Exhibit 10.13
AGREEMENT AND PLAN OF MERGER
among
PURINA XXXXX, INC.
and
LAND O'LAKES, INC.
and
LOL HOLDINGS II, INC.
and
LOL HOLDINGS III, INC.
Dated as of June 17, 2001
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER........................................................... 1
1.01 The Merger............................................................. 1
1.02 Surviving Corporation.................................................. 2
1.03 Effective Time of the Merger........................................... 2
1.04 Certificate of Incorporation and By-Laws of the Surviving Corporation.. 2
1.05 Board of Directors and Officers of the Surviving Corporation........... 3
1.06 Conversion of Shares................................................... 3
1.07 Dissenters' Rights..................................................... 4
1.08 Stock Options, Stock Appreciation Rights, Convertible Notes............ 4
1.09 Payment for Shares..................................................... 5
1.10 No Further Rights or Transfers......................................... 7
ARTICLE II COVENANTS, CONDUCT AND TRANSACTIONS PRIOR TO THE EFFECTIVE TIME..... 8
2.01 Operation of Business of the Company Between the Date of this Agreement
and the Effective Time................................................. 8
2.02 Stockholders' Meeting; Proxy Material................................. 11
2.03 No Shopping............................................................ 12
2.04 Access to Information.................................................. 15
2.05 Amendment or Termination of Company's Employee Plans................... 15
2.06 Stock Options, Stock Appreciation Rights and Convertible Notes......... 15
2.07 Reasonable Best Efforts................................................ 16
2.08 Consents............................................................... 16
2.09 Public Announcements................................................... 17
2.10 Notification of Certain Matters........................................ 17
2.11 Confidentiality Agreement.............................................. 17
2.12 Financing.............................................................. 18
2.13 Amendment to Rights Agreement.......................................... 18
2.14 Section 16 Matters..................................................... 18
2.15 Title Matters.......................................................... 18
ARTICLE III CONDITIONS OF MERGER............................................... 19
3.01 Conditions to the Obligations of Buyer, LOL Subsidiary and Acquisition
to Effect the Merger................................................... 19
3.02 Conditions to the Obligations of the Company to Effect the Merger...... 21
ARTICLE IV CLOSING............................................................. 22
4.01 Time and Place......................................................... 22
4.02 Deliveries at the Closing.............................................. 22
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ARTICLE V TERMINATION AND ABANDONMENT.......................................... 22
5.01 Termination............................................................ 22
5.02 Procedure and Effect of Termination.................................... 24
ARTICLE VI REPRESENTATIONS AND WARRANTIES...................................... 24
6.01 Representations and Warranties of the Company.......................... 24
6.02 Representations and Warranties of Buyer and Acquisition................ 41
ARTICLE VII DIRECTORS' AND OFFICERS' INDEMNIFICATION; DIRECTORS AND OFFICERS
LIABILITY INSURANCE; EMPLOYEE BENEFITS....................................... 44
7.01 Indemnification........................................................ 44
7.02 Directors and Officers Liability Insurance............................. 44
7.03 Fiduciary Liability Insurance.......................................... 45
7.04 Employee Benefits...................................................... 45
ARTICLE VIII MISCELLANEOUS PROVISIONS.......................................... 46
8.01 Termination of Representations, Warranties, Obligations, Covenants
and Agreements......................................................... 46
8.02 Amendment and Modification............................................. 46
8.03 Waiver of Compliance; Consents......................................... 46
8.04 Expenses; Termination Fee.............................................. 47
8.05 Additional Agreements.................................................. 48
8.06 Notices................................................................ 48
8.07 Assignment............................................................. 50
8.08 Interpretation......................................................... 50
8.09 Governing Law.......................................................... 50
8.10 Counterparts........................................................... 51
8.11 Headings............................................................... 51
8.12 Entire Agreement....................................................... 51
ii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 17, 2001 (this "Agreement"),
by and among Purina Xxxxx, Inc., a Delaware corporation (the "Company"), Land
O'Lakes, Inc., a Minnesota cooperative corporation ("Buyer"), LOL Holdings II,
Inc., a Delaware corporation and a wholly-owned subsidiary of Buyer ("LOL
Subsidiary"), and LOL Holdings III, Inc., a Delaware corporation and a
wholly-owned subsidiary of LOL Subsidiary ("Acquisition") (the Company and
Acquisition being sometimes hereinafter collectively referred to as the
"Constituent Corporations").
WITNESSETH:
WHEREAS, the Boards of Directors of the Company, Buyer, LOL Subsidiary and
Acquisition deem a merger of the Company and Acquisition pursuant to the terms
hereof (the "Merger") advisable and in the best interests of their respective
corporations and their respective stockholders; the Boards of Directors of the
Company, Buyer, LOL Subsidiary and Acquisition have, by resolutions duly
adopted, approved this Agreement and the Merger and the Boards of Directors of
the Company and Acquisition have directed that this Agreement and the Merger be
submitted to a vote of the stockholders of their respective Constituent
Corporations in accordance with the laws of the State of Delaware; and LOL
Subsidiary, being the sole stockholder of Acquisition, has, by written action,
approved this Agreement and the Merger in accordance with such laws; and
WHEREAS, the Company, LOL Subsidiary, Acquisition and Buyer desire to
effect the Merger and the other transactions contemplated hereby on the terms
and subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained and for
the purpose of prescribing the terms and conditions of the Merger, the manner
and basis of converting shares of capital stock of the Company into cash, and
such other provisions as are deemed necessary or desirable, the parties agree
that the Merger shall be effected on the terms and subject to the conditions set
forth below and in accordance with the applicable laws of the State of Delaware.
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ARTICLE I
THE MERGER
1.01 The Merger. At the Effective Time, as defined in Section 1.03, and
in accordance with the terms of this Agreement and the General Corporation Law
of the State of Delaware (the "Delaware Law"), Acquisition shall be merged with
and into the Company, the separate corporate existence of Acquisition shall
thereupon cease, and the Company shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving Corporation"), the
name of which shall continue to be Purina Xxxxx, Inc.
1.02 Surviving Corporation. At the Effective Time, the Surviving
Corporation shall thereupon and thereafter possess all the rights, privileges,
powers and franchises, of a public as well as of a private nature, of each of
the Constituent Corporations, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all and
singular, the rights, privileges, powers and franchises of each of the
Constituent Corporations, and all property, real, personal and mixed, and all
debts due to each of the Constituent Corporations on whatever account, as well
for stock subscriptions as all other things in action or belonging to each of
the Constituent Corporations, shall be vested in the Surviving Corporation; and
all property, rights, privileges, powers and franchises, and all and every other
interest, shall be thereafter as effectually the property of the Surviving
Corporation as they were of the several and respective Constituent Corporations;
and the title to any real estate or any interest therein vested by deed or
otherwise, under the laws of Delaware or any other jurisdiction, in either of
the Constituent Corporations shall not revert or be in any way impaired by
reason of the Merger; but all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be preserved
unimpaired; and all debts, duties and liabilities of either of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts, duties and liabilities
had been incurred or contracted by it.
1.03 Effective Time of the Merger. Subject to and immediately following
the receipt of the vote of the stockholders of the Company approving this
Agreement and the Merger and the satisfaction or waiver of all conditions to the
consummation of the Merger set forth in this Agreement, the Company and
Acquisition shall execute in the manner required by the Delaware Law and deliver
for filing to the Secretary of State of the State of Delaware a certificate of
merger with respect to the Merger as required by Delaware Law (the "Certificate
of Merger"). The Merger shall become effective at the time the Certificate of
Merger is accepted for filing with the Secretary of State of the State of
Delaware or at such later time as is set forth in the Certificate of Merger, and
the term "Effective Time" shall mean the date and time when the Merger shall
become effective.
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1.04 Certificate of Incorporation and By-Laws of the Surviving
Corporation.
(a) The Certificate of Incorporation of Acquisition, a copy of which is
attached hereto as Exhibit A, shall be the Certificate of Incorporation of the
Surviving Corporation, until amended in accordance with the laws of the State of
Delaware, except that, from and after the Effective Time, Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended to
read as follows:
"ARTICLE I
The name of this Corporation is Purina Xxxxx, Inc."
(b) The By-Laws of Acquisition in effect immediately prior to the
Effective Time shall be deemed, by virtue of the Merger and without further
action by the stockholders or directors of the Surviving Corporation or
Acquisition, to be the By-Laws of the Surviving Corporation, until further
amended in accordance with the laws of the State of Delaware.
1.05 Board of Directors and Officers of the Surviving Corporation. The
directors of Acquisition immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, each of such directors to hold office,
subject to the applicable provisions of the By-Laws of the Surviving
Corporation, until the expiration of the term for which such director was
elected and until his or her successor is elected and has qualified or as
otherwise provided in the By-Laws of the Surviving Corporation. The officers of
Acquisition immediately prior to the Effective Time shall be the officers of the
Surviving Corporation until their respective successors are chosen and have
qualified or as otherwise provided in the By-Laws of the Surviving Corporation.
1.06 Conversion of Shares. The manner and basis of converting the shares
of each of the Constituent Corporations shall be as follows:
(a) At the Effective Time, each share of common stock of the Company,
par value $.01 per share (the "Company Common Stock"), which is issued and
outstanding immediately prior to the Effective Time (other than (i) Dissenting
Shares (as hereinafter defined), and (ii) shares of Company Common Stock held of
record by Buyer, LOL Subsidiary or Acquisition or any other direct or indirect
Subsidiary of Buyer or the Company immediately prior to the Effective Time)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and represent the right to receive (as provided in
Section 1.09(a) hereof) $23.00 in cash (the "Merger Consideration"), prorated
for fractional shares, if any.
(b) At the Effective Time, each share of common stock of Acquisition,
par value $.01 per share, which is issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and exchanged for one share of
common stock of the Surviving Corporation, which shall
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constitute the only issued and outstanding shares of capital stock of the
Surviving Corporation immediately after the Effective Time.
(c) At the Effective Time, each share of Company Common Stock held of
record by Buyer, LOL Subsidiary or Acquisition or any other direct or indirect
Subsidiary of Buyer or the Company immediately prior to the Effective Time and
each share of Company Common Stock held in the treasury of the Company
immediately prior to the Effective Time shall be canceled and cease to exist at
and after the Effective Time, and no payment shall be made with respect thereto.
1.07 Dissenters' Rights. Notwithstanding any provision of this Agreement
to the contrary, any shares of Company Common Stock outstanding immediately
prior to the Effective Time held by a holder who has demanded and perfected the
right, if any, for appraisal of those shares in accordance with the provisions
of Section 262 of the Delaware Law and as of the Effective Time has not
withdrawn or lost such right to such appraisal ("Dissenting Shares") shall not
be converted into or represent a right to receive a cash payment pursuant to
Section 1.06(a), but the holder shall only be entitled to such rights as are
granted by the Delaware Law. If a holder of shares of Company Common Stock who
demands appraisal of those shares under the Delaware Law shall effectively
withdraw or lose (through failure to perfect or otherwise) the right to
appraisal, then, as of the Effective Time or the occurrence of such event,
whichever occurs later, those shares shall be converted into and represent only
the right to receive the Merger Consideration as provided in Section 1.06(a),
without interest, upon compliance with the provisions, and subject to the
limitations, of Section 1.09 hereof. The Company shall give Buyer (a) prompt
notice of any written demands for appraisal of any shares of Company Common
Stock, attempted withdrawals of such demands, and any other instruments received
by the Company relating to stockholders' rights of appraisal, and (b) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the Delaware Law. The Company shall not, except with the
prior written consent of Buyer, voluntarily make any payment with respect to any
demands for appraisal of Company Common Stock, offer to settle or settle any
such demands or approve any withdrawal of any such demands.
1.08 Stock Options, Stock Appreciation Rights, Convertible Notes.
(a) Each holder of an option to purchase shares of Company Common Stock
which has been heretofore granted under any employee or director stock option or
compensation plan or other arrangement with the Company and which is outstanding
immediately prior to the Effective Time (each, an "Option" and collectively, the
"Options") shall be entitled (whether or not such Option is then exercisable) to
receive in cancellation of such Option and in lieu of any other awards with
respect to such Option, promptly (but in any event within three business days)
after the Effective Time, a cash payment from the Surviving Corporation in an
amount equal to the amount, if any, by which the Merger Consideration exceeds
the per share exercise price of such Option, multiplied by the number of shares
of Company Common Stock subject to such Option immediately prior to the
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Effective Time (the "Option Settlement Amount"), but subject to all required tax
withholdings by the Surviving Corporation. Each Option shall be cancelled
immediately prior to the Effective Time.
(b) Each holder of a stock appreciation right the payments in respect of
which are based on the value of Company Common Stock which has been heretofore
granted under the Company's 2000 Stock Appreciation Rights Plan and which is
outstanding immediately prior to the Effective Time (each, an "SAR" and
collectively, the "SARs") shall be entitled (whether or not such SAR is then
exercisable) to receive in cancellation of such SAR and in lieu of any other
awards with respect to such SAR, promptly (but in any event within three
business days) after the Effective Time, a cash payment from the Surviving
Corporation in an amount equal to the amount, if any, by which the Merger
Consideration exceeds the per share exercise price of such SAR, multiplied by
the number of shares of Company Common Stock equivalents, for purposes of
measuring payments under such SAR, subject to such SAR immediately prior to the
Effective Time (the "SAR Settlement Amount"), but subject to all required tax
withholding of the Surviving Corporation. Each SAR shall be cancelled effective
immediately prior to the Effective Time.
(c) Each holder of a then outstanding note convertible into shares of
Company Common Stock which has been heretofore issued by the Company (each, a
"Convertible Note" and collectively, the "Convertible Notes") shall be entitled,
following execution of a cancellation agreement with the Company, to receive in
cancellation of such Convertible Note, immediately after the Effective Time, a
cash payment from the Surviving Corporation in an amount equal to the Merger
Consideration multiplied by the number of shares of Company Common Stock into
which the outstanding principal of and accrued interest on such Convertible Note
is convertible immediately prior to the Effective Time under the terms of such
Convertible Note, pro rated for fractional shares (the "Convertible Note
Settlement Amount"). Each Convertible Note that is subject to a cancellation
agreement shall be cancelled without further payment upon payment of the
Convertible Note Settlement Amount for such Convertible Note.
1.09 Payment for Shares.
(a) At or before the Effective Time, Buyer, LOL Subsidiary or
Acquisition shall deposit in immediately available funds with Xxxxx Fargo Bank
Minnesota, National Association, or any other disbursing agent selected by Buyer
that is organized under the laws of the United States or any state of the United
States with capital, surplus and undivided profits of at least $100,000,000 (the
"Disbursing Agent"), an amount equal to the product (rounded up or down to the
nearest whole $.01, with $.005 rounded up to the nearest whole $.01) of (i) the
number of shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares then held of record by Buyer, LOL
Subsidiary or Acquisition or any other direct or indirect Subsidiary of Buyer or
the Company), prorated for fractional shares, times (ii) the Merger
Consideration (such product being hereinafter referred to as the "Fund"). Out of
the Fund, the Disbursing Agent shall,
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pursuant to irrevocable instructions from the holders of Company Common Stock,
make the payments referred to in Section 1.06(a) hereof, subject to the
requirements of paragraph (b) of this Section 1.09. At the request of the
Surviving Corporation, in its sole discretion at any time, but without any
obligation to make any such request, the Disbursing Agent also may make
payments, in discharge of any obligations of the Surviving Corporation pursuant
to Section 262 of the Delaware Law, to holders of Company Common Stock who have
exercised dissenters' rights pursuant to Section 262 of the Delaware Law and
have not subsequently withdrawn or lost such rights as long as the payment from
the Fund with respect to any Dissenting Share does not exceed the Merger
Consideration. The Disbursing Agent shall invest portions of the Fund as Buyer
or the Surviving Corporation directs, provided that all such investments shall
be held as cash or in obligations of or guaranteed by the United States of
America, in commercial paper obligations receiving the highest rating from
either Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation, or in
certificates of deposit, bank repurchase agreements or bankers' acceptances of
commercial banks with capital, surplus and undivided profits exceeding
$100,000,000 (collectively, "Permitted Investments"), or in money market funds
which are invested solely in Permitted Investments. Any net profit resulting
from, or interest or income produced by, such investments shall be payable to
Buyer, and shall be remitted from time to time by the Disbursing Agent upon the
request of Buyer. Any amount remaining in the Fund after six months after the
Effective Time may be refunded to the Surviving Corporation at its option;
provided, however, that the Surviving Corporation shall be liable for any cash
payments required to be made thereafter pursuant to Section 1.06(a) hereof and
Section 262 of the Delaware Law.
(b) As soon as practicable after the Effective Time, the Disbursing
Agent shall mail to each holder of record (other than Buyer, LOL Subsidiary or
Acquisition or any other direct or indirect Subsidiary of Buyer or the Company)
of a certificate or certificates (a "Certificate" or "Certificates") which
immediately prior to the Effective Time represented issued and outstanding
shares of Company Common Stock (other than those holders who have exercised
dissenters' rights pursuant to Section 262 of the Delaware Law and have not
subsequently withdrawn or lost such rights), a form letter of transmittal (the
"Letter of Transmittal") for return to the Disbursing Agent, and instructions
for use in effecting the surrender of Certificates and to receive cash for each
of such holder's shares of Company Common Stock pursuant to Section 1.06(a)
hereof. The Letter of Transmittal shall specify that delivery shall be effected,
and risk of loss shall pass, only upon proper delivery of such Certificate or
Certificates to the Disbursing Agent. The Disbursing Agent, as soon as
practicable following receipt of any such Certificate or Certificates together
with the Letter of Transmittal, duly executed, and any other items specified by
the Letter of Transmittal, shall pay, by check or draft, to the persons entitled
thereto, the sum (rounded up or down to the nearest whole $.01, with $.005
rounded up to the nearest whole $.01) of the amounts determined by multiplying
(i) the number of shares of Company Common Stock represented by the Certificate
or Certificates so surrendered (prorated for fractional shares) by (ii) the
Merger Consideration. All of the foregoing payments shall be subject to any
required withholding of taxes by the Surviving Corporation. No interest will be
paid or accrued on
6
the cash payable upon the surrender of the Certificate or Certificates. If
payment is to be made to a person other than the person in whose name the
Certificate or Certificates surrendered are registered, it shall be a condition
of payment that the Certificate or Certificates so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
the payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the Certificate or
Certificates surrendered or establish to the satisfaction of the Surviving
Corporation that the tax has been paid or is not applicable.
(c) In the event any such Certificate or Certificates shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate or Certificates to have been lost, stolen or
destroyed, the amount to which such person would have been entitled under
Section 1.09(b) hereof but for failure to deliver such Certificate or
Certificates to the Disbursing Agent shall nevertheless be paid to such person,
provided that the Surviving Corporation or the Disbursing Agent may, in its sole
discretion and as a condition precedent to such payment, require such person to
give Buyer, LOL Subsidiary, the Surviving Corporation and the Disbursing Agent a
written indemnity agreement in form and substance reasonably satisfactory to the
Surviving Corporation and the Disbursing Agent and, if deemed advisable in the
sole discretion of the Surviving Corporation or the Disbursing Agent, a bond in
such sum as the Surviving Corporation or the Disbursing Agent may direct as
indemnity against any claim that may be had against Buyer, LOL Subsidiary, the
Surviving Corporation or the Disbursing Agent with respect to the Certificate or
Certificates alleged to have been lost, stolen or destroyed.
1.10 No Further Rights or Transfers. At and after the Effective Time, all
shares of Company Common Stock issued and outstanding immediately prior to the
Effective Time (including without limitation fractional shares) shall be
canceled and cease to exist, and each holder of a Certificate or Certificates
that represented shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall cease to have any rights as a
stockholder of the Company with respect to the shares of Company Common Stock
represented by such Certificate or Certificates, except for the right to
surrender such holder's Certificate or Certificates in exchange for the payment
provided pursuant to Section 1.06(a) hereof or to perfect such holder's right to
receive payment for such holder's shares pursuant to Section 262 of the Delaware
Law and Section 1.07 hereof if such holder has validly exercised and not
withdrawn or lost such holder's right to receive payment for such holder's
shares pursuant to Section 262 of the Delaware Law, and no transfer of shares of
Company Common Stock issued and outstanding immediately prior to the Effective
Time shall be made on the stock transfer books of the Surviving Corporation.
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ARTICLE II
COVENANTS, CONDUCT AND TRANSACTIONS PRIOR
TO THE EFFECTIVE TIME
2.01 Operation of Business of the Company Between the Date of this
Agreement and the Effective Time. From the date of this Agreement through the
earlier of termination of this Agreement or the Effective Time:
(a) The Company shall use its reasonable best efforts to preserve intact
in all material respects its business organization, assets and technology and
those of its subsidiaries, to maintain its rights and franchises and those of
its subsidiaries, to keep available to itself and to the Surviving Corporation
the services of the present officers and key employees of the Company and its
subsidiaries, and to preserve for itself and for the Surviving Corporation the
present relationships of the Company and its subsidiaries with persons having
significant business dealings with the Company or any of its subsidiaries.
(b) The Company shall, and shall cause each of its subsidiaries to,
except as otherwise consented to in writing by Buyer, conduct its business and
operations in the ordinary course consistent with past practice.
(c) Except as required in connection with the Merger or as otherwise
consented to in writing by Buyer, the Company shall not:
(i) amend its Certificate of Incorporation or By-Laws, or the
Rights Agreement (as hereinafter defined);
(ii) increase or decrease the number of authorized shares of its
capital stock, as set forth in Section 6.01(b) hereof;
(iii) split, combine or reclassify any shares of its capital stock
or make any other changes in its equity capital structure;
(iv) purchase, redeem or cancel for value, or permit any of its
subsidiaries to purchase, redeem or cancel for value, directly or indirectly,
any shares of capital stock or other equity securities of the Company or any of
its subsidiaries or any Options, SARs or other rights to purchase any such
capital stock or other equity securities or any Convertible Notes or other
securities convertible into or exchangeable for any such capital stock or other
equity securities, except as contemplated by Section 1.08 hereof, and except
that any subsidiary of the Company may purchase, redeem or cancel for value any
shares of its capital stock or other equity securities or any rights to purchase
any such capital stock or other equity securities or any securities convertible
into any such capital stock or other equity securities held by the Company or
any of its other wholly-owned subsidiaries;
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(v) declare, set aside or pay, or permit any of its subsidiaries
to declare, set aside or pay, any dividend or other distribution or payment in
cash, stock or property in respect of shares of its capital stock or other
equity securities, except that any subsidiary of the Company may pay dividends
or other distributions to the Company or any of its other wholly-owned
subsidiaries; or
(vi) designate any class or series of shares of its preferred
stock, par value $.01 per share ("Company Preferred Stock" and, together with
the Company Common Stock, herein collectively called "Company Stock").
(d) The Company shall not and shall not permit any of its subsidiaries
to, except as otherwise consented to in writing by Buyer:
(i) issue, grant, sell or pledge any shares of capital stock or
other equity securities of the Company or any of its subsidiaries (other than
the issuance of shares of Company Common Stock upon exercise of the Options
described in Section 6.02(b) of the Disclosure Schedule of the Company dated the
date hereof, a copy of which has been delivered to Buyer (the "Disclosure
Schedule"), in accordance with their terms or conversion of the Convertible
Notes described in Section 6.02(b) of the Disclosure Schedule in accordance with
their terms) or any options, warrants or other rights to purchase any such
capital stock or other equity securities or any securities convertible into or
exchangeable for any such capital stock or other equity securities or any stock
appreciation rights, performance shares, phantom stock or other similar rights
based upon the value of any such capital stock or other equity securities, or
reprice any Options, SARs or Convertible Notes;
(ii) purchase, lease or otherwise acquire (including without
limitation acquisitions by merger, consolidation or stock or asset purchase) any
assets or properties, other than those the fair value of which does not exceed
$50,000 individually or $500,000 in the aggregate, and other than inventory and
supplies acquired in the ordinary course of business consistent with past
practice;
(iii) sell, lease, encumber, mortgage or otherwise dispose of any
material assets or properties, except that the Company and its subsidiaries may
sell or otherwise dispose of inventory and obsolete equipment in the ordinary
course of business consistent with past practice, and except for the continuing
security interest of the lender under the Company's existing credit agreement;
(iv) waive, release, grant or transfer any rights of value or
modify or change in any material respect any existing license, contract or other
document or agreement, other than in the ordinary course of business consistent
with past practice and in a manner that is not reasonably likely to have a
Material Adverse Effect. For purposes of this Agreement, "Material Adverse
Effect" means any change or effect, or any event, occurrence, state of facts or
development, that is materially adverse to the business, operations, results of
operations, properties, assets, liabilities or condition, financial or
otherwise, of the Company
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and its subsidiaries, taken as a whole; provided, however, that none of the
following shall be taken into account in determining whether there has been or
is reasonably likely to be a Material Adverse Effect: (A) any change in the
market price or trading volume of the Company Common Stock after the date
hereof, or (B) any adverse change, effect, event, occurrence, state of facts or
development to the extent resulting from compliance with the terms of, or the
taking of any action required by, this Agreement;
(v) incur any indebtedness for money borrowed other than
indebtedness of the Company to its wholly-owned subsidiaries or of a
wholly-owned subsidiary to the Company or its other wholly-owned subsidiaries
and other than indebtedness incurred in the ordinary course of business under
the Company's existing credit agreement that, except as disclosed in Section
2.01(d) of the Disclosure Schedule, is prepayable at any time without penalty or
premium, or incur any purchase money indebtedness for fixed assets or enter into
any financing, "synthetic" or capitalized lease;
(vi) incur any other liability or obligation (except of the Company
to its wholly-owned subsidiaries or of a wholly-owned subsidiary to the Company
or its other wholly-owned subsidiaries), other than in the ordinary course of
business consistent with past practice, or assume, guarantee, endorse (other
than endorsements of checks in the ordinary course of business) or otherwise as
an accommodation become responsible for the obligations of any other person
(except by the Company with respect to the obligations of its wholly-owned
subsidiaries or by a subsidiary with respect to the obligations of the Company
or its other wholly-owned subsidiaries);
(vii) except as otherwise required by this Agreement, enter into any
new employee benefit plan, program or arrangement, or any new employment,
severance or consulting agreement, amend any existing employee benefit plan,
program or arrangement, or any existing employment, severance or consulting
agreement, pay any retention, "stay," transaction or other bonuses in connection
with the transactions contemplated by this Agreement (including without
limitation under existing discretionary bonus arrangements or pools), or grant
any increases in compensation or benefits other than pursuant to customary
salary and employee benefit administration in the ordinary course of business
consistent with past practice;
(viii) enter into, extend, renew, modify or amend any collective
bargaining agreement, or enter into any substantive negotiations with respect
thereto without keeping Buyer reasonably informed thereof and, subject to any
applicable legal restrictions, obtaining Buyer's prior approval before proposing
any terms or changes in terms, which approval shall not be unreasonably
withheld;
(ix) enter into any other material transaction, other than in the
ordinary course of business consistent with past practices;
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(x) make any tax election, settle or compromise any material
federal, state, local or foreign income tax liability, file any federal, state,
local or foreign income tax return without affording Buyer a reasonable
opportunity to review and comment on such return, or take any position on any
matter in any federal, state, local or foreign income tax return (except to the
extent it is legally or contractually required to do so) as to which Buyer has
reasonably objected prior to the filing of such return;
(xi) change any accounting principles used by it, unless required
by generally accepted accounting principles;
(xii) settle any litigation, proceedings or material claims other
than those arising in the ordinary course of business the settlement of which is
not reasonably likely to have a Material Adverse Effect;
(xiii) enter into any agreement with any affiliate of the Company or
any Associate (as hereinafter defined) other than agreements solely between the
Company and one or more of its wholly-owned subsidiaries or between two or more
of the Company's wholly-owned subsidiaries; or
(xiv) enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing.
2.02 Stockholders' Meeting; Proxy Material.
(a) The Company shall cause a special meeting of its stockholders to be
duly called and held as soon as reasonably practicable after the execution of
this Agreement for the purpose of voting on the approval of this Agreement and
the Merger. Subject to the applicable provisions of Sections 2.03(b), 5.01 and
8.04 hereof, the Board of Directors of the Company shall recommend to the
stockholders of the Company in the Proxy Statement (as hereinafter defined) that
they vote in favor of approval of this Agreement and the Merger, and the Company
shall solicit proxies in connection with such meeting in favor of such approval,
shall engage a nationally recognized proxy solicitor reasonably acceptable to
Buyer to solicit such proxies, and shall otherwise use its reasonable best
efforts to secure the approval of the stockholders of the Company required to
effect the Merger under applicable law. Simultaneously with the execution of
this Agreement, GSCP Recovery, Inc. has entered into a Voting Agreement dated
the date hereof (the "Voting Agreement") with Buyer, pursuant to which, among
other agreements, it has granted to Xxxxxx Xxxxxxx and Xxxxx Xxxxxxxxxxx, with
full power of substitution, an irrevocable proxy (the "Irrevocable Proxy") to
vote all shares of Company Common Stock held of record by such stockholder (or
over which such stockholder has voting power, by contract or otherwise) to
approve this Agreement and the Merger, unless this Agreement has been earlier
terminated pursuant to Section 5.01 hereof.
11
(b) The Company will prepare, and file with the Securities and Exchange
Commission (the "SEC"), a proxy statement, together with a form of proxy, with
respect to the stockholders meeting described in Section 2.02(a) as soon as
reasonably practicable after the execution of this Agreement (such proxy
statement, together with any amendments thereof or supplements thereto, being
herein called the "Proxy Statement"). The Company (i) shall use its reasonable
best efforts to have the Proxy Statement cleared by the SEC as soon as
reasonably practicable, if such clearance is required, (ii) shall as soon as
reasonably practicable thereafter mail the Proxy Statement to the stockholders
of the Company, and (iii) shall otherwise comply in all material respects with
all applicable legal requirements in respect of such meeting. The Company shall
notify Buyer promptly of the receipt of any comments from the SEC or its staff
and any request by the SEC or its staff for amendments or supplements to the
Proxy Statement or for additional information and shall supply Buyer with copies
of all correspondence between the Company and its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. Prior to filing the Proxy Statement with the SEC, the
Company shall provide reasonable opportunity for Buyer to review and comment
upon the contents of the Proxy Statement and shall not include therein any
information to which counsel to Buyer shall reasonably object (unless counsel to
the Company shall reasonably determine that such information should be included
consistent with applicable legal principles) or omit therefrom any information
which counsel to Buyer shall reasonably request. If at any time prior to the
meeting of the stockholders of the Company contemplated by Section 2.02(a), any
event relating to the Company or any of its subsidiaries, officers or directors
is discovered by the Company which should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly so inform Buyer.
(c) Subject to the applicable provisions of Sections 5.01 and 8.04
hereof, the Board of Directors of the Company shall not withdraw or qualify, or
propose to withdraw or qualify, the approval or recommendation by the Board of
Directors of the Company of this Agreement or the Merger. Nothing contained in
this Section 2.02(c) shall prohibit the Company from taking and disclosing to
its stockholders a position contemplated by Rule 14e-2 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
2.03 No Shopping.
(a) From the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement, the Company shall not and shall not
authorize or permit any of its officers, directors, employees, financial
advisors, representatives, agents, subsidiaries or affiliates to, directly or
indirectly:
(i) solicit, seek, initiate or encourage any inquiries or
proposals that constitute, or would be reasonably likely to lead to, a
proposal or offer for a merger, consolidation or business combination
involving the Company or any of its subsidiaries, a sale of substantial
assets of the Company and its
12
subsidiaries, taken as whole (other than the sale or other disposition of
inventory or obsolete equipment in the ordinary course of business
consistent with past practice), a sale of shares of capital stock of the
Company or any of its subsidiaries (including without limitation by way of
a tender offer) or any similar transaction involving the Company or any of
its subsidiaries, other than the transactions contemplated by this
Agreement (any of the foregoing inquiries or proposals being referred to
in this Agreement as an "Acquisition Proposal"),
(ii) engage in discussions or negotiations with any person or group
other than Buyer or its affiliates (a "Third Party") concerning any
Acquisition Proposal, or provide any non-public information, or afford
access to the properties, books, records or personnel of the Company or
any of its subsidiaries, to any Third Party that is considering making, or
has made, any Acquisition Proposal, or
(iii) agree to or recommend any Acquisition Proposal;
provided, however, that nothing contained in this Section 2.03(a) shall prevent
the Company from (A) furnishing non-public information or affording access to
the properties, books, records or personnel of the Company or any of its
subsidiaries to, or entering into discussions or negotiations with, any Third
Party in connection with an Acquisition Proposal by such Third Party for a Third
Party Transaction if and only to the extent (1) the Board of Directors of the
Company, in the exercise of its fiduciary duties, determines in good faith
(after consultation with the Company's financial and legal advisors) that such
Acquisition Proposal is reasonably likely to result in a Superior Proposal (as
hereinafter defined), and (2) prior to furnishing such non-public information or
affording such access to the properties, books, records and personnel of the
Company or any of its subsidiaries to, or entering into discussions or
negotiations with, such Third Party, the Company receives from such Third Party
an executed confidentiality agreement with terms no less favorable to the
Company than those contained in the letter agreement regarding confidentiality,
dated May 7, 2001, from Buyer to the Company (the "Confidentiality Agreement");
or (B) complying with Rule 14e-2 promulgated under the Exchange Act with regard
to an Acquisition Proposal. The Company agrees not to release any Third Party
from, or waive any provision of, any confidentiality or standstill agreement to
which it is a party, unless the Board of Directors of the Company, in the
exercise of its fiduciary duties, determines in good faith (after consultation
with the Company's financial and legal advisors) that such action is advisable.
For purposes of this Agreement, "Superior Proposal" means an Acquisition
Proposal made by a Third Party for a Third Party Transaction that specifies a
price per share to be paid for the Company Common Stock that is in excess of the
Merger Consideration, that was not solicited by the Company in violation of this
Agreement and that, in the good faith judgment of the Board of Directors of the
Company, taking into account, to the extent deemed appropriate by the Board of
Directors of the Company, the various legal, financial and regulatory aspects of
the Acquisition Proposal and the person or group making such proposal,
13
(x) if accepted, is reasonably likely to be consummated, and (y) if consummated,
would result in a transaction that is more favorable to the Company's
stockholders (in their capacity as stockholders), from a financial point of
view, than the transactions contemplated by this Agreement.
(b) If the Board of Directors of the Company determines in good faith in
the exercise of its fiduciary duties (after consultation with the Company's
financial and legal advisors) to recommend or approve a Superior Proposal, then
the Company shall, at least five business days prior thereto, give Buyer written
notice thereof and furnish Buyer with a copy of the definitive agreement the
Company is prepared to execute with respect to the transactions contemplated by
such Superior Proposal and shall afford a reasonable opportunity to Buyer within
such five business day period to make such adjustments to the terms and
conditions of this Agreement as would enable the Board of Directors of the
Company to maintain its recommendation of this Agreement and the Merger to the
stockholders of the Company and enable the Company to proceed with the Merger on
such adjusted terms, and such Superior Proposal shall not be recommended or
approved by the Board of Directors of the Company nor shall any notice of
termination of this Agreement be given by the Company pursuant to Section
5.01(e) hereof in connection therewith if Buyer submits to the Company during
such five business day period a legally binding, executed offer to enter into an
amendment to this Agreement within such five business day period reflecting such
adjustments unless the Board of Directors of the Company shall have determined
in good faith (after consultation with the Company's financial and legal
advisors) that the transactions contemplated herein as modified by the amendment
to this Agreement that Buyer has agreed to enter into during such five business
day period would not, if consummated, result in a transaction that is at least
as favorable to the Company's stockholders (in their capacity as stockholders)
from a financial point of view as such Superior Proposal. Notwithstanding
anything to the contrary stated herein, the Board of Directors of the Company
may not recommend, approve or accept a Superior Proposal unless the Company
concurrently therewith terminates this Agreement pursuant to Section 5.01(e)
and, concurrently with such termination, makes the payments required by Sections
8.04(b) and 8.04(c).
(c) The Company shall notify Buyer immediately after receipt by the
Company (or its advisors) of any Acquisition Proposal or any request for
non-public information, or for access to the properties, books, records or
personnel of the Company or any of its subsidiaries, by any Third Party that is
considering making, or has made, an Acquisition Proposal. Such notice shall be
made orally and in writing and shall indicate in reasonable detail the terms and
conditions of such Acquisition Proposal or request (including, without
limitation, the identity of the Third Party making such Acquisition Proposal or
request). The Company shall continue to keep Buyer informed, on a current basis,
of the status of any discussions or negotiations regarding any Acquisition
Proposal and the terms being discussed or negotiated (including changes or
amendments thereto).
14
2.04 Access to Information. The Company will give Buyer, and its counsel,
financial advisors, auditors and other authorized representatives, full access
to the offices (including a work area for the use of Buyer and its authorized
representatives), properties (including full access for purposes of conducting
any environmental analysis Buyer shall reasonably determine to be advisable),
personnel, books and records of the Company and its subsidiaries at all
reasonable times upon reasonable notice, and will instruct the personnel,
counsel, financial advisors and auditors of the Company and its subsidiaries to
cooperate in all reasonable respects with Buyer and each such representative in
its investigation of the business of the Company and its subsidiaries, provided
that no investigation pursuant to this Section 2.04 shall affect any
representation or warranty given by the Company to Buyer, LOL Subsidiary and
Acquisition hereunder or unreasonably interfere with the operations of the
Company and its subsidiaries. The Company will confer from time to time with
Buyer at Buyer's request to discuss the status of the operations of the Company
and its subsidiaries. The foregoing access will be subject to the
confidentiality obligations of Buyer contained in the Confidentiality Agreement.
2.05 Amendment or Termination of Company's Employee Plans. The Company
will, effective at or, at the election of Buyer, immediately prior to the
Effective Time, cause any Employee Plans (as hereinafter defined) which it may
have to be amended, to the extent, if any, reasonably requested by Buyer, for
the purpose of permitting the Employee Plans to continue to operate in
conformity with the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations adopted pursuant thereto ("ERISA"), and the
Internal Revenue Code of 1986, as amended, and the rules and regulations adopted
pursuant thereto (the "Code"), subsequent to the Merger, and will take any
actions necessary to terminate, effective at or, at the election of Buyer,
immediately prior to the Effective Time, any Employee Plans (other than those
Employee Plans discussed in the last sentence of Section 7.04 hereof) that Buyer
requests to be terminated.
2.06 Stock Options, Stock Appreciation Rights and Convertible Notes.
(a) The Company shall cause, at or immediately prior to the Effective
Time, each then outstanding Option (whether or not such Option is then
exercisable) to be canceled in respect of a cash payment by the Surviving
Corporation, payable in accordance with Section 1.08(a), equal to the Option
Settlement Amount for such Option, subject to all applicable tax withholding.
Without limiting the generality of the immediately preceding sentence, the Board
of Directors of the Company or any committee to which it shall have granted such
authority under the Company's 2000 Equity Incentive Plan, as amended and
restated as of June 12, 2000, or the Company's Non-Employee Director and Key
Employee Equity Incentive Plan, each in the form provided to Buyer, shall cause
the surrender of all awards under each Option at or immediately prior to the
Effective Time in exchange for the right to receive, in accordance with Section
1.08(a), the Option Settlement Amount payable with respect to such Option,
subject to all applicable tax withholding. The Surviving Corporation shall
comply with all requirements regarding tax withholding in connection with the
foregoing.
15
(b) The Company shall cause, at or immediately prior to the Effective
Time, each then outstanding SAR (whether or not such SAR is then exercisable) to
be canceled in respect of a cash payment by the Surviving Corporation, payable
in accordance with Section 1.08(b), equal to the SAR Settlement Amount for such
SAR, subject to all applicable tax withholding. The Surviving Corporation shall
comply with all requirements regarding tax withholding in connection with the
foregoing.
(c) The Company shall (i) use its reasonable best efforts to cause,
prior to the Effective Time, the holder of each outstanding Convertible Note to
enter into an agreement providing that such Convertible Note shall be canceled
upon receipt of a cash payment by the Surviving Corporation, payable in
accordance with Section 1.08(c), equal to the Convertible Note Settlement Amount
for such Convertible Note, and (ii) give on a timely basis all notices required
to be given under the Convertible Notes in connection with the Merger and the
other transactions contemplated by this Agreement.
2.07 Reasonable Best Efforts. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
consistent with applicable legal requirements to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary or proper and
advisable to ensure that the conditions set forth in Article III hereof are
satisfied and to consummate and make effective, in the most expeditious manner
reasonably practicable, the Merger and the other transactions contemplated by
this Agreement.
2.08 Consents. Each of the parties hereto shall use its reasonable best
efforts to obtain all material consents of third parties and governmental
authorities, and to make all governmental filings, necessary for the
consummation of the transactions contemplated by this Agreement. Each of Buyer
and the Company shall as soon as practicable file a Pre-Merger Notification and
Report Form and such related material as it may be required to file under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act")
with the Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division"). Each of Buyer and the Company
shall (a) respond as promptly as practicable to any inquiries or requests
received from the FTC, the Antitrust Division or any other domestic or foreign
governmental authority for additional information or documentation, and (b) not
extend the waiting period under the HSR Act or enter into any agreement with any
governmental authority not to consummate the transactions contemplated by this
Agreement, except with the prior consent of the other party hereto, which
consent shall not be unreasonably withheld, delayed or conditioned. Nothing
stated in this Agreement shall require Buyer to agree to, or permit the Company
to agree to, the divestiture of any assets of Buyer, the Company or their
respective subsidiaries (other than the divestiture of immaterial assets on
commercially reasonable terms) to obtain termination of any waiting period under
the HSR Act.
16
2.09 Public Announcements. Except as hereinafter provided in this Section
2.09, Buyer and the Company will consult with each other before issuing any
press release or otherwise making any public statements prior to the Effective
Time with respect to the Merger or the other transactions contemplated hereby
and shall not issue any such press release or make any such public statement
prior to receiving the consent of the other party, which consent will not be
unreasonably withheld or delayed. Nothing stated herein shall prohibit (a) any
party from making a press release or other statement required by law or by
obligations pursuant to any listing agreement with any automated interdealer
quotation system if the party making the disclosure has first consulted with the
other parties hereto, or (b) Buyer, after or concurrently with the first public
disclosure by the parties regarding this Agreement, from mailing or otherwise
providing information regarding the Merger or the other transactions
contemplated hereby to its members or to dealers or franchisees of the Company
and its subsidiaries after prior consultation with the Company.
2.10 Notification of Certain Matters. The Company will give prompt
notice, as soon as reasonably practicable, to Buyer of the occurrence or
nonoccurrence of any event, circumstance or condition (a) which has had or is
reasonably likely to have a Material Adverse Effect, (b) which has caused any
representation or warranty of the Company contained in this Agreement to be
untrue or inaccurate in any material respect, or (c) which has caused any
failure of the Company to comply in all material respects with or satisfy in all
material respects any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; provided, however, that the delivery of
any notice pursuant to this Section 2.10 will not limit or otherwise affect the
rights or remedies of Buyer, LOL Subsidiary or Acquisition under this Agreement.
2.11 Confidentiality Agreement. The Confidentiality Agreement shall
remain in full force and effect until the Effective Time. Except as otherwise
required by laws or regulations applicable to the Company, the Company shall
maintain, and shall require its representatives to maintain, all financial
statements and other information of Buyer provided to the Company in connection
with the transactions contemplated hereby ("Buyer Information") on a
confidential basis and will use such Buyer Information strictly and exclusively
in connection with the transactions contemplated hereby. If the Company or any
of its representatives is legally compelled to disclose any Buyer Information,
the Company will promptly notify Buyer in order to permit Buyer to seek a
protective order or take other appropriate action and will cooperate with
Buyer's efforts to obtain a protective order or other reasonable assurances that
confidential treatment will be accorded such Buyer Information.
2.12 Financing. Buyer shall use its reasonable best efforts to obtain, on
commercially reasonable terms, at the Effective Time, the financing contemplated
by the Financing Commitment, as hereinafter defined (the "Financing"). Buyer
shall periodically brief the Company on the status of negotiations to obtain the
Financing and shall advise the Company promptly of the occurrence of any event,
circumstance or condition that it believes may prevent Buyer from obtaining the
Financing at the Effective Time.
17
2.13 Amendment to Rights Agreement. Prior to, or simultaneously with, the
execution and delivery of this Agreement, the Board of Directors of the Company
adopted the amendment to the Rights Agreement attached as Exhibit B hereto.
2.14 Section 16 Matters. Prior to the Effective Time, with respect to
both derivative and non-derivative securities, as applicable, Buyer and the
Company shall take all such steps as may be required or appropriate to cause any
dispositions of the Company Common Stock resulting from the transactions
contemplated by Article I of this Agreement by each individual who is subject to
the reporting requirements of Section 16(a) of the Exchange Act with respect to
the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act,
those steps to be taken in accordance with the no-action letter dated January
12, 1999 issued by the SEC to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
2.15 Title Matters. The Company shall use its reasonable best efforts to
assist Buyer in obtaining at or prior to the Effective Time, at Buyer's expense,
(a) commitments for standard owner's and/or lender's policies of title insurance
from First American Title Insurance Company (or any other title insurance
company designated by Buyer), in form and amounts reasonably acceptable to
Buyer, covering the real property owned by the Company and its subsidiaries; and
(b) such surveys and similar investigations of such real property as Buyer shall
request. Without limiting the generality of the foregoing, the Company shall
arrange for the execution and delivery to such title insurance company at or
prior to the Effective Time of such affidavits as are required by such title
insurance company in order for it to provide endorsements in respect of such
commitments to the effect that the knowledge of the Company or any of its
subsidiaries shall not form the basis for the exclusion from coverage under such
policies.
2.16 Restrictions on Debt. From the date of this Agreement through the
Effective Time, Buyer will not, and will not permit any of its consolidated
subsidiaries to, create, assume, incur, issue, guarantee or otherwise become
directly or indirectly liable in respect of any Debt (as hereinafter defined),
except (a) Debt described in the Financing Commitment in effect as of the date
of this Agreement, (b) Debt incurred in the ordinary course of business after
the date of this Agreement under the credit agreements described in the
Financing Commitment, (c) Debt described in Schedule 6.02(h) hereto, and (d)
other Debt created, assumed, incurred, issued or guaranteed in the ordinary
course of business in an aggregate principal amount outstanding at any time not
to exceed $50,000,000.
18
ARTICLE III
CONDITIONS OF MERGER
3.01 Conditions to the Obligations of Buyer, LOL Subsidiary and
Acquisition to Effect the Merger. The obligations of Buyer, LOL Subsidiary and
Acquisition to effect the Merger shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions, any one or more of which
(except for the conditions set forth in Sections 3.01(b) and 3.01(e)) may be
waived in writing by Buyer:
(a) Accuracy of Representations and Warranties; Compliance with
Covenants. The representations and warranties of the Company contained in
Section 6.01 of this Agreement shall be true and correct in all material
respects as of the date of this Agreement, and immediately prior to the
Effective Time with the same effect as if such representations and warranties
had been made immediately prior to the Effective Time, except to the extent that
any and all inaccuracies in any such representations and warranties (other than
the representations and warranties in the first sentence of Section 6.01(a) and
the representations and warranties in Section 6.01(b) and the first three
sentences of Section 6.01(c), as to which this exception shall not apply) (i)
have not had and are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect (provided that, solely for purposes of this
exception, any representation or warranty in Section 6.01 that is qualified by
materiality or Material Adverse Effect language shall be read as if such
qualifier were not present), and (ii) are not reasonably likely to impair,
individually or in the aggregate, the consummation of the transactions
contemplated by this Agreement. The Company shall have performed and complied in
all material respects with the agreements and obligations contained in this
Agreement required to be performed and complied with by it at or prior to the
Effective Time. Buyer, LOL Subsidiary and Acquisition shall have received a
certificate signed on behalf of the Company by an appropriate executive officer
of the Company to the effects set forth in this Section 3.01(a) and in Section
3.01(d).
(b) Stockholder Approval of Agreement and Merger. This Agreement and the
Merger shall have been approved by the stockholders of the Company by the vote
required by the Delaware Law and the Company's Certificate of Incorporation and
By-Laws.
(c) Absence of Litigation, Injunctions. There shall not be instituted or
pending any suit, action, investigation, inquiry or other proceeding brought by
any governmental or other regulatory or administrative agency or commission
which is reasonably likely to restrain or prohibit the consummation of the
transactions contemplated hereby or require rescission of this Agreement or such
transactions or result in material damages, directly or indirectly, to Buyer or
the Surviving Corporation if the transactions contemplated hereby are
consummated, and there shall not be in effect any injunction, preliminary
restraining order or other writ, order, judgment or decree of any nature issued
by a court or governmental agency of competent jurisdiction directing that the
transactions contemplated hereby not be
19
consummated or any statute, rule or regulation enacted or promulgated that makes
consummation of the transactions contemplated hereby illegal.
(d) Absence of Material Adverse Effect. There shall not have been, since
the date of this Agreement (i) any damage, destruction or loss, whether covered
by insurance or not, that has had or is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect; (ii) any suit, action,
investigation, inquiry or other proceeding brought by or before any court,
arbitrator or governmental or other regulatory or administrative agency or
commission which is reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect; or (iii) any other event, development or condition
(financial or otherwise) of any character or any operations or results of
operations that has had or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.
(e) HSR Act. All filings required prior to the Merger under the HSR Act
shall have been made and all applicable waiting periods under the HSR Act shall
have expired or been terminated.
(f) Dissenting Shares. The holders of not more than twelve percent of
the issued and outstanding Company Common Stock shall have taken such action
prior to or at the time of the stockholders' vote on the Merger as is necessary
as of that time to entitle them to the statutory dissenters' rights referred to
in Section 1.07 hereof.
(g) Cancellation of Stock Options and Stock Appreciation Rights. Each
Option and SAR shall have been cancelled.
(h) Rights. No Rights (as hereinafter defined) shall have become
exercisable under the Rights Plan.
(i) Financing. The proceeds of the Financing shall be available to
Buyer, unless the unavailability of such proceeds is due solely to (i) the
existence of a competing offer, placement or arrangement of any debt securities
or bank financing by or on behalf of Buyer or any of its subsidiaries, or (ii)
Buyer's failure to terminate its 364-Day Credit Agreement dated June 28, 1999,
or (iii) any inaccuracy in or breach of the representations, warranties or
covenants of Buyer contained in clause (a) or (b) of the fourth sentence of the
fourth paragraph of the Financing Commitment (except to the extent such
representations, warranties or covenants relate to the Company or any of its
subsidiaries).
(j) Pay-off of Existing Credit Facility. The Company shall have
delivered to Buyer a duly executed pay-off agreement, in form and substance
reasonably satisfactory to Buyer, providing for, at the Effective Time, the
prepayment in full of all of the obligations of the Company outstanding under
the Company's existing credit agreement, the termination of such credit
agreement and any related interest rate swap agreement, and the release of all
guaranties of and liens securing the obligations of the Company under such
credit agreement,
20
in each case without the payment of any premium, penalty, breakage cost or fee
other than as disclosed in Section 2.01(d) of the Disclosure Schedule.
3.02 Conditions to the Obligations of the Company to Effect the Merger.
The obligations of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions, any
one or more of which (except for the conditions set forth in Sections 3.02(b)
and 3.02(d)) may be waived in writing by the Company:
(a) Accuracy of Representations and Warranties, Compliance with
Covenants. The representations and warranties of Buyer, LOL Subsidiary and
Acquisition contained in Section 6.02 of this Agreement shall be true and
correct in all material respects as of the date of this Agreement, and
immediately prior to the Effective Time with the same effect as if such
representations and warranties had been made immediately prior to the Effective
Time, except to the extent that any and all inaccuracies in any such
representations and warranties are not reasonably likely to impair, individually
or in the aggregate, the consummation of the transactions contemplated by this
Agreement. Each of Buyer, LOL Subsidiary and Acquisition shall have performed
and complied in all material respects with the agreements and obligations
contained in this Agreement required to be performed and complied with by it at
or prior to the Effective Time. The Company shall have received a certificate
signed on behalf of Buyer by an appropriate executive officer of Buyer to the
effects set forth in this Section 3.02(a).
(b) Stockholder Approval of Agreement and Merger. This Agreement and the
Merger shall have been approved by the stockholders of the Company by the vote
required by the Delaware Law and the Company's Certificate of Incorporation and
By-Laws.
(c) Absence of Litigation, Injunctions. There shall not be instituted or
pending any suit, action, investigation, inquiry or other proceeding brought by
any governmental or other regulatory or administrative agency or commission
which is reasonably likely to restrain or prohibit the consummation of the
transactions contemplated hereby or require rescission of this Agreement or such
transactions, and there shall not be in effect any injunction, preliminary
restraining order or other writ, order, judgment or decree of any nature issued
by a court or governmental agency of competent jurisdiction directing that the
transactions contemplated hereby not be consummated or any statute, rule or
regulation enacted or promulgated that makes consummation of the transactions
contemplated hereby illegal.
(d) HSR Act. All filings required prior to the Merger under the HSR Act
shall have been made and all applicable waiting periods under the HSR Act shall
have expired or been terminated.
21
ARTICLE IV
CLOSING
4.01 Time and Place. Subject to the provisions of Articles III and V
hereof, the closing (the "Closing") of the transactions contemplated hereby
shall take place at the offices of Faegre & Xxxxxx LLP on the same business day
as, and promptly following, the meeting of stockholders referred to in Section
2.02(a) hereof or at such other place or at such other time as Buyer and the
Company may mutually agree upon for the Closing to take place.
4.02 Deliveries at the Closing. Subject to the provisions of Articles III
and V hereof, at the Closing:
(a) there shall be delivered to Buyer, LOL Subsidiary, Acquisition and
the Company the certificates and other documents and instruments the delivery of
which is contemplated under Article III hereof;
(b) Acquisition and the Company shall cause the Certificate of Merger to
be filed as provided in Section 1.03 hereof and shall take any and all other
lawful actions and do any and all other lawful things necessary to cause the
Merger to become effective; and
(c) subject to the rights of the Surviving Corporation to receive a
refund of amounts remaining in the Fund six months after the Effective Time
under Section 1.09 hereof, Buyer, LOL Subsidiary or Acquisition shall
irrevocably deposit with the Disbursing Agent the amount designated as the Fund
in Section 1.09 hereof.
ARTICLE V
TERMINATION AND ABANDONMENT
5.01 Termination. This Agreement may be terminated and the Merger and the
other transactions contemplated hereby may be abandoned at any time prior to the
Effective Time whether before or, except as otherwise provided in Section
5.01(e), after approval of this Agreement and the Merger by the stockholders of
the Company:
(a) by mutual written consent of Buyer and the Company;
(b) by Buyer or the Company, if the Merger shall not have been
consummated on or before December 31, 2001, which date may be extended by mutual
agreement of Buyer and the Company, unless such failure of consummation shall be
due to failure by the party seeking to terminate this Agreement (or, in the
event Buyer is seeking termination, the failure by any of Buyer, LOL Subsidiary
or Acquisition) to comply in all material respects with the terms, covenants and
agreements contained in this Agreement;
22
(c) (i) by Buyer, if any of the conditions set forth in Section 3.01
hereof shall become impossible to fulfill other than for reasons totally within
the control of Buyer, LOL Subsidiary or Acquisition, and shall not have been
waived in writing by Buyer, or (ii) by the Company or Buyer, if the stockholders
of the Company shall fail to approve this Agreement and the Merger by the vote
required by the Delaware Law and the Company's Certificate of Incorporation and
By-Laws at the first meeting of stockholders called for that purpose or any
adjournment thereof;
(d) by the Company, if any of the conditions set forth in Section 3.02
hereof shall become impossible to fulfill other than for reasons totally within
the control of the Company, and shall not have been waived in writing by the
Company;
(e) by the Company at any time prior to approval of this Agreement and
the Merger by the stockholders of the Company, concurrently with the
recommendation or approval by the Board of Directors of the Company of a
Superior Proposal; provided, however, that (i) the Board of Directors of the
Company shall have determined in good faith in the exercise of its fiduciary
duties (after consultation with the Company's financial and legal advisors) to
recommend or approve such Superior Proposal, (ii) at all times prior to such
termination the Company shall have complied with Section 2.03 hereof, and (iii)
no termination shall be permitted pursuant to this Section 5.01(e) unless, prior
to or simultaneously with such termination, the payments provided for in
Sections 8.04(b) and 8.04(c) hereof are made to Buyer;
(f) by Buyer, (i) if (A) the Company fails to call or hold the special
meeting of stockholders provided for in Section 2.02(a), to solicit proxies in
connection with such special meeting in favor of approval of this Agreement and
the Merger, or to conduct the vote to approve this Agreement and the Merger at
such special meeting or any adjournment thereof, or (B) the Board of Directors
of the Company fails to recommend the Merger to the Company's stockholders,
withdraws, qualifies or modifies such recommendation or its approval of this
Agreement or the Merger once given, or takes any position or action that is
inconsistent with such recommendation, or (C) the Board of Directors of the
Company or any committee thereof accepts, recommends or approves, or makes a
determination to accept, recommend or approve, an Acquisition Proposal, or (D)
the Company enters into any agreement for a Third Party Transaction, whether or
not, in the case of any of clause (A), (B), (C) or (D), as a result of the
exercise by the Board of Directors of the Company or any committee thereof of
its fiduciary duties, or (ii) if the Company breaches Section 2.03 of this
Agreement; or
(g) by the Company, (i) if the Financing Commitment shall have been
terminated, or (ii) at any time after November 15, 2001, if (A) all of the
conditions to the obligations of Buyer, LOL Subsidiary, Acquisition and the
Company to effect the Merger, other than the condition set forth in Section
3.01(i), shall have been satisfied or waived in writing by Buyer or the Company,
as the case may be, and (B) the condition set forth in Section 3.01(i) shall not
have been satisfied.
23
5.02 Procedure and Effect of Termination. In the event of termination and
abandonment of the Merger by the Company or Buyer pursuant to Section 5.01
hereof, written notice thereof shall forthwith be given to the other parties
hereto and this Agreement shall terminate and the Merger shall be abandoned
without further action by any of the parties hereto. If this Agreement is
terminated as provided herein, no party hereto shall have any liability or
further obligation to any other party to this Agreement except as stated in
Sections 6.01(o), 6.02(d) and 8.04 hereof or except with respect to a material
breach by a party to this Agreement of any representation, warranty or covenant
contained in this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties of the Company. Except as set forth
in the appropriate Section of the Disclosure Schedule, the Company represents
and warrants to Buyer, LOL Subsidiary and Acquisition, and their respective
successors and assigns, as follows:
(a) Corporate Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority to own, lease and operate all of its properties and assets and to
carry on its business as it is now being conducted. Each of the subsidiaries of
the Company is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate all of its
properties and assets and to carry on its business as it is now being conducted.
The Company is incorporated in Delaware and each of its subsidiaries is
incorporated in the jurisdiction set forth opposite its name in Section 6.01(a)
of the Disclosure Schedule. Each of the Company and its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
operated or leased, or the nature of its activities, makes such qualification or
licensing necessary, except such jurisdictions where failure to be so qualified
or licensed has not had and is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect. The Company has prior to the date
hereof delivered to Buyer a certified copy of its Certificate of Incorporation
and its By-Laws and copies of all similar organizational documents of its
subsidiaries. Each such copy is complete and correct in all material respects.
(b) Capitalization. The authorized capital stock of the Company at the
date hereof consists of 20,000,000 shares of Company Common Stock and 5,000,000
shares of Company Preferred Stock. On the date hereof, 10,000,000 shares of
Company Common Stock were issued and outstanding and no shares of Company Common
Stock were held in the treasury of the Company. None of the shares of Company
Preferred Stock has been designated as to
24
class or series other than 300,000 shares designated as Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Series A Junior
Participating Preferred Stock"), and none of the shares of Company Preferred
Stock are issued and outstanding or held in treasury by the Company. Except as
set forth above in this Section 6.01(b), the Company has no other issued or
outstanding shares of capital stock. There are no outstanding subscriptions,
options, warrants, or other rights to purchase Company Stock or any other
capital stock or other equity securities of the Company or its subsidiaries or
any calls or other agreements or commitments by which the Company or its
subsidiaries are bound in respect of the Company Stock or other capital stock or
other equity securities of the Company or its subsidiaries, whether issued or
unissued, and no outstanding securities are convertible into or exchangeable for
Company Stock or any other capital stock or other equity securities of the
Company or its subsidiaries, except for (i) the Rights Agreement dated as of
June 29, 2000 between the Company and Xxxxx Fargo Bank Minnesota, N.A. (formerly
known as Norwest Bank Minnesota, N.A.), as amended by Amendment No. 1 to Rights
Agreement dated December 4, 2000, by Amendment No. 2 to Rights Agreement dated
May 29, 2001, and by Amendment No. 3 to Rights Agreement dated June 17, 2001 (as
so amended, the "Rights Agreement"), pursuant to which each outstanding share of
Company Common Stock has attached to it certain rights (the "Rights"), including
rights under certain circumstances to purchase a fraction of a share of Series A
Junior Participating Preferred Stock for $100 or Company Common Stock at
one-half of its market price, subject to adjustment, (ii) Options to purchase up
to an aggregate of 1,100,000 shares of Company Common Stock, and (iii) the
Convertible Notes. There are no outstanding stock appreciation rights, phantom
stock rights, performance shares or other similar rights based upon the value of
the Company Stock or any other capital stock or other equity securities of the
Company or its subsidiaries, except SARs equivalent, for purposes of measuring
payments thereunder, to an aggregate of 277,000 shares of Company Common Stock.
Section 6.01(b) of the Disclosure Schedule lists, (x) for each of the Options
and Convertible Notes, the person holding such security, the number of shares of
Company Common Stock presently subject to such security, the present exercise
price of such security, and the expiration date of such security, and (y) for
each of the SARs, the person holding such SAR, the number of shares of Company
Common Stock equivalents, for purposes of measuring payments thereunder,
presently subject to such SAR, the present exercise price of such SAR, and the
expiration date of such SAR. The closing sales price of the Company Common Stock
on the effective date of grant of each SAR, as reported on the NASDAQ National
Market System, does not exceed the per share Merger Consideration. All of the
outstanding shares of capital stock or other equity securities of the Company
and its subsidiaries are validly issued, fully paid and nonassessable. Section
6.01(b) of the Disclosure Schedule sets forth the name of each subsidiary of the
Company and the percentage of the outstanding capital stock or other equity
securities of such subsidiary owned, directly or indirectly, by the Company. All
of such capital stock or other equity securities are owned, directly or
indirectly, by the Company free and clear of all restrictions and encumbrances
other than restrictions on transfer imposed by federal and state securities
laws. The Company owns no other equity securities of or equity interest in any
other entity. None of the outstanding shares of capital stock or other equity
securities of the Company or any of its subsidiaries or the Options or
Convertible Notes were granted in violation of
25
preemptive or similar rights. There are no voting trusts or other agreements or
understandings to which the Company or any of its subsidiaries is a party or of
which the Company otherwise has knowledge with respect to the voting of capital
stock of the Company.
(c) Authority. The Company has the corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company have been duly and effectively authorized by the Board of
Directors of the Company, and, except for approval of this Agreement and the
Merger by the stockholders of the Company as provided in Section 3.01(b) hereof,
no further corporate action is necessary on the part of the Company to authorize
the consummation of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Company and, assuming the
accuracy of the representations and warranties of Buyer, LOL Subsidiary and
Acquisition set forth in Section 6.02(b), constitutes the valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity (regardless of whether
enforcement is sought in a court of law or equity). Notwithstanding anything
stated herein, the consummation of the Merger is subject to the satisfaction of
the conditions set forth in Section 3.02 hereof. Neither the execution and
delivery of this Agreement by the Company, nor the consummation by the Company
or any of its subsidiaries of the transactions contemplated hereby, (i) will
conflict with or result in a breach of the Certificate of Incorporation or
By-Laws or similar organizational documents, as currently in effect, of the
Company or any of its subsidiaries, or (ii) require the consent or approval of,
or any filing with, any governmental authority having jurisdiction over any of
the business or assets of the Company or any of its subsidiaries, or violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of its subsidiaries or any of their properties or assets, or
result in a breach of, or constitute a default or an event which, with the
passage of time or the giving of notice or both would constitute a default, give
rise to a right of termination, cancellation or acceleration, create any
entitlement to any payment or benefit, require notice to or the consent of any
third party, or result in the creation of a lien on any of the properties or
assets of the Company or any of its subsidiaries under, any other instrument,
contract or agreement to which the Company or any of its subsidiaries is a party
or by which any of them or any of their properties or assets may be bound,
except, in the case of clause (ii), (A) the filing with the SEC of (1) the Proxy
Statement, and (2) such reports under Section 13(a), 13(d) or 15(d) of the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby, (B) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business as a foreign corporation, (C) the filing of a premerger
notification and report form by the Company under the HSR Act, and (D) where
such violations, breaches, defaults, terminations, cancellations, accelerations,
payments, benefits or liens, or the failure to obtain, make or give such
consents, approvals, filings or notices, would not, individually or in the
26
aggregate, be reasonably likely to have a Material Adverse Effect or to impair
the Company's ability to consummate the Merger or the other transactions
contemplated hereby.
(d) No Proceedings. Neither the execution and delivery of this Agreement
by the Company, nor the consummation by the Company or any of its subsidiaries
of the transactions contemplated hereby, are being challenged by or are the
subject of any pending or, to the knowledge of the Company, threatened
litigation or governmental investigation or proceeding as of the date of this
Agreement.
(e) Securities Reports.
(i) The Company has heretofore made available to Buyer, in the
form filed with the SEC, its (A) Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, (B) Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2001, (C) all proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held since March 23, 2000,
and (D) all other reports or registration statements and all other filings made
by the Company with the SEC since March 23, 2000 (collectively, the "SEC
Reports"). No SEC Report (including any document incorporated by reference
therein), as of its filing date or, if amended, as of the date of the last such
amendment, contained any untrue statement of a material fact or omitted to state
any fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading and each SEC Report at the time of its filing complied as
to form in all material respects with applicable laws and the rules and
regulations of the SEC. Since March 23, 2000, the Company has filed in a timely
manner all reports that it was required to file with the SEC pursuant to the
Exchange Act and the rules and regulations of the SEC. Each of the consolidated
financial statements contained in the SEC Reports was prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto, including without limitation in regard to the adoption by the Company
of "fresh-start" reporting) and each fairly presented in all material respects
the consolidated financial position of the Company and its subsidiaries as at
the respective dates thereof and the consolidated results of operations and cash
flows and changes in stockholders' equity of the Company and its subsidiaries
for the periods indicated, subject in the case of quarterly financial statements
to normal year-end adjustments and except that the quarterly financial
statements do not contain all of the footnote disclosures required by generally
accepted accounting principles to the extent permitted by the rules and
regulations of the SEC.
(ii) The Proxy Statement will not, at the time the Proxy Statement
is mailed to the Company's stockholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and will not, at the
time of the meeting of stockholders to which the Proxy Statement relates or at
the Effective Time, omit to state any material fact necessary to correct any
statement which has become false or misleading in any earlier communication with
respect to the
27
solicitation of any proxy for such meeting, except that no representation is
made by the Company with respect to statements made in the Proxy Statement based
on information furnished in writing to the Company by Buyer, LOL Subsidiary or
Acquisition specifically for use in the Proxy Statement. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC thereunder.
(f) Taxes.
(i) Each of the Company and its subsidiaries has timely filed or
caused to be filed (or received appropriate extensions of time to file) all
material federal, state, local, foreign and other tax returns, reports and
declarations of estimated tax required to be filed by it before such filings
became delinquent, and all such tax returns, reports and declarations of
estimated tax are complete and accurate in all material respects.
(ii) Each of the Company and its subsidiaries has paid all material
federal, state, local and foreign taxes and all other material assessments,
deficiencies, levies, imposts, duties, license fees, registration fees,
withholdings or other similar governmental charges of every kind, character or
description, and any interest, penalties or additions to tax imposed thereon
(collectively, the "Taxes"), due or claimed by any taxing authority to be due by
it, and, as of the date of the Company's most recent audited consolidated
balance sheet contained in the SEC Reports delivered prior to the date of this
Agreement (the "Balance Sheet"), none of the Company or any of its subsidiaries
had any material liability for Taxes (including without limitation any material
liability to indemnify or reimburse any other person for Taxes under any tax
indemnity, tax allocation or tax sharing agreement) other than as reserved for
on the Balance Sheet.
(iii) All material amounts required to be withheld or collected by
the Company or any of its subsidiaries for income taxes, social security taxes,
unemployment insurance taxes and other employee withholding taxes have been so
withheld or collected and either paid to the appropriate governmental authority
or, if not delinquent, accrued and reserved against and entered upon the
consolidated books of the Company and its subsidiaries.
(iv) For federal income tax purposes, all tax years ending on or
before December 31, 1994 are closed or the statute of limitations has expired
with respect thereto. There is no material action, suit, proceeding, audit,
investigation or claim pending or, to the knowledge of the Company, threatened
in respect of any Taxes for which the Company or any of its subsidiaries may
become liable, and no material claims have been made by any taxing authority of
any jurisdiction in which any of the Company or its subsidiaries does not file
tax returns that the Company or any of its subsidiaries is or may be subject to
taxation by that jurisdiction. No presently effective waiver of any statute of
limitations with respect to any taxable year has been executed by the Company or
any of its subsidiaries, there is no presently effective agreement, waiver or
consent providing for an extension of time with
28
respect to the assessment of any Taxes against the Company or any of its
subsidiaries, and no presently effective power of attorney granted by the
Company or any of its subsidiaries with respect to any tax matters is currently
in force.
(v) No property of the Company or any of its subsidiaries is "tax
exempt use property" within the meaning of Section 168(h) of the Code.
(vi) Neither the Company nor any of its subsidiaries has made any
payment, or is a party to any contract, agreement or arrangement which could
obligate it to make any payment, that would, but for the provisions of clause
(ii) of Section 280G(b)(2)(A) of the Code, constitute a "parachute payment"
within the meaning of Section 280G of the Code.
(vii) Neither the Company nor any of its subsidiaries is a party to
any tax indemnity, tax allocation or tax sharing agreement.
(viii) Neither the Company nor any of its subsidiaries has been a
member of an affiliated group (as such term is defined in Section 1504 of the
Code) filing a consolidated federal income tax return for any tax year, other
than a group the common parent of which was the Company.
(ix) Neither the Company nor any of its subsidiaries has filed a
consent under Section 341(f) of the Code concerning collapsible corporations.
(x) Neither the Company nor any of its subsidiaries has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(xi) Neither the Company nor any of its subsidiaries has
distributed the stock of a "controlled corporation" (within the meaning of that
term as used in Section 355(a) of the Code) in a transaction subject to Section
355 of the Code within the past two years.
(xii) Neither the Company nor any of its subsidiaries will be
required to include any material item of income in, or exclude any material item
of deduction from, taxable income for any taxable period (or portion thereof)
ending after the Effective Time as a result of any (A) change in method of
accounting for a taxable period ending at or prior to the Effective Time under
Section 481(c) of the Code (or any corresponding or similar provision of state,
local or foreign income tax law); (B) "closing agreement" as described in
Section 7121 of the Code (or any corresponding or similar provision of state,
local or foreign income tax law) executed at or prior to the Effective Time; (C)
installment sale or open transaction disposition made at or prior to the
Effective Time; or (D) prepaid amount received at or prior to the Effective
Time.
29
(g) Absence of Changes. Except for liabilities incurred in connection
with this Agreement and the transactions contemplated hereby, and except as
disclosed in the SEC Reports filed prior to the date of this Agreement, from the
date of the Balance Sheet through the date of this Agreement, the Company and
its subsidiaries have conducted their business only in the ordinary course
consistent with past practice, and there has not been (i) any damage,
destruction or loss, whether covered by insurance or not, that has had or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect, (ii) any other event, development or condition (financial or otherwise)
of any character or any operations or results of operations that has had or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect, or (iii) any other action or event that would have required the written
consent of Buyer pursuant to Section 2.01(c) or 2.01(d) had such action or event
occurred after the date of this Agreement.
(h) Properties.
(i) The Company and its subsidiaries have good and marketable
title to all property, assets and rights reflected in the Balance Sheet or
acquired by the Company and its subsidiaries after the date of the Balance Sheet
(except for inventory, obsolete equipment and real estate not used in or
necessary for the operation of their business sold or otherwise disposed of and
accounts receivable collected since such date in the ordinary course of
business) or otherwise purported to be owned by them, and have a valid leasehold
interest in or other right to use all other property, assets and rights used in
their business, free and clear of all mortgages, liens, pledges, charges,
restrictions, encroachments, rights of third parties or other encumbrances of
any kind or character other than (A) liens for Taxes not yet due and payable,
(B) mechanic's, warehousemen's, materialmen's, landlord's or similar liens
securing obligations incurred in the ordinary course of business which are not
yet due and payable, (C) encumbrances on real property in the nature of zoning
restrictions, easements, rights of way, encroachments, restrictive covenants and
other similar rights or restrictions which were not incurred in connection with
the borrowing of money or the obtaining of advances or credit and which do not,
individually or in the aggregate, materially detract from the value the
properties subject thereto or affected thereby or materially impair present
business operations at such properties, and (D) existing mortgages, liens and
encumbrances disclosed in the Balance Sheet (or in the notes thereto), except
where the failure to have such title, leasehold interests or other rights to
use, or the existence of such mortgages, liens, pledges, charges, restrictions,
encroachments, rights of third parties or other encumbrances, has not had and is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect.
(ii) All real property owned by the Company and its subsidiaries is
listed by address in Section 6.01(h) of the Disclosure Schedule. All leases of
real property to which the Company or any of its subsidiaries is a party
(whether as landlord or tenant) or by which any of them is bound are valid and
binding and in full force and effect, neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any other party thereto is in
30
default under or in respect of any such lease, the result of which default
(including if such lease were to terminate based thereon) has had or is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect, and all such material leases in effect on the date hereof have been made
available to Buyer and are listed in Section 6.01(h) of the Disclosure Schedule.
The real property described in Section 6.01(h) of the Disclosure Schedule as
being owned by the Company and its subsidiaries and the real property subject to
the leases listed in Section 6.01(h) of the Disclosure Schedule constitute the
only real property used by the Company and its subsidiaries in the conduct of
their business.
(iii) There is no development, incentive or other agreement with any
governmental authority that limits in any material respect the right of the
Company or any of its subsidiaries to protest Taxes, establishes minimum Taxes
or requires continued business operation at any particular location.
(i) Contracts. All Contracts (as hereinafter defined) in effect on the
date hereof (other than those described in clause (y) of the definition thereof)
have been either included as an exhibit to an SEC Report filed prior to the date
of this Agreement or made available to Buyer and listed in Section 6.01(i) of
the Disclosure Schedule. All Contracts are valid and binding and in full force
and effect, and neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any other party thereto is in default under or in
respect of any Contract, the result of which default (including if such Contract
were to terminate based thereon) has had or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect. As used herein,
"Contract" shall mean (x) each "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K promulgated by the SEC), (y) each lease of
tangible personal property entered into after December 31, 2000 the unpaid
obligations of the Company or any subsidiary under which exceed $500,000, and
(z) each of the following other agreements or contracts to which the Company or
any of its subsidiaries is a party or by which any of them or their properties
or assets are bound:
(i) each effective employment agreement, severance agreement,
non-competition agreement or assignment of inventions agreement with any
employee or former employee of the Company or any of its subsidiaries;
(ii) each contract, whether as licensor or licensee, for the
license of any patent, know-how, trademark, trade name, service xxxx, copyright,
software or other intangible asset (other than non-negotiated licenses of
generally available commercial software);
(iii) each loan agreement, indenture or other instrument, contract
or agreement under which any money has been borrowed or loaned or under which
any note, bond or other evidence of indebtedness has been issued and remains
outstanding, each guaranty, indemnification or assumption agreement, and each
contract to reimburse any maker of a letter of credit or banker's acceptance;
31
(iv) each mortgage, contract for deed, security agreement,
conditional sales contract, financing, "synthetic" or capitalized lease, or
similar agreement that effectively creates a lien on any assets of Company or
any of its subsidiaries (other than any purchase money security interest,
conditional sales contract, capitalized lease or similar agreement which creates
a lien only on tangible personal property and the unpaid obligations of the
Company or any of its subsidiaries under which are $500,000 or less);
(v) each contract restricting the Company or any of its
subsidiaries in any material respect from engaging in business or from competing
with any other persons;
(vi) each partnership or joint venture agreement;
(vii) each collective bargaining agreement or other agreement with
any labor union or association representing employees of the Company or any of
its subsidiaries;
(viii) each agreement for the purchase or sale of products or
services (other than purchase or sales orders entered into in the ordinary
course of business on an order-by-order basis) under which the undelivered
balance of such products or services has a price in excess of $500,000;
(ix) each agreement for capital expenditures the unpaid obligations
of the Company or any of its subsidiaries under which exceed $500,000;
(x) each lease of tangible personal property as of December 31,
2000 the unpaid obligations of the Company or any subsidiary under which exceed
$500,000;
(xi) each agreement for the purchase or sale of any business,
division or subsidiary by or to the Company or any of its subsidiaries not yet
consummated or under which the Company or any of its subsidiaries has any
continuing indemnification obligations;
(xii) each agreement with any officer or director of the Company or
any of its subsidiaries, any beneficial owner of five percent or more of the
outstanding Company Common Stock, any ascendant, descendent, sibling or spouse
of any such officer, director or beneficial owner, or any trust, partnership,
corporation or other entity in which any of such persons has at least a five
percent equity interest (collectively, "Associates");
(xiii) each option, right of first refusal or right of first offer
with respect to the sale, purchase or leasing of any real property; and
(xiv) each material agreement entered into other than in the
ordinary course of business.
32
(j) Intellectual Property. Section 6.01(j) of the Disclosure Schedule
sets forth a true and correct list of all material patents, trademarks, trade
names, service marks, copyrights and domain names, and applications and
registrations therefor, which are held by the Company or any of its subsidiaries
(together with all material product formulas and specifications of the Company
or any of its subsidiaries, the "Owned Intellectual Property"). No material
patents, trademarks, trade names, service marks or copyrights, and no material
product formulations or specifications, are used by the Company or any of its
subsidiaries in the conduct of their business, except the Owned Intellectual
Property or those licensed pursuant to licenses listed in Section 6.01(i) of the
Disclosure Schedule or the non-disclosure of which therein does not constitute a
misrepresentation under Section 6.01(i) of this Agreement (the "Licensed
Intellectual Property"). The operation by the Company and its subsidiaries of
their business has not infringed in any material respect on any patent,
trademark, trade name, service xxxx or copyright of any other person, and none
of the Company or its subsidiaries has made use of any invention, process,
technique, confidential information, product formulation or specification, or
other trade secret in violation in any material respect of the rights of any
other person, and, as of the date of this Agreement, the Company has no
knowledge of any allegations by any other person to the contrary. The Company
has no knowledge of any pending patent, trademark, trade name, service xxxx or
copyright application of any other person which, if issued or registered, would
be infringed upon by the operations of the Company or any of its subsidiaries,
in each case in a way which is reasonably likely to have a Material Adverse
Effect. To the knowledge of the Company, no other person is infringing in any
respect upon the Owned Intellectual Property or the Licensed Intellectual
Property or is making use of any invention, process, technique, confidential
information, product formulation or specification, or other trade secret in
violation of the rights of any of the Company or its subsidiaries, nor would any
other person be infringing in any respect upon any pending patent, trademark,
trade name, service xxxx or copyright application of the Company or any of its
subsidiaries in the event that any of the foregoing becomes registered or
issued, in any case in a way which has had or is reasonably likely to have a
Material Adverse Effect. The Company and its subsidiaries have taken all steps
reasonably required to maintain the Owned Intellectual Property and, to the
knowledge of the Company, the licensor thereof has taken all steps reasonably
required to maintain the Licensed Intellectual Property, including timely
payment of all fees and timely filing of all documents required under
intellectual property laws and regulations, except where the failure to timely
pay such fees or timely file such documents has not had and is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
None of the Company or its subsidiaries or, to the knowledge of the Company, any
licensor or licensee thereof has used or enforced, or failed to use or enforce,
any of the Owned Intellectual Property or the Licensed Intellectual Property in
any manner which is reasonably likely to limit its validity or result in its
invalidity, or has received any notice that any of the Owned Intellectual
Property or the Licensed Intellectual Property has been declared unenforceable
or otherwise invalid by any governmental entity, except where such invalidity or
unenforceability has not had and is not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect. No employees of the Company or
any of its subsidiaries have any rights with respect to any of the Owned
Intellectual Property.
33
(k) Undisclosed Liabilities. There are no liabilities of the Company or
any of its subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, other than (i) liabilities
disclosed or set forth in the Balance Sheet, (ii) liabilities incurred in the
ordinary course of business since the date of the Balance Sheet, provided that
the existence of any such liability does not otherwise constitute a
misrepresentation under this Agreement, (iii) liabilities that, individually or
in the aggregate, have not had and are not reasonably likely to have a Material
Adverse Effect, provided that the existence of any such liability does not
otherwise constitute a misrepresentation under this Agreement, (iv) liabilities
under, or required to be incurred under, this Agreement, and (v) liabilities
(other than those in default) under contracts and agreements set forth in
Section 6.01(h) or 6.01(i) of the Disclosure Schedule or the non-disclosure of
which therein does not constitute a misrepresentation under Section 6.01(h) or
6.01(i) of this Agreement.
(l) Litigation. As of the date of this Agreement, there are no claims
(including product liability claims), litigation, arbitrations, administrative
proceedings, abatement orders or investigations of any kind pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries, or, to the knowledge of the Company, against any of their
respective officers, employees or directors in connection with the business or
affairs of the Company or any of its subsidiaries, which, if decided adversely
to the Company, such subsidiary, or such officer, employee or director, are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect. There are no judgments, orders, writs, injunctions, decrees,
indictments, subpoenas or civil investigative demands or awards against the
Company or any of its subsidiaries that have had or are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect.
(m) Compliance with Laws. Each of the Company and its subsidiaries has
complied with, and is not in default under or in violation of, any laws,
ordinances, regulations or other governmental restrictions, orders, judgments or
decrees applicable to it or its properties or assets (including without
limitation regulations regarding the content of feed ingredients and the proper
separation of feed), except where such conflicts, defaults or violations have
not had and are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect, and, as of the date hereof, to the Company's
knowledge, there have been no allegations by any governmental authority or
private persons to the contrary.
(n) Licenses and Permits. Each of the Company and its subsidiaries has
in full force and effect all licenses, franchises, permits and other
governmental authorizations necessary to permit it to lawfully conduct its
business in the manner presently conducted and to own and use its properties and
assets in the manner presently owned and used, and neither the Company nor any
of its subsidiaries is in violation of any such license, franchise, permit or
other governmental authorization, except where the failure to have in full force
and effect any such license, franchise, permit or authorization or the existence
of any such violation has not had and is not reasonably likely to have,
individually or in the aggregate, a Material
34
Adverse Effect. No such license, franchise, permit or other governmental
authorization will terminate or lapse as a result of the consummation of the
transactions contemplated by this Agreement, except to the extent any such
termination or lapse is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect.
(o) Brokers; Finders. Except for the fees of Greenwich Street Capital
Partners II, L.P. as financial advisor to the Company, and the fees of Xxxxxxx,
Xxxxx & Co. due in connection with the rendering of the fairness opinion
referred to in Section 6.01(y) hereof, all of which fees the Company agrees to
pay, there are no claims for brokerage commissions, finders' fees, investment
advisory fees or similar compensation in connection with this Agreement or the
transactions contemplated by this Agreement, based on any arrangement,
understanding, commitment or agreement made by or on behalf of the Company or
any of its subsidiaries, obligating the Company or any of its subsidiaries, or
Buyer, LOL Subsidiary or Acquisition, to pay such claim. The Company has
delivered to Buyer a true and correct copy of all agreements under which any
fees or other remuneration are due from the Company or any of its subsidiaries
to Greenwich Street Capital Partners II, L.P. in connection with the performance
of its services as such financial advisor or to Xxxxxxx, Sachs & Co. in
connection with the rendering of such opinion.
(p) Employee Plans. Except as disclosed in the SEC Reports filed prior
to the date of this Agreement:
(i) Each employee pension benefit plan ("Pension Plan"), as such
term is defined in Section 3 of ERISA, each employee welfare benefit plan
("Welfare Plan"), as such term is defined in Section 3 of ERISA, and each
deferred compensation, bonus, incentive, stock incentive, option, stock
purchase, severance, or other employee benefit plan, agreement, commitment or
arrangement which is maintained by the Company or any of its Affiliates (as
hereinafter defined), or to which the Company or any of its Affiliates
contributes or is under any obligation to contribute, or with respect to which
the Company or any of its Affiliates has any liability (whether current or
contingent) (each, an "Employee Plan" and collectively, the "Employee Plans") is
listed in Section 6.01(p) of the Disclosure Schedule, and a copy of each
Employee Plan which is a written plan has been made available to Buyer. In
addition, copies of the most recent determination letter issued by the Internal
Revenue Service and, if applicable, the most recent actuarial reports or
valuations with respect to each Pension Plan, copies of the most recent summary
plan description for each Pension Plan and each Welfare Plan, copies of any
trust agreement, insurance contract or other funding or investment arrangements
for the benefits under each Pension Plan and each Welfare Plan, and copies of
the annual reports (Form 5500 Series) required to be filed with any governmental
agency for each Pension Plan and each Welfare Plan for the three most recent
plan years of each such plan, have been made available to Buyer.
(ii) Each of the Company and its Affiliates has made on a timely
basis all contributions or payments required to be made by it pursuant to the
terms of the Employee Plans, ERISA, the Code or other applicable laws, unless
such contributions or payments that
35
have not been made are immaterial in amount and the failure to make such
payments or contributions will not materially and adversely affect the Employee
Plans. With respect to each Pension Plan which is subject to Title I, Subtitle
B, Part 3 of ERISA (concerning "Funding"), the funding method used in connection
with such Pension Plan is acceptable under ERISA and the actuarial assumptions
used in connection with funding such Pension Plan, in the aggregate, are
reasonable (taking into account the experience of such Pension Plan and
reasonable expectations). The actuarial present value (based upon the same
actuarial assumptions that would apply if such Pension Plan was terminated at
the Effective Time) of all vested and nonvested accrued benefits (whether on
account of retirement, termination, death or disability) under each such Pension
Plan does not exceed the net fair market value of the assets held to fund each
such Pension Plan by more than the amount, if any, set forth with respect to
such Pension Plan in Section 6.01(p) of the Disclosure Schedule.
(iii) Each Employee Plan (and any related trust or other funding
instrument) has been administered in all respects in compliance with its terms
and in both form and operation is in compliance in all respects with the
applicable provisions of ERISA, the Code and other applicable laws and
regulations, and all reports required to be filed with any government agency
with respect to each Pension Plan and each Welfare Plan have been timely filed,
except in any case as has not had and is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect. The Company has no
knowledge of facts that would cause the Internal Revenue Service to disqualify
any Pension Plan which is intended to be a tax-qualified plan under Section
401(a) of the Code.
(iv) There are no inquiries or proceedings pending or, to the
knowledge of the Company, threatened by the Internal Revenue Service, the U.S.
Department of Labor, the Pension Benefit Guaranty Corporation (the "PBGC") or
any participant or beneficiary with respect to any Employee Plan or any other
employee benefit plan, agreement, commitment or arrangement in the past
maintained by the Company or any of its Affiliates or to which the Company or
any of its Affiliates has ever been under an obligation to contribute which, if
decided adversely to the Company or any of its Affiliates, are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect. Neither
the Company nor, to the knowledge of the Company, any plan fiduciary of any
Pension Plan or Welfare Plan has engaged in any transaction in violation of
Section 406(a) or (b) of ERISA (for which no exemption exists under Section 408
of ERISA) or any "prohibited transaction" (as defined in Section 4975(c)(1) of
the Code) for which no exemption exists under Section 4975(c)(2) or 4975(d) of
the Code (except where any such violation or prohibited transaction has not had
and is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect), or is subject to any material excise tax imposed by
the Code or ERISA with respect to any Employee Plan.
(v) Neither the Company nor any of its Affiliates has ever been a
sponsor of, contributed to, or been under an obligation to contribute to any
"multiemployer plan", as such term is defined in Section 3(37) of ERISA.
36
(vi) Neither the Company nor any of its Affiliates has any unpaid
material liability to the PBGC. The Company has paid all material premiums (and
interest and penalties for late payments, if applicable) due the PBGC with
respect to each Pension Plan for each plan year thereof for which such premiums
are required. In addition, no "reportable event" (as defined in Section 4043(b)
of ERISA) has taken place with respect to any Employee Plan and no filing has
been made by the Company or any Affiliate with the PBGC or the Internal Revenue
Service to terminate any Employee Plan.
(vii) Except as provided for in this Agreement, neither the Company
nor any of its Affiliates is a party to any oral or written (A) agreement with
any director, officer or other employee of the Company or any of its Affiliates
the benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Company of the
nature contemplated by this Agreement, or (B) agreement or plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
(viii) No Employee Plan provides health, dental or life insurance
benefits to any employee of the Company or an Affiliate, or any dependent of
such an employee, following termination of the employee's employment, except as
may be required by Section 4980B of the Code or any similar state law.
(ix) For purposes of this Section 6.01(p), the term "Affiliate"
includes (A) any trade or business with which the Company is, or at any time
since January 1, 1996 was, under common control within the meaning of Section
4001(b) of ERISA, (B) any corporation with which the Company is, or at any time
since January 1, 1996 was, a member of a controlled group of corporations within
the meaning of Section 414(b) of the Code, (C) any entity with which the Company
is, or at any time since January 1, 1996 was, under common control within the
meaning of Section 414(c) of the Code, (D) any entity with which the Company is,
or at any time since January 1, 1996 was, a member of an affiliated service
group within the meaning of Section 414(m) of the Code, and (E) any entity with
which the Company is, or at any time since January 1, 1996 was, aggregated under
Section 414(o) of the Code. Notwithstanding anything to the contrary stated in
this Section 6.01(p), (1) any representation in this Section 6.01(p) given with
respect to a trade, business or entity which would not have been an Affiliate
under the aforesaid definition had the references in such definition to the date
"January 1, 1996" instead been references to "June 29, 2000" (a "Pre-Bankruptcy
Affiliate"), or with respect to any employee benefit plan, agreement, commitment
or arrangement which would not have been an Employee Plan but for any
Pre-Bankruptcy Affiliate maintaining or contributing thereto or being under any
obligation to contribute thereto or having any liability in respect thereof (a
"Pre-Bankruptcy Affiliate Plan"), shall be made only to the Company's knowledge,
(2) no Pre-Bankruptcy Affiliate Plan shall be
37
required to be listed in Section 6.01(p) of the Disclosure Schedule, and (3) no
copies of any Pre-Bankruptcy Affiliate Plan, or of any documents related
thereto, shall be required to be delivered to Buyer.
(q) Labor Matters. Except as disclosed in the SEC Reports filed prior to
the date of this Agreement, there are no existing, and since January 1, 1999
have not been any, labor strikes, walkouts, work stoppages, slowdowns or
lockouts involving the Company or any of its subsidiaries, nor are there any
other existing labor disputes or disturbances involving the Company or any of
its subsidiaries which in each case has had or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect. The employees of
the Company and its subsidiaries are not represented by any union or
association, and there are no pending or, to the Company's knowledge, threatened
representational questions concerning the employees of the Company or its
subsidiaries.
(r) Environmental. Except as disclosed in the SEC Reports filed prior to
the date of this Agreement:
(i) Neither the Company nor any of its subsidiaries has received
written notice of, or, to the knowledge of the Company, is subject to, any
pending or threatened action, cause of action, claim or investigation alleging
liability under or non-compliance with any applicable federal, state or local
laws or regulations relating to pollution or the protection of human health or
the environment ("Environmental Laws"), except for such actions, causes of
action, claims or investigations which, individually or in the aggregate, are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect.
(ii) To the knowledge of the Company, there has been no spill,
discharge, leak, emission, injection, disposal, escape, dumping or release of
any kind (collectively, "Release") of any pollutants, contaminants, hazardous
substances, hazardous chemicals, toxic substances, hazardous wastes, infectious
wastes, radioactive materials, materials, petroleum (including without
limitation crude oil or any fraction thereof) or solid wastes, including without
limitation those defined in any Environmental Law ("Hazardous Materials"), on,
beneath, above or into any of the real property currently owned, leased or
operated by the Company or any of its subsidiaries (collectively, the "Current
Property") or any of the real property formerly owned, leased or operated by the
Company or any of its subsidiaries (collectively, the "Former Property"), except
for any Releases permitted by law or which have not had and are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
(iii) Neither of the Company nor any of its subsidiaries has been
identified as a potentially responsible party at a site listed in the National
Priorities List.
(iv) To the knowledge of the Company, no Current Property or Former
Property is or ever has been used by the Company or any of its subsidiaries, or
by any other person under the control of the Company or any of its subsidiaries,
for the storage, disposal,
38
generation, manufacture, refinement, transportation, production or treatment of
any Hazardous Materials in such a manner as to require a permit under Section
3005 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6925.
(v) To the knowledge of the Company, (A) there are no underground
storage tanks, injection xxxxx or landfills located on any of the Current
Property, and (B) there are no asbestos-containing materials or polychlorinated
biphenyls (PCBs) located on any of the Current Property in such form, quantities
or condition so as to create any material liability or obligation of the Company
or any of its subsidiaries under any Environmental Laws.
(s) Suppliers and Customers. Section 6.01(s) of the Disclosure Schedule
lists the names of the 50 largest customers (by feed ton volume, indicating the
same) of the Company and its subsidiaries, taken as a whole, for the 12-month
period commencing January 1, 2000 and ending on December 31, 2000. Except for
cancellations or modifications which have not had and are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect, no such
customer and no supplier of the Company or any of its subsidiaries has canceled,
or otherwise so modified in a manner adverse to the Company and its
subsidiaries, taken as a whole, or given notice to the Company or any of its
subsidiaries of an intention to so cancel or otherwise so modify, its business
relationship with the Company or any of its subsidiaries. No such customer or
supplier has notified the Company or any of its subsidiaries in writing that the
consummation of the transactions contemplated by this Agreement will materially
and adversely affect its business relationship with the Company or any of its
subsidiaries.
(t) Recalls. Except as disclosed in the SEC Reports filed prior to the
date of this Agreement, no products of the Company or any of its subsidiaries
have been recalled voluntarily or involuntarily since January 1, 1999. No such
recall is being considered by the Company or any of its subsidiaries or, to the
knowledge of the Company, has been requested or ordered by any governmental
entity or consumer group.
(u) Insurance. All insurance policies maintained by the Company and its
subsidiaries are in full force and effect, all premiums required to have been
paid with respect thereto have been paid, no notice of cancellation in respect
thereof has been received and none of such insurance policies will terminate or
lapse as a result of the consummation of the transactions contemplated by this
Agreement.
39
(v) Delaware Law Section 203. All necessary approvals have been granted
by the Board of Directors of the Company under Section 203 of the Delaware Law
so that none of the execution of the Voting Agreement, the granting of the
Irrevocable Proxy or any acquisition of beneficial ownership of Company Common
Stock by Buyer, LOL Subsidiary, Acquisition or any of Buyer's other affiliates
after the execution of this Agreement will limit, delay or impair the
consummation of the Merger or any other transaction with the Company or any of
its subsidiaries by Buyer, LOL Subsidiary, Acquisition or any of Buyer's other
affiliates pursuant to Section 203 of the Delaware Law.
(w) Stockholder Voting Requirement. The only stockholder vote necessary
to consummate the Merger under the Delaware Law and the Company's Certificate of
Incorporation and By-Laws is the affirmative vote of the holders of a majority
of the Company Common Stock.
(x) Associate Transactions. Except as disclosed in the SEC Reports filed
prior to the date of this Agreement, no Associate (i) purchases from or sells or
furnishes to the Company or any of its subsidiaries any material goods or
services, (ii) owns, leases or licenses any real or material personal property
that is used by the Company or any of its subsidiaries or (iii) is a party to
any contract or agreement for joint purchases or sales of any material goods or
services with the Company or any of its subsidiaries.
(y) Fairness Opinion. The Board of Directors of the Company has received
a written opinion of Xxxxxxx, Sachs & Co. to the effect that, as of the date of
this Agreement, the $23.00 per share of Company Common Stock to be received in
the Merger by the holders of Company Common Stock is fair to such holders from a
financial point of view.
(z) Unlawful or Undisclosed Payments. Neither the Company nor any of its
subsidiaries, nor anyone acting on their behalf, has made any material payments
or otherwise provided any material benefits, direct or indirect, to any
customer, supplier, governmental authority or other person, or any employee or
agent thereof, for the purpose of acquiring purchase or sales relationships,
licenses, franchises, permits or other governmental authorizations, or for any
other purpose, that are unlawful in any material respect.
6.02 Representations and Warranties of Buyer and Acquisition. Each of
Buyer, LOL Subsidiary and Acquisition jointly and severally represents and
warrants to the Company, and its successors and assigns, as follows:
(a) Corporate Organization. Buyer is a cooperative corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Each of LOL Subsidiary and Acquisition is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Buyer is incorporated in Minnesota and each of LOL Subsidiary
and Acquisition is incorporated in Delaware. Buyer has prior to the date hereof
delivered to the Company a certified copy of the respective Articles or
40
Certificate of Incorporation and By-Laws of Buyer, LOL Subsidiary and
Acquisition. Each such copy is complete and correct in all material respects.
(b) Authority. Each of Buyer, LOL Subsidiary and Acquisition has the
corporate power to execute this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by Buyer, LOL Subsidiary and Acquisition have been duly and effectively
authorized by the respective Boards of Directors of such corporations, and by
LOL Subsidiary as the sole stockholder of Acquisition, and no further corporate
action is necessary on the part of Buyer, LOL Subsidiary or Acquisition to
authorize the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer, LOL
Subsidiary and Acquisition and, assuming the accuracy of the representations and
warranties of the Company set forth in Section 6.01(c), constitutes a valid and
binding agreement of Buyer, LOL Subsidiary and Acquisition, enforceable against
Buyer, LOL Subsidiary and Acquisition in accordance with its terms, except to
the extent that enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in a court of law or equity). Notwithstanding anything stated herein,
the consummation of the Merger is subject to the satisfaction of the conditions
set forth in Section 3.01 hereof. Except as set forth in Schedule 6.02(b)
hereto, neither the execution and delivery of this Agreement by Buyer, LOL
Subsidiary and Acquisition, nor the consummation by Buyer, LOL Subsidiary or
Acquisition of the transactions contemplated hereby, (i) will conflict with or
result in a breach of the Articles or Certificate of Incorporation or By-Laws,
as currently in effect, of Buyer, LOL Subsidiary or Acquisition, or (ii) require
the consent or approval of, or any filing with, any governmental authority
having jurisdiction over any of the business or assets of Buyer, LOL Subsidiary
or Acquisition, or violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer, LOL Subsidiary or Acquisition or any of their
properties or assets, or result in a breach of or constitute a default or an
event which, with the passage of time or the giving of notice, or both, would
constitute a default, or require notice to or the consent of any third party
under, any other instrument, contract or agreement to which Buyer, LOL
Subsidiary or Acquisition is a party or by which any of them or any of the
properties or assets of any of them may be bound, except, in the case of clause
(ii), (A) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, (B) the filing of a premerger notification and report
form by Buyer under the HSR Act, and (C) where such violations, breaches or
defaults, or the failure to obtain, make or give such consents, approvals,
filings or notices, would not, individually or in the aggregate, be reasonably
likely to impair Buyer's, LOL Subsidiary's or Acquisition's ability to
consummate the Merger or the other transactions contemplated hereby.
41
(c) No Proceedings. Neither the execution and delivery of this Agreement
by Buyer, LOL Subsidiary or Acquisition, nor the consummation by Buyer, LOL
Subsidiary or Acquisition of the transactions contemplated hereby, are being
challenged by or are the subject of any pending or, to the knowledge of Buyer,
LOL Subsidiary or Acquisition, threatened litigation or governmental
investigation or proceeding as of the date of this Agreement.
(d) Finders; Brokers. Except for fees of X.X. Xxxxxx Xxxxx & Co., which
Buyer agrees to pay, there are no claims for brokerage commissions, finders'
fees, investment advisory fees or similar compensation in connection with this
Agreement or the transactions contemplated by this Agreement, based on any
arrangement, understanding, commitment or agreement made by or on behalf of
Buyer, LOL Subsidiary or Acquisition, obligating the Company or any of its
subsidiaries, or Buyer, LOL Subsidiary or Acquisition, to pay such claim.
(e) Financing Commitment. Buyer has delivered to the Company a
commitment letter from The Chase Manhattan Bank and X.X. Xxxxxx Securities Inc.
for the aggregate amount of $1,150,000,000 in financing (the "Financing
Commitment"). Buyer, based on conditions that are presently prevailing and that
have been brought to Buyer's attention, knows of no circumstance or condition
that it expects will prevent it from obtaining the Financing at the Effective
Time, as provided in the Financing Commitment.
(f) Proxy Statement. None of the information supplied or to be supplied
in writing by Buyer, LOL Subsidiary or Acquisition specifically for inclusion in
the Proxy Statement will, at the time the Proxy Statement is mailed to the
Company's stockholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, or will, at the time of the meeting of stockholders
to which the Proxy Statement relates or at the Effective Time, as then amended
or supplemented, omit to state any material fact necessary to correct any
statement which has become false or misleading in any earlier communication with
respect to the solicitation of any proxy for such meeting.
(g) Financial Statements. Buyer has previously delivered to the Company:
(i) the consolidated balance sheets of Buyer as of December 31,
2000 and December 31, 1999 and related consolidated statements of
operations and cash flows of Buyer for the twelve month periods then
ended, including the notes thereto, together with the reports thereon of
Buyer's independent accountants (the "Audited Financial Statements"); and
(ii) the consolidated balance sheet of Buyer as of March 31, 2001
and related consolidated statement of operations of Buyer for the
three-month period then ended prepared by Buyer (the "Interim Financial
Statements").
42
The Audited Financial Statements present fairly, in all material respects, the
consolidated financial position, results of operations and cash flows of Buyer
and its subsidiaries at the respective dates and for the respective periods
indicated and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto). The Interim
Financial Statements present fairly, in all material respects, the financial
position and results of operations of Buyer and its subsidiaries at the date and
for the period indicated and have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with the Audited
Financial Statements (except as may be indicated in the notes thereto), subject
to normal year-end adjustments and except that the Interim Financial Statements
do not contain all footnote disclosures required by generally accepted
accounting principles.
(h) Outstanding Debt.
(i) As of the date hereof, neither Buyer nor any of its
consolidated subsidiaries has any outstanding secured or unsecured material Debt
or commitments for any material Debt, other than (A) as described in, or as
incurred under credit agreements described in, the Financing Commitment, or (B)
as set forth in Schedule 6.02(h) hereto.
(ii) "Debt" means all liabilities and obligations of Buyer and its
consolidated subsidiaries (A) for borrowed money (including the current portion
thereof), (B) under any reimbursement agreement relating to a letter of credit,
bankers' acceptance or note purchase facility, (C) evidenced by a bond, note,
debenture or similar instrument (including a purchase money obligation), and (D)
under any guaranty of another person's indebtedness (other than any such
liabilities or obligations of Buyer to, or with respect to Debt of, its
subsidiaries or of any subsidiary of Buyer to, or with respect to Debt of, Buyer
or its other subsidiaries, and other than endorsements of checks in the ordinary
course of business).
(iii) As of the date hereof, there is no default or event of default
by Buyer or any of its consolidated subsidiaries under the provisions of any
instrument evidencing Debt or of any agreement relating thereto that would be
reasonably likely to impair Buyer's, LOL Subsidiary's or Acquisition's ability
to consummate the Merger or the other transactions contemplated hereby.
43
ARTICLE VII
DIRECTORS' AND OFFICERS' INDEMNIFICATION;
DIRECTORS AND OFFICERS LIABILITY INSURANCE;
EMPLOYEE BENEFITS
7.01 Indemnification. All rights to indemnification, expense advancement
and exculpation existing in favor of any person who is a director or officer of
the Company or any of its subsidiaries immediately prior to the Effective Time
(collectively, the "Indemnified Parties"), when acting in such capacity or when
acting as a fiduciary at the request of the Company under or with respect to an
Employee Plan, as provided in the Company's Certificate of Incorporation or
By-Laws or the certificate or articles of incorporation, by-laws or similar
organizational documents of any of its subsidiaries (or in any indemnification
agreements constituting Contracts) as in effect on the date hereof (as such
rights shall have been effected by the Second Amended Joint Plan of
Reorganization of the Company and certain of its affiliates declared effective
on June 29, 2000 in connection with the Chapter 11 Bankruptcy case filed by the
Company and such affiliates in the United States Bankruptcy Court, District of
Delaware, on October 28, 1999), shall survive the Merger for a period of six
years after the Effective Time (or, with respect to any relevant claim made
within such six-year period, until final disposition of such claim) with respect
to matters occurring at or prior to the Effective Time, and no action taken
during such period shall be deemed to diminish the obligations set forth in this
Section 7.01.
7.02 Directors and Officers Liability Insurance. For a period of six
years after the Effective Time, the Surviving Corporation shall cause to be
maintained in effect either (a) the current policy of directors' and officers'
liability insurance maintained by the Company (provided that Buyer or the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous in any material respects to the Indemnified Parties thereunder)
covering the Indemnified Parties with respect to claims arising from facts or
events which occurred at or before the Effective Time; provided, however, that
in no event shall the Surviving Corporation be required to expend pursuant to
this Section 7.02 more than an amount per year equal to 150% of the current
annual premium (which current annual premium for the policy year ending June 30,
2001 the Company represents and warrants to be approximately $60,000 in the
aggregate) paid by the Company for such existing insurance coverage (the "D&O
Cap"); and provided, further, that if equivalent coverage cannot be obtained, or
can be obtained only by paying an annual premium in excess of the D&O Cap, the
Surviving Corporation shall only be required to obtain as much coverage as can
be obtained by paying an annual premium equal to the D&O Cap, or (b) a run-off
(i.e., "tail") policy or endorsement with respect to the current policy of
directors' and officers' liability insurance maintained by the Company covering
the Indemnified Parties with respect to claims asserted within six years after
the Effective Time arising from facts or events which occurred at or before the
Effective Time.
44
7.03 Fiduciary Liability Insurance. For a period of six years after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
either (a) the current policy of liability insurance maintained by the Company
for Indemnified Parties and other Covered Employees (as hereinafter defined) who
have served as fiduciaries under or with respect to any Employee Plan at the
request of the Company (provided that Buyer or the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous in any material
respects to such Indemnified Parties and other Covered Employees thereunder)
covering such Indemnified Parties and other Covered Employees with respect to
claims arising from facts or events which occurred at or before the Effective
Time; provided, however, that in no event shall the Surviving Corporation be
required to expend pursuant to this Section 7.03 more than an amount per year
equal to 150% of the current annual premium (which current annual premium for
the policy year ending December 31, 2001 the Company represents and warrants to
be approximately $17,000 in the aggregate) paid by the Company for such existing
insurance coverage (the "Fiduciary Cap"); and provided, further, that if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of the Fiduciary Cap, the Surviving Corporation shall
only be required to obtain as much coverage as can be obtained by paying an
annual premium equal to the Fiduciary Cap, or (b) a run-off (i.e., "tail")
policy or endorsement with respect to the current policy of liability insurance
maintained by the Company for Indemnified Parties and other Covered Employees
who have served as fiduciaries under or with respect to any Employee Plan at the
request of the Company covering such Indemnified Parties and other Covered
Employees with respect to claims asserted within six years after the Effective
Time arising from facts or events which occurred at or before the Effective
Time. As used herein, "Covered Employees" means individuals who are employees of
the Company or any of its subsidiaries immediately prior to the Effective Time.
7.04 Employee Benefits. Notwithstanding anything to the contrary
contained in this Agreement, from and after the Effective Time, the Surviving
Corporation will have sole discretion over the hiring, promotion, retention,
firing and other terms and conditions of the employment of employees of the
Surviving Corporation or any of its subsidiaries. Subject to the immediately
preceding sentence, in the case of each individual who is an employee of the
Surviving Corporation or any of its subsidiaries immediately following the
Effective Time and who was an employee of the Company or any of its subsidiaries
immediately prior to the Effective Time, Buyer will recognize, and will cause
the Surviving Corporation and its subsidiaries to recognize, such employee's
continuous service with the Company, any of its subsidiaries or Xxxx Industries,
Inc. prior to the Effective Time, to the extent recognized by the Company as
service with the Company, for purposes of determining eligibility and vesting,
including without limitation for purposes of determining entitlement to vacation
and severance pay (but not for other purposes, including without limitation for
purposes of accrual of retirement benefits), under each employee benefit plan
subject to ERISA which Buyer, the Surviving Corporation or any of their
respective subsidiaries provides to such employee after the Effective Time.
Notwithstanding the foregoing, (a) for the two year period following the
Effective Time, Buyer will provide, or will cause the Surviving
45
Corporation or its subsidiaries to provide, for the benefit of the retired and
terminated employees of the Company who satisfy the current eligibility
requirements of the Company's Retiree Medical Plan, access to medical coverage
under one or more of the Surviving Corporation's medical plans (as in effect
from time to time), provided that the retired and terminated employees pay the
full cost thereof; and (b) Buyer will, or will cause the Surviving Corporation
to, continue and maintain in effect the Company's Capital Accumulation Plan (as
specified in Section 6.01(p) of the Disclosure Schedule) from and after the
Effective Time, provided that such plan may be amended or terminated with the
express written consent of a majority of the active employees of the Company who
are participants in the plan at the time of such amendment or termination.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01 Termination of Representations, Warranties, Obligations, Covenants
and Agreements. The respective representations, warranties, obligations,
covenants and agreements of the parties hereto, except for the obligations of
Buyer, LOL Subsidiary and Acquisition pursuant to Sections 1.06, 1.07, 1.08 and
1.09, and the obligations pursuant to Article VII, shall not survive the
effectiveness of the Merger and shall terminate and be of no further force or
effect upon the effectiveness of the Merger.
8.02 Amendment and Modification. To the extent permitted by applicable
law, this Agreement may be amended, modified or supplemented only by written
agreement of the Company, Buyer, LOL Subsidiary and Acquisition at any time
prior to the Effective Time with respect to any of the terms contained herein,
except that, after the meeting of stockholders contemplated by Section 2.02(a)
hereof, the price per share to be paid pursuant to this Agreement to the holders
of Company Common Stock shall in no event be decreased and the form of
consideration to be received by the holders of Company Common Stock in the
Merger shall in no event be altered without the approval of such holders.
8.03 Waiver of Compliance; Consents. Any failure of Buyer, LOL Subsidiary
or Acquisition, on the one hand, or the Company, on the other hand, to comply
with any obligation, covenant, agreement or condition herein (except the
conditions in Sections 3.01(b), 3.01(d), 3.02(b) and 3.01(d) of this Agreement)
may be waived in writing by the Company or by Buyer, respectively, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 8.03.
46
8.04 Expenses; Termination Fee.
(a) Except as otherwise provided below in this Section 8.04, all
expenses incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
expenses, except that the filing fees under the HSR Act shall be borne one-half
by the Company and one-half by Buyer, LOL Subsidiary and Acquisition.
(b) If this Agreement is terminated pursuant to Section 5.01 and Buyer
is entitled to a Termination Fee (as hereinafter defined) under paragraph (c) or
paragraph (d) of this Section 8.04, the Company shall, at the same time payment
of the Termination Fee is required to be made under paragraph (c) or paragraph
(d) of this Section 8.04, as applicable, pay Buyer, in immediately available
funds, an amount equal to all reasonable out-of-pocket expenses incurred by or
on behalf of Buyer, LOL Subsidiary or Acquisition in connection with the
negotiation, preparation, financing, execution or consummation of this Agreement
and the transactions contemplated hereby, including without limitation legal,
accounting, travel, filing, financing commitment (including not only those
attributable to financing the Merger Consideration, but also those attributable
to refinancing Buyer's existing indebtedness, which refinancing is necessary in
order to finance the Merger Consideration) and other reasonable fees and
expenses, provided that the aggregate fees and expenses payable by the Company
to Buyer pursuant to this Section 8.04(b) shall not exceed $2,000,000.
(c) If this Agreement is terminated pursuant to Section 5.01(e) or
5.01(f), then the Company shall, prior to or simultaneously with such
termination, pay Buyer a fee in immediately available funds (a "Termination
Fee") of $7,500,000.
(d) If (i) this Agreement is terminated by the Company or Buyer pursuant
to Section 5.01(b) or by Buyer pursuant to Section 5.01(c)(i) in each case as a
result of a material breach by the Company of any representations, warranties or
covenants contained in this Agreement or the failure of the conditions set forth
in Section 3.01(f) or 3.01(h) of this Agreement to be satisfied, or is
terminated by the Company or Buyer pursuant to Section 5.01(c)(ii), and (ii)
prior to such termination (A) any person or group shall have informed the
Company (or the Board of Directors of the Company or any executive officer of
the Company) after the date hereof that such person or group proposes, intends
to propose, is considering proposing, or will or may, if the Merger is delayed,
abandoned or not approved by the Company's stockholders, propose, a Third Party
Transaction, or (B) any such person or group or the Company publicly announces
(including without limitation any filing with any federal or state office or
agency) that such person or group has proposed, intends to propose, is
considering proposing, or will or may, if the Merger is delayed, abandoned or
not approved by the Company's stockholders, propose, a Third Party Transaction,
and (iii) within one year after such termination the Company or any of its
subsidiaries enters into a definitive agreement for, or consummates, a Third
Party Transaction (whether or not involving such person or group), then the
Company shall, prior to it or any of its subsidiaries entering into
47
such definitive agreement for or consummating (as the case may be) such Third
Party Transaction, pay to Buyer the Termination Fee.
(e) In no event shall more than one Termination Fee be payable under
this Section 8.04. As used herein, "Third Party Transaction" shall mean (i) an
acquisition subsequent to the date of this Agreement pursuant to an Acquisition
Proposal other than (A) an acquisition of equity securities of the Company
which, when aggregated with all other equity securities of the Company
beneficially owned (as defined in Rule 13d-3 promulgated under the Exchange
Act), immediately after entering into the definitive agreement for, or
consummation of, the Third Party Transaction, by the Third Party making such
Acquisition Proposal or any of its affiliates, constitutes less than 25% of the
total equity interests in, and less than 25% of the total voting power of the
then outstanding equity securities of, the Company, and (B) an acquisition of
assets of the Company or any of its subsidiaries constituting less than 25%, on
a fair market value basis, of the total assets of the Company and its
subsidiaries on a consolidated basis, (ii) the adoption by the Company of a plan
of liquidation or dissolution, (iii) the repurchase of, or recapitalization
involving, more than 25% of the Company's outstanding equity securities, or (iv)
the payment of an extraordinary dividend or other distribution on Company Common
Stock equal to at least 25% of the Company Common Stock's then current market
price.
(f) Buyer (for itself and its affiliates) hereby agrees that, upon (i)
any termination of this Agreement under circumstances where Buyer is entitled to
a Termination Fee under Section 8.04(c) or 8.04(d) hereof, and (ii) payment to
Buyer of such Termination Fee and all amounts due to Buyer under Section 8.04(b)
hereof, neither Buyer nor any of its affiliates shall seek to obtain any
recovery, judgment or damages of any kind, including without limitation
consequential, indirect or punitive damages, against the Company or any of its
subsidiaries or any of their respective directors, officers, employees,
partners, managers, members or stockholders in connection with this Agreement or
the transactions contemplated hereby.
8.05 Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each corporation which is a
party to this Agreement shall take all such necessary action.
8.06 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, effective when
delivered, or by express courier service, effective one business day after
delivery to such courier, or by registered or certified mail (postage prepaid
and return receipt requested), effective when received or three business days
after the mailing, whichever occurs first, or by telecopy, effective when
transmitted and a confirmation is received, provided the same is on a business
day, and, if not, on the next business day, to the parties at the following
addresses (or at such other address for a party or to such other person's
attention as shall be specified by like notice):
48
(a) If to Buyer, LOL Subsidiary or Acquisition, to it c/o:
Land O'Lakes, Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: President
Fax No.: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxx
Associate General Counsel, Law Department
Land O'Lakes, Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
Fax No.: (000) 000-0000
and
Faegre & Xxxxxx LLP
2200 Xxxxx Fargo Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Fax No.: (000) 000-0000
(b) If to the Company, to it at:
Purina Xxxxx, Inc.
0000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Fax No.: (000)000-0000
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxx X. XxXxxx
Fax No.: (000) 000-0000
49
8.07 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other parties (except that LOL
Subsidiary or Acquisition may assign to any other direct or indirect
wholly-owned subsidiary of Buyer any and all rights and obligations of LOL
Subsidiary or Acquisition under this Agreement, provided that any such
assignment will not relieve Buyer from any of its obligations under this
Agreement), and, except as expressly set forth in Article I hereof, or in
Section 7.01, 7.02 or 7.03 hereof with respect to Indemnified Parties, this
Agreement is not intended to confer upon any person except the parties hereto
any rights or remedies hereunder.
8.08 Interpretation. As used in this Agreement, unless otherwise
expressly defined herein, (a) the term "person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a limited liability
company, a trust, an incorporated organization and a government or any
department or agency thereof; (b) the term "affiliate" shall have the meaning
set forth in Rule 12b-2 of the General Rules and Regulations promulgated under
the Exchange Act; (c) the term "subsidiary" of any specified corporation shall
mean any corporation or other entity of which the outstanding securities having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are directly or indirectly owned by such
specified corporation; (d) the term "wholly-owned subsidiary" of any specified
corporation shall mean any subsidiary of such specified corporation all of the
outstanding capital stock or other equity securities of which are directly or
indirectly owned by such specified corporation; (e) the term "business day"
shall mean any day other than a Saturday, Sunday or a day which is a statutory
holiday under the laws of the United States; and (f) the term "knowledge" or any
similar term shall mean the actual knowledge, after due inquiry, of any one or
more of the directors of the Company or any of its subsidiaries or any of the
employees of the Company or any of its subsidiaries listed in Section 8.08 of
the Disclosure Schedule.
8.09 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without regard to its conflict of laws rules.
8.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.11 Headings. The article and section headings contained in this
Agreement are solely for the purpose of reference, and are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement.
50
8.12 Entire Agreement. This Agreement, including the exhibits hereto and
the documents and instruments referred to herein, together with the
Confidentiality Agreement, embody the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein or in the
Confidentiality Agreement, in respect of such subject matter. This Agreement
supersedes all prior agreements and understandings among the parties with
respect to such subject matter, except for the Confidentiality Agreement.
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective duly authorized officers on the date first above
written.
PURINA XXXXX, INC.
By /s/ Xxxx X. Xxxxx
----------------------------------------
Its President and Chief Executive
-------------------------------------
(the Company)
LAND O'LAKES, INC.
Xxxx X. Xxxxxx By /s/ Xxxx X. Xxxxxx
----------------------------------------
Its President and Chief Executive Officer
-------------------------------------
(Buyer)
LOL HOLDINGS II, INC.
Xxxxxx Xxxxxxx By /s/ Xxxxxx Xxxxxxx
----------------------------------------
Its Treasurer
-------------------------------------
(LOL Subsidiary)
LOL HOLDINGS III, INC.
Xxxxxx Xxxxxxx By /s/ Xxxxxx Xxxxxxx
----------------------------------------
Its Treasurer
-------------------------------------
(Acquisition)
