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Agreement And Plan of Share Exchange

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Sectors: Food, Beverages and Tobacco
Governing Law: North Carolina, View North Carolina State Laws
Effective Date: April 26, 2001
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EXHIBIT 10.41


AGREEMENT AND PLAN OF SHARE EXCHANGE


AMONG PIERRE FOODS, INC., PF MANAGEMENT, INC.


JAMES C. RICHARDSON, JR. AND DAVID R. CLARK


2


ARTICLE 1 TERMS AND CONDITIONS OF THE EXCHANGE................................................................ 1


1.1 The Exchange................................................................................ 1
1.2 Payment of Cash and Surrender of Share Certificates......................................... 2
1.3 Effects of the Exchange..................................................................... 3
1.4 Closing..................................................................................... 3
1.5 Stock Options and Employee Benefit Plans.................................................... 3


ARTICLE 2 GENERAL CONDITIONS AND AGREEMENTS................................................................... 4
2.1 Effective Time.............................................................................. 4
2.2 Termination................................................................................. 4
2.3 Effect of Termination....................................................................... 6
2.4 Conduct of the Participating Corporations prior to the Effective Time....................... 6
2.5 Conditions to the Exchange.................................................................. 9


ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................................... 11
3.1 Due Authorization........................................................................... 11
3.2 Consents and Approvals; No Violation........................................................ 11
3.3 SEC Reports................................................................................. 11
3.4 Litigation.................................................................................. 12
3.5 Rights Agreement; Anti-Takeover Laws........................................................ 12
3.6 Fairness Opinion............................................................................ 12
3.7 Board Action................................................................................ 12
3.8 Absence of Certain Changes.................................................................. 12
3.9 Proxy Statement and Transaction Statement Information....................................... 13
3.10 Stock Options............................................................................... 13
3.11 Brokers..................................................................................... 13


ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR...................................................... 14
4.1 Organization, Standing and Qualification.................................................... 14
4.2 Authority for this Agreement................................................................ 14
4.3 Consents and Approvals; No Violation........................................................ 14
4.4 Financing................................................................................... 14
4.5 Litigation.................................................................................. 14
4.6 Brokers..................................................................................... 15
4.7 Proxy Statement and Transaction Statement Information....................................... 15


ARTICLE 5 ADDITIONAL AGREEMENTS............................................................................... 15
5.1 Indemnification; Directors and Officers Liability Insurance................................. 15
5.2 Shareholder Approval; Proxy Statement....................................................... 16
5.3 Fees and Expenses........................................................................... 17
5.4 Reasonable Efforts.......................................................................... 17
5.5 Public Announcements; Certain Notices....................................................... 17
5.6 Exemption from Liability Under Section 16(b)................................................ 18


ARTICLE 6 NOTICES............................................................................................. 18


ARTICLE 7 MISCELLANEOUS....................................................................................... 19
7.1 Governing Law............................................................................... 19
7.2 Binding Agreement........................................................................... 19


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3


7.3 Counterpart Originals....................................................................... 19
7.4 Entire Agreement............................................................................ 19
7.5 Amendments.................................................................................. 19
7.6 Definitions................................................................................. 19


ANNEX A


Articles of Share Exchange between PF Management, Inc. and Pierre Foods, Inc.................................................................... A-1


ii 4


AGREEMENT AND PLAN OF SHARE EXCHANGE


THIS AGREEMENT AND PLAN OF SHARE EXCHANGE (this "Agreement" or the "Exchange Agreement") is made and entered into as of April 26, 2001, among Pierre Foods, Inc., a North Carolina corporation (the "Company"), and PF Management, Inc., a North Carolina corporation (the "Acquiror" and, together with the Company, the "Participating Corporations"), and James C. Richardson, Jr. and David R. Clark, who are the principal shareholders of the Acquiror (the "Principal Shareholders"), pursuant to Section 55-11-02 of the North Carolina Business Corporation Act (the "Act").


STATEMENT OF PURPOSE


The respective Boards of Directors of the Participating Corporations have approved the acquisition of the Company by the Acquiror pursuant to a statutory share exchange in accordance with the provisions of Section 55-11-02 of the Act (the "Exchange"). In the Exchange, all of the outstanding shares of common stock, no par value per share, of the Company (the "Common Stock"), together with the associated preferred stock purchase rights (the "Rights") issued pursuant to the Rights Agreement, as defined below (the shares of Common Stock and associated Rights being referred to herein as "Shares"), other than the Shares already owned by the Acquiror, would, on the terms and subject to the conditions set forth in this Agreement, be converted into the right to receive $1.21 per Share.


The Board of Directors of the Company, other than James C. Richardson, Jr. and David R. Clark (the "Board"), has unanimously adopted resolutions approving this Agreement and the Exchange. The Board determined that the Exchange is fair to and in the best interests of the holders of Shares, other than the Acquiror, and unanimously recommended that the Company's shareholders approve and adopt this Agreement, including the Plan of Share Exchange set forth in the Articles of Share Exchange, the form of which is Annex A to this Agreement (the "Plan").


NOW, THEREFORE, in consideration of the premises and the representations, warranties and agreement herein contained, the parties agree as follows:


ARTICLE 1
TERMS AND CONDITIONS OF THE EXCHANGE


1.1 The Exchange. The Acquiror will become the holder of all of the outstanding Shares pursuant to the terms and conditions of this Agreement and the Plan. At the Effective Time (as defined in Section 2.1 below), and subject to the conditions set forth in this Agreement, the shares of the Participating Corporations shall be exchanged as follows:


(a) Acquiror. The outstanding shares of capital stock of
the Acquiror will not be exchanged, altered or affected in any manner
as a result of the share exchange to be effected pursuant to the Plan
and will remain outstanding as shares of the Acquiror.


5


(b) The Company. At the Effective Time, each of the
outstanding Shares of the Company except those already owned by the
Acquiror (the "Exchange Shares") will, by virtue of the share exchange
provided for by the Plan and without any further action on the part of
the holder thereof, be exchanged for, and become the right to receive
from the Acquiror, $1.21 in cash (the "Exchange Price") upon surrender
to the Acquiror (or an agent of the Acquiror designated as provided in
Section 1.2 hereof) of the certificate or certificates representing
such Exchange Shares, as provided in Section 1.2 hereof, and each of
the Exchange Shares shall be cancelled. No interest shall be payable
with respect to payment of such cash amount on surrender of outstanding
certificates. No holder of any Exchange Shares (or any certificate
representing such Exchange Share or Shares) immediately prior to the
Effective Time shall be entitled to receive any dividend declared and
payable in respect of such Exchange Shares after the Effective Time,
any such dividend being the property of the Acquiror. The stock
transfer ledger of the Company shall be closed in respect of the
Exchange Shares from and after the Effective Time.


1.2 Payment of Cash and Surrender of Share Certificates.


(a) At the Effective Time, the Acquiror shall irrevocably
deposit or cause to be deposited with a bank or trust company to be
designated by the Acquiror and reasonably satisfactory to the Company,
which is organized and doing business under the laws of the United
States or any state thereof and has a combined capital and surplus of
at least $100 million, as paying agent for the holders of the Exchange
Shares, cash in the aggregate amount required to effect the conversion
of the Exchange Shares into the consideration to be paid to the
shareholders of the Company as provided in Section 1.1(b) (the
"Aggregate Exchange Consideration"). Pending distribution pursuant to
this Agreement, the Aggregate Exchange Consideration shall be held in
trust for the benefit of the holders of the Exchange Shares and the
funds shall not be used for any other purposes, and the Acquiror and
the Company may direct the paying agent to invest such cash, provided
that such investments (i) shall be obligations of or guaranteed by the
United States of America, commercial paper obligations receiving the
highest rating from either Moody's Investor Services, Inc. or Standard
& Poor's Corporation, or certificates of deposit, bank repurchase
agreements or bankers acceptances of domestic and commercial banks with
capital exceeding $250 million or money market funds which are invested
solely in such permitted investments and (ii) shall have maturities
that will not prevent or delay payments to be made pursuant to this
Agreement. Any interest and other income resulting from such
investments shall be paid to the Acquiror.


(b) After the Effective Time, each holder, other than the
Acquiror, of an outstanding certificate or certificates representing
Exchange Shares shall surrender the same to the Acquiror in accordance
with the instructions contained in a form of letter of transmittal. The
letter of transmittal and certificate(s) shall be delivered to the
bank, trust company or other party designated by the Acquiror as paying
agent for the exchange of Exchange Shares for cash as provided herein.
Upon such surrender, each such holder shall receive cash in an amount
equal to the Exchange Price for each Exchange Share represented by a
certificate so surrendered. Until so surrendered, each outstanding
certificate that prior to the Effective Time represented one or more
Exchange Shares shall be deemed for all purposes to evidence only the
ownership of the non-transferable right


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to receive the cash to be exchanged for each Exchange Share represented
by such certificate. With respect to any certificate for Exchange
Shares that has been lost or destroyed, the Acquiror shall pay the
holder thereof the consideration attributable to such certificate upon
receipt of (i) evidence of ownership of such Exchange Shares reasonably
satisfactory to the Acquiror, and (ii) an indemnity bond posted by such
holder in such amount as the Acquiror may reasonably require.


(c) If any cash deposited with the paying agent for
purposes of payment in exchange for the Exchange Shares remains
unclaimed following the expiration of six months after the Effective
Time, such cash shall be delivered to the Acquiror by the paying agent,
and thereafter the paying agent shall not be liable to any persons
claiming any amount of such cash, and any future surrender and exchange
shall be effected directly with the Acquiror (subject to applicable
abandoned property, escheat and similar laws). No interest shall accrue
or be payable with respect to any amount which any such holder shall be
so entitled to receive.


(d) None of the Acquiror, the Company or the paying agent
shall be liable to any person in respect of any unsurrendered Exchange
Shares (or dividends or distributions in respect thereto) or cash
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.


1.3 Effects of the Exchange. The Exchange shall transpire pursuant to the provisions of and with the effect provided in the Act. The Exchange is a statutory share exchange and not a merger.


1.4 Closing. The closing of the Exchange (the "Closing") shall take place at the offices of Womble Carlyle Sandridge & Rice, PLLC, 3300 One First Union Center, 301 South College Street, Charlotte, North Carolina 28202-6025, at 10:00 a.m., local time, on the second business day after the day on which the last of the conditions set forth in Section 2.5 of this Agreement shall have been fulfilled or waived or at such other time and place as the Participating Corporations shall agree.


1.5 Stock Options and Employee Benefit Plans. The Company shall (a) terminate the 1997 Special Stock Option Plan, the 1997 Incentive Stock Option Plan and the 1987 Special Stock Option Plan (the "Stock Option Plans"), and shall terminate or amend any other plan or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company, prior to the Effective Time, so that no such interest shall remain outstanding after the Effective Time, (b) grant no further options under the Stock Option Plans and (c) take all necessary actions prior to the Effective Time, including obtaining required consents, such that all outstanding options under the Stock Option Plans shall be cancelled prior to the Effective Time, provided that the exercise prices of all such options are above the Exchange Price.


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ARTICLE 2
GENERAL CONDITIONS AND AGREEMENTS


2.1 Effective Time. As used in the Plan, the term "Effective Time" means the time at which Articles of Share Exchange, substantially in the form attached to this Agreement as Annex A, shall have been filed with the Secretary of State of North Carolina in accordance with Section 55-11-05 of the Act or such later date set forth in the Articles of Share Exchange.


2.2 Termination. This Agreement may be terminated and the transactions contemplated by this Agreement may be abandoned at any time prior to the Closing (whether before or after the approval of this Agreement by the shareholders of the Company) as follows:


(a) By mutual written agreement of the Participating
Corporations; or


(b) (i) By either the Company or the Acquiror if the
Exchange shall not have been consummated by September 30,
2001; provided, that neither of the parties shall be entitled
to terminate this Agreement pursuant to this Section 2.2(b)(i)
if, at the time of such proposed termination, it is in
material breach of its representations and warranties,
covenants or other agreements under this Agreement; or


(ii) By the Company if, prior to the Effective
Time, there has occurred, and the Company has notified the
Acquiror of the occurrence of, a material breach by the
Acquiror of any representation, warranty, covenant or
agreement set forth herein and such breach is not cured within
30 days after notice; provided, that if such breach is not
reasonably capable of being cured within such 30 day period,
the Company may terminate this Agreement at any time after it
has given the Acquiror notice of such breach; and provided
further, that the Company shall not be entitled to terminate
this Agreement pursuant to this Section 2.2(b)(ii) if it is in
material breach of its representations and warranties,
covenants or other agreements under this Agreement; or


(c) (i) By either the Acquiror or the Company if a
federal, state or local court, commission, governmental body,
regulatory or administrative agency, authority or tribunal (a
"Governmental Entity") shall have issued an order, decree or
filing or taken any other action, in each case permanently
restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement; or


(ii) By the Acquiror if, prior to the Effective
Time, there has occurred, and the Acquiror has notified the
Company of the occurrence of, a material breach by the Company
of any representation, warranty, covenant or agreement set
forth herein and such breach is not cured within 30 days after
notice; provided, that if such breach is not reasonably
capable of being cured within such 30 day period, the Acquiror
may terminate this Agreement at any time after it has given
the Company notice of such breach; and provided further, that
the Acquiror shall not be entitled to terminate this Agreement
pursuant to this Section 2.2(c)(ii) if it is in


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material breach of its representations and warranties,
covenant or other agreement under this Agreement.


(d) By the Company for the purpose of allowing the
Company to enter into one or more related agreements in accordance with
Section 2.4 with respect to a Superior Proposal (as defined below) if
the Board, based on the recommendations of the special committee of the
Board established to review and consider the proposal to effect the
Exchange contemplated by this Agreement (the "Special Committee"),
after receiving advice from counsel to the Special Committee, has
determined in good faith that a failure to terminate this Agreement and
enter into an agreement to effect the Superior Proposal would
constitute a breach of its fiduciary duties; provided, that:


(i) the Company has complied with all provisions
of Section 2.4(d);


(ii) the Acquiror does not make, within three
business days after receipt of the Company's written
notification of its intention to enter into a binding
agreement for a Superior Proposal, an offer to enter into an
amendment to this Agreement containing terms such that the
Board, based on the recommendation of the Special Committee
after receiving advice from its financial advisors, determines
in good faith that this Agreement as so amended is at least as
favorable, from a financial point of view, to the shareholders
of the Company (other than the Acquiror) as the Superior
Proposal;


(iii) the Company pays the Acquiror's Expenses (as
defined below) in accordance with Section 2.3(b) hereof; and


(iv) substantially contemporaneously with such
termination, the Company enters into a definitive agreement to
effect the Superior Proposal.


(e) By the Acquiror, at any time prior to the approval of
the Exchange by the shareholders of the Company, if:


(i) the Board, or the Special Committee, shall
have withdrawn, modified, or changed its recommendation in
respect of this Agreement in a manner adverse to the Acquiror
or resolved to do so;


(ii) the Board, or the Special Committee, shall
have recommended any proposal other than by the Acquiror in
respect of an Acquisition Transaction (as defined below) or
resolved to do so; or


(iii) the Company has received a proposal
regarding an Acquisition Transaction and the Company shall not
have rejected such proposal within 10 business days after its
receipt or, if sooner, the date its existence first becomes
publicly disclosed.


(f) By the Company if there shall have been threatened,
instituted or pending any action or proceeding by any Governmental
Entity, or by any other Person, domestic or foreign, before any court
of competent jurisdiction or Governmental Entity, which


-5- 9


could reasonably be expected to make illegal, materially impede or
otherwise directly or indirectly prohibit or materially restrain the
Exchange or seek to obtain material damages in connection therewith.


2.3 Effect of Termination.


(a) In the event of a party's termination of this
Agreement as provided in Section 2.2 hereof, written notice thereof
shall promptly be given to the other party specifying the provision
hereof pursuant to which such termination is made, and, subject to
Section 2.3(b) hereof, this Agreement shall become null and void and
there shall be no liability on the part of the Acquiror or the Company;
provided, that nothing herein shall relieve any party from liability
for any breach of this Agreement.


(b) If:


(i) the Acquiror shall have terminated this
Agreement pursuant to Section 2.2(e);


(ii) the Acquiror shall have terminated this
Agreement pursuant to Section 2.2(c)(ii) and following the
date hereof and either prior to such termination or within two
months after such termination, (A) the Company shall have
received a proposal with respect to an Acquisition Transaction
that the Company has not rejected prior to such termination,
and (B) within 12 months after the date of such termination,
the Company shall enter into a definitive agreement with
respect to such Acquisition Transaction ; or


(iii) the Company shall have terminated this
Agreement pursuant to Section 2.2(d);


then the Company shall pay to the Acquiror an amount equal to the
Acquiror's actual and documented out-of-pocket expenses incurred or
paid by the Acquiror in connection with the Exchange, this Agreement
and the consummation of the transactions contemplated hereby
("Expenses"), which amounts shall be payable by wire transfer to such
account as the Acquiror may designate in writing to the Company. The
Company shall pay such Expenses within two business days after the
Acquiror has provided the Company with documentation of the Expenses
and a written request for payment, provided there has occurred (A) a
termination pursuant to Section 2.2(d) or Section 2.2(e) or (B) an
Acquisition Transaction under the circumstances described in Section
2.3(b)(ii).


2.4 Conduct of the Participating Corporations prior to the Effective Time.


(a) Until the completion of the Exchange, the Company
shall continue to conduct its business without material change and it
shall not, without the consent of the Acquiror, (i) issue any equity
security or instrument convertible into any equity security, (ii) make
any distribution or other disposition of its assets, capital or surplus
except in the ordinary course of business, (iii) take any action which
would impair its assets, or (iv) take any action that would cause its
representations and warranties to be untrue in any material respect at
the Effective Time. Subject to the conditions set forth in this


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Agreement, prior to the Effective Time, each of the Participating
Corporations shall promptly take a
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