STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT is made this 27th day of June, 2001, by and
between SMITHFIELD FOODS, INC., a Virginia corporation ("Smithfield"), XXXXX X.
XXXXX, an individual ("Shore"), XXXXXXX X. XXXXX, an individual ("Queen"), and
PINNACLE FOODS, INC., a Pennsylvania corporation (the "Pinnacle").
BACKGROUND:
WHEREAS, Smithfield purchased from Pinnacle and Pinnacle sold and issued to
Smithfield 13,003,494 shares of Pinnacle Common Stock, par value $0.01 per share
("Common Stock") pursuant to that certain Stock Purchase Agreement dated as of
May 31, 2001 (the "Stock Purchase Agreement").
WHEREAS, Pinnacle has granted to Smithfield the right to acquire additional
shares of Common Stock pursuant to that certain Warrant issued by Pinnacle in
favor of Smithfield dated the date hereof (the "Warrant").
NOW THEREFORE, for and in consideration of the premises and of the mutual
covenants, agreements, representations and warranties set forth herein and in
the Stock Purchase Agreement and the Warrant, the parties hereto, intending to
be legally bound hereby, agree as follows:
1. Definitions. The following terms, as used in this Agreement, shall have
the respective meanings given to such terms as set forth below:
(a) "Affiliate," "Associate," and "Control" shall have the respective
meanings set forth in Rule 405 promulgated under the Securities Act.
(b) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
promulgated under the Exchange Act.
(c) "Business Combination" means any acquisition, purchase, merger,
consolidation, amalgamation, joint venture, contribution of assets, sale, lease,
exchange, mortgage, pledge, transfer, or other disposition in one transaction or
a series of related transactions by which the business of one entity is combined
or put together with the business of another entity, directly or indirectly
(such as through a subsidiary of the acquiring entity).
(d) "Business Day" shall mean a day other than a Saturday, Sunday or
Holiday.
(e) "Confidential Information" means all confidential information of a
party including, without limitation, scientific, commercial, technical,
contractual, engineering, marketing and financial information, drawings,
blueprints, descriptions, know-how, marketing plans, customer and vendor lists,
and other proprietary information, whether or not patented or patentable. Any
and all information derived from Confidential Information and all compilations
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and copies of Confidential Information shall also be deemed to be Confidential
Information pursuant to the terms of this Agreement.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(g) "GAAP" means generally accepted accounting principles consistently
applied from period to period.
(h) "Holiday" means a day, other than a Saturday or Sunday, on which
national banks with branches in the Commonwealth of Pennsylvania are or may
elect to be closed.
(i) "Limitation Period" means the time period beginning on the date of
this Agreement and ending on the first to occur of (i) the fifth anniversary of
such date, (ii) the last day of the sixth consecutive calendar quarter in which
Pinnacle had a net loss (computed in accordance with GAAP), (iii) the first date
on which neither Shore nor Queen is a Beneficial Owner of any Voting Securities,
or (iv) the last day of the calendar quarter on which the net worth of Pinnacle
first falls below Two Million Dollars ($2,000,000).
(j) "Xxxxxxxx Agreement" means the agreement by and between Pinnacle
and Xxxxxx X. Xxxxxxxx dated November 22, 2000.
(k) "Person" means any individual, trust, corporation, partnership,
limited liability company, or other entity.
(l) "SEC" means the Securities and Exchange Commission.
(m) "Securities Act" means the Securities Act of 1933, as amended.
(n) "Smithfield Group" means Smithfield and all of its Affiliates and
Associates (regardless of whether such Affiliate or Associate is an Affiliate or
Associate on the date hereof), both in their individual capacities and
collectively, which own any Voting Securities.
(o) "Subsidiary" shall mean any entity more than fifty percent (50%)
of the equity interests of which are owned by Pinnacle or by another Subsidiary.
(p) "13D Group" shall mean any group of Persons formed for the purpose
of acquiring, holding, voting or disposing of Voting Securities which would be
required under Section 13(d) of the Exchange Act or the rules and regulations
promulgated thereunder to file a Statement on Schedule 13D or a Statement on
Schedule 13G with the Securities and Exchange Commission as a "person" within
the meaning of Section 13(d)(3) of the Exchange Act if such group beneficially
owned more than five percent (5%) of any class of equity securities of Pinnacle
then outstanding.
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(q) "Voting Power" means, with respect to any Voting Security, the
maximum number of votes which such Voting Security is or would be entitled to
cast generally for the election of directors, and in the case of a convertible,
exercisable or exchangeable Voting Security, considering such security both on
an unconverted, unexercised or unexchanged basis and also on a converted,
exercised or exchanged basis, as the case may be.
(r) "Voting Securities" means Common Stock and any other securities of
Pinnacle entitled to vote generally for the election of directors or any
security convertible into or exchangeable or exercisable for the purchase of
Common Stock or other securities of Pinnacle entitled to vote generally for the
election of directors.
2. Restrictions on Resale or Other Disposition.
(a) During the Limitation Period, Smithfield shall not, and shall
cause each other member of the Smithfield Group not to, directly or indirectly,
sell or transfer any beneficial interest in, pledge, hypothecate or otherwise
dispose of, any Voting Securities beneficially owned by it, except pursuant to:
(i) Any lien or encumbrance of all, but not less than all, of the
Voting Securities then beneficially owned by such members, collectively, to an
institutional lender to secure a bona fide loan, the foreclosure of such a lien
or encumbrance, any other such lien or encumbrance which may be placed
involuntarily on all such Voting Securities, or the subsequent sale or other
disposition of all such Voting Securities by such lender or its agent; provided
that such lender and any purchaser or other transferee of such Voting
Securities, whether at foreclosure proceedings, from the lender, or by
subsequent transfer or sale, is a Permitted Transferee (as hereinafter defined);
(ii) a transfer, assignment, sale or disposition of such Voting
Securities among members of the Smithfield Group, provided that all of the
voting and equity interests of the transferee shall be, directly or indirectly,
owned by Smithfield and such transferee also be a Permitted Transferee;
(iii) a Business Combination not in violation of subparagraph
4(b)(x) of this Agreement;
(iv) sales of Common Stock (A) to the public pursuant to and in
compliance with the requirements of Rule 144 promulgated under the Securities
Act or (B) pursuant to a distribution to the public under a registration
statement filed under the Securities Act and declared effective by the SEC,
provided that the Smithfield Group makes such distribution through a firm
commitment underwriting and the underwriters agree to use all commercially
reasonable efforts to effect as wide a distribution of such Common Stock as
reasonably practicable and to prevent any Person or related group of Persons
from purchasing through such sale or underwritten offering Common Stock having
in the aggregate more than five percent (5%) of the total combined Voting Power
of all Voting Securities then outstanding, without the prior express written
consent of Pinnacle, and further provided, that Pinnacle shall
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have approved the lead underwriter used by the selling members of the Smithfield
Group, such approval not to be unreasonably withheld.
(b) Notwithstanding the foregoing, members of the Smithfield Group may
sell, subject to the terms of Paragraph 3, less than all of the Voting
Securities then owned by the Smithfield Group to one or more Permitted
Transferees pursuant to the terms of subparagraph 2(a)(i), provided that any
breach of this Agreement or the taking of any other action under or with respect
to this Agreement by any member of the Smithfield Group or any such Permitted
Transferee shall constitute the action of, and shall be binding upon, Smithfield
and all such Permitted Transferees. No sale, transfer, pledge, hypothecation or
disposition of any or all of the Voting Securities held by the Smithfield Group
shall relieve Smithfield of its obligations under this Agreement except as
permitted under this Agreement.
(c) A "Permitted Transferee" shall mean a person or entity who or
which has delivered the written agreement of such person or entity to Pinnacle,
satisfactory in form and substance to Pinnacle and its counsel, to be bound by
the provisions of this Agreement to the same extent as if such Permitted
Transferee were a member of the Smithfield Group hereunder, together with, in
transactions referred to in subparagraphs 2(a) or 2(b), an opinion of counsel
reasonably satisfactory to Pinnacle to the effect that the foregoing written
agreement constitutes the valid and binding obligation of such Permitted
Transferee, enforceable in accordance with its terms except (i) that such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, or similar laws now or hereafter in effect relating to creditors'
rights and (ii) that the remedy of specific performance and injunctive and other
forms of equitable relief is subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought. Any
Permitted Transferee shall be deemed to be a member of the Smithfield Group for
all purposes of this Agreement.
(d) A sale of all or substantially all of the capital stock or assets
of a member of the Smithfield Group shall be deemed to be an indirect sale of
Voting Securities within the meaning of this Agreement if such Voting Securities
would be owned by a non-member of the Smithfield Group, directly or indirectly,
after such sale; and as such, shall be prohibited except pursuant to the terms
and subject to the conditions of this Agreement.
3. Pinnacle's Right of First Refusal.
(a) If any member of the Smithfield Group (a "Selling Member") shall
at any time desire to sell all or any Voting Securities (other than pursuant to
and in accordance with the provisions of subparagraph 2(a)(iv)), Smithfield
shall cause such Selling Member first to obtain a bona fide written offer which
it desires to accept (hereinafter called the "Offer") to purchase such Voting
Securities for a fixed cash price (which may be payable over time). The Offer
shall set forth its date, the proposed price per Voting Security, the fact that
the prospective purchaser is willing to deliver the written agreement of such
prospective purchaser to be bound by the provisions of this Agreement, and the
other terms and conditions upon which the purchase is proposed to be made, as
well as the name and address of the Prospective Purchaser. "Prospective
Purchaser" as used herein shall mean the prospective record owner or owners of
the Voting Securities, which are the subject of the Offer and all other Persons
proposed to be a
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Beneficial Owner of such Voting Securities. Smithfield shall transmit copies of
the Offer to Pinnacle within seven (7) days after receipt of the Offer.
(b) Transmittal of the Offer to Pinnacle by Smithfield shall
constitute an offer by such Selling Member and Smithfield to sell all, but not
less than all, of the Voting Securities subject to such Offer at the price and
upon the terms set forth in the Offer. For a period of thirty (30) days after
the submission of the Offer to Pinnacle, Pinnacle shall have the option,
exercisable by written notice to Smithfield and such Selling Member, to accept
the offer of such Selling Member and Smithfield as to all or any part of the
applicable Voting Securities. The right and option granted pursuant to this
subparagraph (b) shall be assignable by Pinnacle in whole or in part.
(c) If, at the end of the option period described in subparagraph
3(b), Pinnacle and its assignees have not exercised the option to purchase all
the applicable Voting Securities given to it pursuant to the terms of such
offer, then such Selling Member shall be free for a period of twenty (20) days
thereafter to sell the Voting Securities which Pinnacle and its assignees have
not agreed to purchase and which are subject to the Offer of the Prospective
Purchaser at the price and upon the terms and conditions set forth in the Offer.
If such Voting Securities are not so sold within such twenty-day period, then
such Selling Member shall not be permitted to sell such Voting Securities
without again complying with the terms of this Paragraph 3.
(d) Settlement for the purchase of Voting Securities pursuant to the
option granted in subparagraph 3(b) shall be made within forty-five (45) days
following the date of exercise of such option. The purchase price and the terms
of payment shall be those contained in the Offer, with settlement to be made as
provided herein. Such settlement, unless otherwise agreed to by Pinnacle and
such Selling Member shall be held at the principal executive offices of Pinnacle
during regular business hours. The precise date and hour of settlement shall be
fixed by Pinnacle (within the time limits allowed by the provisions of this
Agreement) by notice in writing to such Selling Member given at least five (5)
days in advance of the settlement date specified.
(e) At settlement, the security certificate or certificates
representing the Voting Securities being sold shall be delivered by such Selling
Member to the purchaser(s), duly endorsed for transfer or with executed stock
powers attached, with signatures guaranteed by a member of the Stock Transfer
Agents Medallion Program, with any necessary documentary and transfer tax stamps
affixed by such Selling Member, together with a certificate of the Secretary or
an Assistant Secretary of such Selling Member that such sale has been approved
by all necessary corporate action, and the purchaser shall deliver to the
Selling Member the full consideration for such Voting Securities in immediately
available funds.
4. Additional Covenants of Smithfield.
(a) During the Limitation Period, Smithfield shall, and shall cause
each other member of the Smithfield Group to, subject to the receipt of proper
notice and the absence of a temporary restraining order or preliminary or
permanent injunction barring such action, as a shareholder of Pinnacle, be
present in person or by proxy, at all annual shareholder
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meetings of Pinnacle and at up to one special meeting of shareholders per year
of Pinnacle so that all Voting Securities beneficially owned by them may be
counted for the purpose of determining the presence of a quorum at such
meetings;
(b) During the Limitation Period, Smithfield, shall refrain, and shall
cause each other member of the Smithfield Group, to refrain, directly or
indirectly, from:
(i) soliciting proxies with respect to Voting Securities, or
becoming a "participant" in a "solicitation" (as such terms are defined in
Regulation 14A promulgated under the Exchange Act) in opposition to the
recommendation of the Board of Directors of Pinnacle;
(ii) depositing any Voting Securities in a voting trust or
subjecting them to a voting agreement, shareholders' agreement, or other
arrangement of similar effect;
(iii) except pursuant to the Warrant or Paragraph 10 of this
Agreement, permitting any entity under the control of any member of the
Smithfield Group to acquire, offer to acquire, agree to acquire, or obtain an
option or right to acquire, directly or indirectly, by purchase or otherwise,
any Voting Securities;
(iv) acquiring, offering to acquire, agreeing to acquire, or
obtaining an option or right to acquire, directly or indirectly, by purchase or
otherwise, any record or beneficial ownership of Voting Securities, except: (A)
through stock splits, stock dividends or other pro rata distributions or
offerings made by Pinnacle to holders of any class of Voting Securities
generally; (B) if such acquisition is a result of the issuance by Pinnacle of
Voting Securities pursuant to the terms of any merger, consolidation, or other
means of acquisition not in violation of subparagraph 4(b)(x) of this Agreement,
in exchange for securities of a corporation or other entity acquired in whole or
in part by Pinnacle or any of its Subsidiaries which securities were owned by
any member of the Smithfield Group prior to the time of the first public
announcement of the acquisition or, if sooner, the time any member of the
Smithfield Group learned of the acquisition; (C) pursuant to the terms of the
Warrant or Paragraph 10 of this Agreement; or (D) with the express written
consent of Pinnacle;
(v) joining a partnership, limited partnership, syndicate, or 13D
Group or other group (other than the Smithfield Group) for the purpose of
acquiring, holding or disposing of Voting Securities;
(vi) initiating or inducing or attempting to induce or give
material support to any other Person to initiate any proposal or tender or
exchange offer to acquire Voting Securities;
(vii) acquiring or permitting any entity under their control
(including but not limited to subsidiaries and employee pension, profit sharing
or other trusts under investment management control of any member of the
Smithfield Group) to acquire, by purchase or otherwise, more than five percent
(5%), in the aggregate, of any class of equity
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securities of any entity which, prior to the time the Smithfield Group acquires
more than five percent (5%) of such class, is publicly disclosed (by filing with
the Securities and Exchange Commission or otherwise) to be the record owner or
Beneficial Owner of more than five percent (5%) of any class of Voting
Securities;
(viii) executing any written consent or demand in lieu of a
meeting with respect to Voting Securities or otherwise taking any action in the
nature of a vote with respect to Voting Securities except at a meeting of the
shareholders of Pinnacle or pursuant to a unanimous consent or other unanimous
action; or
(ix) making or voting in favor of, directly, or indirectly, any
proposal regarding a Business Combination or transaction involving Pinnacle on
the one hand and a corporation, division, or other business entity or unit owned
or controlled by Smithfield, on the other hand, or directly or indirectly,
soliciting or inviting proposals from other parties for a Business Combination
to which Pinnacle is or would be a party without the consent of a majority of
the members of the Board of Directors of Pinnacle, other than the Smithfield
Directors (as defined below).
5. Confidentiality.
(a) During the Limitation Period and for a period of two (2) years
thereafter, Smithfield shall, and shall cause each other member of the
Smithfield Group to, use reasonable care to maintain the strict confidentiality
of all Confidential Information received from Pinnacle, except insofar as
written approval of Pinnacle is obtained; provided, however, that the foregoing
obligation of confidentiality shall not apply to any portion of the Confidential
Information which is or become public knowledge other than through the
unauthorized disclosure of a member of the Smithfield Group; was known to
Smithfield before receipt from Pinnacle; is received legally without restriction
on disclosure from a third party who has the right to make such disclosure; or
is required to be disclosed in order to comply with a judicial order, subpoena,
or decree or with any law or regulation of any governmental authority.
(b) Because any breach of this Paragraph 5 would have a material
adverse effect on Pinnacle for many years, and the monetary impact of any such
breach may be difficult or impossible to measure accurately in monetary terms,
the parties recognize and acknowledge that irreparable damage may result if such
provisions protecting Pinnacle are not specifically enforced. Accordingly, if
any dispute arises regarding compliance with the terms of this Paragraph 5, the
parties agree that Pinnacle shall be entitled, without having to demonstrate
actual damage, to a temporary or permanent injunction, issuable by any court
with appropriate jurisdiction, with respect to noncompliance with such
provisions pending determination of such controversy and that no bond or other
security shall be required to be posted by Pinnacle in connection with such
action. If any dispute arises concerning the rights and obligations of any party
under this Agreement, such right or obligation shall be enforceable by a decree
of specific performance. The remedies provided in this subparagraph (b) are
cumulative and not exclusive of any other remedies provided at law or equity,
and are not intended to limit nor shall they be interpreted as limiting the
generality of subparagraph 11(a) of this Agreement. Moreover, the
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provisions of this Paragraph 5 shall not, and are not intended to, replace or
nullify any fiduciary or other duty owed to Pinnacle by Smithfield or any other
member of the Smithfield Group.
(c) The Confidential Information of Pinnacle shall remain the property
of Pinnacle, and Pinnacle may demand the return thereof at any time upon giving
written notice to Smithfield. Within thirty (30) days of receipt of such notice,
Smithfield shall return all of the original written Confidential Information or
other written materials and all compilations and copies thereof received from
Pinnacle and shall destroy all copies and reproductions (both written and
electronic) in its possession and in the possession of persons to whom any such
Confidential Information and other material which was disclosed to a member of
the Smithfield Group.
(d) Nothing contained in this Agreement shall be construed as
conveying any license or right, express or implied, to Smithfield by Pinnacle
for any invention, patent application, patent, copyright, know-how, trade
secret, trademark, service xxxx, other intellectual property right or
application owned by Pinnacle.
6. Furnishing Certain Information. During the Limitation Period, the
Smithfield Group shall furnish to Pinnacle, in addition to copies of all filings
required by law to be made in the event of any acquisition or sale of Pinnacle
securities by it, a statement, within ten (10) calendar days after the end of
each month in which any Voting Securities are acquired or disposed of, showing
the number of Voting Securities acquired or disposed of during such month and
the aggregate number of Voting Securities currently held by the Smithfield Group
at the end of such month.
7. Legend and Stop Transfer Order. To assist in effectuating the provisions
of this Agreement, Smithfield hereby consents:
(a) to the placement, within ten (10) business days from the date
hereof or the date any Voting Securities are acquired by any member of the
Smithfield Group, of the following legend on all certificates representing
ownership of Voting Securities of which any member of the Smithfield Group (or
any Permitted Transferee) is the Beneficial Owner until such shares are sold,
transferred or disposed of pursuant hereto and free from the restrictions on
transfer imposed hereby:
The shares represented by this certificate are subject to
the provisions of an Agreement among Smithfield Foods, Inc.,
Pinnacle Foods, Inc., Xxxxx X. Xxxxx, and Xxxxxxx X. Xxxxx, dated
June __, 2001, as such agreement may be further amended, and may
not be sold, transferred, pledged, hypothecated or otherwise
disposed of except in accordance therewith. Copies of such
agreement are on file at the office of the corporate secretaries
of Smithfield Foods, Inc. and of Pinnacle Foods, Inc.;
(b) to the entry of stop transfer orders with the transfer agent of
Pinnacle against the transfer of Voting Securities except in compliance with the
requirements of
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this Agreement, or if Pinnacle acts as its own transfer agent, with respect to
the refusal by Pinnacle to transfer any such securities except in compliance
with the requirements of this Agreement. Pinnacle agrees to remove promptly all
legends and stop transfer orders with respect to the proper transfer of Voting
Securities being made in compliance with the provisions of this Agreement to a
Person other than a Permitted Transferee.
8. Additional Agreements of the Parties.
(a) During the Limitation Period, Pinnacle shall not oppose or
interfere with any action by the Smithfield Group to acquire or dispose of
Voting Securities in compliance with the provisions of the Warrant, nor commence
any action against any member of the Smithfield Group arising out of or relating
to its acquisition or holding of Voting Securities, except to enforce, or
arising out of a breach of, the provisions of this Agreement.
(b) During the Limitation Period, Pinnacle shall furnish to Smithfield
such information as Smithfield reasonably requires.
(c) During the Limitation Period, Pinnacle, Smithfield, Shore, and
Queen shall and hereby agree to:
(i) take no action to change the number of directors of Pinnacle
from the five (5) directors now provided for in Pinnacle's By-laws without the
consent of each of them who then hold Voting Securities; and
(ii) vote all their shares of Common Stock in favor of electing
as directors of Pinnacle, one (1) nominee of Queen, two (2) nominees of Shore,
and two (2) nominees of Smithfield (the "Smithfield Directors"). If a vacancy
occurs on the Pinnacle Board of Directors, the parties shall use their best
efforts to cause the vacancy to be filled in a manner consistent with the
intention of the preceding sentence.
(d) During the Limitation Period, without the consent of one of the
two Smithfield Directors, which consent may be withheld in the sole discretion
of such directors, Pinnacle shall not and the parties to this Agreement shall
use reasonable commercial efforts (including, without limitation, voting all
their shares of Common Stock) to cause Pinnacle not to:
(i) declare, pay, or set aside any funds for or in the nature of
a dividend or other distribution on or with respect to the shares of Common
Stock (other than dividends payable in shares of Common Stock);
(ii) engage in any transaction to which Pinnacle is a party on
the one hand, and any director, officer, or Affiliate or Associate of Pinnacle
or of such director, officer, Affiliate or Associate is a party on the other
hand;
(iii) make any capital expenditures except for capital
expenditures made pursuant to a budget approved in advance by a Smithfield
Director, or in the absence of such an approved budget, capital expenditures of
not more than One Hundred Thousand Dollars ($100,000) per year;
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(iv) issue any capital stock, or any right to receive or right
convertible into capital stock except for any such issuances made pursuant to
agreements outstanding on the date hereof and except as otherwise set forth in
subsection (g) of this Section 8;
(v) settle any dispute under the Xxxxxxxx Agreement other than by
issuance of stock and/or the repayment of $300,000 plus accrued interest, if
any, lent by Xx. Xxxxxxxx to the corporation as referenced in the Xxxxxxxx
Agreement;
(vi) except pursuant to that certain Credit Agreement between
Pinnacle as borrower and Smithfield as lender, borrow, create security
interests, modify or prepay existing indebtedness for borrowed money, involving
or securing in excess of $250,000 in the aggregate except as specifically set
forth in a budget approved by the Board of Directors of Pinnacle (the "Budget");
(vii) change Pinnacle's accounting methods except for changes
required to conform to GAAP;
(viii) incur any obligation, including any contingent obligation,
or assume any liability in excess of $250,000, except in accordance with the
Budget;
(ix) enter into new lines of business or new businesses;
(x) execute any amendment to, or modify any provision of the
Articles of Incorporation or the By-Laws;
(xi) commence a voluntary case or consent to the entry of an
order for relief against it in an involuntary case under Chapter 7 or Chapter 11
of the United States Bankruptcy Code;
(xii) acquire (including by merger) stock or assets of another
business (other than assets acquired in the ordinary course of business), from
any seller or group of related sellers in one transaction or in a series of
related transactions, for consideration having a fair market value in excess of
$500,000, except as specifically set forth in the Budget;
(xiii) sell or dispose of assets not in the ordinary course of
business (including by merger or sale of stock of a subsidiary), to any buyer or
group of related buyers in one transaction or in a series of related
transactions, or for consideration having a fair market value in excess of
$500,000, except as specifically set forth in the Budget; or
(xiv) increase the compensation payable to any Pinnacle employee
earning in excess of Seventy Five Thousand Dollars ($75,000) per year, except in
accordance with a company - wide payroll increase of six percent (6%) or less
per year.
(e) Pinnacle shall, promptly following the date hereof, at its cost
and expense, file a registration statement with the SEC under the Exchange Act
and use reasonable commercial efforts to have such registration statement
declared effective.
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(f) Each party to this Agreement understands, acknowledges, and agrees
that, each other party and its respective Affiliates and Associates may invest,
participate, or engage in or may possess an interest in, other financial and
business ventures and investment and professional activities of every kind and
description, independently or with others. The parties hereto expressly agree
that no party shall by reason of their relationship hereunder or of the
execution of this Agreement have any rights in or to any such venture or
activity, or to any fees, income, profits or goodwill derived therefrom or any
right to limit or prevent, in any respect, any such venture or activity,
regardless of its nature, including without limitation, Smithfield's competition
with Pinnacle and Pinnacle's competition with Smithfield.
(g) Notwithstanding the provisions of subsection 8(d)(iv) to the
contrary, Pinnacle shall be entitled to issue stock options (and upon proper
exercise of such options, the underlying shares) to two prospective employees of
Pinnacle (the names of which have been provided to Smithfield) in an aggregate
amount not to exceed Three Hundred Thousand (300,000) shares.
9. Smithfield Beneficial Ownership of Voting Securities. Smithfield hereby
represents and warrants to the other parties to this Agreement that it is not,
and no Affiliate or Associate of Smithfield is, the Beneficial Owner of any
Voting Securities except pursuant to the Stock Purchase Agreement and the
Warrant.
10. Smithfield's Right of First Offer.
(a) If Shore or Queen shall at any time desire to sell all or any
Voting Securities owned by either of them, respectively, he shall give the other
parties to this Agreement notice of his intention to do so. Such notice shall
contain the number and type of Voting Securities which he desires to sell, and
the minimum price per Voting Security and in the aggregate which he is willing
to accept for such Voting Securities.
(b) Transmittal of such notice to Smithfield shall constitute an offer
by such prospective seller to sell all or any portion of the Voting Securities
referred to in such notice at the price set forth therein to Smithfield. For a
period of five (5) days after receipt of such notice to Smithfield, Smithfield
shall have the option, exercisable by written notice to such prospective seller,
to accept the offer of such prospective seller as to all or any part of the
applicable Voting Securities.
(c) If, at the end of the five-day period described in subparagraph
(b), Smithfield has not agreed to purchase all the applicable Voting Securities
given to it pursuant to the terms of such notice, then such prospective seller
shall be free for a period of ninety (90) days thereafter to sell the Voting
Securities referred to in such notice which Smithfield has not agreed to
purchase at a price not lower than that contained in such notice. If all such
Voting Securities are not so sold within such ninety-day period, then such
prospective seller shall not be permitted to sell any such Voting Securities
which then remain unsold without again complying with the terms of this
Paragraph 10.
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(d) Settlement for the purchase of Voting Securities pursuant to the
exercise of the right granted in subparagraph (b) shall be made within
forty-five (45) days following the date of exercise of such right. The purchase
price per Voting Security and the terms of payment shall be those contained in
such notice, with settlement to be made as provided herein. Such settlement,
unless otherwise agreed to by Smithfield and such prospective seller, shall be
held at the principal executive offices of Pinnacle during regular business
hours. The precise date and hour of settlement shall be fixed by Smithfield
(within the time limits allowed by the provisions of this Agreement) by notice
in writing to such prospective seller given at least ten (10) days in advance of
the settlement date specified.
(e) At settlement, the security certificate or certificates
representing the Voting Securities being sold shall be delivered by such
prospective seller to Smithfield, duly endorsed for transfer or with executed
stock powers attached, with signatures guaranteed by a member of the Stock
Transfer Agents Medallion Program, with any necessary documentary and transfer
tax stamps affixed by such prospective seller, and Smithfield shall deliver the
purchase price for the Voting Securities to be purchased in immediately
available funds.
11. General
(a) Specific Enforcement; Other Remedies. Smithfield and Pinnacle
acknowledge and agree that the other would be irreparably damaged in the event
any of the provisions of this Agreement were not performed in accordance with
its specific terms or were otherwise breached. It is accordingly agreed that the
non-breaching party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, in addition to any other remedy to which such
non-breaching party may be entitled at law or equity. If any party (or any
transferee) breaches a material provision of this Agreement, in addition to any
other rights and remedies (including money damages) available to it at law or in
equity, the non-breaching party will be entitled to damages from the breaching
party. The remedy contained in this subparagraph (a) shall not be deemed to be
the exclusive remedy for material breach by a party to this Agreement (or any
transferee) of this Agreement, nor shall such right be deemed to prejudice, or
to operate as a waiver of, any remedy contained herein, or any other remedy to
which Pinnacle or Smithfield may be entitled at law or equity.
(b) Successors and Assigns. Except as provided herein, this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
successors and assigns of the parties hereto.
(c) Indulgences, Etc. Neither the failure nor any delay on the part of
any party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege, nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.
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(d) Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
notwithstanding any conflict-of-laws doctrines of such state or other
jurisdiction to the contrary, and without the aid of any canon, custom or rule
of law requiring construction against the draftsman.
(e) Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received only when delivered against
receipt (personally, by courier service such as Federal Express, or by other
messenger) or when deposited in the United States mails, registered or certified
mail, postage prepaid, return receipt requested, addressed as set forth below:
(i) If to Pinnacle:
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President
with a copy, given in the manner
prescribed above, to:
Xxxxxx X. Xxxx, Esquire
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
(ii) If to Queen:
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
(iii) If to Shore:
0000 Xxxxxxx Xxxxx
#000X
Xxxxxxxx, XX 00000
(iv) If to Smithfield:
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X.X. Xxxxxxx, Vice-President,
General Counsel, and Senior Advisor to the Chairman
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with a copy, given in the manner prescribed above, to:
Xxxxxxx X. Xxxx, Esquire
Smithfield Foods, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
In addition, notice by mail shall be by air mail if posted outside of the
continental United States. Any party may alter the address to which
communications or copies are to be sent by giving notice of such change of
address in conformity with the provisions of this subparagraph (e) for the
giving of notice.
(f) Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all the parties reflected hereon as the
signatories.
(g) Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
(h) Entire Agreement. This Agreement contains the entire understanding
among the parties hereto with respect to the subject matter hereof except for
related matters in the Stock Purchase Agreement, the Warrant, and the documents
referred to therein, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms hereof. This Agreement may not be modified or amended other than by an
agreement in writing.
(i) Paragraph Headings. The paragraph and subparagraph headings in
this Agreement have been inserted for convenience of reference only; they form
no part of this Agreement and shall not affect its interpretation.
(j) Gender, Etc. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context indicates is appropriate.
(k) Number of Days. In computing the number of days for purposes of
this Agreement, all days shall be counted, including Saturdays, Sundays and
Holidays; provided,
14
however, that if the final day of any time period falls on a Saturday, Sunday or
Holiday, then the final day shall be deemed to be the next day which is not a
Saturday, Sunday or Holiday.
(l) Consent. Whenever consent or approval of Pinnacle is required
under this Agreement, such consent or approval shall require the consent or
approval of a majority of the Pinnacle Board of Directors other than directors
nominated by Smithfield in accordance with subparagraph 8(c)(ii).
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their proper and duly authorized officers, as of the date first
above written.
Attest: PINNACLE FOODS, INC.
By
------------------------------ ------------------------------------
[Corporate Seal] Title:
Attest: SMITHFIELD FOODS, INC.
By
------------------------------ ------------------------------------
[Corporate Seal] Title:
Witness:
------------------------------ -----------------------------------(SEAL)
Xxxxx X. Xxxxx
Witness:
------------------------------ -----------------------------------(SEAL)
Xxxxxxx X. Xxxxx
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