EXHIBIT 2.2
PARTIAL ASSIGNMENT AND ASSUMPTION
AGREEMENT
This Partial Assignment and
Assumption Agreement (the “Agreement”), dated this
2 nd day of October, 2006, is made by and
between SMITHFIELD FOODS, INC. , a Virginia corporation
(“ Assignor ”) and BUTTERBALL, LLC , a
North Carolina limited liability company (“ Assignee
”).
WHEREAS , pursuant to an Asset Purchase Agreement by and
between Assignor and ConAgra Foods Packaged Foods Company, Inc.
(“ Seller ”), dated July 31, 2006, as
amended on the date hereof and attached hereto as Exhibit A
(the “ Purchase Agreement ”; capitalized terms
used but not defined herein shall have the meanings assigned to
them in the Purchase Agreement), Assignor has agreed to purchase
substantially all of the assets of Seller’s refrigerated
meats business; and
WHEREAS, Assignor has agreed to transfer and assign to
Assignee, and Assignee has agreed to assume from Assignor, certain
of Assignor’s rights and obligations under the Purchase
Agreement on the terms set forth herein as they relate to that
portion of the Seller’s refrigerated meats business related
to the growing and processing of turkey and sale and distribution
of turkey products under the Butterball and Longmont brands (the
“ Turkey Business ”); and
WHEREAS, pursuant to Section 20.9 of the Purchase
Agreement, Assignor may assign its rights and obligations under the
Purchase Agreement with the consent of Seller and Seller has
consented to the assignment contemplated herein.
NOW THEREFORE,
in consideration of the premises and
the mutual covenants contained herein, and for other good and
valuable consideration, the receipt, adequacy and sufficiency of
which are hereby acknowledged, Assignor and Assignee hereby agree
as follows:
SECTION 1. Assignment
. Subject to the terms and conditions set forth herein,
Assignor hereby assigns, conveys, transfers and sets over
(collectively, the “ Assignment ”) to Assignee
the following:
a. all of Assignor’s right,
title, benefit, privileges and interest under the Purchase
Agreement related to the acquisition and subsequent operation of
the Turkey Business, including, without limitation:
(i) the right to purchase from
Seller the Assets described in Exhibit B attached hereto
(collectively, the “ Turkey Assets ”) as of the
Effective Time in accordance with the terms of the Purchase
Agreement for an amount equal to Three Hundred Twenty-Five Million
Dollars ($325,000,000) (the “ Base Turkey Purchase
Price ”), plus (or minus) the amount by which the Closing
Turkey Working Capital Amount (defined in Section 8 below) is
greater than (or less than) One Hundred Million Dollars
($100,000,000) (the “ Target Turkey Working Capital
Amount ”) (the Base Turkey Purchase Price as adjusted
shall be referred to herein as the “ Turkey Purchase
Price ”);
(ii) the right to assume from Seller
in accordance with the terms of the Purchase Agreement all rights
and obligations accruing under the Turkey Contracts and the Mixed
Contracts (each defined in Exhibit B ) arising from and
after the Effective Time;
(iii) the right to enter into and
accept delivery of the Assignment and Assumption Agreement; the
Transition Services Agreement; the Ingredients Supply Agreement;
the Finished Product Supply Agreement; the Butterball Trademark
License Agreement; and the Patent License Agreement; each to the
extent related to the Turkey Assets or the Turkey Business
(collectively, the “ Turkey Ancillary Agreements
”);
(iv) The right to enforce for
Assignee’s benefit any of the covenants, agreements or
undertakings of Seller under the Purchase Agreement, to the extent
related to the Turkey Business or the Turkey Assets, including,
without limitation, all of Assignor’s right, title, benefit,
privileges and interest under Section 16 (Indemnity) of the
Purchase Agreement;
(v) the right to rely on the
Seller’s representations and warranties as set forth in the
Purchase Agreement insofar as they relate to the Turkey Assets or
the Turkey Business; and
b. the following burdens,
obligations and liabilities of Assignor under the Purchase
Agreement (collectively, the “ Assigned Obligations
”):
(i) The obligation to assume the
Assumed Liabilities set forth on Exhibit C attached hereto
(the “ Turkey Assumed Liabilities ”);
(ii) The obligation to pay the
Turkey Purchase Price;
(iii) Assignor’s obligations
under Section 5.7 of the Purchase Agreement, with respect to
the Butterball Canada License;
(iv) The obligations of Assignor
under 6.1.4 (Certificate) and 6.1.6 (Secretary’s Certificate)
of the Purchase Agreement, solely to the extent such obligations
relate to Assignor’s acquisition of the Turkey Assets or
assumption of the Assumed Liabilities;
(v) The liabilities and obligations
of Assignor under Article 8 (Employee Matters), but only with
respect to (A) individuals employed at the Dedicated Locations
set forth on Exhibit D attached hereto (the “
Dedicated Turkey Locations ”) and (B) the
Business Employees listed on Exhibit E attached hereto (the
“ Turkey Business Employees ”); provided,
further, that Assignee shall only assume the Retention Agreements
referenced in Section 8.12 of the Purchase Agreement that are
set forth in Exhibit F attached hereto
(vi) The obligations of Assignor
under Sections 11.3 (Trade Name Protection), 11.4 (Insurance
Matters), 11.5 (No Post-Closing Extension of Contracts),
11.7
(Privacy Policy), 11.8 (Record
Retention), 11.9 (Business Information; Cooperation in Litigation),
11.10 (Receivables), 11.11 (Environmental Covenant Not to Sue) and
11.12 (Use Restriction) of the Purchase Agreement, solely to the
extent related to the Turkey Business.
(vii) The obligation of Assignor
under Section 11.6 of the Purchase Agreement with respect to
the Guarantees listed on Exhibit G attached hereto (the
“ Turkey Guarantees ”);
(viii) Assignor’s obligation
to enter into the Turkey Ancillary Agreements and any other
documents necessary to consummate the transaction contemplated by
the Purchase Agreement;
(ix) Assignor’s obligations
under Section 16.2.1 of the Purchase Agreement, solely to the
extent indemnification obligations thereunder are attributable to
the Turkey Assumed Liabilities;
(x) Assignor’s obligations
under Section 16.2.2 of the Purchase Agreement solely to the
extent indemnification obligations thereunder are attributable to
the Assumed Obligations; and
(xi) Assignor’s obligations
under Section 16.2.3 of the Purchase Agreement, solely to the
extent indemnification obligations thereunder are attributable to
the Turkey Assets or the Turkey Business.
SECTION 2. Assumption;
Closing . Subject to the terms and conditions set forth
herein, Assignee hereby accepts the Assignment and assumes and
agrees to observe and perform all of the Assumed Obligations (the
“ Assumption ”), and agrees to indemnify
Assignor against and hold Assignor harmless therefrom. At the
Closing, Assignee shall purchase and accept from Seller all of the
assets and rights that comprise the Assignment, and shall assume
from Seller all of the liabilities and obligations that comprise
the Assumption, and shall pay the Turkey Purchase Price therefor in
accordance with this Agreement.
SECTION 3. Purchase Price
Adjustment; Allocation .
a. Promptly following
Assignor’s receipt of the statement setting forth the
Estimated Working Capital Amount from Seller, Assignor shall
forward a copy thereof to Assignee and, thereafter, as promptly as
possible prior to the Closing Date, Assignor shall deliver to
Assignee its good faith estimate of the Estimated Turkey Working
Capital Amount.
b. In accordance with this
Agreement, Assignee shall pay the following amount directly to
Seller at Closing: the Base Turkey Purchase Price minus
(i) the amount equal to any Crated Equipment Proceeds
attributable to the Turkey Crated Equipment (defined in
Section 8 below); plus or minus (ii) an amount
necessary to adjust for any rent or other charges due under the
Turkey Contracts and for Taxes applicable to the Turkey Assets in
accordance with Section 17 of the Purchase Agreement; plus
or minus (iii) an amount necessary to adjust for any costs
and expenses in accordance with
Section 18 of the Purchase
Agreement, to the extent attributable to the Turkey Assets; and
plus or minus (iv) an amount equal to the difference
between the Target Turkey Working Capital Amount minus the
Estimated Turkey Working Capital Amount. Assignor and Assignee
agree to make such other payments to each other after the Closing
as may be necessary to reflect further adjustments to the Base
Turkey Purchase Price for costs or expenses allocable to the Turkey
Assets, including to take into account any payments received by
either of them from Seller in respect thereof.
c. Promptly following receipt of the
Statement of Net Working Capital from Seller, Assignor shall
forward a copy thereof to Assignee. No less than five
(5) calendar days prior to expiration of the Objection Period,
Assignee shall notify Seller in writing of
(i) Assignee’s good faith determination of the value of
the Turkey Inventory and the Turkey Prepaids (each defined in
Exhibit B attached hereto), (ii) Assignee’s good
faith determination of the amount of the Accrued Turkey Expenses
(defined in Section 9 below), and (iii) any objections to
be included in the Objection Notice, to the extent related to the
Turkey Inventory, the Turkey Prepaids or the Accrued Turkey
Expenses (the “ Turkey Objections ”), specifying
in reasonable detail each Turkey Objection and the basis for each
Turkey Objection. Assignor shall include all timely Turkey
Objections in a timely Objection Notice to Seller and shall
represent Assignee’s position with respect to such objections
in good faith in its negotiations with Seller under
Section 7.1(b) of the Purchase Agreement. Resolution of any
Turkey Objection shall be subject to Assignee’s prior
approval, which approval shall not be unreasonably withheld. If
requested by Assignee, Assignor shall submit Turkey Objections that
Assignor and Seller are unable to so resolve to the Arbitrator for
final resolution, along with supporting data and analysis prepared
or approved by Assignee. Assignee shall reimburse Assignor for the
pro-rata portion of any fees and expenses of the Arbitrator
incurred by Assignor attributable to Turkey Objections, which
proportionate allocation shall be calculated in a manner consistent
with Section 7.1(a) of the Purchase Agreement. Promptly
following receipt thereof, Assignor shall forward a copy of the
revised Statement of Net Working Capital to Assignee, and Assignor
and Assignee shall calculate the final, adjusted, Closing Turkey
Working Capital Amount therefrom.
d. On the Settlement Date,
(i) if the Closing Turkey Working Capital Amount exceeds the
Estimated Turkey Working Capital Amount, the Assignee shall
immediately remit to Assignor the amount by which the Closing
Turkey Working Capital Amount exceeds the Estimated Turkey Working
Capital Amount, plus interest thereon from the Closing Date to the
date of payment at the Prevailing Rate; or (ii) if the
Estimated Turkey Working Capital Amount exceeds the Closing Turkey
Working Capital Amount, the Assignor shall immediately remit to
Assignee the amount by which the Estimate Turkey Working Capital
Amount exceeds the Closing Turkey Working Capital Amount, plus
interest thereon from the Closing Date to the date of payment at
the Prevailing Rate.
e. In determining the allocation of
the Purchase Price either before or after the Closing pursuant to
Section 5.6 of the Purchase Agreement, Assignor and Seller
shall allocate the portion of the Purchase Price constituting the
Turkey Purchase Price and, to the extent they are part of the
amount realized for federal income tax purposes, the part of the
Assumed Liabilities constituting Turkey Assumed Liabilities, to the
Turkey Assets and such allocation shall be subject to
Assignee’s reasonable approval.
SECTION 4. Shared Costs and
Expenses . Assignor and Assignee hereby agree that all
expenses of the parties related to the matters that are the subject
of this Agreement, including, but not limited to, legal and other
third-party fees, related to (a) the negotiation and execution
of this Agreement and the Purchase Agreement, (b) due
diligence with respect to the acquisition contemplated by the
Purchase Agreement; (c) closing of the transactions
contemplated by this Agreement and the Purchase Agreement;
(d) the conversion of the Carolina Turkeys general partnership
to form the Assignee; (e) the preparation of documents and
notifications required under the HSR Act in connection with the
transactions contemplated by the Purchase Agreement, and
(d) Assignee’s financing of the acquisition of the
Turkey Business (collectively, the “ Acquisition
Expenses ”), shall be shared between the parties 57
percent by Assignee and 43 percent by Assignor. Promptly following
the Settlement Date, or as soon thereafter as the actual aggregate
Acquisition Expenses of the parties are known, Assignee or
Assignor, as applicable, shall make a payment to the other in an
amount necessary to allocate the Acquisition Expenses between the
parties as set forth herein.
SECTION 5.
Indemnification .
a. Assignee Indemnity .
Assignee agrees to defend, indemnify and hold harmless Assignor,
its officers, directors, managers, members, employees, agents,
attorneys, successors and assigns (the “ Assignor
Indemnified Parties ”) from and against any and all
Losses suffered, sustained, or incurred by any such person arising
from, related to or in connection with any and all claims caused
by, or alleged to be caused by, Assignee’s breach of any of
its agreements, covenants, representations, warranties, duties or
obligations under this Agreement.
b. Assignor Indemnity .
Assignor agrees to defend, indemnify and hold harmless Assignee,
its officers, directors, managers, members, employees, agents,
attorneys, successors and assigns (the “ Assignee
Indemnified Parties ”) from and against any and all
Losses suffered, sustained, or incurred by any such person arising
from, related to or in connection with any and all claims caused
by, or alleged to be caused by, Assignor’s breach of any of
its agreements, covenants, representations, warranties, duties or
obligations under this Agreement.
c. Purchase Agreement
Indemnification Provisions . The parties hereby agree to share
ratably in any recovery, based on the relative size of the parties
aggregate valid claims for indemnification that are subject to any
“basket” or analogous provisions of the Purchase
Agreement, including without limitation Sections 16.4.2 and 16.4.3
thereof. For purposes of example only, if Assignor has $25,000,000
in valid claims and Assignee has $5,000,000 in valid claims to
which the “basket” in Section 16.4.2 of the
Purchase Agreement will apply, the parties shall split the
$7,000,000 net indemnification payment from Seller, with 1/6 paid
to Assignee and 5/6 paid to Assignor. Each party agrees to provide
a copy to the other party hereunder of any and all Notices of
Claims it may make under the Purchase Agreement.
SECTION 6. Representations and
Warranties of Assignor .
a. Organization, Good Standing
and Corporate Power . Assignor is a corporation duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Virginia, and has the corporate power to enter into
this Agreement and perform its obligations hereunder.
b. Corporate Authorization;
Binding Effect . The execution, delivery and performance by
Assignor of this Agreement, and all of the other documents and
instruments required hereby from Assignor, and the consummation of
the transactions contemplated hereby by Assignor, have been duly
and validly authorized by all necessary corporate action on the
part of Assignor. This Agreement has been duly executed and
delivered by Assignor. This Agreement is, and the other documents
and instruments required hereby to which Assignor is a party will
be, when executed and delivered by the parties thereto, the legal,
valid and binding obligations of Assignor, enforceable against
Assignor in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors’ rights and to general equity
principles.
c. Effect of Agreement . The
execution, delivery and performance of this Agreement, and of all
of the other documents and instruments contemplated hereby to which
Assignor is a party, and the consummation of the transactions
contemplated hereby do not and will not, with or without the giving
of notice or the lapse of time or both, (i) conflict with or
violate any Law to which Assignor is subject; (ii) conflict
with or violate any judgment, order, writ or decree of any court
applicable to Assignor; (iii) breach or conflict with any
term, covenant or condition of, modify, terminate or constitute a
default under any contract to which Assignor is a party or by which
it is bound; or (iv) conflict with or violate Assignor’s
corporate charter or by-laws.
d. No Authorization Required
. No consent, approval, authorization or order of, or qualification
with, any court, governmental authority or any third party is
required for the execution and delivery by Assignor of this
Agreement or the consummation by Assignor of the transactions
contemplated by this Agreement.
e. Brokers and Finders .
Assignor has not employed any investment banker, broker or finder,
or incurred any liability for any brokerage fees, commissions or
finders fees in connection with the transactions contemplated by
this Agreement.
SECTION 7. Representations and
Warranties of Assignee .
a. Organization, Good Standing
and Power . Assignee is a limited liability company duly
organized, validly existing and in good standing under the laws of
North Carolina, and has the power to enter into this Agreement and
perform its obligations hereunder.
b. Corporate Authorization;
Binding Effect . The execution, delivery and performance by
Assignee of this Agreement, and all of the other documents and
instruments required hereby from Assignee, and the consummation of
the transactions contemplated hereby by Assignee, have been duly
and validly authorized by all necessary action on the part of
Assignee. This Agreement has been duly executed and delivered
by
Assignee. This Agreement is, and the
other documents and instruments required hereby to which Assignee
is a party will be, when executed and delivered by the parties
thereto, the legal, valid and binding obligations of Assignee,
enforceable against Assignee in accordance with their respective
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and
to general equity principles.
c. Effect of Agreement . The
execution, delivery and performance of this Agreement, and of all
of the other documents and instruments contemplated hereby to which
Assignee is a party, and the consummation of the transactions
contemplated hereby do not and will not, wit
