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DISBURSING AGREEMENT
by and among
XXXXXXX MILLING COMPANY
XXXXXXX X. XXXXXX
XXXXX XXXX PET FOOD COMPANY, INC.
and
NORWEST BANK MINNESOTA, N.A.
Dated as of May 21, 1997
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TABLE OF CONTENTS
Page
1. REFERENCES ............................................................. 2
2. REMITTANCE OF FUNDS TO DISBURSING AGENT ON CLOSING DATE ................ 3
(A) ARMOUR ESCROW .......................................................... 3
(B) ARMOUR RESERVE ......................................................... 3
(C) ESTIMATED MERGER CONSIDERATION ......................................... 3
3. CLOSING DATE BALANCE SHEET ADJUSTMENTS ................................. 4
(A) ARMOUR STOCK PURCHASE AGREEMENT CLOSING DATE BALANCE SHEET ADJUSTMENT .. 4
(B) MERGER AGREEMENT CLOSING DATE BALANCE SHEET ADJUSTMENT ................. 4
4. ESCROW ................................................................. 5
(A) ARMOUR ESCROW ACCOUNT .................................................. 5
(B) MERGER ESCROW ACCOUNT .................................................. 5
5. INVESTMENT OF .......................................................... 5
6. DISBURSEMENT OF ESTIMATED MERGER CONSIDERATION ......................... 6
(A) PROCEDURES FOR PAYMENT ................................................. 6
(B) REMITTANCE OF UNDISBURSED FUNDS TO THE COMPANY ......................... 8
7. DISBURSEMENT OF ARMOUR RESERVE ACCOUNT ................................. 8
8. DISBURSEMENT OF ESCROW FUND ACCOUNTS ................................... 8
(A) REMITTANCE OF ESCROW ACCOUNTS .......................................... 8
(B) INDEMNIFICATION DISBURSEMENTS .......................................... 9
(C) EXPENSE REIMBURSEMENT .................................................. 9
9. FEES, EXPENSES ......................................................... 11
10. RESIGNATION OR REMOVAL OF DISBURSING AGENT ............................. 11
(A) RESIGNATION AND REMOVAL ................................................ 11
(B) RELEASE OF DISBURSING AGENT ............................................ 11
11. RESPONSIBILITY OF DISBURSING AGENT ..................................... 11
12. NOTICES ................................................................ 11
13. TERM OF AGREEMENT ...................................................... 13
14. GOVERNING LAW .......................................................... 13
15. MISCELLANEOUS .......................................................... 13
(A) BINDING EFFECT; NO LIEN ................................................ 13
(B) COUNTERPARTS ........................................................... 13
(C) AMENDMENTS ............................................................. 14
(D) RECEIPTS ............................................................... 14
(E) MERGER AGREEMENT ....................................................... 14
(F) ENTIRE AGREEMENT ....................................................... 14
(G) SEVERABILITY ........................................................... 14
16. THIRD PARTY BENEFICIARIES .............................................. 14
ii
INDEX OF DEFINED TERMS
(Not Part of Agreement)
Section
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Agreement ..........................................................Introduction
Armour .................................................................Recitals
Armour Capital Stock ...................................................Recitals
Armour Common Stock .............................Armour Stock Purchase Agreement
Armour Common Stock Purchase Price ..............Armour Stock Purchase Agreement
Armour Escrow Account ......................................................2(a)
Armour Escrow Amount .......................................................2(a)
Armour Reserve Account .....................................................2(b)
Armour Reserve Amount ......................................................2(b)
Armour Shareholder Representative ..................................Introduction
Armour Shareholders ............................................Merger Agreement
Armour Stock Purchase Agreement ........................................Recitals
Armour Stock Purchase Indemnification Obligations ......................Recitals
Buyer ..............................................................Introduction
Buyer Subsidiary .......................................................Recitals
Closing Date ...................................................Merger Agreement
Closing Date Balance Sheet .....................................Merger Agreement
Common Stock Merger Consideration ..............................Merger Agreement
Common Stock Merger Consideration Per Share ....................Merger Agreement
Converted Shares .......................................................Recitals
Disbursing Agent ...................................................Introduction
Dissenting Holders .............................................Merger Agreement
Effective Time .................................................Merger Agreement
Estimated Armour Common Stock Purchase Price ....Armour Stock Purchase Agreement
Estimated Common Stock Merger Consideration ....................Merger Agreement
Estimated Merger Consolidation .............................................2(c)
Xxxxxxx ............................................................Introduction
Xxxxxxx Capital Stock ..................................................Recitals
Xxxxxxx Class A Common Stock ...................................Merger Agreement
Xxxxxxx Class B Common Stock ...................................Merger Agreement
Xxxxxxx 5% Preferred Stock .....................................Merger Agreement
Indemnified Party ............................................ Merger Agreement;
................................................Armour Stock Purchase Agreement
Initial Common Stock Payment Account ...................................2(c)(iv)
Initial Common Stock Payment Amount ....................................2(c)(iv)
Letter of Transmittal ...................................................6(a)(i)
Merger .................................................................Recitals
Merger Agreement .......................................................Recitals
iii
Merger Agreement Indemnification Obligations ...........................Recitals
Merger Escrow Account ..................................................2(c)(ii)
Merger Escrow Amount ...................................................2(c)(ii)
Merger Reserve Account ................................................2(c)(iii)
Merger Reserve Amount .................................................2(c)(iii)
Permitted Investments .........................................................5
Preferred Stock Account .................................................2(c)(i)
Preferred Stock Merger Consideration ...........................Merger Agreement
Shareholder Representative .........................................Introduction
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THIS DISBURSING AGREEMENT ("Agreement") is made as of the 21st day
of May, 1997 by and among XXXXXXX MILLING COMPANY, a Minnesota corporation
("Xxxxxxx"), XXXXXXX X. XXXXXX, as the Armour Shareholder Representative under
the Armour Stock Purchase Agreement (as hereinafter defined) (together with any
successor representative appointed under the Armour Stock Purchase Agreement,
the "Armour Shareholder Representative"), XXXXXXX X. XXXXXX, as the Shareholder
Representative under the Merger Agreement (as hereinafter defined) (together
with any successor representative appointed under the Merger Agreement, the
"Shareholder Representative"), XXXXX XXXX PET FOOD COMPANY, INC., a Delaware
corporation ("Buyer"), and NORWEST BANK MINNESOTA, N.A., a national banking
association, as disbursing agent (the "Disbursing Agent"). Capitalized terms
used herein and not otherwise defined shall have the meaning set forth in the
Merger Agreement.
WITNESSETH:
WHEREAS, the issued and outstanding capital stock of Xxxxxxx
consists of 18,329 shares of Xxxxxxx 5% Preferred Stock, 1,145,050 shares of
Xxxxxxx Class A Common Stock, and 14,511,823 shares of Xxxxxxx Class B Common
Stock (hereinafter collectively called the "Xxxxxxx Capital Stock");
WHEREAS, all of the issued and outstanding Xxxxxxx Capital Stock is
owned by Armour Corporation, a Delaware corporation ("Armour"), and certain
other persons;
WHEREAS, Buyer is to acquire Xxxxxxx by (i) purchasing all of the
issued and outstanding capital stock of Armour (the "Armour Capital Stock") from
the Armour Shareholders pursuant to that certain Stock Purchase Agreement dated
as of April 22, 1997, between Buyer and the Armour Shareholders (the "Armour
Stock Purchase Agreement"), and (ii) thereafter effecting the merger (the
"Merger") of Xxxxx Xxxx Pet Food Acquisition Co., a wholly-owned subsidiary of
Buyer ("Buyer Subsidiary"), with and into Xxxxxxx pursuant to that certain
Merger Agreement dated as of March 21, 1997, as amended March 31, 1997, among
Xxxxxxx, Buyer, and Buyer Subsidiary (the "Merger Agreement");
WHEREAS, Section 2.02(b) of the Armour Stock Purchase Agreement
requires Buyer to remit to the Disbursing Agent on the Closing Date (i) funds to
be held in escrow to provide the sole source of funds and property to satisfy
the Armour Stock Purchase Indemnification Obligations (as hereinafter defined),
and (ii) funds to be held by the Disbursing Agent pending a final determination
of the Armour Common Stock Purchase Price (as defined in the Armour Stock
Purchase Agreement), such funds to be held and disbursed by the Disbursing Agent
pursuant to the terms and conditions set forth below;
WHEREAS, Section 8.02(a) of the Armour Stock Purchase Agreement sets
forth the indemnification obligations of the Armour Shareholders, which
indemnification obligations set forth in clauses (iii) through (vii) of said
Section 8.02 (a) are to be secured by
an escrow (the indemnification obligations set forth in clauses (iii) through
(vii) of said Section 8.02(a) are hereinafter called the "Armour Stock Purchase
Indemnification Obligations");
WHEREAS, Section 2.02(a) of the Merger Agreement requires Buyer to
remit to the Disbursing Agent on the Closing Date (i) funds to be held and
disbursed by the Disbursing Agent to the holders of Converted Shares (as
hereinafter defined) prior to the final determination of the Common Stock Merger
Consideration Per Share, (ii) funds to be held by the Disbursing Agent pending a
final determination of the Common Stock Merger Consolidation Per Share, and
(iii) funds to be held in escrow to provide the sole source of funds and
property to satisfy the Merger Agreement Indemnification Obligations (as
hereinafter defined);
WHEREAS, the Merger Agreement provides that from and after the
Effective Time, the shareholders of Xxxxxxx, other than Armour or a Dissenting
Holder, may surrender the certificate or certificates held by such persons
representing shares of Xxxxxxx Capital Stock immediately prior to the Effective
Time (the shares held by persons other than Armour or a Dissenting Holder are
hereinafter called the "Converted Shares") to the Disbursing Agent and receive
in exchange an amount in cash calculated as set forth in Section 2.02 of the
Merger Agreement;
WHEREAS, none of the shareholders of Xxxxxxx have elected to
exercise their dissenters' rights under Section 302A.473 of the Minnesota
Business Corporation Act and, accordingly, there are no Dissenting Holders;
WHEREAS, Section 9.02(a) of the Merger Agreement sets forth the
indemnification obligations of the shareholders of Xxxxxxx, all of which
indemnification obligations are to be secured by an escrow (the "Merger
Agreement Indemnification Obligations"); and
WHEREAS, the Merger Agreement and the Armour Stock Purchase
Agreement require the execution of this Agreement to effect the foregoing
arrangements;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. References. This Agreement is the Disbursing Agreement referred
to in the Merger Agreement and the Armour Stock Purchase Agreement.
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2. Remittance of Funds to Disbursing Agent on Closing Date.
(a) Armour Escrow Account. Buyer hereby remits to the
Disbursing Agent, and the Disbursing Agent hereby acknowledges receipt thereof,
immediately available funds in the amount of Five Hundred Ten Thousand Nine
Hundred Sixty Dollars ($510,960) pursuant to Section 2.02(b)(ii) of the Armour
Stock Purchase Agreement (the "Armour Escrow Amount"). The Armour Escrow Amount
shall be held in a separate account (the "Armour Escrow Account") and shall be
applied in accordance with Section 8 of this Agreement.
(b) Armour Reserve Account. Buyer hereby remits to the
Disbursing Agent, and the Disbursing Agent hereby acknowledges receipt thereof,
immediately available funds in the amount of Three Hundred Eighty Four Thousand
Three Hundred Two and 47/100 Dollars ($384,302.47) pursuant to Section
2.02(b)(iii) of the Armour Stock Purchase Agreement (the "Armour Reserve
Amount"). The Armour Reserve Amount shall be held in a separate account (the
"Armour Reserve Account") pending final determination of the Armour Common Stock
Purchase Price as provided in Section 3(a) of this Agreement.
(c) Estimated Merger Consideration. Buyer hereby remits to the
Disbursing Agent, and the Disbursing Agent hereby acknowledges receipt thereof,
immediately available funds in the aggregate amount of One Hundred Forty Eight
Million Three Hundred Five Thousand Six Hundred Eleven and 41/100 Dollars
($148,305,611.41) pursuant to Section 2.02(a) of the Merger Agreement (the
"Estimated Merger Consideration"). The Estimated Merger Consideration shall be
applied as follows:
(i) the Disbursing Agent shall deposit the amount of Nine
Hundred Twenty Five Thousand Four Hundred Thirty One and 21/100 Dollars
($925,431.21), representing the Preferred Stock Merger Consideration in a
separate account (the "Preferred Stock Account") to be applied in
accordance with Section 6 of this Agreement;
(ii) the Disbursing Agent shall deposit the amount of Nine
Million Four Hundred Eighty-Nine Thousand Forty Dollars ($9,489,040) (the
"Merger Escrow Amount") in a separate account (the "Merger Escrow
Account") to be applied in accordance with Section 8 of this Agreement;
(iii) the Disbursing Agent shall deposit the amount of Six
Million Eight Hundred Fifty Three Thousand Five Hundred Twenty and 30/100
Dollars ($6,853,520.30) (the "Merger Reserve Amount") in a separate
account (the "Merger Reserve Account") to be held pending final
determination of the Common Stock Merger Consideration as provided in
Section 3(b) of this Agreement; and
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(iv) the Disbursing Agent shall deposit the amount of One
Hundred Thirty One Million Thirty Seven Thousand Six Hundred Nineteen and
90/100 Dollars ($131,037,619.90) (the "Initial Common Stock Payment
Amount") in a separate account (the "Initial Common Stock Payment
Account") to be applied in accordance with Section 6 of this Agreement.
3. Closing Date Balance Sheet Adjustments.
(a) Armour Stock Purchase Agreement Closing Date Balance Sheet
Adjustment. Within two (2) business days of the calculation of the Armour Common
Stock Purchase Price, Buyer and the Armour Shareholder Representative shall
deliver to the Disbursing Agent a statement signed by Buyer and the Armour
Shareholder Representative setting forth the Armour Common Stock Purchase Price
and the Estimated Armour Common Stock Purchase Price (as defined in the Armour
Stock Purchase Agreement). Buyer shall concurrently with the delivery of such
statement remit to the Disbursing Agent immediately available funds in an amount
equal to the excess (if any) of (i) the Armour Common Stock Purchase Price over
(ii) the Estimated Armour Common Stock Purchase Price, which excess shall be
held in the Armour Reserve Account and disbursed by the Disbursing Agent in
accordance with Section 7 of this Agreement. Alternatively, if the Estimated
Armour Common Stock Purchase Price exceeds the Armour Common Stock Purchase
Price, the Disbursing Agent shall, from funds in the Armour Reserve Account,
remit such excess to the Buyer within two (2) business days of receipt of such
statement and the balance of the funds in the Armour Reserve Account shall be
disbursed by the Disbursing Agent in accordance with Section 7 of this
Agreement.
(b) Merger Agreement Closing Date Balance Sheet Adjustment.
Within two (2) business days of the delivery of the Closing Date Balance Sheet,
Buyer and the Shareholder Representative shall deliver to the Disbursing Agent a
statement signed by Buyer and Shareholder Representative setting forth the
Common Stock Merger Consideration and the Estimated Common Stock Merger
Consideration. Buyer shall concurrently with the delivery of such statement
remit to the Disbursing Agent immediately available funds in an amount equal to
the excess (if any) of (i) the Common Stock Merger Consideration over (ii) the
Estimated Common Stock Merger Consideration, which excess shall be held in the
Merger Reserve Account and disbursed by the Disbursing Agent in accordance with
Section 6 of this Agreement. Alternatively, if the Estimated Common Stock Merger
Consideration exceeds the Common Stock Merger Consideration, the Disbursing
Agent shall from the funds in the Merger Reserve Account, remit such excess to
the Buyer within two (2) business days of such statement and the balance of the
funds in the Armour Reserve Account shall be disbursed by the Disbursing Agent
in accordance with Section 6 of this Agreement.
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4. Escrow Accounts.
(a) Armour Escrow Account. The Armour Escrow Account shall be held
by the Disbursing Agent for the account of the Armour Shareholders pursuant to
the terms and conditions of this Agreement solely for application in accordance
with the terms of this Agreement. All funds held in the Armour Escrow Account
shall only be released by the Disbursing Agent in accordance with Section 8 of
this Agreement.
(b) Merger Escrow Account. The Merger Escrow Account shall be held
by the Disbursing Agent for the account of the Shareholders pursuant to the
terms and conditions of this Agreement solely for application in accordance with
the terms of this Agreement. All funds held in the Merger Escrow Account shall
be released by the Disbursing Agent only in accordance with Section 8 of this
Agreement.
5. Investment of Funds. The Disbursing Agent is empowered and
directed, upon receipt of written instructions signed by (i) the Shareholder
Representative in the case of funds held in the Merger Escrow Account and the
Merger Reserve Account, and (ii) the Armour Shareholder Representative in the
case of funds held in the Armour Escrow Account and the Armour Reserve Account,
to invest said funds in the Norwest Advantage U.S. Government Fund and/or
Norwest Advantage Treasury Fund (collectively "Permitted Investments") as the
Shareholder Representative or the Armour Shareholder Representative, as the case
may be, shall direct. The Disbursing Agent is further authorized to sell or
redeem any or all Permitted Investments and to reinvest the proceeds of such
sales or redemptions in Permitted Investments, all upon written instructions
signed by the Shareholder Representative or the Armour Shareholder
Representative, as the case may be. The Disbursing Agent is further authorized
to sell or redeem any or all of said investments without further instructions as
may be necessary from time to time to pay in cash any Merger Agreement
Indemnification Obligations or Armour Stock Purchase Indemnification Obligations
in accordance with Section 8 hereof or to make payments from the Merger Reserve
Account in accordance with Section 6(a)(iii) hereof and payments from the Armour
Reserve Account in accordance with Section 7 hereof. In the absence of
instructions from the Armour Shareholder Representative or the Shareholder
Representative, as the case may be, funds held in the Merger Escrow Account, the
Merger Reserve Account, the Armour Escrow Account and the Armour Reserve Account
shall be invested and reinvested in Norwest Advantage U.S. Government Fund.
Notwithstanding any of the foregoing, no portion of the funds held in the Merger
Escrow Account, the Merger Reserve Account, the Armour Escrow Account or the
Armour Reserve Amount may be held in an investment which cannot be sold,
redeemed or otherwise liquidated at the holder's option in ninety (90) days or
less without loss of interest or discount. All amounts and investments (other
then bearer instruments) held in the Merger Escrow Account, the Merger Reserve
Account, the Armour Escrow Account or the Armour Reserve Account shall be
registered and held in the name of the Disbursing Agent, as Disbursing Agent
hereunder. All income earned on the Merger Escrow Account, the Merger Reserve
Account, the Armour Escrow Account or the Armour Reserve Account shall be
credited to
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such account and shall be distributed in accordance with the other provisions of
this Agreement.
6. Disbursement of Estimated Merger Consideration.
(a) Procedures for Payments to Shareholders. The following
procedures shall apply for payments by the Disbursing Agent to each holder of
Converted Shares:
(i) Upon the Disbursing Agent's receipt of (i) certificate(s)
which represent Converted Shares, and (ii) a duly executed letter of
transmittal with respect to such Converted Shares in the form attached as
Exhibit A hereto (the "Letter of Transmittal"), the Disbursing Agent is
hereby directed to deliver, or cause to be delivered, in accordance with
the instructions in the Letter of Transmittal, (A) a check in respect of
funds held in the Preferred Stock Account in an amount equal to $50.49
with respect to each share of Xxxxxxx 5% Preferred Stock represented by
such surrendered certificate(s) and (B) a check in respect of funds held
in the Initial Common Stock Payment Account in an amount equal to $8.82
with respect to each share of Xxxxxxx Class A Common Stock and/or Xxxxxxx
Class B Common Stock represented by such surrendered certificate(s). If
any holder of Converted Shares is entitled to receive $500,000 or more
pursuant to clause (A) or (B) above, the Disbursing Agent shall make the
foregoing payments by wire transfer of immediately available funds to any
such holder who has provided wire payment instructions in the Letter of
Transmittal, and mail written notice thereof to such holder's address
listed in the Letter of Transmittal. Such check or wire transfer shall be
sent on the Closing Date with respect to any certificate duly delivered to
the Disbursing Agent at least two (2) business days prior to the Effective
Time and as soon as practicable following receipt thereof with respect to
any certificate thereafter duly delivered to the Disbursing Agent. No
interest will be paid to, or accrued for the benefit of, any registered
owner on the cash payable upon surrender of any certificate.
(ii) At least five (5) days prior to the Effective Time,
Xxxxxxx shall deliver to the Disbursing Agent a list, certified by the
Secretary of Xxxxxxx, of the registered owners of Converted Shares,
identifying the registered owners (and the amount of shares owned) of
Xxxxxxx Capital Stock as of the Effective Time. The Disbursing Agent is
authorized and directed to cancel all certificates formerly representing
Converted Shares received by the Disbursing Agent after verification
against such list and upon making payment to the holders of Converted
Shares as provided in clause (i) of this Section 6(a). The Disbursing
Agent will thereafter return canceled certificates formerly representing
Converted Shares to the Secretary of Xxxxxxx.
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(iii) Upon delivery to the Disbursing Agent of the statement
required by Section 3(b) hereof setting forth the Common Stock Merger
Consideration and after making any deposit to or disbursement of funds
from the Merger Reserve Account required by Section 3(b) hereof, and
subject to the receipt of the documents required by clause (i) of this
Section 6(a), the Disbursing Agent is hereby directed to deliver, or cause
to be delivered, in accordance with the instructions in the Letter of
Transmittal, a check or wire in respect of funds held in the Merger
Reserve Account in an amount with respect to each share of Xxxxxxx Class A
Common Stock and/or Xxxxxxx Class B Common Stock represented by the
surrendered certificate(s) equal to (A) the amount of funds held in the
Merger Reserve Account immediately after the deposits or disbursements
required by Section 3(b) hereof, divided by (B) 14,856,873. Such check or
wire shall be sent within two (2) business days following the receipt of
the statement required by Section 3(b) of the Common Stock Merger
Consideration with respect to any certificate duly delivered to the
Disbursing Agent pursuant to clause (i) of this Section 6(a) at least two
(2) business days prior to the delivery of such statement, and at the time
of delivery of the check required by clause (i) of this Section 6(a) with
respect to any certificate delivered to the Disbursing Agent after the
delivery to the Disbursing Agent of such statement.
(iv) The Disbursing Agent is authorized and directed to pass
upon the adequacy of the items received by the Disbursing Agent, including
compliance with the instructions contained in the Letter of Transmittal,
applying the same standards with respect to payment to someone other than
the registered owners as the Disbursing Agent would apply in its capacity
as a corporation's transfer agent for shares of its common stock, with
respect to transfer of common stock from one registered owner to another,
and when inadequacies exist as to any matter to take such action as the
Disbursing Agent may deem appropriate in seeking to cause such
inadequacies to be remedied.
(v) If a registered owner of Converted Shares reports the loss
or destruction of any certificate, upon the making of an affidavit of that
fact by the registered owner claiming such certificate to have been lost,
stolen or destroyed, the consideration to which such registered owner
would have been entitled hereof but for failure to deliver such
certificate to the Disbursing Agent shall nevertheless be paid to such
registered owner, provided that the Disbursing Agent and Xxxxxxx shall as
a condition precedent to such payment, require such registered owner to
give the Disbursing Agent a surety bond in such sum as the Disbursing
Agent and Xxxxxxx may direct as indemnity against any claim that may be
made against Xxxxxxx or the Disbursing Agent with respect to the
certificate alleged to have been lost, stolen or destroyed.
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The Disbursing Agent will have no duty to arrange for the surety bond or
perform any other duties to locate lost, stolen or destroyed certificates.
(b) Remittance of Undisbursed Funds to the Company. On
November 26, 1997, (i) the Disbursing Agent shall furnish Xxxxxxx with a final
report showing the disposition of cash delivered to the Disbursing Agent for
disbursement to the holders of the Converted Shares pursuant to this Section 6
and the amount of such cash not theretofore properly claimed and disbursed,
together with the names and addresses of all persons on the list referred to in
Section 6(a)(ii) of this Agreement who have not properly surrendered their
certificates representing Converted Shares, and (ii) the Disbursing Agent shall
remit to Xxxxxxx, as the surviving corporation of the Merger, the remaining
balance of the Preferred Stock Account, Initial Common Stock Payment Account,
and Merger Reserve Account. Xxxxxxx, by its acceptance of such remaining
balance, acknowledges and agrees that it shall be solely liable (and the
Disbursing Agent shall have no liability whatsoever) for any payments required
to be made thereafter under the Merger Agreement to any holder of Converted
Shares, except for payments required by Section 8(a) hereof.
7. Disbursement of Armour Reserve Account. Prior to the Effective
Time, the Armour Shareholder Representative shall deliver to the Disbursing
Agent a list, certified by the secretary of Armour, of the registered owners of
Armour Common Stock (as defined in the Armour Stock Purchase Agreement),
identifying the registered owners (and the number of shares of Armour Common
Stock owned) and the address to which payments are to be sent by the Disbursing
Agent. Following the calculation of the Armour Common Stock Purchase Price and
the receipt by the Disbursing Agent of additional funds from the Buyer or the
remittance of funds by the Disbursing Agent to the Buyer, as the case may be, as
provided in Section 3(a) of this Agreement, the Disbursing Agent is hereby
directed to deliver, or cause to be delivered, in accordance with the written
instructions provided by the Armour Shareholder Representative, a check in
respect of funds held in the Armour Reserve Account in an amount with respect to
each share of Armour Common Stock equal to (A) the amount of funds held in the
Armour Reserve Account immediately after the deposits or disbursements required
by Section 3(a) hereof, divided by (B) 10,000. Such checks shall be sent within
two (2) business days following receipt of the statement required by Section
3(a) of the Armour Common Stock Purchase Price.
8. Disbursement of Escrow Fund Accounts.
(a) Remittance of Escrow Accounts. Except as otherwise
provided in Section 8(b) of this Agreement, on the date which is eighteen (18)
months after the Effective Time, the Disbursing Agent shall (i) pay to the
Shareholder Representative from funds held in the Merger Escrow Account the
amount, if any, payable to the Shareholder representative pursuant to Section
8.05 of the Merger Agreement as set forth in a written statement signed by the
Shareholder Representative, and (ii) pay to the Armour Shareholder
Representative from funds held in the Armour Escrow Account the amount, if any,
payable to
8
the Armour Shareholder Representative pursuant to Section 7.05 of the Armour
Stock Purchase Agreement as set forth in a written statement signed by the
Armour Shareholder Representative. Following such payments to the Shareholder
Representative and the Armour Shareholder Representative, the Disbursing Agent
shall remit (i) the then remaining balance in the Armour Escrow Account
including interest accrued thereon to the holders of Armour Common Stock pro
rata (based upon their ownership of Armour Common Stock as set forth in the list
referred to in Section 7 hereof) by delivery of checks in accordance with the
written instructions provided by the Armour Shareholder Representative; and (ii)
the then remaining balance in the Merger Escrow Account including interest
accrued thereon to the holders (other than Armour) of shares of Xxxxxxx Class A
Common Stock and Xxxxxxx Class B Common Stock on a pro rata basis based upon
their ownership of such shares by delivery of checks to such holders in
accordance with the instructions contained in the Letters of Transmittal
referred to in clause (i) of Section 6(a) hereof (or in accordance with written
instructions from the Shareholder Representative with respect to any Shareholder
who has not submitted a Letter of Transmittal to the Disbursing Agent).
(b) Indemnification Disbursements. If the Disbursing Agent
receives a written notice of a claim from an Indemnified Party seeking
indemnification for an Armour Stock Purchase Indemnification Obligation or a
Merger Agreement Indemnification Obligation, as the case may be, the Disbursing
Agent shall promptly provide a copy of such notice to the Shareholder
Representative and the Armour Shareholder Representative and thereafter shall
release and deliver to the Indemnified Party such amount in the Escrow Accounts
necessary to satisfy such claim unless the Shareholder Representative or the
Armour Shareholder Representative objects in writing to such release to the
Indemnified Party and the Disbursing Agent within thirty (30) days of the date
of receiving a copy of the Indemnified Party's notice to the Disbursing Agent.
If the Shareholder Representative or the Armour Shareholder Representative
objects in accordance with the preceding sentence, the Disbursing Agent shall
not release any funds from the Armour Escrow Account or the Merger Escrow
Account to the Indemnified Party, except for any undisputed amount of such claim
(which shall be released), until final settlement of such dispute between the
Indemnifying Party and the Indemnified Party in accordance with the terms of the
Merger Agreement and the Armour Stock Purchase Agreement and receipt of a joint
direction from the Buyer, the Shareholder Representative and the Armour
Shareholder Representative that the Disbursing Agent pay to Buyer the amount of
such claim in accordance with such final settlement. Any payment of any claim
shall be made 94.8904% from funds held in the Merger Escrow Account and 5. 1096%
from funds held in the Armour Escrow Account.
(c) Expense Reimbursement.
(i) If the Disbursing Agent receives a written statement from
the Shareholder Representative for reimbursement of expenses incurred by
the Shareholder Representative pursuant to Section 8.02 of the Merger
Agreement, subject to the limitations set forth below, the Disbursing
Agent shall reimburse the
9
Shareholder Representative for the amount of such expenses from funds held
in the Merger Escrow Account. In the event that the amount of any
statement for reimbursement of expenses submitted by the Shareholder
Representative, together with the amount of all prior statements submitted
by the Shareholder Representative exceeds the aggregate amount of income
earned on funds held in the Merger Escrow Account from and after the date
of this Agreement, prior to reimbursing the Shareholder Representative for
such expenses the Disbursing Agent shall provide a copy of such statement
to the Buyer. The Disbursing Agent shall reimburse the Shareholder
Representative for the amount of such statement unless the Buyer objects
in writing to the Shareholder Representative and the Disbursing Agent to
such reimbursement within thirty (30) days of receiving a copy of such
statement on the grounds that the expenses listed therein were not
reasonably incurred. In the event that the Buyer objects in accordance
with the preceding sentence, the Disbursing Agent shall not pay such
statement, except for any undisputed amount (which shall be paid), until
final settlement of such dispute between Buyer and the Shareholder
Representative in accordance with the Merger Agreement, and receipt of a
joint direction from Buyer and the Shareholder Representative that the
Disbursing Agent pay to the Shareholder Representative the amount of such
statement in accordance with such final settlement.
(ii) If the Disbursing Agent receives a written statement from
the Armour Shareholder Representative for reimbursement of expenses
incurred by the Armour Shareholder Representative pursuant to Section 7.02
of the Armour Stock Purchase Agreement, subject to the limitations set
forth below, the Disbursing Agent shall reimburse the Armour Shareholder
Representative for the amount of such expenses from funds held in the
Armour Escrow Account. In the event that the amount of any statement for
reimbursement of expenses submitted by the Armour Shareholder
Representative, together with the amount of all prior statements submitted
by the Armour Shareholder Representative exceeds the aggregate amount of
income earned on funds held in the Armour Escrow Account from and after
the date of this Agreement, prior to reimbursing the Armour Shareholder
Representative for such expenses the Disbursing Agent shall provide a copy
of such statement to the Buyer. The Disbursing Agent shall reimburse the
Armour Shareholder Representative for the amount of such statement unless
the Buyer objects in writing to the Armour Shareholder Representative and
the Disbursing Agent to such reimbursement within thirty (30) days of
receiving a copy of such statement on the grounds that the expenses listed
therein were not reasonably incurred. In the event that the Buyer objects
in accordance with the preceding sentence, the Disbursing Agent shall not
pay such statement, except for any undisputed amount (which shall be
paid), until final settlement of such dispute between Buyer and the Armour
Shareholder Representative in accordance with the Armour Stock Purchase
Agreement, and receipt of a joint direction from Buyer and the Armour
Shareholder Representative that the Disbursing
10
Agent pay to the Armour Shareholder Representative the amount of such
statement in accordance with such final settlement.
9. Fees, Expenses. Buyer agrees to pay the Disbursing Agent fees for
services hereunder or in connection herewith in accordance with Schedule I
hereto and to reimburse the Disbursing Agent for all expenses incurred by the
Disbursing Agent pursuant to or in connection with services hereunder or in
connection herewith.
10. Resignation or Removal of Disbursing Agent.
(a) Resignation and Removal. The Disbursing Agent may resign
following the giving of thirty (30) days' prior written notice to Buyer, the
Shareholder Representative and the Armour Shareholder Representative. Similarly,
the Disbursing Agent may be removed and replaced following the giving of thirty
(30) days' prior written notice to the Disbursing Agent by Buyer, the
Shareholder Representative and the Armour Shareholder Representative. In either
event, the duties of the Disbursing Agent shall terminate thirty (30) days after
the date of such notice (or at such earlier date as may be mutually agreeable),
and the Disbursing Agent shall then deliver the balance of the funds then in its
possession pursuant to this Agreement to a successor Disbursing Agent as shall
be appointed by mutual agreement of Buyer, the Shareholder Representative and
the Armour Shareholder Representative as evidenced by a written notice filed
with the Disbursing Agent.
(b) Release of Disbursing Agent. Upon acknowledgment by any
successor Disbursing Agent of the receipt of the funds transferred to such
successor Disbursing Agent pursuant to Section 10(a), the then acting Disbursing
Agent shall be fully released and relieved of all duties, responsibilities, and
obligations under this Agreement, other than liability for any action taken or
omitted by such Disbursing Agent under this Agreement that shall have
constituted gross negligence or willful misconduct.
11. Responsibility of Disbursing Agent. The Disbursing Agent agrees
to hold all funds delivered to it hereunder under the terms and conditions
hereof and to perform the acts and duties imposed upon it hereby. If at any time
in the performance of its duties hereunder it is necessary for the Disbursing
Agent to receive, accept or act upon any notices submitted to it hereunder, it
shall be entitled to deem the signatories thereof as being those purported to
sign such notices on behalf of the parties thereto and shall be entitled to rely
upon the genuiness of the signatures of such signatories without inquiry and
without requiring substantiating evidence of any kind. The Disbursing Agent may
act in reliance upon the advice of counsel in reference to any matter relating
hereto and shall not be liable for any acts or omissions of any kind unless
occasioned by its own negligence or willful misconduct.
12. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to be duly delivered on the day they are
delivered personally or, if mailed, three days after being deposited in the
mail, first class, postage prepaid, to the parties
11
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) If to Buyer or Xxxxxxx, to or, in the case of Xxxxxxx, in
care of:
Xxxxx Xxxx Pet Food Company, Inc.
c/o Dartford Partnership
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxx
with a copy to:
Xxxxxxxx & O'Neil LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxx X. Xxxxxxxxxxx
(b) If to the Armour Shareholder Representative or the
Shareholder Representative, to:
Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
with a copy to:
Faegre & Xxxxxx LLP
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
12
(c) If to the Disbursing Agent:
Norwest Bank Minnesota, N.A.
Master Trust & Custody Services
Norwest Center
6th and Marquette
Xxxxxxxxxxx, XX 00000-0000
Attention: Xx. Xxxxx X. Xxxxxxx, Account Manager
Telephone: 000-000-0000
Facsimile: 000-000-0000
In the event notice is required to be delivered hereunder to any Indemnifying
Party or Indemnified Party (as such terms are defined in the Armour Stock
Purchase Agreement and the Merger Agreement), such notice shall be deemed duly
delivered if delivered in accordance with the notice provisions of the Armour
Stock Purchase Agreement or the Merger Agreement, as applicable.
13. Term of Agreement. This Agreement, and the Disbursing Agent's
duties hereunder, shall terminate at such time as the Disbursing Agent shall
have disbursed all of the funds held by the Disbursing Agent hereunder in
accordance with the provisions of this Agreement.
14. Governing Law. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the internal laws of the
state of Minnesota without regard to principles of conflict of laws.
15. Miscellaneous.
(a) Binding Effect; No Lien. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors. The Disbursing Agent shall not have a lien or adverse claim upon, or
any other right whatsoever to payment from, any funds in its possession pursuant
to this Agreement (or interest earned thereon) for or on account of any right to
payment or reimbursement hereunder or otherwise.
(b) Counterparts. This Agreement and any notice, demand or
instruction pursuant hereto may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
but one and the same instrument; provided, however, that the Disbursing Agent
shall not be bound by or act in accordance with any such counterpart until all
counterparts are received by it.
13
(c) Amendments. This Agreement may be modified, amended or
canceled only by a written instrument signed by all parties hereto.
(d) Receipts. The Disbursing Agent shall provide receipts to
the Buyer for all funds deposited hereunder, with a copy thereof to the
Shareholder Representative and the Armour Shareholder Representative.
(e) Merger Agreement. A copy of the Armour Stock Purchase
Agreement and the Merger Agreement has been provided to the Disbursing Agent in
connection with the execution hereof and the Disbursing Agent understands the
terms of such agreements incorporated by reference herein.
(f) Entire Agreement. This Agreement, along with the Armour
Stock Purchase Agreement and the Merger Agreement, embodies the entire agreement
between the parties with respect to the subject matter herein and there are no
restrictions, provisions, representations, warranties, covenants or undertakings
relating to such subject matter other than those set forth or provided for
herein.
(g) Severability. If any provision of this Agreement is held
to be invalid or unenforceable, such invalidity shall not impair or otherwise
affect the validity or enforceability of any other provision of this Agreement.
16. Third Party Beneficiaries. This Agreement is for the benefit of
the registered owners of the Armour Common Stock and the Converted Shares, and
such owners are entitled to rely upon its provisions.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective duly authorized officers as of the date first
above written.
XXXXXXX MILLING COMPANY
By /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Its President
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx, as Shareholder
Representative and Armour Shareholder
Representative
XXXXX XXXX PET FOOD COMPANY, INC.
By /s/ Xxx Xxxxx
---------------------------------------
Its Executive Vice President
NORWEST BANK MINNESOTA, N.A.
By /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------------------
Its Vice President
Schedule I
NORWEST MASTER TRUST & CUSTODY SERVICES
FEE PROPOSAL FOR DISBURSING AGENT SERVICES
XXXXXXX MILLING COMPANY
Initial Relationship Set-Up (One-Time)(1) $1,500.00
Annual Account Maintenance (Per Account)(1) $1,250.00
Transmittal Letter Processing/Certificate Receipt
(Per Letter/Certificate) $ 20.00
Wire Disbursement (Per Wire) $ 15.00
Check Disbursement (Per Check) $ 10.00
1099 Issuance (Per 1099) $ 10.00
Address Maintenance (Per Maintenance Request) $ 10.00
M1:0236796.12
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(1) Payable at closing ($9,OOO total)
