Exhibit 2.1
AGREEMENT TO FORM A LIMITED LIABILITY
COMPANY,
TRANSFER ASSETS THERETO, AND PURCHASE
UNITS OF MEMBERSHIP THEREIN
THIS
Agreement to Form a Limited Liability Company, Transfer Assets
Thereto, and Purchase Units of Membership Therein (the
“Agreement”) is effective as of the 28th day of July,
2005, by and among Hillandale Farms of Florida, Inc. and Hillandale
Farms, Inc. (either “Members” or “Hillandale
Companies”) and Jack E. Hazen, Jack E. Hazen, Jr., Homer E.
Hunnicut, Jr., Orland R. Bethel and Dorman W. Mizell (the
“Shareholders”). The Members and Shareholders are
collectively known as the “Sellers,” and Cal-Maine
Foods Inc., a Delaware corporation (“Cal-Maine”).
Cal-Maine and the Sellers may hereinafter be referred to as the
“Parties.” The new limited liability company which is
to be formed pursuant to this Agreement shall be formed under the
name Hillandale, LLC (“Company”).
NOW,
THEREFORE, in consideration of the mutual covenants and promises
and of the premises and provisions contained in this Agreement, and
the Parties intending to be legally bound thereby, the Parties
agree:
1. FORMATION
OF THE COMPANY. The Parties agree to form a new
limited liability company under the laws of the State of Florida,
such company to be named Hillandale, LLC. The Hillandale Companies
shall be the initial members of the Company for the purpose of its
formation only.
2. GOVERNANCE
AND STRUCTURE OF THE COMPANY.
2.1 LLC AGREEMENT.
The Parties agree to enter into a Limited Liability
Company Agreement in the form and content set forth in Schedule 2.1
hereto.
2.2 The affairs of
the Company shall be managed by a Board of Directors which shall
consist of five (5) members. Three (3) members of such board shall
be selected by and represent Cal-Maine. Two (2) members of the
board shall be selected by and represent the Hillandale Companies.
Such composition of the Board of Directors shall continue until
such time as Cal-Maine has acquired all of the Units of Membership
of the Company at which time the Company shall become a
wholly-owned subsidiary of Cal-Maine and shall be managed in such
manner as Cal-Maine shall then determine.
2.3. Chief
Operating Officer . The Board of Directors of the Company shall
appoint a Chief Operating Officer who shall be responsible for the
day-to-day operation of the Company, subject to the general control
and direction of the Board of Directors. The initial Chief
Operating Officer shall be Jack Hazen.. The Board of Directors
shall select a Chief Operating Officer each year, along with such
other officers as the Board of Directors deems necessary or
appropriate and as permitted under the Limited Liability Company
Agreement.
2.4 Units
of Membership. The Company shall be authorized to issue
__________ Units of Membership. Upon making the contributions to
capital as set forth in paragraph 3 hereof, initially all of the
authorized Units of Membership shall be issued to the Hillandale
Companies with Hillandale Farms of Florida, Inc. receiving ____
Units of Membership and Hillandale Farms, Inc. receiving _______
Units of Membership.
3.
INITIAL CONTRIBUTIONS
TO CAPITALOF THE COMPANY BY THE HILLANDALE COMPANIES. Set forth
on Schedules 3 and 3.1 hereto is a listing of assets and
liabilities which shall be transferred to the Company by the
Hillandale Companies in consideration and in exchange for the
number of Units of Membership set forth in paragraph 2.4. Schedule
3 lists values for certain of the assets scheduled thereon. Such
values have been agreed to by the Hillandale Companies and
Cal-Maine. The assets to be transferred to the Company by the
Hillandale Companies shall be free and clear of all liens or
encumbrances of any nature except such liabilities as may be
specifically approved by Cal-Maine and set forth in Schedules 3 and
3.1.
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3.1 Current or Other
Assets. In addition to the assets set forth on Schedule 3, the
Hillandale Companies shall also transfer to the Company the assets
scheduled on Exhibit 3.1. All costs of such transfer shall be
paid by the Hillandale Companies. No value has been assigned
to the current assets scheduled on Exhibit 3.1, and the value of
such assets shall be established as of the Inventory Date as
provided in paragraph 4 hereof.
4.
EVALUATION OF CURRENT
OR OTHER ASSETS . The assets set forth on Schedule 3.1 shall be
valued as of the Saturday first following the execution of this
Agreement (the “Inventory Date”). The assets to be
inventoried and valued as of the Inventory Date and the manner of
valuing such assets shall be as follows:
4.1 Packaging
Materials . All packaging materials that are current and
usable, including egg cartons, cases, filler flats, liners, and
similar items will be valued at cost as verified by the vendor who
sold the respective items to the Hillandale Companies. It is
expressly agreed that damaged or obsolete packaging materials are
not to be transferred to the Company nor valued.
4.2 Egg Inventories
. On the Inventory Date, all eggs held by the Hillandale Companies
will be inventoried. The price or value therefor shall be equal to
the market price for the class of egg involved as of the Inventory
Date adjusted to FOB plant less 1¢ per dozen.
4.3 Feed Inventory
. All finished feed in feed bins at the layer and grower houses of
the Hillandale Companies, all finished feed at the Hillandale
Companies’ feed mills, and feed ingredients at such mills
will be transferred by the Hillandale Companies to the Company and
the value will be the market value thereof at Inventory
Date.
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4.4 Laying Hen and
Replacement Pullet Flocks . All laying hens and replacement
pullet flocks owned by the Hillandale Companies shall be
transferred to the Company and will be valued at book value as of
the Inventory Date as shown on the books of the Hillandale
Companies.
4.5 Interest in
American Egg Products. The Hillandale Companies’ interest
in American Egg Products shall be deemed to be the net book value
thereof as shown on the books of American Egg Products as of the
accounting period Closing Date of American Egg Products nearest to
the Inventory Date.
4.6 Quality Egg
Company . The value of Quality Egg in Miami, Florida, will be
fixed at its net book value as of the Inventory Date. Schedule 4.6
sets forth pertinent information concerning litigation with certain
former key employees of the Hillandale Companies.
5.
PURCHASE OF
MEMBERSHIP UNITS OF THE COMPANY BY CAL-MAINE. Cal-Maine agrees
to purchase from the Hillandale Companies, and the Hillandale
Companies hereby agree to sell to Cal-Maine, all of the Units of
Membership of the Company issued to the Hillandale Companies as
provided in paragraph 2.4 above. The purchase of such Membership
Units by Cal-Maine shall take place at Closing, as hereinafter
defined, and in a series of Subsequent Purchases over the four-year
period immediately following Closing.
5.1 Purchase at Closing
by Cal-Maine. At Closing Cal-Maine shall purchase fifty-one
percent (51%) of the Units of Interest of the Company, such
fifty-one percent (51%) to be composed of ______ Units to be
acquired from Hillandale Farms of Florida, Inc. and ______ Units to
be acquired from Hillandale Farms, Inc. The purchase price to be
paid by Cal-Maine for the Units of Membership purchased at Closing
and the manner of payment shall be as set forth in paragraph 6
hereof.
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5.2 Subsequent
Purchases by Cal-Maine. After the Closing, Cal-Maine agrees to
buy from the Hillandale Companies, and the Hillandale Companies
agree to sell to Cal-Maine the remaining forty-nine percent (49%)
of the Units of Interest of the Company (the “Subsequent
Purchases”). Such Subsequent Purchases shall be made in
accordance with the following schedule:
5.2.1 At
approximately twelve (12) months after Closing, Cal-Maine shall
acquire an additional thirteen percent (13%) of the total
Membership Units.
5.2.2 At
approximately twenty-four (24) months after Closing, Cal-Maine
shall acquire an additional twelve percent (12%) of the total
Membership Units.
5.2.3 At
approximately thirty-six (36) months after Closing, Cal-Maine shall
acquire an additional twelve percent (12%) of the total Membership
Units.
5.2.4 At
approximately forty-eight (48) months after Closing, Cal-Maine
shall acquire the remaining twelve percent (12%) of total Units of
Membership of the Company.
5.2.5 The
Subsequent Purchases by Cal-Maine as provided in subparagraph 5.2
above shall be made from the Hillandale Companies with ______%
being purchased from Hillandale Farms of Florida, Inc. and _____ %
from Hillandale Farms, Inc. The specified date of such purchase
shall be the “Subsequent Purchase Dates.”
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6. COMPUTATION OF
PURCHASE PRICE TO BE PAID BY CAL-MAINE.
6.1 Closing Purchase
Price. The purchase price to be paid by Cal-Maine for the
fifty-one percent (51%) of the Units of Membership of the Company
acquired by Cal-Maine at Closing shall be a sum equal to fifty-one
percent (51%) of the total of the values shown on Schedule 3 and
computed in accordance with paragraph 4.
6.2 Purchase Price for
Purchases of Membership Units by Cal-Maine After Closing. The
purchase price to be paid by Cal-Maine for purchases of Units of
Membership as provided in paragraph 5.2 will be the book value of
the Units of Membership purchased as of the Purchase Date computed
as follows:
6.2.1 The
Hillandale Companies’ capital accounts will be equal to
forty-nine percent (49%) of the total of the values shown in
Schedule 3 and computed in accordance with paragraph 4.
6.2.2 The
Hillandale Companies’ capital accounts will be increased for
any additional capital contributions made by the Hillandale
Companies and decreased for any distributions made to the
Hillandale Companies.
6.2.3 The
Hillindale Companies’ capital accounts will be either
increased or decreased to reflect the Hillandale Companies’
proportionate share of the earnings or losses of the
Company.
6.2.4 The earnings
and losses of the Company will be determined using the accounting
policies, procedures and practices approved by Cal-Maine. Assets
contributed to the Company by the Hillandale Companies in
consideration for their Units of Membership will be recorded on the
books of the Company at an amount equal to the initial net purchase
price paid therefore by Cal-Maine at Closing. Cal-Maine agrees that
until such time as the Company is wholly owned by Cal-Maine, the
Company will not be allocated any “home office”expenses
of Cal-Maine.
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6.2.5 The
inventories needed to perform the purchase price computations
provided in subparagraphs 6.2.1 through 6.2.4 above shall be done
on Subsequent Inventory Dates which shall be the Saturday nearest
twelve months, twenty-four months, thirty-six months and
fourty-eight months following the Inventory Date.
6.3 Payment of Purchase
Price. All payments of the Purchase Price by Cal-Maine shall be
by wire transfer to the Hillandale Companies into such accounts as
may be directed by the Hillandale Companies at Closing.
7. CLOSING. The
Closing of the transaction contemplated hereby (the
“Closing”) will take place at the offices of Cal-Maine
Food, Inc., in Jackson, Mississippi, at the earliest practical date
following the Inventory Date, but only after the satisfaction of
all terms and conditions set forth herein.
8. REPRESENTATION AND
WARRANTIES OF SELLERS. The Hillandale Companies, jointly and
severally, and Jack Hazen, Jack E. Hazen, Jr., Homer E. Hunnicut,
Jr., Orland R. Bethel and Dorman W. Mizell, to the best of their
knowledge, represent and warrant to Cal-Maine, and acknowledge that
Cal-Maine is relying on such representations and warranties in
entering into and consummating this Agreement, that:
8.1 Standing. The
Hillandale Companies are corporations duly organized, validly
existing, and in good standing of the laws of the State of Florida
and are duly qualified in all jurisdictions where their activities
so require. The Hillandale Companies have the full corporate power
and authority to own and transfer to the Company all of the assets
of the Hillandale Companies shown on Schedules 3 and 3.1. The
Hillandale Companies have full corporate power and authority to
enter into this Agreement and all other Agreements contemplated
hereby, and to consummate the transactions contemplated hereunder
and there under. Each Shareholder has the full authority and
capability to validly enter into this Agreement and to discharge
such Shareholders’ duties and obligations hereunder and is
not subject to any legal disability that could cause such
Shareholders’ actions and obligations hereunder to not be
valid.
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8.2 Authorization,
Execution and Delivery of this Agreement. This Agreement has
been duly authorized by all necessary corporate action of the
Hillandale Companies and has been duly executed and delivered by
the Hillandale Companies. The execution and delivery by the
Hillandale Companies of this Agreement and the consummation by the
Hillandale Companies of the transactions contemplated hereby will
not conflict with nor constitute a violation of any provisions of
the Articles of Incorporation or Bylaws of either Hillandale
Company or any applicable law, regulation or contract to which they
are subject or a party.
8.3 Execution and
Delivery of this Agreement by Shareholders. This Agreement has
been duly executed and delivered by the Shareholders. The execution
and delivery by Shareholders of this Agreement and the consummation
by the Shareholders of the transactions contemplated hereby will
not conflict with or constitute a violation, breach or default
under any applicable law, regulation, contract or trust agreement,
and the Shareholders are not subject to any legal disability or
impediment that would prevent their executing and consummating this
Agreement.
8.4 Financial
Statements. The Sellers shall provide Cal-Maine with financial
statements of the Hillandale Companies as of the Inventory
Date.
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8.4.1 Such
financial statements shall be audited by Douglas, Douglas and
Farnsworth, Independent Certified Public Accountants.
8.4.2 Such
financial statements shall be certified as true and correct and as
accurately presenting the financial conditions of the Hillandale
Companies as of the Inventory Date by the Presidents and the Boards
of Directors of each of the Hillandale Companies.
8.4.3 The
Hillandale Companies shall, until the Closing, maintain all of
their books and records on an accounting and financial basis
consistent with past practices.
8.4.4 Cal-Maine
shall have the right during the 90 day period following receipt of
such financial statements to review the auditors’ work papers
in order to confirm any post Closing adjustment to the purchase
price computed pursuant to paragraphs 6.1 and 6.2. Any needed
adjustment, either as a result of such review of auditor’s
work papers or as a result of any unrecorded liabilities, will be
made by either increasing or decreasing the purchase price to be
paid by Cal-Maine on the first Subsequent
Purchase.
8.5 Real and Personal
Property. The Hillandale Companies own and have good and
merchantable title to the respective real and personal property,
plant and equipment as shown on Schedules 3 and 3.1, free and clear
of any defects of title (except for taxes not yet due and payable).
All assets used by the Hillandale Companies which are to be
transferred to the Company are in good and serviceable condition
for the purpose for which they shall be employed. All assets shown
in Schedules 3 and 3.1 are to be transferred to the Company free
and clear of any lien or encumbrance of any nature, except as
disclosed on Schedules 3 and 3.1 and agreed to by
Cal-Maine.
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8.6
ENVIRONMENTAL MATTERS.
8.6.1 Compliance.
The Hillandale Companies and the assets to be transferred by the
Hillandale Companies to the Company are in compliance with all
applicable Federal, State and Local laws, rules, regulations,
ordinances and requirements relating to the environment.
8.6.2 Hazardous
Waste. The Hillandale Companies have never generated,
transported, stored or disposed of any “hazardous
waste” (as hereinafter defined) on any real property to be
transferred by the Hillandale Companies to the Company and such
real property and assets do not contain any hazardous waste.
“Hazardous Waste” for the purposes of this Agreement
shall include, without limitation: (1) hazardous substances or
hazardous waste as those terms are defined by the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C.A.
§ 9601 et seq ., the Resource
Conservation and Recovery Act, 42 U.S.C.A. § 6901 et
seq. , and any other applicable Federal, State or
Local law, rule or regulation, ordinance or requirement, all as
amended or hereinafter amended; (2) petroleum, including without
limitation, crude oil or any fraction thereof which is liquid at
standard conditions of temperature and pressure (60 degrees
Fahrenheit and 14.7 pounds per square inch absolute); (3) any
radioactive material, including without limitation any source,
special nuclear or by-product material as defined in 42 U.S.C.A
§ 2011, et seq. and; (4) asbestos or any
asbestoform minerals in any form or condition.
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8.6.3 Environmental
Survey. At least seven (7) days prior to Closing, the Sellers
at the cost of the Hillandale Companies shall deliver to Cal-Maine
a phase 1 environmental survey from a company acceptable to
Cal-Maine showing the assets to be transferred by the Hillandale
Companies to the Company to be in such environmental condition as
to be acceptable to Cal-Maine’s lender. Such survey shall be
addressed to Cal-Maine and such other entities or parties as
Cal-Maine may subsequently designate.
8.7 Contracts.
Except for this Agreement and any Agreement contemplated hereby,
and such Agreements, Contracts or commitments as are shown in
Schedule 8.7, or other Schedules of this Agreement, neither the
Hillandale Companies nor the assets being transferred by the
Hillandale Companies to the Company is a party to, or subject to
any:
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(a)
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Written
employment contract for the employment of any officer or employee
which is not terminable without penalty and without payment to them
to perform future services on thirty (30) days (or less)
notice;
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(b)
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Collective
Bargaining Agreement or other Agreement with any labor union or
labor organization;
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(c)
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Agreement,
indenture or other instrument related to the borrowing of money or
the guarantee of any obligation for the borrowing of
money;
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(d)
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Contract for
the purchase of inventory materials, supplies, service, equipment
or any item or items involving and in consideration of more than
$1,000 per Contract or series of related Contracts and continuing
over a period of twelve (12) months from the date of this
Agreement;
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(e)
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Lease of
personal property involving a consideration of more than $5,000 per
lease or series of leases which has a term, including renewal
options exercisable by any other party thereto, ending more than
twelve (12) months after the date of this Agreement.
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8.8 Licenses and
Permits. The Hillandale Companies have all governmental
licenses, franchises, permits, privileges, immunities, approvals
and other governmental authorizations (the “Governmental
Authorizations”) necessary to permit the Hillandale Companies
to conduct their businesses as the same are now conducted. The
Hillandale Companies shall use all reasonable efforts to cause the
governmental authorizations to continue in effect through and
including the Closing Date and to be transferred to the Company
where possible to cause the Company to be duly permitted and
certified to conduct in its name the operations and businesses
theretofore conducted by the Hillandale Companies. There are no
citations, enforcement claims, or other notices alleging the
violation of any law, governmental authorization, or regulation
which have not been resolved or settled, except as shown on
Schedule 8.8.
8.9 Tax Returns and
Payments. The Hillandale Companies have timely filed all
Federal, State, Foreign and Local income, real and personal
property, employment and all other tax returns, reports and
declarations of estimated tax or estimated tax deposit forms, tax
information and reports required to be filed through December 31,
2004 and have paid all taxes, interest and penalties which have
become due pursuant to such returns and reports or pursuant to any
assessment received by either of them except for any taxes which
are disclosed on Schedule 8.09 hereto, the validity of which the
Hillandale Companies may be contesting in good faith and
appropriate proceedings. Where such returns and reports have not
been audited and approved or settled, there has not been any new
waiver or extension of any applicable statute of limitations, and
neither Hillandale Companies nor the Shareholders have received any
notice of deficiency or adjustment.
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8.10 Employee Benefit
Plans. Schedule 8.10 to this Agreement is a list of all pension
plans, as defined in Section 3.2 of the Employment Retirement
Income Security Act of 1974, as amended (“ERISA”)
maintained by the Hillandale Companies (the “Plans”)
covering their employees and all bonus, profit sharing, option, or
other type of employee benefit plans, arrangements with employees
for bonuses, incentive compensation, deferred compensation,
vacations, severance pay, retirement insurance or other employee
benefits maintained by the Hillandale Companies in which their
employees are participating. Copies of all Plans described in the
preceding sentence have been delivered to Cal-Maine. The Plans are
qualified under § 401(a) of the Internal Revenue Code of 1986
as amended (the “Code”) and the related Trusts are
exempt under § 501(a) of the Code. None of the Plans have
accumulated any funding deficiency (as defined in ERISA and §
412 of the Code) whether or not waived, and until the Closing Date
all contributions to the Plan as necessary to satisfy the minimum
funding requirements under ERISA have been and will be made prior
to the date they are due. Except as set forth in Schedule 8.10; (1)
there has been no violation of the reporting and disclosure
requirements imposed under ERISA or the Code for which any penalty
in a material amount has been or may be imposed with respect to any
Plan; (2) no Plan has any liability of any nature other than for
routine payments to be made in due course to participants and
beneficiaries; (3) No event has occurred which would constitute a
prohibited transaction under section 406 of ERISA; (4) there are no
lawsuits or claims which have been or will be, prior to Closing,
asserted or instituted against the assets of any trust under the
Plans or against of the Plans; (5) there are no investigations
pending by any governmental authority of the assets of any trust
under the Plans or against any of the Plans; and (6) none of the
Plans is a “Multi-Employer Plan” as defined in section
3(37) of ERISA, as amended by the Multi-Employer Pension Plan
Amendment Act of 1980. It is expected that the Plans will be
transferred to and continued by the Company.
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8.11 Certificate of
Limited Liability Company and Limited Liability Company
Agreement. Attached as Schedule 8.11 to this Agreement are true
and correct copies of the Limited Liability Articles of
Organization of the Company and a true and correct copy of the
Limited Liability Company Agreement of the Company.
8.12 Capitalization.
The Company is authorized to issue 1,000 Units of Membership all of
which will be issued to and owned, free and clear of all liens and
encumbrances, by the Hillandale Companies at Closing (the
“Membership Units” or “Units of
Membership”). All the Membership Units will have been validly
issued and will be fully paid and non-assessable at Closing. The
Company, at Closing, will have no outstanding subscription, option,
warrant, calls or commitment of any kind relating to the Membership
Units, and the Company will not have issued any securities, with
the exception of the Units of Membership to be issued to the
Hillandale Companies.
8.13 Ownership of
Membership Units. At Closing Hillandale Farms of Florida, Inc.
will own _____ Membership Units and Hillandale Farms, Inc., at
Closing, will own _______ Units of Membership of the Company. Each
of the Hillandale Companies will be the true and lawful owner of
their Membership Units as aforesaid and, as of Closing, each
Hillandale Company will have full right and power of authority to
sell, transfer, and deliver the Membership Units to Cal-Maine. No
Member will at Closing have knowledge of any adverse claim
affecting its Membership Units or the Membership Units owned by any
other Member, and there are no notations of any adverse claim
marked on the certificates for the Membership Units. At the
Closing, and at the time of Subsequent Purchases, Cal-Maine will
acquire the Membership Units free and clear of any security
interest, mortgage, adverse claims, liens or encumbrances of any
nature or description. There will be no equity interest in the
Company other than the Membership Units and no provisions of the
Articles of Incorporation or Bylaws of the Hillandale Companies or
of any contract, trust agreement, mortgage indenture or other
agreement or instruments to which the Hillandale Companies are a
party or by which any of them are bound or to which the Hillandale
Companies or any of their properties are subject, which requires
the consent or authorization of any other person or entity as a
condition precedent to the consummation of the transaction
contemplated by this Agreement.
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8.14 Consent of
Shareholders. No provision of any contract, trust agreement,
mortgage indenture or other agreement as to which any Shareholder
is a party or by which any Shareholder is bound or to which any of
the properties of any Shareholder is subject requires the consent
or authorization of any other person or entity as a condition
precedent to the consummation of the transactions contemplated by
this Agreement.
8.15 No person or
entity is entitled to any brokerage fee or commission or other like
payment in connection with the negotiations relating to, or the
transactions contemplated by this Agreement, based on any
Agreement, arrangement or understanding with (a) the Hillandale
Companies or any of the Hillandale Companies’ respective
officers, directors, shareholders, agents or employees, or (b) any
of the Shareholders.
8.16 Accuracy. No
representation or warranty made by the Hillandale Companies or any
of the Shareholders in this Agreement and no statement made by them
on their behalf in any certificate, document, exhibit or schedule
furnished or to be furnished in connection with the transactions
herein contemplated contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact
necessary to make such representation or warranty or any such
statement not misleading to Cal-Maine or necessary to enable
Cal-Maine to be accurately informed as to the status and condition
of the Hillandale Companies, their assets or the
Shareholders.
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8.17 Bad Debts. The
financial statements to be provided pursuant to paragraph 8.4 shall
provide for a reserve for bad debts. In the event any receivable of
the Hillandale Companies transferred to the Company as an asset are
uncollected by the Company at one hundred and eighty (180) days
after Closing, the amount of such uncollected receivables, to the
extent such uncollected receivables exceed, or are less than, the
aforesaid reserve for bad debts, shall be credited against, or
added to the first payment, from Cal-Maine to the Hillandale
Companies as purchase price for Subsequent Purchases.
8.18 Lack of
Acceleration. Neither the execution of this Agreement,
nor any act or condition required or contained herein on the part
of the Hillandale Companies or the Shareholders shall cause any
obligation of the Hillandale Companies to become due or
acceleratable by any action called for or permitted under the terms
of this Agreement, including but not limited to the payment of
money.
9.
REPRESENTATIONS AND
WARRANTIES OF CAL-MAINE. Cal-Maine represents and warrants to
the Sellers, and acknowledges that the Sellers rely on such
representations and warranties in entering into the proceeding
under this Agreement that:
9.1 Corporate
Standing. Cal-Maine is a Corporation duly organized, validly
existing and in good standing of all the laws of the State of
Delaware with full corporate power and authority to enter into this
Agreement and all other Agreements contemplated by this Agreement
and to consummate the transactions contemplated herein and
thereafter.
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9.2 Authorization,
Execution and Delivery of this Agreement . This Agreement has
been duly authorized, and all necessary corporate actions of
Cal-Maine have been duly executed and delivered by Cal-Maine. The
execution and delivery of this Agreement by Cal-Maine and the
consummation by Cal-Maine of the transactions contemplated hereby
will not conflict with or constitute a violation of any provisions
of the Articles of Incorporation or Bylaws of Cal-Maine or conflict
with or constitute a violation, breach or default on any material
contract, trust agreement, mortgage indenture or other agreements
or instruments to which Cal-Maine is a party or by which Cal-Maine
is bound or to which Cal-Maine or any of its properties are
subject.
9.3 BROKERS . No
person or entity is entitled to any brokerage or finder’s fee
or commission or other like payments in connection with the
negotiations relating to or the transactions contemplated by this
Agreement based upon any agreement, arrangement or understanding
with Cal-Maine or any of Cal-Maine’s respective officers,
directors, agents or employees.
10.
CHANGE IN
CIRCUMSTANCES. From the date of this Agreement until the
Closing the Parties shall promptly notify all other Parties upon
receipt of actual notice or knowledge of any fact which would make
any representation or warranty contained in this Agreement untrue
in any material respect.
11.
OBLIGATIONS OF
SELLERS PRIOR TO CLOSING. From the date of this Agreement until
the Closing Date the Sellers shall use all reasonable efforts
to:
11.1 Afford
Cal-Maine, its accountants and other representatives free access
during normal business hours to the offices, equipment, property,
records, files, contracts, agreements, books of account, minute
books, deeds, insurance policies, tax returns and records and files
of every nature of the Hillandale Companies and furnish Cal-Maine
with all information concerning the business and properties of the
Hillandale Companies as Cal-Maine shall reasonably
request.
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11.2 Conduct the
business of Hillandale Companies in ordinary course and in
accordance with customary practices, preserve their business
organization intact, and retain substantially all present
employees, and preserve the goodwill of their suppliers, customers
and others having business relations with them.
11.3 Continue in
force all policies of insurance, bonds, surety contracts and
guaranties.
11.4 Not increase
the rate of compensation, bonus or any benefit to any employee
without the prior written consent of Cal-Maine or enter into any
employment agreement with any person unless they have the right to
terminate such employment agreement without liability.
11.5 Not amend the
Certificate of Formation of the Company or its Limited Liability
Company Agreement without the written consent of
Cal-Maine.
11.6 Not
knowingly take any action or omit to take any action which in the
exercise of reasonable care the Hillandale Companies and the
Shareholders should have known would result in a material violation
by the Hillandale Companies of any law applicable to this
transaction or cause a material breach by the Hillandale Companies
of any material representations and warranties of the Hillandale
Companies and Shareholders set forth in this Agreement or any
material lease, agreement, contract or commitment to which the
Hillandale Companies are parties.
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11.7 Cause the
Company to obtain all consents by third parties required to permit
the Company to conduct the business as previously conducted by the
Hillandale Companies and to obtain any and all governmental
authorizations or permits which are necessary for the
Company’s operation of its business and the utilization of
its assets acquired from the Hillandale Companies.
11.8 Title Insurance
and Uniform Commercial Code. At least ____ days prior to
Closing the Sellers shall at the cost of Hillandale Companies
deliver to Cal-Maine binders of title insurance on all real
property to be conveyed to the Company showing such title to be in
such conditions as is acceptable to Cal-Maine and the results of a
Uniform Commercial Code search of the Hillandale Companies showing
the other assets of the Hillandale Companies being transferred to
the Company to be free and clear of all liens or encumbrances
except for such liens or encumbrances as are acceptable to
Cal-Maine. All ad valorem taxes on property to be transferred to
the Company shall be prorated and reserved between Grantor and
Grantee as of the Inventory Date.
11.9 Tax
Elections. The Hillandale Companies, on their own behalf, as
members of the Company, and the Company will make such tax
elections so as to permit Cal-Maine to receive a tax basis in its
Units of Membership of the Company at least equal to the purchase
price paid by Cal-Maine for such Units.
12.
OBLIGATION OF
CAL-MAINE PRIOR TO CLOSING. From the date of this Agreement
until Closing, Cal-Maine shall: (a) not knowingly take any action
or omit to take any action which would result in a material
violation by Cal-Maine of any law applicable to this transaction or
cause a material breach by Cal-Maine of any of its representations
and warranties set forth herein, and (b) use all reasonable efforts
to obtain all consents by third parties and all government
authorizations which are necessary for the Company to own and
operate its business following the Closing.
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13.
CONDITIONS PRECEDENT
TO CAL-MAINE’S OBLIGATION. The obligation of Cal-Maine to
consummate at the Closing and on the Subsequent Purchase Dates the
transactions contemplated in this Agreement will be subject to the
satisfaction of each of the following conditions by the time
required but no later than on or prior to the Closing Date, or the
Subsequent Purchase Date as the case may be, unless expressly
waived by Cal-Maine.
13.1 Opinion of
Counsel. Cal-Maine shall have received the opinion of Taylor
and Taylor of Keystone Heights, Florida, dated the Closing Date,
substantially in form acceptable to Cal-Maine.
13.2 Representations
and Warranties. The representations and warranties of the
Sellers contained in this Agreement shall be true and correct in
all material respect on and of the Closing Date and on and as of
the Subsequent Purchase Date as if made, on and as of such date,
except for changes resulting from the ordinary course of the
Hillandale Companies’ business or as contemplated by this
Agreement, and the Sellers shall have delivered to Purchaser a
certificate respectively signed by the President of the Hillandale
Companies and by the Shareholders dated the Closing Date to such
effect.
13.3 Performance of
this Agreement. The Sellers shall have performed and observed
in all material respects the covenants, conditions and obligations
set forth in this Agreement prior to or on the Closing Date, and
the Sellers shall have delivered to Cal-Maine a certificate
respectively signed by Sellers to that effect and dated the Closing
Date.
13.4 Litigation. No
action or proceeding shall have been instituted or threatened
against the Hillandale Companies or the assets to be transferred to
the Company or against the Shareholders, which reasonably could
have a material and adverse effect on the business of the Company;
no action or proceeding shall have been instituted or threatened
against any of the parties to this Agreement or their directors or
officers, before any court or government department, agency or
commission to restrain, prohibit or obtain damages in respect of
this Agreement or the consummation of the transactions contemplated
hereby; and no party to this Agreement shall have received written
notice from any court or governmental department, agency or
commission of its intention to institute any action or proceeding
to restrain or enjoin or commence any investigation (other than a
routine letter of inquiry) into the consummation of this Agreement
and the transactions contemplated hereby or to nullify or render
ineffective this Agreement or such transactions being consummated,
which, in the opinion of Cal-Maine would make it inadvisable to
consummate such transaction.
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13.5 Delivery of
Certificates of Membership . The Hillandale Companies shall
have tendered certificates representing fifty-one percent (51%) of
the Units of Membership outstanding as of the date of
Closing.
14.
CONDITION TO THE
SELLER’S OBLIGATION. The obligation of the Sellers to
consummate on Closing and on Subsequent Purchase Dates the
transactions contemplated by this Agreement will be subject to the
satisfaction of each of the following conditions at the time
required but prior to the Closing, or Subsequent Purchase Date,
unless expressly waived by the Sellers.
14.1 Opinion of Counsel
for Cal-Maine . The Seller shall have received the opinion of
YoungWilliams P.A. dated the Closing Date substantially and in form
acceptable to the Sellers.
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14.2 Representations
and Warranties . The representations and warranties of
Cal-Maine contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date and on the
Subsequent Purchase Dates, except for changes resulting from the
ordinary course of the Company’s business or as contemplated
by this Agreement, and Cal-Maine shall have delivered to the
Sellers a certificate to that effect duly signed by a duly
authorized officer of Cal-Maine dated the Closing Date.
14.3 Performance of
this Agreement. Cal-Maine shall have performed and observed in
all material respects its covenants, conditions and obligations set
forth in this Agreement prior to or on the Closing Date, and
Cal-Maine shall have delivered to the Sellers, a certificate signed
by a duly authorized officer of Cal-Maine and dated the Closing
Date to such effect.
15.
INDEMNIFICATION.
15.1 Indemnification by
Sellers. For a period of four (4) years after the Closing Date
or until Cal-Maine has paid for the Subsequest Purchases, each
Seller shall, as to those representations, warranties, covenants
and agreements which are made herein by that Seller, indemnify,
defend and hold Cal-Maine harmless against and in respect
of:
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(a)
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any damage, deficiency or costs
resulting from any misrepresentation, omission or breach of
warranty or non-fulfillment of any covenant or agreement on the
part of such Seller under this Agreement, or any omission or
inaccuracy in any schedule hereto or any document to be delivered
to Cal-Maine by such Seller hereunder, including but not limited to
representations as to environmental matters; and
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(b)
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Any claim, action, suit,
proceeding, demand, judgment, assessment, cost or expense,
including reasonable attorney’s fees incident to the
foregoing.
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(c)
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Any insurance proceeds received
by Cal-Maine from any indemnitors’ coverage shall be credited
against the underlying indemnity obligation.
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15.2 Indemnification by
Cal-Maine. For a period of four (4) years after the Closing
Date or until Cal-Maine has paid for the Subsequent Purchases,
Cal-Maine shall, as to those representations and warranties which
are hereunder made or agreed to by Cal-Maine, indemnify and hold
Sellers harmless from and against and in respect of:
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(a)
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Any damage, deficiency or cost
resulting from any misrepresentation, omissions or breach of
warranty or any non-fulfillment of any covenant or agreement on the
part of Cal-Maine under this Agreement or omission or inaccuracy in
any document to be delivered to the Sellers by Cal-Maine hereunder;
and
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(b)
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any claim, action, suit,
proceeding, demand, judgment assessment cost or expenses including
reasonable counsels’ fees incident any of the
foregoing.
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(c)
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Any insurance proceeds received
by Sellers from any indemnitors’ coverage shall be credited
against the underlying indemnity obligation.
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15.3 Indemnification
Procedures. A party seeking indemnification (the
“Indemnitee”) shall use all reasonable efforts to
minimize any liabilities, damages, deficiencies, claims, judgments,
assessments, costs, and expenses (including without limitation
taxes and attorney fees) in respect of which indemnity may be
sought under this Agreement. The Indemnitee shall give prompt
written notice to the party from whom indemnification is sought
(the “Indemnitor”) of the assertion of a claim for
indemnification but in no event later that (a) 30 days after
service of process in the event litigation is commenced against the
Indemnitee by a third party, or (b) 30 days after the Indemnitee
becomes aware of circumstances, not involving the commencement of
litigation by a third party, which may give rise to a claim for
indemnification. No such notice of assertion of a claim shall
satisfy the requirements of this paragraph 15.3 unless it describes
in reasonable detail and in good faith the facts and circumstances
upon which the asserted claim for indemnification is made, to the
extent known to Indemnitee. The Indemnitee shall consult with the
Indemnitor with respect to the payment, settlement, or defense of
any claims, action, suit, proceeding, or demand. If any action or
proceeding shall be brought against the Indemnitee in connection
with any liability or claim to be indemnified hereunder, the
Indemnitee shall provide the Indemnitor a period of 30 days to
decide whether to defend such liability or claim. During such
period the Indemnitee shall take all reasonable steps to protect
the interests of itself and the Indemnitor, including the filing of
necessary responsive pleadings, the seeking of emergency relief, or
other action necessary to maintain the status quo, subject to
reimbursement from the Indemnitor of its expenses in doing so. If
the Indemnitor determines that it shall defend such action or
proceeding, the Indemnitor shall defend such action or proceeding
at its expense, using counsel selected by any insurance company
insuring against any such claim and undertaking to defend such
claim, or by other counsel selected by the Indemnitor and approved
by the Indemnitee, which approval shall not be unreasonably
withheld or delayed. The Indemnitor shall keep the Indemnitee fully
apprised at all times as to the status of the defense and shall
consult with the Indemnitee prior to settlement of any indemnified
matter. In the event the Indemnitee has a claim or claims against
any third party growing out of or connected with the indemnified
matter, then upon receipt of indemnification, the Indemnitee shall
fully assign to the Indemnitor the entire claim or claims, and the
Indemnitor shall thereupon be subrogated with respect to such claim
or claims of the Indemnitee.
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16.
SURVIVAL OF
REPRESENTATIONS WARRANTIES AND COVENANTS. All representations,
warranties and covenants by any of the Parties in this Agreement
contained herein or in any Certificate or other instrument
delivered by or on behalf of any Party hereto shall be continuous
and survive closing for the period set forth in paragraphs 15.1 and
15.2.
17.
RECORDS AND FURTHER
ASSURANCES. From time to time prior to or after the Closing the
Sellers will execute all such instruments as Cal-Maine, being
advised by Counsel, shall reasonably request in connection with and
in carrying out the intents and purposes hereof in all transactions
contemplated by this Agreement including, without limitation, the
execution and delivery of confirmatory and other instruments in
addition to those to be delivered on the Closing Date and any and
all actions which may be reasonably necessary and desirable to
complete the transactions contemplated hereby.
18.
POST CLOSING
MATTERS. The Parties acknowledge and agree that post
closing:
18.1 Cal-Maine
will utilize a term loan to fund up to 70% of the total purchase
price of the Units of Membership being acquired by
Cal-Maine.
18.2 Certain of
the assets of the Company will be loaned to Cal-Maine to use as
collateral to secure the loan referenced in paragraph
18.1.
18.3 The Company
will not be permitted to use the cash basis of accounting but may
use the “farm price method” in its accounting
practices.
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19.
PUBLIC
STATEMENTS. Cal-Maine is a publicly traded company and as such
is subject to various rules and regulations promulgated by the
Securities and Exchange Commission of the United States, including
the requirement that upon the execution of this Agreement such
action is required to be publicly announced. Prior to Cal-Maine
making the public announcement and filings with the Securities and
Exchange Commission as required by law, the Sellers shall not make
any public announcement or statement concerning the execution of
this Agreement. Cal-Maine will cooperate with Sellers in preparing
the necessary public announcement and press release relative to the
execution of this Agreement.
20.
CONFIDENTIALITY.
Unless and until the Closing of the transactions contemplated
hereby have occurred, and except as may be otherwise required by
applicable law, the Parties shall cause their employees, agents and
representatives to maintain in confidence and not otherwise use or
disseminate information, documents and data furnished to them or to
any person or entity in connection herewith.
21.
REMEDIES. The
Parties acknowledge that there may not be an adequate remedy at law
for breach of this Agreement and that in addition to any other
remedies available to the Parties, injunctive relief may be granted
to any Party entitled to such relief.
22.
NOTICES. All
Notices, requests, consents or other communications required or
permitted hereunder shall be in writing and be mailed first class
registered or certified mail postage prepaid or sent by overnight
carrier and delivered to:
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If to
Sellers:
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If to
Cal-Maine:
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Jack
Hazen
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Fred
Adams
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P.O. Box
2109
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Cal-Maine
Foods, Inc
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Lake City, FL
32056-2109
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P. O. Box
2960
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Jackson, MS
39207
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with a copy
to:
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with a copy
to:
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James J.
Taylor, Jr.
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James H. Neeld,
III
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P.O. Box
2000
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YoungWilliams
P.A
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Keystone
Heights, Fl 32652
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P.O. Box
23059
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Jackson, MS
39225-3059
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23.
ARBITRATION.
23.1 Scope of
Arbitration. Any controversy or claim arising out of or
relating to this Agreement is to be resolved by
arbitration.
23.2 Rules of
Arbitration . The arbitration is to be conducted in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association.
23.3 Appointment of
Arbitrators . The arbitration is to be held before a panel of
three arbitrators, each of whom must be independent of the parties.
No later than 15 days after the arbitration begins, each party
shall select an arbitrator and request the two selected arbitrators
to select a third neutral arbitrator, which must be done on or
before the 10th day after the second arbitrator was selected.
Before beginning the hearings, each arbitrator must provide an oath
or undertaking of impartiality.
23.4 Scope of
Arbitrators’ Authority.
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(i)
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Interim
Relief . Either party is
entitled to seek from any court having jurisdiction any interim or
provisional relief that is necessary to protect the rights or
property of that party. By doing so, that party does not waive any
right or remedy under this Agreement. The interim or provisional
relief is to remain in effect until an arbitral tribunal is
established.
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(ii)
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Punitive
Damages . The arbitrators
will have no authority to award punitive damages or other damages
not measured by the prevailing party’s actual damages, and
may not, in any event, make any ruling, finding or award that does
not conform to the provisions of this Agreement.
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23.5 Time
Limitation . Any arbitration proceeding under this Agreement
must be commenced no later than one year after the controversy or
claim arose. Failure timely to commence an arbitration proceeding
constitutes both an absolute bar to the commencement of an
arbitration proceeding with respect to the controversy or claim,
and a waiver of the controversy or claim.
23.6 Costs and Expenses
of Arbitration. Each party will bear its own costs and expenses
with respect to any disputes arising under this Agreement;
provided, however, that the Parties shall each bear one-half (1/2)
of the fees paid to the arbitrators for their services.
23.7 Choice of Law
. The arbitrators are to interpret all controversies and claims
arising under or relating to this Agreement in accordance with the
laws of the State of Florida, without regard to its choice of laws
principles.
23.8
Venue. The arbitration is to be conducted in Jacksonville,
Florida.
23.9 Submission to
Jurisdiction . Each party shall submit to any court of
competent jurisdiction for purposes of the enforcement of any
award, order or judgment. Any award, order or judgment pursuant to
arbitration is final and may be entered and enforced in any court
of competent jurisdiction.
24.
ENTIRE AGREEMENT.
This Agreement, including the Schedules hereto, constitute and
contain the entire Agreement of the Parties with respect to the
transactions contemplated hereby and supersede any prior writing by
the Parties. This Agreement may be amended in writing by agreement
of the Parties, or by written Agreement, the parties may waive any
provision hereof.
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25.
SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall to any
extent be held to be invalid or unenforceable, the remainder of the
Agreement or the application of such provision to persons or
circumstances other than those to which it was held to be invalid
or unenforceable shall not be affected and shall be valid and
enforceable to the fullest extent permitted by law.
26.
COUNTERPARTS. This Agreement will be executed concurrently
in one or more counterparts, any one of which need not contain the
signatures of more than one Party, but all of which taken together
shall constitute one in the same Agreement.
27.
EXPENSES. Hillandale Companies shall pay any and all fees
and expenses that they may incur in connection with the
negotiation, preparation and execution of this Agreement, the
Closing, or other transactions contemplated hereby. Cal-Maine shall
pay any and all fees and expenses that it may incur in connection
with the negotiation, preparation and execution of this Agreement,
the Closing or the other transactions contemplated
hereby.
28.
SCHEDULES. The Schedules attached to this Agreement
constitute a part of this Agreement and are incorporated herein by
reference in their entirety as if fully set forth in this Agreement
at the point first mentioned.
29. RELEASE OF
PERSONAL GUARANTIES OF SHAREHOLDERS. Cal-Maine will exert its
best efforts to cause the personal guaranty of any Shareholder
which guarantees any obligation transferred to the Company under
the terms of this Agreement to be released as soon as practical
after Closing.
29
IN
WITNESS WHEREOF the Parties hereto have executed this Agreement
effective as of the date set forth in the initial paragraph
hereof.
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HILLANDALE
FARMS OF FLORIDA, INC.
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By: /s/ Jack E.
Hazen
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President
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HILLANDALE
FARMS, INC.
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By: /s/ Jack E.
Hazen
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President
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/s/ Jack E.
Hazen
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Jack E.
Hazen
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/s/ Jack E.
Hazen,
Jr.
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Jack E.
Hazen, Jr.
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/s/ Homer E.
Hunnicut,
Jr.
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Homer E.
Hunnicut, Jr.
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/s/ Orland
R.
Bethel
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Orland R.
Bethel
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/s/ Dorman
W.
Mizell
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Dorman W.
Mizell
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CAL-MAINE
FOODS, INC.
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By: /s/ Fred R. Adams,
Jr.
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Fred R.
Adams, Jr.,
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Chief
Executive Officer
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30
INDEX — SCHEDULES TO THE
AGREEMENT
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1.
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Schedule 2.1
– Limited Liability Company Agreement
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2.
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Schedule 3
– List of Values of Certain Assets
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3.
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Schedule 3.1
– List of Assets and Liabilities to be Transferred and
Assumed*
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4.
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Schedule 4.6
– Litigation with Certain Former Key Employees of the
Hillandale Companies*
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5.
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Schedule 8.7
– Contracts*
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6.
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Schedule 8.8
– Licenses and Permits*
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7.
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Schedule 8.9
– Tax Returns and Payments*
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8.
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Schedule 8.10
– Employee Benefit Plans*
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9.
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Schedule 8.11
– Certificate of Limited Liability Company and Limited
Liability Company Agreement*
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* The Schedules to the Agreement
marked with an asterisk have been omitted from this filing.
Cal-Maine agrees to provide a copy of any omitted schedule to the
Commission upon request.
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SCHEDULE 2.1
See form of Operating Agreement
for Hillandale, LLC, attached as Attachment 2.1-1.
_______________________________, LLC
OPERATING AGREEMENT
Effective ___________________, 2005
OPERATING AGREEMENT
THIS
OPERATING AGREEMENT is made and entered into as of
__________________, 2005 (the “ Effective Date
”), by and among the undersigned Members who, in
consideration of the mutual covenants herein contained, agree as
follows:
ARTICLE I
DEFINITIONS
1.01
Defined Terms .
The following terms used in this Agreement shall have the following
meanings (unless otherwise expressly provided herein):
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(a)
“ Act ” shall mean the_____________________
Limited Liability Company Act as now in effect and as amended or
superseded from time to time.
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(b)
“ Agreemen t” shall mean this Operating
Agreement as originally executed and as amended from time to
time.
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(c)
“ As Converted Basis ” shall mean, when
referring to allocations, prorations or similar calculations with
respect to Common Units, the number of Common Units outstanding on
the applicable date assuming the conversion of all outstanding
convertible securities, provided , however ,
outstanding warrants, options or other rights to subscribe for or
purchase any Membership Interests shall not be taken into account
except as may be expressly provided for herein.
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(d)
“ Business Day ” shall mean any day other than a
Saturday, Sunday or other day on which commercial banks in the City
of __________________are authorized or required by law or executive
order to close.
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(e)
“ Board or Board of Directors ” shall mean the
group of Directors selected in accordance with Article IV herein
and given the authority set forth herein.
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(f)
“ Capital Account ” as of any given date shall
mean the Capital Contribution to the Company by a Member as
adjusted up to the date in question pursuant to Article
IX.
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(g)
“ Capital Contribution ” shall mean any
contribution to the capital of the Company in cash, property or
services by a Member whenever made.
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(h)
“ Certificate ” shall mean the Articles of
Organization of the Company, as filed with the Secretary of State
of the State of __________________and as the same may be amended
from time to time. (i) “ Code ” shall mean the
Internal Revenue Code of 1986, as amended, or corresponding
provisions of subsequent superseding federal revenue
laws.
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(i)
“ Code ” shall mean the Internal Revenue Code of
1986, as amended, or corresponding provisions of subsequent
superseding federal revenue laws.
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(j)
“ Common Units ” shall have the meaning set
forth in Section 1.01(bb).
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(k)
“ Company ” shall refer to
“___________________________” If “Company”
is used in reference to the Code or any Treasury Regulation, then
for purposes of applying the Code or Treasury Regulation,
“Company” shall be understood to constitute a
“partnership.”
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(l)
“ Deficit Capital Account ” shall mean with
respect to any Member, the deficit balance, if any, in such
Member’s Capital Account as of the end of the taxable year,
after giving effect to the following adjustments: (i) credit to
such Capital Account any amount which such Member is obligated to
restore under Section 1.704-1(b)(2)(ii)(c) of the Treasury
Regulations, as well as any addition thereto pursuant to the next
to last sentence of Sections 1.704-2(g)(1) and (i)(5) of the
Treasury Regulations, after taking into account thereunder any
changes during such year in partnership minimum gain (as determined
in accordance with Section 1.704-2(d) of the Treasury Regulations)
and in the minimum gain attributable to any partner nonrecourse
debt (as determined under Section 1.704-2(i)(3) of the Treasury
Regulations); and (ii) debit to such Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the
Treasury Regulations. This definition of Deficit Capital Account is
intended to comply with the provision of Treasury Regulations
Section 1.704-1(b)(2)(ii)(d) and 1.704-2, and will be interpreted
consistently with those provisions.
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(m)
“ Distributable Cash ” means all cash, revenues
and funds received by the Company from Company operations, less the
sum of the following to the extent paid or set aside by the
Company: (i) all principal and interest payments on indebtedness of
the Company and all other sums paid to lenders; (ii) all cash
expenditures incurred incident to the normal operation of the
Company’s business; (iii) such Reserves as the Directors deem
reasonably necessary to the proper operation of the Company’s
business.
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(n)
“ Economic Interest ” shall mean a
Member’s or Economic Interest Owner’s share of one or
more of the CompanyR
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