board may have given different weight to the different factors.
OPINION OF FINANCIAL ADVISOR TO HUDSON
In its role as financial advisor to Hudson, DLJ was asked by Hudson to
render an opinion to the Hudson Board as to the fairness to the Hudson Public
Stockholders, from a financial point of view, of the Per Share Merger
Consideration offered pursuant to the terms of the Merger Agreement. On
September 4, 1997, DLJ delivered an oral opinion, subsequently confirmed in
writing in the DLJ Opinion, to the effect that as of such date, and based upon
and subject to the assumptions, limitations and qualifications set forth in
such opinion, the Per Share Merger Consideration offered was fair to the
Hudson Public Stockholders from a financial point of view.
THE FULL TEXT OF THE DLJ OPINION IS ATTACHED HERETO AS ANNEX II. HUDSON
STOCKHOLDERS ARE URGED TO READ THE DLJ OPINION IN ITS ENTIRETY FOR ASSUMPTIONS
MADE, PROCEDURES FOLLOWED, OTHER MATTERS CONSIDERED AND LIMITS OF THE REVIEW
BY DLJ.
The DLJ Opinion was prepared for the Hudson Board and is directed only to
the fairness of the Per Share Merger Consideration offered to the Hudson
Public Stockholders from a financial point of view and does not constitute a
recommendation to any Hudson stockholder as to how such stockholder should
vote at the Special Meeting. As part of its investment banking business, DLJ
is regularly engaged in the valuation of businesses and securities in
connection with mergers, acquisitions, underwritings, sales and distributions
of listed and unlisted securities, private placements and valuations for
corporate and other purposes.
The DLJ Opinion does not constitute an opinion as to the price at which
Tyson Class A Common Stock will actually trade at any time. The Per Share
Merger Consideration offered was determined in arm's-length negotiations
between Hudson and Tyson. DLJ was not requested to, nor did it, solicit the
interest of any other party in acquiring Hudson.
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In arriving at the DLJ Opinion, DLJ reviewed the Merger Agreement and the
exhibits thereto. DLJ also reviewed financial and other information that was
publicly available or furnished to it by Hudson and Tyson, including
information provided during discussions with their respective managements.
Included in the publicly available information were certain consensus earnings
per share projections for Tyson and Hudson, as published by First Call, for
the respective companies' 1997 and 1998 fiscal years, which DLJ discussed with
the managements of Tyson and Hudson. In light of recent developments relating
to the publicly announced recall of ground beef patties produced at a Hudson
plant in Columbus, Nebraska, DLJ believes that the uncertainty resulting from
such recent developments has caused Hudson financial projections to become
stale and, accordingly, DLJ did not review any Hudson financial projections
and instead reviewed the earnings projections described above. In addition,
DLJ compared certain financial and securities data of Hudson and Tyson with
various other companies whose securities are traded in public markets,
reviewed the historical stock prices and trading volumes of Hudson Class A
Common Stock and Tyson Class A Common Stock, reviewed prices and premiums paid
in certain other business combinations and conducted such other financial
studies, analyses and investigations as DLJ deemed appropriate for purposes of
rendering its opinion.
In rendering its opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to it from public sources, that was provided to it by Hudson and Tyson or
their respective representatives (other than financial projections of Hudson
prepared prior to the recall of the ground beef patties which, in light of
such recall and DLJ's discussions with management of Hudson of such recall and
the uncertainty relating to the business of Hudson caused by the adverse
publicity arising from such recall, DLJ neither reviewed nor relied upon), or
that was otherwise reviewed by it. DLJ relied upon the estimates of the
management of Hudson of the operating synergies achievable as a result of the
Merger and its discussion of such synergies with the management of Tyson. DLJ
did not make any independent evaluation of the assets or liabilities of Hudson
or Tyson, nor did DLJ independently verify the information reviewed by it.
The DLJ Opinion is necessarily based on economic, market, financial and
other conditions as they existed on, and on the information made available to
it as of, the date of such opinion. It should be understood that, although
subsequent developments may affect such opinion, DLJ does not have any
obligation to update, revise or reaffirm the DLJ Opinion.
The following is a summary of the report given by DLJ to the Hudson Board at
its September 4, 1997 meeting. Hudson stockholders are urged to read the DLJ
Opinion in its entirety. The analysis set forth below with respect to
multiples implied by the Per Share Merger Consideration are based on an
assumed Per Share Merger Consideration value of $21.
Pro Forma Merger Analysis. DLJ analyzed certain pro forma effects resulting
from the Merger, both with and without the operating synergies estimated to
result from the Merger by combining the operations of Tyson and Hudson, as
estimated by Hudson. DLJ analyzed the pro forma effect of the Merger, both
with and without such operating synergies, on earnings per share for Tyson.
The analysis indicated that the pro forma earnings per share ("EPS") of Tyson
on a fully taxed basis, assuming the annual operating synergies estimated by
Hudson to result from the Merger, would be slightly higher in each of the
fiscal years in the three-year period ending October 1, 1999 than comparable
estimates for Tyson as a stand-alone company during the same fiscal years.
Analysis of Certain Other Publicly Traded Companies. To provide contextual
data and comparative market information, DLJ compared selected historical
share price, earnings and operating and financial ratios for Hudson to the
corresponding data and ratios of Tyson, Pilgrim's Pride Corporation
("Pilgrim's Pride") and certain other companies whose securities are publicly
traded (collectively, the "Comparable Companies"). The Comparable Companies
were chosen because they possess general business, operating and financial
characteristics representative of companies in the industry in which Hudson
and Tyson operate. The Comparable Companies consisted of: Cagle's Inc.,
Sanderson Farms, Inc. and WLR Foods Inc. Such data and ratios included
Enterprise Value ("Enterprise Value" is defined as the product of the stock
price and total shares outstanding plus Net Debt ("Net Debt" is defined as
total debt less cash and cash equivalents)) as a multiple of EBITDA ("EBITDA"
is defined as earnings before interest, taxes, depreciation and amortization)
for the latest reported
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twelve months ("LTM"). The mean multiple of Enterprise Value to LTM EBITDA for
the Comparable Companies and such multiple for Pilgrim's Pride and Tyson were
11.3, 8.3 and 10.9, respectively, compared to the Enterprise Value to LTM
EBITDA multiple implied by the Per Share Merger Consideration of 12.1. The
mean multiple of current stock price to LTM EPS for the Comparable Companies,
and such multiple for Pilgrim's Pride and Tyson were 22.6, 18.2 and 30.5,
respectively, compared to the current stock price to LTM EPS multiple implied
by the Per Share Merger Consideration of 21.4.
In addition, DLJ examined the ratios of current stock prices (based on
reported closing prices on September 2, 1997) to (i) estimated fiscal year
1997 EPS for the Comparable Companies, Pilgrim's Pride and Tyson (as provided
by I/B/E/S Inc.) and (ii) 1998 EPS estimates of brokerage firm analysts for
Pilgrim's Pride and Tyson. The mean multiple of current stock prices to
estimated fiscal year 1997 EPS for the Comparable Companies was 10.0 and such
multiple for Pilgrim's Pride and Tyson was 12.0 and 25.8, respectively,
compared to such multiple implied by the Per Share Merger Consideration of
27.6. The multiple of current stock prices to estimated fiscal year 1998 EPS
for Pilgrim's Pride and Tyson was 10.0 and 17.1, respectively, compared to
such multiple implied by the Per Share Merger Consideration of 14.7.
Premiums Paid Analysis. DLJ determined the percentage premiums of the offer
price over the trading prices one day, one week and four weeks prior to the
announcement date of selected recent merger or acquisition transactions
ranging in Equity Value ("Equity Value" is defined as Enterprise Value less
Net Debt) from $400 million to $700 million and announced since August 24,
1996. The mean premiums for the selected transactions over the trading prices,
one day, one week, and one month prior to the announcement dates were 22.8%,
27.3% and 36.6%, respectively. For the proposed transaction, DLJ derived
premiums of the Per Share Merger Consideration over the Hudson Class A Common
Stock trading prices one day, one week, and four weeks prior to September 3,
1997 of 25.8%, 46.7% and 30.7%, respectively.
Comparable Merger and Acquisition Transactions. DLJ reviewed premiums paid
in 14 selected comparable food processing transactions that occurred since the
beginning of 1991. With respect to these transactions, the LTM EBITDA
multiples ranged from 5.4 to 21.8 with a mean (excluding high and low) of 7.9,
which compare to the implied LTM EBITDA multiple of 12.1 for the Per Share
Merger Consideration.
The summary set forth above does not purport to be a complete description of
the analysis performed by DLJ, but describes, in summary form, the principal
elements of the report given by DLJ to the Hudson Board at its September 4,
1997 meeting. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to summary
description. Each of the analyses conducted by DLJ was carried out in order to
provide a different perspective on the Merger and add to the total mix of
information available. DLJ did not form a conclusion as to whether any
individual analysis, considered in isolation, supported or failed to support
an opinion as to fairness from a financial point of view. Rather, in reaching
its conclusion, DLJ considered the results of the analyses in light of each
other and ultimately reached its opinion based on the results of all analyses
taken as a whole. DLJ did not place particular reliance or weight on any
individual analysis, but instead concluded that its analyses, taken as a
whole, supported its determination. Accordingly, notwithstanding the separate
factors summarized above, DLJ believes that its analyses must be considered as
a whole and that selecting portions of its analyses and the factors considered
by it, without considering all analyses and factors, could create an
incomplete or misleading view of the evaluation process underlying its
opinion. In performing its analyses, DLJ made numerous assumptions with
respect to industry performance, business and economic conditions and other
matters. The analyses performed by DLJ are not necessarily indicative of
actual values or future results, which may be significantly more or less
favorable than suggested by such analyses.
Pursuant to the terms of an engagement letter, Hudson has agreed to pay DLJ
a fee of $1,000,000 upon notification that DLJ is prepared to deliver the DLJ
Opinion. Hudson has also agreed to reimburse DLJ promptly for all out-of-
pocket expenses (including the reasonable fees and out-of-pocket expenses of
counsel) incurred by DLJ in connection with its engagement, and to indemnify
DLJ and certain related persons against certain liabilities in connection with
its engagement, including liabilities under the federal securities laws. The
terms of
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the fee arrangement with DLJ, which DLJ and Hudson believe are customary in
transactions of this nature, were negotiated at arm's length between Hudson
and DLJ and the Hudson Board was aware of such arrangement.
In the ordinary course of business, DLJ may actively trade the securities of
both Hudson and Tyson for its own account and for the accounts of its
customers and, accordingly, may at any time hold a long or short position in
such securities.
CERTAIN TRANSACTIONS; CONFLICTS OF INTEREST OF CERTAIN PERSONS IN THE MERGER
Certain directors and executive officers of Hudson, as well as others, have
interests in the Merger in addition to their interests as stockholders of
Hudson, as described below.
Consulting Agreements
In connection with the execution of the Merger Agreement, Tyson entered into
Consulting Agreements with each of James T. Hudson, a director and Chairman of
Hudson, Michael T. Hudson, a director and President and Chief Executive
Officer of Hudson, and Charles B. Jurgensmeyer, a director and Chief Financial
Officer and Executive Vice President of Hudson. During the term of their
respective Consulting Agreements, Messrs. J. Hudson, M. Hudson and
Jurgensmeyer have agreed to provide consulting services to Tyson and not to
compete with Tyson in its business, and will, in consideration therefor,
receive compensation of $1,200,000, $350,000 and $350,000 per annum,
respectively, in equal monthly installments. Tyson will also reimburse (x)
James T. Hudson for business expenses in an aggregate amount up to $800,000
per annum and (y) each other Consultant for the reasonable and necessary
business expenses of such Consultant for travel, meals and similar items
incurred in connection with the performance of the Consultant's duties under
the Consulting Agreement, and which are consistent with such guidelines as the
Tyson Board may from time to time establish. In addition, Tyson will also
provide each Consultant with certain additional benefits. See "OTHER
AGREEMENTS--Consulting Agreements."
Hudson Options
The Merger Agreement provides that, at the Effective Time, each holder of
then outstanding options to purchase shares of Hudson Common Stock ("Options")
under Hudson's 1985 Stock Option Plan or 1996 Stock Option Plan (collectively,
"Option Plans"), whether or not then exercisable, will become entitled to
receive for each share subject to an Option, upon payment of the exercise
price, the Per Share Merger Consideration. The Merger Agreement provides that,
prior to the Effective Time, Tyson and Hudson will use their respective
reasonable best efforts to establish procedures for the cashless exercise of
such Options. See "--Treatment of Stock Options." The number of Options, if
any, held by each director and each of the five most highly compensated
executive officers of Hudson is as follows: Norbert E. Woodhams (10,000).
Indemnification
The Merger Agreement provides that all rights to indemnification existing in
favor of any employee, agent, director or officer of Hudson, as provided in
the Hudson Charter (as defined herein), the Hudson By-laws (as defined herein)
or agreements disclosed to Tyson, will survive the Merger and continue in full
force and effect for a period of six years after the Effective Time. In
addition, Tyson agreed that, after the Effective Time, the Surviving
Corporation will cause to be maintained in effect for six years after the
Effective Time the policies of directors' and officers' liability insurance
maintained by Hudson and disclosed to Tyson, except that the Surviving
Corporation will not be required to pay an annual premium for such insurance
in excess of 150% of the last annual premium paid by Hudson prior to the date
of the Merger Agreement (but the Surviving Corporation will be required to
obtain as much comparable insurance as possible for an annual premium equal to
such amount). See "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Indemnification
and Insurance."
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Registration Rights Agreement
The Consulting Agreement between Tyson and James T. Hudson, Chairman and the
principal stockholder of Hudson, provides that, at the Effective Time, Tyson
will enter into the Registration Rights Agreement with Mr. Hudson providing
for certain registration rights with respect to the resale of shares of Tyson
Class A Common Stock to be received by him in the Merger. See "OTHER
AGREEMENTS--Registration Rights Agreement."
OWNERSHIP INTEREST OF HUDSON STOCKHOLDERS AFTER THE MERGER
Based on the number of shares of Hudson Common Stock outstanding on the
Record Date, upon consummation of the Merger there will be approximately
128,957,264 shares of Tyson Class A Common Stock outstanding at the Effective
Time, of which the stockholders of Hudson will own approximately 14.2%
(approximately 14.1% on a fully diluted basis assuming the exercise of all
currently outstanding options to purchase shares of Tyson Class A Common
Stock), representing approximately 1.6% of the voting power of Tyson Common
Stock (approximately 1.6% on a fully diluted basis).
TREATMENT OF STOCK OPTIONS
The Merger Agreement provides that, at the Effective Time, each holder of a
then outstanding Option to purchase shares of Hudson Common Stock granted by
Hudson under any Option Plan, whether or not then exercisable, will in
settlement thereof, become entitled to receive for each such share of Hudson
Common Stock subject to any such Option, upon payment of the exercise price
under such Option for such share, the Per Share Merger Consideration
multiplied by the number of shares of Hudson Common Stock for which such
Option is exercisable; provided that, prior to the Effective Time, Tyson and
Hudson will use their respective reasonable best efforts to establish
procedures for the cashless exercise of such Options. Prior to the Effective
Time, Hudson will use its best efforts to obtain all necessary consents or
releases from holders of Options, to the extent required by the terms of the
Option Plans, or pursuant to the terms of any Option granted thereunder, and
take all such other lawful action as may be necessary to give effect to the
transactions contemplated by the Merger Agreement (except for such action that
may require the approval of Hudson's stockholders). Tyson will register under
the Securities Act on a Registration Statement on Form S-8 or another
appropriate form the issuance of all shares of Tyson Class A Common Stock
issuable pursuant to all Options.
STOCK EXCHANGE LISTING
Under the terms of the Merger Agreement, Tyson has agreed to use its
reasonable best efforts to cause the shares of Tyson Class A Common Stock
issued in the Merger to be listed on the Nasdaq National Market or on any
securities exchange on which shares of Tyson Class A Common Stock will be
listed at the Effective Time. Tyson Class A Common Stock is listed for trading
on the NYSE.
DELISTING AND DEREGISTRATION OF HUDSON COMMON STOCK
If the Merger is consummated, the shares of Hudson Class A Common Stock will
be delisted from the NYSE and will be deregistered under the Exchange Act.
ACCOUNTING TREATMENT
The Merger will be accounted for under the "purchase" method in accordance
with GAAP. Therefore, the aggregate consideration paid by Tyson in the Merger
will be allocated to Hudson's assets and liabilities based upon their fair
market value with any excess being treated as excess of investment over net
assets acquired. The assets and liabilities and results of operations of
Hudson will be consolidated with the assets and liabilities and results of
operations of Tyson subsequent to the consummation of the Merger.
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GOVERNMENTAL AND REGULATORY APPROVALS
The consummation of the Merger is conditioned upon the expiration or
termination of the applicable waiting period under the HSR Act. In addition,
other filings with, notifications to and authorizations and approvals of,
various governmental agencies, both domestic and foreign, with respect to the
transactions contemplated by the Merger Agreement, relating primarily to
antitrust and securities law issues, must be made and received prior to the
consummation of the Merger.
United States. Under the HSR Act and the regulations promulgated thereunder
by the FTC, the Merger may not be consummated until notifications have been
given and certain information has been furnished to the FTC and the Antitrust
Division and the applicable waiting period has expired or been terminated. On
September 18, 1997, Hudson and Tyson filed notifications and report forms
under the HSR Act with the FTC and the Antitrust Division. The applicable
waiting period under the HSR Act expired on October 18, 1997.
Notwithstanding that the waiting period under the HSR Act has expired, the
FTC or the Antitrust Division could take such action under the antitrust laws
as it deems necessary or desirable in the public interest, including seeking
to enjoin the consummation of the Merger or seeking divestiture of substantial
assets of Hudson or Tyson. Notwithstanding that the waiting period under the
HSR Act has expired, any state could take such action under the antitrust laws
as it deems necessary or desirable in the public interest. Such action could
include seeking to enjoin the consummation of the Merger or seeking
divestiture of substantial assets of Hudson or Tyson. Private persons may also
seek to take legal action under the antitrust laws under certain
circumstances.
Closing Conditions. The respective obligations of Hudson and Tyson to
consummate the Merger are subject to the condition that no court or other
Governmental Entity having jurisdiction over Hudson or Tyson, or any of their
respective subsidiaries, shall have entered any injunction or other order
(whether temporary, preliminary or permanent) which is then in force and has
the effect of making the Merger or any of the transactions contemplated by the
Merger Agreement illegal. See "CERTAIN PROVISIONS OF THE MERGER AGREEMENT--
Conditions to Consummation of the Merger."
Other Foreign Approvals. Hudson and Tyson conduct operations in a number of
foreign countries where regulatory filings or approvals may be required in
connection with the consummation of the Merger. Hudson and Tyson believe that
all such material filings and approvals either have been made or obtained, or
will be made or obtained (if required), as the case may be, prior to the
Effective Time.
PROCEDURES FOR EXCHANGE OF HUDSON COMMON STOCK CERTIFICATES
Tyson will designate a bank or trust company reasonably satisfactory to
Hudson to act as exchange agent under the Merger Agreement (the "Exchange
Agent"). Immediately following the Effective Time, Tyson will deliver, in
trust, to the Exchange Agent, for the benefit of the holders of shares of
Hudson Common Stock, for exchange in accordance with the Merger Agreement
through the Exchange Agent, (i) cash in an amount sufficient to make any cash
payment to be made as part of the Per Share Merger Consideration and in lieu
of any fractional shares of Tyson Class A Common Stock (the "Exchange Fund")
and (ii) certificates evidencing the shares of Tyson Class A Common Stock
issuable as part of the Per Share Merger Consideration.
At the Effective Time, all shares of Hudson Common Stock will no longer be
outstanding and will automatically be cancelled and retired and will cease to
exist; and each holder of a certificate which immediately prior to the
Effective Time represented outstanding shares of Hudson Common Stock (the
"Certificates") will cease to have any rights as a stockholder of Hudson. As
soon as practicable after the Effective Time, Tyson will cause the Exchange
Agent to mail to each holder of Certificates (i) a form of letter of
transmittal specifying that delivery will be effected, and risk of loss and
title to the Certificates will pass, only upon proper delivery of the
Certificates to the Exchange Agent, and (ii) instructions for use in
surrendering such Certificates in exchange for the Per Share Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate will be entitled to receive in
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exchange therefor (A) the product of the Per Share Merger Consideration
multiplied by the number of shares of Hudson Common Stock represented by the
surrendered Certificate; provided, however, that each holder will receive cash
in lieu of any fractional shares of Tyson Class A Common Stock to which such
holder is entitled pursuant to the Merger Agreement, and (B) any amounts to
which the holder is entitled as a result of certain dividends or
distributions, if any, declared by Tyson, after giving effect to any required
tax withholdings, and the Certificate so surrendered will thereafter be
cancelled.
No dividends or other distributions that are declared on or after the
Effective Time on Tyson Class A Common Stock, or are payable to the holders of
record thereof who became such on or after the Effective Time, will be paid to
any person entitled by reason of the Merger to receive certificates
representing shares of Tyson Class A Common Stock, and no cash payment in lieu
of any fractional shares of Tyson Class A Common Stock will be paid to any
person, until such person will have surrendered its Certificates as provided
in the Merger Agreement. Subject to applicable law, there will be paid to each
person receiving a certificate representing such shares of Tyson Class A
Common Stock, at the time of such surrender or as promptly as practicable
thereafter, the amount of any dividends or other distributions previously paid
with respect to the shares of Tyson Class A Common Stock represented by such
certificate and having a record date on or after the Effective Time but prior
to such surrender and a payment date on or subsequent to such surrender. In no
event will the person entitled to receive such dividends or other
distributions be entitled to receive interest thereon. If any cash or
certificate representing shares of Tyson Class A Common Stock is to be paid to
or issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it will be a condition of such exchange that
the Certificate so surrendered will be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange will pay
to the Exchange Agent any transfer or other taxes required by reason of the
issuance of such certificate representing shares of Tyson Class A Common Stock
and the distribution of such cash payment in a name other than that of the
registered holder of the Certificate so surrendered, or will establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable.
Tyson or the Exchange Agent will be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Merger Agreement to any holder
of Hudson Common Stock such amounts as Tyson or the Exchange Agent are
required to deduct and withhold under the Code or any provision of state,
local or foreign tax law, with respect to the making of such payment. To the
extent that amounts are so withheld by Tyson or the Exchange Agent, such
withheld amounts will be treated for all purposes of the Merger Agreement as
having been paid to the holder of Hudson Common Stock in respect of whom such
deduction and withholding were made by Tyson or the Exchange Agent.
At the Effective Time, the stock transfer books of Hudson will be closed and
no transfer of shares of Hudson Common Stock will thereafter be made. If,
after the Effective Time, Certificates are presented to Tyson, they will be
cancelled and exchanged as provided in the Merger Agreement.
No certificates or scrip representing any fractional shares of Tyson Class A
Common Stock will be issued upon the surrender for exchange of Certificates;
no dividend or distribution with respect to shares will be payable on or with
respect to any fractional shares; and such fractional share interests will not
entitle the owner thereof to vote or to any other rights of a stockholder of
Tyson. In lieu of any fractional share of Tyson Class A Common Stock, Tyson
will pay to each former stockholder of Hudson who otherwise would be entitled
to receive a fractional share of Tyson Class A Common Stock an amount in cash
(without interest) rounded to the nearest whole cent, determined by
multiplying (i) the per share closing price on the NYSE of Tyson Class A
Common Stock on the date on which the Effective Time occurs (or, if Tyson
Class A Common Stock does not trade on the NYSE on such date, the first day of
trading in Tyson Class A Common Stock thereafter) by (ii) the fractional
interest in a share of Tyson Class A Common Stock to which such holder would
otherwise be entitled.
RESALES OF TYSON CLASS A COMMON STOCK
All shares of Tyson Class A Common Stock to be issued in the Merger will be
freely transferable, except that shares received by any person who may be
deemed to be an "affiliate" (as used in paragraphs (c) and (d) of
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Rule 145, including, without limitation, directors and certain executive
officers) of Hudson for purposes of Rule 145 may not be resold except in
transactions permitted by Rule 145 or as otherwise permitted under the
Securities Act.
Hudson has agreed to prepare and deliver to Tyson a list identifying each
person who, at the time of the Special Meeting, may be deemed to be an
"affiliate" (as used in the preceding paragraph) of Hudson and to use its
reasonable best efforts to cause each person so identified to deliver to Tyson
on or prior to the Effective Time a written agreement, in the form previously
approved by Tyson and Hudson, providing that such person will not sell,
transfer or otherwise dispose of any shares of Tyson Class A Common Stock
issued to such person in connection with the Merger, except pursuant to an
effective registration statement or in compliance with Rule 145 or another
exemption from the registration requirements of the Securities Act. See
"CERTAIN PROVISIONS OF THE MERGER AGREEMENT--Conditions to Consummation of the
Merger."
Following the Merger, the shares of Tyson Class A Common Stock received by
James T. Hudson, Chairman and the principal stockholder of Hudson, in the
Merger may be reoffered or resold pursuant, and subject to the terms of, the
Registration Rights Agreement. See "OTHER AGREEMENTS--Registration Rights
Agreement."
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
In the opinions of Davis Polk & Wardwell, special counsel to Hudson, and
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Tyson, subject to
the qualifications set forth below and contained herein, the following are the
material U.S. federal income tax consequences of the Merger to holders of
Hudson Common Stock that exchange such stock for Tyson Class A Common Stock
and cash pursuant to the Merger. The following disclosure addresses only such
stockholders who hold their Hudson Common Stock as a capital asset, and does
not address all of the U.S. federal income tax considerations that may be
relevant to particular stockholders in light of their individual circumstances
or to stockholders that are subject to special rules, such as financial
institutions, tax-exempt organizations, insurance companies, dealers in
securities, foreign holders, or holders who acquired their shares pursuant to
the exercise of employee stock options or otherwise as compensation. Such
opinions are not binding on the IRS. The following disclosure is based upon
the Code, laws, regulations, rulings and decisions in effect as of the date
hereof, all of which are subject to change possibly with retroactive effect.
Tax consequences under state, local, and other foreign laws are not addressed
herein. EACH STOCKHOLDER IS STRONGLY ADVISED TO CONSULT HIS OR HER TAX ADVISOR
AS TO THE PARTICULAR FACTS AND CIRCUMSTANCES WHICH MAY BE UNIQUE TO SUCH
STOCKHOLDER AND ALSO AS TO ANY ESTATE, GIFT, STATE, LOCAL OR FOREIGN TAX
CONSIDERATIONS ARISING OUT OF THE MERGER.
No ruling has been (or will be) sought from the IRS as to the U.S. federal
income tax consequences of the Merger. It is a condition to the consummation
of the Merger that Hudson receive an opinion from its counsel, Davis Polk &
Wardwell, and that Tyson receive an opinion from its counsel, Skadden, Arps,
Slate, Meagher & Flom LLP, to the effect that, based upon certain facts,
representations and assumptions, the Merger will qualify as a reorganization
within the meaning of Section 368(a) of the Code. However, Hudson is entitled
to waive the condition to consummation of the Merger that it receive such an
opinion from Davis Polk & Wardwell, and Tyson is entitled to waive the
condition to consummation of the Merger that it receive such an opinion from
Skadden, Arps, Slate, Meagher & Flom LLP. In the event that both Hudson and
Tyson waive such conditions, Hudson will recirculate revised proxy materials
and resolicit the vote of its stockholders. The issuance of such opinions is
conditioned, among other things, on the receipt by such tax counsel of
representation letters from each of Tyson and Merger Sub, Hudson and one or
more stockholders of Hudson, in each case, in form and substance reasonably
satisfactory to each such counsel. The following disclosure assumes that the
Merger qualifies as a reorganization within the meaning of Section 368(a) of
the Code.
Based on the above assumptions and qualifications, no gain or loss will be
recognized for U.S. federal income tax purposes by Hudson, Tyson or Merger Sub
as a result of the Merger. In addition, subject to the disclosure below under
the caption "Additional Considerations," a stockholder will generally
recognize capital gain, but not loss, for U.S. federal income tax purposes
with respect to the receipt of Tyson Class A Common Stock and cash in exchange
for Hudson Common Stock pursuant to the Merger. The amount of gain, if any,
recognized by a stockholder will be equal to the lesser of (i) the amount of
gain realized (i.e., the excess of the amount of cash and the fair market
value of Tyson Class A Common Stock received in the Merger over the tax basis
of the Hudson Common Stock surrendered) and (ii) the amount of cash received
in the Merger. In the case of a stockholder that owns more than one "block" of
Hudson Common Stock, the amount of gain recognized should be calculated
separately with respect to each "block" surrendered in the Merger. For
purposes of such calculation, the aggregate amount of cash and Tyson Class A
Common Stock received by a stockholder will be allocated proportionally among
the "blocks" of Hudson Common Stock surrendered in exchange therefor pursuant
to the Merger. In the case of an individual stockholder, capital gain
recognized with respect to the receipt of Tyson Class A Common Stock and cash
in exchange for Hudson Common Stock will generally be subject to U.S. federal
income tax at a maximum rate of (i) 20%, if the stockholder held such Hudson
Common Stock for more than 18 months at the Effective Time and (ii) 28%, if
the stockholder held such Hudson Common Stock for more than one year, but not
more than 18 months at the Effective Time.
The aggregate tax basis of the Tyson Class A Common Stock received by a
stockholder will be the same as the aggregate tax basis of the Hudson Common
Stock surrendered in exchange therefor pursuant to the Merger,
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decreased by the total amount of cash received and increased by the amount of
gain recognized. The holding period of the Tyson Class A Common Stock will
include the holding period of the Hudson Common Stock surrendered in exchange
therefor.
ADDITIONAL CONSIDERATIONS
It is possible that, under certain circumstances, the gain recognized by a
holder of Hudson Common Stock could be treated as dividend income rather than
capital gain unless the requirements of Section 302 of the Code are satisfied.
In order to determine whether those requirements are satisfied, a stockholder
is treated as receiving solely Tyson Class A Common Stock in the Merger
(instead of the cash actually received) and then receiving cash from Tyson in
a hypothetical redemption of those shares. The hypothetical redemption will
satisfy the requirements under Section 302 if it either (i) is "not
essentially equivalent to a dividend" or (ii) has the effect of a
"substantially disproportionate" redemption of Tyson Class A Common Stock.
Whether such hypothetical redemption of Tyson Class A Common Stock is "not
essentially equivalent to a dividend" depends on the individual facts and
circumstances of each stockholder but in any event must result in a meaningful
reduction of a stockholder's proportionate stock interest in Tyson. Generally,
in the case of a Hudson stockholder whose stock interest in Tyson (relative to
the total number of Tyson shares outstanding) is minimal, and who exercises no
control over the affairs of Tyson, any actual reduction in proportionate
interest will be treated as "meaningful." Alternatively, the hypothetical
redemption of the Tyson Class A Common Stock will be "substantially
disproportionate" if (i) the ratio which the Tyson Class A Common Stock (and
any other Tyson voting stock) owned by the stockholder after the hypothetical
redemption bears to all of the voting stock of Tyson at such time is less than
80% of the ratio which the Tyson Class A Common Stock (and any other Tyson
voting stock) hypothetically owned by the stockholder after the Merger but
before the redemption bears to all of the voting stock of Tyson at such time
and (ii) the stockholder owns less than 50 percent of the combined voting
power of all of the voting stock of Tyson outstanding immediately after the
hypothetical redemption. Stockholders should consult their tax advisors
regarding the application of the foregoing tests and the consequences of not
satisfying such tests.
In addition, in applying the foregoing tests, there must be taken into
account not only actual ownership of stock but also stock constructively owned
by a stockholder by reason of certain attribution rules under Section 318 of
the Code. Under these rules, a stockholder is treated as owning the stock
owned by certain family members, stock subject to an option to acquire such
stock, stock owned by certain estates and trusts of which the stockholder is a
beneficiary, and stock owned by certain affiliated entities. BECAUSE OF THE
COMPLEXITY OF THESE RULES, STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS.
BACKUP WITHHOLDING
Unless an exemption applies, the Exchange Agent will be required to
withhold, and will withhold, 31% of any cash payments to which a stockholder
or other payee is entitled pursuant to the Merger, unless the stockholder or
other payee provides his or her tax identification number (social security
number or employer identification number) and certifies that such number is
correct. Each stockholder and, if applicable, each other payee is required to
complete and sign the Form W-9 that will be included as part of the
transmittal letter to avoid backup withholding, unless an applicable exemption
exists and is proved in a manner satisfactory to Tyson and the Exchange Agent.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE ARE BASED UPON PRESENT
LAW, ARE FOR GENERAL INFORMATION ONLY AND DO NOT PURPORT TO BE A COMPLETE
ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS WHICH MAY APPLY TO A HOLDER
OF HUDSON COMMON STOCK. THE TAX EFFECTS AS APPLICABLE TO A PARTICULAR HOLDER
OF HUDSON COMMON STOCK MAY BE DIFFERENT FROM THE TAX EFFECTS AS APPLICABLE TO
OTHER HOLDERS OF HUDSON COMMON STOCK, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL AND OTHER TAX LAWS, AND THUS, HOLDERS OF HUDSON COMMON STOCK ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS.
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CERTAIN PROVISIONS OF THE MERGER AGREEMENT
The description of the Merger and the Merger Agreement contained in this
Proxy Statement/Prospectus does not purport to be complete and is qualified in
its entirety by reference to the Merger Agreement, a copy of which is attached
hereto as Annex I and incorporated herein by reference.
CERTAIN REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of
Hudson and Tyson relating, among other things, to: (i) their incorporation,
existence and good standing; (ii) their capitalization; (iii) their
subsidiaries; (iv) their authorization, execution, delivery and performance of
the Merger Agreement and related matters; (v) compliance with applicable law;
(vi) the absence of conflicts, violations or defaults under their certificates
of incorporation and by-laws and certain other agreements and documents; (vii)
government approvals and required consents; (viii) the documents and reports
filed with the SEC and the accuracy of the information contained therein; (ix)
the absence of certain changes or events; (x) pending or threatened
litigation; (xi) the absence of undisclosed liabilities; (xii) certain tax
matters; and (xiii) the accuracy and correctness of certain information
contained in this Proxy Statement/Prospectus. In addition, the Merger
Agreement contains representations and warranties of Hudson relating to (i)
material contracts; (ii) intellectual property; (iii) employee benefit plans;
(iv) certain environmental matters; and (v) certain labor matters. The
representations and warranties of Hudson, Tyson and Merger Sub do not survive
the Effective Time.
CONDUCT OF BUSINESS BY HUDSON PENDING THE MERGER
Hudson has agreed that, during the period from the date of the Merger
Agreement to the Effective Time, unless Tyson otherwise agrees in writing
(which agreement will not be unreasonably withheld), Hudson will conduct, and
cause each of its subsidiaries to conduct, its business only in the ordinary
and usual course consistent with past practice, and Hudson will use, and cause
each of its subsidiaries to use, its reasonable best efforts to preserve
intact the present business organization, keep available the services of its
present officers and key employees, and preserve their existing business
relationships.
Without limiting the generality of the foregoing, Hudson has agreed that,
without the prior written consent of Tyson, it will not, nor will it permit
any of its subsidiaries to: (i) (a) amend its certificate of incorporation,
by-laws or other organizational documents, (b) split, combine or reclassify
any shares of its outstanding capital stock, (c) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property (other than
regular quarterly dividends with record dates and payment dates substantially
consistent with past practice of not more than $.02 per share of Hudson Class
A Common Stock and $.0167 per share of Hudson Class B Common Stock), or (d)
directly or indirectly redeem or otherwise acquire any shares of its capital
stock or shares of the capital stock of any of its subsidiaries; (ii)
authorize for issuance, issue (except upon the exercise of outstanding Options
or warrants) or sell or agree to issue or sell any shares of, or rights to
acquire or convertible into any shares of, its capital stock (other than
pursuant to the terms of Hudson's Employee Stock Purchase Plan (as amended in
accordance with the Merger Agreement) or shares of the capital stock of any of
its subsidiaries (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise); (iii)
(a) merge, combine or consolidate with another entity, (b) acquire or purchase
an equity interest in or a substantial portion of the assets of another
corporation, partnership or other business organization or otherwise acquire
any assets outside the ordinary course of business and consistent with past
practice or otherwise enter into any material contract, commitment or
transaction outside the ordinary course of business and consistent with past
practice or (c) sell, lease, license, waive, release, transfer, encumber or
otherwise dispose of any of its material assets outside the ordinary course of
business and consistent with past practice; (iv) (a) incur, assume or prepay
any indebtedness, obligations or liabilities other than, in each case, in the
ordinary course of business and consistent with past practice, (b) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person
other than a subsidiary of Hudson, in each case other than in the ordinary
course of business and consistent with past practice
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or (c) make any loans, advances or capital contributions to, or investments
in, any other person, other than to any subsidiary of Hudson; (v) pay,
satisfy, discharge or settle any material claim, liabilities or obligations
(absolute, accrued, contingent or otherwise), other than in the ordinary
course of business and consistent with past practice or pursuant to mandatory
terms of any contract of Hudson in effect on the date of the Merger Agreement;
(vi) modify or amend, or waive any benefit of, any non-competition agreement
to which Hudson or any of its subsidiaries is a party; (vii) authorize or make
capital expenditures in excess of $200,000 individually, or in excess of
$1,000,000 in the aggregate except for those projects currently in progress as
disclosed to Tyson; (viii) permit any insurance policy naming Hudson or any
subsidiary of Hudson as a beneficiary or a loss payee to be cancelled or
terminated other than in the ordinary course of business; (ix) (a) adopt,
enter into, terminate or amend (except as required by applicable law or as
previously disclosed to Tyson) any employee plan, agreement, contract,
arrangement or other such plan for the current or future benefit or welfare of
any director, officer or employee, (b) except in the ordinary course of
business consistent with past practice, subject to certain exceptions,
increase in any manner the compensation or fringe benefits of, or pay any
bonus to, any director, officer or employee, or (c) other than pursuant to the
Merger Agreement, take any action to fund or in any other way secure, or to
accelerate or otherwise remove restrictions with respect to, the payment of
compensation or benefits under any employee plan, agreement, contract,
arrangement or other such plan; (x) make any material change in its accounting
or tax policies or procedures, except as required by applicable law or to
comply with GAAP; or (xi) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing.
The Merger Agreement provides that each of Tyson and Hudson will afford the
other and its representatives reasonable access through the Effective Time to
all of its books and records, properties, plants and personnel. In addition,
each of Tyson and Hudson have agreed to hold in confidence all non-public
information acquired as a result of such access.
EMPLOYEE BENEFITS
The Merger Agreement provides that Tyson intends to cause the Surviving
Corporation and its subsidiaries, after the Effective Time, to provide
employees of Hudson such compensation, employee benefit plans and employee
programs, arrangements and agreements which, in the aggregate, are no less
favorable than currently provided to similarly situated employees of Tyson.
Nothing contained in the Merger Agreement, however, will prohibit Tyson, the
Surviving Corporation or any of their respective subsidiaries from amending or
terminating any such plan, program, arrangement or agreement at any time in
accordance with applicable law (except as to benefits already vested
thereunder) and subject to the terms of such plans, programs or arrangements
or other agreements.
NO SOLICITATION
Hudson has agreed that, prior to the Effective Time, it will not, and it
will use its reasonable best efforts to cause its subsidiaries and affiliates,
and their respective directors, officers, employees, agents or
representatives, not to, directly or indirectly, (i) solicit or initiate any
inquiries or the making of any proposal with respect to any merger,
consolidation or other business combination involving Hudson or any subsidiary
of Hudson or the acquisition of all or any significant part of the assets or
capital stock of Hudson or any subsidiary of Hudson (other than the sale by
Hudson of its (y) Columbus, Nebraska beef processing plant and (z) minority
interest in Diversity Foods LLC) (an "Acquisition Transaction") or (ii)
negotiate, explore or otherwise engage in discussions with any person (other
than Tyson and its representatives) with respect to any Acquisition
Transaction, or which may reasonably be expected to lead to a proposal for an
Acquisition Transaction or enter into any agreement, arrangement or
understanding with respect to any such Acquisition Transaction or which would
require it to abandon, terminate or fail to consummate the Merger or any other
transaction contemplated by the Merger Agreement; provided, however, that,
Hudson may, in response to an unsolicited written proposal from a third party
regarding a Superior Proposal, furnish information to, negotiate or otherwise
engage in discussions with such third party, if the Hudson Board determines in
good faith, based upon the advice of outside counsel, that such action is
required for the Hudson Board to comply with its fiduciary duties under
applicable law.
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Except as may be required to comply with the fiduciary duties of the Hudson
Board under applicable law (based on the advice of outside counsel), Hudson
has agreed that, as of the date of the Merger Agreement, it, its subsidiaries
and affiliates, and the respective directors, officers, employees, agents and
representatives of the foregoing, will immediately cease and cause to be
terminated any existing activities, discussions and negotiations with any
person (other than Tyson and its representatives) conducted prior to that date
with respect to any Acquisition Transaction. Hudson has agreed to promptly
advise Tyson of any inquiries or proposals received by, any such information
requested from, and any negotiations or discussions sought to be initiated or
continued with, Hudson, its subsidiaries or affiliates, or any of the
respective directors, officers, employees, agents or representatives of the
foregoing, in each case from a person (other than Tyson and its
representatives) with respect to an Acquisition Transaction. As used in the
Merger Agreement, "Superior Proposal" means a bona fide, written and
unsolicited proposal or offer made by any person or group (other than Tyson or
any of its subsidiaries) with respect to an Acquisition Transaction on terms
which the Hudson Board determines in good faith, and in the exercise of
reasonable judgment (based on the advice of independent financial advisors and
legal counsel), to be more favorable to Hudson and its stockholders than the
transactions contemplated by the Merger Agreement (including taking into
account the financing thereof).
THIRD-PARTY STANDSTILL AGREEMENTS
During the period from the date of the Merger Agreement through the
Effective Time, Hudson has agreed that it will not terminate, amend, modify or
waive any provision of any confidentiality or standstill agreement to which it
or any of its subsidiaries is a party.
INDEMNIFICATION AND INSURANCE
Tyson and Hudson have agreed that all rights to indemnification now existing
in favor of any employee, agent, director or officer of Hudson and its
subsidiaries (the "Indemnified Parties"), as provided in their respective
certificates of incorporation or by-laws, or in any agreement between an
Indemnified Party and Hudson or one of its subsidiaries as disclosed to Tyson,
will survive the Merger and will continue in full force and effect for a
period of six years after the Effective Time; provided that in the event any
claim is asserted or made within such six-year period, all rights to
indemnification in respect of such claim will continue until its final
disposition.
Moreover, Tyson has agreed that, from and after the Effective Time, the
Surviving Corporation will cause to be maintained in effect for six years
after the Effective Time the policies of the directors' and officers'
liability insurance maintained by Hudson on the date of the Merger Agreement
and as disclosed to Tyson; provided that the Surviving Corporation may
substitute policies of at least the same coverage containing terms and
conditions which are no less advantageous to the Indemnified Parties and
provided that such substitution will not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time; and
provided, further, that the Surviving Corporation will not be required to pay
an annual premium in excess of 150% of the last annual premium paid by Hudson
prior to the date of the Merger Agreement (the "Maximum Amount") and if the
Surviving Corporation is unable to obtain the insurance required by the Merger
Agreement, it will obtain as much comparable insurance as possible for an
annual premium equal to the Maximum Amount.
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of Hudson, Tyson and Merger Sub to effect the
Merger are subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions: (i) the approval and adoption of the Merger
Agreement by the requisite vote of Hudson's stockholders; (ii) the receipt of
all necessary governmental approvals and consents; (iii) the termination or
expiration of the waiting period under the HSR Act; (iv) the absence of any
stop order suspending the effectiveness of the Registration Statement and
proceedings initiated for that purpose by the SEC; and (v) the absence of any
action by any governmental entity having jurisdiction over Hudson or Tyson, or
any of their respective subsidiaries, enacting, issuing, promulgating,
enforcing or entering any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) which
has the effect of making the Merger or the Voting Agreement illegal or
otherwise prohibiting consummation of the Merger.
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The obligations of Tyson and Merger Sub to effect the Merger are also
subject to the satisfaction at or prior to the Effective Time of the following
additional conditions, unless waived in writing by Tyson: (i) the
representations and warranties of Hudson that are qualified with reference to
materiality being true and correct, and the representations and warranties
that are not so qualified being true and correct in all material respects, in
each case as of the date of the Merger Agreement, and, except to the extent
such representations and warranties speak as of an earlier date, as of the
Effective Time as though made at and as of the Effective Time; (ii) the
performance by Hudson in all material respects of all obligations required to
be performed by it under the Merger Agreement at or prior to the Effective
Time; (iii) the absence, since the date of the Merger Agreement, of any event
or occurrence which has had, or would reasonably be expected to have, a Hudson
Material Adverse Effect (as defined herein); (iv) the receipt by Tyson of
written agreements from Hudson's Rule 145 affiliates; (v) the absence of any
pending or threatened suit, action or proceeding by any governmental entity as
a result of the Merger Agreement or any of the transactions contemplated
thereby which, if such governmental entity were to prevail, would reasonably
be expected to have a material adverse effect on the business, properties,
assets, liabilities, condition (financial or otherwise), or results of
operations of Tyson and its subsidiaries taken as a whole, or the ability of
Tyson or Merger Sub to consummate the Merger and the other transactions
contemplated by the Merger Agreement ("Tyson Material Adverse Effect") or
material adverse effect on the business, properties, assets, liabilities,
condition (financial or otherwise), or results of operations of Hudson and its
subsidiaries taken as a whole, or the ability of Hudson to consummate the
Merger and the other transactions contemplated by the Merger Agreement
("Hudson Material Adverse Effect"); (vi) Hudson having obtained any necessary
non-governmental consents and approvals required to consummate the
transactions contemplated by the Merger Agreement; and (vii) the receipt by
Tyson of an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special
counsel to Tyson, relating to certain tax matters.
The obligation of Hudson to effect the Merger is subject to the satisfaction
at or prior to the Effective Time of the following additional conditions,
unless waived in writing by Hudson: (i) the representations and warranties of
Tyson and Merger Sub that are qualified with reference to materiality being
true and correct, and the representations and warranties that are not so
qualified being true and correct in all material respects, in each case as of
the date of the Merger Agreement, and, except to the extent such
representations and warranties speak as of an earlier date, as of the
Effective Time as though made on and as of the Effective Time; (ii) each of
Tyson and Merger Sub having performed in all material respects all obligations
required to be performed by it under the Merger Agreement at or prior to the
Effective Time; (iii) the absence, since the date of the Merger Agreement, of
any event or occurrence which has had, or would reasonably be expected to
have, a Tyson Material Adverse Effect; and (iv) the receipt by Hudson of an
opinion of Davis Polk & Wardwell, special counsel to Hudson, relating to
certain tax matters.
TERMINATION
The Merger Agreement may be terminated, and the Merger and the other
transactions contemplated thereby may be abandoned, at any time prior to the
Effective Time, whether before or after approval by the stockholders of
Hudson:
(i) by mutual written consent of Tyson and Hudson;
(ii) by either Tyson or Hudson, if (a) the Merger has not been
consummated on or before February 28, 1998 or (b) the stockholders of
Hudson do not approve the Merger Agreement by the requisite vote at the
Special Meeting, in each case, subject to certain limitations;
(iii) by either Tyson or Hudson, if any permanent injunction, order,
decree or ruling by any governmental entity of competent jurisdiction
preventing the consummation of the Merger becomes final and nonappealable;
provided, however, that the party seeking to terminate the Merger Agreement
will have used reasonable best efforts to remove such injunction or
overturn such action, subject to the proviso that Hudson will not, without
Tyson's prior written consent, and Tyson will not be required to, divest or
hold separate or otherwise take or commit to take any other similar action
with respect to any assets, businesses or product lines of Tyson, Hudson or
any of their respective subsidiaries;
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(iv) by Tyson, if (a) there has been a breach of any of the
representations or warranties, covenants or agreements of Hudson set forth
in the Merger Agreement, the effect of which is a Hudson Material Adverse
Effect, which breach is not curable or, if curable, is not cured within 30
days after written notice of such breach is given by Tyson to Hudson, or
(b) the Hudson Board (x) fails to recommend the approval of the Merger
Agreement and the Merger to Hudson's stockholders, or (y) withdraws or
amends or modifies in a manner adverse to Tyson its recommendation or
approval of the Merger Agreement or the Merger or fails to reconfirm such
recommendation within two business days of a written request for such
confirmation by Tyson;
(v) by Hudson, if the Hudson Board reasonably determines that a proposal
for an Acquisition Transaction constitutes a Superior Proposal; provided,
however, that Hudson may not terminate the Merger Agreement on this basis
unless (x) five business days will have elapsed after delivery to Tyson of
a written notice of such determination by the Hudson Board and, during such
five business day period, Hudson will have fully cooperated with Tyson,
including, without limitation, by informing Tyson of the terms and
conditions of such proposal for an Acquisition Transaction and the identity
of the person or group making such proposal for an Acquisition Transaction,
with the intent of enabling Tyson to agree to a modification of the terms
and conditions of this Agreement so that the transactions contemplated
hereby may be effected, and (y) at the end of such five business day
period, the Hudson Board continues reasonably to believe that such proposal
for an Acquisition Transaction constitutes a Superior Proposal and promptly
thereafter Hudson enters into a definitive acquisition, merger or similar
agreement to effect such Superior Proposal; and
(vi) by Hudson, if there has been a breach of any of the representations
or warranties, covenants or agreements of Tyson or Merger Sub set forth in
the Merger Agreement, the effect of which is a Tyson Material Adverse
Effect, which breach is not curable or, if curable, is not cured within 30
days after written notice of such breach is given by Hudson to Tyson.
FEES AND EXPENSES
Each of Tyson and Hudson will bear its own costs and expenses in connection
with the Merger Agreement and the transactions contemplated thereby. The
Merger Agreement also provides for the payment of the following amounts:
(i) If (x) the Merger Agreement is terminated by Tyson as a result of (A)
the Hudson Board's failure to recommend the approval of the Merger
Agreement and the Merger to the stockholders of Hudson or (B) the Hudson
Board's withdrawal, amendment or modification in a manner adverse to Tyson
of its recommendation or approval of the Merger Agreement or the Merger or
the Hudson Board's failure to reconfirm such recommendation within two
business days of a written request for such confirmation by Tyson or (y)
the Merger Agreement is terminated by Hudson because the Hudson Board
reasonably determines that a proposal for an Acquisition Transaction
constitutes a Superior Proposal then, in any such case, Hudson will be
obligated to pay Tyson (A) a termination fee of $22.5 million plus (B) an
amount equal to $5 million which the parties agree represents a good faith
estimate of Tyson's expenses in connection with the Merger Agreement
(including, without limitation, attorneys' fees and fees of financial
advisors); and
(ii) If the Merger Agreement is terminated by Tyson or Hudson because the
Merger has not been consummated on or before February 28, 1998 and at the
time of such termination all conditions to the consummation of the Merger
have been satisfied or waived other than the applicable waiting period
under the HSR Act having expired or been terminated, then Tyson will be
obligated to pay Hudson $10 million; provided that Tyson will be obligated
to pay Hudson an additional $5 million if, in addition, certain other
conditions are met.
AMENDMENT AND MODIFICATION
The Merger Agreement may be amended, modified or supplemented at any time
prior to the Effective Time only by written agreement (referring specifically
to the Merger Agreement) of Tyson and Hudson with respect to any of the terms
contained in the Merger Agreement; provided, however, that after any approval
and adoption of
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the Merger Agreement by the stockholders of Hudson, no such amendment,
modification or supplementation will be made which under applicable law
requires the approval of such stockholders, without the further approval of
such stockholders.
WAIVER
At any time prior to the Effective Time, Tyson, on the one hand, and Hudson,
on the other hand, may (i) extend the time for the performance of any of the
obligations or other acts of the other, (ii) waive any inaccuracies in the
representations and warranties of the other contained in the Merger Agreement
or in any documents delivered pursuant thereto and (iii) waive compliance by
the other with any of the agreements or conditions contained in the Merger
Agreement which may legally be waived. Any such extension or waiver will be
valid only if set forth in an instrument in writing specifically referring to
the Merger Agreement and signed on behalf of such party.
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OTHER AGREEMENTS
The description of the Voting Agreement, the Registration Rights Agreement
and the Consulting Agreements contained in this Proxy Statement/Prospectus do
not purport to be complete and are qualified in their entirety by reference to
the full text of the Voting Agreement, the form of the Registration Rights
Agreement and each of the Consulting Agreements, copies of which have been
filed as exhibits to the Registration Statement and are incorporated herein by
reference.
VOTING AGREEMENT
In connection with the execution of the Merger Agreement, Tyson entered into
the Voting Agreement with James T. Hudson, Chairman and the principal
stockholder of Hudson. As of the Record Date, Mr. Hudson owned 65,028 shares
of Hudson Class A Common Stock and 7,650,000 shares of Hudson Class B Common
Stock, representing approximately 65% of the voting power of the Hudson Common
Stock then outstanding.
Pursuant to the Voting Agreement, Mr. Hudson has: (i) agreed to revoke any
and all previous proxies with respect to the shares of Hudson Common Stock
owned by him; (ii) irrevocably agreed to vote and otherwise act (including
pursuant to written consent), with respect to all of the shares of Hudson
Common Stock owned by him, for the approval and the adoption of the Merger
Agreement, as the same may be amended from time to time, all agreements
related to the Merger and any actions related thereto; and (iii) agreed to
vote such shares against any proposal or transaction which could prevent or
delay the consummation of the transactions contemplated by the Voting
Agreement or the Merger Agreement, at any meeting or meetings of the
stockholders of Hudson, and at any adjournment, postponement or continuation
thereof, at which the Merger Agreement and other related agreements, or such
other actions are submitted for the consideration and vote of the stockholders
of Hudson. The foregoing agreements will remain in effect with respect to the
shares of Hudson Common Stock owned by Mr. Hudson until the termination of the
Voting Agreement. The Voting Agreement will terminate on the earlier of (i)
the Effective Time or (ii) the termination of the Merger Agreement in
accordance with its terms.
The Voting Agreement further provides that Mr. Hudson, during the term of
the Voting Agreement, will not: (i) subject to certain exceptions, transfer or
consent to any transfer of any or all of the shares owned by him or any
interest therein, except pursuant to the Merger; (ii) enter into any contract,
option or other agreement or understanding with respect to any transfer of any
or all of such shares or any interest therein; (iii) grant any proxy, power-
of-attorney or other authorizations in or with respect to such shares; or (iv)
deposit such shares into a voting trust or enter into a voting agreement or
arrangement with respect to the shares. Notwithstanding the foregoing, the
Voting Agreement provides that Mr. Hudson may transfer any of the shares of
Hudson Common Stock owned by him to a Permitted Transferee (as defined in the
Hudson Charter) provided that (a) at least thirty (30) days prior to any such
transfer, Mr. Hudson provides to Tyson at his expense, a written opinion of
nationally recognized tax counsel, in form and substance reasonably acceptable
to Tyson, that such transfer will not adversely affect the treatment of the
Merger as a reorganization within the meaning of the Code, (b) prior to any
such transfer, such Permitted Transferee agrees in writing to take such shares
subject to, and comply with, all of the provisions of the Voting Agreement and
(c) immediately after any such transfer, the shares of Hudson Common Stock
owned by Mr. Hudson continue to represent at least a majority of the
outstanding voting power of the Hudson Common Stock and are sufficient to
adopt and approve the Merger Agreement and the transactions contemplated
thereby, including the Merger.
Mr. Hudson has further agreed that, prior to the Effective Time, he will
not, and will use his reasonable best efforts to cause his affiliates, and
their respective agents or representatives not to, directly or indirectly, (i)
solicit or initiate (including by way of furnishing or disclosing non-public
information) any inquiries or the making of any proposal with respect to any
merger, consolidation or other business combination involving Hudson or any
subsidiary of Hudson or the acquisition of all or any significant part of the
assets or capital stock of Hudson, including the shares owned by Mr. Hudson,
or any subsidiary of Hudson (other than the sale by Hudson (y) of its
Columbus, Nebraska beef processing plant and (z) its minority interest in
Diversity Foods LLC) or (ii) negotiate, explore or otherwise engage in
discussions with any person (other than Tyson and its
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representatives) with respect to, or which may reasonably be expected to lead
to a proposal for, any of the transactions described above, or enter into any
agreement, arrangement or understanding with respect to any of the
transactions described above, or which would require it to abandon, terminate
or fail to consummate the Merger or any other transaction contemplated by this
Voting Agreement.
REGISTRATION RIGHTS AGREEMENT
Demand Registration
Pursuant to the Registration Rights Agreement to be entered into at the
Effective Time by Tyson and James T. Hudson, Tyson has agreed that, upon the
request of Mr. Hudson or any of his Permitted Transferees (as defined in the
Registration Rights Agreement), in each case holding a minimum number of
shares of Tyson Common Stock (in any case, a "Selling Stockholder"), during
the year following the Effective Time, Tyson, on one occasion, will effect the
registration under the Securities Act of all or a portion of such Selling
Stockholder's Registrable Securities (defined generally as shares of Tyson
Class A Common Stock) in order to facilitate the ultimate sale of such Selling
Stockholder's Registrable Securities (a "Demand Registration"). Tyson has
agreed to pay all expenses arising in connection with any such Demand
Registration. Notwithstanding the foregoing, Tyson will not be required to
effect any such registration unless Mr. Hudson has complied with the
obligations set forth in the Consulting Agreement with respect to the
disposition of shares of Class A Tyson Common Stock received by him in the
Merger. See "SELLING STOCKHOLDER."
Piggyback Registration
In addition, if Tyson proposes to register any of the Tyson Common Stock
under the Securities Act (other than on a Registration Statement on Form S-8
or S-4), whether or not for sale for its own account, during the year
following the Effective Time, it will each such time, subject to the
provisions of the Registration Rights Agreement, give prompt written notice at
least ten (10) days prior to the anticipated filing date of the registration
statement relating to such registration to Mr. Hudson. Any such notice must
set forth the stockholder's rights to Piggyback Registration (as defined
herein) under the Registration Rights Agreement and must offer Mr. Hudson the
opportunity to include in such registration statement such number of shares of
Tyson Common Stock as Mr. Hudson may request (a "Piggyback Registration").
Offer and Sale under Registration Statement
In order to reduce the administrative burden on Tyson resulting from its
obligations under the Registration Rights Agreement, Tyson has registered the
offer and sale by Mr. Hudson of shares of Tyson Class A Common Stock received
by him in the Merger pursuant to the Registration Statement relating to this
Proxy Statement/Prospectus. See "SELLING STOCKHOLDER."
CONSULTING AGREEMENTS
In connection with the Merger Agreement, Tyson entered into Consulting
Agreements with each of James T. Hudson, Michael T. Hudson and Charles B.
Jurgensmeyer. Under the terms of the Consulting Agreements, each Consultant is
required to make himself available to perform consulting services with respect
to the businesses conducted by Tyson and its subsidiaries. Such consulting
services will relate to such matters as the Chief Executive Officer of Tyson
may designate from time to time, and each Consultant must devote reasonable
time and his reasonable best efforts, skill and attention to the performance
of such consulting services, including travel reasonably required in the
performance of such consulting services.
The term of each Consultant's engagement under his Consulting Agreement will
commence at the Effective Time and, unless earlier terminated pursuant to the
terms of such Consulting Agreement, will continue in effect for a period of
five (5) years thereafter with respect to James T. Hudson and ten (10) years
thereafter with respect to Michael T. Hudson and Charles B. Jurgensmeyer (such
period, as may be earlier terminated, the "Term"). The Consulting Agreements
provide that extension of the Term may only be effected by written instrument
duly executed and delivered by both parties.
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During the Term of their respective Consulting Agreements, James T. Hudson,
Michael T. Hudson and Charles B. Jurgensmeyer will receive compensation of
$1,200,000, $350,000 and $350,000 per annum, respectively, in equal monthly
installments (subject to proration for any partial month). Tyson will also
reimburse (i) James T. Hudson for business expenses in an aggregate amount up
to $800,000 per annum and (ii) each other Consultant for the reasonable and
necessary business expenses of such Consultant for travel, meals and similar
items incurred in connection with the performance of the Consultant's duties
under the Consulting Agreement, and which are consistent with such guidelines
as the Tyson Board may from time to time establish.
In addition to the compensation and expenses described above, Tyson will
also provide each Consultant with the following additional benefits: (i)
continuation of benefits payable pursuant to and in accordance with Hudson's
Salary Continuation Plan in effect as of the date of the Consulting
Agreements; provided, however, that each Consultant has acknowledged and
agreed that he will not be entitled to receive payments under such plan for an
extended period as a result of the Merger; (ii) continuation of the split-
dollar life insurance policy provided by Hudson prior to the date of the
Consulting Agreements under the terms and conditions at least as favorable to
the Consultant as those in effect as of such date; and (iii) continued medical
insurance benefits during the Term comparable to those provided by Hudson
prior to the date of the Consulting Agreements. Moreover, Tyson will also
provide James T. Hudson during the Term of his Consulting Agreement with
exclusive use of Hudson's condominium located in Palm Springs, California and
Hudson's hangar located at the Rogers, Arkansas airport.
Each Consultant has agreed that, during the Term, he will not: (i) directly
or indirectly, whether individually, as a director, stockholder, owner,
partner, employee, principal or agent of any business, or in any other
capacity, make known, disclose, furnish, make available or utilize any of the
confidential information, other than in the proper performance of the duties
contemplated under his Consulting Agreement; or (ii) engage in competition
with Tyson which, for purposes of each Consulting Agreement, is defined as
engaging in, or otherwise directly or indirectly being employed by or acting
as a consultant or lender to, or being a director, officer, employee,
principal, licensor, trustee, broker, agent, stockholder, member, owner, joint
venturer or partner of, or permitting his name to be used in connection with
the activities of any other business or organization which competes, directly
or indirectly, with the business of Tyson. Each Consultant has also agreed
that he will not, directly or indirectly, for his benefit or for the benefit
of any other person, firm or entity, do any of the following: (i) solicit from
any customer doing business with Tyson, business of the same or of a similar
nature to the Business (as defined in the Consulting Agreements) with such
customer; (ii) solicit the employment or services of, or hire, any person who
at the time is employed by or was a consultant to Tyson; or (iii) otherwise
interfere with the Business or accounts of Tyson including the making of any
statements or comments of a defamatory or disparaging nature to third parties
regarding Tyson or its officers, directors, personnel or products.
Pursuant to the Consulting Agreement between Tyson and James T. Hudson, Mr.
Hudson agreed that he will not, for a period of two years commencing as of the
Effective Time, enter into any transaction or arrangement with respect to
shares of Tyson Class A Common Stock received by him in the Merger to the
extent that such transaction or arrangement (combined with any other
transactions or arrangements entered into by Mr. Hudson) would result in
causing Mr. Hudson not to satisfy the "continuity of proprietary interest"
requirement under Section 368 of the Code with respect to such shares, unless
at least thirty (30) business days prior to entering into any such proposed
transactions or arrangements, Mr. Hudson provides at his expense a written
opinion of nationally recognized tax counsel, in form and substance reasonably
acceptable to Tyson, that such proposed transactions will not adversely affect
the treatment of the Merger as a reorganization within the meaning of Section
368 of the Code. See "SELLING STOCKHOLDER." In addition, the Consulting
Agreement between Tyson and James T. Hudson further provides that Tyson and
Mr. Hudson will enter into the Registration Rights Agreement at the Effective
Time. See "--Registration Rights Agreement."
Each Consulting Agreement will terminate on the first to occur of the
following: (i) the date that Tyson and the Consultant mutually agree to such
termination; (ii) the date of the Consultant's death or adjudicated
incompetency; (iii) the date on which Tyson gives the Consultant notice of
termination on account of disability; (iv) the date on which Tyson gives the
Consultant notice of termination for cause; (v) the date on which Tyson
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gives the Consultant notice of termination without cause; and (vi) the
expiration of the Term. In the event that any Consultant's engagement under
the Consulting Agreement is terminated pursuant to clause (i), (iv) or (vi)
above, such Consultant will be entitled to receive unpaid consulting fees
through the date of termination and additional benefits when due and payable.
In the event that any Consultant's engagement under the Consulting Agreement
is terminated pursuant to clause (ii), (iii) or (v) above, such Consultant
will be entitled to receive unpaid consulting fees through the date of
termination, all consulting fees and expenses payable through the end of the
Term when payable, and additional benefits when due and payable.
APPRAISAL RIGHTS
PROVISIONS OF THE MERGER AGREEMENT
Each outstanding share of Hudson Common Stock as to which a written demand
for appraisal is filed in accordance with Section 262 of the DGCL at or prior
to the Special Meeting and not withdrawn at or prior to the Special Meeting
and which is not voted in favor of the Merger will not be converted into or
represent a right to receive the Per Share Merger Consideration unless and
until the holder thereof will have failed to perfect, or will have effectively
withdrawn or lost, the right to appraisal of and payment for each such share
of Hudson Common Stock under Section 262, at which time each such share will
be converted into the right to receive the Per Share Merger Consideration. All
such shares of Hudson Common Stock as to which such a written demand for
appraisal is so filed and not withdrawn at or prior to the Special Meeting and
which are not voted in favor of the Merger, except any such shares of Hudson
Common Stock the holder of which, prior to the Effective Time, will have
effectively withdrawn or lost such right to appraisal and payment for such
shares of Hudson Common Stock under Section 262, are herein referred to as
"Dissenting Shares."
Hudson will give Tyson prompt notice upon receipt by Hudson of any written
demands for appraisal rights, withdrawal of such demands, and any other
written communications delivered to Hudson pursuant to Section 262, and Hudson
will give Tyson the opportunity, to the extent permitted by law, to
participate in all negotiations and proceedings with respect to such demands.
Except with the prior written consent of Tyson, Hudson will not voluntarily
make any payment with respect to any demands for appraisal rights and will not
settle or offer to settle any such demands. Each holder of Dissenting Shares
who becomes entitled, pursuant to the provisions of Section 262, to payment
for such shares of Dissenting Shares under the provisions of Section 262 will
receive payment therefor from the Surviving Corporation and such shares of
Hudson Common Stock will be cancelled.
APPRAISAL PROCEDURES
Under the DGCL, any stockholder who does not wish to accept the Per Share
Merger Consideration for shares of Hudson Common Stock as provided in the
Merger Agreement has the right to dissent from the Merger and to seek an
appraisal by the Court of Chancery of the State of Delaware (the "Court of
Chancery") of, and to be paid in cash the "fair value" (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
for, the Dissenting Shares, provided that such stockholder complies with the
provisions of Section 262 of the DGCL.
Holders of record of Hudson Common Stock who do not vote in favor of the
Merger Agreement and who otherwise comply with the applicable statutory
procedures summarized herein will be entitled to appraisal rights under
Section 262 of the DGCL. A person having a beneficial interest in shares of
Hudson Common Stock held of record in the name of another person, such as a
broker or nominee, must act promptly to cause the record holder to follow the
steps summarized below properly and in a timely manner to perfect appraisal
rights.
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW PERTAINING
TO APPRAISAL RIGHTS UNDER THE DGCL AND IS QUALIFIED IN ITS ENTIRETY BY THE
FULL TEXT OF SECTION 262 OF THE DGCL WHICH IS REPRINTED IN ITS ENTIRETY AS
ANNEX III TO THIS PROXY STATEMENT/PROSPECTUS. ALL REFERENCES IN SECTION 262 OF
THE DGCL AND IN THIS SUMMARY TO A "STOCKHOLDER" OR "HOLDER" ARE TO THE RECORD
HOLDERS OF DISSENTING SHARES.
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Under Section 262 of the DGCL, where a proposed merger is to be submitted
for approval at a meeting of stockholders, the corporation, not less than
twenty (20) days prior to the meeting, must notify each of its stockholders
who was a stockholder on the record date for such meeting with respect to
shares for which appraisal rights are available, that appraisal rights are so
available, and must include in such notice a copy of Section 262 of the DGCL.
This Proxy Statement/Prospectus constitutes such notice to the holders of
Dissenting Shares and the applicable statutory provisions of the DGCL are
attached to this Proxy Statement/Prospectus as Annex III. Any stockholder who
wishes to exercise such appraisal rights or who wishes to preserve his or her
right to do so should review the following discussion and Annex III carefully,
because failure timely and properly to comply with the procedures therein
specified will result in the loss of appraisal rights under the DGCL.
A holder of Dissenting Shares wishing to exercise such holder's appraisal
rights (a) must not vote in favor of the Merger Agreement and (b) must deliver
to Hudson prior to the vote on the Merger Agreement at the Special Meeting, a
written demand for appraisal of such holder's Dissenting Shares. This written
demand for appraisal must be in addition to and separate from any proxy or
vote abstaining from or against the Merger. This demand must reasonably inform
Hudson of the identity of the stockholder and of the stockholder's intent
thereby to demand appraisal of Dissenting Shares. A holder of Dissenting
Shares wishing to exercise such holder's appraisal rights must be the holder
of record of such Dissenting Shares on the date the written demand for
appraisal is made and must continue to hold such Dissenting Shares until the
consummation of the Merger. Accordingly, a holder of Dissenting Shares who is
the holder of record of Dissenting Shares on the date the written demand for
appraisal is made, but who thereafter transfers such Dissenting Shares prior
to consummation of the Merger, will lose any right to appraisal in respect of
such Dissenting Shares.
Only a holder of record of Dissenting Shares is entitled to assert appraisal
rights for the Dissenting Shares registered in that holder's name. A demand
for appraisal should be executed by or on behalf of the holder of record,
fully and correctly, as such holder's name appears on such holder's stock
certificates. If the Dissenting Shares are held of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution of the demand
should be made in that capacity, and if the Dissenting Shares are held of
record by more than one owner as in a joint tenancy or tenancy in common, the
demand should be executed by or on behalf of all joint owners. An authorized
agent, including one or more joint owners, may execute a demand for appraisal
on behalf of a holder of record; however, the agent must identify the holder
of record and expressly disclose the fact that, in executing the demand, the
agent is agent for such holder. A holder of record such as a broker who holds
Dissenting Shares as nominee for several beneficial owners may exercise
appraisal rights with respect to the Dissenting Shares held for one or more
beneficial owners while not exercising such rights with respect to the
Dissenting Shares held for other beneficial owners; in such case, the written
demand should set forth the number of Dissenting Shares as to which appraisal
is sought. When no number of Dissenting Shares is expressly mentioned, the
demand will be presumed to cover all Dissenting Shares in brokerage accounts
or other nominee forms and those who wish to exercise appraisal rights under
Section 262 of the DGCL are urged to consult with their brokers to determine
the appropriate procedures for the making of a demand for appraisal by such a
nominee.
ALL WRITTEN DEMANDS FOR APPRAISAL SHOULD BE SENT OR DELIVERED TO HUDSON
FOODS, INC., 1225 HUDSON ROAD, ROGERS, ARKANSAS 72756, ATTENTION: SECRETARY.
Within ten (10) days after the consummation of the Merger, the Surviving
Corporation will notify each stockholder who has properly asserted appraisal
rights under Section 262 of the DGCL and has not voted in favor of the Merger
Agreement of the date the Merger became effective.
Within 120 days after the consummation of the Merger, but not thereafter,
the Surviving Corporation or any stockholder who has complied with the
statutory requirements summarized above may file a petition in the Court of
Chancery demanding a determination of the fair value of the Dissenting Shares.
Neither Hudson nor the Surviving Corporation is under any obligation, and
Hudson has no present intention, to file a petition with respect
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to the appraisal of the fair value of the Dissenting Shares. Accordingly, it
is the obligation of stockholders wishing to assert appraisal rights to
initiate all necessary action to perfect their appraisal rights within the
time prescribed in Section 262 of the DGCL.
Within 120 days after the consummation of the Merger, any stockholder who
has complied with the requirements for exercise of appraisal rights will be
entitled, upon written request, to receive from the Surviving Corporation a
statement setting forth the aggregate number of Dissenting Shares not voted in
favor of adoption of the Merger Agreement and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
Dissenting Shares. Such statements must be mailed within ten (10) days after a
written request therefor has been received by the Surviving Corporation.
If a petition for an appraisal is filed timely, after a hearing on such
petition, the Court of Chancery will determine the stockholders entitled to
appraisal rights and will appraise the "fair value" of their Dissenting
Shares, exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. Stockholders
considering seeking appraisal should be aware that the fair value of their
Dissenting Shares as determined under Section 262 of the DGCL could be more
than, the same as or less than the value of the consideration they would
receive pursuant to the Merger Agreement if they did not seek appraisal of
their Dissenting Shares and that investment banking opinions as to fairness
from a financial point of view are not necessarily opinions as to fair value
under Section 262 of the DGCL. The Supreme Court of the State of Delaware has
stated that "proof of value by any techniques or methods which are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered in the appraisal proceedings.
The Court of Chancery will determine the amount of interest, if any, to be
paid upon the amounts to be received by stockholders whose Dissenting Shares
have been appraised. The costs of the action may be determined by the Court of
Chancery and taxed upon the parties as the Court of Chancery deems equitable.
The Court of Chancery may also order that all or a portion of the expenses
incurred by any stockholder in connection with an appraisal, including,
without limitation, reasonable attorneys' fees and the fees and expenses of
experts utilized in the appraisal proceeding, be charged pro rata against the
value of all of the Dissenting Shares entitled to appraisal.
Any holder of Dissenting Shares who has duly demanded an appraisal in
compliance with Section 262 of the DGCL will not, after the consummation of
the Merger, be entitled to vote the Dissenting Shares for any purpose or be
entitled to the payment of dividends or other distributions on those
Dissenting Shares (except dividends or other distributions payable to holders
of record of Dissenting Shares as of a record date prior to the consummation
of the Merger).
If any stockholder who properly demands appraisal of Dissenting Shares under
Section 262 of the DGCL fails to perfect, or effectively loses or withdraws,
the right to appraisal, as provided in Section 262 of the DGCL, the Dissenting
Shares of such stockholder will be converted into the right to receive the Per
Share Merger Consideration in accordance with the Merger Agreement. A
stockholder will fail to perfect, or effectively lose or withdraw, the right
to appraisal if, among other things, no petition for appraisal is filed within
120 days after the consummation of the Merger, or if the stockholder delivers
to Hudson a written withdrawal of the demand for appraisal. Any such attempt
to withdraw an appraisal demand more than sixty (60) days after the
consummation of the Merger will require the written approval of the Surviving
Corporation.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS (IN WHICH
EVENT A STOCKHOLDER WILL BE ENTITLED TO RECEIVE THE PER SHARE MERGER
CONSIDERATION IN ACCORDANCE WITH THE MERGER AGREEMENT).
42
<PAGE>
PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
The Unaudited Pro Forma Combined Condensed Balance Sheet at September 27,
1997 (the "Pro Forma Balance Sheet") and the Unaudited Pro Forma Combined
Condensed Statement of Income for the fiscal year ended September 27, 1997
(the "Pro Forma Income Statement" and, together with the Pro Forma Balance
Sheet, the "Pro Forma Financial Statements") are presented using the purchase
method of accounting to give effect to the Merger and reflect the combination
of consolidated historical financial data of Hudson and Tyson.
The Pro Forma Balance Sheet is derived from the audited financial statements
of Hudson and Tyson contained in their respective Annual Reports on Form 10-K
for the fiscal year ended September 27, 1997, which are incorporated by
reference herein, and is presented as if the Merger had occurred on September
27, 1997. The Pro Forma Income Statement has been derived from the audited
financial statements of Hudson and Tyson contained in their respective Annual
Reports on Form 10-K for the fiscal year ended September 27, 1997, which are
incorporated by reference herein, and is presented as if the Merger had
occurred on September 29, 1996.
The pro forma adjustments reflected in the Pro Forma Financial Statements
represent estimated values and amounts based on available information
regarding Hudson's assets and liabilities. The actual adjustments that will
result from the Merger will be based on further evaluations and may differ
substantially from the adjustments presented herein. The Pro Forma Financial
Statements are presented for illustrative purposes only and are not
necessarily indicative of the financial position or operating results that
would have been achieved had the Merger been consummated as of the dates
indicated or of the results that may be obtained in the future.
The Pro Forma Financial Statements should be read in conjunction with the
accompanying notes and the historical financial statements of Hudson and Tyson
incorporated by reference herein. See "AVAILABLE INFORMATION" and
"INCORPORATION OF DOCUMENTS BY REFERENCE."
43
<PAGE>
TYSON FOODS, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 27, 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
PRO FORMA
TYSON HUDSON -----------------------
FOODS, INC. FOODS, INC. ADJUSTMENTS COMBINED
----------- ----------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.. $ 23.6 $ 2.8 $ -- $ 26.4
Accounts receviable........ 617.8 128.2 -- 746.0
Inventories................ 886.1 243.9 -- 1,130.0
Other current assets....... 45.0 73.4 -- 118.4
--------- ------- ------- --------
Total current assets......... 1,572.5 448.3 -- 2,020.8
Net property, plant and
equipment................... 1,924.8 389.0 50.0 (1) 2,363.8
Excess of investments over
net assets acquired......... 731.1 13.6 (13.6)(2)
14.6 (7)
328.5 (2)
5.0 (10) 1,079.2
Investments and other as-
sets........................ 182.6 36.1 12.7 (8) 231.4
--------- ------- ------- --------
Total assets................. $ 4,411.0 $ 887.0 $ 397.2 $5,695.2
========= ======= ======= ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Notes payable.............. $ 37.3 $ 78.0 $ -- $ 115.3
Current portion of long-
term debt................. 94.6 25.7 -- 120.3
Trade accounts payable..... 290.3 67.5 -- 357.8
Other accrued liabilities.. 298.8 64.1 5.0 (10)
0.3 (7)
2.7 (8)
38.3 (6) 409.2
--------- ------- ------- --------
Total current liabilities.... 721.0 235.3 46.3 1,002.6
Long-term debt............... 1,558.2 269.3 257.4 (3) 2,084.9
Deferred income taxes........ 506.1 78.3 (38.3)(6)
18.5 (9) 564.6
Other liabilities............ 4.2 -- 14.3 (7)
10.0 (8) 28.5
Shareholders' equity:
Class A common stock....... 11.9 0.2 (0.2)(4)
1.8 (5) 13.7
Class B common stock....... 10.3 0.1 (0.1)(4) 10.3
Capital in excess of par
value..................... 379.1 161.4 391.3 (5)
(161.4)(4) 770.4
Retained earnings.......... 1,390.8 153.6 (153.6)(4) 1,390.8
Currency translation ad-
justment.................. (2.5) -- -- (2.5)
--------- ------- ------- --------
1,789.6 315.3 77.8 2,182.7
Less treasury stock........ 165.6 11.2 (11.2)(4) 165.6
Less unamortized deferred
compensation.............. 2.5 -- -- 2.5
--------- ------- ------- --------
Total shareholders' equity... 1,621.5 304.1 89.0 2,014.6
--------- ------- ------- --------
Total liabilities and share-
holders' equity............. $ 4,411.0 $ 887.0 $ 397.2 $5,695.2
========= ======= ======= ========
</TABLE>
See accompanying notes.
44
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED BALANCE SHEET
(DOLLARS IN MILLIONS)
(1) To increase the property, plant and equipment of Hudson to estimated fair
market value.
(2) To record the remaining excess of investments over net assets acquired as
follows:
<TABLE>
<S> <C>
Purchase price paid:
Cash paid for all outstanding Hudson shares (30,648,076 shares at
$8.40 per share).................................................. $257.4
Tyson Class A Common Stock issued for all Hudson shares based upon
market value of Tyson Class A Common Stock at September 3, 1997,
the day before the transaction was announced, of $21.375
(18,388,846 at $21.375)........................................... 393.1
------
Total purchase price............................................. $650.5
======
Purchase price allocated:
Book value of Hudson's net assets acquired......................... $304.1
To increase Hudson's property, plant and equipment to their fair
market value...................................................... 50.0
To increase deferred taxes on the estimated amount of excess
purchase price that is expected to be assigned to property, plant
and equipment..................................................... (18.5)
To eliminate Hudson's excess of investments over net assets
acquired.......................................................... (13.6)
Remaining amount of excess of investment over net assets acquired.. 328.5
------
Total purchase price............................................. $650.5
======
</TABLE>
(3) To reflect incremental additional debt required to finance the Merger.
Much of Hudson's debt may be retired and replaced with new debt; however,
it is expected that the current maturities will approximate those
presented above.
(4) To eliminate Hudson's stockholders' equity balances.
(5) To reflect the additional shares of Tyson Class A Common Stock to be
issued in the Merger at Tyson's market value on September 3, 1997 of
$21.375.
(6) To reflect deferred taxes due currently. As a result of the Merger,
Hudson will cease to be a family-owned farming business and related taxes
deferred under Section 447(i) of the Code will be currently payable.
(7) To record the estimated present value liability for the accelerated
vesting of Hudson's contractual severance plan resulting from a change in
ownership using a discount rate of 8%.
(8) To record the estimated present value liability for the Consulting
Agreements using a discount rate of 8%. For a summary of the terms and
conditions of the Consulting Agreements, see "OTHER AGREEMENTS--
Consulting Agreements." The terms and annual compensation under the
Consulting Agreements are as follows:
<TABLE>
<CAPTION>
ANNUAL
CONSULTANT TERM COMPENSATION
---------- ---------- ------------
<S> <C> <C>
James T. Hudson Five years $2,000,000
Michael T. Hudson Ten years 350,000
Charles B. Jurgensmeyer Ten years 350,000
</TABLE>
(9) To reflect deferred taxes on the estimated amount of excess purchase
price that is expected to be assigned to property, plant and equipment.
(10) To reflect estimated fees and other expenses of the Merger.
45
<PAGE>
TYSON FOODS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FISCAL YEAR ENDED SEPTEMBER 27, 1997
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
TYSON HUDSON ----------------------
FOODS, INC. FOODS, INC. ADJUSTMENTS COMBINED
----------- ----------- ----------- --------
<S> <C> <C> <C> <C>
Sales......................... $6,355.7 $1,665.1 $ -- $8,020.8
Cost of sales................. 5,318.0 1,490.6 3.3 (1) 6,811.9
-------- -------- ------- --------
1,037.7 174.5 (3.3) 1,208.9
Expenses:
Selling..................... 513.3 111.6 -- 624.9
General and administrative.. 96.9 32.5 (0.0)(2) 129.4
Amortization................ 27.6 -- 8.7 (3) 36.3
International
reorganization............. -- 24.2 -- 24.2
Other special charges....... -- 28.3 -- 28.3
-------- -------- ------- --------
Operating income (loss)....... 399.9 (22.1) (12.0) 365.8
Other expense (income):
Interest.................... 110.4 13.3 17.6 (4) 141.3
Other....................... (40.2) (0.9) -- (41.1)
-------- -------- ------- --------
Income (loss) before taxes on
income....................... 329.7 (34.5) (29.6) 265.6
Provision (benefit) for income
taxes........................ 143.9 (13.3) (7.7)(5) 122.9
-------- -------- ------- --------
Net income (loss)............. $ 185.8 $ (21.2) $ (21.9) $ 142.7
======== ======== ======= ========
Average shares outstand-
ing(6)....................... 218.2 30.2 236.6
Earnings (loss) per share..... $ 0.85 $ (0.70) $ 0.60
</TABLE>
See accompanying notes.
46
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
(1) To increase depreciation expense for the amount of the purchase price
allocated to property, plant and equipment. Additional depreciation
computed using the straight-line method over an average useful life of
fifteen years.
(2) To reflect amortization of consulting and non-compete fees over the term
of the Consulting Agreements ranging from five to ten years, offset by
reduced salary and bonus payments of $2.7 million for three key Hudson
executives who will not be continuing as officers.
(3) To amortize the excess of investment over net assets acquired in the
Merger over forty years.
(4) To reflect increased interest expense resulting from (a) debt incurred in
connection with the Merger based on an assumed interest rate of 6.85%
which was Tyson's average interest rate for the fiscal year ended
September 27, 1997 for total debt and (b) the discount at a rate of 8%
from the estimated present value liability reflected on the Pro Forma
Balance Sheet for Consulting Agreements.
(5) To reflect the net tax benefit resulting from the additional depreciation
and interest expense at an effective rate of 37%.
(6) On January 10, 1997, Tyson's Board of Directors authorized a three-for-two
stock split in the form of a stock dividend effective February 15, 1997
for shareholders of record on February 1, 1997. All references to number
of shares, per share amounts and average shares outstanding in the
Unaudited Pro Forma Combined Statement of Income have been restated to
reflect such stock split.
47
<PAGE>
SELLING STOCKHOLDER
Pursuant to the Registration Rights Agreement to be entered into at the
Effective Time, James T. Hudson, Chairman and the principal stockholder of
Hudson, will, among other things, be entitled to cause Tyson to register under
the Securities Act the resale of the shares of Tyson Class A Common Stock
received by him in the Merger. See "OTHER AGREEMENTS--Registration Rights
Agreement." In order to reduce the administrative burden on Tyson resulting
from its obligations under the Registration Rights Agreement, Tyson has
registered the offer and sale by Mr. Hudson of shares of Tyson Class A Common
Stock received by him in the Merger pursuant to the Registration Statement
relating to this Proxy Statement/Prospectus. As a result, all of the 4,623,617
shares of Tyson Class A Common Stock to be owned by Mr. Hudson following the
Merger may be offered and sold by Mr. Hudson pursuant to the Registration
Statement of which this Proxy Statement/Prospectus constitutes a part.
In addition to sales pursuant to the Registration Statement, the Selling
Stockholder will be permitted to resell the shares of Tyson Class A Common
Stock owned by him pursuant to, and subject to the limitations under, Rule 145
under the Securities Act.
Pursuant to the Consulting Agreement between Tyson and Mr. Hudson, Mr.
Hudson agreed that he will not, for a period of two years commencing as of the
Effective Time, enter into any transaction or arrangement with respect to
shares of Tyson Class A Common Stock received by him in the Merger to the
extent that such transaction or arrangement (combined with any other
transactions or arrangements entered into by Mr. Hudson) would result in
causing Mr. Hudson not to satisfy the "continuity of proprietary interest"
requirement under Section 368 of the Code with respect to such shares, unless
at least thirty (30) business days prior to entering into any such proposed
transactions or arrangements, Mr. Hudson provides at his expense a written
opinion of nationally recognized tax counsel, in form and substance reasonably
acceptable to Tyson, that such proposed transactions will not adversely affect
the treatment of the Merger as a reorganization within the meaning of Section
368 of the Code. See "OTHER AGREEMENTS--Consulting Agreements."
48
<PAGE>
DESCRIPTION OF TYSON CAPITAL STOCK
The following statements are brief summaries of certain provisions with
respect to Tyson's capital stock. The summaries do not purport to be complete
and such statements are qualified in their entirety by reference to Tyson's
Certificate of Incorporation, as amended (the "Tyson Charter"), and Amended
and Restated By-Laws (the "Tyson By-Laws"), copies of which have been filed as
exhibits to the Registration Statement and are incorporated herein by
reference.
COMMON STOCK
Tyson currently has issued and outstanding two classes of capital stock, the
Tyson Class A Common Stock and the Class B Common Stock, par value $.10 per
share, of Tyson (the "Tyson Class B Common Stock" and, together with the Tyson
Class A Common Stock, "Tyson Common Stock"). The Tyson Charter authorizes the
issuance of up to 900 million shares of each of the Tyson Class A Common Stock
and the Tyson Class B Common Stock. The holders of the Tyson Class A Common
Stock are entitled to one vote, and the holders of the Tyson Class B Common
Stock are entitled to ten (10) votes, for each share held of record on all
matters submitted to a vote of stockholders, including the election of
directors. Except as required by law, holders of Tyson Class A Common Stock
and Tyson Class B Common Stock vote together as a single class. Holders of
Tyson Class A Common Stock and holders of Tyson Class B Common Stock do not
have cumulative voting rights. Holders of Tyson Class A Common Stock and Tyson
Class B Common Stock are entitled to receive such dividends and other
distributions as may be determined by the Tyson Board out of any funds legally
available therefor; provided, however, that no cash dividend may be paid on
the Tyson Class B Common Stock unless a cash dividend is simultaneously paid
on the Tyson Class A Common Stock, and the amount of the cash dividend paid on
the Tyson Class B Common Stock cannot exceed 90% of the cash dividend
simultaneously paid on the Tyson Class A Common Stock.
Upon liquidation of Tyson, the holders of the Tyson Class A Common Stock and
the Tyson Class B Common Stock share ratably in the assets, if any, remaining
after payment of all debts and liabilities of Tyson. Such holders do not have
preemptive, conversion or redemption rights, except that each holder of the
Tyson Class B Common Stock may, at such holder's option, and upon written
notice to Tyson, convert each share of Tyson Class B Common Stock into one (1)
fully paid and nonassessable share of Tyson Class A Common Stock.
Article Fourth of the Tyson Charter provides that the holders of the
outstanding shares of Tyson Class B Common Stock may waive or suspend (i)
certain of their rights to convert their shares of Tyson Class B Common Stock
into shares of Tyson Class A Common Stock as provided in such stock
certificates and (ii) Tyson's obligation imposed by a covenant contained in
such Article to reserve and keep available for issuance shares of Tyson Class
A Common Stock sufficient to provide for any such conversion.
The transfer agent for the Tyson Class A Common Stock and the Tyson Class B
Common Stock is First Chicago Trust Company of New York.
49
<PAGE>
COMPARISON OF THE RIGHTS OF HOLDERS OF HUDSON COMMON STOCK
AND TYSON COMMON STOCK
The statements set forth under this heading with respect to the DGCL, the
Tyson Charter, the Tyson By-laws, the Restated Certificate of Incorporation of
Hudson (the "Hudson Charter") and the Restated By-laws of Hudson (the "Hudson
By-laws") (copies of which have been filed as exhibits to the Registration
Statement and are incorporated herein by reference) are brief summaries
thereof and do not purport to be complete. Such statements are qualified in
their entirety by reference to the full text of the DGCL, the Tyson Charter,
the Tyson By-laws, the Hudson Charter and the Hudson By-laws. See "AVAILABLE
INFORMATION."
The following summary compares certain rights of the holders of Tyson Common
Stock to the rights of the holders of Hudson Common Stock. The rights of
Hudson stockholders are governed principally by the DGCL, the Hudson Charter
and the Hudson By-laws. Upon consummation of the Merger, such stockholders
will become holders of Tyson Class A Common Stock, and their rights will be
governed principally by the DGCL, the Tyson Charter and the Tyson By-laws.
DIVIDEND RIGHTS
The rights of Hudson stockholders and Tyson stockholders with respect to the
receipt of dividends are substantially the same. Upon the exchange of shares
of Hudson Class B Common Stock for shares of Tyson Class A Common Stock in the
Merger, holders of Hudson Class B Common Stock will no longer be subject to
certain restrictions with respect to the payment of dividends on the Hudson
Class B Common Stock. See "DESCRIPTION OF TYSON COMMON STOCK" and "SUMMARY--
Market Prices and Dividends Paid."
Under the DGCL, a corporation may pay dividends when, as and if declared by
the corporation's board of directors out of surplus (defined as the excess, if
any, of net assets over capital) or, if no such surplus exists, out of its net
profits for the fiscal year in which such dividends are declared for its
preceding fiscal year, provided that dividends may not be paid out of net
profits if the capital of such corporation is less than the aggregate amount
of capital represented by the outstanding stock of all classes having a
preference upon the distribution of assets.
VOTING RIGHTS
Each share of Hudson Class A Common Stock and each share of Tyson Class A
Common Stock is entitled to one (1) vote per share on all matters submitted to
a vote of stockholders. Each share of Hudson Class B Common Stock and each
share of Tyson Class B Common Stock is entitled to ten (10) votes per share on
each matter submitted to a vote of stockholders. Holders of Hudson Class A
Common Stock and Hudson Class B Common Stock, and holders of Tyson Class A
Common Stock and Tyson Class B Common Stock, vote together as a single class.
Upon the exchange of shares of Hudson Class B Common Stock for shares of Tyson
Class A Common Stock in the Merger, former holders of Hudson Class B Common
Stock (like other holders of Tyson Class A Common Stock) will be entitled to
only one (1) vote per share on all matters submitted to a vote of
stockholders.
The directors of both Hudson and Tyson are elected by a majority of the
votes cast, provided a quorum is present. Except as otherwise provided by the
DGCL, approval of all other matters submitted to a vote of stockholders of
Hudson or Tyson requires the affirmative vote of a majority of the votes cast,
provided a quorum is present.
DIRECTORS
Number and Election of Directors. Under the DGCL, the certificate of
incorporation or by-laws of a corporation may specify the number of directors
that serve on such corporation's Board of Directors. The Hudson Board
currently is comprised of eight directors. The Hudson By-laws provide that the
Hudson Board shall consist
50
<PAGE>
of not less than three nor more than fifteen directors. The Tyson By-laws
provide that the number of directors serving on the Tyson Board shall be as
determined by the Tyson Board. The Tyson Board currently is comprised of
eleven directors.
Pursuant to the Hudson By-laws and the Tyson By-laws, respectively, the
directors of each of Hudson and Tyson are elected annually by a vote of the
corporations' respective stockholders. Both the Hudson By-laws and the Tyson
By-laws provide that vacancies or newly created directorships may be filled by
the vote of a majority of the directors then in office, even though less than
a quorum. The Tyson By-laws provide that any stockholder wishing to nominate a
person to serve as a candidate for election to the Tyson Board must submit the
name of such candidate in writing to the current Tyson Board on or before
September 30 of any year. No comparable provision is included in the Hudson
Charter or the Hudson By-laws.
Fiduciary Duties of Directors. Under the DGCL, the business and affairs of a
corporation are managed by or under the direction of its board of directors.
In exercising their powers, directors are charged with an unyielding fiduciary
duty to protect the interests of the corporation and to act in the best
interests of its stockholders. In recognition of the managerial prerogatives
granted to the directors of a Delaware corporation, Delaware law presumes
that, in making a business decision, such directors are disinterested and act
on an informed basis, in good faith and in the honest belief that the action
taken was in the best interests of such corporation, which presumption is
known as the "business judgment rule." A party challenging the propriety of a
decision of a board of directors bears the burden of rebutting the
applicability of the presumption of the business judgment rule by
demonstrating that, in reaching their decision, the directors breached one or
more of their fiduciary duties -- good faith, loyalty and due care. If the
presumption is not rebutted, the business judgment rule attaches to protect
the directors and their decisions, and their business judgments will not be
second guessed. Where, however, the presumption is rebutted, the directors
bear the burden of demonstrating the entire fairness of the relevant
transaction. Notwithstanding the foregoing, Delaware courts subject directors'
conduct to enhanced scrutiny in respect of defensive actions taken in response
to a threat to corporate control and approval of a transaction resulting in a
sale of such control.
CALL OF SPECIAL MEETINGS
The Hudson By-laws provide that, except as otherwise provided by law or the
Hudson Charter, a special meeting of Hudson's stockholders may be called at
any time by the President and shall be called by the President or the
Secretary at the request of a majority of the Hudson Board or at the request
in writing of the holders of a majority of Hudson's issued and outstanding
capital stock. The Tyson By-laws provide that, except as otherwise provided by
law or by the Tyson Charter, a special meeting of Tyson's stockholders may be
called at any time by the Senior Chairman of the Tyson Board, the Chairman of
the Tyson Board, the Chief Executive Officer or the President, and shall be
called by any such officer at the request in writing of a majority of the
Tyson Board or at the request in writing of stockholders owning a majority of
the stock of Tyson, issued and outstanding and entitled to vote. A special
meeting of the stockholders of either Hudson or Tyson may be called for any
purpose or purposes.
ACTION BY STOCKHOLDERS WITHOUT A MEETING
Both the Hudson By-laws and the Tyson By-laws provide that stockholders may
act on any matter by written consent in lieu of voting on such matter at an
annual or special meeting of stockholders. Approval of any matter by written
consent of the stockholders of either Hudson or Tyson requires the affirmative
vote of the holders of outstanding stock of either Hudson or Tyson, as the
case may be, having not less than the minimum number of votes required to
authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
STOCKHOLDER PROPOSALS
The Hudson By-laws provide that any stockholder seeking to have a proposal
considered at an annual meeting must submit such proposal to Hudson's
Secretary at least 120 days in advance of the date set for the
51
<PAGE>
annual meeting. The Tyson By-laws provide that for business to be brought at
an annual meeting by a stockholder, the stockholder must give timely notice
thereof to Tyson's Secretary. To be timely, a stockholder's notice must be
received by Tyson not less than 75 days nor more than 100 days prior to the
date set for the meeting; provided, however, that in the event that less than
85 days' prior notice or public disclosure of the date of the meeting is given
or made to Tyson's stockholders, notice by the stockholder to be timely must
be received within ten (10) days after the notice of the date of the annual
meeting was mailed or such public disclosure was made.
AMENDMENT TO CERTIFICATE OF INCORPORATION
Under the DGCL, both the Hudson Charter and the Tyson Charter may be amended
by approval of the Hudson Board and the Tyson Board, respectively, and the
affirmative vote of the holders of shares of Hudson voting stock or Tyson
voting stock, respectively, voting as a single class, representing a majority
of the votes entitled to be cast on such amendment. Notwithstanding any
provision of a corporation's certificate of incorporation to the contrary,
pursuant to Section 242(b) of the DGCL, holders of a class of a corporation's
stock are entitled to vote as a class on the approval and adoption of any
amendment to the corporation's certificate of incorporation which would: (i)
increase or decrease the aggregate number of authorized shares of such class;
(ii) increase or decrease the par value of the shares of such class; or (iii)
alter or change the powers, preferences or rights of such class so as to
affect them adversely.
AMENDMENT TO BY-LAWS
The Hudson By-laws and the Tyson By-laws may each be altered, amended or
repealed by the stockholders of Hudson or Tyson, respectively, or by the
respective boards of directors of Hudson or Tyson. New by-laws may also be
adopted by the stockholders of either corporation and by either corporation's
board of directors. The alteration, amendment or repeal of the Hudson By-laws
or the Tyson By-laws, as the case may be, or the adoption of new by-laws can
be effected at any annual meeting of stockholders, any meeting of the Hudson
Board or the Tyson Board, respectively, or at any special meeting of the
stockholders of either corporation, provided notice of such alteration,
amendment, repeal or adoption is included in the notice relating to the
special meeting.
APPROVAL OF MERGERS AND ASSET SALES
Under the DGCL, unless required by its certificate of incorporation (neither
the Hudson Charter nor the Tyson Charter contains such a provision), no vote
of the stockholders of a constituent corporation surviving a merger is
necessary to authorize such merger if: (i) the agreement of merger does not
amend the certificate of incorporation of such constituent corporation; (ii)
each share of stock of such constituent corporation outstanding prior to such
merger is to be an identical outstanding or treasury share of the surviving
corporation after such merger; (iii) either no shares of common stock of the
surviving corporation and no shares, securities or obligations convertible
into such common stock are to be issued under such agreement of merger, or the
number of shares of common stock issued or so issuable does not exceed 20% of
the number thereof outstanding immediately prior to such merger; and (iv)
certain other conditions are satisfied. In addition, the DGCL provides that a
parent corporation that is the record holder of at least 90% of the
outstanding shares of each class of stock of a subsidiary may merge such
subsidiary into such parent corporation without the approval of such
subsidiary's stockholders or board of directors. Whenever the approval of the
stockholders of a corporation is required for an agreement of merger or
consolidation or for a sale, lease or exchange of all or substantially all of
its assets, such agreement, sale, lease or exchange must be approved by the
affirmative vote of the holders of a majority of outstanding shares of such
corporation entitled to vote thereon.
RIGHTS OF APPRAISAL
The DGCL provides for appraisal rights only in the case of certain mergers
or consolidations and not (unless the certificate of incorporation of a
corporation so provides, which neither the Hudson Charter nor the Tyson
Charter does) in the case of other mergers, a sale or transfer of all or
substantially all of its assets or an
52
<PAGE>
amendment to its certificate of incorporation. Moreover, the DGCL does not
provide appraisal rights in connection with a merger or consolidation (unless
the certificate of incorporation so provides, which neither the Hudson Charter
nor the Tyson Charter does) to the holders of shares of a constituent
corporation listed on a national securities exchange (or designated as a
national market system security by the National Association of Securities
Dealers, Inc.) or held of record by more than 2,000 stockholders, unless the
applicable agreement of merger or consolidation requires the holders of such
shares to receive, in exchange for such shares, any property other than shares
of stock of the resulting or surviving corporation, shares of stock of any
other corporation listed on a national securities exchange (or designated as
described above) or held of record by more than 2,000 holders, cash in lieu of
any fractional shares or any combination of the foregoing. In addition, the
DGCL denies appraisal rights to the stockholders of the surviving corporation
in a merger if such merger did not require for its approval the vote of the
stockholders of such surviving corporation. See "-- Approval of Merger and
Asset Sales."
LIMITATION OF LIABILITY
Section 102(b)(7) of the DGCL allows a Delaware corporation to limit or
eliminate the personal liability of directors to a corporation and its
stockholders for monetary damages for breach of fiduciary duty as a director,
subject to certain limitations. The Hudson Charter and the Tyson Charter
provide for the limitation of liability as permitted by Section 102(b)(7).
While these provisions provide directors with protection from awards for
monetary damages for breaches of their duty of care, they do not eliminate
such duty. Accordingly, these provisions will have no effect on the
availability of equitable remedies such as an injunction or rescission based
on a director's breach of his or her duty of care. Also, these provisions do
not eliminate or limit the liability of a director for breach of the duty of
loyalty, acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law, unlawful dividends or stock
repurchases, or any transaction from which the director derived an improper
personal benefit. The provisions described above apply to an officer of a
corporation only if he or she is a director of such corporation and is acting
in his or her capacity as director, and do not apply to officers of the
corporation who are not directors.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the DGCL provides that a Delaware corporation may indemnify
its officers and directors who are a party, or threatened to be made a party,
to any threatened, pending or completed action, suit or proceeding by reason
of the fact that he or she is or was a director, officer or employee of the
corporation by, among other things, a majority vote of directors who were not
parties to such action, suit or proceeding (whether or not a quorum), provided
that such officers and directors acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation. The Hudson Charter and the Tyson By-laws each provide for
indemnification of officers and directors to the fullest extent permitted by
Section 145 of the DGCL.
STATE ANTI-TAKEOVER STATUTE
Section 203 of the DGCL, a statutory provision restricting business
combinations with certain stockholders who acquire 15% or more of a Delaware
corporation's voting stock, is applicable to both Hudson and Tyson. Section
203 prohibits certain "business combination" transactions (defined broadly to
include mergers, consolidations, sales or other disposition of assets having
an aggregate value in excess of 10% of the consolidated assets of the
corporation, and certain transactions that would increase the interested
stockholder's proportionate share ownership in the corporation) between a
publicly held Delaware corporation and any "interested stockholder" for a
period of three years after the date on which the interested stockholder
became an interested stockholder unless (a) prior to that date the
corporation's board of directors approved either the proposed business
combination or the transaction which resulted in the interested stockholder
becoming an interested stockholder, (b) upon consummation of the transaction
which resulted in the interested stockholder becoming an
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interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (i) by persons who are directors and also
officers and (ii) by employee stock plans in which employee participants do
not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer, or (c) on or
subsequent to such date the business combination is approved by the
corporation's board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote
of at least two-thirds of the outstanding voting stock which is not owned by
the interested stockholder.
Section 203 would not preclude the holders of a controlling interest from
exercising control over Hudson or Tyson and would not prevent a hostile
takeover or hostile acquisition of control of Hudson or Tyson. Section 203
may, however, discourage or make more difficult a hostile takeover or
acquisition of control.
LIQUIDATION RIGHTS
The rights of the holders of Hudson Common Stock upon the liquidation or
dissolution of Hudson are substantially the same as the holders of Tyson
Common Stock upon the liquidation or dissolution of Tyson. See "DESCRIPTION OF
TYSON COMMON STOCK."
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INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of Tyson incorporated by reference in,
and the consolidated financial statement schedule appearing in, Tyson's Annual
Report on Form 10-K for the year ended September 27, 1997 have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference. Such consolidated
financial statements and schedule are incorporated herein by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
The consolidated balance sheets of Hudson as of September 27, 1997 and
September 28, 1996 and the consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended September 27, 1997 incorporated by reference in this Proxy
Statement/Prospectus, have been incorporated by reference herein in reliance
on the report of Coopers & Lybrand L.L.P., independent accountants, given on
the authority of that firm as experts in accounting and auditing.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Special Meeting, will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
LEGAL OPINIONS
The validity of the shares of Tyson Class A Common Stock being offered
hereby is being passed upon for Tyson by Skadden, Arps, Slate, Meagher & Flom
LLP.
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Tyson, and
Davis Polk & Wardwell, special counsel to Hudson, have each given opinions to
the effect that the discussion under the caption "CERTAIN U.S. FEDERAL INCOME
TAX CONSIDERATIONS," subject to certain qualifications, fairly and accurately
describes the material U.S. federal income tax consequences of the Merger to
holders of Hudson Common Stock that exchange such stock for Tyson Class A
Common Stock and cash pursuant to the Merger.
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ANNEX I
-------
AGREEMENT AND PLAN OF MERGER
AMONG
TYSON FOODS, INC.,
HFI ACQUISITION SUB INC.
AND
HUDSON FOODS, INC.
DATED AS OF SEPTEMBER 4, 1997
<PAGE>
TABLE OF CONTENTS
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ARTICLE I
THE MERGER................................................................ I-2
Section 1.1 The Merger................................................. I-2
Section 1.2 Closing.................................................... I-2
Section 1.3 Effective Time ............................................ I-2
Section 1.4 Certificate of Incorporation and By-Laws................... I-3
Section 1.5 Directors and Officers..................................... I-3
ARTICLE II
CONVERSION OF SHARES...................................................... I-3
Section 2.1 Conversion of Shares....................................... I-3
Section 2.2 Exchange Procedures........................................ I-4
Section 2.3 Dividends; Transfer Taxes; Withholding..................... I-5
Section 2.4 Fractional Shares.......................................... I-6
Section 2.5 Return of Exchange Fund.................................... I-7
Section 2.6 Dissenting Shares.......................................... I-7
Section 2.7 Options.................................................... I-8
Section 2.8 Closing of Transfer Books.................................. I-8
Section 2.9 Further Assurances......................................... I-8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................. I-9
Section 3.1 Organization and Good Standing............................. I-9
Section 3.2 Certificate of Incorporation and By-Laws................... I-9
Section 3.3 Capitalization............................................. I-9
Section 3.4 Company Subsidiaries....................................... I-10
Section 3.5 Corporate Authority........................................ I-11
Section 3.6 Compliance with Applicable Law............................. I-12
Section 3.7 Non-Contravention.......................................... I-12
Section 3.8 Government Approvals; Required Consents.................... I-13
Section 3.9 SEC Documents and Other Reports............................ I-13
Section 3.10 Absence of Certain Changes or Events....................... I-14
Section 3.11 Actions and Proceedings.................................... I-14
Section 3.12 Absence of Undisclosed Liabilities......................... I-15
Section 3.13 Contracts.................................................. I-15
Section 3.14 Taxes...................................................... I-15
Section 3.15 Intellectual Property...................................... I-16
Section 3.16 Information in Disclosure Documents and Registration
Statement................................................. I-16
Section 3.17 Employee Benefit Plans; ERISA.............................. I-17
Section 3.18 Environmental Matters...................................... I-18
Section 3.19 Labor Matters.............................................. I-19
Section 3.20 Affiliate Transactions..................................... I-19
Section 3.21 Opinion of Financial Advisor............................... I-19
Section 3.22 Brokers.................................................... I-19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.................... I-20
Section 4.1 Organization and Good Standing............................. I-20
Section 4.2 Certificate of Incorporation and By-Laws................... I-20
</TABLE>
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Section 4.3 Capitalization............................................. I-20
Section 4.4 Parent Subsidiaries........................................ I-21
Section 4.5 Corporate Authority........................................ I-22
Section 4.6 Compliance with Applicable Law............................. I-22
Section 4.7 Non-contravention.......................................... I-23
Section 4.8 Government Approvals; Required Consents.................... I-23
Section 4.9 SEC Documents and Other Reports............................ I-24
Section 4.10 Absence of Certain Changes or Events....................... I-24
Section 4.11 Actions and Proceedings.................................... I-25
Section 4.12 Absence of Undisclosed Liabilities......................... I-25
Section 4.13 Information in Disclosure Documents and Registration
Statement................................................. I-25
Section 4.14 Affiliate Transactions..................................... I-26
Section 4.15 Taxes...................................................... I-26
Section 4.16 Operations of Purchaser.................................... I-27
Section 4.17 Brokers.................................................... I-27
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER.................................... I-27
Section 5.1 Conduct of Business by the Company Pending the Merger...... I-27
ARTICLE VI
ADDITIONAL AGREEMENTS..................................................... I-29
Section 6.1 Access and Information..................................... I-29
Section 6.2 No Solicitation............................................ I-30
Section 6.3 Third-Party Standstill Agreements.......................... I-31
Section 6.4 Registration Statement..................................... I-31
Section 6.5 Proxy Statements; Stockholder Approval..................... I-31
Section 6.6 Compliance with the Securities Act......................... I-32
Section 6.7 Reasonable Best Efforts.................................... I-32
Section 6.8 Employee Benefits.......................................... I-33
Section 6.9 Public Announcements....................................... I-33
Section 6.10 Directors' and Officers' Indemnification and Insurance..... I-34
Section 6.11 Expenses................................................... I-34
Section 6.12 Listing Application........................................ I-35
Section 6.13 Supplemental Disclosure.................................... I-35
Section 6.14 Purchase Plan.............................................. I-35
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER.................................. I-35
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger.................................................... I-35
Section 7.2 Conditions to Obligation of Parent and the Purchaser to
Effect the Merger......................................... I-36
Section 7.3 Conditions to Obligation of the Company to Effect the
Merger.................................................... I-38
ARTICLE VIII
TERMINATION............................................................... I-39
Section 8.1 Termination................................................ I-39
Section 8.2 Effect of Termination...................................... I-40
</TABLE>
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ARTICLE IX
GENERAL PROVISIONS......................................................... I-41
Section 9.1 Amendment and Modification.................................. I-41
Section 9.2 Waiver...................................................... I-41
Section 9.3 Survivability; Investigations .............................. I-41
Section 9.4 Notices .................................................... I-42
Section 9.5 Descriptive Headings; Interpretation........................ I-43
Section 9.6 Entire Agreement............................................ I-43
Section 9.7 Governing Law............................................... I-43
Section 9.8 Enforcement ................................................ I-44
Section 9.9 Counterparts................................................ I-44
Section 9.10 Assignment; Third-Party Beneficiaries....................... I-44
</TABLE>
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Exhibit A Form of Stock Voting Agreement................................ Omitted
Exhibit B Form of Affiliate Letter...................................... Omitted
</TABLE>
I-iii
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 4, 1997 (this
"Agreement"), by and among Tyson Foods, Inc., a Delaware corporation
("Parent"), HFI Acquisition Sub Inc., a Delaware corporation and newly formed,
wholly owned subsidiary of Parent (the "Purchaser"), and Hudson Foods, Inc., a
Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of the Parent and the Company have each
approved and deem it advisable and in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to
the conditions of this Agreement; and
WHEREAS, it is intended that the transaction be accomplished by a merger of
the Company with and into the Purchaser, with the Purchaser continuing as the
surviving corporation, (the "Merger"); and
WHEREAS, as a condition and an inducement to Parent and the Purchaser
entering into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, Parent is
entering into a Stock Voting Agreement with a stockholder of the Company, who
has an aggregate of approximately 65% of the voting power of the outstanding
shares of Company Common Stock (as hereinafter defined), in the form of
Exhibit A hereto (the "Stock Voting Agreement"); and
WHEREAS, the Board of Directors of the Company has approved the transactions
contemplated by this Agreement and the Stock Voting Agreement in accordance
with the provisions of Sections 203 and 251 of the General Corporation Law of
the State of Delaware (the "DGCL"), and has resolved, subject to the terms of
this Agreement, to recommend the approval of the Merger by its stockholders;
and
WHEREAS, the Board of Directors of the Purchaser has unanimously approved
the transactions contemplated by this Agreement and has unanimously resolved,
subject to the terms of this Agreement, to recommend the approval of the
Merger by Parent, its sole stockholder; and
WHEREAS, the Board of Directors of Parent has approved the transactions
contemplated hereby as sole stockholder of the Purchaser; and
WHEREAS, the parties hereto intend that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and that this Agreement shall be, and
is hereby, adopted as a plan of reorganization for purposes of Section 368 of
the Code; and
WHEREAS, this Agreement shall be submitted to the stockholders of the
Company for their approval.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
contained in this Agreement, and in accordance with the DGCL, at the Effective
Time (as hereinafter defined), the Company shall be merged with and into the
Purchaser, the separate corporate existence of the Company shall thereupon
cease, and the Purchaser shall continue as the surviving corporation
(sometimes hereinafter referred to as the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Delaware. In
accordance with Section 259 of the DGCL, all of the rights, privileges,
powers, immunities, purposes and franchises of the Purchaser and the Company
shall vest in the Surviving Corporation and all of the debts, liabilities,
obligations and duties of the
I-1
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Purchaser and the Company shall become the debts, liabilities, obligations and
duties of the Surviving Corporation.
Section 1.2 Closing. Subject to the terms and conditions of this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom, 919
Third Avenue, New York, New York, at 10:00 a.m., local time, as promptly as
practicable after all of the conditions set forth in Article VII are satisfied
or waived or on such other date and at such other time and place as Parent and
the Company shall agree (the date on which the Closing actually occurs being
referred to herein as the "Closing Date").
Section 1.3 Effective Time. The Merger shall become effective at the time of
filing of, or at such later time specified in, a properly executed certificate
of merger (the "Certificate of Merger"), in the form required by and executed
in accordance with the DGCL, filed with the Secretary of State of the State of
Delaware, in accordance with the provisions of Section 251 of the DGCL. Such
filing shall be made contemporaneously with, or immediately after, the
Closing. When used in this Agreement, the term "Effective Time" shall mean the
date and time at which the Merger shall become effective.
Section 1.4 Certificate of Incorporation and By-Laws. From and after the
Effective Time, the Certificate of Incorporation of the Purchaser as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended in
accordance with Applicable Law (as hereinafter defined); provided that Article
I of such Certificate of Amendment shall be amended to change the name of the
Surviving Corporation to "Hudson Foods, Inc." From and after the Effective
Time, the By-Laws of the Purchaser in effect immediately prior to the
Effective Time shall be the By-Laws of the Surviving Corporation until
thereafter amended in accordance with Applicable Law.
Section 1.5 Directors and Officers. From and after the Effective Time, the
directors of the Purchaser immediately prior to the Effective Time shall
become the directors of the Surviving Corporation and shall hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation or By-Laws of the Surviving Corporation or as otherwise provided
by law. The officers of the Purchaser at the Effective Time shall become the
officers of the Surviving Corporation and shall hold office from the Effective
Time until their respective successors are duly elected or appointed and
qualified in the manner provided in the Certificate of Incorporation or By-
Laws of the Surviving Corporation or as otherwise provided by law.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of any shares of
Company Common Stock (as defined herein) or any shares of capital stock of the
Purchaser:
(a) Each share of Class A Common Stock, par value $.01 per share ("Class
A Common Stock"), and each share of Class B Common Stock, par value $.01
per share ("Class B Common Stock"), in each case, of the Company (together,
Class A Common Stock and Class B Common Stock, "Company Common Stock" or
"Shares") issued and outstanding immediately prior to the Effective Time
(other than Shares to be cancelled pursuant to Section 2.1(c) hereof and
Shares which are held by stockholders exercising appraisal rights under
Section 262 of the DGCL) shall be converted into the right to receive (i)
$8.40 in cash, without interest thereon, and (ii) six-tenths (0.6) of a
validly issued, fully paid and nonassessable share of Class A Common Stock,
par value $.10 per share ("Parent Common Stock"), of Parent (collectively,
the "Per Share Merger Consideration").
I-2
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(b) Each share of common stock, par value $.01, of the Purchaser
("Purchaser Common Stock") issued and outstanding immediately prior to the
Effective Time shall be converted into one duly issued, validly authorized,
fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
(c) All Shares that are owned by the Company as treasury stock shall
automatically be cancelled and retired and shall cease to exist and no
consideration shall be delivered or deliverable in exchange therefor.
(d) All Shares converted pursuant to Section 2.1(a) shall no longer be
outstanding and shall automatically be cancelled and retired and shall
cease to exist and each holder of a certificate which immediately prior to
the Effective Time represented such outstanding Shares (the "Certificates")
shall cease to have any rights as stockholders of the Company, except the
right to receive the consideration set forth in Section 2.1(a) for each
such Share.
(e) If between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares (other than as a result of conversions of
capital stock of Parent permitted by Parent's Certificate of Incorporation,
as in effect on the date hereof), the number of shares of Parent Common
Stock to be issued in the Merger shall be correspondingly adjusted to
reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, upon surrender
of the certificate formerly representing Shares in the manner provided in
Section 2.2 hereof.
Section 2.2 Exchange Procedures.
(a) Parent shall designate a bank or trust company to act as Exchange
Agent hereunder (the "Exchange Agent") reasonably satisfactory to the
Company. Immediately following the Effective Time, Parent shall deliver, in
trust, to the Exchange Agent, for the benefit of the holders of Shares, for
exchange in accordance with this Article II through the Exchange Agent, (i)
cash in an amount sufficient to make any cash payment due under Sections
2.1(a) and 2.4 hereof (the "Exchange Fund") and (ii) certificates
evidencing the shares of Parent Common Stock issuable pursuant to Section
2.1(a) in exchange for outstanding Shares.
(b) As soon as practicable after the Effective Time, Parent shall cause
the Exchange Agent to mail to each holder of record of Certificates (i) a
form of letter of transmittal specifying that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and (ii) instructions
for use in surrendering such Certificates in exchange for the Merger
Consideration (as hereinafter defined). Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) the product of the Per Share
Merger Consideration multiplied by the number of Shares represented by the
surrendered Certificate; provided however, that each holder shall receive
cash in lieu of any fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.4 hereof, and (B) any amounts to
which the holder is entitled pursuant to Section 2.3 hereof after giving
effect to any required tax withholdings and the Certificate so surrendered
shall forthwith be cancelled. Until surrendered as contemplated by this
Section 2.2(b), each Certificate shall be deemed from and after the
Effective Time to represent only the right to receive upon such surrender
the Per Share Merger Consideration. In no event shall the holder of any
such surrendered Certificate be entitled to receive interest on any cash to
be received in the Merger. Neither the Exchange Agent nor any party hereto
shall be liable to a holder of Shares for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
(c) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such person of a bond, in such reasonable and customary amount
as Parent may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange
I-3
<PAGE>
Agent will issue in exchange for such lost, stolen or destroyed Certificate
the Per Share Merger Consideration.
Section 2.3 Dividends; Transfer Taxes; Withholding. No dividends or other
distributions that are declared on or after the Effective Time on Parent
Common Stock, or are payable to the holders of record thereof who became such
on or after the Effective Time, shall be paid to any person entitled by reason
of the Merger to receive certificates representing shares of Parent Common
Stock, and no cash payment in lieu of any fractional share of Parent Common
Stock shall be paid to any person pursuant to Section 2.4 hereof, until such
person shall have surrendered its Certificate(s) as provided in Section 2.2
hereof. Subject to applicable law, there shall be paid to each person
receiving a certificate representing such shares of Parent Common Stock, at
the time of such surrender or as promptly as practicable thereafter, the
amount of any dividends or other distributions theretofore paid with respect
to the shares of Parent Common Stock represented by such certificate and
having a record date on or after the Effective Time but prior to such
surrender and a payment date on or subsequent to such surrender. In no event
shall the person entitled to receive such dividends or other distributions be
entitled to receive interest on such dividends or other distributions. If any
cash or certificate representing shares of Parent Common Stock is to be paid
to or issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange shall
pay to the Exchange Agent any transfer or other taxes required by reason of
the issuance of such certificate representing shares of Parent Common Stock
and the distribution of such cash payment in a name other than that of the
registered holder of the Certificate so surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Parent or the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of Company Common Stock such amounts as Parent or the Exchange
Agent are required to deduct and withhold under the Code or any provision of
state, local or foreign tax law, with respect to the making of such payment.
To the extent that amounts are so withheld by Parent or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Company Common Stock in respect of whom
such deduction and withholding were made by Parent or the Exchange Agent.
Section 2.4 Fractional Shares. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender
for exchange of Certificates, no dividend or distribution with respect to
shares shall be payable on or with respect to any fractional share and such
fractional share interests shall not entitle the owner thereof to vote or to
any other rights of a stockholder of Parent. In lieu of any such fractional
share of Parent Common Stock, Parent shall pay to each former stockholder of
the Company who otherwise would be entitled to receive a fractional share of
Parent Common Stock an amount in cash (without interest) rounded to the
nearest whole cent, determined by multiplying (i) the per share closing price
on the NASDAQ National Market of Parent Common Stock on the date on which the
Effective Time shall occur (or, if Parent Common Stock shall not trade on the
NASDAQ National Market on such date, the first day of trading in Parent Common
Stock thereafter) by (ii) the fractional interest in a share of Parent Common
Stock to which such holder would otherwise be entitled.
Section 2.5 Return of Exchange Fund. Any portion of the Exchange Fund and
certificates representing shares of Parent Common Stock issuable upon
conversion of Company Common Stock pursuant to Section 2.1(a) hereof, together
with any dividends or distributions payable in respect thereof pursuant to
Section 2.3 hereof, which remains undistributed to the former holders of
Company Common Stock for six months after the Effective Time shall be
delivered to Parent, upon its request, and any such former holders who have
not theretofore surrendered to the Exchange Agent their Certificate(s) in
compliance with this Article II shall thereafter look only to Parent for
payment of their claim for such cash and shares of Parent Common Stock, any
cash in lieu of fractional shares of Parent Common Stock and any dividends or
distributions with respect to such shares of Purchaser Common Stock (in each
case, without interest thereon). The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
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Section 2.6 Dissenting Shares. Each outstanding share of Company Common
Stock as to which a written demand for appraisal is filed in accordance with
Section 262 of the DGCL at or prior to the Company Stockholder Meeting and not
withdrawn at or prior to the Company Stockholder Meeting and which is not
voted in favor of the Merger shall not be converted into or represent a right
to receive the Per Share Merger Consideration unless and until the holder
thereof shall have failed to perfect, or shall have effectively withdrawn or
lost the right to appraisal of and payment for each such share of Company
Common Stock under said Section 262, at which time each such share shall be
converted into the right to receive the Merger Consideration. All such shares
of Company Common Stock as to which such a written demand for appraisal is so
filed and not withdrawn at or prior to the Company Stockholder Meeting and
which are not voted in favor of the Merger, except any such shares of Company
Common Stock the holder of which, prior to the Effective Time, shall have
effectively withdrawn or lost such right to appraisal and payment for such
shares of Company Common Stock under said Section 262, are herein referred to
as "Dissenting Shares." The Company shall give Parent prompt notice upon
receipt by the Company of any written demands for appraisal rights, withdrawal
of such demands, and any other written communications delivered to the Company
pursuant to said Section 262, and the Company shall give Parent the
opportunity, to the extent permitted by law, to participate in all
negotiations and proceedings with respect to such demands. Except with the
prior written consent of Parent, the Company shall not voluntarily make any
payment with respect to any demands for appraisal rights and shall not, settle
or offer to settle any such demands. Each holder of Dissenting Shares who
becomes entitled, pursuant to the provisions of said Section 262, to payment
for such shares of Dissenting Shares under the provisions of said Section 262
shall receive payment therefor from the Surviving Corporation and such shares
of Company Common Stock shall be cancelled.
Section 2.7 Options. At the Effective Time, each holder of a then
outstanding option to purchase Shares (collectively "Options") granted by the
Company under the Company's 1985 Stock Option Plan or 1996 Stock Option Plan
(collectively, the "Option Plans"), whether or not then exercisable, shall in
settlement thereof, become entitled to receive for each such Share subject to
any such Option, upon payment of the exercise price under such Option for such
Share, the Per Share Merger Consideration multiplied by the number of Shares
for which such Option is exercisable; provided that, prior to the Effective
Time, Parent and the Company shall use their respective reasonable best
efforts to establish procedures for the cashless exercise of such Options.
Prior to the Effective Time, the Company shall use its best efforts to obtain
all necessary consents or releases from holders of Options, to the extent
required by the terms of the Option Plans, or pursuant to the terms of any
Option granted thereunder, and take all such other lawful action as may be
necessary to give effect to the transactions contemplated by this Section 2.7
(except for such action that may require the approval of the Company's
shareholders). Parent shall register under the Securities Act on a
Registration Statement on Form S-8 or another appropriate form all shares of
Parent Common Stock issuable pursuant to all Options.
Section 2.8 Closing of Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to Parent, they shall be cancelled and exchanged as
provided in this Article II.
Section 2.9 Further Assurances. If, at any time after the Effective Time,
Parent shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company or otherwise, all such deeds, bills of sale, assignments
and assurances and to take and do all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to or under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the purposes of this
Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule (each section of which
qualifies the correspondingly numbered representation and warranty only) of
the Company attached hereto (the "Company Disclosure Schedule"), the Company
represents and warrants to Parent and Purchaser as follows:
Section 3.1 Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to carry on its
business as it is now being conducted. The Company is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease
or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified or in good standing would not have a
material adverse effect, individually or in the aggregate, on the business,
properties, assets, liabilities, condition (financial or otherwise), or
results of operations of the Company and its Subsidiaries taken as a whole, or
the ability of the Company to consummate the Merger and the other transactions
contemplated by this Agreement (a "Company Material Adverse Effect"). As used
in this Agreement, a "Subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which, sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by such person.
Section 3.2 Certificate of Incorporation and By-Laws. True, correct and
complete copies of the Certificates of Incorporation and By-laws or equivalent
organizational documents, each as amended to date, of the Company and each of
its Subsidiaries have been made available to Parent. The Certificates of
Incorporation, By-laws and equivalent organizational documents of the Company
and each of its Subsidiaries are in full force and effect. Neither the Company
nor any of its Subsidiaries is in violation of any provision of its
Certificate of Incorporation, By-laws or equivalent organizational documents.
Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of 40,000,000
shares of Class A Common Stock, and 40,000,000 shares of Class B Common
Stock. As of June 28, 1997, (i) 20,657,331 shares of Company Class A Common
Stock were issued and outstanding and 846,644 shares were held in the
treasury of the Company, (ii) 9,602,372 shares of Company Class B Common
Stock were issued and outstanding and no shares are held in the treasury of
the Company, and (iii) 388,373 shares of Class A Common Stock were reserved
for issuance upon the exercise of outstanding Options. Since June 28, 1997,
the Company has not issued any shares of capital stock, or any security
convertible into or exchangeable for shares of such capital stock,
including any Option, other than the issuance of shares of Class A Common
Stock upon the exercise of Options. All of the issued and outstanding
Shares have been validly issued, and are fully paid and nonassessable, and
are not subject to preemptive rights.
(b) Except as described in Section 3.3(a) hereof: (i) no shares of
capital stock or other equity securities of the Company are authorized,
issued or outstanding, or reserved for issuance, and there are no options,
warrants or other rights (including registration rights), agreements,
arrangements or commitments of any character to which the Company or any of
its Subsidiaries is a party relating to the issued or unissued capital
stock or other equity interests of the Company or any of its Subsidiaries,
requiring the Company or any of its Subsidiaries to grant, issue or sell
any shares of the capital stock or other equity interests of the Company or
any of its Subsidiaries by sale, lease, license or otherwise; (ii) neither
the Company nor its Subsidiaries have any obligations, contingent or
otherwise, to repurchase, redeem or otherwise acquire any shares of the
capital stock or other equity interests of the Company or its Subsidiaries;
(iii) neither the Company nor any of its Subsidiaries, directly or
indirectly, owns, or has agreed to purchase or otherwise acquire, the
capital stock or other equity interests of, or any interest convertible
into or exchangeable or exercisable for such capital stock or such equity
interests, of any corporation, partnership, joint venture or other entity
which
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would be material in value to the Company; and (iv) there are no voting
trusts, proxies or other agreements or understandings to or by which the
Company or any of its Subsidiaries is a party or is bound with respect to
the voting of any shares of capital stock or other equity interests of the
Company or any of its Subsidiaries.
Section 3.4 Company Subsidiaries. The Company Disclosure Schedule sets forth
a list of each material Subsidiary of the Company. Each Subsidiary of the
Company is a corporation, partnership or other entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each Subsidiary of the Company has all
requisite corporate power and authority to carry on its business as it is now
being conducted. Each Subsidiary of the Company is duly qualified as a foreign
corporation or organization authorized to do business, and is in good
standing, in each jurisdiction where the character of its properties owned or
held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified or in good standing
would not, individually or in the aggregate, have a Company Material Adverse
Effect. All of the outstanding shares of capital stock or other ownership
interests in each of the Company's Subsidiaries have been validly issued, and
are fully paid, nonassessable and are owned by the Company or another
Subsidiary of the Company free and clear of all pledges, claims, options,
liens, charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"), and are not subject to preemptive rights.
Section 3.5 Corporate Authority.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and, subject to the approval of the
Merger by the Company's stockholders, to consummate the transactions
contemplated hereby. The execution and delivery by the Company of this
Agreement, and the consummation by the Company of the transactions
contemplated hereby, have been duly authorized by its Board of Directors
and, except for the approval of the Merger by the Company's stockholders,
no other corporate action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and
the consummation by it of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding agreement of the Company and is enforceable
against the Company in accordance with its terms, except that (i) such
enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may
be subject to equitable defense, and to the discretion of the court before
which any proceeding therefor may be brought. The preparation of the Proxy
Statement (as hereinafter defined) to be filed with the SEC has been duly
authorized by the Board of Directors of the Company.
(b) Prior to execution and delivery of this Agreement, the Board of
Directors of the Company (at a meeting duly called and held) has (i)
approved this Agreement, the Stock Voting Agreement and the Merger and the
other transactions contemplated hereby or thereby, and such approval is
sufficient to render inapplicable to the Merger and all other transactions
contemplated hereby or thereby the provisions of Section 203 of the DGCL,
(ii) determined that the transactions contemplated hereby are fair to and
in the best interests of the holders of Company Common Stock and (iii)
except as may be required to comply with its fiduciary duties under
Applicable Law (as hereinafter defined) as advised by counsel, determined
to recommend this Agreement, the Merger and the other transactions
contemplated hereby to the Company's stockholders for approval and adoption
at the stockholders meeting contemplated by Section 6.5(a) hereof. The
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock, voting together as a single class, is the only vote
of the holders of any class or series of the Company's capital stock
necessary to approve the Merger or the transactions contemplated hereby.
The Company has taken all steps necessary to approve and irrevocably exempt
the transactions contemplated by this Agreement and the Stock Voting
Agreement from any applicable takeover statute of any jurisdiction and from
any applicable charter, organizational document or other agreement,
arrangement or understanding to which the Company is a party containing any
change of control, "antitakeover" or similar provision.
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Section 3.6 Compliance with Applicable Law. (i) Each of the Company and its
Subsidiaries holds, and is in compliance with the terms of, all permits,
licenses, exemptions, orders and approvals of all Governmental Entities (as
hereinafter defined) necessary for the conduct of their respective businesses
("Company Permits"), except for failures to hold or to comply with such
permits, licenses, exemptions, orders and approvals which would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect; (ii) with respect to the Company Permits, no action
or proceeding is pending or, to the knowledge of the Company, threatened, and,
to the knowledge of the Company, no fact exists or event has occurred that
would, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect; (iii) the business of the Company and its
Subsidiaries is being conducted in compliance with all applicable laws,
ordinances, regulations, judgments, decrees or orders ("Applicable Law") of
any federal, state, local, foreign or multinational court, arbitral tribunal,
administrative agency or commission or other governmental or regulatory
authority or administrative agency or commission (a "Governmental Entity"),
except for violations or failures to so comply that would not, individually,
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect; and (iv) to the knowledge of the Company, no investigation or review
by any Governmental Entity with respect to the Company or its Subsidiaries is
pending or threatened, other than, in each case, those which would not,
individually, or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 3.7 Non-Contravention. The execution and delivery by the Company of
this Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof will not, (i) result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under any loan, guarantee
of indebtedness or credit agreement, note, bond, mortgage, indenture, lease,
agreement, contract, instrument, permit, concession, franchise, right or
license (any of the foregoing, a "Contract") binding upon the Company or any
of its Subsidiaries, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries, (ii) conflict
with or result in any violation of any provision of the Certificate of
Incorporation or By-Laws or other equivalent organizational document, in each
case as amended, of the Company or any of its Subsidiaries, or (iii) conflict
with or violate any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its Subsidiaries or any of
their respective properties or assets, other than, in the case of clauses (i)
and (iii), any such violation, conflict, default, right, loss or Lien that,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
Section 3.8 Government Approvals; Required Consents. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement
by the Company or is necessary for the consummation of the transactions
contemplated hereby (including, without limitation, the Merger) except: (i) in
connection, or in compliance, with the provisions of the Securities Act of
1933, as amended (the "Securities Act"), the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and any applicable state securities or "blue
sky" law, (ii) the filing of a notification under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (iii) the
filing of a Certificate of Merger with the Secretary of State of the State of
Delaware, (iv) such consents, approvals, authorizations, permits, filings and
notifications listed in the Company Disclosure Schedule and (v) such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to obtain or make would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 3.9 SEC Documents and Other Reports.
(a) The Company has filed all documents required to be filed prior to the
date hereof by it and its Subsidiaries with the Securities and Exchange
Commission (the "SEC") since September 30, 1995 (the "Company SEC
Documents"). As of their respective dates, or if amended, as of the date of
the last such amendment, the Company SEC Documents complied, and all
documents required to be filed by the Company with the SEC after the date
hereof and prior to the Effective Time (the "Subsequent Company
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SEC Documents") will comply, in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and the
applicable rules and regulations promulgated thereunder and none of the
Company SEC Documents contained, and the Subsequent Company SEC Documents
will not contain, any untrue statement of a material fact or omitted, or
will omit, to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, or are to be made, not misleading. The
consolidated financial statements of the Company included in the Company
SEC Documents fairly present, and included in the Subsequent Company SEC
Documents will fairly present, the consolidated financial position of the
Company and its consolidated Subsidiaries, as at the respective dates
thereof and the consolidated results of their operations and their
consolidated cash flows for the respective periods then ended (subject, in
the case of the unaudited statements, to normal year-end audit adjustments
and to any other adjustments described therein) in conformity with United
States generally accepted accounting principles ("GAAP") (except, in the
case of the unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto). Since September 30, 1995, the
Company has not made any change in the accounting practices or policies
applied in the preparation of its financial statements, except as may be
required by GAAP.
Section 3.10 Absence of Certain Changes or Events. Except as set forth in
the Company SEC Documents, since September 28, 1996, the Company and its
Subsidiaries have conducted their respective businesses and operations only in
the ordinary and usual course consistent with past practice and, except as set
forth in Section 3.10 of the Company Disclosure Schedule, there has not
occurred (i) any event, condition or occurrence having or that would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect; (ii) any damage, destruction or loss (whet her or not
covered by insurance) having or which would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect; (iii) any
declaration, setting aside or payment of any dividend or distribution of any
kind by the Company on any class of its capital stock (other than regular
quarterly dividends of not more than $.02 per share of Class A Common Stock
and $.0167 per share of Class B Common Stock); or (iv) any event during the
period from September 28, 1996 through the date of this Agreement that, if
taken during the period from the date of this Agreement through the Effective
Time, would constitute a breach of Section 5.1 hereof.
Section 3.11 Actions and Proceedings. Except as set forth in the Company SEC
Documents, there are no outstanding orders, judgments, injunctions, awards or
decrees of any Governmental Entity against the Company or any of its
Subsidiaries, any of their properties, assets or business, or, to the
knowledge of the Company, any of the Company's or its Subsidiaries' current or
former directors or officers or any other person whom the Company or any of
its Subsidiaries has agreed to indemnify, as such, that would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. Except as set forth in the Company SEC Documents, there are no
actions, suits or legal, administrative, regulatory or arbitration proceedings
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, any of their properties, assets or business, or, to
the knowledge of the Company, any of the Company's or its Subsidiaries'
current or former directors or officers or any other person whom the Company
or any of its Subsidiaries has agreed to indemnify, as such, that relates to
the transactions contemplated by this Agreement or would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 3.12 Absence of Undisclosed Liabilities. Except as set forth in the
Company SEC Documents and for liabilities or obligations which are accrued or
reserved against on the balance sheet (or reflected in the notes thereto)
included in the Company's Annual Report on Form 10-K for the year ended
September 28, 1996 (the "Company 10-K"), neither the Company nor any of its
Subsidiaries has any material liabilities or obligations (including, without
limitation, Tax (as hereinafter defined) liabilities) (whether absolute,
accrued, contingent or otherwise), other than liabilities or obligations
incurred in the ordinary course of business since September 28, 1996 or
liabilities under this Agreement.
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Section 3.13 Contracts. All of the material contracts of the Company and its
Subsidiaries that are required to be described in the Company SEC Documents or
to be filed as exhibits thereto have been described or filed as required.
Neither the Company or any of its Subsidiaries nor, to the knowledge of the
Company, any other party is in breach of or default under any such contract
which is currently in effect, except for such breaches and defaults which are
described in the Company Disclosure Schedule or which would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. Except as set forth in the Company SEC Documents, neither the Company
nor any of its Subsidiaries is a party to or bound by any non-competition
agreement or any other agreement or obligation which purports to limit in any
material respect the manner in which, or the localities in which, the Company
or any such Subsidiary is entitled to conduct all or any material portion of
the business of the Company and its Subsidiaries taken as a whole.
Section 3.14 Taxes. (i) The Company and each of its Subsidiaries has filed
all federal, and all material state, local, foreign and provincial, tax
returns, declarations, statements, reports, schedules, bonus and information
returns and any amendments to any of the preceding ("Tax Returns") required to
have been filed on or prior to the date hereof, or appropriate extensions
therefor have been properly obtained, and such Tax Returns are true, correct
and complete, except to the extent that any failure to be true, correct and
complete would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect; (ii) all federal, state, local and
foreign taxes, and other assessments of a similar nature (whether imposed
directly or through withholding) including any interest, additions to tax or
penalties applicable thereto ("Taxes") shown to be due on such Tax Returns
have been timely paid or extensions for payment have been properly obtained,
or such Taxes are being timely and properly contested; (iii) the Company and
each of its Subsidiaries have complied in all material respects with all rules
and regulations relating to the withholding of Taxes, except to the extent any
failure to comply with such rules and regulations would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect; (iv) neither the Company nor any of its Subsidiaries has waived any
statute of limitations in respect of its Taxes or Tax Returns; (v) any Tax
Returns of the Company and its Subsidiaries relating to federal and Material
State (as hereinafter defined) income Taxes have been examined by the Internal
Revenue Service ("IRS") or the appropriate taxing authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required to
be filed has expired; (vi) no issues that have been raised in writing by a
taxing authority in connection with the examination of any federal or Material
State Tax Returns of the Company and its Subsidiaries are currently pending
except those which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect; (vii) all deficiencies
asserted or assessments made as a result of any examination of such Tax
Returns by any taxing authority have been paid in full or are being timely and
properly contested; (viii) neither the Company nor any of its Subsidiaries
have any liability for Taxes of any person other than the Company and its
Subsidiaries under (a) Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law) or (b) any express or implied
agreement; and (ix) neither the Company nor any of its Subsidiaries have been
a member of any affiliated group within the meaning of Section 1504(a) of the
Code other than the affiliated group of which the Company is the common parent
corporation. For purposes of this Section 3.14, "Material State" means any
state for which the average allocation percentage for the Company and its
Subsidiaries for the past three years exceeds ten percent (10%).
Section 3.15 Intellectual Property. The Company and its Subsidiaries own or
have a valid license to use all inventories, patents, trademarks, service
marks, trade names, copyrights, trade secrets, software, mailing lists and
other intellectual property rights (collectively, the "Company Intellectual
Property") necessary to carry on their respective businesses as currently
conducted; and neither the Company nor any such Subsidiary has received any
notice of infringement of or conflict with, and, to the Company's knowledge,
there are no infringements of or conflicts with, the rights of others with
respect to the use of any of the Company Intellectual Property that, in either
such case, has had or would reasonable be expected to have, individually or in
the aggregate, a Company Material Adverse Effect or result in material adverse
publicity for the Company.
Section 3.16 Information in Disclosure Documents and Registration
Statement. None of the information supplied or to be supplied by the Company
for inclusion in (i) the Registration Statement on Form S-4 to be
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filed with the SEC under the Securities Act for the purpose of registering the
shares of Parent Common Stock to be issued in connection with the Merger (the
"Registration Statement") or (ii) the joint proxy statement/prospectus to be
distributed in connection with the Company's meeting of stockholders to vote
upon this Agreement (the "Proxy Statement") will, in the case of the
Registration Statement, at the time it becomes effective or, in the case of
the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the initial mailing of the Proxy Statement and any amendments or
supplements thereto, and at the time of the Company Stockholder Meeting (as
defined herein) to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The
Registration Statement, as of its effective date, will comply (with respect to
information relating to the Company) as to form in all material respects with
the requirements of the Securities Act, and the rules and regulations
promulgated thereunder, and as of the date of its initial mailing and as of
the date of the Company's stockholders' meeting, the Proxy Statement will
comply (with respect to information relating to the Company) as to form in all
material respects with the applicable requirements of the Exchange Act, and
the rules and regulations promulgated thereunder. Notwithstanding the
foregoing, the Company makes no representation with respect to any statement
in the foregoing documents based upon information supplied by Parent or the
Purchaser for inclusion therein.
Section 3.17 Employee Benefit Plans; ERISA.
(a) The Company Disclosure Schedule sets forth the name of each Company
Plan (as defined below) and of each bonus, deferred compensation (together
with a list of participants therein), incentive compensation, salary
continuation (together with a list of participants therein), stock
purchase, stock option, employment, severance, termination, consulting or
supplemental retirement plan or agreement, true copies of which have
heretofore been made available or will be made available to Parent. Each
Company Plan complies in all material respects with the Employee Retirement
Securities Act of 1974, as amended ("ERISA"), the Code and all other
applicable laws and administrative or governmental rules and regulations.
No "reportable event" (within the meaning of Section 4043 of ERISA) has
occurred with respect to any Company Plan for which the 30-day notice
requirement has not been waived (other than with respect to the
transactions contemplated by this Agreement); neither the Company nor any
of its ERISA Affiliates has withdrawn from any Company Plan under Section
4063 of ERISA or Company Multiemployer Plan (as hereinafter defined) under
Section 4203 or 4205 of ERISA or has taken, or is currently considering
taking, any action to do so; and no action has been taken, or is currently
being considered, to terminate any Company Plan subject to Title IV of
ERISA. No Company Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived. There are no actions, suits or claims pending or, to
the knowledge of the Company, threatened (other than routine claims for
benefits) with respect to any Company Plan which would reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect. Neither the Company nor any of its ERISA Affiliates has
incurred or would reasonably be expected to incur any material liability
under or pursuant to Title IV of ERISA that has not been satisfied in full.
To the knowledge of the Company, no non-exempt prohibited transactions
described in Section 406 of ERISA or Section 4975 of the Code have
occurred. All Company Plans that are intended to be qualified under Section
401(a) of the Code have received a favorable determination letter as to
such qualification from the Internal Revenue Service, and no event has
occurred, either by reason of any action or failure to act, which could be
expected to cause the loss of any such qualification, and the Company is
not aware of any reason why any Company Plan is not so qualified in
operation. Neither the Company nor any of its ERISA Affiliates knows or has
been notified by any Company Multiemployer Plan that such Company
Multiemployer Plan is currently in reorganization or insolvency under and
within the meaning of Section 4241 or 4245 of ERISA or that such Company
Multiemployer Plan intends to terminate or has been terminated under
Section 4041A of ERISA. As used herein: (i) "Company Plan" means a "pension
plan" (as defined in Section 3(2) of ERISA, other than a Company
Multiemployer Plan) or a "welfare plan" (as defined in Section 3(1) of
ERISA) established or maintained by the Company or any of its ERISA
Affiliates or to which the Company or any of its ERISA
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Affiliates has contributed in the last six years or otherwise may have any
liability; and (ii) "Company Multiemployer Plan" means a "multiemployer
plan" (as defined in Section 4001(a)(3) of ERISA) to which the Company or
any of its ERISA Affiliates is or has been obligated to contribute or
otherwise may have any liability.
(b) (i) No amount payable under any Company Plan will fail to be
deductible for federal income tax purposes by virtue of Section 280G of the
Code; and (ii) the consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with any other event
that is reasonably likely to occur, (A) entitle any current or former
director, officer or employee of the Company or any of its ERISA Affiliates
to severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (B) accelerate the time of payment
or vesting, or increase the amount of compensation due any such director,
officer or employee.
Section 3.18 Environmental Matters. Except as set forth in the Company SEC
Documents, neither the Company nor any of the Company Subsidiaries is the
subject of any federal, state, local, foreign or provincial investigation, and
neither the Company nor any of the Company Subsidiaries has received any
notice or claim, or entered into any negotiations or agreements with any
person, relating to any material liability or material remedial action or
potential material liability or material remedial action under any
environmental laws; and there are no pending, or, to the knowledge of the
Company, threatened actions, suits or proceedings against the Company, any of
the Company Subsidiaries or any of their respective properties, assets or
operations asserting any such material liability or seeking any material
remedial action in connection with any environmental laws.
Section 3.19 Labor Matters. Neither the Company nor any of its Subsidiaries
has any labor contracts, collective bargaining agreements or material
employment or consulting agreements with any persons employed by the Company
or any persons otherwise performing services primarily for the Company or any
of its Subsidiaries (the "Company Business Personnel"). There is no unfair
labor practice complaint pending or, to the knowledge of the Company,
threatened, against the Company or any of its Subsidiaries with respect to the
Company Business Personnel which, in either such case, would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. Since September 29, 1996, there has not been any labor strike,
dispute, slowdown or stoppage pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, and neither the
Company nor any of its Subsidiaries has experienced any primary work stoppage
or other labor difficulty involving its employees, in either such case, which
has had or would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 3.20 Affiliate Transactions. Except as set forth in the Company SEC
Documents, there are no material Contracts or other material transactions
between the Company or any of its Subsidiaries, on the one hand, and any (i)
officer or director of the Company or of any of its Subsidiaries, (ii) record
or beneficial owner of five percent or more of any class of the voting
securities of the Company or (iii) affiliate (as such term is defined in Rule
12b-2 promulgated under the Exchange Act) of any such officer, director or
beneficial owner, on the other hand.
Section 3.21 Opinion of Financial Advisor. The Company has received the
written opinion of Donaldson Lufkin & Jenrette Securities Corporation ("DLJ")
to the effect that the consideration to be received in the Merger by the
holders of Company Common Stock is fair to such holders from a financial point
of view. A true, correct and complete copy of the written opinion delivered by
DLJ, which opinion shall be included in the Proxy Statement, has been
delivered to Parent by the Company.
Section 3.22 Brokers. Other than DLJ, no broker, finder or financial advisor
retained by the Company is entitled to any brokerage, finder's or other fee or
commission from the Company in connection with the transactions contemplated
by this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Except as set forth in the disclosure schedule of Parent and the Purchaser
attached hereto (the "Parent Disclosure Schedule") (each section of which
qualifies the correspondingly numbered representation and warranty only),
Parent and the Purchaser, jointly and severally, represent and warrant to the
Company as follows:
Section 4.1 Organization and Good Standing. Each of Parent and the Purchaser
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has the corporate power and authority
to carry on its business as it is now being conducted. Parent is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified or in good standing would not have
a material adverse effect, individually or in the aggregate, on the business,
properties, assets, liabilities, condition (financial or otherwise), or
results of operations of Parent and its Subsidiaries taken as a whole, or the
ability of Parent or the Purchaser to consummate the Merger and the other
transactions contemplated by this Agreement (a "Parent Material Adverse
Effect").
Section 4.2 Certificate of Incorporation and By-Laws. True, correct and
complete copies of the Certificates of Incorporation and By-laws or equivalent
organizational documents, each as amended to date, of Parent and the Purchaser
have been made available to the Company. The Certificates of Incorporation and
By-laws, or equivalent organizational documents, of Parent and each of its
Subsidiaries are in full force and effect. Neither Parent nor any of its
Subsidiaries is in violation of any provision of its Certificate of
Incorporation, By-laws or equivalent organizational documents.
Section 4.3 Capitalization.
(a) The authorized capital stock of Parent consists of (i) 900,000,000
shares of Class A Common Stock, par value $.10 per share, constituting
Parent Common Stock, and (ii) 900,000,000 shares of Class B Common Stock,
par value $.10 per share ("Parent Class B" and, together with Parent Common
Stock, "Parent Capital Stock"). As of June 28, 1997, (i) 112,807,465 shares
of Parent Common Stock were issued and outstanding, 6,735,000 shares were
held in the treasury of Parent and 102,670,113 shares were reserved for
issuance upon conversion of shares of Parent Class B, and (ii) 102,670,113
shares of Parent Class B were issued and outstanding and no shares were
held in the treasury of Parent. Since June 28, 1997, Parent has not issued
any shares of its capital stock, or any security convertible into or
exchangeable for shares of such capital stock, other than (i) upon the
exercise of stock options or upon conversion of shares of Parent Class B as
permitted under Parent's Certificate of Incorporation and (ii) 1,058,524
shares of Parent Common Stock in connection with the acquisition of
Mallard's Food Products, Inc. The authorized capital stock of the Purchaser
consists of 1,000 shares of Common Stock, par value $.01 per share,
constituting the Purchaser Common Stock. As of the date hereof, 1,000
shares of Purchaser Common Stock are issued and outstanding, all of which
are owned by Parent, and no shares of Purchaser Common Stock are held in
the treasury of Purchaser. All of the issued and outstanding shares of
Parent Common Stock and Purchaser Common Stock have been validly issued,
and are fully paid and nonassessable, and are not subject to preemptive
rights. Each share of Parent Common Stock to be issued in connection with
the Merger has been duly authorized and, when so issued, will be fully paid
and nonassessable, and will not be subject to preemptive rights.
(b) Except as described in Section 4.3(a) hereof: (i) no shares of
capital stock or other equity securities of Parent or Purchaser are
authorized, issued or outstanding, or reserved for issuance and there are
no options, warrants or other rights (including registration rights),
agreements, arrangements or commitments of any character to which Parent or
Purchaser or any of their respective Subsidiaries is a party relating to
the issued or unissued capital stock or other equity interests of Parent or
Purchaser, requiring Parent or Purchaser to grant, issue or sell any shares
of the capital stock or other equity interests of Parent or Purchaser or
any of their respective Subsidiaries by sale, lease, license or otherwise;
(ii) neither Parent nor
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any of its Subsidiaries have any obligation, contingent or otherwise, to
repurchase, redeem or otherwise acquire any shares of the capital stock or
other equity interests of Parent or Purchaser or any of their respective
Subsidiaries; (iii) none of Parent or Purchaser or any of their respective
Subsidiaries, directly or indirectly, owns, or has agreed to purchase or
otherwise acquire, the capital stock or other equity interests of, or any
interest convertible into or exchangeable or exercisable for such capital
stock or such equity interests, of any corporation, partnership, joint
venture or other entity which would be material in value to Parent; and
(iv) there are no voting trusts, proxies or other agreements or
understandings to or by which Parent or Purchaser or any of their
respective Subsidiaries is a party or is bound with respect to the voting
of any shares of capital stock or other equity interests of Parent or
Purchaser or any of their respective Subsidiaries.
Section 4.4 Parent Subsidiaries. Each Subsidiary of Parent is a corporation,
partnership or other entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization.
Each Subsidiary of Parent has all requisite corporate power and authority to
carry on its business as it is now being conducted. Each Subsidiary of Parent
is duly qualified as a foreign corporation or organization authorized to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure to be so qualified or
in good standing would not, individually or in the aggregate, have a Parent
Material Adverse Effect. All of the outstanding shares of capital stock or
other ownership interests in each of the Parent's Subsidiaries have been
validly issued, and are fully paid, nonassessable and are owned by Parent or
another Subsidiary of Parent free and clear of all Liens, and are not subject
to preemptive rights.
Section 4.5 Corporate Authority.
(a) Each of Parent and Purchaser has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Purchaser and the consummation by Parent and
Purchaser of the transactions contemplated hereby have been duly authorized
by its respective Board of Directors and no other corporate action on the
part of Parent or Purchaser is necessary to authorize the execution and
delivery by Parent and Purchaser of this Agreement and the consummation by
it of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and Purchaser and constitutes a valid and
binding agreement of Parent and Purchaser and is enforceable against Parent
and Purchaser in accordance with its terms, except that (i) such
enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may
be subject to equitable defense, and to the discretion of the court before
which any proceeding therefor may be brought. The preparation of the Proxy
Statement and the Registration Statement to be filed with the SEC has been
duly authorized by the Board of Directors of Parent.
(b) Prior to the execution and delivery of this Agreement, the Board of
Directors of each of Parent and Purchaser (at a meeting duly called and
held) has unanimously (i) approved this Agreement, the Stock Voting
Agreement, the Merger and the other transactions contemplated hereby, and
(ii) determined that the transactions contemplated hereby are fair to and
in the best interests of the holders of Parent Common Stock.
Section 4.6 Compliance with Applicable Law. (i) Each of Parent and its
Subsidiaries holds, and is in compliance with the terms of, all permits,
licenses, exemptions, orders and approvals of all Governmental Entities
necessary for the conduct of their respective businesses ("Parent Permits"),
except for failures to hold or to comply with such permits, licenses,
exemptions, orders and approvals which would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect,
(ii) with respect to the Parent Permits, no action or proceeding is pending
or, to the knowledge of Parent, threatened and, to the knowledge of Parent, no
fact exists or event has occurred that would, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect,
(iii) the business of Parent and its Subsidiaries is being conducted in
compliance with all Applicable Laws, except for violations or failures to so
comply that would not, individually
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or in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect, and (iv) to the knowledge of Parent, no investigation or review by any
Governmental Entity with respect to Parent or its Subsidiaries is pending or
threatened, other than, in each case, those which would not, individually or
in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect.
Section 4.7 Non-contravention. The execution and delivery by Parent and the
Purchaser of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, (i)
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under any
Contract binding upon Parent or any of its Subsidiaries, or result in the
creation of any Lien upon any of the properties or assets of Parent or any of
its Subsidiaries, (ii) conflict with or result in any violation of any
provision of the Certificate of Incorporation or By-Laws or other equivalent
organizational document, in each case as amended, of Parent or any of its
Subsidiaries, or (iii) conflict with or violate any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other than, in
the case of clauses (i) and (iii), any such violation, conflict, default,
right, loss or Lien that, individually or in the aggregate, would not
reasonably be expected to have a Parent Material Adverse Effect.
Section 4.8 Government Approvals; Required Consents. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Parent or is
necessary for the consummation of the transactions contemplated hereby
(including, without limitation, the Merger) except: (i) in connection, or in
compliance, with the provisions of the Securities Act, the Exchange Act, and
any applicable state securities or "blue sky" law, (ii) the filing of a
notification under the HSR Act, (iii) the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware, (iv) such consents,
approvals, authorizations, permits, filings and notifications listed in the
Parent Disclosure Schedule and (v) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which
to obtain or make would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
Section 4.9 SEC Documents and Other Reports. Parent has filed all documents
required to be filed prior to the date hereof by it and its Subsidiaries with
the SEC since September 30, 1995 (the "Parent SEC Documents"). As of their
respective dates, or if amended as of the date of the last such amendment, the
Parent SEC Documents complied, and all documents required to be filed by
Parent with the SEC after the date hereof and prior to the Effective Time
("Subsequent Parent SEC Documents") will comply, in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may
be, and the applicable rules and regulations promulgated thereunder and none
of the Parent SEC Documents contained, and the Subsequent Parent SEC Documents
will not contain, any untrue statement of a material fact or omitted, or will
omit, to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, or are to be made, not misleading. The consolidated financial
statements of Parent included in the Parent SEC Documents fairly present, and
included in the Subsequent Parent SEC Documents will fairly present, the
consolidated financial position of Parent and its consolidated Subsidiaries,
as at the respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the respective periods then
ended (subject, in the case of the unaudited statements, to normal year-end
audit adjustments and to any other adjustments described therein) in
conformity with GAAP (except, in the case of the unaudited statements) applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto). Since September 30, 1995, Parent has not
made any change in the accounting practices or policies applied in the
preparation of its financial statements, except as may be required by GAAP.
Section 4.10 Absence of Certain Changes or Events. Except as set forth in
the Parent SEC Documents, since September 28, 1996, Parent and its
Subsidiaries have conducted their respective businesses and operations only in
the ordinary and usual course consistent with past practice and there has not
occurred (i) any event, condition or occurrence having or that would
reasonably be expected to have, individually or in the aggregate, a
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Parent Material Adverse Effect; (ii) any damage, destruction or loss (whether
or not covered by insurance) having or which would reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect; or
(iii) any declaration, setting aside or payment of any dividend or
distribution of any kind by Parent or the Purchaser on any class of its
capital stock.
Section 4.11 Actions and Proceedings. Except as set forth in the Parent SEC
Documents, there are no outstanding orders, judgments, injunctions, awards or
decrees of any Governmental Entity against Parent or any of its Subsidiaries,
any of their properties, assets or business, or, to the knowledge of Parent,
any of Parent's or its Subsidiaries' current or former directors or officers
or any other person whom Parent or any of its Subsidiaries has agreed to
indemnify, as such, that would reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect. Except as set forth in the
Parent SEC Documents, there are no actions, suits or legal, administrative,
regulatory or arbitration proceedings pending or, to the knowledge of Parent,
threatened against Parent or any of its Subsidiaries, any of their properties,
assets or business, or, to the knowledge of Parent, any of Parent's or its
Subsidiaries' current or former directors or officers or any other person whom
Parent or any of its Subsidiaries has agreed to indemnify, as such, that
relates to transactions contemplated by this Agreement or would reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
Section 4.12 Absence of Undisclosed Liabilities. Except as set forth in the
Parent SEC Documents and for liabilities or obligations which are accrued or
reserved against on the balance sheet (or reflected in the notes thereto)
included in Parent's Annual Report on Form 10-K for the year ended September
28, 1996, neither Parent nor any of its Subsidiaries has any material
liabilities or obligations (including, without limitation, Tax liabilities)
(whether absolute, accrued, contingent or otherwise), other than liabilities
or obligations incurred in the ordinary course of business since September 28,
1996 or liabilities under this Agreement.
Section 4.13 Information in Disclosure Documents and Registration
Statement. None of the information supplied or to be supplied by Parent or the
Purchaser for inclusion in (i) the Registration Statement or (ii) the Proxy
Statement will, in the case of the Registration Statement, at the time it
becomes effective or, in the case of the Proxy Statement or any amendments
thereof or supplements thereto, at the time of the initial mailing of the
Proxy Statement and any amendments or supplements thereto, and at the time of
the meeting of stockholders of Parent and the Company to be held in connection
with the Merger, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The Registration Statement, as of its effective
date, will comply (with respect to information relating to Parent and the
Purchaser) as to form in all material respects with the requirements of the
Securities Act, and the rules and regulations promulgated thereunder, and as
of the date of its initial mailing and as of the date of the Company
Stockholders Meeting, the Proxy Statement will comply (with respect to
information relating to Parent and the Purchaser) as to form in all material
respects with the applicable requirements of the Exchange Act, and the rules
and regulations promulgated thereunder. Notwithstanding the foregoing, neither
Parent nor the Purchaser makes any representation with respect to any
statement in the foregoing documents based upon information supplied by the
Company for inclusion therein.
Section 4.14 Affiliate Transactions. Except as set forth in the Parent SEC
Documents, there are no material Contracts or other material transactions
between Parent or any of its Subsidiaries, on the one hand, and any (i)
officer or director of Parent or of any of its Subsidiaries, (ii) record or
beneficial owner of five percent or more of any class of the voting securities
of Parent or (iii) affiliate (as such term is defined in Regulation 12b-2
promulgated under the Exchange Act) of any such officer, director or
beneficial owner, on the other hand.
Section 4.15 Taxes. (i) Parent and each of its Subsidiaries has filed all
Tax Returns required to have been filed on or prior to the date hereof, or
appropriate extensions therefor have been properly obtained, and such Tax
Returns are true, correct and complete, except to the extent that any failure
to be true, correct and complete would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect; (ii) all
Taxes shown to be due on such Tax Returns have been timely paid or extensions
for payment have been properly
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obtained, or such Taxes are being timely and properly contested; (iii) Parent
and each of its Subsidiaries have complied in all material respects with all
rules and regulations relating to the withholding of Taxes, except to the
extent that any failure to comply with such rules would not, individually or
in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect; (iv) neither Parent nor any of its Subsidiaries has waived any statute
of limitations in respect of its Taxes or Tax Returns; (v) any Tax returns of
Parent and its Subsidiaries relating to federal and Material State (as defined
below) income Taxes have been examined by the IRS or the appropriate state
taxing authority or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired; (vi) no issues that
have been raised in writing by a taxing authority in connection with the
examination of any federal or Material State income Tax Returns of Parent and
its Subsidiaries are currently pending except those which would not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect; (vii) all deficiencies asserted or assessments made
as a result of any examination of such Tax Returns by any taxing authority
have been paid in full or are being timely and properly contested; (viii)
neither Parent nor any of its Subsidiaries have any liability for Taxes of any
person other than Parent and its Subsidiaries under (a) Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or foreign law) or
(b) any express or implied agreement; and (ix) neither Parent nor any of its
Subsidiaries have been a member of any affiliated group within the meaning of
Section 1504(a) of the Code other than the affiliated group of which Parent is
the common parent corporation. For purposes of this Section 4.15, "Material
State" means any state for which the average allocation percentage for Parent
and its Subsidiaries for the past three (3) years exceeds ten percent (10%).
Section 4.16 Operations of Purchaser. The Purchaser has been formed solely
for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations only
as contemplated hereby.
Section 4.17 Brokers. Other than Stephens Inc., no broker, finder or
financial adviser retained by Parent and the Purchaser is entitled to any
brokerage, finder's or other fee or commission from Parent and the Purchaser
in connection with the transactions contemplated by this Agreement.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business by the Company Pending the Merger. Prior to
the Effective Time, unless Parent shall otherwise agree in writing (which
agreement shall not be unreasonably withheld), or as set forth in Section 5.1
of the Company Disclosure Schedule, the Company shall conduct, and cause each
of its Subsidiaries to conduct, its business only in the ordinary and usual
course consistent with past practice, and the Company shall use, and cause
each of its Subsidiaries to use, its reasonable best efforts to preserve
intact the present business organization, keep available the services of its
present officers and key employees, and preserve their existing business
relationships. Without limiting the generality of the foregoing, unless Parent
shall otherwise agree in writing (which agreement shall not be unreasonably
withheld), or as set forth in Section 5.1 of the Company Disclosure Schedule,
prior to the Effective Time the Company shall not, nor shall it permit any of
its Subsidiaries to:
(a) (i) amend its Certificate of Incorporation, as amended, By-Laws or
other organizational documents, (ii) split, combine or reclassify any
shares of its outstanding capital stock, (iii) declare, set aside or pay
any dividend or other distribution payable in cash, stock or property
(other than regular quarterly dividends with record dates and payment dates
substantially consistent with past practice of not more than $.02 per share
of Class A Common Stock and $.0167 per share of Class B Common Stock (it
being the express understanding of Parent and the Company that the
shareholders of the Company shall be entitled to either a dividend on the
Shares or on the shares of Parent Common Stock, but not both, for the
quarter in which the Closing shall occur, and the Board of Directors of the
Company shall not declare any dividend or fix any
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record therefor which would have such effect)), or (iv) directly or
indirectly redeem or otherwise acquire any shares of its capital stock or
shares of the capital stock of any of its Subsidiaries;
(b) authorize for issuance, issue (except upon the exercise of
outstanding stock options or warrants) or sell or agree to issue or sell
any shares of, or rights to acquire or convertible into any shares of, its
capital stock (other than pursuant to the terms of the Company's Employee
Stock Purchase Plan, as amended in accordance with Section 6.14 hereof) or
shares of the capital stock of any of its Subsidiaries (whether through the
issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise);
(c) (i) merge, combine or consolidate with another entity, (ii) acquire
or purchase an equity interest in or a substantial portion of the assets of
another corporation, partnership or other business organization or
otherwise acquire any assets outside the ordinary course of business and
consistent with past practice or otherwise enter into any material
contract, commitment or transaction outside the ordinary course of business
and consistent with past practice or (iii) sell, lease, license, waive,
release, transfer, encumber or otherwise dispose of any of its material
assets outside the ordinary course of business and consistent with past
practice;
(d) (i) incur, assume or prepay any indebtedness, obligations or
liabilities other than in each case in the ordinary course of business and
consistent with past practice, (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise)
for the obligations of any other person other than a Subsidiary of the
Company, in each case other than in the ordinary course of business and
consistent with past practice or (iii) make any loans, advances or capital
contributions to, or investments in, any other person, other than to any
Subsidiary of the Company;
(e) pay, satisfy, discharge or settle any material claim, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than in the
ordinary course of business and consistent with past practice or pursuant
to mandatory terms of any Company Contract in effect on the date hereof;
(f) modify or amend, or waive any benefit of, any non-competition
agreement to which the Company or any of its Subsidiaries is a party;
(g) authorize or make capital expenditures in excess of $200,000
individually, or in excess of $1,000,000 in the aggregate except for those
projects currently in progress as set forth in Section 5.1(g) of the
Company Disclosure Schedule;
(h) permit any insurance policy naming the Company or any Subsidiary of
the Company as a beneficiary or a loss payee to be cancelled or terminated
other than in the ordinary course of business;
(i) (i) adopt, enter into, terminate or amend (except as may be required
by Applicable Law) any employee plan, agreement, contract, arrangement or
other Company Plan, including the Company's Employee Stock Purchase Plan,
for the current or future benefit or welfare of any director, officer or
employee, (ii) except in the ordinary course of business consistent with
past practice, increase in any manner the compensation or fringe benefits
of, or pay any bonus to, any director, officer or employee; provided,
however, that no such increase or payment shall be made to or for the
benefit of any person listed in Section 5.1(i) of the Company Disclosure
Schedule, or (iii) other than pursuant to Section 2.7 hereof, take any
action to fund or in any other way secure, or to accelerate or otherwise
remove restrictions with respect to, the payment of compensation or
benefits under any employee plan, agreement, contract, arrangement or other
Company Plan;
(j) make any material change in its accounting or tax policies or
procedures, except as required by Applicable Law or to comply with GAAP; or
(k) enter into any contract, agreement, commitment or arrangement with
respect to any of the foregoing.
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ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Access and Information. Each party hereto shall (and shall cause
its Subsidiaries and its and their respective officers, directors, employees,
auditors and agents to) afford to the other party and to such other party's
officers, employees, financial advisors, legal counsel, accountants,
consultants and other representatives (except to the extent not permitted
under Applicable Law as advised by counsel) reasonable access during normal
business hours throughout the period prior to the Effective Time to all of its
books and records and its properties, plants and personnel and, during such
period, shall furnish promptly to the other party a copy of each report,
schedule and other document filed or received by it pursuant to the
requirements of federal securities laws. Unless otherwise required by
Applicable Law, each party hereto agrees that it shall, and it shall cause its
Subsidiaries and its and their respective officers, directors, employees,
auditors and agents to, hold in confidence all non-public information so
acquired and to use such information solely for purposes of effecting the
transactions contemplated by this Agreement.
Section 6.2 No Solicitation.
(a) Prior to the Effective Time, the Company agrees that it shall not,
and it shall use its reasonable best efforts to cause its Subsidiaries and
affiliates, and their respective directors, officers, employees, agents or
representatives not to, directly or indirectly, (i) solicit or initiate
(including by way of furnishing or disclosing non-public information) any
inquiries or the making of any proposal with respect to any merger,
consolidation or other business combination involving the Company or any
Subsidiary of the Company or the acquisition of all or any significant part
of the assets or capital stock of the Company or any Subsidiary of the
Company (other than the sale by the Company (y) of its Columbus, Nebraska
beef processing plant and (z) the Company's minority interest in Diversity
Foods LLC) (an "Acquisition Transaction") or (ii) negotiate, explore or
otherwise engage in discussions with any person (other than Parent and its
representatives) with respect to any Acquisition Transaction, or which may
reasonably be expected to lead to a proposal for an Acquisition Transaction
or enter into any agreement, arrangement or understanding with respect to
any such Acquisition Transaction or which would require it to abandon,
terminate or fail to consummate the Merger or any other transaction
contemplated by this Agreement; provided, however, that, the Company may,
in response to an unsolicited written proposal from a third party regarding
a Superior Proposal (as hereinafter defined), furnish information to,
negotiate or otherwise engage in discussions with such third party, if the
Board of Directors of the Company determines in good faith, based upon the
advice of outside counsel, that such action is required for the Board of
Directors to comply with its fiduciary duties under Applicable Law.
(b) Except as may be required to comply with the fiduciary duties of the
Company's Board of Directors under Applicable Law (based on the advice of
outside counsel), the Company agrees that, as of the date hereof, it, its
Subsidiaries and affiliates, and the respective directors, officers,
employees, agents and representatives of the foregoing, shall immediately
cease and cause to be terminated any existing activities, discussions and
negotiations with any person (other than Parent and its representatives)
conducted heretofore with respect to any Acquisition Transaction. The
Company agrees to promptly advise Parent of any inquiries or proposals
received by, any such information requested from, and any negotiations or
discussions sought to be initiated or continued with, the Company, its
Subsidiaries or affiliates, or any of the respective directors, officers,
employees, agents or representatives of the foregoing, in each case from a
person (other than Parent and its representatives) with respect to an
Acquisition Transaction. As used herein, "Superior Proposal" means a bona
fide, written and unsolicited proposal or offer made by any person or group
(other than Parent or any of its Subsidiaries) with respect to an
Acquisition Transaction on terms which the Board of Directors of the
Company determines in good faith, and in the exercise of reasonable
judgment (based on the advice of independent financial advisors and legal
counsel), to be more favorable to the Company and its stockholders than the
transactions contemplated hereby (including taking into account the
financing thereof).
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Section 6.3 Third-Party Standstill Agreements. During the period from the
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its Subsidiaries is a party.
Section 6.4 Registration Statement. As promptly as practicable, Parent and
the Company shall in consultation with each other prepare and file with the
SEC the Proxy Statement and Registration Statement in preliminary form. Each
of the Company and Parent shall use its reasonable best efforts to have the
Proxy Statement cleared by the SEC and the Registration Statement declared
effective as soon as practicable. The Company shall furnish Parent with all
information concerning the Company and the holders of its capital stock and
shall take such other action Parent may reasonably request in connection with
the Registration Statement and the issuance of shares of Parent Common Stock
in connection with the Merger. If, at any time prior to the Effective Time,
any event or circumstance relating to the Company, any Subsidiary of the
Company, Parent or any Subsidiary of Parent, or their respective officers or
directors, should be discovered by such party which should be set forth in an
amendment or a supplement to the Registration Statement or Proxy Statement,
such party shall promptly inform the other thereof and take appropriate action
in respect thereof.
Section 6.5 Proxy Statements; Stockholder Approval.
(a) The Company, acting through its Board of Directors, shall, subject to
and in accordance with Applicable Law, its Certificate of Incorporation and
its By-Laws, promptly and duly call, give notice of, convene and hold as
soon as practicable following the date upon which the Registration
Statement becomes effective a meeting of the holders of Company Common
Stock for the purpose of voting to approve and adopt this Agreement and the
transactions contemplated hereby (the "Company Stockholder Meeting"), and,
(i) except as required to comply with the fiduciary duties of the Board of
Directors as advised by outside counsel, recommend approval and adoption of
this Agreement and the transactions contemplated hereby by the stockholders
of the Company and include in the Proxy Statement such recommendation and
(ii) except as required to comply with the fiduciary duties of the Board of
Directors as advised by outside counsel, take all reasonable action to
solicit and obtain such approval.
(b) The Company, as promptly as practicable, shall cause the definitive
Proxy Statement to be mailed to its stockholders as soon as practicable
following the date on which it is cleared by the SEC and the Registration
Statement is declared effective.
Section 6.6 Compliance with the Securities Act. Prior to the Effective Time,
the Company shall cause to be prepared and delivered to Parent a list
(reasonably satisfactory to counsel for Parent) identifying each person who,
at the time of the Company Stockholder Meeting, may be deemed to be an
"affiliate" of the Company, as such term is used in paragraphs (c) and (d) of
Rule 145 under the Securities Act (the "Company Rule 145 Affiliates"). The
Company shall use its reasonable best efforts to cause each person who is
identified as a Company Rule 145 Affiliate in such list to deliver to Parent
on or prior to the Effective Time a written agreement, substantially in the
form of Exhibit B hereto.
Section 6.7 Reasonable Best Efforts.
(a) Subject to the terms and conditions herein provided and applicable
legal requirements, each of the parties hereto agrees to use its reasonable
best efforts to take, or cause to be taken, all action, and to do, or cause
to be done, and to assist and cooperate with the other parties hereto in
doing, as promptly as practicable, all things necessary, proper or
advisable under applicable laws and regulations to ensure that the
conditions set forth in Article VII are satisfied and to consummate and
make effective the transactions contemplated by this Agreement; provided,
however, that the Company shall not, without Parent's prior written
consent, and Parent shall not be required to, divest or hold separate or
otherwise take or commit to take any other similar action with respect to
any assets, businesses or product lines of Parent, the Company or any of
their respective Subsidiaries.
(b) Each of the parties shall use its reasonable best efforts to obtain
as promptly as practicable all consents, waivers, approvals, authorizations
or permits of, or registration or filing with or notification to
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(any of the foregoing being a "Consent"), of any Governmental Entity or any
other person required in connection with, and waivers of any violations,
defaults or breaches that may be caused by, the consummation of the
transactions contemplated by this Agreement.
(c) Each party hereto shall promptly inform the other of any material
communication from the SEC, the United States Federal Trade Commission, the
United States Department of Justice or any other Governmental Entity
regarding any of the transactions contemplated by this Agreement. If any
party hereto or any affiliate thereof receives a request for additional
information or documentary material from any such Governmental Entity with
respect to the transactions contemplated by this Agreement, then such party
shall use commercially reasonable efforts to cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request.
(d) Without limiting the generality of the foregoing and subject to the
proviso to Section 6.7(a) hereof, Parent and the Company will use their
respective reasonable best efforts to obtain all authorizations or waivers
required under the HSR Act to consummate the transactions contemplated
hereby, including, without limitation, making all filings with the
Antitrust Division of the Department of Justice ("DOJ") and the Federal
Trade Commission ("FTC") required in connection therewith (the initial
filing to occur no later than ten business days following the execution and
delivery of this Agreement) and responding as promptly as practicable to
all inquiries received from the DOJ or FTC for additional information or
documentation. Each of Parent and the Company shall furnish to the other
such necessary information and reasonable assistance as the other may
request in connection with its preparation of any filing or submission
which is necessary under the HSR Act. Parent and the Company shall keep
each other apprised of the status of any communications with, and any
communications with, and any inquiries or requests for additional
information from, the FTC and the DOJ.
(e) The parties hereto intend the Merger to qualify as a reorganization
under Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code. Each of the
parties hereto shall, and shall cause its respective Subsidiaries to, and
shall use its reasonable best efforts to cause its respective affiliates
to, use its and their respective reasonable best efforts to cause the
Merger to so qualify. No party hereto nor any affiliate thereof shall take
any action that would cause the Merger not to qualify under these Sections
of the Code, and the parties hereto shall take the position for all
purposes that the Merger qualifies as a reorganization under such Sections
of the Code.
Section 6.8 Employee Benefits. Parent currently intends to cause the
Surviving Corporation and its Subsidiaries, after the Effective Time, to
provide employees of the Company such compensation, employee benefit plans and
employee programs, arrangements and agreements which, in the aggregate, are no
less favorable than currently provided to similarly situated employees of
Parent. Nothing in this Agreement shall prohibit Parent, the Surviving
Corporation or any of their respective Subsidiaries from amending or
terminating any such plan, program, arrangement or agreement at any time in
accordance with Applicable Law (except as to benefits already vested
thereunder) and subject to the terms of such plans, programs or arrangements
or other agreements.
Section 6.9 Public Announcements. Parent and the Company shall consult with
each other before issuing any press releases or otherwise making any public
statement with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation and without approval (which shall not unreasonably be
withheld and which shall be timely given) of the other, except as may be
required by applicable law or by existing obligations pursuant to any listing
agreement with any national securities exchange.
Section 6.10 Directors' and Officers' Indemnification and Insurance.
(a) Parent and the Company agree that all rights to indemnification now
existing in favor of any employee, agent, director or officer of the
Company and its Subsidiaries (the "Indemnified Parties"), as provided in
their respective certificates of incorporation or by-laws, or in an
agreement between an
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Indemnified Party and the Company or one of its Subsidiaries set forth in
Section 6.10 of the Company Disclosure Schedule, shall survive the Merger
and shall continue in full force and effect for a period of six years after
the Effective Time; provided that in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification
in respect of any such claim shall continue until final disposition of such
claim.
(b) Parent agrees that from and after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect for six years after the
Effective Time the policies of the directors' and officers' liability
insurance maintained by the Company on the date hereof and listed in
Section 6.10 of the Company Disclosure Schedule; provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous to
the Indemnified Parties and provided that such substitution shall not
result in any gaps or lapses in coverage with respect to matters occurring
prior to the Effective Time; and provided, further, that the Surviving
Corporation shall not be required to pay an annual premium in excess of
150% of the last annual premium paid by the Company prior to the date
hereof (the "Maximum Amount") (which premium is set forth in Section 6.10
of the Company Disclosure Schedule) and if the Surviving Corporation is
unable to obtain the insurance required by this Section 6.10, it shall
obtain as much comparable insurance as possible for an annual premium equal
to the Maximum Amount.
Section 6.11 Expenses. Except as otherwise set forth in Sections 8.2(b) and
(c), each party hereto shall bear its own costs and expenses in connection
with this Agreement and the transactions contemplated hereby.
Section 6.12 Listing Application. Parent shall each use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued pursuant to
this Agreement in the Merger to be listed for trading on the NASDAQ National
Market or on any securities exchange on which shares of Parent Common Stock
shall be listed at the Effective Time.
Section 6.13 Supplemental Disclosure. The Company shall give prompt notice
to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which would be likely to cause (x) any representation or warranty contained
in this Agreement to be untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(ii) any failure of the Company or Parent, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.13 shall not have any effect for the purpose of
determining the satisfaction of the conditions set forth in Article VII of
this Agreement or otherwise limit or affect the remedies available hereunder
to any party.
Section 6.14 Purchase Plan. Immediately hereafter the Company shall amend
its Employee Stock Purchase Plan to prohibit prior to the termination of this
Agreement the modification by any participant of any election thereunder the
effect of which is to increase such participant's contributions to the plan
above the level of such participant's contributions as of the date hereof.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction or waiver at or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the requisite
vote (as described in Section 3.5(b)) of the Company in accordance with
Applicable Law.
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(b) Governmental Approvals. All authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or
expirations of waiting periods imposed by, any Governmental Entity, which
the failure to obtain, make or occur would have the effect of making the
Merger or any of the transactions contemplated hereby illegal or would have
a Material Adverse Effect on Parent or the Company (as the Surviving
Corporation) or would materially impair the operations of the Surviving
Corporation, assuming the Merger had taken place, shall have been obtained,
shall have been made or shall have occurred.
(c) HSR Act. The waiting period under the HSR Act shall have expired or
been terminated.
(d) Registration Statement. The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act. No stop
order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated by the SEC.
(e) No Injunction. No Governmental Entity having jurisdiction over the
Company or Parent, or any of their respective Subsidiaries, shall have
enacted, issued, promulgated, enforced or entered any law, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is then in effect and has the
effect of making the Merger or the Stock Voting Agreement illegal or
otherwise prohibiting consummation of the Merger.
Section 7.2 Conditions to Obligation of Parent and the Purchaser to Effect
the Merger. The obligation of Parent and the Purchaser to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following additional conditions, unless waived in writing by Parent:
(a) Representations and Warranties. The representations and warranties of
the Company that are qualified with reference to materiality shall be true
and correct, and the representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case
as of the date hereof, and, except to the extent such representations and
warranties speak as of an earlier date, as of the Effective Time as though
made at and as of the Effective Time, and Parent shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer
or the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and Parent
shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer or the Chief Financial Officer of the Company to
such effect.
(c) Material Adverse Change. Except as set forth in Section 7.2 of the
Company Disclosure Schedule, since the date of this Agreement, there shall
have been no event or occurrence which has had, or would reasonably be
expected to have, a Company Material Adverse Effect, and Parent shall have
received a certificate signed on behalf of the Company by the Chief
Executive Officer or the Chief Financial Officer of the Company to such
effect.
(d) Company Affiliate Agreements. Parent shall have received the written
agreements, substantially in the form of Exhibit B hereto, from the Company
Rule 145 Affiliates described in Section 6.6.
(e) Litigation. There shall not have been instituted or be pending, or
threatened, any suit, action or proceeding by any Governmental Entity as a
result of this Agreement or any of the transactions contemplated hereby
which, if such Governmental Entity were to prevail, would reasonably be
expected to have a Parent Material Adverse Effect or Company Material
Adverse Effect (as the Surviving Corporation).
(f) Consents Under Agreements. The Company shall have obtained the
consent or approval of each person (other than the Governmental Entities
referred to in Section 7.1(b)) whose consent or approval shall be required
in connection with the transactions contemplated hereby under any
indenture, mortgage, evidence of indebtedness, lease or other agreement or
instrument, except where the failure to obtain the same would not
reasonably be expected, individually or in the aggregate, to have a Parent
Material Adverse Effect or Company Material Adverse Effect (as the
Surviving Corporation).
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(g) Tax Opinion. Parent shall have received an opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, special counsel to Parent, to the effect that
the Merger will qualify as a reorganization within the meaning of Section
368 of the Code. The issuance of such opinion shall be conditioned on the
receipt by such tax counsel of representation letters from each of Parent
and the Purchaser, the Company and certain stockholders of the Company,
including, but not limited to, James T. Hudson, in each case, in form and
substance reasonably satisfactory to Skadden, Arps, Slate, Meagher & Flom
LLP. The specific provisions of each such representation letter shall be in
form and substance reasonably satisfactory to such tax counsel, and each
such representation letter shall be dated on or before the date of such
opinion and shall not have been withdrawn or modified in any material
respect.
Section 7.3 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by the Company:
(a) Representations and Warranties. The representations and warranties of
Parent and the Purchaser that are qualified with reference to materiality
shall be true and correct, and the representations and warranties that are
not so qualified shall be true and correct in all material respects, in
each case as of the date hereof, and, except to the extent such
representations and warranties speak as of an earlier date, as of the
Effective Time as though made on and as of the Effective Time, and the
Company shall have received a certificate signed on behalf of Parent by the
Chief Executive Officer or the Chief Financial Officers of Parent to such
effect.
(b) Performance of Obligations of Parent and Purchaser. Each of Parent
and the Purchaser shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Effective Time, and the Company shall have received a certificate
signed on behalf of Parent and the Purchaser by the Chief Executive Officer
or the Chief Financial Officer of Parent and the Purchaser to such effect.
(c) Material Adverse Change. Since the date of this Agreement, there
shall have been no event or occurrence which has had, or would reasonably
be expected to have, a Parent Material Adverse Effect, and the Company
shall have received a certificate signed on behalf of Parent by the Chief
Executive Officer or the Chief Financial Officer of Parent to such effect.
(d) Tax Opinion. The Company shall have received an opinion of Davis Polk
& Wardwell, special counsel to the Company, to the effect that the Merger
will qualify as a reorganization within the meaning of Section 368 of the
Code. The issuance of such opinion shall be conditioned on the receipt by
such tax counsel of representation letters from each of Parent and the
Purchaser, the Company and certain stockholders of the Company, including,
but not limited to, James T. Hudson, in each case, in form and substance
reasonably satisfactory to Davis Polk & Wardwell. The specific provisions
of each such representation letter shall be in form and substance
reasonably satisfactory to such tax counsel, and each such representation
letter shall be dated on or before the date of such opinion and shall not
have been withdrawn or modified in any material respect.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated, and the Merger
and the other transactions contemplated hereby may be abandoned, at any time
prior to the Effective Time, whether before or after approval by the
stockholders of the Company or Parent:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company, if (i) the Merger shall not have
been consummated on or before February 28, 1998 or (ii) the stockholders of
the Company do not approve this Agreement by the requisite
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vote at a meeting duly convened therefor or any adjournment thereof
(unless, in the case of any such termination pursuant to this Section
8.1(b), the failure of such event to occur shall have been caused by the
action or failure to act of the party seeking to terminate this Agreement,
which action or failure to act constitutes a breach of such party's
obligations under this Agreement);
(c) by either Parent or the Company, if any permanent injunction, order,
decree or ruling by any Governmental Entity of competent jurisdiction
preventing the consummation of the Merger shall have become final and
nonappealable; provided, however, subject to the proviso to Section 6.7(a)
hereof, that the party seeking to terminate this Agreement pursuant to this
Section 8.1(c) shall have used reasonable best efforts to remove such
injunction or overturn such action;
(d) by Parent, if (i) there has been a breach of any of the
representations or warranties, covenants or agreements of the Company set
forth in this Agreement, the effect of which is a Company Material Adverse
Effect, which breach is not curable or, if curable, is not cured within 30
days after written notice of such breach is given by Parent to the Company,
or (ii) the Board of Directors of the Company (x) fails to recommend the
approval of this Agreement and the Merger to the Company's stockholders in
accordance with Section 6.5(a) hereof, or (y) withdraws or amends or
modifies in a manner adverse to Parent its recommendation or approval in
respect of this Agreement or the Merger or fails to reconfirm such
recommendation within two business days of a written request for such
confirmation by Parent;
(e) by the Company if the Board of Directors of the Company shall
reasonably determine that a proposal for an Acquisition Transaction
constitutes a Superior Proposal; provided, however, that the Company may
not terminate this Agreement pursuant to this subsection (e) unless (i)
five business days shall have elapsed after delivery to Parent of a written
notice of such determination by such Board of Directors and, during such
five business day period, the Company shall have fully cooperated with
Parent, including, without limitation, informing Parent of the terms and
conditions of such proposal for an Acquisition Transaction and the identity
of the person or group making such proposal for an Acquisition Transaction,
with the intent of enabling Parent to agree to a modification of the terms
and conditions of this Agreement so that the transactions contemplated
hereby may be effected, and (ii) at the end of such five business day
period, the Board of Directors of the Company shall continue reasonably to
believe that such proposal for an Acquisition Transaction constitutes a
Superior Proposal and promptly thereafter the Company shall enter into a
definitive acquisition, merger or similar agreement to effect such Superior
Proposal; and
(f) by the Company, if there has been a breach of any of the
representations or warranties, covenants or agreements of Parent or the
Purchaser set forth in this Agreement, the effect of which is a Parent
Material Adverse Effect, which breach is not curable or, if curable, is not
cured within 30 days after written notice of such breach is given by the
Company to Parent.
Section 8.2 Effect of Termination.
(a) In the event of termination of this Agreement pursuant to this
Article VIII, the Merger shall be deemed abandoned and this Agreement shall
forthwith become void, except that the provisions of the last sentence of
Section 6.1, Section 6.11 and this Section 8.2 shall survive any
termination of this Agreement; provided, however, that, except as set forth
in Subsection (c) below, nothing in this Agreement shall relieve any party
from liability for any breach of this Agreement.
(b) If (x) Parent shall have terminated this Agreement pursuant to
Section 8.1(d)(ii) or (y) the Company shall have terminated this Agreement
pursuant to Section 8.1(e), then, in any such case, the Company shall pay
Parent (A) a termination fee of $22.5 million plus (B) an amount equal to
$5 million which the parties agree represents a good faith estimate of
Parent's expenses in connection with this Agreement (including, without
limitation, attorneys' fees and fees of financial advisors). Any fees or
amounts payable under this Section 8.2(b) shall be paid in same day funds
contemporaneously with a termination described in either clause (x) or (y)
of this Section 8.2(b), and no notice of termination pursuant
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to such sections shall be effective and this Agreement shall not terminate,
until such termination fee is received by Parent.
(c) If Parent or the Company shall have terminated this Agreement
pursuant to Section 8.1(b)(i) and at the time of such termination all other
conditions to the Merger have been satisfied or waived other than the
applicable waiting period under the HSR Act having expired or been
terminated, then Parent shall pay the Company $10 million; provided that
Parent shall pay the Company an additional $5 million if, in addition to
the circumstances described in this subsection, the circumstances set forth
in Section 8.2(c) of the Company Disclosure Schedule shall have occurred.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Amendment and Modification. At any time prior to the Effective
Time, this Agreement may be amended, modified or supplemented only by written
agreement (referring specifically to this Agreement) of Parent and the Company
with respect to any of the terms contained herein; provided, however, that
after any approval and adoption of this Agreement by the stockholders of the
Company, no such amendment, modification or supplementation shall be made
which under Applicable Law requires the approval of such stockholders, without
the further approval of such stockholders.
Section 9.2 Waiver. At any time prior to the Effective Time, Parent, on the
one hand, and the Company, on the other hand, may (i) extend the time for the
performance of any of the obligations or other acts of the other, (ii) waive
any inaccuracies in the representations and warranties of the other contained
herein or in any documents delivered pursuant hereto and (iii) waive
compliance by the other with any of the agreements or conditions contained
herein which may legally be waived. Any such extension or waiver shall be
valid only if set forth in an instrument in writing specifically referring to
this Agreement and signed on behalf of such party.
Section 9.3 Survivability; Investigations. The respective representations
and warranties of Parent and Purchaser, on the one hand, and the Company, on
the other hand, contained herein or in any certificates or other documents
delivered prior to or as of the Effective Time (i) shall not be deemed waived
or otherwise affected by any investigation made by any party hereto and (ii)
shall not survive beyond the Effective Time. The covenants and agreements of
the parties hereto (including the Surviving Corporation after the Merger)
shall survive the Effective Time, without limitation (except for those which,
by their terms, contemplate a shorter survival period).
Section 9.4 Notices. All notices and other communications hereunder shall be
in writing and shall be delivered personally or by next-day courier or
telecopied with confirmation of receipt, to the parties at the addresses
specified below (or at such other address for a party as shall be specified by
like notice; provided that notices of a change of address shall be effective
only upon receipt thereof). Any such notice shall be effective upon receipt,
if personally delivered or telecopied, or one day after delivery to a courier
for next-day delivery.
If to Parent or the Purchaser, to:
Tyson Foods, Inc.
2210 Oaklawn Drive
Springdale, Arkansas 72764
Attention: Executive Vice President
and Chief Financial Officer
Telephone: (501) 290-4000
Telecopier: 501) 290-4028
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with copies to:
Skadden, Arps, Slate, Meagher
& Flom LLP
One Rodney Square
Wilmington, Delaware 19801
Attention: Robert B. Pincus, Esq.
Telephone: (302) 651-3000
Telecopier:(302) 651-3001
If to the Company, to:
Hudson Foods, Inc.
1225 Hudson Road
Rogers, Arkansas 72756
Attention: Mr. Michael T. Hudson
Telephone: (501) 636-1100
Telecopier:(501) 631-5400
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: William L. Rosoff, Esq.
Telephone: (212) 450-4000
Telecopier:(212) 450-4500
Section 9.5 Descriptive Headings; Interpretation. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. References in this Agreement
to Sections, Exhibits or Articles mean a Section, Exhibit or Article of this
Agreement unless otherwise indicated. References to this Agreement shall be
deemed to include the Exhibits hereto, the Company Disclosure Schedule and the
Parent Disclosure Schedule, unless the context otherwise requires. The term
"person" shall mean and include an individual, a partnership, a joint venture,
a corporation, a trust, a Governmental Entity or an unincorporated
organization.
Section 9.6 Entire Agreement. This Agreement (including the Exhibits, the
Company Disclosure Schedule and the Parent Disclosure Schedule) constitutes
the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them, with
respect to the subject matter hereof.
Section 9.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
the provisions thereof relating to conflicts of law.
Section 9.8 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court,
this being in addition to any other remedy to which they are entitled at law
or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court located in the State
of Delaware or any Delaware state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other
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request for leave from any such court and (c) agrees that it will not bring
any action relating to this Agreement or any of the transactions contemplated
by this Agreement in any court other than a federal or state court sitting in
the State of Delaware.
Section 9.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same agreement.
Section 9.10 Assignment; Third-Party Beneficiaries. This Agreement and the
rights, interests and obligations hereunder shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns;
provided, however, that no party hereto may assign or otherwise transfer its
rights, interests or obligations hereunder without the prior written consent
of the other parties hereto. Nothing in this Agreement is intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREFORE, Parent, the Purchaser and the Company have caused this
Agreement and Plan of Merger to be executed on its behalf by their respective
officers thereunto duly authorized, all as of the date first above written.
TYSON FOODS, INC.
By: /s/ Leland E. Tollett
---------------------------------
Leland E. Tollett
Chairman and Chief Executive
Officer
HFI ACQUISITION SUB INC.
By: /s/ Wayne Britt
---------------------------------
Wayne Britt
President
HUDSON FOODS, INC.
By: /s/ James T. Hudson
---------------------------------
James T. Hudson
Chairman
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ANNEX II
[LOGO OF DONALDSON, LUFKIN & JENRETTE APPEARS HERE]
December 8, 1997
Board of Directors
Hudson Foods, Inc.
1225 Hudson Road
Rogers, Arkansas 72756
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the holders of Class A Common Stock, par value $0.01 per share ("Class
A Common Stock"), of Hudson Foods, Inc. (the "Company") and Class B Common
Stock, par value $0.01 per share ("Class B Common Stock" and together with the
Class A Common Stock, the "Company Common Stock"), of the Company, other than
such holders who are affiliates of the Company, of the consideration to be
received by such holders pursuant to the terms of the Agreement and Plan of
Merger dated as of September 4, 1997 (the "Agreement"), by and among Tyson
Foods, Inc. ("Tyson"), HFI Acquisition Sub, Inc. ("Merger Sub"), a wholly
owned subsidiary of Tyson, and the Company, pursuant to which the Company will
be merged (the "Merger") with and into Merger Sub.
Pursuant to the Agreement, each share of Company Common Stock will be
converted, subject to certain exceptions, into the right to receive (i) $8.40
per share in cash and (ii) six-tenths of one share of Class A Common Stock,
par value $0.10 per share ("Tyson Common Stock"), of Tyson (collectively, the
"Consideration").
In arriving at our opinion, we have reviewed the Agreement and the exhibits
thereto. We also have reviewed financial and other information that was
publicly available or furnished to us by the Company and Tyson including
information provided during discussions with their respective managements.
Included in the publicly available financial information were certain
consensus earnings per share projections for Tyson, and the Company, as
published by First Call, for the respective companies' 1997 and 1998 fiscal
years, which we have discussed with the managements of Tyson and the Company.
In light of recent developments relating to the publicly announced recall of
ground beef patties produced at a Company plant in Columbus, Nebraska, we
believe that the uncertainty resulting from such recent developments has
caused Company financial projections to become stale and, accordingly, we have
not reviewed any Company financial projections. We have instead reviewed the
First Call earnings estimates described above. In addition, we have compared
certain financial and securities data of the Company and Tyson with various
other companies whose securities are traded in public markets, reviewed the
historical stock prices and trading volumes of the Class A Common Stock and
Tyson Common Stock, reviewed prices and premiums paid in certain other
business combinations and conducted such other financial studies, analyses and
investigations as we deemed appropriate for purposes of this opinion. We were
not requested to, nor did we, solicit the interest of any other party in
acquiring the Company.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to us from public sources, that was provided to us by the Company and Tyson or
their respective representatives (other than financial projections of the
Company prepared prior to the recall of the ground beef patties referred to
above which, in light of such recall and the uncertainty relating to the
business of the Company caused by the adverse publicity arising from such
recall, we have neither reviewed nor relied upon), or that was otherwise
reviewed by us. In particular, we have relied upon the estimates
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of the management of the Company of the operating synergies achievable as a
result of the Merger and upon our discussion of such synergies with the
management of Tyson. With respect to the consensus earnings per share
projections as published by First Call, we have assumed that such projections
do not differ in any material respect from the estimates and judgments of the
management of Tyson and the Company as to the future earnings per share
performance of Tyson and the Company, respectively. We have not assumed any
responsibility for making an independent evaluation any assets or liabilities
or for making any independent verification of any of the information reviewed
by us. We have relied as to certain legal matters on advice of counsel to the
Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as
of, the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. We are expressing no opinion herein as to the
prices at which Tyson Common Stock will actually trade at any time. Our
opinion does not constitute a recommendation to any holder of Company Common
Stock as to how such holder should vote on the proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. DLJ has
performed investment banking and other services for the Company in the past
and has been compensated for such services.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Consideration to be received by the holders of Company
Common Stock, other than such holders who are affiliates of the Company, is
and, as of September 4, 1997 was, fair to such holders from a financial point
of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Robert J. McMullan
----------------------------
Robert J. McMullan
Senior Vice President
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ANNEX III
EXCERPT FROM THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
262 APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to (S) 228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of the stockholder's shares of stock
under the circumstances described in subsections (b) and (c) of this section.
As used in this section, the word "stockholder" means a holder of record of
stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is ordinarily
meant by those words and also membership or membership interest of a member of
a nonstock corporation; and the words "depository receipt" mean a receipt or
other instrument issued by a depository representing an interest in one or
more shares, or fractions thereof, solely of stock of a corporation, which
stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to (S) 251 (other than a merger effected pursuant to (S)
251(g) of this title), (S) 252, (S) 254, (S) 257, (S) 258, (S) 263, or (S) 264
of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection (f) of (S)
251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of stock
of a constituent corporation if the holders thereof are required by the terms
of an agreement of merger or consolidation pursuant to (S)(S) 251, 252, 254,
257, 258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock or depository receipts at the effective
date of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in
lieu of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party
to a merger effected under (S) 253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
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(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for such
meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of his shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written demand for
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation shall notify
each stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to (S) 228 or (S)
253 of this title, each constituent corporation, either before the effective
date of the merger or consolidation or within ten days thereafter, shall
notify each of the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval of the merger
or consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation, such
notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal
of such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the effective date
of the merger or consolidation notifying each of the holders of any class or
series of stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided, however,
that if such second notice is sent more than 20 days following the sending of
the first notice, such second notice need only be sent to each stockholder who
is entitled to appraisal rights and who has demanded appraisal of such
holder's shares in accordance with this subsection. An affidavit of the
secretary or assistant secretary or of the transfer agent of the corporation
that is required to give either notice that such notice has been given shall,
in the absence of fraud, be prima facie evidence of the facts stated therein.
For purposes of determining the stockholders entitled to receive either
notice, each constituent corporation may fix, in advance, a record date that
shall be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day
on which the notice is given.
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(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw his demand
for appraisal and to accept the terms offered upon the merger or
consolidation. Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which
demands for appraisal have been received and the aggregate number of holders
of such shares. Such written statement shall be mailed to the stockholder
within 10 days after his written request for such a statement is received by
the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted his certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that he is not entitled to
appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation
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of the certificates representing such stock. The Court's decree may be
enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting corporation be a corporation of this State or of
any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of his demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon
such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
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Exhibit 99.1
PROXY
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
FOR SPECIAL MEETING OF STOCKHOLDERS, JANUARY 9, 1998
HUDSON FOODS, INC.
The undersigned hereby constitute(s) James T.
Hudson and Charles B. Jurgensmeyer as Proxies,
each with the power to appoint his substitute,
and hereby authorizes the Proxies, or either of
them, to represent and vote as designated below
all of the shares of common stock of Hudson
Foods, Inc. held of record by the undersigned
on November 28, 1997, at the Special Meeting of
Stockholders to be held on January 9, 1998, and
any and all adjournments, postponements or
continuations thereof.
PLEASE SEE REVERSE SIDE
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Please mark
your votes
as this [X]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
- ---
1. Approval and adoption of the Agreement and Plan of Merger dated as of Sep-
tember 4, 1997 among Tyson Foods, Inc., HFI Acquisition Sub Inc. and Hudson
Foods, Inc.
For Against Abstain
[_] [_] [_]
2. In their discretion on any other matter which may properly come before the
Special Meeting, including any adjournments, postponements or continuations
thereof.
For Against Abstain
[_] [_] [_]
Signature(s) ____________________________ Date ___________________, 199
Please sign exactly as your name appears on this Proxy. If signing as
executor, administrator, trustee, guardian, attorney or for a corporation,
please give full title as such. For joint accounts or co-fiduciaries, all
joint owners or co-fiduciaries should sign.
