Tyson Foods 2002 Annual Report Download - page 55

notes to
consolidated
financial
statements
p 53
Following expedited discovery, the Delaware Court conducted a nine day trial, beginning on May 14, 2001, on IBP’s and the
plaintiffs’ claims for specific performance with respect to the terminated cash tender offer and the Merger Agreement and the Company’s
counterclaims. On June 15, 2001, following expedited post-trial briefing, the Delaware Court issued a memorandum opinion, which
was issued in revised form on June 18, 2001 (the Post-Trial Opinion), in which the Delaware Court concluded, among other things,
that (1) the Merger Agreement is a valid and enforceable contract that was not induced by any material misrepresentation or omission,
(2) the Company did not breach the Merger Agreement or any duty to IBP’s stockholders by failing to close the terminated cash
tender offer, (3) the Company did not have a basis to terminate the Merger Agreement under its terms, and (4) specific performance
of the Merger Agreement was the only method by which to adequately redress the harm threatened to IBP and its stockholders.
After negotiations and in accordance with the Post-Trial Opinion, the Company and IBP presented an Order, Judgment and
Decree to the Delaware Court, entered on June 27, 2001, requiring the Company and its affiliates to specifically perform the Merger
Agreement as modified by, and subject to the conditions contained in, a Stipulation between the Company and IBP, including making
a cash tender offer for 50.1% of IBP’s shares and effecting the merger with IBP.
On August 3, 2001, the Delaware Court entered an order approving the settlement of the Consolidated Action and extinguished
all claims that were or could have been asserted by the IBP stockholders in the Consolidated Action in exchange for, among other
things, the acceleration of the closing of a new Cash Tender Offer to August 3, 2001.
On January 7, 2002, the Company filed a motion in the Delaware Court asking that court to vacate its Post-Trial Opinion on
grounds of mootness or, in the alternative, to enter final judgment so that an appeal could be taken. The Delaware Court denied
this motion on February 11, 2002, and the Company has appealed that decision, as well as the Post-Trial Opinion and certain earlier
rulings by the Delaware Court, to the Delaware Supreme Court. Certain of the plaintiffs in the Delaware Federal Actions discussed
below have filed a motion to dismiss the Company’s appeal as untimely as to all matters except the Delaware Court’s denial of
the motion to vacate the Post-Trial Opinion. On July 24, 2002, the Delaware Supreme Court granted that partial motion to dismiss
and directed that the balance of the appeal go forward. Oral argument on the balance of the appeal has been scheduled for
December 12, 2002.
On June 19, 2001, a purported Company stockholder commenced a derivative action in the Delaware Court entitled Alan Shapiro v.
Barbara R. Allen, et al., C.A. No. 18967-NC seeking monetary damages on behalf of the Company, a nominal defendant, from the
members of the Company’s Board of Directors. The complaint alleges the directors violated their fiduciary duties by attempting to
terminate the Merger Agreement. On July 17, 2001, the defendants moved to dismiss the complaint. On August 16, 2002, the plaintiff
filed an Amended Complaint, and on September 3, 2002, the defendants renewed their motion to dismiss. A hearing on the
defendants’ motion to dismiss has been scheduled for December 17, 2002. The defendants intend to vigorously defend these claims.
Between June 22 and July 20, 2001, various plaintiffs commenced actions (the Delaware Federal Actions) against the Company,
Don Tyson, John Tyson and Les Baledge in the U.S. District Court for the District of Delaware, seeking monetary damages on behalf
of a purported class of those who sold IBP stock or traded in certain IBP options from March 29, 2001, when the Company announced
its intention to terminate the Merger Agreement with IBP, and June 15, 2001, when the Delaware Court rendered its Post-Trial
Opinion in the Consolidated Action. The actions, entitled Meyer v. Tyson Foods, Inc., et al., C.A. No. 01-425 SLR; Banyan Equity
Mgt. v. Tyson Foods, Inc., et al., C.A. No. 01-426 GMS; Steiner v. Tyson Foods, Inc., et al., C.A. No. 01-462 GMS; Aetos Corp., et al. v.
Tyson, et al., C.A. No. 01-463 GMS; Meyers, et al. v. Tyson Foods, Inc., et al., C.A. No. 01-480; Binsky v. Tyson Foods, Inc., et al.,
C.A. No. 01-495; Management Risk Trading LP v. Tyson Foods, Inc., et al., C.A. No. 01-496; and Stark Investments, L.P., et al. v.
Tyson et al., C.A. No. 01-565 allege that the defendants violated federal securities laws by making, or causing to be made, false and
misleading statements in connection with the Company’s attempted termination of the Merger Agreement. The various actions
were subsequently consolidated under the caption In re Tyson Foods, Inc. Securities Litigation. On December 4, 2001, the plaintiffs
in the consolidated action filed a Consolidated Class Action Complaint. The plaintiffs allege that, as a result of the defendants’ alleged
conduct, the purported class members were harmed. On January 22, 2002, the defendants filed a motion to dismiss the consolidated
complaint. By memorandum order dated October 23, 2002, the court granted in part and denied in part the defendants’ motion
to dismiss. The defendants intend to vigorously defend the remaining claims.
Tyson Foods, Inc. 2002 annual report