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EXHIBIT B
AMENDMENT NO. 2 TO AGREEMENT AND
PLAN OF REORGANIZATION
BY AND AMONG XXXXXXX FOODS, INC.,
X.X. XXXXXXXX COMPANY AND
PAPETTI'S HYGRADE EGG PRODUCTS,INC., AND
QUAKER STATE FARMS, INC.,
PAPETTI'S OF IOWA FOOD PRODUCTS, INC.,
MONARK EGG CORPORATION,
EGG SPECIALTIES, INC.,
PAPETTI FOODS, INC.,
CASA TRUCKING LIMITED PARTNERSHIP,
PAPETTI TRANSPORT LEASING LIMITED PARTNERSHIP, AND
PAPETTI EQUIPMENT LEASING LIMITED PARTNERSHIP
THIS AMENDMENT ("Amendment No. 2") is entered into as of February 26, 1997
(effective as of December 31, 1996) by and among XXXXXXX FOODS, INC., a
Delaware corporation ("Xxxxxxx"), X.X. XXXXXXXX COMPANY, a Nebraska corporation
("Acquisition") and PAPETTI'S HYGRADE EGG PRODUCTS, INC., a New Jersey
corporation ("Papetti's Hygrade") and QUAKER STATE FARMS, INC., a Pennsylvania
corporation ("Quaker"), PAPETTI'S OF IOWA FOOD PRODUCTS, INC., an Iowa
corporation ("Papetti's of Iowa"), MONARK EGG CORPORATION, a Missouri
corporation ("Monark"), EGG SPECIALTIES, INC., a Pennsylvania corporation ("Egg
Specialties"), PAPETTI FOODS, INC., a New Jersey corporation ("Papetti Foods",
and collectively with Quaker, Papetti's of Iowa, Monark, and Egg Specialties,
the "Acquired Companies"), CASA TRUCKING LIMITED PARTNERSHIP, a New Jersey
limited partnership ("Casa Trucking"), PAPETTI TRANSPORT LEASING LIMITED
PARTNERSHIP, a New Jersey limited partnership ("Papetti Transport"), and
PAPETTI EQUIPMENT LEASING LIMITED PARTNERSHIP, a New Jersey limited partnership
("Papetti Equipment" and together with Casa Trucking and Papetti Transport, the
"Acquired Partnerships") (the Acquired Companies and the Acquired Partnerships
are collectively referred to herein as the "Acquired Entities").
R E C I T A L S:
As of June 28, 1996, Xxxxxxx, Acquisition and Papetti's Hygrade and the
Acquired Entities executed and delivered an Agreement and Plan of
Reorganization which was amended and modified by Amendment No. 1 to the
Agreement and Plan of Reorganization dated October 18, 1996 (together, the
"Agreement") which the parties now desire to further modify and amend in
certain respects.
NOW, THEREFORE, the parties hereto covenant and agree as follows:
1. Unless the context otherwise requires, all capitalized terms used herein
shall have the meanings ascribed thereto in the Agreement.
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2. Schedules 2.1 and 2.2 are hereby amended in their entirety as provided in
Exhibit A attached hereto.
3. Section 4.4 shall be amended in its entirety to read as follows:
"4.4 Financial Statements. (i) The audited combined balance sheets of
Papetti's Hygrade and the Acquired Entities as of December 31, 1995 and 1994
and the unaudited balance sheets of Papetti's Hygrade as of July 31, 1996 and
of the Acquired Entities as of September 30, 1996 and (ii) the related
statements of income and retained earnings and the statements of cash flows
for the years and the periods then ended of Papetti's Hygrade and the
Acquired Entities, together with the notes thereto, in the case of the
audited financial statements for 1995 certified by Coopers & Xxxxxxx, L.L.P.
and for 1994 certified by Ehrenkrantz & Company, in each case the independent
certified public accountants of Papetti's Hygrade and the Acquired Companies,
have been previously delivered by Papetti's Hygrade and the Acquired Entities
to Xxxxxxx. Such audited financial statements and the notes thereto were
prepared in accordance with GAAP consistently applied during the years
covered by such audited financial statements, are in accordance with the
books and records of Papetti's Hygrade and the Acquired Entities, and present
fairly the financial condition and results of operations of Papetti's Hygrade
and the Acquired Entities as of such dates and for such years. All
transactions between Papetti's Hygrade and the Acquired Entities, on the one
hand, and any of their respective Shareholders or Partners or their
Affiliates, on the other hand, related to the business and operations of
Papetti's Hygrade and the Acquired Entities (other than as related to
compensation of any of the Shareholders or Partners, as applicable, who were
employed by Papetti's Hygrade or any Acquired Entity during the years covered
by the audited financial) have been included in the applicable audited
financial statements. Except as set forth in Schedule 4.4 hereto, the
unaudited financial statements of Papetti's Hygrade and the Acquired Entities
delivered pursuant to this Section 4.4 have been prepared by management of
Papetti's Hygrade and the Acquired Entities consistent with the accounting
principles utilized in the preparation of the audited financial statements
delivered pursuant to this Section 4.4 and, to the best knowledge of
Papetti's Hygrade and each of the Acquired Entities, present fairly the
financial condition and results of operations of Papetti's Hygrade and the
Acquired Entities as of the date and for such periods covered by such
unaudited financial statements, except for the lack of complete explanatory
footnote disclosures required by GAAP. All transactions between Papetti's
Hygrade and the Acquired Entities, on the one hand, and any of their
respective Shareholders or Partners or their Affiliates, on the other hand,
related to the business and operations of Papetti's Hygrade and the Acquired
Entities (other than as related to compensation of any of the Shareholders or
Partners, as applicable, who were employed by Papetti's Hygrade or any
Acquired Entity during the periods covered by the unaudited financial
statements) have been included in the applicable unaudited financial
statements. For purposes of this Agreement, the "Balance Sheet" shall mean
the combined balance sheets of Papetti's Hygrade at
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July 31, 1996 and of the Acquired Entities at September 30, 1996, and the
respective dates thereof are referred to in this Agreement as the "Balance
Sheet Dates." Xxxxxxx further acknowledges that it has received an unaudited
monthly balance sheet and an unaudited monthly statement of income for
Papetti's Hygrade and each of the Acquired Entities for each month after the
Balance Sheet Dates through January 31, 1997."
4. Section 6.2.6 shall be amended in its entirety to read as follows:
"6.2.6 Enter into or modify any material contract or commitment, incur any
material liability, absolute or contingent, waive or fail to enforce any
material right or enter into any other material transaction, other than in
the ordinary course of business or in connection with this transaction, or
enter into any commitment after December 20, 1996, with respect to operating
leases or capital expenditures, including capital leases."
5. Section 6.2.8 shall be amended in its entirety to read as follows:
"6.2.8 Have made or become obligated to make any dividend payment or other
distribution to the Shareholders or Partners of Papetti's Hygrade or any
Acquired Entity other than dividends or distributions from the Acquired
Entities that are pass-through entities for tax purposes to the extent of any
federal, state or local income tax obligations of the Shareholders or
Partners with respect to the taxable income of such entities since the
Balance Sheet Date, provided that such dividends or distributions have not
previously been made."
6. The pre-existing language set forth in Section 6.11 shall be retained in
its entirety; provided, however, that Section 6.11 shall be amended by adding
thereto the following sentence to the end of the Section:
"Prior to the Closing Date, Papetti's Hygrade and the Acquired Entities shall
provide to Xxxxxxx a complete list of salaries, bonuses, dividends and other
distributions paid to the Shareholders and/or Partners of Papetti's Hygrade
and the Acquired Entities during the period from September 30, 1996 through
the Closing Date."
7. The first sentence of Section 6.10 is hereby deleted and the following
inserted in its place:
"Financial Statements Subsequent to Balance Sheet Date. Papetti's Hygrade
and the Acquired Entities shall deliver to Xxxxxxx interim unaudited monthly
balance sheets and unaudited monthly statements of income for Papetti's
Hygrade and each of the Acquired Entities for each month after the Balance
Sheet Dates through December 31, 1996."
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8. Article 8 is amended by adding thereto a new Section 8.18 as follows:
"8.18 Papetti Farms Agreement. At Closing, Xxxxxxx shall have executed and
delivered to the Representative the Papetti Farms Agreement (as defined in
Section 10.4 of this Agreement)."
9. Section 9.10 shall be amended by revising the first sentence thereof in
its entirety to read as follows:
"At the Effective Time, the aggregate indebtedness of Papetti's Hygrade, the
Acquired Companies and the Acquired Partnerships assumed by Xxxxxxx shall not
exceed $24,600,000."
10. Section 9.12 shall be amended in its entirety to read as follows:
"9.12 Related Party Indebtedness. All amounts owing to Papetti's Hygrade
or the Acquired Entities from Affiliates other than Acquired Entities in
excess of $3,700,000 shall be repaid in cash at or prior to Closing and the
remaining $3,700,000 of such related party indebtedness shall be eliminated
or discharged."
11. Article 9 is amended by adding thereto a new Section 9.19 as follows:
"9.19 Papetti Farms Agreement. At Closing, Papetti's Hygrade and the
Acquired Entities shall have caused Papetti Farms, Inc. to execute and
deliver to Xxxxxxx the Xxxxxxx Farms Agreement."
12. Section 10.4 is hereby amended in its entirety to read as follows:
"At Closing, Xxxxxxx shall execute and deliver to the Representative, and
Papetti's Hygrade and the Acquired Entities shall cause Papetti Farms, Inc.
to execute and deliver to Xxxxxxx an agreement, in substantially the form set
forth as Exhibit H to this Agreement (the "Papetti Farms Agreement"), with
respect to Michael's rights to acquire the ownership interest that Papetti
Farms, Inc. holds in Sunbest-Papetti Farms and Papetti Farms, Inc.'s
obligations to sell such ownership interest to Xxxxxxx."
13. Section 13.1.5 is amended in its entirety to read as follows:
"13.1.5 Papetti's Hygrade and the Acquired Entities or Xxxxxxx if the
transactions contemplated herein shall not have become effective on or before
March 15, 1997."
14. Notwithstanding any other provision in the Agreement to the contrary,
prior to Closing Papetti's Hygrade and the Acquired Entities shall pay all
professional fees incurred by them in connection with or as a result of the
Agreement or the transactions contemplated
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thereby, including all legal, accounting and consulting fees. The fees of
Coopers & Xxxxxxx LLP for investment banking advice and/or for estate or tax
planning for the Shareholders and Partners of Papetti's Hygrade and the
Acquired Entities shall be paid by such Shareholders or Partners, as the case
may be, as provided for in Section 4.17 of the Agreement.
15. X.X. Xxxxxxxx Company may transfer the Acquired Companies and Acquired
Partnerships to a wholly-owned subsidiary of X.X. Xxxxxxxx Company by having
the Mergers and Asset Acquisitions completed through such wholly-owned
subsidiary, but X.X. Xxxxxxxx Company nevertheless shall for purposes of this
Agreement retain all of the rights and obligations of Acquisition under the
Agreement.
16. Except as otherwise provided for herein, the Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, each of the parties have caused this Amendment to the
Agreement to be executed and delivered as of the day and year first above
written.
PAPETTI'S HYGRADE EGG PRODUCTS, INC.
By:/s/ Xxxxxx X. Xxxxxxx
----------------------
Xxxxxx X. Xxxxxxx, President
QUAKER STATE FARMS, INC.
By:/s/ Xxxxxx X. Xxxxxxx
----------------------
Xxxxxx X. Xxxxxxx, Vice President
PAPETTI'S OF IOWA FOOD PRODUCTS, INC.
By:/s/ Xxxxxx X. Xxxxxxx
-----------------------
Xxxxxx X. Xxxxxxx, Vice President
MONARK EGG CORPORATION
By:/s/ Xxxxxx X. Xxxxxxx
-----------------------
Xxxxxx X. Xxxxxxx, Vice President
EGG SPECIALTIES, INC.
By:/s/ Xxxxxx X. Xxxxxxx
-----------------------
Xxxxxx X. Xxxxxxx, President
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PAPETTI FOODS, INC.
By:/s/ Xxxxxxx Xxxxxxx
-------------------------------
Xxxxxxx Xxxxxxx, President
CASA TRUCKING LIMITED PARTNERSHIP
BY CASA TRUCKING CORPORATION,
GENERAL PARTNER
By:/s/ Xxxxxx Xxxxxxx
-------------------------------
Xxxxxx Xxxxxxx, President
PAPETTI TRANSPORT LEASING
LIMITED PARTNERSHIP
BY PAPETTI TRANSPORT LEASING
CORPORATION, GENERAL PARTNER
By:/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx, President
PAPETTI EQUIPMENT LEASING
LIMITED PARTNERSHIP
BY PAPETTI EQUIPMENT LEASING
CORPORATION, GENERAL PARTNER
By:/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx, President
XXXXXXX FOODS, INC.
By:/s/ Xxxxxxx X. Xxxxxxx
------------------------
Xxxxxxx X. Xxxxxxx,
Executive Vice President
X.X. XXXXXXXX COMPANY
By:/s/ Xxxxxxx X. Xxxxxxx
------------------------
Xxxxxxx X. Xxxxxxx, Secretary
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EXHIBIT A
SCHEDULE 2.1 AND 2.2
PURCHASE PRICE AND CONSIDERATION CALCULATION AND ADJUSTMENTS
PURCHASE PRICE CALCULATION
Subject to the adjustments set forth in this Schedule 2.1 and 2.2, the
aggregate purchase price shall be Eighty Million Four Hundred Fifty Thousand
and no/100ths Dollars ($80,450,000).
CONSIDERATION PAYABLE TO THE SHAREHOLDERS/PARTNERS OF THE ACQUIRED ENTITIES
Subject to the adjustments set forth in this Schedule 2.1 and 2.2 or
in the Reorganization Agreement, the consideration to be paid at Closing shall
be payable as follows:
Three Million One Hundred Ninety Five Thousand Four Hundred
Fifty Five (3,195,455) Shares of Xxxxxxx Common Stock shall be issued
by Xxxxxxx ratably to the Common Shareholders of Papetti's Hygrade,
pursuant to the Papetti's Hygrade Reorganization in accordance with
this Schedule 2.1 and 2.2 and in the manner set forth in Section 2.3
of the Agreement;
Forty-Five Million Three Hundred Thousand Dollars
($45,300,000) shall be paid in cash by Xxxxxxx to the Shareholders and
Partners of Papetti's Hygrade and the Acquired Entities in the amounts
determined in accordance with this Schedule 2.1 and 2.2 and in the
manner set forth in Section 2.4 of the Agreement.
CLOSING MARKET PRICE AND OTHER ADJUSTMENTS
To the extent that the average of the last transaction prices of
Xxxxxxx Common Stock as reported by NASDAQ-NMS for the period of ten
consecutive trading days ending three days prior to the date of Closing (the
"Closing Date Average Price") is greater than or less than $11.00 per share,
the difference between $11.00 and the Closing Date Average Price shall be
multiplied by 3,195,455 (or such other number as shall equal the aggregate
number of shares of Xxxxxxx Common Stock that are to be issued to the
Shareholders of Papetti's Hygrade) to determine the difference in value of the
consideration payable in shares of Xxxxxxx Common Stock between the date of the
Agreement and the date of Closing (the "Stock Value Differential"). To the
extent that the Closing Date Average Price is greater than $11.00, the cash
portion of the consideration payable to the Shareholders of Papetti's Hygrade
shall be decreased by one-half of the Stock Value Differential. To the extent
that the Closing Date Average Price is less than $11.00, the cash portion of
the consideration payable to the Shareholders of Papetti's Hygrade shall be
increased by one-half of the Stock Value Differential. Except as set forth in
the next paragraph of this Schedule 2.1 and 2.2, there shall be no
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adjustment to 3,195,455 shares of Xxxxxxx Common Stock to be issued to the
Shareholders of Papetti's Hygrade at Closing based upon the Stock Value
Differential, if any.
In no event shall Xxxxxxx be required to issue a number of shares of
Xxxxxxx Common Stock at the Closing that will equal or exceed 20% of its Common
Stock then outstanding. To the extent that it is determined that the number of
shares of Xxxxxxx Common Stock that Xxxxxxx would be required to issue at
Closing will be 20% or more of the then-outstanding Common Stock without
considering the Xxxxxxx Common Stock to be issued hereunder, the number of
shares required to be issued shall be reduced to the highest number of whole
shares that Xxxxxxx can issue without exceeding such limitation. In such
event, the Shareholders of Papetti's Hygrade who would have been entitled to
receive such shares of Xxxxxxx Common Stock shall become entitled to receive
the dollar amount of the shares of Xxxxxxx Common Stock not issued on the basis
of the Closing Date Average Price plus or minus the Stock Value Differential
formula set forth in the immediately preceding paragraph. In no event shall
Xxxxxxx be required to issue more than 3,195,455 shares of its Common Stock in
the transactions contemplated under the Agreement.
ALLOCATION OF CONSIDERATION AMONG PAPETTI'S HYGRADE REORGANIZATION, THE MERGERS
OF THE ACQUIRED ENTITIES AND THE ASSET ACQUISITIONS OF THE ACQUIRED
PARTNERSHIPS
Subject to the adjustments set forth in this Schedule 2.1 and 2.2, the
consideration to be paid at Closing shall be allocated among Papetti's Hygrade
Reorganization, the Mergers of the Acquired Companies and the Asset
Acquisitions of the Acquired Partnerships as follows:
TRANSACTION XXXXXXX FOODS
----------- COMMON STOCK CASH
------------ ------------
Papetti's Hygrade Reorganization 3,195,455 shares $18,350,000(1)
Quaker Merger -0- 9,150,000
Papetti's of Iowa Merger -0- 4,800,000
Monark Merger -0- 3,600,000
Egg Specialties Merger -0- 1,100,000
Papetti Foods Merger -0- 6,650,000
Casa Trucking Asset Acquisition -0- 1,650,000
Papetti Equipment Asset Acquisition -0- 0
Papetti Transport Asset Acquisition -0- 0
---------------
(1) As adjusted pursuant to this Schedule 2.1 and 2.2.
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The shares or cash to be distributed to each Shareholder or Partner of
Papetti's Hygrade or an Acquired Entity shall be based on each Shareholder's or
Partner's pro rata interest in Papetti's Hygrade, the respective Acquired
Company or the respective Acquired Partnership as set forth on a schedule to be
provided by the Representative at or prior to Closing.
The description of the assets purchased and liabilities assumed in
each Acquired Partnership acquisition shall be as set forth in each Acquisition
Agreement.
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