Exhibit 2.1
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of
December 21, 2000
by and among
M-FOODS HOLDINGS, INC.,
PROTEIN ACQUISITION CORP.
and
MICHAEL FOODS, INC.
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TABLE OF CONTENTS
Page
ARTICLE 1
THE MERGER............................................................2
1.1 The Merger...................................................2
1.2 Closing......................................................2
1.3 Effective Date and Time......................................2
1.4 Effects of the Merger........................................2
1.5 Subsequent Actions...........................................2
1.6 Articles of Incorporation....................................3
1.7 Bylaws.......................................................3
1.8 Officers and Directors of Surviving Corporation..............3
1.9 Effect on Capital Stock......................................3
1.10 Options......................................................4
1.11 Surrender and Payment........................................4
1.12 Lost Certificates............................................6
1.13 Unclaimed Merger Consideration...............................6
1.14 Dissenting Shares............................................7
ARTICLE 2
REPRESENTATIONS AND WARRANTIES........................................7
2.1 Representations and Warranties of the Company................7
2.2 Representations and Warranties of Holdings and Merger Sub...20
ARTICLE 3
COVENANTS RELATING TO CONDUCT OF BUSINESS............................23
3.1 Covenants of the Company....................................23
3.2 Advice of Changes; Government Filings.......................25
3.3 Financing Related Cooperation...............................25
ARTICLE 4
ADDITIONAL AGREEMENTS................................................26
4.1 Preparation of the Proxy Statement; Schedule 13E; the
Company Shareholders Meeting................................26
4.2 Access to Information.......................................27
4.3 Approvals and Consents; Cooperation.........................28
4.4 Acquisition Proposals.......................................29
4.5 Employee Benefits...........................................30
4.6 Fees and Expenses...........................................31
4.7 Indemnification; Directors' and Officers' Insurance.........31
4.8 Public Announcements........................................32
4.9 Further Assurances..........................................32
4.10 Disposition of Litigation...................................32
4.11 Delisting...................................................33
ARTICLE 5
CONDITIONS PRECEDENT.................................................33
5.1 Conditions to Each Party's Obligation to Effect the Merger..33
5.2 Conditions to the Obligations of Holdings and Merger Sub
to Effect the Merger........................................33
5.3 Conditions to the Obligations of the Company to Effect
the Merger..................................................34
ARTICLE 6
TERMINATION AND AMENDMENT............................................35
6.1 Termination by Either the Company or Holdings...............35
6.2 Termination by Holdings.....................................35
6.3 Termination by the Company..................................36
6.4 Effect of Termination.......................................36
6.5 Amendment...................................................38
6.6 Extension; Waiver...........................................38
ARTICLE 7
GENERAL PROVISIONS...................................................38
7.1 Non-Survival of Representations, Warranties and Agreements;
No Other Representations and Warranties.....................38
7.2 Notices.....................................................38
7.3 Interpretation..............................................40
7.4 Counterparts................................................41
7.5 Entire Agreement; No Third Party Beneficiaries; Liability...41
7.6 Governing Law...............................................41
7.7 Severability................................................41
7.8 Assignment..................................................41
7.9 Enforcement.................................................42
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CROSS REFERENCES
Section
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Acquisition Proposal..................................................... 4.4(e)
Agreement...............................................................Preamble
Articles of Merger...........................................................1.3
Banc of America Bridge................................................... 2.2(c)
Bank Commitment Letter................................................... 2.2(c)
Bank of America.......................................................... 2.2(c)
CERCLA................................................................ 2.1(n)(i)
Certificate.............................................................. 1.9(c)
Closing......................................................................1.2
Closing Date.................................................................1.2
Code..................................................................... 2.1(h)
Commitment Letters....................................................... 2.2(c)
Company.................................................................Preamble
Company Benefit Plans................................................. 2.1(l)(i)
Company Board...........................................................Recitals
Company Common Stock....................................................Recitals
Company Disclosure Schedule..................................................2.1
Company Material Contracts............................................... 2.1(r)
Company Participants.................................................. 2.1(l)(i)
Company Representatives.................................................. 4.4(a)
Company SEC Reports..........................................................2.1
Company Shareholders Meeting............................................. 4.1(a)
Company Voting Debt................................................. 2.1(b)(iii)
Confidentiality Agreement....................................................4.2
Dissenting Shares...........................................................1.14
Effective Date...............................................................1.3
Effective Time...............................................................1.3
Environmental, Health, and Safety Requirements....................... 2.1(n)(ii)
ERISA................................................................. 2.1(l)(i)
Exchange Act............................................................ 1.11(c)
Executive Incentive Plan....................................................1.10
Executive Performance Plan..................................................1.10
Expense Payment.......................................................... 6.4(b)
Expenses.....................................................................4.6
Financing................................................................ 2.2(c)
Funds................................................................... 1.11(a)
GAAP.................................................................. 2.1(d)(i)
Governmental Entity..................................................... 1.13(b)
Holdings................................................................Preamble
Holdings Disclosure Schedule.................................................2.2
HSR Act............................................................. 2.1(c)(iii)
Indemnified Parties...................................................... 4.7(c)
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Indemnified Party........................................................ 4.7(c)
Intellectual Property................................................. 2.1(m)(i)
Investors...............................................................Recitals
Leases................................................................ 2.1(k)(i)
Liens................................................................ 2.1(b)(ii)
Management Equity Agreements............................................Recitals
Marathon................................................................. 2.2(c)
Marathon Fund Commitment Letter.......................................... 2.2(c)
Material Adverse Effect.................................................. 2.1(a)
MBCA.........................................................................1.1
Merger..................................................................Recitals
Merger Sub..............................................................Preamble
NASDAQ.............................................................. 2.1(c)(iii)
Option(s)...................................................................1.10
Option Plans................................................................1.10
Ordinary Course...................................................... 2.1(d)(ii)
Organizational Documents................................................. 2.1(a)
Other Equity Agreements.................................................Recitals
Owned Real Property................................................... 2.1(k)(i)
Paying Agent............................................................ 1.11(a)
Permits.................................................................. 2.1(f)
Person.................................................................. 1.11(c)
Price Per Share.......................................................... 1.9(c)
Proxy Statement....................................................... 2.1(e)(i)
Required Approvals...........................................................4.3
Schedule 13E-3........................................................... 4.1(c)
SEC..........................................................................2.1
Securities Act...................................................... 2.1(c)(iii)
Share Awards.......................................................... 2.1(b)(i)
Special Committee.......................................................Recitals
Special Meeting.......................................................... 6.1(d)
Subsidiary............................................................ 2.1(b)(i)
Superior Proposal........................................................ 4.4(f)
Surviving Corporation........................................................1.1
SWDA.................................................................. 2.1(n)(i)
Tax, Taxes, Taxable..................................................... 1.11(c)
Tax Returns.............................................................. 2.1(h)
Terminating Company Breach............................................... 6.2(b)
Terminating Holdings Breach.............................................. 6.3(a)
Termination Fee.......................................................... 6.4(c)
U.S. Bancorp Piper Jaffray............................................... 2.1(o)
Vestar................................................................... 2.2(c)
Vestar Commitment Letter................................................. 2.2(c)
Violation............................................................ 2.1(c)(ii)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 21, 2000
(this "Agreement"), by and among M-Foods Holdings, Inc., a Delaware corporation
("Holdings"), Protein Acquisition Corp., a Minnesota corporation and a wholly
owned subsidiary of Holdings ("Merger Sub"), and Michael Foods, Inc., a
Minnesota corporation (the "Company").
W I T N E S S E T H :
WHEREAS, Merger Sub and the Company have each determined that it is
in their respective best interests for Merger Sub to acquire the Company, upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective boards of directors of Holdings, Merger Sub
and the Company each have approved this Agreement, the Merger and the other
transactions contemplated by this Agreement, with each share of the Company's
common stock, par value $0.01 per share (the "Company Common Stock"), issued and
outstanding immediately prior to the Effective Time being cancelled,
extinguished and converted into and becoming a right to receive a price per
share equal to the Price Per Share, subject to the terms and conditions set
forth herein;
WHEREAS, as of the date hereof, (1) certain executives of the
Company will enter into letter agreements with M-Foods Investors, LLC, a
Delaware limited liability company ("Investors"), pursuant to which such persons
agree to execute, immediately prior to the Closing, certain agreements (the
"Management Equity Agreements") which will provide for, among other things, (a)
the cancellation of a portion of their options to purchase Company Common Stock
as of the Effective Date in exchange for rights under a deferred compensation
arrangement with Holdings and (b) the purchase of membership interests in
Investors by such persons and (2) certain beneficial and record shareholders of
the Company will enter into letter agreements with Investors pursuant to which
such persons agree to execute, immediately prior to the Closing, certain
agreements (the "Other Equity Agreements") which will provide that, among other
things, such persons will exchange shares of the Company Common Stock they hold
for a price per share equal to the Price Per Share and membership interests in
Investors;
WHEREAS, as soon as may be permitted after satisfaction or waiver of
the conditions set forth herein, Merger Sub shall be merged with and into the
Company (the "Merger") in accordance with this Agreement and the relevant
provisions of the MBCA, and the surviving corporation of the Merger shall be the
Company; and
WHEREAS, the board of directors of the Company (the "Company
Board"), subsequent to the unanimous recommendation of a special committee of
the Company Board (the "Special Committee"), has determined that this Agreement
and the transactions contemplated hereby, including the Merger, are fair to and
in the best interests of the shareholders of the Company, has declared the
Merger and this Agreement to be advisable and has recommended approval of the
Merger and adoption of this Agreement by the shareholders of the Company.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, Merger Sub shall be merged with and into the Company at
the Effective Time. Following the Merger, the separate corporate existence of
Merger Sub shall cease and the Company, as a wholly owned subsidiary of
Holdings, shall continue as the surviving corporation (the "Surviving
Corporation"). The Merger will be effected pursuant to the provisions of, and
with the effect provided in, the Minnesota Business Corporation Act (the
"MBCA").
1.2 Closing. The closing of the Merger (the "Closing") will take
place as soon as practicable, but no later than the fourth business day, after
satisfaction or waiver (as permitted by this Agreement and applicable law) of
the conditions (excluding conditions that, by their terms, cannot be satisfied
until the Closing Date) set forth in Article 5 (the "Closing Date"), unless
another time or date is agreed to in writing by the parties hereto. The Closing
shall be held at the offices of Kirkland & Ellis, 200 East Randolph Drive,
Chicago, Illinois 60601, unless another place is agreed to in writing by the
parties hereto.
1.3 Effective Date and Time. Upon the Closing, the parties shall
file with the Secretary of State of the State of Minnesota appropriate articles
of merger or other appropriate documents (in any such case, the "Articles of
Merger") executed in accordance with the relevant provisions of the MBCA and
shall make all other filings, recordings or publications required under the MBCA
in connection with the Merger. The Merger shall become effective as of the date
and time of such filings or such other time after such filings as the parties
hereto shall agree to in the Articles of Merger (the "Effective Time"). The date
on which the Effective Time shall occur is referred to as the "Effective Date."
1.4 Effects of the Merger. At the Effective Time, the separate
corporate existence of Merger Sub shall cease and the Surviving Corporation
shall continue its corporate existence under the laws of the State of Minnesota.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers, immunities and
franchises of Merger Sub and the Company shall vest in the Surviving
Corporation, and all debts, liabilities, obligations and duties of Merger Sub
and the Company shall become the debts, liabilities, obligations and duties of
the Surviving Corporation.
1.5 Subsequent Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Merger Sub acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this
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Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of either the
Company or Merger Sub, all such deeds, bills of sale, assignments and assurances
and to take, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out the transactions contemplated by this Agreement.
1.6 Articles of Incorporation. Subject to Section 4.7(a), at the
Effective Time, the articles of incorporation of the Company (as amended and
restated in substantially the form set forth in Exhibit A hereto) shall be the
articles of incorporation of the Surviving Corporation, until thereafter amended
as provided by the MBCA and the provisions of such articles of incorporation.
1.7 Bylaws. At the Effective Time, the bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, shall become the bylaws of the
Surviving Corporation until thereafter amended as provided by the MBCA, the
provisions of the articles of incorporation of the Surviving Corporation and
such bylaws.
1.8 Officers and Directors of Surviving Corporation. The officers of
the Company immediately prior to the Effective Time shall be, from and after the
Effective Time, the officers of the Surviving Corporation, until the earlier of
their resignation or removal or otherwise ceasing to be an officer. The
directors of Merger Sub immediately prior to the Effective Time shall be, from
and after the Effective Time, the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
1.9 Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of the
Company Common Stock or any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each share of capital stock of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and become one fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock; Merger Sub-Owned Stock. Each
share of the Company Common Stock that is issued and outstanding immediately
prior to the Effective Time and owned by Merger Sub or by the Company or any
direct or indirect wholly owned subsidiary of the Company, shall be cancelled,
extinguished and retired, and no payment of any consideration shall be made with
respect thereto.
(c) Company Common Stock. Each share of the Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares to be cancelled in accordance with Section 1.9(b) and any Dissenting
Shares) will, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive $30.10 in cash per share
of Company Common Stock without any interest thereon (the "Price Per Share"),
subject to
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appropriate adjustment for any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange with respect to the Company
Common Stock occurring before the Effective Time. As of the Effective Time, all
such shares of the Company Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a stock certificate which immediately prior to the Effective Time represented
any such shares of the Company Common Stock (a "Certificate") shall cease to
have any rights with respect thereto, except the right to receive, upon the
surrender of such Certificates as provided in Section 1.11, the Price Per Share
in cash.
1.10 Options. Except as may be otherwise agreed in writing between
the Company and any holder of any Option (as hereinafter defined), upon the
consummation of the Merger, each option to acquire Company Common Stock
outstanding immediately prior to the Effective Time under the Company's 1994
Executive Incentive Plan, as amended (the "Executive Incentive Plan"), the
Company's 1997 Stock Incentive Plan, as amended, the Company's 1994 Executive
Performance Stock Award Plan, as amended (the "Executive Performance Plan"), the
Company's 1987 Non-Qualified Stock Option Plan, as amended and the Company's
Stock Option Plan for Non-Employee Directors, as amended (such plans referred to
herein as the "Option Plans"), whether vested or unvested (each, an "Option,"
collectively, the "Options"), shall automatically become immediately vested and
exercisable and each holder of an Option shall have the right to receive from
the Surviving Corporation a cash payment (less applicable federal, state and
local withholding taxes) in an aggregate amount equal to the difference, if any,
between the Price Per Share less the applicable exercise price per share of
Company Common Stock applicable to such Option for all Company Common Stock
subject to the Option as expressly stated in the applicable Option Plan, stock
option agreement or other agreement. Options with an exercise price equal to or
greater than the Price Per Share will be cancelled without any consideration.
The Company shall use its reasonable best efforts (including, without
limitation, giving requisite notices to holders of Options advising them of such
accelerated vesting and rights pursuant to this Section 1.10) to fully advise
holders of Options of their rights under this Agreement and the Options, to
facilitate their timely exercise of such rights and to effectuate the provisions
of this Section 1.10. From and after the Effective Time, other than as expressly
set forth in this Section 1.10, no holder of an Option shall have any other
rights in respect thereof other than to receive payment for his or her Options
as set forth in this Section 1.10, and the Company shall take all necessary
actions to terminate effective as of the Effective Time the Company's Option
Plans, stock option agreements and similar arrangements.
1.11 Surrender and Payment.
(a) Paying Agent. Before the Effective Time, Holdings shall
designate a bank or trust company reasonably acceptable to the Company to act as
agent for the record holders of shares of the Company Common Stock in connection
with the Merger (the "Paying Agent"). At or before the Effective Time, Holdings
will deposit, or cause Merger Sub to deposit, as applicable, in trust for the
benefit of the holders of Certificates with the Paying Agent immediately
available funds (the "Funds") in an amount necessary to make the payments for
the shares of the Company Common Stock contemplated by this Agreement on a
timely basis. The Paying Agent will be authorized, at the request of Holdings,
to invest any Funds held by it in (i) investment grade money market instruments,
(ii) direct obligations of the United States of America, (iii) obligations for
which the
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full faith and credit of the United States of America is pledged to provide for
the payment of principal and interest, (iv) commercial paper rated the highest
quality by either Moody's Investors Services, Inc. or Standard & Poor's
Corporation or (v) certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $10 billion, in
each case having maturities not to exceed 30 days and as designated by Holdings,
with any interest earned thereon being paid to Holdings at the earlier of (A)
payment in full of the aggregate Price Per Share to all record holders of
Company Common Stock immediately prior to the Effective Time of the Merger and
(B) 180 days after the Effective Time; provided that no loss on investments made
pursuant to this Section 1.11(a) shall relieve Holdings of its obligations to
pay the Price Per Share to all record holders of Company Common Stock as
provided in Article 1 of this Agreement.
(b) Surrender of Certificates. Promptly (and in any event not later
than five (5) business days) after the Effective Time, Holdings and the
Surviving Corporation will cause the Paying Agent to mail and/or make available
to each record holder of Certificates that immediately prior to the Effective
Time represented shares of the Company Common Stock (other than holders of
Certificates representing Dissenting Shares or representing shares covered by
Section 1.9(b)), a notice and letter of transmittal and instructions in standard
form for use in effecting the surrender of all Certificates held by such record
holder.
(c) Payment Procedures. Upon surrender to the Paying Agent of a
Certificate, together with such letter of transmittal duly executed and
completed, the Paying Agent shall pay to the holder of such Certificate the
aggregate Price Per Share attributable to the number of shares of the Company
Common Stock represented by such Certificate, and such Certificate will then be
cancelled. Until surrendered in accordance with the provisions of this Section
1.11, each Certificate (other than Certificates representing Dissenting Shares
and Certificates representing shares covered by Section 1.9(b)) will represent
for all purposes only the right to receive the aggregate Price Per Share
relating thereto. No interest shall accrue or be paid in respect of cash payable
upon the surrender of Certificates. After the Effective Time, holders of
Certificates shall cease to have any rights as shareholders of the Company,
except as provided herein or under applicable state corporation law. If any
payment of cash in respect of cancelled shares of the Company Common Stock is to
be paid to a Person other than the registered holder of the shares represented
by the Certificate or Certificates surrendered in exchange therefor, it shall be
a condition to such payment that the Certificate or Certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Paying Agent any transfer or
other Taxes required as a result of such payment to a Person other than the
registered holder of such shares or establish to the satisfaction of the Paying
Agent that such Tax has been paid or is not payable. Any consideration otherwise
payable pursuant to this Agreement shall be subject to all applicable federal,
state and local Tax withholding requirements. For purposes of this Agreement,
"Tax" (including, with correlative meaning, the terms "Taxes" and "Taxable")
means all federal, state, local and foreign income, profits, franchise, gross
receipts, environmental, customs duty, capital stock, severance, stamp, payroll,
sales, transfer, employment, unemployment disability, use, property,
withholding, excise, production, value added, occupancy and other taxes, duties
or assessments of any nature whatsoever, together with all interest, penalties,
fines and additions to tax imposed with respect to such amounts and any interest
in respect of such penalties and additions to tax. For purposes of this
Agreement, "Person" means an individual, corporation, partnership, limited
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liability company association, trust, unincorporated organization, entity or
group (as defined in the Securities and Exchange Act of 1934, as amended (the
"Exchange Act")).
(d) No Transfer. After the Effective Time, there will be no
transfers of shares of the Company Common Stock recorded on the stock transfer
books of the Surviving Corporation. If, after the Effective Time, Certificates
are presented to the Paying Agent or the Surviving Corporation for any reason
they will be cancelled and exchanged for the Price Per Share as provided in
Section 1.13(a) below.
1.12 Lost Certificates. If any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Paying Agent
shall issue in exchange for such lost, stolen or destroyed Certificate the Price
Per Share due to such Person as provided in Section 1.13(a) of this Agreement.
1.13 Unclaimed Merger Consideration.
(a) Transfer to Surviving Corporation. Any portion of the Funds made
available to the Paying Agent pursuant to Section 1.11(a) that remain unclaimed
by holders of Certificates that immediately prior to the Effective Time
represented shares of Company Common Stock for 180 days after the Effective Time
will be transferred to the Surviving Corporation upon demand. Any holder of
Certificates who has not theretofore complied with this Article 1 will
thereafter look only to the Surviving Corporation for payment of the Price Per
Share in accordance with this Agreement upon surrender of such Certificates.
(b) No Escheat of Remaining Funds. None of Holdings, Merger Sub, the
Company or the Paying Agent will be liable to any Person in respect of any cash
delivered from the Funds to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates have not been
surrendered before seven years after the Effective Time (or immediately before
such earlier date on which any payment pursuant to this Section 1.13 would
otherwise escheat to or become the property of any Governmental Entity), the
aggregate Price Per Share payable in respect to such Certificates will, unless
otherwise provided by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any Person previously
entitled thereto. For purposes of this Agreement, "Governmental Entity" means
any supranational, foreign, national, state, municipal or local government, any
instrumentality, subdivision, court, administrative agency or commission or
other authority thereof, or any quasi-governmental or private body exercising
any regulatory, taxing or other governmental or quasi-governmental authority.
(c) Merger Consideration. Any portion of the Funds made available to
the Paying Agent pursuant to Section 1.11(a) to pay the Price Per Share for
shares of the Company Common Stock issued and outstanding immediately prior to
the Effective Time for which appraisal rights have been perfected shall be
returned to Holdings, upon demand.
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1.14 Dissenting Shares. Notwithstanding Section 1.9 hereof, shares
of the Company Common Stock issued and outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has properly demanded and perfected such
holder's right to dissent from the Merger and to be paid the fair value of such
shares in accordance with Sections 302A.471 and 302A.473 of the MBCA (and who
has neither effectively withdrawn nor lost his right to dissent) ("Dissenting
Shares"), shall not be converted into a right to receive cash pursuant to
Section 1.9, and the holder thereof shall be entitled to only such rights as are
granted by the MBCA. If after the Effective Time such holder fails to perfect or
withdraws or otherwise loses his right to dissent, such shares of Company Common
Stock shall be treated as if they had been converted as of the Effective Time
into the right to receive cash as provided in Section 1.9, without interest
thereon. The Company shall give Holdings reasonably prompt notice of any demands
for payment received by the Company under Sections 302A.471 and 302A.473 of the
MBCA, and Holdings shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Holdings, make any payment with respect to, or settle
or offer to settle, any such demands.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. Except as set
forth in the Company Disclosure Schedule delivered by the Company to Holdings at
or prior to the execution and delivery of this Agreement (the "Company
Disclosure Schedule") (the Company Disclosure Schedule is arranged by sections
corresponding to the lettered and numbered sections contained in this Section
2.1 and the disclosure in any one section of the Company Disclosure Schedule
shall qualify only that particular section of this Section 2.1 unless a
cross-reference is made to another lettered or numbered section to which such
disclosure also qualifies or the context of such disclosure makes it reasonably
clear, if read in the context of such other lettered or numbered section, that
such disclosure affects or modifies such other lettered or numbered section) or
any reports, schedules, forms, statements and other documents required to be
filed by the Company with the Securities and Exchange Commission (the "SEC")
since December 31, 1997 through the date of this Agreement, including all
exhibits thereto (the "Company SEC Reports"), the Company represents and
warrants to Holdings and Merger Sub:
(a) Organization, Standing and Power. Each of the Company and each
of its Subsidiaries (i) has been duly organized and is validly existing and in
good standing under the laws of its jurisdiction of organization, (ii) is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary, (iii) has all requisite corporate power and authority
to own or lease and operate its properties and assets, and to carry on its
business as now conducted and (iv) has obtained all licenses, permits,
franchises and other governmental authorizations necessary to the ownership or
operation of its properties or the conduct of its business as now conducted,
except, in the cases of clauses (i) (with respect to Subsidiaries only), (ii),
(iii) and (iv), as would not reasonably be expected to have a Material Adverse
Effect on the Company. For purposes of this Agreement, "Material Adverse Effect"
means, with respect to any entity, any adverse change, circumstance or
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effect that, individually or aggregated with other changes, circumstances and
effects, is materially adverse to the business, operations, cash flows, assets,
liabilities, condition (financial or otherwise), or results of operations of
such entity and its Subsidiaries taken as a whole. True and complete copies of
the Organizational Documents, as amended and currently in force, and all
corporate minute books and records of the Company and each of its Subsidiaries
have been furnished by the Company to Holdings for inspection to the extent
requested by Holdings. For purposes of this Agreement, "Organizational
Documents" means, with respect to any entity, the certificate of incorporation,
bylaws and/or other similar governing documents of such entity.
(b) Capital Structure.
(i) The authorized capital stock of the Company consists
solely of (A) 40,000,000 shares of the Company Common Stock, of which
18,289,484 shares are outstanding as of December 20, 2000, and (B)
10,000,000 shares of undesignated shares, of which no shares are
outstanding. All issued and outstanding shares of the Company Common Stock
are duly authorized, validly issued, fully paid and nonassessable, and
were not issued in violation of any preemptive rights. No Subsidiary of
the Company owns any capital stock of the Company. There are no
outstanding options, warrants or other rights (including preemptive
rights) to acquire capital stock of the Company other than Options
representing in the aggregate the right to purchase 1,814,915 shares (all
of which have a per share exercise price that is less than the Price Per
Share) of the Company Common Stock under the Option Plans and share awards
outstanding under the Executive Incentive Plan and Executive Performance
Plan (the "Share Awards"). Section 2.1(b)(i) of the Company Disclosure
Schedule identifies, as of the date indicated thereon, the holder of each
outstanding Option, the number of shares of Company Common Stock issuable
upon exercise of each Option and the exercise price and expiration date
thereof. Section 2.1(b)(i) of the Company Disclosure Schedule also
identifies as of the date indicated thereon, the number of shares of
Company Common Stock subject to the Share Awards and the recipients
thereof. For purposes of this Agreement, "Subsidiary" when used with
respect to any party means any corporation or other organization, whether
incorporated or unincorporated, (i) of which such party or any other
Subsidiary of such party is a general partner (excluding partnerships, the
general partnership interests of which held by such party or any
Subsidiary of such party do not have a majority of the voting and economic
interests in such partnership) or (ii) at least a majority of the
securities or other interests of which having by their terms ordinary
voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party
or by any one or more of its Subsidiaries, or by such party and one or
more of its Subsidiaries.
(ii) All of the issued and outstanding shares of capital stock
of the Company's Subsidiaries are duly authorized, validly issued, fully
paid and nonassessable and are owned directly or indirectly by the Company
free and clear of any liens, claims, encumbrances, restrictions,
preemptive rights or any other claims of any third party ("Liens"). Except
for the capital stock of its Subsidiaries, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in
any Person.
-8-
(iii) No bonds, debentures, notes or other indebtedness of the
Company having, or convertible into other securities having, the right to
vote on any matters on which shareholders may vote ("Company Voting Debt")
are issued or outstanding.
(iv) Except for the Options and the Share Awards, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of
its Subsidiaries is a party or by which any of them is bound obligating
the Company or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or any of its Subsidiaries or
obligating the Company or any of its Subsidiaries to issue, grant, extend
or enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or
its Subsidiaries. There is no voting trust or other agreement or
understanding to which the Company or any of its Subsidiaries is a party
or is bound, or, to the knowledge of the Company, to which any shareholder
of such entity is a party or is bound, with respect to the voting of the
capital stock or other voting securities of the Company or any of its
Subsidiaries, other than agreements contemplated by this Agreement. The
Company has the ability to effect any action requiring the approval of the
shareholders of any of its Subsidiaries and to designate all of the
members of the board of directors of each of its Subsidiaries.
(c) Authority; No Conflicts.
(i) The Company has all requisite corporate power and
corporate authority to execute and deliver this Agreement and, subject to
the adoption of this Agreement by the requisite vote of the holders of the
Company Common Stock, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject in the case
of the consummation of the Merger to any required adoption of this
Agreement by the holders of the Company Common Stock. Subject to the
adoption of this Agreement by the requisite vote of the holders of the
Company Common Stock, this Agreement has been duly executed and delivered
by the Company and (assuming the due authorization and valid execution and
delivery of this Agreement by Holdings and Merger Sub) constitutes a valid
and binding agreement of the Company, enforceable against it in accordance
with its terms.
(ii) The execution and delivery of this Agreement by the
Company does not or will not, as the case may be, and the consummation by
the Company of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or constitute a default (with or
without notice or lapse of time, or both) under, or give rise to a right
of termination, amendment, cancellation or acceleration of any material
obligation or the loss of a material benefit under, or the creation of a
Lien on any assets pursuant to (any such conflict, violation, default,
right of termination, amendment, cancellation or acceleration, loss or
creation, a "Violation"): (A) any provision of the Organizational
Documents of the Company or any of its Subsidiaries or (B) except for such
Violations as
-9-
would not reasonably be expected to have a Material Adverse Effect on the
Company or impair the ability of the Company to perform its material
obligations under this Agreement or delay in any material respect or
prevent the consummation of the Merger, and subject to obtaining or making
the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in Section 2.1(c)(iii) below, any
loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession,
franchise or license binding upon or held by the Company or any Subsidiary
or any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company, its Subsidiaries or their respective
properties or assets.
(iii) No material consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity
is required by or with respect to the Company or any of its Subsidiaries
in connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions
contemplated hereby, except for those required under or in relation to (A)
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (B) state securities or "blue sky" laws, (C) the Securities
Act of 1933, as amended (the "Securities Act"), (D) the Exchange Act, (E)
the MBCA with respect to the filing and recordation of appropriate
articles of merger or other documents, (F) rules and regulations of the
NASDAQ National Market ("NASDAQ") and (G) any applicable federal and state
laws governing the transfer of food processing and distribution facilities
subject to licensing or permit requirements, inspection agreements, and
similar facility-wide approvals (including, but not limited to, the Egg
Products Inspection Act and the Minnesota Consolidated Food Licensing
Law).
(d) Reports and Financial Statements.
(i) The Company has filed all required Company SEC Reports.
None of the Company's Subsidiaries is required to file any form, report or
other document with the SEC. None of the Company SEC Reports, as of their
respective dates (and, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Each of the financial statements (including the related notes) included in
the Company SEC Reports presents fairly, in all material respects, the
consolidated financial position and consolidated results of operations and
cash flows of the Company and its Subsidiaries as of the respective dates
or for the respective periods set forth therein, all in conformity with
generally accepted accounting principles ("GAAP") consistently applied
during the periods involved except as otherwise noted therein, and
subject, in the case of the unaudited interim financial statements, to
normal year-end adjustments and exceptions permitted by Form 10-Q under
the Exchange Act. Since December 31, 1999, there has been no material
change in the Company's accounting methods or principles except as
described in the notes to the consolidated financial statements of the
Company contained in the Company SEC Reports. All of such Company SEC
Reports, as of their respective dates (and as of the date of any amendment
to the respective Company SEC Report), complied as to form in all material
respects with the applicable requirements
-10-
of the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder.
(ii) Except as set forth in the consolidated balance sheets
(and notes thereto) of the Company and its consolidated Subsidiaries
included in the Company SEC Reports, and except for liabilities or
obligations incurred in the Ordinary Course or in connection with the
transactions contemplated by this Agreement since September 30, 2000,
neither the Company nor any of its Subsidiaries has incurred any
liabilities or obligations of any nature which would reasonably be
expected to have a Material Adverse Effect on the Company. For purposes of
this Agreement, "Ordinary Course" means, with respect to any entity, any
actions taken in the regular and ordinary course of that entity's
business, consistent in all material respects with past practices.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by the
Company in writing specifically for inclusion or incorporation by
reference in (A) the proxy or information statement related to the meeting
of the Company's shareholders to be held in connection with the Merger and
the transactions contemplated by this Agreement (the "Proxy Statement") or
(B) the Schedule 13E-3 will, (1) at the respective times such documents
are filed, and, with respect to the Proxy Statement when first published,
sent or given to the shareholders of the Company, contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading or
(2) in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Company Shareholders Meeting and at
the Effective Time, contain an 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 made therein, in light of the circumstances
under which they are made, not misleading or necessary to correct any
statement in any earlier communication with respect to any solicitation of
proxies for the Company Shareholders Meeting which shall have become false
or misleading. The Proxy Statement when filed will comply as to form in
all material respects with the applicable requirements of the Exchange Act
and the Securities Act and the rules and regulations of the SEC
thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
2.1(e), no representation or warranty is made by the Company with respect
to (A) statements made or incorporated by reference in the Proxy Statement
and the Schedule 13E-3 based on information supplied by Holdings or Merger
Sub for inclusion or incorporation by reference therein or (B) any
forward-looking information which may have been supplied by the Company
and incorporated into the Proxy Statement or the Schedule 13E-3.
(f) Compliance with Applicable Laws; Regulatory Matters. The Company
and its Subsidiaries hold all permits, licenses, certificates, franchises,
registrations, variances, exemptions, orders and approvals of all Governmental
Entities ("Permits") which are necessary to each of them to own, lease and
operate its properties or to carry on its business as now being conducted,
except for such failures to have received such Permits as would not reasonably
be
-11-
expected to have a Material Adverse Effect on the Company. The Company and its
Subsidiaries and the Owned Real Property and the Leases are in compliance with
the terms of such Permits, except where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect on the Company. The
businesses of the Company and its Subsidiaries are not being and have not been
conducted in violation of any law, ordinance, regulation, judgment, decree,
injunction, rule or order of any Governmental Entity, except for violations
which would not reasonably be expected to have a Material Adverse Effect on the
Company. No investigation by any Governmental Entity with respect to the Company
or any of its Subsidiaries is pending or, to the knowledge of the Company,
threatened, other than investigations which would not reasonably be expected to
have a Material Adverse Effect on the Company.
(g) Litigation. There is no litigation, arbitration, grievance,
claim, suit, action, investigation or proceeding pending or, to the knowledge of
the Company, threatened, against or affecting the Company or any of its
Subsidiaries or any of their respective assets which would reasonably be
expected to have a Material Adverse Effect on the Company. There is no judgment,
award, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of its Subsidiaries which
would reasonably be expected to have a Material Adverse Effect on the Company.
(h) Taxes. (i) The Company and each of its Subsidiaries have duly
and timely filed (taking into account any extension of time within which to
file) all material Tax Returns required to be filed by any of them, and all such
filed Tax Returns are complete and accurate in all material respects, (ii) the
Company and each of its Subsidiaries have paid all Taxes that are required to be
paid in respect to the periods covered by such returns whether or not shown on
such filed Tax Returns or that the Company or any of its Subsidiaries are
obligated to withhold from amounts owing to any shareholder, employee, creditor
or third party, except with respect to matters contested in good faith and for
which adequate reserves have been established in accordance with GAAP as
reflected in the most recent consolidated balance sheet or for such amounts that
would not reasonably be expected to have a Material Adverse Effect on the
Company, (iii) there are no pending or, to the knowledge of the Company,
threatened audits, examinations, investigations or other proceedings in respect
of Taxes or Tax matters relating to the Company or any of its Subsidiaries
which, if determined adversely to the Company or any of its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect on the Company, (iv)
there are no deficiencies or claims for any Taxes that have been proposed,
asserted or assessed against the Company or any of its Subsidiaries which, if
such deficiencies or claims were finally resolved against the Company or any of
such Subsidiaries, would reasonably be expected to have a Material Adverse
Effect on the Company, (v) there are no material Liens for Taxes upon the assets
of the Company or any of its Subsidiaries, other than Liens for current Taxes
not yet due and payable and Liens for Taxes that are being contested in good
faith by appropriate proceedings and (vi) none of the Company or its
Subsidiaries has made an election under Section 341(f) of the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder
(the "Code"). 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 past five years. Neither the Company nor any of its
Subsidiaries is a party to, bound by or has any obligation under, any Tax
sharing agreement or similar contract or arrangement or any agreement that
obligates it to make any payment computed by reference to the Taxes, taxable
income or taxable losses of any other Person (other than contracts
-12-
or arrangements entered into with employees, consultants or independent
contractors or in connection with purchase or sale agreements or sale
leasebacks, which contracts and arrangements would not reasonably be expected to
have a Material Adverse Effect on the Company). The Company and its Subsidiaries
(A) are not, and have not been, a member of an affiliated group filing a
consolidated federal income Tax Return other than a group the common parent of
which is the Company and (B) have no liability for Taxes of any Person under
Treasury Regulation 1.1502-6(a) (or any similar provision of state, local or
foreign law), or as a transferee or successor, by contract or otherwise. No
claim has ever been made by a taxing authority in a jurisdiction where the
Company or any of its Subsidiaries does not file Tax Returns that such Person is
or may be subject to taxation by such jurisdiction which, if determined
adversely to the Company or such Subsidiary, would reasonably be expected to
have a Material Adverse Effect on the Company. None of the Company or its
Subsidiaries has consented to extend the time, or is the beneficiary of any
extension of time, in which any Tax may be assessed or collected by any taxing
authority. None of the Company or its Subsidiaries will be required to include
any item of income in, or exclude any item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date as a
result of any (i) change in method of accounting for a taxable period ending on
or prior to the Closing Date under Code ss. 481(c) (or any corresponding or
similar provision of state, local or foreign income Tax law), (ii) "closing
agreement" as described in Code ss. 7121 (or any corresponding or similar
provision of state, local or foreign income Tax law), (iii) deferred
intercompany gain or any excess loss account described in Treasury Regulations
under Code ss. 1502 (or any corresponding or similar provision of state, local
or foreign income Tax law) or (iv) installment sale made prior to the Closing
Date. For purposes of this Agreement, "Tax Return" means all returns and reports
(including elections, claims, declarations, disclosures, schedules, estimates,
computations and information returns) required to be supplied to a Tax authority
in any jurisdiction relating to Taxes, including any amendments thereof.
(i) Absence of Certain Changes or Events. Since September 30, 2000
other than in connection with or arising out of this Agreement and the
transactions contemplated hereby, the Company and its Subsidiaries have
conducted their respective businesses in the Ordinary Course and there has not
been (i) any condition, event or occurrence which has had or would reasonably be
expected to have a Material Adverse Effect on the Company or (ii) any action
which, if it had been taken after the date hereof, would have required Holdings'
consent under Section 3.1.
(j) Vote Required. The affirmative vote of the holders of a majority
of the voting power of all shares of the Company Common Stock entitled to vote
is the only vote of the holders of any class or series of the capital stock of
the Company necessary to approve this Agreement and the transactions
contemplated hereby.
(k) Real Property.
(i) Section 2.1(k)(i) of the Company Disclosure Schedule sets
forth the street address of each parcel of real property owned by the
Company or one of its Subsidiaries, the "Owned Real Property"). The
Company and its Subsidiaries have good and marketable fee simple title to
the Owned Real Property, free and clear of all Liens, except where such
impairment to title would not reasonably be expected to have a Material
Adverse Effect on the Company. Section 2.1(k)(i) of the Company Disclosure
Schedule sets forth a
-13-
true and complete list of all leases, subleases, licenses and other
agreements (true and correct copies of which have been delivered to
Holdings) pursuant to which the Company and its Subsidiaries occupy and
use any real property (the "Leases"). The Leases are in full force and
effect in all material respects, free and clear of all Liens, except for
such exceptions as would not reasonably be expected to have a Material
Adverse Effect on the Company. To the best knowledge of the Company, no
parties to the Leases are in material breach or default of such leases.
(ii) Neither the Company nor any of its Subsidiaries is
obligated under or bound by any agreement, option, right of first refusal,
purchase contract, or other contractual right to sell, lease or dispose of
any Owned Real Property or any portions thereof or interests therein which
property, portions and interests, individually or in the aggregate, are
material to the conduct of the business of the Company or its Subsidiaries
as currently conducted. Neither the Company nor any of its Subsidiaries or
any affiliates of any of the foregoing has an ownership, financial or
other interest in the landlord under any of the Leases which exceeds a 50%
ownership, financial or other interest in such landlord. The Owned Real
Property and the Leases comprise all of the real property used in the
Company's and its Subsidiaries' business.
(l) Employee Benefit Plans; Labor Matters.
(i) Section 2.1(l)(i) of the Company Disclosure Schedule
contains a true and complete list of each written material (a) employee
benefit plan, policy and program (including, without limitation, each
"employee benefit plan," within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
each "multiemployer plan" within the meaning of Section 3(37) of ERISA)
sponsored, maintained or contributed to by the Company or any of its
Subsidiaries for the benefit of employees, directors, consultants or
independent contractors and (b) benefit arrangement and contract between
the Company or its Subsidiaries and any current or former employees (which
have or have had an annual base salary of more than $100,000), directors,
consultants and independent contractors, under which any such current or
former employee, director, consultant or independent contractor of the
Company or any of its Subsidiaries (the "Company Participants") has any
present or future right to material benefits (collectively, the "Company
Benefit Plans").
(ii) (a) Each of the Company Benefit Plans has been
established, operated and administered in compliance with applicable law,
including but not limited to ERISA and the Code, except where such
noncompliance would not reasonably be expected to have a Material Adverse
Effect on the Company, (b) each of the Company Benefit Plans intended to
be "qualified" within the meaning of Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue
Service to such effect and the Company knows of no event that would cause
the disqualification of any such Company Benefit Plan, (c) no Company
Benefit Plan provides welfare or insurance benefits (whether or not
insured) to Company Participants or their dependents or beneficiaries
beyond the Company Participant's termination of employment or termination
of service of non-employees with the Company or any of its Subsidiaries,
which benefits would reasonably be expected to have
-14-
a Material Adverse Effect on the Company, other than coverage mandated by
applicable law or benefits the full cost of which is borne by the Company
Participant (or his or her dependent or beneficiary), (d) neither the
Company nor any Subsidiary nor any other entity, that together with the
Company or any Subsidiary is treated as a single employer under Section
414 of the Code, maintains, contributes to, or has any material liability
with respect to a "multiemployer plan," as such term is defined in Section
3(37) or 4001 of ERISA, nor does such entity have any pension benefit plan
subject to Section 412 of the Code or Title IV of ERISA, (e) neither the
Company nor any of its Subsidiaries have engaged in a transaction with
respect to any Company Benefit Plan which to the Company's knowledge
subjects such entity to either a civil penalty assessed pursuant to
Sections 502(i) or 502(e) of ERISA or a Tax imposed pursuant to Section
4975 or 4976 of the Code, in each case which penalty or Tax would
reasonably be expected to have a Material Adverse Effect on the Company,
(f) to the knowledge of the Company, there are no pending or threatened
claims (other than routine claims for benefits) by, on behalf of or
against any of the Company Benefit Plans or any trusts related thereto,
which would reasonably be expected to have a Material Adverse Effect on
the Company, (g) no event has occurred and no condition exists that to the
Company's knowledge would subject the Company or any of its Subsidiaries
to any Tax, fine, lien, penalty or other liability (other than liabilities
incurred in the ordinary course of the plan's operations that are
reflected in the Company's financial statements) with respect to any
Company Benefit Plan imposed by ERISA or the Code, which would reasonably
be expected to have a Material Adverse Effect on the Company and (h) all
material contributions or other material amounts payable by the Company or
any of its Subsidiaries as of the Effective Time with respect to any
Company Benefit Plan in respect of current or prior plan years which are
required to be reflected in the Company's financial statements in
accordance with GAAP have been, in all material respects, paid or accrued
in accordance with GAAP.
(iii) Except as provided pursuant to this Agreement, neither
the execution, delivery or performance of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated
hereby shall (a) result in any payment becoming due to any Company
Participant, (b) increase any benefits otherwise payable under any Company
Benefit Plan, (c) result in any acceleration of the time of payment or
vesting of any benefits under any Company Benefit Plan or (d) violate the
provisions of any agreement between a Company Participant and the Company
or any of its Subsidiaries, except in each case where such payment,
increase, acceleration or violation would not reasonably be expected to
have a Material Adverse Effect on the Company.
(iv) (a) Neither the Company nor any of its Subsidiaries is a
party to any collective bargaining or other labor union contract and no
collective bargaining agreement is being negotiated by the Company or any
of its Subsidiaries, (b) there is no pending or to the knowledge of the
Company, threatened labor dispute, strike, work stoppage, lockout or other
labor controversy involving the Company or any of its Subsidiaries which
may interfere with the respective business activities of the Company or
any of its Subsidiaries, except where such dispute, strike or work
stoppage would not reasonably be expected to have a Material Adverse
Effect on the Company nor has the Company or any of its Subsidiaries
experienced any such labor controversy within the past three years, (c)
there is no pending
-15-
or, to the knowledge of the Company, threatened action, complaint,
arbitration, proceeding or investigation against the Company or any of its
Subsidiaries by or before (or that could be brought before) any court,
governmental agency, administrative agency, board, commission or
arbitrator brought by or on behalf of any prospective, current or former
employee, labor organization or other representative of employees of the
Company or any of its Subsidiaries which would reasonably be expected to
have a Material Adverse Effect on the Company (d) the Company and its
Subsidiaries are in compliance with all applicable laws, agreements, and
policies relating to employment, employment practices and terms and
conditions of employment except where such noncompliance would not
reasonably be expected to have a Material Adverse Effect on the Company
and (e) neither the Company nor any of its Subsidiaries has closed any
plant or facility, effectuated any layoffs of employees or implemented any
early retirement, separation or window program within the past year, nor
has the Company or any of its Subsidiaries planned or announced any such
action or program for the future.
(m) Intellectual Property.
(i) The Company or one of its Subsidiaries owns, or has the
right to use, pursuant to written license agreements set forth on Section
2.1(m) of the Company Disclosure Schedule, free and clear of all liens,
security interests or other encumbrances, all trademarks, tradenames,
service marks, Internet domain names, trade dress, patents, patent
applications or other applications for registration of intellectual
property, copyrights, technology, software, know-how, trade secrets and
processes used by the Company or any of its Subsidiaries in their
respective businesses as presently conducted or necessary therefor (the
"Intellectual Property"), except for those the failure to own or have such
legal right to use as would not reasonably be expected to have a Material
Adverse Effect on the Company.
(ii) No claim has been asserted and is pending by any Person
challenging the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, except for such matters
as would not reasonably be expected to have a Material Adverse Effect on
the Company.
(iii) The conduct of the Company's and its Subsidiaries'
businesses does not infringe on the intellectual property or other rights
of any Person, except for such claims and infringements that would not
reasonably be expected to have a Material Adverse Effect on the Company.
(iv) To the Company's knowledge, no third party has infringed
any of the Intellectual Property, except for such infringements as would
not reasonably be expected to have a Material Adverse Effect on the
Company.
(v) Except to the extent that it would not reasonably be
expected to have a Material Adverse Effect on the Company, the owners of
any Intellectual Property licensed to the Company have taken all
reasonably necessary and desirable actions to maintain and protect such
Intellectual Property.
-16-
(n) Environmental, Health, and Safety Matters.
(i) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, each of the Company and its
Subsidiaries has complied and is in compliance with all Environmental,
Health, and Safety Requirements, including, without limitation, all
permits, licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the occupation of its
facilities and the operation of its business. Except as would not
reasonably be expected to have a Material Adverse Effect on the Company,
none of the Company or its Subsidiaries has received any notice, report or
other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any liabilities or
potential liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise), including any investigatory, remedial or corrective
obligations, relating to any of them or its facilities arising under
Environmental, Health, and Safety Requirements. Except as would not
reasonably be expected to have a Material Adverse Effect on the Company,
none of the Company, its Subsidiaries, or their respective predecessors
has treated, stored, disposed of, arranged for or permitted the disposal
of, transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given rise to liabilities or could
reasonably be expected to give rise to liabilities, including any
liability for response costs, corrective action costs, personal injury,
property damage, natural resource damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as amended
("SWDA"), or any other Environmental, Health, and Safety Requirements,
except for such obligations as would not reasonably be expected to have a
Material Adverse Effect on the Company. Neither this Agreement nor the
consummation of the transaction that is the subject of this Agreement will
result in any obligations for site investigation or cleanup, or
notification to or consent of government agencies or third parties,
pursuant to any of the so-called "transaction-triggered" or "responsible
property transfer" Environmental, Health, and Safety Requirements. Except
as would not reasonably be expected to have a Material Adverse Effect,
neither the Company nor any of its Subsidiaries has assumed, undertaken,
or otherwise become subject to, any liability, including without
limitation any obligation for corrective or remedial action, of any other
person or entity relating to Environmental, Health, and Safety
Requirements. Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, no facts, events or conditions
relating to the past or present facilities, properties or operations of
the Company, its Subsidiaries, or any of their respective predecessors
will prevent, hinder or limit continued compliance with Environmental,
Health, and Safety Requirements, give rise to any investigatory, remedial
or corrective obligations pursuant to Environmental, Health, and Safety
Requirements, or give rise to any other liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to
Environmental, Health, and Safety Requirements, including without
limitation any relating to onsite or offsite releases or threatened
releases of hazardous materials, substances or wastes, personal injury,
property damage or natural resources damage.
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(ii) The Company has provided to Holdings and the Merger Sub,
copies of all material environmental reports, audits, assessments, and
investigations, and any other material environmental documents, related to
the past or present facilities, properties or operations of the Company,
its Subsidiaries, or any of their respective predecessors, to the extent
the forgoing are in the possession, custody, or control of the Company or
any of its Subsidiaries.
For purposes of this Agreement, "Environmental, Health, and Safety Requirements"
shall mean all federal, state, local and foreign statutes, regulations,
ordinances and other provisions having the force or effect of law, all judicial
and administrative orders and determinations, all contractual obligations and
all common law concerning public health and safety, worker health and safety,
and pollution or protection of the environment, including without limitation all
those relating to food or to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or cleanup
of any hazardous materials, substances or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation,
each as amended.
(o) Brokers or Finders. Except for the engagement of Merrill Lynch &
Co. and U.S. Bancorp Piper Jaffray Inc. ("U.S. Bancorp Piper Jaffray"), no
agent, broker, investment banker, financial advisor or other firm or Person is
or will be entitled to any broker's or finder's fee or any other similar
commission or fee in connection with any of the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
(p) Insurance. Section 2.1(p) of the Company Disclosure Schedule
contains a list of all material insurance policies which are owned by the
Company and any of its Subsidiaries and which name the Company or any of its
Subsidiaries as an insured, including without limitation self-insurance programs
and those which pertain to the Company's assets, employees or operations. All
such insurance policies are in full force and effect and the Company has not
received notice of cancellation of any such insurance policies other than those
policies the absence or cancellation of which would not reasonably be expected
to have a Material Adverse Effect on the Company.
(q) Affiliate Transactions. There are no contracts, commitments,
agreements, arrangements or other transactions between the Company or any of its
Subsidiaries, on the one hand, and any (i) present officer or director of the
Company or any of its Subsidiaries or any of their immediate family members
(including their spouses) or (ii) affiliate of any such officer, director,
family member or beneficial owner, on the other hand, required to be disclosed
pursuant to Item 404 of Regulation S-K of the SEC.
(r) Material Contracts. Section 2.1(r) of the Company Disclosure
Schedule sets forth a list of all of the Company Material Contracts as of the
date of this Agreement and, prior to the date hereof, the Company has made
available to Holdings true copies of each Company Material Contract and
summaries of all oral Company Material Contracts. For purposes of this
Agreement, the term "Company Material Contracts" shall mean: (i) all contracts
required to be disclosed pursuant to Items 401 or 601 of Regulation S-K of the
SEC as an exhibit to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31,1999 or any Company SEC Report filed
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thereafter, in each case under the rules and regulations of the SEC, (ii) all
contracts for the future purchase of materials, supplies, merchandise or
equipment providing for remaining payments in excess of $3 million in the
aggregate, (iii) all contracts for the sale or lease of any of the assets of the
Company or its Subsidiaries, other than sales of inventory in the Ordinary
Course, providing for payments in excess of $3 million in the aggregate, (iv)
all mortgages, pledges, conditional sales contracts, security agreements,
factoring agreements or other similar agreements with respect to any assets of
the Company providing for payments in excess of $1 million in the aggregate, (v)
all consulting agreements providing for payments thereunder in excess of
$250,000 in the aggregate, (vi) all non-competition or similar agreements which
restrict or may hereafter restrict in any material respect the geographic or
operational scope of the business of the Company or any of its affiliates or the
ability of the Company or any of its affiliates to enter into new lines of
business, (vii) all agreements or indentures relating to borrowed money or other
indebtedness or the mortgaging, pledging or otherwise placing a Lien on any
material asset or material group of assets of the Company or its Subsidiaries,
(viii) all contracts under which the Company has advanced or loaned any other
Person in the aggregate exceeding $250,000, (ix) all sales, distribution or
franchise agreements the termination of which would have a Material Adverse
Effect on the Company, (x) all warranty agreements and (xi) all agreements by
which the Company or its Subsidiaries guarantee, endorse or otherwise becomes or
is contingently liable for the debt, obligation or other liability of any other
Person or guarantees the payment of dividends or other distribution upon the
shares of any other Person. All such written Company Material Contracts are
valid, binding and enforceable in accordance with their respective terms
(assuming the other parties thereto are bound) and are in full force and effect,
except to the extent they have previously expired in accordance with their
terms, or, except where such invalidity or unenforceability would not reasonably
be expected to have a Material Adverse Effect on the Company. No payment
default, breach or violation by the Company or its Subsidiaries or to the
Company's knowledge, by any other party thereto exists under such Company
Material Contracts, except for defaults, breaches or violations which would not
reasonably be expected to have a Material Adverse Effect on the Company.
(s) State Takeover Statutes. The Company Board and a special
committee thereof satisfying the requirements of Section 673 Subd. 1(d)(1) of
the MBCA has approved the execution of this Agreement and authorized and
approved the Merger prior to the execution by the Company of this Agreement in
accordance with the Section 673 of the MBCA, so that such Section will not apply
to this Agreement or the transactions contemplated hereby (including the
Merger). The Company Board has taken all such action required to be taken by it
to provide that this Agreement and the transactions contemplated hereby shall be
exempt from the requirements of any "moratorium," "control share," "fair price"
or other anti-takeover laws or regulations of any state (including without
limitation Section 671 of the MBCA).
(t) Financial Advisory Opinion. U.S. Bancorp Piper Jaffray has
delivered to the Company Board its written opinion, subject to the
qualifications and limitations stated therein, to the effect that the
consideration to be received by the holders of the Company Common Stock pursuant
to the Merger is fair to the holders of the Company Common Stock (other than any
holders of Company Common Stock who will be shareholders of the Surviving
Corporation or hold interests in Investors or Holdings after consummation of the
Merger) from a financial point of view.
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(u) Compliance with Applicable Food Laws. The Company and its
Subsidiaries have produced and distributed and are producing and distributing
food products that are in compliance with the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 321 et seq.), the Federal Egg Products Inspection Act (21 U.S.C.
1031 et seq.), the Minnesota Food Law (Minnesota Statutes, Ch. 31), all other
applicable federal and state laws governing the production of food, and all
applicable regulations and administrative interpretations promulgated under any
such laws, except for such failures to be in compliance as would not reasonably
be expected to have a Material Adverse Effect on the Company.
2.2 Representations and Warranties of Holdings and Merger Sub.
Except as set forth in the Holdings Disclosure Schedule delivered by Holdings to
the Company at or prior to the execution and delivery of this Agreement (the
"Holdings Disclosure Schedule"), Holdings and Merger Sub each represent and
warrant to the Company that:
(a) Organization, Standing and Power. Each of Holdings and Merger
Sub has been duly organized and is validly existing and in good standing under
the laws of its jurisdiction of organization. Each of Holdings and Merger Sub is
duly qualified and in good standing to do business in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification necessary, except as would not reasonably be expected to have
a Material Adverse Effect on Holdings and Merger Sub. True and complete copies
of the Organizational Documents of the Holdings and Merger Sub have been
furnished by Holdings to the Company for inspection to the extent requested by
the Company.
(b) Authority; No Conflicts.
(i) Each of Holdings and Merger Sub has all requisite power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of Holdings
and Merger Sub. This Agreement has been duly executed and delivered by
Holdings and Merger Sub and (assuming the due authorization and valid
execution and delivery of this Agreement by the Company) constitutes a
valid and binding agreement of Holdings and Merger Sub, enforceable
against them in accordance with its terms.
(ii) The execution and delivery of this Agreement by Holdings
and Merger Sub does not or will not, as the case may be, and the
consummation by Holdings and Merger Sub of the transactions contemplated
hereby will not, result in any Violation of: (A) any provision of the
Organizational Documents of Holdings and Merger Sub or (B) except for such
Violations as would not reasonably be expected to have a Material Adverse
Effect on Holdings and Merger Sub or impair the ability of Holdings or
Merger Sub to perform their material obligations under this Agreement or
delay in any material respect or prevent the consummation of the Merger,
and subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, any loan or credit agreement, note, mortgage, bond,
indenture, lease, benefit plan or other agreement, obligation, instrument,
permit, concession, franchise or license binding
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upon or held by Holdings or Merger Sub or any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Holdings or
Merger Sub or their respective properties or assets.
(iii) No material consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity
is required by or with respect to Holdings or Merger Sub in connection
with the execution and delivery of this Agreement by Holdings or Merger
Sub or the consummation by Holdings or Merger Sub of the transactions
contemplated hereby, except for (A) the consents, approvals, orders,
authorizations, registrations, declarations and filings required under or
in relation to Section 2.1(c)(iii) and (B) such consents, approvals,
orders, authorizations, registrations, declarations and filings the
failure of which to make or obtain would not reasonably be expected to
have a Material Adverse Effect on Holdings and Merger Sub or impair or
delay the ability of Holdings or Merger Sub to consummate the transactions
contemplated hereby.
(iv) Each of Holdings and Merger Sub holds all Permits which
are material to the operation of their respective businesses, taken as a
whole.
(c) Financing Commitments. An executed commitment letter from Bank
of America, N.A. ("Bank of America"), Banc of America Bridge LLC ("Banc of
America Bridge") and Banc of America Securities LLC dated as of December 20,
2000 (the "Bank Commitment Letter"), is included in Section 2.2(c) of the
Holdings Disclosure Schedule. Pursuant to the Bank Commitment Letter and subject
to the terms and conditions contained therein, (i) Bank of America has committed
to provide senior debt financing to Merger Sub in the amount of $470,000,000,
consisting of a $370,000,000 term loan and a $100,000,000 revolving credit
facility and Banc of America Bridge has committed to purchase unsecured senior
subordinated debt securities of the Company in the aggregate amount of
$200,000,000. The Company has also received a copy of a commitment letter, a
true and correct copy of which is included in Section 2.2(b) of the Holdings
Disclosure Schedule (the "Vestar Commitment Letter"), dated December 20, 2000
from Vestar Capital Partners IV, L.P. ("Vestar") pursuant to which Vestar has
committed, subject to the terms and conditions contained therein, to purchase
equity securities of Investors for an aggregate purchase price of $133,900,405.
The Company has also received a copy of a commitment letter, a true and correct
copy of which is included in Section 2.2(c) of the Holdings Disclosure Schedule
(the "Marathon Fund Commitment Letter" and, together with the Bank Commitment
Letter and the Vestar Commitment Letter, the "Commitment Letters" and the
financing to be provided thereunder, the "Financing"), dated December 20, 2000
from Marathon Fund Limited Partnership IV ("Marathon") pursuant to which
Marathon has committed, subject to the terms and conditions contained therein,
to purchase equity securities of Investors for an aggregate purchase price of
$35,000,000. The obligations to fund the commitments under the Commitment
Letters are not subject to any condition other than set forth in the Commitment
Letters. Holdings and Merger Sub have no actual knowledge of any fact or
occurrence existing on the date of this Agreement which in their good faith
judgment would reasonably be expected to (i) make the material assumptions or
statements set forth in the Bank Commitment Letter inaccurate, (ii) cause the
Bank Commitment Letter to be ineffective or (iii) preclude in any material
respect the satisfaction of the conditions set forth in the Bank Commitment
Letter. As of the date hereof, the Commitment Letters are in full force and
effect and have not been amended in any material respect. To the knowledge of
Holdings
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and Merger Sub, assuming all of the representations and warranties of the
Company set forth herein are true, the funds contemplated to be received
pursuant to the Commitment Letters together with the roll over contributions to
be made as set forth in the Management Equity Agreements and the Other Equity
Agreements will be sufficient to consummate the Merger and to pay all related
fees and expenses. The financing and other fees that are due and payable under
the Commitment Letters have been paid in full. Holdings and Merger Sub believe
that, upon consummation of the transactions contemplated by this Agreement,
including the Financing, (i) the Surviving Corporation will not be insolvent,
(ii) the Surviving Corporation will not be left with unreasonably small capital,
(iii) the Surviving Corporation will not have incurred debts beyond its ability
to pay such debts as they mature and (iv) the capital of the Surviving
Corporation will not be impaired.
(d) Information Supplied.
(i) The Schedule 13E-3 and any amendments or supplements
thereto, will, when filed, comply as to form in all material respects with
the applicable requirements of the Exchange Act and the rules and
regulations thereunder.
(ii) None of the information supplied or to be supplied by
Holdings or Merger Sub in writing specifically for inclusion or
incorporation by reference in the Proxy Statement, the Schedule 13E-3 and
any other documents to be filed with the SEC in connection with the
transactions contemplated hereby, including any amendment or supplement to
such documents, will, at the respective times such documents are filed,
and, with respect to the Proxy Statement, when first published, sent or
given to shareholders of the Company, 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 made therein, in
light of the circumstances under which they are made, not misleading or,
in the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Company Shareholders Meeting, and at the
Effective Time, 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 made therein, in light of the circumstances
under which they are made, not misleading or necessary to correct any
statement in any earlier communication with respect to any solicitation of
proxies for the Company Shareholders Meeting which shall have become
misleading.
(iii) Notwithstanding the foregoing provisions of this Section
2.2(d), no representation or warranty is made by Holdings or Merger Sub
with respect to statements made or incorporated by reference in the
Schedule 13E-3 based on information supplied by the Company for inclusion
or incorporation by reference therein.
(e) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Holdings or Merger Sub, other than Vestar Capital Partners and
Goldner Hawn Johnson & Morrison Incorporated.
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(f) Ownership of Company Capital Stock. As of the date of this
Agreement, neither Holdings nor, to the best of its knowledge, any of its
affiliates or associates (as such terms are defined under the Exchange Act) (i)
beneficially owns, directly or indirectly or (ii) is party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, in case of either clause (i) or (ii), shares of the capital stock
of the Company. Holdings has provided the Company with true and correct copies
of the form of Management Equity Agreements and the form of Other Equity
Agreements and related letter agreements, which are included in Section 2.2(f)
of the Holdings Disclosure Schedule.
(g) Other Information Regarding Holdings and Merger Sub. Each of
Holdings and Merger Sub is a newly organized corporation, each formed solely for
the purpose of engaging in the transactions contemplated hereby. Prior to the
date hereof, neither Holdings nor Merger Sub has engaged in any business
activities or conducted any operations other than in connection with the
transactions contemplated hereby. Merger Sub is a wholly owned Subsidiary of
Holdings, and, as of the date hereof, Holdings does not own, directly or
indirectly, any capital stock or other ownership interest in any Person other
than Merger Sub.
ARTICLE 3
COVENANTS RELATING TO CONDUCT OF BUSINESS
3.1 Covenants of the Company. During the period from the date of
this Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement, as set forth in Section 3.1 of the
Company Disclosure Schedule or to the extent that Holdings shall otherwise
consent in writing):
(a) Ordinary Course. The Company and its Subsidiaries shall carry on
their respective businesses in the Ordinary Course and shall use all reasonable
efforts to preserve intact their present business organizations and their
relationships with customers, suppliers and others having business dealings with
them.
(b) Dividends; Changes in Share Capital. The Company shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions in respect of any of
its capital stock, except dividends by the Company or its Subsidiaries in the
Ordinary Course, (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock or (iii)
repurchase, redeem or otherwise acquire any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock.
(c) Issuance of Securities. The Company shall not, and shall cause
its Subsidiaries not to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class, any
Company Voting Debt or any securities convertible into or exercisable for, or
any rights, warrants or options to acquire, any such shares or Company Voting
Debt, or enter into any agreement with respect to any of the foregoing, other
than (i) the issuance of shares of the Company Common Stock (A) upon the
exercise of Options issued in the Ordinary Course prior to the date hereof in
accordance with the terms of the Option Plans as in effect
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on the date of this Agreement or (B) under the Share Awards outstanding on the
date of this Agreement and (ii) the issuance of Share Awards in an amount not to
exceed that number of shares of Company Common Stock equal to $1,025,000 divided
by the market price of Company Common Stock as determined in accordance with the
terms of the Executive Performance Plan and the Executive Incentive Plan.
(d) Organizational Documents. Except to the extent required to
comply with their respective obligations hereunder, by law or by the rules and
regulations of the NASDAQ, the Company and its Subsidiaries shall not amend or
propose to amend their respective Organizational Documents.
(e) Indebtedness and Other Matters. The Company shall not, and shall
not permit any of its Subsidiaries to, (i) other than incurrence of indebtedness
under existing working capital facilities in the ordinary course of business
consistent with past practices, incur any indebtedness for borrowed money or
guarantee, assume, endorse or otherwise become responsible for any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or its Subsidiaries or of other
Persons, other than indebtedness of the Company or its Subsidiaries to the
Company or its Subsidiaries, (ii) make any loans or advances other than by the
Company or its Subsidiaries to or in the Company or its Subsidiaries or other
than to customers for the purchase of products from the Company in the ordinary
course of business consistent with past practices, (iii) make any capital
contributions to, or investments in, any other Person, other than by the Company
or its domestic Subsidiaries to or in the Company or its domestic Subsidiaries,
(iv) other than the payment, discharge or satisfaction of claims, liabilities
and obligations in the ordinary course of business consistent with past
practices not in excess of amounts duly accrued or accruable therefor, pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), (v) make capital expenditures
in excess of $32,000,000 prior to the Closing Date or enter into binding
contracts to make capital expenditures in excess of $46 million during the 2001
fiscal year, (vi) issue, deliver, sell, lease, sell and leaseback, pledge,
dispose of or encumber material properties or material assets of the Company or
any of its Subsidiaries other than inventory in the Ordinary Course, except
Liens for Taxes not currently due, (vii) (A) make or change any Tax election or
method of accounting with respect to Taxes, (B) file any amended Tax Return or
(C) settle or compromise any examination or proceeding with respect to any
material Tax liability, (viii) settle or compromise any litigation (whether or
not commenced prior to the date of this Agreement), other than settlements
involving amounts payable by the Company and its Subsidiaries that are not in
excess of $500,000 in the aggregate over amounts fully recoverable from insurers
of the Company and its Subsidiaries, (ix) enter into any new or amended contract
or agreement with any labor unions representing employees of the Company or any
Subsidiary, (x) enter into or amend, modify, renew or terminate any material
agreement or material transaction, including, without limitation, any material
transaction involving any merger, consolidation, joint venture, license
agreement, partial or complete liquidation or dissolution, reorganization,
recapitalization, restructuring, or a purchase, sale, lease or other acquisition
or disposition of any assets or capital stock, (xi) knowingly undertake any
action or fail to take any action that will result in a breach of the
representations and warranties set forth in Section 2.1 as if made on and as of
the Closing Date or (xii) agree, or commit to agree, to take any action not
permitted to be taken pursuant to this Section 3.1(e).
-24-
(f) Benefit Plans. The Company shall not, and shall not permit any
of its Subsidiaries to, (i) establish, adopt, enter into, or amend any Company
Benefit Plan, or any plan, agreement, program, policy, trust, fund or other
arrangement that would be a Company Benefit Plan if it were in existence as of
the date of this Agreement, except as required by law, (ii) increase the
compensation payable or to become payable to (A) any of its directors or
officers, except to the extent required under agreements existing as of the date
of this Agreement or as consistent with the Company's 2001 operating budget
previously provided to Holdings; provided that such increases shall not exceed,
in the aggregate, 5% of current levels, or (B) except in the Ordinary Course
consistent with the Company's 2001 operating budget, other employees or (iii)
take any action with respect to the grant, modification or amendment of any
severance or termination pay, or stay, bonus or other incentive arrangement
(other than pursuant to benefit plans and policies in effect on the date of this
Agreement).
3.2 Advice of Changes; Government Filings. Each of the Company and
Holdings shall (a) confer on a regular and frequent basis with the other, (b)
report (to the extent permitted by law, regulation and any applicable
confidentiality agreement) to the other on operational matters and (c) promptly
advise the other orally and in writing of (i) any representation or warranty
made by it contained in this Agreement becoming untrue or inaccurate in any
respect such that the conditions set forth in Section 5.2(a) or 5.3(a) would not
be satisfied, (ii) the failure by it (A) to comply with or satisfy in any
respect any covenant, condition or agreement required to be complied with or
satisfied by it under this Agreement that is qualified as to materiality or (B)
to comply with or satisfy in any material respect any covenant, condition or
agreement required to be complied with or satisfied by it under this Agreement
that is not so qualified as to materiality or (iii) any change, event or
circumstance that has had a Material Adverse Effect on such party or materially
and adversely affects its ability to consummate the transactions contemplated
hereby in a timely manner; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement. The
Company and Holdings and Merger Sub shall file all reports required to be filed
by each of them with the SEC (and all other Governmental Entities) between the
date of this Agreement and the Effective Time and shall (to the extent permitted
by law or regulation or any applicable confidentiality agreement) deliver to the
other party copies of all such reports promptly after the same are filed.
Subject to applicable laws relating to the exchange of information, each of the
Company and Holdings shall have the right to review in advance, and to the
extent practicable each will consult with the other, with respect to all the
information relating to the other party and each of their respective
Subsidiaries, which appears in any filings, announcements or publications made
with, or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each of the Company and Holdings
agrees that, to the extent practicable, it will consult with the other party
with respect to the obtaining of all Permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
further agrees to keep the other apprized of the status of matters relating to
completion of the transactions contemplated hereby.
3.3 Financing Related Cooperation. The Company agrees to provide,
and will cause its Subsidiaries and its and their respective officers, employees
and advisors to provide, all
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cooperation reasonably necessary in connection with the arrangement of any
financing to be consummated contemporaneously with or at or after the expiration
of the Effective Time in respect of the transactions contemplated by this
Agreement, including participation in meetings, due diligence sessions, road
shows, the preparation of offering memoranda, private placement memoranda,
prospectuses and similar documents, the execution and delivery of any commitment
letters, underwriting or placement agreements, pledge and security documents,
other definitive financing documents, or other requested certificates or
documents, including a certificate of the chief financial officer of the Company
with respect to solvency matters, comfort letters of accountants and legal
opinions as may be reasonably requested by Holdings and taking such other
actions as are reasonably required to be taken by the Company in the Commitment
Letters, provided that Holdings and Merger Sub shall use reasonable efforts not
to materially interfere with the duties of such officers, employees and advisors
such that the Company's business and results of operations would be materially
adversely affected thereby. In addition, in conjunction with the obtaining of
any such financing, the Company agrees, at the reasonable request of Holdings,
to call for prepayment or redemption, or to prepay, redeem and/or renegotiate,
as the case may be, any then existing indebtedness of the Company and its
Subsidiaries; provided that no call for redemption or prepayment shall be
irrevocably made until contemporaneously with or after the Effective Time.
Holdings and Merger Sub shall use their commercially reasonable best efforts to
cause the Financing to be fulfilled in accordance with the terms of the
Commitment Letters.
ARTICLE 4
ADDITIONAL AGREEMENTS
4.1 Preparation of the Proxy Statement; Schedule 13E; the Company
Shareholders Meeting.
(a) Company Shareholders Meeting. The Company shall, acting through
the Company's Board, as soon as practicable following execution of this
Agreement and in accordance with this Agreement, duly call, give notice of,
convene and hold a special meeting of its shareholders (the "Company
Shareholders Meeting") for the purpose of considering and taking action upon the
approval of the Merger and the adoption of this Agreement, and the Company
shall, through the Company Board, recommend to its shareholders that they adopt
this Agreement; provided, however, that the Company Board may withdraw, modify
or change such recommendation in accordance with the terms of Section 4.4 of
this Agreement. Holdings and Merger Sub shall vote or cause to be voted all the
shares of the Company Common Stock owned of record or beneficially by Holdings
or any of its Subsidiaries in favor of this Agreement and the transactions
contemplated by this Agreement.
(b) Proxy Statement. As soon as practicable following the execution
of this Agreement, the Company shall prepare and file with the SEC the Proxy
Statement with respect to the Company Shareholders Meeting, and use its
reasonable good faith efforts to have a Proxy Statement cleared by the SEC and
mailed to the Company's shareholders. Holdings and Merger Sub and the Company
shall cooperate with each other in the preparation of the Proxy Statement. The
Proxy Statement (i) shall contain (A) subject to the fiduciary duties of the
Company Board, statements of the Company Board that it has (x) determined that
this Agreement and the transactions contemplated hereby, including the Merger,
are fair to and in the best interests of the shareholders
-26-
of the Company, (y) declared the Merger and this Agreement to be advisable and
(z) recommended unanimously that the shareholders of the Company vote in favor
of the approval of the Merger and the adoption of this Agreement and (B) the
written opinion of U.S. Bancorp Piper Jaffray and (ii) shall comply as to form
and content in all material respects with the applicable provisions of the
federal securities laws. Holdings and its counsel shall be given an opportunity
to review and comment upon the Proxy Statement and any amendment or supplement
thereto prior to the filing thereof with the SEC, and the Company shall consider
any such comments in good faith. The Company agrees to provide to Holdings and
its counsel any comments which the Company or its counsel may receive from the
staff of the SEC with respect to the Proxy Statement promptly after receipt
thereof. Holdings and Merger Sub will promptly supply to the Company in writing,
for inclusion in the Proxy Statement, all information concerning Holdings and
Merger Sub required by law, rule or regulation to be included in the Proxy
Statement. The Company, Holdings and Merger Sub agree to promptly correct any
information provided by any of them for use in the Proxy Statement which shall
have become false or misleading in any respect, and the Company further agrees
to take all steps reasonably necessary to cause such Proxy Statement as so
corrected to be filed with the SEC and disseminated to the Company's
shareholders, in each case as and to the extent required by the applicable
provisions of the federal securities laws. The Company agrees to use its
reasonable best efforts, after consultation with the other parties hereto, and
each of Holdings and Merger Sub agree to use its reasonable best efforts to
promptly provide the Company with any information necessary to respond promptly
to any comments made by the Commission with respect to the Proxy Statement and
any preliminary version thereto or amendment thereof, filed by it, and each of
the Company, Holdings and Merger Sub shall use reasonable efforts to cause the
Proxy Statement to be mailed to the Company's shareholders at the earliest
practicable time.
(c) Schedule 13E. Concurrently with the filing of the Proxy
Statement, Holdings and Merger Sub and their respective affiliates (to the
extent required by law) shall prepare and file with the SEC, together with the
Company, a Rule 13E-3 Transaction Statement on Schedule 13E-3 (together with all
supplements and amendments thereto, the "Schedule 13E-3") with respect to the
transactions contemplated by this Agreement. The Company shall promptly furnish
to Holdings all information concerning the Company as may reasonably be
requested in connection with the preparation of the Schedule 13E-3. The Company
shall promptly supplement, update and correct any information provided by it for
use in the Schedule 13E-3 if and to the extent that it is or shall have become
incomplete, false or misleading. In any such event, Holdings and the Company
shall take all steps necessary to cause the Schedule 13E-3 as so supplemented,
updated or corrected to be filed with the SEC and to be disseminated to the
holders of Company Common Stock, in each case, as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
an opportunity to review and comment on the Schedule 13E-3 and each supplement,
amendment or response to comments with respect thereto prior to its being filed
with or delivered to the SEC and Holdings shall consider any such comments in
good faith. Holdings agrees to provide the Company and its counsel with any
comments that Holdings or its counsel may receive from the staff of the SEC
promptly after receipt thereof.
4.2 Access to Information. Upon reasonable notice, each of the
Company and Holdings shall (and shall cause their respective Subsidiaries, to)
afford to the officers, employees, accountants, counsel, financial advisors and
other representatives of the other party reasonable access during normal
business hours, during the period prior to the Effective Time, to all its
properties,
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books, contracts, commitments and records and its officers, employees and
representatives and, during such period, each of the Company and Holdings shall
(and shall cause its Subsidiaries, to) furnish promptly to the other party (a) a
copy of each report, schedule, registration statement and other document filed,
published, announced or received by it during such period pursuant to the
requirements of federal or state securities laws, as applicable (other than
reports or documents which such party is not permitted to disclose under
applicable law) and (b) consistent with its legal obligations, all other
information concerning its business, properties and personnel as the other party
may reasonably request. Such information shall be held in confidence to the
extent required by, and in accordance with, the provisions of the letter dated
September 9, 1999, between the Company and Vestar (the "Confidentiality
Agreement"), which Confidentiality Agreement shall remain in full force and
effect.
4.3 Approvals and Consents; Cooperation. Each of the Company,
Holdings and Merger Sub shall cooperate with each other and use (and shall cause
their respective Subsidiaries to use) its reasonable best efforts to take or
cause to be taken all actions, and do or cause to be done all things, necessary,
proper or advisable on their part under this Agreement and applicable laws to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement as soon as practicable, including without limitation (i)
preparing and filing as promptly as practicable all documentation to effect all
necessary applications, notices, petitions, filings, Tax ruling requests and
other documents and to obtain as promptly as practicable all consents, waivers,
licenses, orders, registrations, approvals, Permits, Tax rulings and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement (including, but not limited to,
those approvals, consents, orders, registrations, declarations and filings
required under Section 2.1(c)(iii)) (collectively, the "Required Approvals") and
(ii) taking all reasonable steps as may be necessary to obtain all such Required
Approvals. Without limiting the generality of the foregoing, each of the Company
and Holdings and Merger Sub agree to make all necessary filings in connection
with the Required Approvals as promptly as practicable after the date of this
Agreement, and to use its reasonable best efforts to furnish or cause to be
furnished, as promptly as practicable, all information and documents requested
with respect to such Required Approvals, and shall otherwise cooperate with any
applicable Governmental Entity in order to obtain any Required Regulatory
Approvals in as expeditious a manner as possible. Each of the Company, Holdings
and Merger Sub shall use its reasonable best efforts to resolve such objections,
if any, as any Governmental Entity may assert with respect to this Agreement and
the transactions contemplated hereby in connection with the Required Approvals.
In the event that a suit is instituted by a Person or Governmental Entity
challenging this Agreement and the transactions contemplated hereby as violative
of applicable antitrust or competition laws, each of the Company and Holdings
shall use its reasonable best efforts to resist or resolve such suit. The
Company and Holdings each shall, upon request by the other, furnish the other
with all information concerning itself, its Subsidiaries, affiliates, directors,
officers and shareholders and such other matters as may reasonably be necessary
or advisable in connection with the Proxy Statement, the Schedule 13E-3 or any
other statement, filing, Tax ruling request, notice or application made by or on
behalf of the Company, Holdings or any of their respective Subsidiaries to any
third party and/or any Governmental Entity in connection with the Merger or the
other transactions contemplated by this Agreement.
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4.4 Acquisition Proposals.
(a) Neither the Company nor any of its Subsidiaries shall (whether
directly or indirectly through advisors, agents or other intermediaries), nor
shall the Company or any of its Subsidiaries authorize or permit any of its or
their officers, directors, agents, representatives or advisors (the "Company
Representatives") to (a) solicit, initiate, knowingly encourage (including by
way of furnishing non-public information) or take any action knowingly to
facilitate the submission of any inquiries, proposals or offers (whether or not
in writing) from any Person (other than Holdings and its affiliates), other than
the transactions contemplated by this Agreement, that constitute, or are
reasonably expected to lead to, an Acquisition Proposal (as defined below), or
(b) enter into or participate in any discussions or negotiations regarding an
Acquisition Proposal; provided, however, that, at any time during the period
following the execution of this Agreement and prior to the Effective Time, if
the Company receives a proposal or offer that was not solicited by the Company
or a Company Representative, and that the Company Board determines in good faith
(after consultation with its outside legal counsel and financial advisors) is a
Superior Proposal (as defined below but ignoring, for purposes of this Section
4.4(a) only, clause (i) of the definition of Superior Proposal), and subject to
compliance with Section 4.4(b), the Company Board may, or may authorize any
committee thereof or any Company Representatives to, (x) furnish information
with respect to the Company and its Subsidiaries to the Person making such
proposal or offer pursuant to a confidentiality agreement on terms not less
favorable to the Company than the Confidentiality Agreement and (y) participate
in discussions or negotiations regarding such proposal or offer.
(b) The Company shall notify Holdings promptly (and in any case
prior to providing any information or access referred to below) after receipt by
the Company (or any Company Representative) of any Acquisition Proposal or any
inquiry regarding the making of an Acquisition Proposal or any request for
non-public information in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any of its Subsidiaries by
any Person that informs the Company that it 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 identity of the offeror and the terms
and conditions of such proposal, inquiry or contact. The Company shall continue
to keep Holdings informed, on a reasonably current basis, of the status of any
such discussions or negotiations and the terms being discussed or negotiated.
(c) Neither the Company nor the Company Board nor any committee
thereof shall withdraw or modify, or propose to withdraw or modify, in any
manner adverse to Holdings, the approval or recommendation of this Agreement or
the Merger, or propose publicly to approve or recommend an Acquisition Proposal,
unless the withdrawal or modification of such approval or recommendation or such
approval or recommendation is, in the good faith judgment of the Company Board
or such committee thereof (after consultation with its outside legal counsel),
necessary to comply with its fiduciary obligations to the Company's shareholders
under applicable law. Nothing contained in this Agreement shall prohibit the
Company nor the Company Board nor any committee thereof from taking and
disclosing to its shareholders a position contemplated by Rule 14e-2 and Rule
14d-9 promulgated under the Exchange Act or from making any disclosure to the
Company's shareholders if, in the good faith judgment of the Company Board or
such committee thereof (after consultation with its outside legal counsel) the
failure to make such disclosure would be inconsistent with its fiduciary duties
to the Company's shareholders or other obligations under applicable law.
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Notwithstanding anything to the contrary contained in this Section 4.4 or
elsewhere in this Agreement, prior to the Effective Time, the Company may, in
connection with a possible Acquisition Proposal, refer any third party to this
Section 4.4 and to Section 6.2, and make a copy of this Section 4.4 and Section
6.2 available to such third party.
(d) The Company will immediately cease and cause its advisors,
agents and other intermediaries to cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing, and shall use its reasonable best efforts to cause any
such parties in possession of confidential information about the Company that
was furnished by or on behalf of the Company to return or destroy all such
information in the possession of any such party or in the possession of any
agent or advisor of any such party. The Company agrees not to release any third
party from or waive any provisions of confidentiality in any confidentiality
agreement to which the Company is a party.
(e) "Acquisition Proposal" means any inquiry, proposal or offer for
(i) an acquisition or purchase of 10 percent or more of the consolidated assets
of the Company and its Subsidiaries or of 10 percent or more of any class of
equity securities of the Company or any of its Subsidiaries, (ii) any tender
offer (including a self tender offer) or exchange offer that if consummated
would result in any Person beneficially owning 10 percent or more of any class
of equity securities of the Company or any of its Subsidiaries or (iii) any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries whose assets, individually or in the
aggregate, constitute 10 percent or more of the consolidated assets of the
Company.
(f) "Superior Proposal" means a proposal with respect to any of the
transactions described in the definition of Acquisition Proposal (with all of
the percentages included in the definition of such term replaced with "all or
substantially all" for purposes of this definition) with respect to which the
Company Board shall have concluded in good faith, after consultation with its
outside legal counsel and financial advisor, (i) is reasonably likely to be
completed, taking into account all legal, financial, regulatory and other
aspects of the Acquisition Proposal, including the status of the financing
therefor and the Person making the proposal and (ii) would, if consummated,
result in a transaction more favorable to the Company's shareholders from a
financial point of view than the transactions contemplated by this Agreement.
4.5 Employee Benefits.
(a) For a period of one year immediately following the Effective
Time, the Surviving Corporation shall maintain in effect employee benefit plans
and arrangements with overall employee benefits which are substantially
comparable, in the aggregate, to the benefits provided by the Company Benefit
Plans as of the date hereof (not taking into account the value of any benefits
under any such plans which are equity-based).
(b) For purposes of determining eligibility to participate or
vesting where length of service is relevant under any employee benefit plan or
arrangement of the Surviving Corporation or any of their respective
Subsidiaries, employees of the Company and its Subsidiaries as of the Effective
Time shall receive service credit for service with the Company and its
Subsidiaries to the
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same extent such service credit was granted under the Company Benefit Plans,
subject to offsets for previously accrued benefits and no duplication of
benefits.
(c) Upon the consummation of the Merger, each Share Award
outstanding immediately prior to the Effective Time shall automatically become
immediately vested and each holder of a Share Award shall have the right to
receive from the Surviving Corporation a cash payment (less applicable federal,
state and local withholding taxes) in an aggregate amount equal to the Price Per
Share for each share of Company Common Stock subject to such Share Award.
4.6 Fees and Expenses. Whether or not the Merger is consummated, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses, except
(a) if the Merger is consummated, the Surviving Corporation shall pay, or cause
to be paid, all expenses of Holdings and Merger Sub incurred in connection with
the transactions contemplated by this Agreement and (b) as set forth in Section
6.4(b). For purposes of this Agreement, "Expenses" includes all out-of-pocket
expenses (including all fees and expenses of counsel, accountants, investment
bankers, financing sources and their counsel, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Proxy Statement
and the Schedule 13E-3 and the solicitation of shareholder approvals and all
other matters related to the transactions contemplated hereby.
4.7 Indemnification; Directors' and Officers' Insurance.
(a) Continuation of Organizational Documents Obligations. The
Company shall and, from and after the Effective Time until the sixth anniversary
of the Effective Time, the Surviving Corporation shall maintain the right to
indemnification and exculpation of officers and directors provided for in the
Organizational Documents of the Company as in effect on the date hereof, with
respect to indemnification and exculpation for acts and omissions occurring
prior to the Effective Time, including, without limitation, the transactions
contemplated by this Agreement.
(b) Continuation of Directors' and Officers' Insurance. Until the
sixth anniversary of the Effective Time, the Surviving Corporation shall
maintain officers' and directors' liability insurance covering the Persons who
are presently covered by the Company's officers' and directors' liability
insurance policies (copies of which have heretofore been delivered to Holdings)
with respect to actions and omissions occurring prior to the Effective Time, by
obtaining tail coverage of such existing insurance policies on terms which are
not less favorable than the terms of such current insurance in effect for the
Company on the date hereof and providing coverage only with respect to matters
occurring prior to the Effective Time, to the extent that such tail coverage can
be maintained at an annual cost to the Surviving Corporation of not greater than
200% of the annual premium for the Company's current insurance policies and, if
such tail coverage cannot be so maintained at such cost, providing as much of
such insurance as can be so maintained at a cost equal to 200% of the annual
premium for the Company's current insurance policies.
(c) Indemnification. The Company shall and, from and after the
Effective Time, the Surviving Corporation shall, to the fullest extent permitted
under applicable law and to the extent
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such Person would have been indemnified under the articles of incorporation and
bylaws of the Company or any Company Subsidiary as such documents were in effect
on the date of this Agreement, indemnify and hold harmless each present and
former director and officer of the Company or any Company Subsidiary (each an
"Indemnified Party" and collectively, the "Indemnified Parties") against any
costs or expenses, together with such person's heirs, executors or
administrators (including by advancing attorney's fees and expenses in advance
of the final disposition of any claim, action, suit, proceeding or investigation
to the fullest extent permitted by and subject to the conditions of law),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any pending, threatened or completed claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action or
omission based upon or arising from his or her capacity as an officer or
director of the Company or any Company Subsidiary occurring prior to the
Effective Time (including, without limitation, any claim, action, suit,
proceeding or investigation arising out of or pertaining to the transactions
contemplated by this Agreement).
(d) Survival. This Section 4.7 shall survive the closing of the
transactions contemplated hereby, is intended to benefit the Company, Merger Sub
and the Surviving Corporation and each of the Indemnified Parties (each of whom
shall be entitled to enforce this Section 4.7 against the Company, Merger Sub
and the Surviving Corporation, as the case may be), and shall be binding on all
successors and assigns of the Surviving Corporation.
(e) Merger, Assignment, etc. If the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 4.7.
4.8 Public Announcements. Neither party hereto shall make any press
release or public announcement with respect to this Agreement, the Merger or the
transactions contemplated hereby without the prior written consent of the other
party hereto (which consent shall not be unreasonably withheld); provided,
however, that each party hereto may make any disclosure or announcement which
such party, after consultation with its legal counsel, determines that it is
obligated to make pursuant to applicable law or regulation of any national
securities exchange or in order to discharge its fiduciary duties, in which
case, the party desiring to make the disclosure shall consult with the other
party hereto prior to making such disclosure or announcement.
4.9 Further Assurances. In case at any time after the Effective Time
any further action is reasonably necessary to carry out the purposes of this
Agreement or the transactions contemplated by this Agreement, the proper
officers of the Company, Holdings and the Surviving Corporation shall take any
such reasonably necessary action.
4.10 Disposition of Litigation. In connection with any litigation
which may be brought against the Company or its directors relating to the
transactions contemplated hereby, the Company shall keep Holdings, and any
counsel which Holdings may retain at its own expense, informed of the status of
such litigation and will provide Holdings' counsel the right to participate
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in the defense of such litigation to the extent Holdings is not otherwise a
party thereto, and the Company shall not enter into any settlement or compromise
of any such stockholder litigation without Holdings' prior written consent,
which consent shall not be unreasonably withheld or delayed.
4.11 Delisting. Each of the parties agrees to cooperate with each
other in taking, or causing to be taken, all actions necessary to delist the
Company Common Stock from NASDAQ and to terminate registration under the
Exchange Act, provided that such delisting and termination shall not be
effective until after the Effective Time of the Merger.
ARTICLE 5
CONDITIONS PRECEDENT
5.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of Holdings, Merger Sub and the Company to effect the
Merger are subject to the satisfaction or waiver on or prior to the Closing Date
of the following conditions:
(a) Shareholder Approval. The Company shall have obtained all
approvals of holders of shares of the capital stock of the Company required
under the MBCA to approve this Agreement and the transactions contemplated
hereby;
(b) HSR Act. Any waiting period applicable to the Merger under the
HSR Act (including any extension thereof) shall have been terminated or shall
have expired; and
(c) No Injunctions or Restraints, Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
a United States federal or state court of competent jurisdiction shall be in
effect and have the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
5.2 Conditions to the Obligations of Holdings and Merger Sub to
Effect the Merger. The respective obligations of Holdings and Merger Sub to
effect the Merger are subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement (other than those
representations and warranties that address matters as of particular dates)
shall be true and correct as of the Closing Date and any representation and
warranty of the Company set forth in this Agreement that addresses matters as of
a particular date shall be true and correct as of the date referred to therein;
it being understood that (i) any inaccuracies in such representations and
warranties shall be disregarded if the circumstances giving rise to such
inaccuracies (considered collectively) do not constitute a Material Adverse
Effect on the Company and (ii) for purposes of determining whether such
representations and warranties are true and correct, all "Material Adverse
Effect" qualifications and any other materiality qualifications in such
representations and warranties shall be disregarded;
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(b) Performance. The Company shall have performed all obligations
and complied in all material respects with all agreements or covenants to be
performed or complied with by it under this Agreement;
(c) Prohibitions to Merger. There shall not be pending any action or
proceeding by a United States federal or state Governmental Entity of competent
jurisdiction nor shall a statute, rule or regulation have been promulgated or
enacted by a United States federal or state Governmental Entity of competent
jurisdiction after the date of this Agreement which would have the effect of (i)
restraining or prohibiting the consummation of the Merger, (ii) prohibiting or
restricting the ownership or operation by Holdings (or any of its affiliates or
Subsidiaries) of a material portion of the business or assets of the Company and
its Subsidiaries taken as a whole, or compelling Holdings (or any of its
affiliates or Subsidiaries) to dispose of or hold separate a material portion of
the business or assets of the Company and its Subsidiaries taken as a whole,
(iii) imposing material limitations on the ability of Holdings (or any of its
affiliates or Subsidiaries) effectively to acquire or to hold or to exercise
full rights of ownership of the shares of the Company Common Stock, including,
without limitation, the right to vote such shares purchased by Holdings (or any
of its affiliates or Subsidiaries) on all matters properly presented to the
shareholders of the Company, (iv) imposing any material limitations on the
ability of Holdings (or any of its affiliates or Subsidiaries) effectively to
control in any material respect the business and operations of the Company or
(v) obtaining material damages from Holdings or any of its affiliates in
connection with the making or consummation of the Merger and there shall not be
in effect any injunction, order, decree, judgment or ruling issued by a United
States federal or state court of competent jurisdiction having any effect set
forth in clauses (i) through (v) above;
(d) Financing. Merger Sub shall have received the proceeds of the
financing contemplated by the Commitment Letters on the terms and conditions set
forth therein and with other material terms satisfactory to Holdings, in the
amounts necessary to consummate the Merger and pay all related fees and
expenses; or
(e) No Material Adverse Effect. There shall not have occurred any
event or circumstance that has had or would be reasonably likely to have a
Material Adverse Effect on the Company since the date of the Agreement.
5.3 Conditions to the Obligations of the Company to Effect the
Merger. The obligations of the Company to effect the Merger are subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Holdings and Merger Sub set forth in this Agreement (other than
those representations and warranties that address matters as of particular
dates) shall be true and correct as of the Closing Date and any representation
and warranty of Holdings and Merger Sub set forth in this Agreement that
addresses matters as of a particular date shall be true and correct as of the
date referred to therein; it being understood that (i) any inaccuracies in such
representations and warranties shall be disregarded if the circumstances giving
rise to such inaccuracies (considered collectively) do not constitute a Material
Adverse Effect on Holdings and Merger Sub, taken as a whole and (ii) for
purposes of determining whether such representations and warranties are true and
correct, all "Material Adverse Effect"
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qualifications and any other materiality qualifications in such representations
and warranties shall be disregarded; and
(b) Performance. Holdings and Merger Sub shall have performed all
obligations and complied in all material respects with all agreements or
covenants to be performed or complied with by them under this Agreement.
ARTICLE 6
TERMINATION AND AMENDMENT
6.1 Termination by Either the Company or Holdings. This Agreement
may be terminated at any time prior to the Effective Time by either the Company
or Holdings, whether before or after adoption of this Agreement by the Company's
shareholders:
(a) by the mutual written consent of Holdings and the Company, by
action of their respective boards of directors;
(b) if any United States federal or state Governmental Entity shall
have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable; provided, however, that the party seeking to terminate
this Agreement shall have used its commercially reasonably efforts to remove or
lift such order, decree, ruling or other action;
(c) if the Merger has not been consummated by May 31, 2001, provided
that the party seeking to exercise such right is not then in breach in any
material respect of any of its obligations under this Agreement; and
(d) if, at a duly held shareholders meeting of the Company or any
adjournment thereof at which this Agreement and the Merger are voted upon (the
"Special Meeting"), the requisite shareholder adoption and approval shall not
have been obtained.
6.2 Termination by Holdings. This Agreement may also be terminated
by Holdings at any time prior to the Effective Time:
(a) if the Company or the Company Board shall have (i) withdrawn,
modified or amended in any respect adverse to Holdings or Merger Sub any of its
recommendations described in Section 4.1(a) hereof, (ii) approved, recommended
or entered into an agreement with respect to, or consummated, any Acquisition
Proposal from a Person other than Holdings or any of its affiliates, (iii) in
response to the commencement of any tender offer or exchange offer for
outstanding shares of Company Common Stock, not recommended rejection of such
tender offer or exchange offer within ten (10) business days of commencement of
such tender offer or exchange offer, or (iv) resolved to do any of the foregoing
or publicly announced its intention to do any of the foregoing; or
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(b) (i) if (A) any covenant or agreement of the Company contained in
this Agreement shall be materially breached, (B) any of the Company's
representations and warranties contained in this Agreement shall have been
inaccurate as of the date of this Agreement such that the condition set forth in
Section 5.2(a) would not be satisfied (assuming that the phrase "date of this
Agreement" is substituted for the phrase "Closing Date" contained in Section
5.2(a)), or (C) any of the Company's representations and warranties contained in
this Agreement shall have become inaccurate after the date of this Agreement
such that the condition set forth in Section 5.2(a) would not be satisfied
(each, a "Terminating Company Breach"); and (ii) such Terminating Company Breach
shall not have been cured by the Company within twenty (20) days of receipt of
written notice of such Terminating Company Breach.
6.3 Termination by the Company. This Agreement may also be
terminated by the Company at any time prior to the Effective Time:
(a) (i) if (A) any covenant or agreement of the Holdings or Merger
Sub contained in this Agreement shall be materially breached, (B) any of the
representations and warranties of Holdings or Merger Sub contained in this
Agreement shall have been inaccurate as of the date of this Agreement such that
the condition set forth in Section 5.3(a) would not be satisfied (assuming that
the phrase "date of this Agreement" is substituted for the phrase "Closing Date"
contained in Section 5.3(a)), or (C) any of the representations and warranties
of Holdings or Merger Sub contained in this Agreement shall have become
inaccurate after the date of this Agreement such that the condition set forth in
Section 5.3(a) would not be satisfied (each, a "Terminating Holdings Breach");
and (ii) such Terminating Holdings Breach shall not have been cured by Holdings
or Merger Sub within twenty (20) days of receipt of written notice of such
Terminating Holdings Breach; or
(b) if the Company Board approves a Superior Proposal; provided,
however, that (A) the Company shall have complied with the terms of Section 4.4
and (B) this Agreement may not be terminated pursuant to this Section 6.3(b)
unless (x) concurrently with such termination, the Company pays to Holdings the
Termination Fee (as hereinafter defined) less any Expense Payment (as
hereinafter defined) previously paid and (y) the Company shall have provided
Holdings with at least five business days' advance notice of such termination
and Holdings does not make, within four (4) business days of receipt of the
Company's notification of its intention to terminate this Agreement, an offer
that the Company Board determines, in good faith after consultation with its
outside legal counsel and financial advisors, is at least as favorable to the
shareholders of the Company as such Superior Proposal.
6.4 Effect of Termination.
(a) In the event of termination of this Agreement by either the
Company or Holdings as provided in this Article 6, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of Holdings, Merger Sub or the Company or their respective officers, directors,
shareholders, affiliates, representatives, agents, employees or advisors,
except, with respect to Holdings, Merger Sub and the Company, (i) with respect
to Section 4.6, this Section 6.4, Article 7 and the last sentence of Section 4.2
and (ii) with respect to any liabilities or damages incurred or suffered by a
party as a result of the willful breach by the other party or parties of this
Agreement.
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(b) The Company shall (provided that neither Holdings nor the Merger
Sub is then in material breach of its obligations under this Agreement) (i) upon
the termination of this Agreement pursuant to Section 6.1(d), promptly, but in
no event later than two business days following written notice thereof, pay to
Holdings and Merger Sub $5 million for its out-of-pocket expenses and fees
(including fees payable to banks, investment banking firms and other financial
institutions, and their respective agents and counsel, and fees of counsel,
accountants, financial printers, advisors, experts and consultants to Holdings
and its affiliates) or (ii) upon the termination of this Agreement pursuant to
Section 6.2(b), promptly, but in no event later than two business days following
written notice thereof, together with reasonable supporting documentation,
reimburse Holdings and Merger Sub in an amount up to $2,500,000 for its
out-of-pocket expenses and fees (including fees payable to banks, investment
banking firms and other financial institutions, and their respective agents and
counsel, and fees of counsel, accountants, financial printers, advisors, experts
and consultants to Holdings and its affiliates) (either of the payments in
clauses (i) or (ii) being referred to herein as the "Expense Payment"). It is
understood that in the event that Holdings is paid a Termination Fee, to the
extent not previously paid, the Expense Payment shall not be paid.
(c) In the event that this Agreement is terminated by Holdings
pursuant to Section 6.2(a) or by the Company pursuant to Section 6.3(b), the
Company shall pay to Holdings, by wire transfer of immediately available funds
to an account designated by Holdings on the next business day following such
termination (or, in the case of a termination by the Company pursuant to Section
6.3(b), by wire transfer of immediately available funds to an account designated
by Holdings, concurrently with the effectiveness of such termination), an amount
equal to $20 million (the "Termination Fee"), less any Expense Payment
previously paid.
(d) If all of the following events have occurred:
(i) (A) this Agreement is terminated pursuant to Section
6.1(c) (other than on account of a failure of the conditions set forth in
Sections 5.1(a), 5.1(c), 5.2(c), 5.2(d), 5.3(a) or 5.3(b)), Section 6.1(d)
or Section 6.2(b) and (B) an Acquisition Proposal is publicly disclosed or
publicly proposed to the Company or its shareholders at any time on or
after the date of this Agreement but (x) in the case of a termination
pursuant to Section 6.1(c) or Section 6.2(b), prior to such termination,
or (y) in the case of a termination pursuant to Section 6.1(d), prior to
or at the time of the Special Meeting; and
(ii) thereafter, within 12 months of the date of such
termination, the Company enters into a definitive agreement with respect
to, or consummates, the Acquisition Proposal referred to in clause (i), or
any proposal with respect to any of the transactions described in clause
(i), (ii) or (iii) of the definition of Acquisition Proposal (with all of
the percentages included in the definition of such term raised to 50% for
purposes of this definition); then, the Company shall pay to Holdings,
concurrently with the earlier of the execution of such definitive
agreement or the consummation of such Acquisition Proposal, an amount
equal to the Termination Fee (less any Expense Payment previously paid).
(e) The Company acknowledges that the agreements contained in
Sections 6.4(b), (c) and (d) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Holdings and
Merger Sub would not enter into this Agreement.
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6.5 Amendment. This Agreement may be amended by the parties hereto,
by action taken or authorized by their respective boards of directors, at any
time before or after adoption of this Agreement by the Company's shareholders,
but, after any such adoption, no amendment shall be made which by law or in
accordance with the rules of the NASDAQ requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
6.6 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective boards of
directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. No delay on
the part of any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party hereto of any right, power or privilege hereunder operate as a waiver
of any other right, power or privilege hereunder, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder. Unless otherwise provided, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies which
the parties hereto may otherwise have at law or in equity. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE 7
GENERAL PROVISIONS
7.1 Non-Survival of Representations, Warranties and Agreements; No
Other Representations and Warranties. None of the representations, warranties,
covenants and other agreements in this Agreement or in any instrument delivered
pursuant to this Agreement, including any rights arising out of any breach of
such representations, warranties, covenants and other agreements, shall survive
the Effective Time, except for those covenants and agreements contained herein
and therein that by their terms apply or are to be performed in whole or in part
after the Effective Time and/or the provisions of this Article 7. Each party
hereto agrees that, except for the representations and warranties contained in
this Agreement, none of the Company, Holdings or Merger Sub makes any other
representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers, directors,
employees, agents, financial and legal advisors or other representatives, with
respect to the execution and delivery of this Agreement, the documents and the
instruments referred to herein, or the transactions contemplated hereby or
thereby, notwithstanding the delivery or disclosure to the other party or the
other party's representatives of any documentation or other information with
respect to any one or more of the foregoing.
7.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, (b) on the first
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business day following the date of dispatch if delivered by a nationally
recognized next-day courier service, (c) on the third business day following the
date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid or (d) if sent by facsimile transmission, with a copy
mailed on the same day in the manner provided in (a) or (b) above, when
transmitted and receipt is confirmed by telephone. All notices hereunder shall
be delivered as set forth below, or pursuant to such other instructions as may
be designated in writing by the party to receive such notice:
if to Holdings or Merger Sub:
c/o Vestar Capital Partners IV, L.P.
1225 Seventeenth Street
Suite 1660
Denver, CO 80202
Attention: James P. Kelley
Facsimile: (303) 292-6639
and
c/o Goldner Hawn Johnson & Morrison Incorporated
5250 Wells Fargo Center
Minneapolis, MN 55402-4123
Attention: John L. Morrison
Michael T. Sweeney
Facsimile: (612) 338-2860
with copies to:
Vestar Capital Partners IV, L.P.
245 Park Avenue
41st Floor
New York, NY 10167
Attention: General Counsel
Facsimile: (212) 808-4922
and
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: Stephen L. Ritchie
Facsimile: (312) 861-2118
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and
Faegre & Benson
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-3901
Attention: Bruce M. Engler
Facsimile: (612) 336-3026
if to the Company:
Michael Foods, Inc.
324 Signal Bank Building
5353 Wayzata Boulevard
Minneapolis, MN 55416
Attention: President
Facsimile: (952) 546-3711
with copies to:
Kaplan, Strangis & Kaplan, P.A.
90 S. Seventh Street
Suite 5500
Minneapolis, MN 55402
Attention: James C. Melville
Facsimile: (612) 375-1143
7.3 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, cross references and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statue or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the content requires otherwise. It is understood
and agreed that neither the specifications of any dollar amount in this
Agreement nor the inclusion of any specific item in the Schedules or Exhibits is
intended to imply that such amounts or higher or lower amounts, or the items so
included or other items, are or are not material, and neither party shall use
the fact of setting of such amounts or the fact of the inclusion of such item in
the Schedules or Exhibits in any dispute or controversy between the parties as
to whether any obligation, item or matter is or is not material for purposes
hereof.
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7.4 Counterparts. This Agreement may be executed in two or more
counterparts (including by means of telecopied signature pages), all of which
shall be considered one and the same agreement and shall become effective when
two or more counterparts have been signed by each of the parties and delivered
to the other party, it being understood that both parties need not sign the same
counterpart.
7.5 Entire Agreement; No Third Party Beneficiaries; Liability.
(a) This Agreement (including the Schedules and Exhibits)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, other than the Confidentiality Agreement, which shall
survive the execution and delivery of this Agreement.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
Section 4.7 (which is intended to be for the benefit of the Persons covered
thereby and may be enforced by such Persons).
(c) No affiliate, officer, director or shareholder of any party
hereto shall have any liability hereunder.
7.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Minnesota, without regard to the laws
that might be applicable under conflicts of laws principles.
7.7 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible. Any provision of this Agreement
held invalid or unenforceable only in part, degree or certain jurisdictions will
remain in full force and effect to the extent not held invalid or unenforceable.
To the extent permitted by applicable law, each party waives any provision of
law which renders any provision of this Agreement invalid, illegal or
unenforceable in any respect.
7.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other parties, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
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7.9 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
* * * * *
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IN WITNESS WHEREOF, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of date first written above.
M-FOODS HOLDINGS, INC., a Delaware corporation
By: ____________________________________
Name:
Title:
PROTEIN ACQUISITION CORP., a Minnesota corporation
By: ____________________________________
Name:
Title:
MICHAEL FOODS, INC., a Minnesota corporation
By: ____________________________________
Name:
Title:
Exhibit A
Articles of Incorporation of Surviving Corporation
[See Attached]
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