AMENDMENT NO. 2 TO
AGREEMENT AND PLAN OF SHARE EXCHANGE
THIS AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF SHARE EXCHANGE (this
"Amendment") is made and entered into as of December 20, 2001 among Pierre
Foods, Inc., a North Carolina corporation (the "Company"), PF Management, Inc.,
a North Carolina corporation (the "Acquiror" and, together with the Company, the
"Participating Corporations"), and Xxxxx X. Xxxxxxxxxx, Xx. and Xxxxx X. Xxxxx,
who are the principal shareholders of the Acquiror (the "Principal
Shareholders").
Statement Of Purpose
The Company, the Acquiror and the Principal Shareholders are parties to
that certain Agreement and Plan of Share Exchange dated as of April 26, 2001, as
amended as of September 18, 2001 (the "Agreement"). Due to various events,
including the Company's receipt of a competing proposal from Xxxxxxx X. Xxxxx &
Sons Private Equity Partners, L. P. and Triton Partners (Restructuring) L.L.C.
to acquire any and all shares of the Common Stock for a purchase price of $2.50
per share, which proposal was withdrawn on December 13, 2001, the Participating
Corporations have not consummated the transactions contemplated by the
Agreement.
On December 17, 2001, the Acquiror submitted to the Company a proposal
to enter into this Amendment in order to, among other things, increase the
Exchange Price under the Agreement from $1.21 to $2.50 per share in cash,
provide for the payment by the Company of the Acquiror's expenses and extend the
expiration date of the Agreement from March 2, 2002 to June 30, 2002. The Board
of Directors of the Company, based on a recommendation of the Special Committee,
has authorized the Company to enter into this Amendment for such purposes.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms not otherwise defined in this Amendment shall have
the meanings given to such terms in the Agreement.
ARTICLE 2
TERMS AND CONDITIONS OF THE EXCHANGE
1. Each of the following sections or provisions of the Agreement is
hereby amended by changing "$1.21" where it appears therein to "$2.50": The
first paragraph of "Statement of Purpose"; Section 1.1(b); and Section B.2. of
the Plan of Share Exchange included in the Articles of Share Exchange attached
to the Agreement as Annex A.
ARTICLE 3
GENERAL CONDITIONS AND AGREEMENTS
1. Section 2.2(b)(i) of the Agreement is hereby amended by changing
"March 2, 2002" to "June 30, 2002".
2. Section 2.2(d)(iii) of the Agreement is hereby amended and restated
to read as follows:
"(iii) the Company pays the Termination Fee and the Expenses
(as defined below) in accordance with Section 2.3(b) and (c) hereof;
and"
3. Section 2.3(b) of the Agreement is hereby amended and restated to
read as follows:
"(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;
(iii) the Company shall have terminated this
Agreement pursuant to Section 2.2(d); or
(iv) this Agreement shall have expired on the date
set forth in Section 2.2(b)(i) and within 12 months after such
date the Company shall enter into a definitive agreement
providing for an Acquisition Transaction (as defined in
Section 2.4(d)(i)) with Xxxxxxx X. Xxxxx & Sons Private Equity
Partners, L. P. or Triton Partners (Restructuring) L.L.C., or
an affiliate thereof, or with any third party that, prior to
the date set forth in Section 2.2(b)(i), submitted to the
Company or publicly disclosed a proposal to enter into an
Acquisition Transaction;
then the Company shall pay to the Acquiror a termination fee in the
amount of $500,000 (the "Termination Fee"). The Termination Fee shall
be payable by wire transfer to such account as the Acquiror may
designate in writing to the Company. The Termination Fee shall be paid
by the Company simultaneously with such termination if pursuant to
Section 2.2(d), on the next business day after the execution of a
definitive agreement with respect to an Acquisition Transaction under
the circumstances described in Section 2.3(b)(ii) or (iv), or promptly,
but in no event later than two business days, after the date of any
other termination entitling the Acquiror to the Termination Fee."
4. Section 2.3(c) of the Agreement is hereby added and shall read as
follows:
"(c) Upon any termination of this Agreement (other than a
termination by the Acquiror pursuant to Section 2.2(b)(i) or by the
Company pursuant to Section 2.2(b)(ii)) or at the Effective Time, the
Company shall pay the Acquiror an amount equal to its actual and
documented out-of-pocket expenses incurred or paid by the Acquiror, to
and including the date of termination or the Effective Time, as the
case may be, in connection with the Exchange, this Agreement and the
consummation of the transactions contemplated hereby and not previously
paid by the Company to the Acquiror under Section 5.3 of this Agreement
(the "Expenses"). The Company shall pay the Expenses promptly, but in
no event later than two business days, after the Acquiror has provided
the Company with documentation of the Expenses and a written request
for payment."
5. Section 2.5(c) of the Agreement is hereby amended and restated to
read as follows:
"(c) The obligations of the Company to consummate the Exchange
shall be conditioned on (i) the representations and warranties of the
Acquiror made in this Agreement being true and correct in all material
respects at, and at all times prior to, the Effective Time, (ii) the
Acquiror having fully performed in all material respects its covenants
and obligations under this Agreement at or prior to the Effective Time,
and (iii) the Principal Shareholders delivering to the Company a
solvency certificate, in form and substance satisfactory to the
Company, attesting to the solvency of the Company as of the Effective
Time (after giving effect to the transactions contemplated by this
Agreement)."
6. Section 2.6 of the Agreement is hereby added and shall read as
follows:
"2.6 Suspension of Payment. In the event that the payment of
any sums due by the Company pursuant to this Agreement would result in
the Insolvency (as defined below) of the Company at the time of such
payment, such payment shall be suspended until such time, if any, that
the making of such payment does not render the Company Insolvent.
Notwithstanding the foregoing, the Company shall be obligated to make a
partial payment to the extent that such payment does not render the
Company Insolvent. As used in this Section 2.6, solely for the purposes
of this Section, the Company shall be deemed "Insolvent" in the event
that (a) the sum of the Company's debt is greater than all of the
Company's assets at a fair valuation, as determined by the fair market
price of the Company's assets that could be obtained if sold in a
prudent manner within a reasonable period of time, or (b) the Company
is generally not paying its debts as they become due in the usual
course of business, unless such debts are subject to a bona fide
dispute."
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
1. Section 3.11 of the Agreement is hereby amended and restated to read
as follows:
"3.11 Brokers. No broker, finder or other investment banker is
entitled to receive any brokerage, finder's or other fee or commission
in connection with this Agreement or the transactions contemplated by
this Agreement based upon agreements made by or on behalf of the
Company, except as follows:
(a) Xxxxx Xxxxxxxx LLP was retained by, and acted as
financial advisor to, the Special Committee. Xxxxx Xxxxxxxx
LLP's fee for its financial advisory services is set forth in
letter agreements between Xxxxx Xxxxxxxx LLP and the Special
Committee, dated February 27, April 11, and December 12, 2001,
copies of which have been supplied to the Acquiror.
(b) Xxxxxxx X. Xxxxx & Sons, LLC ("Simon") has been
retained by the Acquiror to provide financial advisory
services to the Acquiror. The Company has guaranteed the
Acquiror's financial obligations under the Agreement. Simon's
fee for its financial advisory services is set forth in an
engagement letter between Simon and the Acquiror dated
December 13, 2001, to which the Company is a party in its
capacity as guarantor."
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
1. Section 4.6 of the Agreement is hereby amended and restated to read
as follows:
"4.6 Brokers. No broker, finder or other investment banker is
entitled to any brokerage, finder's or other similar fee or commission
in connection with this Agreement or the transactions contemplated by
this Agreement based upon agreements made by or on behalf of the
Acquiror or its shareholders, except as follows:
(a) HHCO Limited was retained by, and acted as
financial advisor to, the Acquiror. HHCO Limited's fee for its
financial advising services is set forth in a letter agreement
between HHCO Limited and the Acquiror, dated February 12,
2001, a copy of which has been supplied to the Company.
(b) As described in Section 3.11(b), the Acquiror has
retained Simon to provide financial advisory services to the
Acquiror. The Company has guaranteed the Acquiror's financial
obligations under the Agreement. Simon's fee for its financial
advisory services is set forth in an engagement letter between
Simon and the Acquiror dated December 13, 2001, to which the
Company is a party in its capacity as guarantor."
ARTICLE 6
ADDITIONAL AGREEMENTS
1. Section 5.3 of the Agreement is hereby amended and restated to read
as follows:
"Section 5.3 Fees and Expenses. In addition to the obligations
of the Company pursuant to Section 2.3(c) of this Agreement,
simultaneously with the execution and delivery of this Agreement, the
Company shall pay to the Acquiror, by wire transfer to such account as
the Acquiror may designate in writing to the Company, an amount equal
to $409,410.96 as reimbursement of all Expenses of the Acquiror
incurred to the date of this Amendment. The Company shall be
responsible for its own fees and expenses in connection with the
Exchange, this Agreement and the transactions contemplated hereby."
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date indicated above.
PIERRE FOODS, INC.
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Chairman of the Special Committee
of the Board of Directors
PF MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
President
/s/ Xxxxx X. Xxxxxxxxxx, Xx.
Xxxxx X. Xxxxxxxxxx, Xx.
(Solely for the purpose of Sections
4.4 and 2.5 of the Agreement)
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
(Solely for the purpose of Sections
4.4 and 2.5 of the Agreement)
