AGREEMENT
Exhibit 99.2
EXECUTION COPY
This Agreement, dated as of October 9, 2007 (“Agreement”), is by and among Lancaster Colony
Corporation, an Ohio corporation (the “Company”), and the other persons and entities that are
signatories hereto (collectively, the “Barington Group,” and each, individually, a “member” of the
Barington Group) which are or may be deemed to be members of a “group” with respect to the common
stock of the Company, without par value (the “Common Stock”), pursuant to Rule 13d-5 promulgated by
the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”).
WHEREAS, the Barington Group (i) has publicly indicated that it intends to solicit proxies for
the election of its own alternative slate of nominees (the “Proxy Solicitation”) for election to
the Company’s board of directors (the “Board”) at the 2007 annual meeting of shareholders of the
Company (the “2007 Annual Meeting”) and (ii) has taken certain actions in furtherance thereof; and
WHEREAS, the Company and the members of the Barington Group have determined that the interests
of the Company and its shareholders would be best served by, among other things, avoiding the
substantial expense and disruption that would result from the Proxy Solicitation;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Representations and Warranties of the Company. The Company hereby represents and
warrants to the Barington Group that (i) this Agreement has been duly authorized, executed and
delivered by the Company, and is a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar
laws generally affecting the rights of creditors and subject to general equity principles; and (ii)
neither the execution of this Agreement nor the fulfillment of the terms hereof will conflict with,
result in a breach or violate in any material respect the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which the Company or any of its subsidiaries is a party or bound or to
which its or their property is subject.
2. Representations and Warranties of the Barington Group. Each member of the
Barington Group represents and warrants to the Company that (i) this Agreement has been duly
authorized, executed and delivered by such member, and is a valid and binding obligation of such
member, enforceable against such member in accordance with its terms, except as enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws generally affecting the rights of creditors and subject to general
equity principles; and (ii) as of September 21, 2007 and as of the date of this
Agreement, the members of the Barington Group, together with their respective Affiliates and
Associates, beneficially own in the aggregate 1,694,321 shares of Common Stock (the “Barington
Group Shares”).
3. Barington Nomination; Voting Agreement.
(a) The Barington Group hereby withdraws its letter dated September 19, 2007 to the Secretary
of the Company providing Notice to the Secretary of the intention of Barington Companies Equity
Partners, L.P. to nominate persons for election as directors at the 2007 Annual Meeting (the
“Barington Nomination”).
(b) At the 2007 Annual Meeting and at every adjournment or postponement thereof, the Barington
Group shall, with respect to the Barington Group Shares and any other shares of Common Stock in
respect of which the Barington Group has the right to direct the vote (collectively, the “Voting
Shares”): (i) appear at such meeting or otherwise cause the Voting Shares to be counted as present
thereat for purposes of establishing a quorum; and (ii) vote or cause to be voted the Voting Shares
in favor of the persons nominated by the Board to serve on the Board, as identified in the
Company’s definitive proxy statement filed in respect of the 2007 Annual Meeting, and not in favor
of any other nominees to serve on the Board.
4. Standstill Period.
(a) Except as provided in Section 4(b), each member of the Barington Group agrees
that, from the date of this Agreement until the earlier of November 17, 2008 and the Company’s 2008
annual meeting of shareholders (such period, the “Standstill Period”), without the prior written
consent of the Board specifically expressed in a written resolution adopted by a majority vote of
the entire Board, neither it nor any of its Affiliates or Associates under its control or direction
will, and it will cause each of its Affiliates and Associates under its control not to, directly or
indirectly, in any manner: (i) engage in any solicitation of proxies or consents to vote any voting
securities of the Company or become a participant in any election contest with respect to the
Company; (ii) seek to influence any person with respect to the voting or disposition of any
securities of the Company; provided, however, that any member of the Barington Group and any
Affiliate or Associate of any such member may disclose, publicly or otherwise, how it intends to
vote or act with respect to any securities of the Company, any stockholder proposal or other matter
to be voted on by the stockholders of the Company (other than the election of directors) and the
reasons therefor; (iii) demand a copy of the Company’s list of shareholders or its other books and
records; (iv) otherwise publicly act, alone or in concert with others, to seek to influence the
management, the Board or policies of the Company or initiate or take any action to obtain
representation on the Board, except as permitted expressly by this Agreement; (v) form, join or in
any way participate in a “group” (as defined under the Exchange Act) with respect to the Company,
except that nothing contained herein shall prohibit members of the Barington Group or their
Affiliates and Associates from (x) participating in a group to the extent such group currently
exists, (y) adding its Affiliates or Associates to such group, or (z) participating in a group to
the extent that such group does not take any actions that any member of the Barington Group would
be prohibited from doing individually pursuant to this Section 4(a); or (vi) enter
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into any agreements with any third party with respect to any of the foregoing, except in each
case, as contemplated by this Agreement.
(b) Nothing in Section 4(a) shall limit any member of the Barington Group or the
Associates or Affiliates of such member from taking any of the actions otherwise prohibited by
Section 4(a) in connection with the 2008 annual meeting of shareholders of the Company,
including without limitation, nominating directors or soliciting proxies for the election of
directors or other purposes, requesting a shareholder list, related information and other books and
records, making public filings or announcements or taking any other action, in each case, related
to the solicitation of proxies at the 2008 annual meeting of shareholders of the Company;
provided, however, that each member of the Barington Group and its Associates or Affiliates
shall (i) comply with the terms of the Company’s Code of Regulations as in effect on the date
hereof as they apply to the 2008 annual meeting of shareholders of the Company (including without
limitation provisions relating to the nomination of directors), and (ii) refrain from soliciting
proxies or making public filings or announcements in connection with the solicitation of proxies
for the Company’s 2008 annual meeting of shareholders prior to the earlier of (x) the submission of
a timely notice of an intent to nominate persons to serve as directors at the 2008 annual meeting
of shareholders, and (y) August 15, 2008.
(c) As used in this Agreement, the terms “Affiliate” and “Associate” shall have the
respective meanings set forth in Rule 12b-2 promulgated by the SEC under the Exchange Act; the
terms “beneficial owner” and “beneficial ownership” shall have the same meanings as set forth in
Rule 13d-3 promulgated by the SEC under the Exchange Act; and the terms “person” or “persons” shall
mean any individual, corporation (including not-for-profit), general or limited partnership,
limited liability company, joint venture, estate, trust, association, organization or other entity
of any kind or nature.
(d) In the event that the Company is in material breach of its obligations under this
Agreement, including, without limitation, a failure to comply in any material respect with the
provisions of Section 5 through Section 10 of this Agreement, and such material
breach is not cured within 30 days after notice thereof to the Company by the Barington Group, then
in addition to any other remedies that the members of the Barington Group may have, the provisions
of Sections 3 and 4(a) shall also terminate.
5. Additional Director.
(a) The Nominating and Governance Committee and the Barington Group shall work in good faith
to identify a mutually acceptable candidate to serve as a director on the Board (the “New
Director”) within ninety (90) days of the date hereof. The New Director shall qualify as an
Independent Director. For purposes of this Agreement, an “Independent Director” is a director that
qualifies as “independent” under the listing standards of The Nasdaq Stock Market, Inc (Marketplace
Rule 4200 and any successor thereto) and Item 407(a) of Regulation S-K promulgated by the SEC. In
addition, the New Director shall be an individual that the Company and the Barington Group
reasonably believe does not have a relationship with the Barington Group, the Company or any of the
Company’s executive officers that would impair the independence of such director in carrying out
the responsibilities of a director of the Company.
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(b) Upon the identification of the New Director, the Board shall, at its next regularly
scheduled meeting, (i) either (A) cause a then-current member of the Board whose term expires at
the Company’s 2010 annual meeting of stockholders to resign, retire or be removed, or (B) cause the
size of the Board to be increased by one, and (ii) appoint the New Director to fill the newly
created vacancy (it being understood that in either case the New Director shall be a member of the
class of directors whose term ends at the 2010 annual meeting of the shareholders of the Company).
6. Improvement in Operations and Profitability.
(a) As promptly as reasonably practicable (and in any case no later than forty-five (45) days
from the date of this Agreement), the Company shall form a working group (the “Task Force”) to
enhance its ongoing efforts to improve the continuing operations and profitability of the Company
(it being understood that this review may not include a review of non-food operations). The Task
Force shall include the Company’s Chief Financial Officer and such other members as are designated
by the Company’s Chief Financial Officer. The Task Force shall seek to identify measures to, among
other things
| i. | Improve gross margins; | ||
| ii. | Reduce SG&A expenses; and | ||
| iii. | Enhance manufacturing and marketing efficiencies. |
(b) The Chief Financial Officer shall consider in good faith whether it is desirable for the
Task Force to retain a third-party consultant to assist the Task Force (and if the Chief Financial
Officer so decides that it is desirable, the Company shall retain a third-party consultant to
assist the Task Force).
(c) The Task Force shall use commercially reasonable efforts to develop a business plan (the
“Business Plan”) identifying measures to improve the operations and profitability of the Company
within one hundred and eighty (180) days after the date hereof, and shall use commercially
reasonable efforts to implement the measures identified in the Business Plan as promptly as
reasonably practicable thereafter. Upon completion of the Business Plan, the Company shall issue a
press release or make such other public disclosure that provides the Company’s shareholders with
such description of the Business Plan as the Company deems appropriate.
(d) In connection with the development of the Business Plan, a representative of the Task
Force shall consult with representatives of the Barington Group regarding any suggested
improvements the Barington Group may have, and the Task Force shall consider such suggested
improvements in good faith.
7. Share Repurchase Program. The Company shall utilize commercially reasonable
efforts to continue to repurchase outstanding shares of Common Stock up to the amount
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authorized by the Board (it being understood that the Board has authorized the Company to
repurchase approximately 2.6 million shares of Common Stock in addition to those shares of Common
Stock that the Company has repurchased prior to the date hereof, and that the Board does not intend
to revoke or reduce this authorization), with a goal (but not a requirement) of repurchasing a
total of at least two (2) million shares during the period from July 1, 2007 through June 30, 2008,
inclusive. The Barington Group acknowledges that the Company’s obligations pursuant to this
Section 7 are subject to compliance with all applicable laws (including without limitation
all applicable securities laws) and contractual obligations, and that the Company may take into
account prevailing market factors in determining whether and when to repurchase any shares of
Common Stock.
8. Completion of Strategic Process. The Company shall continue its efforts, as
publicly announced on August 17, 2007, to explore strategic alternatives for its nonfood businesses
with the assistance of outside financial advisors. The Company shall use commercially reasonable
efforts to complete these efforts prior to August 31, 2008.
9. Lead Independent Director. No later than the 2007 Annual Meeting, the Independent
Directors of the Board shall appoint a lead Independent Director. The Independent Directors of the
Board may appoint successor lead Independent Directors at any time and from time to time as they
deem appropriate. The lead Independent Director shall: (i) work closely with the chairman of the
Board with regard to approving the information presented to the Board and setting and approving
meeting agendas and meeting schedules; (ii) chair meetings of the Board in the absence of the
chairman of the Board; (iii) oversee meetings of the Independent Directors of the Board; (iv) serve
as the principal liaison between the Independent Directors of the Board and the chairman of the
Board; (v) take a leading role in the Board evaluation process; and (vi) have the authority to call
meetings of the Independent Directors of the Board.
10. Corporate Governance Review. As soon as reasonably practicable, but in any event
with a goal of completion within one hundred and eighty (180) days of the date of this Agreement,
the Nominating and Governance Committee shall implement a review of the Company’s corporate
governance and prepare, for consideration by the entire Board, a report identifying any proposed
changes that the Nominating and Governance Committee deems appropriate to improve the Company’s
corporate governance. In connection with this review, the Nominating and Governance Committee
shall be entitled to retain, at the Company’s expense, independent counsel and such other advisors
as it deems necessary or appropriate to assist the committee in its evaluation. The Nominating and
Governance Committee shall cause a representative of the committee to meet with a representative of
the Barington Group regarding any suggested improvements the Barington Group may have, and the
committee shall consider such suggested improvements in good faith.
11. Public Announcement. The Barington Group and the Company shall issue a joint
press release in the form attached hereto as Exhibit A on the date hereof.
12. Expense Reimbursement; Costs and Expenses. Within five (5) business days after
receiving documentation thereof, the Company shall reimburse Barington Capital Group, L.P. for the
actual documented out-of-pocket expenses (up to a maximum of $150,000) incurred by
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the members of the Barington Group in connection with its Schedule 13D filings, the Barington
Nomination and related anticipated proxy solicitation, and the negotiation and execution of this
Agreement and all related activities and matters. Except as provided in the preceding sentence,
all costs and expenses incurred in connection with this Agreement will be paid by the party
incurring such cost or expense.
13. Confidentiality. The members of the Barington Group (each, a “Recipient”) each
acknowledge the confidential and proprietary nature of the Confidential Information (as defined
below) and agree that the Confidential Information (a) will be kept confidential by Recipient and
Recipient’s Representatives and (b) will not be disclosed by Recipient (except to other Recipients
and their Affiliates and Associates and such person’s Representatives to the extent contemplated by
this Agreement) or by Recipient’s Representatives (as defined below) to any person except with the
specific prior written consent of the Company or except as expressly otherwise permitted by this
Agreement. It is understood that (y) Recipient may disclose Confidential Information only to those
of Recipient’s Representatives who are informed by Recipient of the confidential nature of the
Confidential Information and the obligations of this Agreement, and (z) Recipient shall be
responsible for the breach of the provisions of this Section 13 by Recipient’s
Representatives. As used in this Agreement, the term “Confidential Information” means and includes
any and all confidential, non-public or proprietary information concerning the business and
affairs of the Company that may hereafter be disclosed to Recipient by the Company or by the
directors, officers, employees, agents, consultants, advisors or other representatives, including
legal counsel, accountants and financial advisors (“Representatives”) of the Company; provided that
“Confidential Information” shall not include information that (a) was in or enters the public
domain or was or becomes generally available to the public other than as a result of disclosure by
Recipient or any Representative thereof, (b) was independently acquired by Recipient without
violating any of the obligations of Recipient or its Representatives under this Agreement, or under
any other contractual, legal, fiduciary or binding obligation of Recipient or its Representatives
with or to the Company, (c) was available, or becomes available, to Recipient on a nonconfidential
basis other than as a result of its disclosure to Recipient by the Company or any Representative of
the Company, but only if to the knowledge of Recipient the source of such information is not bound
by a confidentiality agreement with the Company or is not otherwise prohibited from transmitting
the information to Recipient or Recipient’s Representatives by a contractual, legal, fiduciary or
other binding obligation with or to the Company, or (d) was independently developed by Recipient or
its Representatives without reference to any other Confidential Information.
14. Jurisdiction; Applicable Law. Each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of the Court of Chancery or other federal or state courts of
the State of Delaware in the event any dispute arises out of this Agreement or the transactions
contemplated by this Agreement, (b) agrees that it shall not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court, (c) agrees that it
shall not bring any action relating to this Agreement or the transactions contemplated by this
Agreement in any court other than the Court of Chancery or other federal or state courts of the
State of Delaware, and each of the parties irrevocably waives the right to trial by jury, (d)
agrees to waive any bonding requirement under any applicable law, in the case any other party seeks
to enforce the terms by way of equitable relief and (e) each of the parties irrevocably consents to
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service of process by first class certified mail, return receipt requested, postage prepaid,
to the address of such parties’ principal place of business or as otherwise provided by applicable
law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND
EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED
WHOLLY WITHIN SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE.
15. Representative. Each member of the Barington Group hereby irrevocably appoints
Barington Capital Group, L.P. as such member’s attorney-in-fact and representative (the “Barington
Representative”), in such member’s place and stead, to do any and all things and to execute any and
all documents and give and receive any and all notices or instructions in connection with this
Agreement and the transactions contemplated hereby. The Company shall be entitled to rely, as
being binding on each member of the Barington Group, upon any action taken by the Barington
Representative or upon any document, notice, instruction or other writing given or executed by the
Barington Representative.
16. Severability. If at any time subsequent to the date hereof, any provision of this
Agreement shall be held by any court of competent jurisdiction to be illegal, void or
unenforceable, such provision shall be of no force and effect, but the illegality or
unenforceability of such provision shall have no effect upon the legality or enforceability of any
other provision of this Agreement.
17. No Third-Party Beneficiaries. No provision of this Agreement is intended to
confer any rights, benefits, remedies or liabilities upon any person other than the parties hereto,
their respective successors and assigns.
18. Counterparts. This Agreement may be executed in two or more counterparts which
together shall constitute a single agreement.
19. Entire Agreement; Amendment; Assignment. This Agreement contains the entire
understanding of the parties hereto with respect to its subject matter. There are no restrictions,
agreements, promises, representations, warranties, covenants or undertakings other than those
expressly set forth herein. This Agreement may be amended only by a written instrument duly
executed by the parties hereto, or in the case of the Barington Group, the Barington
Representative, or their respective successors or assigns. The Company may not assign, delegate or
otherwise transfer any of its rights or obligations under this Agreement without the consent of the
Barington Representative, and no member of the Barington Group may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the consent of the Company.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized
signatories of the parties as of the date hereof.
| LANCASTER COLONY CORPORATION | ||||||
| By: | /s/ Xxxx X. Xxxxxxx, Xx. | |||||
| Name: | ||||||
| Title: | Chief Executive Officer | |||||
| BARINGTON COMPANIES EQUITY PARTNERS, L.P. | ||||||
| By: Barington Companies Investors, LLC, its general partner | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||||
| Name: | ||||||
| Title: | Managing Member | |||||
| BARINGTON COMPANIES INVESTORS, LLC | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||||
| Name: | ||||||
| Title: | Managing Member | |||||
| BARINGTON INVESTMENTS, L.P. | ||||||
| By: Barington Companies Investors, LLC, its general partner | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||||
| Name: | ||||||
| Title: | Managing Member | |||||
| BARINGTON COMPANIES ADVISORS, LLC | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||||
| Name: | ||||||
| Title: | Managing Member | |||||
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| BENCHMARK OPPORTUNITAS FUND PLC | ||||||
| By: Barington Offshore Advisors, LLC, its general partner | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||||
| Name: | ||||||
| Title: | Managing Member | |||||
| BARINGTON OFFSHORE ADVISORS, LLC | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||||
| Name: | ||||||
| Title: | Managing Member | |||||
| BARINGTON COMPANIES OFFSHORE FUND, LTD. | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||||
| Name: | ||||||
| Title: | President | |||||
| BARINGTON OFFSHORE ADVISORS II, LLC | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||||
| Name: | ||||||
| Title: | Managing Member | |||||
| BARINGTON CAPITAL GROUP, L.P. | ||||||
| By: LNA Capital Corp., its general partner | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||||
| Name: | ||||||
| Title: | President and CEO | |||||
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| LNA CAPITAL CORP. | ||||||||
| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||||||
| Name: | ||||||||
| Title: | President and CEO | |||||||
| /s/ Xxxxx X. Xxxxxxxxxxx | ||||||||
| Xxxxx X. Xxxxxxxxxxx | ||||||||
| RJG CAPITAL PARTNERS, L.P. | ||||||||
| By: RJG Capital Management, LLC, its general partner | ||||||||
| By: | /s/ Xxxxxx X. Xxxxx | |||||||
| Name: | ||||||||
| Title: | Managing Member | |||||||
| RJG CAPITAL MANAGEMENT, LLC | ||||||||
| By: | /s/ Xxxxxx X. Xxxxx | |||||||
| Name: | ||||||||
| Title: | Managing Member | |||||||
| /s/ Xxxxxx X. Xxxxx | ||||||||
| Xxxxxx X. Xxxxx | ||||||||
| X.X. XXXXX SPECIAL OPPORTUNITIES FUND, L.P. | ||||||||
| By: X.X. XXXXX PARTNERS, LLC, its general partner |
||||||||
| BY: XXXXX HOLDINGS, LLC, its managing member |
||||||||
| By: | /s/ Xxxxxxxx Xxxxxx | |||||||
| Name: | ||||||||
| Title: | Chief Compliance Officer Chief Operating Officer |
|||||||
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| X.X. XXXXX SPECIAL OPPORTUNITIES FUND, LTD. | ||||||
| By: X.X. Xxxxx & Co., L.P., its manager | ||||||
| By: DBZ GP, LLC, its general partner | ||||||
| By: Xxxxx Holdings, LLC, its managing member | ||||||
| By: | /s/ Xxxxxxxx Xxxxxx | |||||
| Name: | ||||||
| Title: | Chief Compliance Officer Chief Operating Officer |
|||||
| HCM/Z SPECIAL OPPORTUNITIES LLC | ||||||
| By: X.X. Xxxxx & Co., L.P., its manager | ||||||
| By: DBZ GP, LLC, its general partner | ||||||
| By: Xxxxx Holdings, LLC, its managing member | ||||||
| By: | /s/ Xxxxxxxx Xxxxxx | |||||
| Name: | ||||||
| Title: | Chief Compliance Officer Chief Operating Officer |
|||||
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| X.X. XXXXX & CO., L.P. | ||||||
| By: DBZ GP, LLC, its general partner | ||||||
| By: Xxxxx Holdings, LLC, its managing member | ||||||
| By: | /s/ Xxxxxxxx Xxxxxx | |||||
| Name: | ||||||
| Title: | Chief Compliance Officer Chief Operating Officer |
|||||
| DBZ GP, LLC | ||||||
| By: Xxxxx Holdings, LLC, its managing member | ||||||
| By: | /s/ Xxxxxxxx Xxxxxx | |||||
| Name: | ||||||
| Title: | Chief Compliance Officer Chief Operating Officer |
|||||
| XXXXX HOLDINGS, LLC | ||||||
| By: | /s/ Xxxxxxxx Xxxxxx | |||||
| Name: | ||||||
| Title: | Chief Compliance Officer Chief Operating Officer |
|||||
| /s/ Xxxxxxxx Xxxxxx POA | ||||||
| Xxxxxx X. Xxxxx | ||||||
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