SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT
(Date of earliest event reported):
October 1, 1997
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ALPINE LACE BRANDS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-15584 22-2717823
(State or other jurisdiction (Commission File number) (I.R.S. Employer
of incorporation) Identification No.)
111 DUNNELL ROAD, MAPLEWOOD, NJ 07040
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201) 378-8600
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Item 5. Other Events.
On October 1, 1997, the Registrant entered into an Agreement and Plan
of Merger (the "Merger Agreement") among the Registrant, Land O'Lakes, Inc., a
Minnesota cooperative corporation ("Land O'Lakes"), and AVV Inc., a Delaware
corporation and a wholly-owned subsidiary of Land O'Lakes ("Acquisition").
Pursuant to the Merger Agreement and subject to certain conditions, including,
but not limited to, the approval of holders of the Registrant's common stock and
regulatory review, the Registrant will merge with Acquisition. If the merger is
consummated, the surviving corporation will be a wholly-owned subsidiary of Land
O'Lakes and the stockholders of the Registrant will receive $9.125, in cash, for
each share of common stock of the Registrant, as set forth in the Merger
Agreement. Preferred stockholders of the Registrant will receive a cash merger
payment as if such shares of preferred stock were converted into common stock.
Upon consummation of the transactions contemplated by the Merger Agreement, each
of Carl T. Wolf and Marion F. Wolf will enter into five year Non-Compete
Agreements with Land O'Lakes. The Non-Compete Agreements are filed herewith as
Exhibits to the Merger Agreement.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 2.1 Agreement and Plan of Merger, dated October 1, 1997, by and
among the Registrant, Land O'Lakes and AVV Inc., a Delaware
corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALPINE LACE BRANDS, INC.
Date: October 8, 1997 By: /s/ Carl T. Wolf
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Carl T. Wolf
President and Chief Executive Officer
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INDEX
Exhibit
No. Description
- ------- -----------
2.1 Agreement and Plan of Merger, dated October 1, 1997, among the
Registrant, Land O'Lakes, Inc., a Minnesota cooperative corporation,
and AVV Inc., a Delaware corporation.
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AGREEMENT AND PLAN OF MERGER
among
ALPINE LACE BRANDS, INC.
and
LAND O'LAKES, INC.
and
AVV INC.
Dated as of October 1, 1997
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TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
ARTICLE I THE MERGER...........................................................................1
1.01 The Merger..............................................................................2
1.02 Surviving Corporation...................................................................2
1.03 Effective Time of the Merger............................................................2
1.04 Certificate of Incorporation and By-Laws of the Surviving Corporation...................2
1.05 Board of Directors and Officers of the Surviving Corporation............................3
1.06 Conversion of Shares....................................................................3
1.07 Dissenters' Rights......................................................................4
1.08 Stock Options and Warrants..............................................................4
1.09 Payment for Shares......................................................................6
1.10 No Further Rights or Transfers..........................................................8
ARTICLE II COVENANTS, CONDUCT AND TRANSACTIONS PRIOR TO THE
EFFECTIVE TIME..................................................................................8
2.01 Operation of Business of the Company Between the Date of this Agreement and
the Effective Time...........................................................................8
2.02 Stockholders' Meeting; Proxy Material.................................................11
2.03 No Shopping............................................................................12
2.04 Access to Information..................................................................13
2.05 Amendment of Company's Employee Plans..................................................13
2.06 Stock Options and Warrants.............................................................13
2.07 Best Efforts...........................................................................14
2.08 Consents...............................................................................14
2.09 Public Announcements...................................................................14
2.10 Notification of Certain Matters........................................................14
2.11 Certain Resignations...................................................................15
2.12 Confidentiality Agreement..............................................................15
2.13 Write-Off of Note Receivable...........................................................15
ARTICLE III CONDITIONS OF MERGER..............................................................15
3.01 Conditions to the Obligations of Buyer and Acquisition to Effect the Merger............15
3.02 Conditions to the Obligations of the Company to Effect the Merger......................18
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ARTICLE IV CLOSING............................................................................20
4.01 Time and Place.........................................................................20
4.02 Deliveries at the Closing..............................................................20
ARTICLE V TERMINATION AND ABANDONMENT.........................................................20
5.01 Termination............................................................................20
5.02 Procedure and Effect of Termination....................................................21
ARTICLE VI REPRESENTATIONS AND WARRANTIES.....................................................22
6.01 Representations and Warranties of the Company..........................................22
6.02 Representations and Warranties of Buyer and Acquisition................................35
ARTICLE VII OFFICERS' AND DIRECTORS' INDEMNIFICATION, DIRECTORS
AND OFFICERS LIABILITY INSURANCE, EMPLOYEE CONTRACTS...........................................37
7.01 Indemnification........................................................................37
7.02 Directors and Officers Liability Insurance.............................................37
7.03 Employee Contracts.....................................................................37
ARTICLE VIII MISCELLANEOUS PROVISIONS.........................................................38
8.01 Termination of Obligations, Covenants and Agreements...................................38
8.02 Amendment and Modification.............................................................38
8.03 Waiver of Compliance; Consents.........................................................38
8.04 Expenses; Termination Fee.............................................................38
8.05 Additional Agreements..................................................................40
8.06 Notices................................................................................40
8.07 Assignment.............................................................................41
8.08 Interpretation.........................................................................41
8.09 Governing Law..........................................................................42
8.10 Counterparts...........................................................................42
8.11 Headings...............................................................................42
8.12 Entire Agreement.......................................................................42
</TABLE>
Exhibit A-1 -- Opinion of local counsel to the Company
Exhibit A-2 -- Opinion of Kramer, Levin, Naftalis & Frankel, Special Counsel to
the Company
Exhibit B -- Non-Compete Agreement between Buyer and Carl T. Wolf
Exhibit C -- Non-Compete Agreement between Buyer and Marion F. Wolf.
Exhibit D -- Opinion of Thuy-Nga T. Vo, Counsel to Buyer and Acquisition
Exhibit D-2 -- Opinion of Faegre & Benson LLP, Special Counsel to Buyer and
Acquisition
ii
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of October 1, 1997, by and among
Alpine Lace Brands, Inc., a Delaware corporation (the "Company"), Land O'Lakes,
Inc., a Minnesota cooperative corporation ("Buyer"), and AVV Inc., a Delaware
corporation and a wholly-owned subsidiary of Buyer ("Acquisition") (the Company
and Acquisition being sometimes hereinafter collectively referred to as the
"Constituent Corporations").
WITNESSETH:
WHEREAS, the Boards of Directors of the Company, Acquisition and Buyer and the
special committee of independent directors of the Board of Directors of the
Company (the "Special Committee") deem a merger of the Company and Acquisition
pursuant to the terms hereof (the "Merger") desirable and in the best interests
of their respective corporations and their stockholders; the Boards of Directors
of the Company, Acquisition and Buyer and the Special Committee have, by
resolutions duly adopted, approved this Agreement and the Boards of Directors of
the Company and Acquisition have directed that it be submitted to a vote of the
stockholders of their respective Constituent Corporations in accordance with the
laws of the State of Delaware; and Buyer, being the sole stockholder of
Acquisition, has, by written action, duly approved this Agreement in accordance
with such laws; and
WHEREAS, the Company, Acquisition and Buyer desire to effect the Merger and the
other transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants,
representations, warranties and agreements herein contained and for the purpose
of prescribing the terms and conditions of the Merger, the manner and basis of
converting shares of capital stock of the Company into cash, and such other
provisions as are deemed necessary or desirable, the parties agree that the
Merger shall be effected on the terms and subject to the conditions set forth
below and in accordance with the applicable laws of the State of Delaware.
ARTICLE I
THE MERGER
1.01 The Merger. At the Effective Time, as defined in Section 1.03, and
in accordance with the terms of this Agreement and the General Corporation Law
of the State of Delaware (the "Delaware Law"), Acquisition shall be merged with
and into the Company, the separate corporate existence of Acquisition shall
thereupon cease, and the Company shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving
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Corporation"), the name of which shall continue to be "Alpine Lace Brands, Inc."
1.02 Surviving Corporation. At the Effective Time, the Surviving
Corporation shall thereupon and thereafter possess all the rights, privileges,
powers and franchises, of a public as well as of a private nature, of each of
the Constituent Corporations, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all and
singular, the rights, privileges, powers and franchises of each of the
Constituent Corporations, and all property, real, personal and mixed, and all
debts due to each of the Constituent Corporations on whatever account, as well
for stock subscriptions as all other things in action or belonging to each of
the Constituent Corporations, shall be vested in the Surviving Corporation; and
all property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the several and respective Constituent Corporations;
and the title to any real estate or any interest therein vested by deed or
otherwise, under the laws of Delaware or any other jurisdiction, in either of
the Constituent Corporations shall not revert or be in any way impaired by
reason of the Merger; but all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be preserved
unimpaired; and all debts, duties and liabilities of either of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts, duties and liabilities
had been incurred or contracted by it.
1.03 Effective Time of the Merger. Subject to and immediately following
the receipt of the vote of the stockholders of the Company approving and
adopting this Agreement and the Merger and the satisfaction or waiver of all
conditions to the consummation of the Merger set forth in this Agreement, the
Company and Acquisition shall execute in the manner required by the Delaware Law
and deliver for filing to the Secretary of State of the State of Delaware a
certificate of merger with respect to the Merger as required by Delaware Law
(the "Certificate of Merger"). The Merger shall become effective at the time the
Certificate of Merger is accepted for filing with the Secretary of State of the
State of Delaware, and the term "Effective Time" shall mean the date and time
when the Merger shall become effective.
1.04 Certificate of Incorporation and By-Laws of the Surviving
Corporation. The Certificate of Incorporation of the Company in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation, until amended in accordance with the
laws of the State of Delaware.
The By-Laws of Acquisition in effect immediately prior to the Effective
Time shall be deemed, by virtue of the Merger and without further action by the
stockholders or directors of the Surviving Corporation or Acquisition, to be the
By-Laws of the Surviving Corporation, until further amended in accordance with
the laws of the State of Delaware.
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1.05 Board of Directors and Officers of the Surviving Corporation. The
directors of Acquisition immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, each of such directors to hold office,
subject to the applicable provisions of the By-Laws of the Surviving
Corporation, until the expiration of the term for which such director was
elected and until his or her successor is elected and has qualified or as
otherwise provided in the By-Laws of the Surviving Corporation. The officers of
Acquisition immediately prior to the Effective Time shall be the officers of the
Surviving Corporation until their respective successors are chosen and have
qualified or as otherwise provided in the By-Laws of the Surviving Corporation.
1.06 Conversion of Shares . The manner and basis of converting the
shares of each of the Constituent Corporations shall be as follows:
(a) At the Effective Time, each share of common stock of the Company,
par value $.01 per share (the "Company Common Stock"), which is issued and
outstanding immediately prior to the Effective Time (other than (i) shares of
Company Common Stock as to which dissenters' rights are exercised under Section
262 of the Delaware Law and Section 1.07 hereof and (ii) shares of Company
Common Stock held of record by Buyer or Acquisition or any other direct or
indirect subsidiary of Buyer or the Company immediately prior to the Effective
Time) shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and represent the right to receive (as
provided in Section 1.09(a) hereof) $9.125 in cash (the "Common Stock Merger
Consideration"), pro-rated for fractional shares of Company Common Stock
outstanding immediately prior to the Effective Time, if any.
(b) At the Effective Time, each share of preferred stock of the
Company, par value $.01 per share (the "Company Preferred Stock"), which is
issued and outstanding immediately prior to the Effective Time (other than (i)
shares of Company Preferred Stock as to which dissenters' rights are exercised
under Section 262 of the Delaware Law and Section 1.07 hereof and (ii) shares of
Company Preferred Stock held of record by Buyer or Acquisition or any other
direct or indirect subsidiary of Buyer or the Company immediately prior to the
Effective Time) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and represent the right to receive
(as provided in Section 1.09(a) hereof) cash in an amount equal to the product
of (x) $9.125 multiplied by (y) an amount which is equal to the quotient of (A)
$50 plus all accrued dividends on one share of Company Preferred Stock that
remain unpaid as of the Effective Time (which unpaid dividends shall accrue
until the Effective Time at the rate of $.010274 per share per day), divided by
(B) $7.375 (the "Preferred Stock Merger Consideration"), pro-rated for
fractional shares of Company Preferred Stock outstanding immediately prior to
the Effective Time, if any.
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(c) At the Effective Time, each share of common stock of Acquisition,
par value $1.00 per share (the "Acquisition Common Stock"), which is issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and exchanged for 6,000 shares of common stock of the Surviving
Corporation, which shall constitute the only issued and outstanding shares of
capital stock of the Surviving Corporation immediately after the Effective Time.
(d) At the Effective Time, each share of Company Common Stock and
Company Preferred Stock (the Company Common Stock and Company Preferred Stock
being herein sometimes referred to collectively as the "Company Stock") held of
record by Buyer or Acquisition or any other direct or indirect subsidiary of
Buyer or the Company immediately prior to the Effective Time and each share of
Company Stock held in the treasury of the Company immediately prior to the
Effective Time shall be canceled and cease to exist at and after the Effective
Time, and no payment shall be made with respect thereto.
1.07 Dissenters' Rights. Notwithstanding any provision of this
Agreement to the contrary, any shares of Company Stock outstanding immediately
prior to the Effective Time held by a holder who has demanded and perfected the
right, if any, for appraisal of those shares in accordance with the provisions
of Section 262 of the Delaware Law and as of the Effective Time has not
withdrawn or lost such right to such appraisal ("Dissenting Shares") shall not
be converted into or represent a right to receive a cash payment pursuant to
Section 1.06, but the holder shall only be entitled to such rights as are
granted by the Delaware Law. If a holder of shares of Company Stock who demands
appraisal of those shares under the Delaware Law shall effectively withdraw or
lose (through failure to perfect or otherwise) the right to appraisal, then, as
of the Effective Time or the occurrence of such event, whichever last occurs,
those shares shall be converted into and represent only the right to receive the
Common Stock Merger Consideration or the Preferred Stock Merger Consideration,
as the case may be, as provided in Section 1.06, without interest, upon
compliance with the provisions, and subject to the limitations, of Section 1.09
hereof. The Company shall give Buyer (a) prompt notice of any written demands
for appraisal of any shares of Company Stock, attempted withdrawals of such
demands, and any other instruments served pursuant to the Delaware Law and
received by the Company relating to stockholders' rights of appraisal, and (b)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under the Delaware Law. The Company shall not, except with
the prior written consent of Buyer, voluntarily make any payment with respect to
any demands for appraisal of Company Stock, offer to settle or settle any such
demands or approve any withdrawal of any such demands.
1.08 Stock Options and Warrants. At or immediately prior to the
Effective Time, each holder of a then outstanding option (an "Option") or
warrant (a "Warrant") to purchase shares of Company Common Stock heretofore
granted under any employee stock option
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or compensation plan, warrant agreement or other arrangement with the Company
shall be entitled (whether or not such Option or Warrant is then exercisable)
upon execution of a cancellation agreement with the Company to receive in
cancellation of such Option or Warrant a cash payment from the Company in an
amount equal to the amount, if any, by which the Common Stock Merger
Consideration exceeds the per share exercise price of such Option or Warrant,
multiplied by the number of shares of Company Common Stock then subject to such
Option or Warrant (the "Purchase Right Settlement Amount") but subject to all
required tax withholdings by the Company. Each Option or Warrant that is subject
to a cancellation agreement shall be canceled upon payment of the Purchase Right
Settlement Amount for such Option or Warrant.
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1.09 Payment for Shares.
(a) At or before the Effective Time, Buyer or Acquisition shall deposit
in immediately available funds with Norwest Bank Minnesota, N.A., or any other
disbursing agent selected by Buyer that is organized under the laws of the
United States or any state of the United States with capital, surplus and
undivided profits of at least $500,000,000 (the "Disbursing Agent"), an amount
equal to the sum (rounded up or down to the nearest whole $.01, with $.005
rounded up to the nearest whole $.01) of (A) the product of (i) the number of
shares of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares then held of record by Buyer or Acquisition or
any other direct or indirect subsidiary of Buyer or the Company), pro-rated for
fractional shares, times (ii) the Common Stock Merger Consideration and (B) the
product of (i) the number of shares of Company Preferred Stock issued and
outstanding immediately prior to the Effective Time (other than shares then held
of record by Buyer or Acquisition or any other direct or indirect subsidiary of
Buyer or the Company), pro-rated for fractional shares, times (ii) the Preferred
Stock Merger Consideration (such sum being hereinafter referred to as the
"Fund"). Out of the Fund, the Disbursing Agent shall, pursuant to irrevocable
instructions from the holders of Company Stock, make the payments referred to in
Sections 1.06 (a) and (b) hereof, subject to the requirements of paragraph (b)
of this Section 1.09. At the request of the Surviving Corporation, in its sole
discretion at any time, but without any obligation to make any such request, the
Disbursing Agent also may make payments, in discharge of any obligations of the
Surviving Corporation pursuant to Section 262 of the Delaware Law, to holders of
Company Stock who have exercised dissenters' rights pursuant to Section 262 of
the Delaware Law and have not subsequently withdrawn or lost such rights as long
as the payment from the Fund with respect to any Dissenting Share does not
exceed the Common Stock Merger Consideration or the Preferred Stock Merger
Consideration, as the case may be. The Disbursing Agent may invest portions of
the Fund as Buyer or the Surviving Corporation directs, provided that all such
investments shall be held as cash or in obligations of or guaranteed by the
United States of America, in commercial paper obligations receiving the highest
rating from either Moody's Investors Service, Inc. or Standard & Poor's
Corporation, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital, surplus and undivided
profits exceeding $500,000,000 (collectively, "Permitted Investments"), or in
money market funds which are invested solely in Permitted Investments. Any net
profit resulting from, or interest or income produced by, such investments shall
be payable to the Surviving Corporation, and shall be remitted from time to time
by the Disbursing Agent upon the request of Buyer or the Surviving Corporation.
Any amount remaining in the Fund after nine months after the Effective Time may
be refunded to the Surviving Corporation at its option; provided, however, that
the Surviving Corporation shall be liable for any cash payments required to be
made thereafter pursuant to Sections 1.06(a) and 106(b) hereof and Section 262
of the Delaware Law.
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(b) As soon as practicable after the Effective Time, the Disbursing
Agent shall mail to each holder of record (other than Buyer or Acquisition or
any direct or indirect subsidiary of Buyer or the Company) of a certificate or
certificates (a "Certificate" or "Certificates") which immediately prior to the
Effective Time represented issued and outstanding shares of Company Stock (other
than those holders who have exercised dissenters' rights pursuant to Section 262
of the Delaware Law and have not subsequently withdrawn or lost such rights), a
form letter of transmittal (the "Letter of Transmittal") for return to the
Disbursing Agent, and instructions for use in effecting the surrender of
Certificates and to receive cash for each of such holder's shares of Company
Stock pursuant to Sections 1.06(a) and 1.06(b) hereof. The Letter of Transmittal
shall specify that delivery shall be effected, and risk of loss shall pass, only
upon proper delivery of such Certificate or Certificates to the Disbursing
Agent. The Disbursing Agent, as soon as practicable following receipt of any
such Certificate or Certificates together with the Letter of Transmittal, duly
executed, and any other items specified by the Letter of Transmittal, shall pay,
by check or draft, to the persons entitled thereto, the sum (rounded up or down
to the nearest whole $.01, with $.005 rounded up to the nearest whole $.01) of
the amounts determined by (A) multiplying (i) the number of shares of Company
Common Stock represented by the Certificate or Certificates so surrendered
(pro-rated for fractional shares) by (ii) the Common Stock Merger Consideration
and (B) multiplying (i) the number of shares of Company Preferred Stock
represented by the Certificate or Certificates so surrendered (pro-rated for
fractional shares) by (ii) the Preferred Stock Merger Consideration. All of the
foregoing payments shall be subject to any required withholding of taxes by the
Surviving Corporation. No interest will be paid or accrued on the cash payable
upon the surrender of the Certificate or Certificates. If payment is to be made
to a person other than the person in whose name the Certificates surrendered are
registered, it shall be a condition of payment that the Certificates so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting the payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the Certificates surrendered or establish to the satisfaction of the
Surviving Corporation that the tax has been paid or is not applicable.
(c) In the event any such Certificate or Certificates shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate or Certificates to have been lost, stolen or
destroyed, the amount to which such person would have been entitled under
Section 1.09(b) hereof but for failure to deliver such Certificate or
Certificates to the Disbursing Agent shall nevertheless be paid to such person,
provided that the Surviving Corporation may, in its sole discretion and as a
condition precedent to such payment, require such person to give the Surviving
Corporation a written indemnity agreement in form and substance reasonably
satisfactory to the Surviving Corporation and, if reasonably deemed advisable by
the Surviving Corporation, a bond in such sum as the Surviving Corporation may
direct as indemnity against any claim that may be had against Buyer or the
Surviving
7
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Corporation with respect to the Certificate or Certificates alleged to have been
lost, stolen or destroyed.
1.10 No Further Rights or Transfers. At and after the Effective Time,
all shares of Company Stock issued and outstanding immediately prior to the
Effective Time (including without limitation fractional shares) shall be
canceled and cease to exist, and each holder of a Certificate or Certificates
that represented shares of Company Stock issued and outstanding immediately
prior to the Effective Time shall cease to have any rights as a stockholder of
the Company with respect to the shares of Company Stock represented by such
Certificate or Certificates, except for the right to surrender such holder's
Certificate or Certificates in exchange for the payment provided pursuant to
Sections 1.06(a) and 1.06(b) hereof or to perfect such holder's right to receive
payment for such holder's shares pursuant to Section 262 of the Delaware Law and
Section 1.07 hereof if such holder has validly exercised and not withdrawn or
lost such holder's right to receive payment for such holder's shares pursuant to
Section 262 of the Delaware Law, and no transfer of shares of Company Stock
issued and outstanding immediately prior to the Effective Time shall be made on
the stock transfer books of the Surviving Corporation.
ARTICLE II
COVENANTS, CONDUCT AND TRANSACTIONS PRIOR
TO THE EFFECTIVE TIME
2.01 Operation of Business of the Company Between the Date of this
Agreement and the Effective Time. From the date of this Agreement through the
Effective Time:
(a) The Company will use its best efforts to preserve intact in all
material respects its business organization and that of its subsidiaries, keep
available to itself and to the Surviving Corporation the services of the present
officers and key employees of the Company and its subsidiaries set forth in
Section 2.01(a) of the Disclosure Schedule of the Company dated the date hereof
(the "Disclosure Schedule"), a copy of which has been delivered to Buyer and
Acquisition, and preserve for itself and for the Surviving Corporation the
present relationships of the Company and its subsidiaries with entities and
persons having significant business dealings with the Company or its
subsidiaries.
(b) The Company shall, and shall cause its subsidiaries to, except as
otherwise consented to in writing by Buyer, conduct its business and operations
in the ordinary course of business.
(c) Except as required in connection with the Merger or as otherwise
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consented to in writing by Buyer, the Company shall not (i) amend its
Certificate of Incorporation or By-Laws, (ii) increase or decrease the number of
authorized shares of its capital stock, as set forth in Section 6.01(b) hereof,
(iii) split, combine or reclassify any shares of its capital stock or make any
other changes in its equity capital structure (other than the issuance of shares
of Company Common Stock upon exercise of Options or Warrants heretofore granted
by the Company in accordance with their terms or the conversion of outstanding
Company Preferred Stock in accordance with the terms thereof), (iv) purchase,
redeem or cancel for value, directly or indirectly, any shares of its capital
stock or any Options, Warrants or other rights to purchase any such capital
stock or any capital stock of its subsidiaries or any securities convertible
into or exchangeable for any such capital stock, except as contemplated by
Section 1.08 hereof, or (v) declare, set aside or pay any dividend or other
distribution or payment in cash, stock or property in respect of shares of its
capital stock, except that it may declare, set aside and pay in the ordinary
course of business a regular quarterly cash dividend on Company Preferred Stock
in an amount of $.9375 per share of Company Preferred Stock payable on December
15, 1997 if the Effective Time does not occur prior to December 15, 1997.
(d) The Company shall not and shall not permit its subsidiaries to,
except as otherwise consented to in writing by Buyer, (i) issue, grant, sell or
pledge, or agree or propose to issue, grant, sell or pledge, any shares of
capital stock of the Company or its subsidiaries (other than the issuance of
shares of Company Common Stock upon exercise of Options or Warrants heretofore
granted by the Company in accordance with their terms or the conversion of
outstanding Company Preferred Stock in accordance with the terms thereof) or any
options, rights or warrants to purchase any such capital stock or any securities
convertible into or exchangeable for such capital stock, or any stock
appreciation rights, performance shares or other phantom stock based upon the
value of any such capital stock or designate any class or series of shares of
Company Preferred Stock, (ii) purchase, lease or otherwise acquire (including
without limitation acquisitions by merger, consolidation or stock or asset
purchase) any assets or properties, other than those that do not individually
exceed $2,000, provided that the aggregate amount of such purchases, leases and
other acquisitions does not exceed $25,000, and other than inventory (including
supplies) acquired in the ordinary course of business, (iii) sell, lease,
encumber, mortgage or otherwise dispose of any material assets or properties,
except that the Company and its subsidiaries may sell, lease, encumber, mortgage
or otherwise dispose of assets or properties in the ordinary course of business
that are not material to the Company and its subsidiaries, taken as a whole, and
except for the continuing security interest of the lender under the Company's
existing revolving line of credit agreement, (iv) waive, release, grant or
transfer any rights of value or modify or change in any material respect any
existing license, contract or other document or agreement, other than in the
ordinary course of business and in a manner that does not have a material
adverse effect on the business, operations, results of operations, properties,
assets, prospects or condition, financial or otherwise, of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"), (v) incur any
indebtedness
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for money borrowed other than indebtedness of the Company to its wholly-owned
subsidiaries or of a wholly-owned subsidiary to the Company or its other
wholly-owned subsidiary and other than indebtedness incurred in the ordinary
course of business for working capital purposes (including, without limitation,
as permitted indebtedness, borrowings in the ordinary course of business for
working capital purposes under the Company's existing revolving line of credit)
that, except as disclosed in Section 2.01(d) of the Disclosure Schedule, is
prepayable at any time without penalty or premium or incur any purchase money
indebtedness for fixed assets or enter into any capitalized lease, (vi) incur
any other liability or obligation (except of the Company to its wholly-owned
subsidiaries or of a wholly-owned subsidiary to the Company or its other
wholly-owned subsidiary), other than in the ordinary course of business, or
assume, guarantee, endorse (other than endorsements of checks in the ordinary
course of business) or otherwise as an accommodation become responsible for the
obligations of any other individual or entity (except of the Company with
respect to obligations of its wholly-owned subsidiaries or of a wholly-owned
subsidiary with respect to obligations of the Company or its other wholly-owned
subsidiary), (vii) except as otherwise required by this Agreement, enter into
any new employee benefit plan, program or arrangement, or any new employment,
severance or consulting agreement, amend any existing employee benefit plan,
program or arrangement, or any existing employment, severance or consulting
agreement, or, except as disclosed in Section 2.01(d) of the Disclosure
Schedule, grant any increases in compensation or benefits, (viii) adopt any
collective bargaining agreement, (ix) enter into any other transaction, other
than in the ordinary course of business and consistent with past practices, (x)
make any tax election or settle or compromise any material federal, state, local
or foreign income tax liability, (xi) change any accounting principles used by
it, unless required by generally accepted accounting principles, (xii) settle
any litigation or proceedings other than those arising in the ordinary course of
business, the settlement of which would not have a Material Adverse Effect or
(xiii) enter into any contract, agreement, commitment or arrangement with
respect to any of the foregoing.
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2.02 Stockholders' Meeting; Proxy Material.
(a) The Company shall cause a meeting of its stockholders to be duly
called and held as soon as reasonably practicable after the execution of this
Agreement for the purpose of voting on the adoption of this Agreement. The Board
of Directors of the Company shall recommend approval and adoption of this
Agreement by the Company's stockholders. The Company shall use its best efforts
consistent with applicable legal requirements to solicit proxies in connection
with a meeting of stockholders called pursuant to this Section 2.02(a) and shall
solicit such proxies in favor of such approval and adoption and take all other
action necessary to attempt to secure the stockholder approval required to
effect the Merger under applicable law. Simultaneously with the execution of
this Agreement, each of Carl T. Wolf and Marion F. Wolf have entered into a
Voting Agreement dated the date hereof with Buyer, pursuant to which they have
granted to Ronald O. Ostby and Thomas A. Verdoorn, with full power of
substitution, an irrevocable proxy (collectively the "Irrevocable Proxies") to
vote all shares of Company Common Stock held of record by such stockholder (or
over which such stockholder has voting power, by contract or otherwise) to
approve and adopt this Agreement and the Merger.
(b) The Company will prepare, and file with the Securities and Exchange
Commission (the "SEC"), a proxy statement, together with a form of proxy, with
respect to the stockholders meeting described in Section 2.02(a) (such proxy
statement, together with any amendments thereof or supplements thereto, being
herein called the "Proxy Statement"). The Company (i) will use its best efforts
to have the Proxy Statement cleared by the SEC as soon as reasonably
practicable, if such clearance is required, (ii) will as soon as reasonably
practicable thereafter mail the Proxy Statement to stockholders of the Company
and (iii) will otherwise comply in all material respects with all applicable
legal requirements in respect of such meeting. The Company shall notify Buyer
promptly of the receipt of any comments from the SEC or its staff and any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Buyer with copies of all
correspondence between the Company and its representatives, on the one hand, and
the SEC or its staff, on the other hand, with respect to the Proxy Statement or
the Merger. Prior to filing the Proxy Statement with the SEC, the Company shall
provide reasonable opportunity for Buyer to review and comment upon the contents
of the Proxy Statement and shall not include therein any information to which
counsel to Buyer shall reasonably object (unless counsel to the Company shall
reasonably determine that such information should be included consistent with
applicable legal principles) or omit therefrom any information which counsel to
Buyer shall reasonably request. If at any time prior to the meeting of the
stockholders of the Company contemplated by this Section 2.02, any event
relating to the Company or any of its subsidiaries, officers or directors is
discovered by the Company which should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly so inform Buyer.
The Proxy Statement shall contain the recommendation of the Board of Directors
of the Company and the
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Special Committee in favor of the Merger and that the stockholders vote for and
adopt the Merger and this Agreement.
2.03 No Shopping.
(a) From the date hereof until the termination of this Agreement, the
Company will not, and will not permit any officer, director, employee,
investment banker or other agent or any subsidiary of the Company to, directly
or indirectly (i) take any action to seek, initiate or solicit any offer from
any person, entity or group to acquire any shares of capital stock of the
Company or its subsidiaries, to merge or consolidate with the Company or its
subsidiaries, or to otherwise acquire any significant portion of the assets of
the Company and its subsidiaries, taken as a whole, except for acquisitions
solely of inventory in the ordinary course of business (a "Third Party
Acquisition Offer"), or (ii) except to the extent otherwise required by their
fiduciary obligations under applicable law, based upon the advice of outside
counsel to the Company, engage in negotiations or discussions concerning a Third
Party Acquisition Offer or the business or assets of the Company or its
subsidiaries with, or disclose financial information relating to the Company or
its subsidiaries, or any confidential or proprietary trade or business
information relating to the business of the Company or its subsidiaries to, or
afford access to the properties, books or records of the Company or its
subsidiaries to, any third party that may be considering a Third Party
Acquisition Offer; provided, however, that if the officers or directors of the
Company shall be required by their fiduciary obligations under applicable law,
based upon the advice of outside counsel to the Company, to enter into any such
negotiations or discussions, disclose any such information or afford any such
access to any third party, the Company may do so only if (A) the Board of
Directors of the Company is advised by one or more of its financial advisors
that the third party has the financial resources to consummate a Superior
Acquisition, as defined in paragraph (c) below, and the Board of Directors of
the Company determines that the third party is likely to submit a bona fide
Third Party Acquisition Offer to consummate a Superior Acquisition; (B) the
Company has provided Buyer, as soon as reasonably practicable and in any event
prior to such discussions, negotiations, disclosure or access, notice of the
Company's intent to enter into such discussions or negotiations, to supply
information and/or to provide access, the identity of such third party and, as
soon as reasonably practicable after such terms are known by the Company, the
terms of the Third Party Acquisition Offer; and (C) such third party has signed
and delivered to the Company a confidentiality agreement substantially in the
form of the Confidentiality Agreement referred to in Section 2.12. The Company
will immediately cease or cause to be terminated any existing activities,
discussions or negotiations with any parties conducted with respect to any of
the foregoing.
(b) The Company will orally notify Buyer immediately, followed by
prompt written notice, of the receipt and the terms of any Third Party
Acquisition Offer from any person, entity or group (other than from Buyer or
Acquisition), or of any request for information
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or access, with respect to any Third Party Acquisition Offer, or any indication
from any person, entity or group that it or another person, entity or group is
considering making a Third Party Acquisition Offer or such a request, which
notice shall include the identity of the third party.
(c) For purposes of this Agreement, a "Superior Acquisition" is a
transaction pursuant to which a tender offer is made to acquire all of the
outstanding Company Stock, or a merger, consolidation or a sale of substantially
all of the assets of the Company (to be followed by a complete liquidation of
the Company) occurs, pursuant to which the per share tender offer price or the
per share merger or consolidation price or the per share price that would be
received by the stockholders in the liquidation (i) for the Company Common Stock
is higher than the Common Stock Merger Consideration and (ii) for the Company
Preferred Stock is higher than the Preferred Stock Merger Consideration.
2.04 Access to Information. The Company will give Buyer and
Acquisition, and their respective counsel, financial advisors, auditors and
other authorized representatives, full access to the offices (including a work
area for the use of Buyer, Acquisition and their authorized representatives),
properties, employees, books and records of the Company and its subsidiaries at
all reasonable times upon reasonable notice, and will instruct the employees,
counsel, financial advisors and auditors of the Company and its subsidiaries to
cooperate in all reasonable respects with Buyer, Acquisition and each such
representative in its investigation of the business of the Company and its
subsidiaries, provided that no investigation pursuant to this Section 2.04 shall
affect any representation or warranty given by the Company to Buyer and
Acquisition hereunder. The Company will confer from time to time with Buyer at
Buyer's request to discuss the status of the operations of the Company and its
subsidiaries.
2.05 Amendment of Company's Employee Plans. The Company will, effective
at or immediately prior to the Effective Time, cause any Employee Plans (as
hereinafter defined) which it may have to be amended, to the extent, if any,
reasonably requested by Buyer, for the purpose of permitting the Employee Plans
to continue to operate in conformity with the Employee Retirement Income
Security Act of 1974, as amended, and the regulations adopted pursuant thereto
("ERISA"), and the Internal Revenue Code of 1986 and the rules and regulations
adopted pursuant thereto (the "Code"), subsequent to the Merger.
2.06 Stock Options and Warrants. At or immediately prior to the
Effective Time, the Company shall use its best efforts to cause each then
outstanding Option and Warrant (whether or not such Option or Warrant is then
exercisable) to be canceled in respect of a cash payment by the Company equal to
the Purchase Price Settlement Amount for such Option or Warrant, subject to all
applicable tax withholding. The Company shall, prior to the Effective Time, take
such action as may be necessary to effect the foregoing and shall comply with
all requirements regarding income tax withholding in connection with the
foregoing.
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2.07 Best Efforts. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use its best efforts consistent with
applicable legal requirements to take, or cause to be taken, all action, and to
do, or cause to be done, all things reasonably necessary or proper and advisable
under applicable laws and regulations to ensure that the conditions set forth in
Article III hereof are satisfied and to consummate and make effective, in the
most expeditious manner reasonably practicable, the Merger and the other
transactions contemplated by this Agreement.
2.08 Consents. Buyer and the Company each shall use their respective
best efforts to obtain all material consents of third parties and governmental
authorities, and to make all governmental filings, necessary for the
consummation of the transactions contemplated by this Agreement. Buyer and the
Company each shall as soon as practicable file a Pre-Merger Notification and
Report Form under the Hart Scott Rodino Antitrusts Improvements Act (the "HSR
Act") with the Federal Trade Commission (the "FTC") and the Antitrust Division
of the Department of Justice (the "Antitrust Division") and shall use their
respective best efforts to respond as promptly as reasonably practicable to all
inquiries received from the FTC or the Antitrust Division for additional
information or documentation.
2.09 Public Announcements. Except as hereinafter provided in this
Section 2.09, Buyer and the Company will consult with each other before issuing
any press release or otherwise making any public statements prior to the
Effective Time with respect to the Merger or the other transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to receiving the consent of the other party, which consent will
not be unreasonably withheld or delayed. Nothing stated herein shall prohibit
any party from making a press release or other statement required by law or by
obligations pursuant to any listing agreement with any automated interdealer
quotation system if the party making the disclosure has first consulted with the
other parties hereto, and nothing stated herein shall prohibit Buyer, after or
concurrently with the first public disclosure by the parties regarding this
Agreement, from mailing information to its members regarding the Merger or the
other transactions contemplated hereby after prior consultation with the
Company.
2.10 Notification of Certain Matters. The Company will give prompt
notice, as soon as reasonably practicable, to Buyer and Acquisition of the
occurrence or non-occurrence of any event (i) which has had or is reasonably
likely to have a Material Adverse Effect, (ii) which has caused any
representation or warranty of the Company contained in this Agreement to be
untrue or inaccurate in any material respect or (iii) which has caused any
failure of the Company to comply in all material respects with or satisfy in all
material respects any covenant, condition or agreement to be complied with or
satisfied under this Agreement; provided, however, that the delivery of any
notice pursuant to this Section 2.10 will not limit or otherwise affect the
remedies available under this Agreement to Buyer or limit the rights of the
Company
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under this Agreement.
2.11 Certain Resignations. The Company will use all reasonable efforts
to assist Buyer in procuring the resignation, effective as of the Effective
Time, of all of the members of the Boards of Directors of the Company and the
Company's subsidiaries and of all officers of the Company and the Company's
subsidiaries as such officers; provided, however, that those persons resigning
as officers of the Company and the Company's subsidiaries shall continue as
employees thereof until such employment is terminated.
2.12 Confidentiality Agreement. The Confidentiality Agreement between
the Company and Buyer dated April 17, 1997, shall remain in full force and
effect until the Effective Time. Until the Effective Time, the Company and Buyer
agree to comply with the terms of such Confidentiality Agreement.
2.13 Write-Off of Note Receivable. Prior to the Effective Time, the
Company will write-off in its entirety on the books and the most recent balance
sheet of the Company the principal amount of, and any accrued interest on, the
promissory note of Mountain Farms, Inc. to the Company in the principal amount
of $1,675,948.
ARTICLE III
CONDITIONS OF MERGER
3.01 Conditions to the Obligations of Buyer and Acquisition to Effect
the Merger. The obligations of Buyer and Acquisition to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the following
conditions, any one or more of which (except for the condition set forth in
Section 3.01(b)) may be waived by Buyer and Acquisition:
(a) Accuracy of Representations and Warranties; Compliance with
Covenants. The representations and warranties of the Company contained in
Section 6.01 of this Agreement shall be true and correct in all material
respects (i) as of the date of this Agreement, and (ii) immediately prior to the
Effective Time with the same effect as if such representations and warranties
had been made immediately prior to the Effective Time, except to the extent that
any and all inaccuracies in any representations and warranties, other than those
in the first sentence of Section 6.01(a) and those in Section 6.01(b) and
Section 6.01(c), that were true and correct on the date of this Agreement but
were inaccurate immediately prior to the Effective Time have not had, and are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect (provided that, for purposes of this clause (ii), any
representation or warranty in Section 6.01 that is qualified by Material Adverse
Effect language shall be read solely for
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purposes of this Section 3.01(a)(ii) as if such language (other than the last
sentence of Section 6.01(c)) were not present) or impair the consummation of the
transactions contemplated hereby. The Company shall have performed and complied
in all material respects with the agreements and obligations contained in this
Agreement required to be performed and complied with by it at or prior to the
Effective Time. Buyer and Acquisition shall have received a certificate signed
on behalf of the Company by an appropriate executive officer of the Company to
the effects set forth in this paragraph (a).
(b) Stockholder Approval of Agreement and Merger. This Agreement and
the Merger shall have been approved and adopted at the meeting of the
stockholders of the Company referred to in Section 2.02 hereof by the vote
required by the Delaware Law and the Company's Certificate of Incorporation and
By-Laws.
(c) Other Corporate Action. All other corporate action on the part of
the Company necessary to authorize the execution, delivery and consummation of
this Agreement or any agreement or instrument contemplated hereby to which the
Company is or is to be a party or the transactions contemplated hereby or
thereby shall have been duly and validly taken.
(d) Absence of Litigation, Injunctions. There shall not be threatened,
instituted or pending any suit, action, investigation, inquiry or other
proceeding by or before any court or governmental or other regulatory or
administrative agency or commission requesting an order, judgment or decree
(except those in which Buyer or Acquisition is a plaintiff directly or
derivatively) which, in the reasonable judgment of Buyer would, if issued, be
reasonably likely to restrain or prohibit the consummation of the transactions
contemplated hereby or require rescission of this Agreement or such transactions
or result in material damages to Buyer, Acquisition or the Surviving Corporation
if the transactions contemplated hereby are consummated, and there shall not be
in effect any injunction, writ, preliminary restraining order or any order of
any nature issued by a court or governmental agency of competent jurisdiction
directing that the transactions contemplated hereby not be consummated as so
provided or any statute, rule or regulation enacted or promulgated that makes
consummation of the transactions contemplated hereby illegal.
(e) Absence of Material Adverse Effect. There shall not have been,
since December 31, 1996 (i) any damage, destruction or loss, whether covered by
insurance or not, that has had, or is reasonably likely to have, a Material
Adverse Effect; (ii) any suit, action, investigation, inquiry or other
proceeding by or before any court or governmental or other regulatory or
administrative agency or commission requesting an order, judgment or decree
(except those in which Buyer or Acquisition is a plaintiff directly or
derivatively) which, in the reasonable judgment of Buyer, would be reasonably
likely, if issued, to have a Material Adverse Effect; or (iii) any other event
or condition (financial or otherwise) of any character or any
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operations or results of operations that has had, or is reasonably likely to
have, a Material Adverse Effect.
(f) Opinion. Buyer and Acquisition shall have received from local
counsel to the Company (which counsel shall be satisfactory to Buyer), and
Kramer, Levin, Naftalis & Frankel, special counsel to the Company, their opinion
letters, dated the date of the Effective Time, containing the opinions in
substantially the forms of Exhibit A-1 and A-2 hereto, respectively.
(g) Consents. The Company, Buyer and Acquisition shall have received
all federal, state, local and foreign governmental consents, if any, and all
material consents of any private persons, necessary to execute and deliver this
Agreement, to consummate the transactions contemplated herein and to conduct the
business of the Company after the Effective Time in essentially the same manner
as it was conducted prior to the Effective Time, and all waiting periods
specified by law shall have expired or terminated. Without limiting the
generality of the foregoing, all filings required prior to the Merger under the
HSR Act shall have been made and all applicable waiting periods under the HSR
Act shall have expired or been terminated.
(h) Dissenting Shares
. The holders of not more than 5% of the issued and outstanding Company Stock
(which percentage shall be calculated by determining (i) the sum of the number
of Dissenting Shares constituting Company Common Stock and the number of shares
of Company Common Stock into which the Dissenting Shares constituting Company
Preferred Stock are convertible immediately prior to the Effective Time as a
percentage of (ii) the sum of the number of issued and outstanding shares of
Company Common Stock and the number of shares of Company Common Stock into which
the issued and outstanding Company Preferred Stock is convertible immediately
prior to the Effective Time) shall have taken such action prior to or at the
time of the stockholders' vote as is necessary as of that time to entitle them
to the statutory dissenters' rights referred to in Section 1.07 hereof.
(i) Cancellation of Options and Warrants
. Except for Options and Warrants, entitling the holders thereof to purchase, in
the aggregate, up to a maximum of 10,000 shares of Company Common Stock, the
Company shall have obtained the written cancellation of all Options and Warrants
from the holders thereof and shall have paid the Purchase Right Settlement
Amount for each such Option and Warrant entitled to such payment as provided in
Section 1.08 of this Agreement.
(j) Title Insurance. The Company shall have provided to Buyer and
Acquisition standard owner's policies of title insurance in amounts reasonably
acceptable to
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Buyer and Acquisition covering each parcel of real property owned by the Company
or its subsidiaries. Such policies or the latest endorsements thereof shall
show, as of a date no more than five days prior to the Closing (as hereinafter
defined), that the Company or one of its subsidiaries has title in fee simple to
all such real property, shall delete all standard exceptions and shall not show
any material inaccuracy in any representation made with respect to such real
property in Section 6.01(h) hereof.
(k) Non-Compete Agreements. Buyer and Carl T. Wolf shall have entered
into a non-compete agreement substantially in the form of Exhibit B hereto, and
Buyer and Marion F. Wolf shall have entered into a non-compete agreement
substantially in the form of Exhibit C hereto.
(l) Cancellation of Subsidiary Option and Put Right. The Company shall
have obtained the termination, effective as of the Effective Time, of the Stock
Option Agreement, Put Option Agreement and Shareholders Agreement, each dated as
of January 1, 1995 (as amended to the date hereof, collectively referred to as
the "Meyers Agreements"), between MCT Dairies, Inc. and Kenneth E. Meyers (and,
in the case of certain of the Meyers Agreements, the Company) in exchange for a
cash payment to Kenneth E. Meyers in an amount not to exceed the amount
calculated pursuant to the formula set forth in Section 3 of the Put Option
Agreement, assuming that all shares subject to the Stock Option Agreement had
been purchased, less an amount equal to the purchase price per share under the
Stock Option Agreement multiplied by such number of shares.
(m) Employment Agreements. The Company and each of Messrs. Dominick
Gonella, Arthur Karmel, George S. Wenger, David Horowitz, Michael Kelly and
Marysusan Fitzsimmons shall have entered into an agreement, in form satisfactory
to Buyer and effective as of the Effective Time, acknowledging the Company's
right to terminate such employee without cause during the first six months after
the Effective Time. MCT Dairies, Inc. and Kenneth E. Meyers shall have entered
into an agreement, in form reasonably satisfactory to Buyer and effective as of
the Effective Time, terminating the existing employment agreement between MCT
Dairies, Inc. and Mr. Meyers.
3.02 Conditions to the Obligations of the Company to Effect the Merger.
The obligations of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions, any
one or more of which (except for the condition set forth in Section 3.02(b)) may
be waived by the Company:
(a) Accuracy of Representations and Warranties, Compliance with
Covenants. The representations and warranties of Buyer and Acquisition contained
in Section 6.02 of this Agreement shall be true and correct in all material
respects immediately prior to the Effective
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Time with the same effect as if such representations and warranties had been
made immediately prior to the Effective Time; Buyer and Acquisition each shall
have performed and complied in all material respects with the agreements and
obligations contained in this Agreement required to be performed and complied
with by them at or prior to the Effective Time; and the Company shall have
received a certificate signed on behalf of Buyer by an appropriate executive
officer of Buyer to the effects set forth in this paragraph (a).
(b) Stockholder Approval of Agreement and Merger. This Agreement and
the Merger shall have been adopted at the meeting of the stockholders of the
Company referred to in Section 2.02 hereof by the vote required by the Delaware
Law and the Company's Certificate of Incorporation and By-Laws.
(c) Corporate Action. All corporate action on the part of Buyer and
Acquisition necessary to authorize the execution, delivery and consummation of
this Agreement or any agreement or instrument contemplated hereby to which Buyer
or Acquisition is or is to be a party or the transactions contemplated hereby or
thereby shall have been duly and validly taken.
(d) Absence of Litigation, Injunction. There shall not be threatened,
instituted or pending any suit, action, investigation, inquiry or other
proceeding by or before any court or governmental or other regulatory or
administrative agency or commission requesting an order, judgment or decree
(except those in which the Company is a plaintiff directly or derivatively)
which, in the reasonable judgment of the Company, would, if issued, be
reasonably likely to restrain or prohibit the consummation of the transactions
contemplated hereby or require rescission of this Agreement or such transactions
or result in material damages to the Company, and there shall not be in effect
any injunction, writ, preliminary restraining order or any order of any nature
issued by a court or governmental agency of competent jurisdiction directing
that the transactions contemplated hereby not be consummated as so provided or
any statute, rule or regulation enacted or promulgated that makes consummation
of the transactions contemplated hereby illegal.
(e) Opinion. The Company shall have received from Thuy-Nga T. Vo,
counsel to Buyer and Acquisition, and Faegre & Benson LLP, special counsel to
Buyer and Acquisition, their opinion letters, dated the date of the Effective
Time, containing the opinions in substantially the forms of Exhibit D-1 and D-2
hereto, respectively.
(f) HSR Act. All filings required prior to the Merger under the HSR Act
shall have been made and all applicable waiting periods under the HSR Act shall
have expired or been terminated.
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ARTICLE IV
CLOSING
4.01 Time and Place. Subject to the provisions of Articles III and V
hereof, the closing (the "Closing") of the transactions contemplated hereby
shall take place at the offices of Faegre & Benson LLP on the same business day
as, and promptly following, the meeting of stockholders referred to in Section
2.02 hereof or at such other place or at such other time as Buyer and the
Company may mutually agree upon for the Closing to take place.
4.02 Deliveries at the Closing. Subject to the provisions of Articles
III and V hereof, at the Closing:
(a) There shall be delivered to Buyer, Acquisition and the Company the
opinions, certificates, and other documents and instruments the delivery of
which is contemplated under Article III hereof;
(b) Acquisition and the Company shall cause the Certificate of Merger
to be filed as provided in Section 1.03 hereof and shall take any and all other
lawful actions and do any and all other lawful things necessary to cause the
Merger to become effective; and
(c) Subject to the rights of the Surviving Corporation to receive a
refund of amounts remaining in the Fund nine months after the Effective Time
under Section 1.09 hereof, Buyer or Acquisition shall irrevocably deposit with
the Disbursing Agent the amount designated as the Fund in Section 1.09 hereof.
ARTICLE V
TERMINATION AND ABANDONMENT
5.01 Termination. This Agreement may be terminated and the Merger and
the other transactions contemplated herein may be abandoned at any time prior to
the Effective Time whether before or after approval of the Merger by the
stockholders of the Company and Acquisition:
(a) by mutual written consent of Buyer, Acquisition and the Company;
(b) by Buyer, Acquisition or the Company, if the Merger shall not have
been consummated on or before March 1, 1998, which date may be extended by
mutual agreement of Buyer, Acquisition and the Company, unless such failure of
consummation shall be due to failure by
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the party seeking to terminate this Agreement to comply in all material respects
with the terms, covenants and agreements contained in this Agreement;
(c) by Buyer or Acquisition, if (i) any of the conditions set forth in
Section 3.01 hereof shall become impossible to fulfill other than for reasons
totally within the control of Buyer or Acquisition, and shall not have been
waived pursuant to Section 8.03 hereof, or (ii) the stockholders of the Company
shall fail to approve and adopt this Agreement and the Merger by the vote
required by the Delaware Law and the Company's Certificate of Incorporation and
ByLaws at the first meeting of stockholders called for that purpose or any
adjournment thereof;
(d) by the Company, if any of the conditions set forth in Section 3.02
hereof shall become impossible to fulfill other than for reasons totally within
the control of the Company, and shall not have been waived pursuant to Section
8.03 hereof;
(e) by the Company, if the Company receives a bona fide Third Party
Acquisition Offer which constitutes a Superior Acquisition and which Third Party
Acquisition Offer the Board of Directors of the Company or the Special Committee
accepts, approves or recommends; or
(f) by Buyer or Acquisition, if the Board of Directors of the Company
fails to call or hold a special meeting of stockholders or to conduct the vote
to approve and adopt this Agreement and the Merger at the special meeting or any
adjournment thereof or if the Board of Directors of the Company or the Special
Committee fails to recommend the Merger to the Company's stockholders, withdraws
or qualifies such recommendation or its approval of this Agreement or the Merger
once given or takes any position or action that is inconsistent with such
recommendation or accepts, recommends or approves a Third Party Acquisition
Offer, whether or not as a result of the Board's or the Special Committee's
exercise of its fiduciary duties.
5.02 Procedure and Effect of Termination. In the event of termination
and abandonment of the Merger by one or more of the Company, Buyer or
Acquisition pursuant to Section 5.01 hereof, written notice thereof shall
forthwith be given to the other parties hereto and this Agreement shall
terminate and the Merger shall be abandoned without further action by any of the
parties hereto. If this Agreement is terminated as provided herein, no party
hereto shall have any liability or further obligation to any other party to this
Agreement except as stated in Section 8.04 hereof or except with respect to a
material breach by a party to this Agreement of any representation, warranty or
covenant contained in this Agreement.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties of the Company. The Company
warrants and represents to Buyer and Acquisition, and their respective
successors and assigns, as follows:
(a) Corporate Organization and Qualification. Each of the Company and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has the requisite
corporate power and authority to own, lease and operate all of its properties
and assets and to carry on its business as it is now being conducted. Each of
the Company and its subsidiaries is duly qualified as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned, operated or leased, or the nature of its activities,
makes such qualification necessary, except such jurisdictions where failure to
be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. The Company has delivered to Buyer and Acquisition a certified
copy of its Certificate of Incorporation and its By-Laws and copies of all
similar organizational documents and By-Laws of its subsidiaries. Each such copy
is complete and correct.
(b) Capitalization. The authorized capital stock of the Company at the
date hereof consists of 10,000,000 shares of Company Common Stock and 1,000,000
shares of Company Preferred Stock. On the date hereof, 5,227,657 shares of
Company Common Stock were issued and outstanding and 106,606 shares of Company
Common Stock were held in the treasury of the Company. Of the 1,000,000 shares
of authorized Company Preferred Stock, the Board of Directors of the Company has
designated 60,000 shares as Series A 7.50% Cumulative Convertible Preferred
Stock, of which, on the date hereof, 45,000 shares were issued and outstanding
and no shares were held in the treasury of the Company. The Board of Directors
of the Company has made no other designations of any series of Company Preferred
Stock. Except as set forth above in this Section 6.01(b), the Company has no
other issued or outstanding shares of capital stock. There are no outstanding
subscriptions, options, warrants, or other rights to purchase Company Stock or
any other capital stock or other equity securities of the Company or its
subsidiaries or any calls or other agreements or commitments by which the
Company or its subsidiaries are bound in respect of the Company Stock or other
capital stock or other equity securities of the Company or its subsidiaries,
whether issued or unissued, and no outstanding securities are convertible into
or exchangeable for any such capital stock or other equity securities, except
(i) Options to purchase up to an aggregate of 898,932 shares of Company Common
Stock granted to the officers and employees of the Company and its subsidiaries
and others listed in Section 6.01(b) of the Disclosure Schedule for the
respective number of shares at the respective exercise prices listed therein
beside their names, (ii) Warrants
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to purchase up to an aggregate of 125,003 shares of Company Common Stock granted
to the persons listed in Section 6.01(b) of the Disclosure Schedule for the
respective number of shares at the respective exercise prices listed therein
beside their names, (iii) the 45,000 shares of Company Preferred Stock which are
convertible into Company Common Stock pursuant to a formula under which each
share of Company Preferred Stock can be converted into a number of shares of
Company Common Stock equal to (A) $50.00 plus an amount equal to all accrued and
unpaid dividends on a share of Company Preferred Stock to the date fixed for
conversion, divided by (B) $7.375 per share and (iv) the option and put rights
of Kenneth E. Meyers contained in the Meyers Agreements to purchase and sell
shares of common stock of MCT Dairies, Inc. There are no stock appreciation
rights or phantom stock rights or performance shares outstanding with respect to
the Company or any of its subsidiaries. All of the outstanding shares of capital
stock of the Company and its subsidiaries are validly issued, fully paid and
nonassessable. Except as set forth in Section 6.01(b) of the Disclosure
Schedule, the Company has no subsidiaries except MCT Dairies, Inc. and Dakota
Farms Cheese, Inc., 100% of the outstanding capital stock of each of which is
owned by the Company, and Alpine Lace Fresh Deli-Express, Inc., 75% of the
outstanding capital stock of which is owned by the Company, and in each case
such capital stock is owned free and clear of all restrictions and encumbrances
other than restrictions on transfer imposed by federal and state securities
laws, and the Company owns no other equity securities of or equity interest in
any other entity. None of the outstanding shares of capital stock of the Company
or any of its subsidiaries or the Options or the Warrants were granted in
violation of preemptive or similar rights. No Preferential Dividend NonPayment,
as defined in the certificate of designation establishing the Series A 7.50%
Cumulative Convertible Preferred Stock of the Company, has occurred and no
accrued or cumulative dividends on such Company Preferred Stock remain unpaid
other than dividends that first accrued after September 15, 1997. There are no
voting trusts or other agreements or understandings to which the Company or any
of its subsidiaries is a party or of which the Company otherwise has knowledge
with respect to the voting of capital stock of the Company.
(c) Authority. The Company has the corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company have been duly and effectively authorized by the Special
Committee and the Board of Directors of the Company, and, except for approval of
this Agreement by the stockholders of the Company as provided in Section 3.01(b)
hereof, no further corporate action is necessary on the part of the Company to
authorize the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company and
constitutes the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms. Notwithstanding anything stated
herein, the consummation of the Merger is subject to the satisfaction of the
conditions set forth in Section 3.02 hereof. Except as disclosed in Section
6.01(c) of the Disclosure Schedule, neither the execution and delivery of this
Agreement by the
23
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Company, nor the consummation by the Company or its subsidiaries of the
transactions contemplated hereby, (i) will conflict with or result in a breach
of the Certificate of Incorporation or By-Laws, as currently in effect, of the
Company or any of its subsidiaries, or (ii) require the consent or approval of
any governmental authority having jurisdiction over any of the business or
assets of the Company or any of its subsidiaries, or result in a breach of, or
constitute a default or an event which, with the passage of time or the giving
of notice or both would constitute a default, give rise to a right of
termination, cancellation or acceleration, create any entitlement to any payment
or benefit (except as expressly contemplated by this Agreement), or require
notice to or the consent of any third party (except the filing and expiration or
termination of the applicable waiting periods under the HSR Act) or result in
the creation of any lien on the assets of the Company or its subsidiaries under,
any other instrument, contract or agreement to which the Company or any of its
subsidiaries is a party or by which any of them or any of their properties or
assets may be bound, excluding from the foregoing clause (ii) any consents,
approvals, breaches, defaults or rights of termination, cancellation or
acceleration or entitlements or notices or liens which, either individually or
in the aggregate, are not reasonably likely to have a Material Adverse Effect or
to impair the Company's ability to consummate the Merger or the other
transactions contemplated hereby.
(d) No Proceedings. Neither the execution and delivery of this
Agreement by the Company, nor the consummation by the Company or its
subsidiaries of the transactions contemplated hereby, are being challenged by or
are the subject of any pending or, to the knowledge of the Company, threatened
litigation or governmental investigation or proceeding as of the date of this
Agreement, or will violate any order, writ, injunction, decree, statute, rule or
regulation presently applicable to the Company or any subsidiaries or any of
their material properties or assets.
(e) Securities Reports. (i) The Company has heretofore delivered to the
Buyer and Acquisition, in the form filed with the SEC, its (x) Annual Report on
Form 10-K for each of the fiscal years ended December 31, 1993 through 1996,
inclusive, (y) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since May 1, 1993, and (z) all
other reports or registration statements and all other filings (including
amendments to previously filed documents) made by the Company with the SEC since
January 1, 1993 (collectively, the "SEC Reports"), provided, however, that the
Company has not delivered to the Buyer and Acquisition any Form 10-Q Reports for
periods ended on or prior to December 31, 1996. No SEC Report (including any
document incorporated by reference therein) contained, as of its filing date,
any untrue statement of a material fact or omitted to state any fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading and each SEC Report at the time of
its filing complied as to form in all material respects with the applicable laws
and rules and regulations of the SEC. Since January 1, 1993, the Company has
filed in a timely manner all reports that
24
<PAGE>
it was required to file with the SEC pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the SEC.
Each of the consolidated financial statements contained in the SEC Reports and
the consolidated balance sheet of the Company and its subsidiaries at August 31,
1997 (a copy of which has been delivered to Buyer) was prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and each fairly presented in all material respects the consolidated
assets, liabilities and financial position of the Company and its subsidiaries
as at the respective dates thereof and, except for the period ended August 31,
1997, the consolidated results of operations and changes in financial position
and changes in stockholders' equity of the Company and its subsidiaries for the
periods indicated, subject in the case of interim financial statements to normal
year-end adjustments and except that the interim financial statements do not
contain all of the footnote disclosures required by generally accepted
accounting principles and except that the Company does not accrue vacation pay.
(ii) The Proxy Statement will not, at the time the Proxy Statement is
mailed, contain any untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and will not, at the time of the meeting of stockholders to which
the Proxy Statement relates or at the Effective Time omit to state any material
fact necessary to correct any statement which has become false or misleading in
any earlier communication with respect to the solicitation of any proxy for such
meeting; except that no representation is made by the Company with respect to
statements made or incorporated by reference into the Proxy Statement based on
information furnished in writing to the Company by Buyer specifically for use in
the Proxy Statement. The Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC thereunder.
(f) Taxes. (i) The Company has duly filed or caused to be filed all
material federal, state, local, foreign and other tax returns, reports and
declarations of estimated tax required to be filed by it or its subsidiaries
before such filings became delinquent and has paid or established adequate
reserves for the payment of all federal, state, local and foreign taxes and all
other taxes, assessments, deficiencies, levies, imposts, duties, license fees,
registration fees, withholdings or other similar governmental charges of every
kind, character or description, and any interest, penalties or additions to tax
imposed thereon (collectively, the "Taxes"), (x) shown on such returns which are
due or (y) claimed by any taxing authority to be due. All such tax returns,
reports and declarations of estimated tax are complete and accurate in all
material respects.
(ii) All material amounts required to be withheld or collected by the
Company or its subsidiaries for income taxes, social security taxes,
unemployment insurance taxes and other
25
<PAGE>
employee withholding taxes have been so withheld or collected and either paid to
the respective governmental authority or accrued and reserved against and
entered upon the consolidated books of the Company and its subsidiaries as of
the date of the most recent consolidated financial statements of the Company and
its subsidiaries that have been delivered to Buyer.
(iii) For federal income tax purposes, all tax years ending on or
before December 31, 1992 are closed or the statute of limitations has expired
with respect thereto. Except as disclosed in Section 6.01(f) of the Disclosure
Schedule, there is no action, suit, proceeding, audit, investigation or claim
pending or, to the knowledge of the Company, threatened in respect of any Taxes
for which the Company or any of its subsidiaries may become liable. No presently
effective waiver of any statute of limitations with respect to any taxable year
has been executed by the Company or its subsidiaries. There is no presently
effective agreement, waiver or consent providing for an extension of time with
respect to the assessment of any Taxes against the Company or its subsidiaries,
and no presently effective power of attorney granted by the Company or any of
its subsidiaries with respect to any tax matters is currently in force.
(iv) No property of the Company or its subsidiaries is "tax exempt use
property" within the meaning of Section 168(h) of the Code.
(v) Except as set forth in Section 6.01(f)(v) of the Disclosure
Schedule, none of the Company or any of its subsidiaries has made any payment,
or is a party to any contract, agreement or arrangement which could obligate it
to make any payment that would, but for the provisions of clause (ii) of Section
280G(b)(2)(A) of the Code, constitute a "parachute payment" within the meaning
of Section 280G of the Code.
(vi) Except as set forth in Section 6.01(f)(vi) of the Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any tax
sharing agreement.
(g) Absence of Changes. Except as set forth in Section 6.01(g) of the
Disclosure Schedule, since December 31, 1996, the Company and its subsidiaries
have conducted their businesses and operations in the ordinary course of
business, and no transaction or event of the type restricted or prohibited by
Section 2.01(c) or (d) hereof has occurred. Since December 31, 1996 through the
date of this Agreement, the amount spent or committed by the Company and its
subsidiaries, in the aggregate, for the purchase, lease or other acquisition of
any assets or properties, including capital assets but excluding inventory
(including supplies) acquired in the ordinary course of business and excluding
those items disclosed in Section 6.01(g) of the Disclosure Schedule, did not
exceed $25,000.
(h) Properties. The Company and its subsidiaries have good and
marketable title to all real and personal properties reflected in the Company's
consolidated balance sheet dated as of
26
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December 31, 1996 or acquired by the Company and its subsidiaries after December
31, 1996 (except for inventory and obsolete equipment sold or otherwise disposed
of or the collection of accounts receivable since such date in the ordinary
course of business), free and clear of all mortgages, liens, pledges, charges,
restrictions, encroachments, rights of third parties or other encumbrances of
any kind or character, except (i) liens for current taxes not yet due and
payable, (ii) inchoate mechanic's, warehousemen's, materialmen's or similar
liens arising in the ordinary course of business, (iii) liens, encumbrances,
restrictions, encroachments and easements, all with respect to tangible
properties which were not incurred in connection with the borrowing of money or
the obtaining of advances or credit and which do not materially detract from the
value of or materially interfere with the present use of the properties subject
thereto or affected thereby, or otherwise materially impair present business
operations at such properties, and (iv) existing mortgages, liens and
encumbrances disclosed in the Company's consolidated balance sheet dated
December 31, 1996. All real property owned by the Company and its subsidiaries
is listed by address in Section 6.01(h) of the Disclosure Schedule. All leases
of real or material personal property to which the Company or any of its
subsidiaries is a party are valid, binding and enforceable in accordance with
their respective terms, subject to any bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and except that the remedies of specific performance,
injunctive and other forms of equitable relief are subject to certain tests of
equity jurisdiction, equitable defenses and the discretion of the court before
which any proceeding therefor may be brought, and those in effect on the date
hereof have been delivered to Buyer and are listed in Section 6.01(h) of the
Disclosure Schedule, and neither the Company nor its subsidiaries nor, to the
knowledge of the Company, any other party thereto is in material default under
or in respect of any such lease, the result of which default could have,
individually or in the aggregate, together with all other such defaults, a
Material Adverse Effect. The real property described in Section 6.01(h) of the
Disclosure Schedule as being owned by the Company and its subsidiaries and the
real property subject to the leases listed in Section 6.01(h) of the Disclosure
Schedule constitute the only real property used by the Company and its
subsidiaries in the conduct of their businesses. The buildings, plants,
structures and equipment of the Company and its subsidiaries that are used in
the operation of their respective businesses are in good operating condition and
repair (ordinary wear and tear excepted) and do not encroach upon any property
not owned or leased by the Company or its subsidiaries. Except as set forth in
Section 6.01(h) of the Disclosure Schedule all the inventory owned by the
Company and its subsidiaries, to the extent not covered by adequate reserves, is
in good condition, and the finished goods inventory of the Company and its
subsidiaries is salable in the ordinary course of business.
(i) Contracts. All Contracts (as hereinafter defined) in effect on the
date hereof are valid and binding agreements of the Company or its subsidiaries
in full force and effect, and neither the Company nor its subsidiaries nor, to
the knowledge of the Company, any other party thereto
27
<PAGE>
is in default under or in respect of any such Contract, the result of which
default could have, individually or in the aggregate, together with all other
such defaults, a Material Adverse Effect. All such Contracts in effect on the
date hereof have been delivered to Buyer and Acquisition and are listed in
Section 6.01(i) of the Disclosure Schedule.
As used herein, "Contract" shall mean any of the following agreements
or contracts to which the Company or any of its subsidiaries is a party or by
which any of them or their assets are bound: (i) non-compete agreements, (ii)
royalty agreements and licenses (as licensor or licensee) of any material
patents, trademarks, trade names, service marks, copyrights or software (other
than non-negotiated licenses of generally available commercial software), (iii)
agreements for the purchase or sale of products or services under which the
undelivered balance of such products or services has a price in excess of
$25,000, (v) agreements evidencing, securing or guaranteeing indebtedness for
borrowed money, (vi) agreements with distributors, sales representatives and
brokers, (vii) agreements for capital expenditures the unpaid obligations of the
Company or its subsidiaries under which exceed $25,000, (viii) agreements for
the purchase or sale of any business, division or subsidiary by or to the
Company or its subsidiaries, (ix) agreements with officers, directors,
beneficial owners of 5% or more of the outstanding Company Stock (or any
ascendant, descendent, sibling or spouse of any such person) or any trust,
partnership, corporation or other entity in which any of such persons has at
least a 5% equity interest ("Associates"), (x) agreements entered into other
than in the ordinary course of business and (xi) agreements in which the
aggregate amount to be paid or received by the Company and its subsidiaries
exceeds $25,000.
(j) Intellectual Property. Section 6.01(j) of the Disclosure Schedule
sets forth a true and correct list of all material patents, trademarks, trade
names, service marks and copyrights, and applications therefor, which are held
by any of the Company or its subsidiaries, and a listing of all recipes
constituting trade secrets of the Company or its subsidiaries (the "Intellectual
Property"). No patents, trademarks, trade names, service marks, copyrights or
recipes are used by the Company or its subsidiaries in the conduct of their
businesses except the Intellectual Property or those licensed pursuant to
licenses listed in Section 6.01(i) of the Disclosure Schedule or non-negotiated
licenses of generally available commercial software. The operation by the
Company and its subsidiaries of their respective businesses has not infringed on
any patent, trademark, trade name, service mark, copyright or recipe of any
other person or entity, and none of the Company or its subsidiaries has made use
of any invention, process, technique, confidential information or trade secret
in violation of the rights of any other person or entity, and the Company has no
knowledge of any allegations by any other person or entity to the contrary. The
Company has no knowledge of any pending patent, trademark, trade name, service
mark or copyright application of any other person or entity which, if issued or
registered, would be infringed upon by the operations of the Company or any of
its subsidiaries, in each case in a way which is reasonably likely to have a
Material Adverse Effect. To the
28
<PAGE>
knowledge of the Company, except as set forth in Section 6.01(j) of the
Disclosure Schedule, no other person or entity is infringing in any material
respect upon the Intellectual Property or is making use of any material
invention, process, technique, confidential information or trade secret in
violation of the rights of any of the Company or its subsidiaries, nor would any
other person or entity be infringing in any material respect upon any pending
patent, trademark, trade name, service mark, copyright application or recipe of
the Company or any of its subsidiaries in the event that any of the foregoing
becomes registered or issued. The Company and its subsidiaries have taken all
steps reasonably required to maintain the Intellectual Property, including
timely payment of all fees and timely filing of all documents required under
intellectual property laws and regulations, except where the failure to timely
pay such fees or timely file such documents is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect. None of the Company
or its subsidiaries has used or enforced, or failed to use or enforce, any of
the Intellectual Property in any manner which is reasonably likely to limit its
validity or result in its invalidity, or has received any notice that any of the
Intellectual Property has been declared unenforceable or otherwise invalid by
any governmental entity, except where such invalidity or unenforceability is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect. Except as set forth in Section 6.01(j) of the Disclosure Schedule, no
employees of the Company or any of its subsidiaries have any rights with respect
to the Intellectual Property.
(k) Undisclosed Liabilities. There are no material liabilities of the
Company or its subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, other than (i) liabilities
disclosed or set forth in the Company's consolidated balance sheet dated
December 31, 1996, (ii) liabilities incurred in the ordinary course of business
since December 31, 1996 or that individually or in the aggregate are not
reasonably likely to have a Material Adverse Effect, provided that the existence
of any such liability does not otherwise constitute a material misrepresentation
under this Agreement, (iii) liabilities under, or required to be incurred under,
this Agreement, (iv) liabilities under contracts and agreements (other than
those in default) set forth in Section 6.01(i) of the Disclosure Schedule or the
non-disclosure of which therein does not constitute a misrepresentation under
Section 6.01(i) of this Agreement, and (v) tax liabilities disclosed in Section
6.01(f) of the Disclosure Schedule or the non-disclosure of which therein does
not constitute a misrepresentation under Section 6.01(f) of this Agreement.
(l) Litigation. Except as disclosed in Section 6.01(l) of the
Disclosure Schedule, there are no claims (including product liability claims),
litigation, arbitrations, administrative proceedings, abatement orders or
investigations of any kind pending or, to the knowledge of the Company,
threatened against the Company or its subsidiaries or any of their officers,
employees or directors in connection with the business or affairs of the Company
or its subsidiaries, which, if decided adversely to the Company, its
subsidiaries, or such officer, employee or director, are
29
<PAGE>
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect.
(m) Compliance with Laws. The Company and its subsidiaries have
substantially complied with, and are not in material default under or in
violation of, any laws, ordinances and regulations or other governmental
restrictions, orders, judgments or decrees applicable to their respective
businesses, including individual products marketed by them, which default or
violation is reasonably likely to have, individually or in the aggregate
together with all other such defaults or violations, a Material Adverse Effect.
(n) Licenses and Permits. All licenses, franchises, permits and other
governmental authorizations of the Company and its subsidiaries are valid and
sufficient for all businesses presently carried on by the Company and its
subsidiaries, and the Company and its subsidiaries are not in violation of any
such license, franchise, permit or other governmental authorization the result
of which would be reasonably likely to have, individually or in the aggregate,
together with all other such violations, a Material Adverse Effect. All such
material licenses, franchises, permits and other governmental authorizations in
effect on the date hereof are listed in Section 6.01(n) of the Disclosure
Schedule.
(o) Brokers; Finders. Except for the fees of Merrill Lynch, Pierce,
Fenner & Smith Incorporated, which the Company agrees to pay, there are no
claims for brokerage commissions, finders' fees, investment advisory fees or
similar compensation in connection with this Agreement or the transactions
contemplated by this Agreement, based on any arrangement, understanding,
commitment or agreement made by or on behalf of the Company or its subsidiaries,
obligating the Company, Buyer or Acquisition to pay such claim.
(p) Employee Plans. (i) Each employee pension benefit plan ("Pension
Plan"), as such term is defined in Section 3 of ERISA, each employee welfare
benefit plan ("Welfare Plan"), as such term is defined in Section 3 of ERISA,
and each deferred compensation, bonus, incentive, stock incentive, option, stock
purchase or other employee benefit plan, agreement, commitment or arrangement
("Benefit Plan") which is maintained by the Company or any of its Affiliates (as
hereinafter defined) or to which the Company or any of its Affiliates
contributes or is under any obligation to contribute (collectively, the
"Employee Plans") has been delivered to Buyer and Acquisition and is listed in
Section 6.01(p) of the Disclosure Schedule. In addition, copies of the most
recent determination letter issued by the Internal Revenue Service with respect
to each Pension Plan and copies of the annual reports (Form 5500 Series)
required to be filed with any governmental agency for each Pension Plan and each
Welfare Plan for the three most recent plan years of each such plan have been
delivered to Buyer and Acquisition.
(ii) The Company and each of its Affiliates have made on a timely basis
all contributions or payments required to be made by them pursuant to the terms
of the Employee Plans, ERISA,
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the Code or other applicable laws, unless such contributions or payments that
have not been made are immaterial in amount and the failure to make such
payments or contributions will not materially affect the Employee Plans. With
respect to each Pension Plan which is subject to Title I, Subtitle B, Part 3 of
ERISA (concerning "Funding"), the funding method used in connection with such
Pension Plan is acceptable under ERISA and the actuarial assumptions used in
connection with funding such Pension Plan, in the aggregate, are reasonable
(taking into account the experience of such Pension Plan and reasonable
expectations). The actuarial present value (based upon the same actuarial
assumptions as those heretofore used for funding purposes) of all vested and
nonvested accrued benefits (whether on account of retirement, termination, death
or disability) under each such Pension Plan does not exceed the net fair market
value of the assets held to fund each such Pension Plan.
(iii) Each Employee Plan (and any related trust or other funding
instrument) has been administered in all material respects in compliance with
its terms and in both form and operation is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other applicable
laws and regulations, and all reports required to be filed with any government
agency with respect to each Pension Plan and each Welfare Plan have been timely
filed. The Company has no knowledge of facts that would cause the Internal
Revenue Service to disqualify any Pension Plan which is intended to be a
tax-qualified plan under Section 401(a) of the Code.
(iv) There are no inquiries or proceedings pending or, to the knowledge
of the Company, threatened by the Internal Revenue Service, the U.S. Department
of Labor, the Pension Benefit Guaranty Corporation (the "PBGC"), or any
participant or beneficiary with respect to any Employee Plan or any other plan
in the past maintained by the Company or any of its Affiliates or to which the
Company or any of its Affiliates have ever been under an obligation to
contribute. Neither the Company nor, to the knowledge of the Company, any plan
fiduciary of any Pension Plan or Welfare Plan has engaged in any transaction in
violation of Section 406(a) or (b) of ERISA (for which no exemption exists under
Section 408 of ERISA) or any "prohibited transaction" (as defined in Section
4975(c)(1) of the Code) for which no exemption exists under Section 4975(c)(2)
or 4975(d) of the Code, or is subject to any excise tax imposed by the Code or
ERISA with respect to any Employee Plan.
(v) Neither the Company nor any of its Affiliates has ever been a
sponsor of, contributed to, or been under an obligation to contribute to any
"multi-employer plan", as such term is defined in Section 3(37) of ERISA.
(vi) Neither the Company nor any of its Affiliates has any unpaid
liability to the PBGC. The Company has paid all premiums (and interest and
penalties for late payments, if applicable) due the PBGC with respect to each
Pension Plan for each plan year thereof for which such premiums are required. In
addition, no "reportable event" (as defined in Section 4043(b) of
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ERISA) has taken place with respect to any Employee Plan and no filing has been
made by the Company or any Affiliate with the PBGC or the Internal Revenue
Service to terminate any Employee Plan.
(vii) For purposes of this Section 6.01(p), the term "Affiliate"
includes (A) any trade or business with which the Company is under common
control within the meaning of Section 4001(b) of ERISA, (B) any corporation with
which the Company is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Code, (C) any entity with which the Company is
under common control within the meaning of Section 414(c) of the Code, (D) any
entity with which the Company is a member of an affiliated service group within
the meaning of Section 414(m) of the Code, and (E) any entity with which the
Company is aggregated under Section 414(o) of the Code.
(q) Labor Matters. There are no existing labor disputes or disturbances
which are reasonably likely to have a Material Adverse Effect. The employees of
the Company and its subsidiaries are not represented by any union or
association, and there are no pending or, to the Company's knowledge, threatened
representational questions concerning the employees of the Company or its
subsidiaries. Neither the Company nor any of its subsidiaries is subject to any
collective bargaining agreement with any union or other association for
employees.
(r) Environmental. Except as set forth in Section 6.01(r) of the
Disclosure Schedule:
(i) Neither the Company nor any of its subsidiaries has received
written notice of, or to the knowledge of the Company is subject to, any pending
or threatened action, cause of action, claim or investigation alleging liability
under or non-compliance with any applicable federal, state or local laws or
regulations relating to pollution or the protection of human health or the
environment ("Environmental Laws"), except for such actions, causes of action,
claims or investigations which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect.
(ii) To the knowledge of the Company, there has been no spill,
discharge, leak, emission, injection, disposal, escape, dumping or release of
any kind (collectively, "Release") on, beneath, above or into any of the real
property currently owned, leased or operated by the Company or any of its
subsidiaries (collectively, the "Current Property"), or any of the real property
formerly owned, leased or operated by the Company or any of its subsidiaries
(collectively, the "Former Property"), of any pollutants, contaminants,
hazardous substances, hazardous chemicals, toxic substances, hazardous wastes,
infectious wastes, radioactive materials, materials, petroleum (including
without limitation crude oil or any fraction thereof) or solid wastes, including
without limitation those defined in any Environmental Law ("Hazardous
Materials"), except for any Releases which have been investigated and cleaned up
and which,
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individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect.
(iii) Neither of the Company nor any of its subsidiaries has been
identified as a potentially responsible party at a site listed in the National
Priorities List.
(iv) To the knowledge of the Company, no Current Property is or ever
has been used by the Company, and no Former Property was used by the Company
during the Company's or any of its subsidiaries' period of ownership or
operation thereof, or by any other person or entity under the Company's control
for the storage, disposal, generation, manufacture, refinement, transportation,
production or treatment of any Hazardous Materials in such a manner as to
require a permit under the Resource Conservation and Recovery Act, 42 U.S.C. ss.
6901, et seq.
(v) To the knowledge of the Company, there are no underground storage
tanks, injection wells or landfills located on the Current Property, and there
are no asbestos-containing materials or polychlorinated biphenyls (PCBs) located
on the Current Property in such form, quantities or condition which create any
material unpaid liability or obligation of the Company or any of its
subsidiaries under any Environmental Laws.
(s) Suppliers and Customers. Section 6.01(s) of the Disclosure Schedule
lists the names of the ten largest branded customers, the ten largest
non-branded customers and the ten largest suppliers (by dollar volume,
indicating the same) of the Company and its subsidiaries, taken as a whole, for
each of (i) the 12-month period commencing January 1, 1996 and ending on
December 31, 1996 and (ii) the six-month period commencing January 1, 1997 and
ending on June 30, 1997. No such branded customer and no such supplier has
canceled, or otherwise so modified in a manner materially adverse to the Company
and its subsidiaries, taken as a whole, or given notice to the Company or any of
its subsidiaries of an intention to so cancel or otherwise so modify, its
business relationship with the Company or any of its subsidiaries and, to the
knowledge of the Company, the consummation of the transactions contemplated by
this Agreement and the Merger Agreement will not materially and adversely affect
any such business relationship.
(t) Recalls. Except as set forth in Section 6.01(t) of the Disclosure
Schedule, no products of any of the Company or its subsidiaries have been
recalled voluntarily or involuntarily since January 1, 1995. No such recall is
being considered by the Company or any of its subsidiaries or, to the knowledge
of the Company, has been requested or ordered by any governmental entity or
consumer group.
(u) Insurance. Section 6.01(u) of the Disclosure Schedule contains a
list of all insurance policies maintained by the Company and its subsidiaries,
together with a brief description of the coverages afforded thereby. All of such
insurance policies are in full force and effect, and none
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of such insurance policies will terminate or lapse as a result of the
consummation of the transactions contemplated by this Agreement.
(v) Bank Accounts. Section 6.01(v) of the Disclosure Schedule sets
forth a list of (i) each account or safe deposit box maintained by the Company
or any of its subsidiaries with any bank or other financial institution, and
(ii) the names of all persons authorized to draw thereon or have access thereto.
(w) Delaware Law Section 203. All necessary approvals have been granted
by the Special Committee and the Board of Directors of the Company under Section
203 of the Delaware Law so that neither the granting of the Irrevocable Proxies
nor any acquisition of beneficial ownership of Company Stock by Buyer,
Acquisition or any of Buyer's other affiliates after the execution of this
Agreement will limit, delay or impair the consummation of the Merger or any
other transaction with the Company or any of its subsidiaries by Acquisition,
Buyer or any of Buyer's other affiliates pursuant to Section 203 of the Delaware
Law.
(x) Stockholder Voting Requirement. The only stockholder vote necessary
to consummate the Merger under Delaware Law and the Company's Certificate of
Incorporation and By-Laws is the affirmative vote of the holders of a majority
of the Company Common Stock.
(y) Associate Transactions. Except as set forth in Section 6.01(y) of
the Disclosure Schedule, no Associate (i) furnishes or sells services or
products that the Company or its subsidiaries furnishes or sells, or proposes to
furnish or sell, (ii) purchases from or sells or furnishes to, the Company or
its subsidiaries, any goods or services, or (iii) owns or leases property, real
or personal, that is used by the Company or its subsidiaries.
(z) Accounts Receivable. All accounts receivable of the Company and its
subsidiaries arose in the ordinary course of business out of bona fide
transactions at the aggregate amounts thereof. All accounts receivable shown on
the consolidated balance sheet of the Company as of June 30, 1997 are carried at
values determined in accordance with generally accepted accounting principles
consistently applied on a reasonable basis. As of June 30, 1997, none of the
accounts receivable of the Company or its subsidiaries is subject to any claim
of offset, recoupment, setoff or counter-claim except to the extent reserved
against and entered upon the books of the Company and its subsidiaries as of the
June 30, 1997 consolidated financial statements of the Company and its
subsidiaries. Since June 30, 1997, none of the accounts receivable of the
Company or its subsidiaries is subject to any claim of offset, recoupment,
setoff or counter-claim except to the extent reserved against and entered on the
books of the Company and its subsidiaries in accordance with the historical
practices of the Company. No accounts receivable are contingent upon the
performance by the Company of any obligation or contract.
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6.02 Representations and Warranties of Buyer and Acquisition. Each of
Buyer and Acquisition warrants and represents to the Company, and its successors
and assigns, as follows:
(a) Corporate Organization. Each of Buyer and Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation. Buyer is incorporated in Minnesota and
Acquisition is incorporated in Delaware. Buyer and Acquisition each will, within
ten days after the date hereof, deliver to the Company a certified copy of their
respective Articles or Certificate of Incorporation and By-Laws. Each such copy
will be complete and correct.
(b) Capitalization. The authorized capital stock of Acquisition as of
the date hereof consists of 1,000 shares of Acquisition Common Stock, of which
1,000 shares are outstanding as of the date hereof. Acquisition has no
subsidiaries and was formed solely to facilitate the Merger.
(c) Authority. Buyer and Acquisition have the corporate power to
execute this Agreement and consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by each of Buyer and
Acquisition have been duly and effectively authorized by the respective Boards
of Directors of Buyer and Acquisition, and by Buyer as the sole stockholder of
Acquisition, and no further corporate action is necessary on the part of Buyer
or Acquisition to make this Agreement valid and binding on Buyer and
Acquisition. This Agreement has been duly and validly executed and delivered by
Buyer and Acquisition and constitutes a valid and binding agreement of Buyer and
Acquisition, enforceable against Buyer and Acquisition in accordance with its
terms. Notwithstanding anything stated herein, the consummation of the Merger is
subject to the satisfaction of the conditions set forth in Section 3.01 hereof.
Neither the execution and delivery of this Agreement by Buyer and Acquisition,
nor the consummation by Buyer or Acquisition of the transactions contemplated
hereby, (i) will conflict with or result in a breach of the Articles or
Certificate of Incorporation or By-Laws, as currently in effect, of Buyer or
Acquisition, or (ii) require the consent or approval of any governmental
authority having jurisdiction over any of the business or assets of Buyer or
Acquisition, or result in a breach of or constitute a default or an event which,
with the passage of time or the giving of notice, or both, would constitute a
default, give rise to a right of termination, cancellation or acceleration,
create any entitlement to any payment or benefit or require notice to or the
consent of any third party (except the filing required and the expiration or
termination of the applicable waiting periods under the HSR Act) under, any
other instrument, contract or agreement to which Buyer or Acquisition is a party
or by which either of them or any of the properties or assets of either of them
may be bound, excluding from the foregoing clause (ii) any consents, approvals,
breaches, defaults or rights of termination, cancellation or acceleration or
entitlements or notices which, either individually or in the aggregate, are not
reasonably likely to have a material adverse effect on the business, operations,
results of operations, properties, assets, prospects or condition, financial or
otherwise, of Buyer or impair
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Buyer's or Acquisition's ability to consummate the Merger or the other
transactions contemplated hereby.
(d) No Proceedings. Neither the execution and delivery of this
Agreement by Buyer or Acquisition, nor the consummation by Buyer or Acquisition
of the transactions contemplated hereby, are being challenged by or are the
subject of any pending or, to the knowledge of Buyer or Acquisition, threatened
litigation or governmental investigation or proceeding as of the date of this
Agreement, or will violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer or Acquisition or any of their material
properties or assets.
(e) Finders; Brokers. Except for fees to Janney Montgomery Scott, which
Buyer agrees to pay, there are no claims for brokerage commissions, finders'
fees, investment advisory fees or similar compensation in connection with this
Agreement or the transactions contemplated by this Agreement, based on any
arrangement, understanding, commitment or agreement made by or on behalf of
Buyer or Acquisition, obligating the Company, Buyer or Acquisition to pay such
claim.
(f) Financial Ability to Perform. Buyer has cash funds available
sufficient to make all cash payments required to be made for Company Stock under
this Agreement.
(g) Proxy Statement. None of the information supplied or to be supplied
in writing by Buyer or Acquisition specifically for inclusion in the Proxy
Statement will, at the time the Proxy Statement is mailed, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and will not, at
the time of the meeting of stockholders to which the Proxy Statement relates or
at the Effective Time omit to state any material fact necessary to correct any
statement which has become false or misleading in any earlier communication with
respect to the solicitation of any proxy for such meeting.
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ARTICLE VII
OFFICERS' AND DIRECTORS' INDEMNIFICATION,
DIRECTORS AND OFFICERS LIABILITY INSURANCE,
EMPLOYEE CONTRACTS
7.01 Indemnification. All rights to indemnification and exculpation
existing in favor of any present or former director, officer or employee of the
Company or any of its subsidiaries (an "Indemnified Party") as provided in the
Company's Certificate of Incorporation or By-Laws or the certificate or articles
of incorporation, by-laws or similar organizational documents or by-laws of any
of its subsidiaries as in effect on the date hereof shall survive the Merger for
a period of three years with respect to matters occurring at or prior to the
Effective Time and no action taken during such three-year period shall be deemed
to diminish the obligations set forth in this Section 7.01.
7.02 Directors and Officers Liability Insurance. For a period of three
years after the Effective Time, the Surviving Corporation shall cause to be
maintained in effect either (i) the current policy of directors' and officers'
liability insurance maintained by the Company (provided that Buyer or the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous in any material respects to the indemnified parties thereunder)
with respect to claims arising from facts or events which occurred before the
Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 7.02 more than an
amount per year equal to 100% of the current annual premium (which current
annual premium for the policy year ending May 8, 1998 the Company represents and
warrants to be approximately $58,500 in the aggregate) paid by the Company for
such existing insurance coverage (the "Cap"); and provided, further, that if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of the Cap, the Surviving Corporation shall only be
required to obtain as much coverage as can be obtained by paying an annual
premium equal to the Cap, or (ii) a run-off (i.e., "tail") policy or endorsement
with respect to the current policy of directors' and officers' liability
insurance covering claims asserted within three years after the Effective Time
arising from facts or events which occurred before the Effective Time.
7.03 Employee Contracts. At the Effective Time, the Company shall
terminate, and cause Carl T. Wolf and Marion F. Wolf to terminate, the existing
employment agreements of Carl T. Wolf and Marion F. Wolf with the Company, and
Buyer shall enter into the non-compete agreements with Carl T. Wolf and Marion
F. Wolf substantially in the forms of Exhibits B and C hereto, respectively.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01 Termination of Obligations, Covenants and Agreements. The
respective obligations, covenants and agreements of the parties hereto, except
for the obligations of Buyer and Acquisition pursuant to Sections 1.06, 1.07 and
1.09, and the obligations pursuant to Article VII, shall not survive the
effectiveness of the Merger and shall terminate and be of no further force or
effect upon the effectiveness of the Merger.
8.02 Amendment and Modification. To the extent permitted by applicable
law, this Agreement may be amended, modified or supplemented only by written
agreement of the Company, Buyer and Acquisition at any time prior to the
Effective Time with respect to any of the terms contained herein, except that
after the meeting of stockholders contemplated by Section 2.02 hereof, the price
per share to be paid pursuant to this Agreement to the holders of Company Stock
shall in no event be decreased and the form of consideration to be received by
the holders of Company Stock in the Merger shall in no event be altered without
the approval of such holders.
8.03 Waiver of Compliance; Consents. Any failure of Buyer or
Acquisition, on the one hand, or the Company, on the other hand, to comply with
any obligation, covenant, agreement or condition herein (except the conditions
in Sections 3.01(b) and 3.02(b) of this Agreement) may be waived in writing by
the Company or by Buyer and Acquisition, respectively, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 8.03.
8.04 Expenses; Termination Fee.
(a) Except as otherwise provided below in this Section 8.04, all
expenses incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(b) If this Agreement is terminated pursuant to Section 5.01 and
provided Buyer is entitled to a Termination Fee under paragraph (c) or paragraph
(d) of this Section 8.04, the Company shall, at the same time as payment of the
Termination Fee is required to be paid under paragraph (c) or paragraph (d) of
this Section 8.04, as applicable, pay Buyer an amount equal to all
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<PAGE>
reasonable out-of-pocket expenses incurred by or on behalf of Buyer or
Acquisition in connection with the negotiation, preparation, financing,
execution or consummation of this Agreement and the transactions contemplated
hereby, including without limitation legal, accounting, travel, filing,
printing, financing commitment and other reasonable fees and expenses; provided
that the aggregate fees and expenses payable by the Company to Buyer pursuant to
this Section 8.04(b) shall not exceed $500,000.
(c) If this Agreement is terminated pursuant to Section 5.01(e) or
5.01(f), then the Company shall, within five business days after such
termination, pay Buyer a fee (a "Termination Fee") of $2,000,000 in addition to
the expenses set forth in paragraph (b) of this Section 8.04.
(d) If (i) this Agreement is terminated by Buyer or Acquisition
pursuant to Section 5.01(b) or 5.01(c)(i) as a result of a material breach by
the Company of any representations, warranties or covenants contained in this
Agreement or the failure of the conditions set forth in Section 3.01(c) or
3.01(k) or 3.01(m) of this Agreement to be satisfied, or is terminated by Buyer
or Acquisition pursuant to Section 5.01(c)(ii), and (ii) prior to such
termination (A) any person or group shall have informed the Company (or the
Board or the Special Committee or any executive officer of the Company) that
such person or group proposes, intends to propose, is considering proposing, or
will or may, if the Merger is delayed, abandoned or not approved by the
Company's stockholders, propose, a Third Party Transaction (as hereinafter
defined), or (B) any such person or group or the Company publicly announces
(including without limitation any filing with any federal or state office or
agency) that such person or group has proposed, intends to propose, is
considering proposing, or will or may, if the Merger is delayed, abandoned or
not approved by the Company's stockholders, propose, a Third Party Transaction,
and (iii) within one year after such termination a Third Party Transaction
(whether or not involving such person or group) is consummated, then the Company
shall, within five business days after such consummation, pay to Buyer the
Termination Fee in addition to the expenses set forth in paragraph (b) of this
Section 8.04
(e) In no event shall more than one Termination Fee be payable under
this Section 8.04. As used herein, "Third Party Transaction" shall mean (i) an
acquisition pursuant to a Third Party Acquisition Offer other than an
acquisition of equity securities of the Company constituting less than 25% of
the total equity interests in, and less than 25% of the total voting power of
the then outstanding equity securities of, the Company, (ii) the adoption by the
Company of a plan of liquidation or dissolution or (iii) the repurchase of, or
recapitalization involving, more than 25% of the Company's outstanding equity
securities or (iv) the payment of an extraordinary dividend or other
distribution on Company Common Stock equal to at least 25% of the Company Common
Stock's then current market price.
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8.05 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
reasonably necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each corporation which is a party to this Agreement
shall take all such necessary action.
8.06 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, effective when
delivered, or by express delivery service, effective when delivered, or mailed
by registered or certified mail (return receipt requested), effective three
business days after the mailing, to the parties at the following addresses (or
at such other address for a party or to such other person's attention as shall
be specified by like notice):
(a) If to Buyer or Acquisition, to it c/o:
(i) if by personal delivery:
Land O'Lakes, Inc.
4001 Lexington Avenue N.
Arden Hills, Minnesota 55126-2998
Attention: President
(ii) if by mail:
Land O'Lakes, Inc.
P.O. Box 64101
St. Paul, Minnesota 55164-0101
Attention: President
(iii) if by express delivery:
Land O'Lakes, Inc.
1200 County Road F West
Arden Hills, Minnesota 55112-2921
Attention: President
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with a copy to:
Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Attention: Philip S. Garon
(b) If to the Company, to it at:
Alpine Lace Brands, Inc.
111 Dunnell Road
Maplewood, New Jersey 07040
Attention: President
with a copy to:
Kramer, Levin, Naftalis & Frankel
913 Third Avenue
New York, New York 10022
Attention: Thomas E. Constance
8.07 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other parties (except that
Acquisition may assign to any other direct or indirect wholly-owned subsidiary
of Buyer any and all rights and obligations of Acquisition under this Agreement,
provided that any such assignment will not relieve Buyer from any of its
obligations under this Agreement), and except as expressly set forth in Article
I and Article VII, this Agreement is not intended to confer upon any other
person except the parties any rights or remedies hereunder.
8.08 Interpretation. As used in this Agreement, unless otherwise
expressly defined herein, (i) the term "person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
incorporated organization and a government or any department or agency thereof;
(ii) the term "affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations promulgated under the Exchange Act; (iii) the term
"subsidiary" of any specified corporation shall mean any corporation of which
the outstanding securities having ordinary voting power to elect a majority of
the board of directors are directly or indirectly owned by such specified
corporation; and (iv) the term "knowledge" or any similar
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term shall mean the actual knowledge of any one or more of the directors of the
Company or any of its subsidiaries or any of the employees of the Company or any
of its subsidiaries listed in Section 8.08 of the Disclosure Schedule.
8.09 Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without regard to its conflict of laws rules.
8.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.11 Headings. The article and section headings contained in this
Agreement are solely for the purpose of reference, and are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement.
8.12 Entire Agreement. This Agreement, including the exhibits hereto
and the documents and instruments referred to herein, together with the
Confidentiality Agreement described in Section 2.12, embody the entire agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such subject matter except for
the Confidentiality Agreement described in Section 2.12.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective duly authorized officers on the date first above
written.
ALPINE LACE BRANDS, INC.
By /s/ Carl T. Wolf
-------------------------
Its Chief Executive Officer
(the Company)
LAND O'LAKES, INC.
By /s/ John E. Gherty
-------------------------
Its President and Chief Executive Officer
(Buyer)
AVV INC.
By /s/ Richard C. Anderson
-------------------------
Its President
(Acquisition)
<PAGE>
Exhibit A-1
SUBSTANCE OF OPINION OF LOCAL COUNSEL TO THE COMPANY
No consent, approval, authorization or order
of, or any registration, declaration or filing with, any New
Jersey state governmental department, commission, board,
bureau, agency or instrumentality is required for the
execution or delivery by the Company of, or the consummation
by the Company and its subsidiaries of the transactions
contemplated by, the Agreement, or to enable the Company to
continue to operate the business of the Company and its
subsidiaries substantially in the manner now conducted, except
such consents, approvals, authorizations, orders,
registrations, declarations or filings as have been obtained
or made and are in full force and effect.
In rendering the foregoing opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, as to matters of fact,
upon certificates of government officials and of any officer or officers of the
Company or its subsidiaries. Counsel may also assume the authenticity of all
documents represented to such counsel to be originals, the conformity to
original documents of all copies of documents submitted to such counsel, the
accuracy and completeness of all corporate records made available to such
counsel by the Company and its subsidiaries and their agents and the genuineness
of all signatures not executed in such counsel's presence.
<PAGE>
Exhibit A-2
SUBSTANCE OF OPINION OF KRAMER, LEVIN, NAFTALIS & FRANKEL,
SPECIAL COUNSEL TO THE COMPANY
(i) Each of the Company and its subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws
of the state of its incorporation and has the requisite corporate power
and authority to own, lease and operate all of its properties and to
carry on its business as now being conducted;
(ii) Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties
owned, operated or leased, or the nature of its activities, makes such
qualification necessary, except such jurisdictions where failure to be
so qualified would not, individually or in the aggregate, have a
material adverse effect upon the Company and its subsidiaries, taken as
a whole;
(iii) The Company has the corporate power and authority to
execute and deliver the Agreement, and to consummate the transactions
contemplated thereby; and the execution and delivery of the Agreement,
the consummation of the transactions contemplated hereby, and the
execution and filing of the Certificate of Merger have been duly
authorized by all requisite corporate action on the part of the Company
and its stockholders;
(iv) The Agreement has been duly executed and delivered by the
Company and (assuming the valid authorization, execution and delivery
of the Agreement by Buyer and Acquisition) is the legal, valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms, except (A) as such enforcement may be
limited by or subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights, and (B) that the
remedies of specific performance, injunction and other forms of
equitable relief are subject to certain tests of equity jurisdiction,
equitable defenses and the discretion of the court before which any
proceeding therefor may be brought;
(v) Neither the execution and delivery of the Agreement by the
Company, nor the consummation by the Company or its subsidiaries of the
transactions contemplated thereby, will conflict with or result in a
breach of the Certificate of Incorporation or ByLaws, as currently in
effect, of the Company or its subsidiaries;
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(vi) Neither the execution and delivery of the Agreement by
the Company, nor the consummation by the Company and its subsidiaries
of the transactions contemplated thereby, are being challenged by or
are the subject of any pending or, to the best of our knowledge after
due inquiry, threatened litigation or governmental investigation or
proceeding (except those in which Buyer or Acquisition is a plaintiff
directly or derivatively) or, to the best of our knowledge after due
inquiry, will violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company or its subsidiaries or any
of their material properties or assets;
(vii) The authorized capital stock of the Company consists of
10,000,000 shares of Company Common Stock and 1,000,000 shares of
Company Preferred Stock;
(viii) As of the date hereof, there are __________ shares of
Company Common Stock issued and outstanding; of the Company Preferred
Stock, the Board of Directors of the Company has designated 60,000
shares as Series A 7.50% Cumulative Convertible Preferred Stock, of
which 45,000 shares are issued and outstanding; the Company has no
other issued or outstanding shares of capital stock; except as
disclosed in Section 6.01(b) of the Disclosure Schedule, to the best of
our knowledge after due inquiry, there are no outstanding
subscriptions, options, warrants, calls or other agreements or
commitments to which the Company or its subsidiaries is bound in
respect of the capital stock of the Company or its subsidiaries,
whether issued or unissued, and there are no outstanding securities
convertible into or exchangeable for any such capital stock; and all of
the outstanding shares of capital stock of the Company and its
subsidiaries are validly issued, fully paid and nonassessable; the
Company owns of record 100% of the outstanding capital stock of MCT
Dairies, Inc. and Dakota Farms Cheese, Inc. and 75% of the outstanding
capital stock of Alpine Lace Fresh Deli-Express, Inc., and to the best
of our knowledge after due inquiry, the Company holds such shares free
and clear of all claims, liens, charges and encumbrances;
(ix) To the best of our knowledge after due inquiry neither
the execution and delivery of the Agreement by the Company, nor the
consummation by the Company or its subsidiaries of the transactions
contemplated thereby, will result in a breach of, or constitute a
default or an event which, with the passage of time or the giving of
notice, or both, would constitute a default, give rise to a right of
termination, cancellation or acceleration, create any entitlement to
any payment or benefit (except as expressly contemplated by the
Agreement, pursuant to the terms of the employment agreements listed in
Section 6.01(i) of the Disclosure Schedule or the severance obligations
set forth in Section 6.01(p) of the Disclosure Schedule, and for the
prepayment penalty discussed in Section 2.01(d) of the Disclosure
Schedule), require the consent of any third party or result in the
creation of any lien on the assets of the Company or its subsidiaries
under,
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any material contact or agreement to which the Company or its
subsidiaries is a party or by which any of them or any of their
material properties or assets may be bound, except those that would
not, individually or in the aggregate, have a material adverse effect
upon the Company and its subsidiaries, taken as a whole;
(x) Assuming all applicable requirements of the HSR Act have
been complied with, no consent, approval, authorization or order of, or
any registration, declaration or filing with, any federal, New York or
Delaware state governmental department, commission, board, bureau,
agency or instrumentality is required for the execution or delivery by
the Company of, or the consummation by the Company and its subsidiaries
of the transactions contemplated by, the Agreement, or to enable the
Company to continue to operate the business of the Company and its
subsidiaries substantially in the manner now conducted, except such
consents, approvals, authorizations, orders, registrations,
declarations or filings as have been obtained or made and are in full
force and effect and the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware; and
(xi) Upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, the Merger will be
effective in accordance with the terms and provisions of the Agreement,
the Certificate of Merger and the laws of the State of Delaware.
In rendering the foregoing opinion, such counsel may rely, to the
extent such counsel deems such reliance necessary or appropriate, as to matters
of fact, upon certificates of government officials and of any officer or
officers of the Company or its subsidiaries. Counsel may also assume the
authenticity of all documents represented to such counsel to be originals, the
conformity to original documents of all copies of documents submitted to such
counsel, the accuracy and completeness of all corporate records made available
to such counsel by the Company and its subsidiaries and their agents and the
genuineness of all signatures not executed in such counsel's presence.
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Exhibit B
NON-COMPETE AGREEMENT
THIS AGREEMENT is made and entered into this _____ day of _________, 199__ by
and between Land O'Lakes, Inc., a Minnesota cooperative corporation with its
principal place of business at 4001 Lexington Avenue North, Arden Hills,
Minnesota 55126 (hereinafter referred to as "LOL"), and Carl Wolf, an individual
residing at 627 Inwood Land, South Orange, New Jersey 07079 (hereinafter
referred to as "Carl").
WHEREAS, LOL, Alpine Lace Brands, Inc., a Delaware corporation ("Company"), and
AVV Inc., a Delaware corporation and a wholly-owned subsidiary of LOL
("Acquisition"), have entered into an Agreement and Plan of Merger dated as of
October 1, 1997 (the "Merger Agreement"), pursuant to which Acquisition shall
merge with and into the Company and the existing stockholders of Company shall
exchange their shares of capital stock of Company for cash; for purposes of this
Agreement, the transactions contemplated by the Merger Agreement shall be
referred to as "the Merger."
WHEREAS, pursuant to the Merger Agreement, the execution and delivery of this
Agreement is a condition precedent to LOL's obligation to consummate the Merger;
WHEREAS, Carl co-founded Company and was actively involved in the creation and
implementation of Company's Branded Products and Company's marketing strategies;
WHEREAS, Carl has served as President and Chairman of the Board of Company; and
WHEREAS, Carl's efforts have been a significant factor in Company's current name
recognition and national prominence;
WHEREAS, LOL believes that Carl has the capability of using his knowledge and
skill to create a business enterprise which might be able to effectively compete
with LOL with respect to the business which LOL is acquiring from Company;
WHEREAS, Carl and Company are parties to an employment agreement dated January
4, 1993 ("Employment Agreement"), which LOL wishes to have terminated;
WHEREAS, LOL is willing to provide the payments described herein in
consideration of Carl's non-compete covenant and the termination of Carl's
Employment Agreement and Carl's forfeiture of all compensation, benefits and
other rights thereunder;
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NOW, THEREFORE, in consideration of the premises and the respective covenants
and commitments of LOL and Carl set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, LOL and Carl agree as follows:
1. Term and Termination.
A. Term. This Agreement shall have a term of five (5) years commencing
on the effective date of the Merger (hereinafter referred to as the "Term").
B. Termination. Except as otherwise specifically provided herein, this
Agreement and the rights and obligations of LOL and Carl hereunder shall
terminate immediately upon the occurrence of any of the following events,
provided, however, that the payment obligations of LOL under paragraph 2A. (but
not under 2B.) of this Agreement shall continue notwithstanding the occurrence
of an event set forth in clause (i) or (ii) of this paragraph 1B:
i. In the event of Carl's death; or
ii. In the event of a material breach of Carl's
obligations hereunder, provided that such breach is
not cured within thirty (30) days after Carl receives
written notice thereof from LOL.
2. Payment.
A. As consideration for the termination of the Employment Agreement and
Carl's forfeiture of all compensation, benefits and other rights thereunder, LOL
shall make monthly payments in arrears to Carl in the amount of eight thousand
three hundred thirty-three dollars and thirty-three cents ($8,333.33) per month
during the Term of this Agreement.
B. As consideration for the non-compete covenant set forth in paragraph
3, LOL shall make monthly payments in arrears to Carl in the amount of twenty
thousand eight hundred thirty-three dollars and thirty-four cents ($20,833.34)
per month during the Term of this Agreement.
3. Non-Compete Covenant.
A. Carl agrees that he will not, anywhere within the United States,
directly or indirectly own, manage, operate, control, participate in, or be
connected in any manner with the ownership, management, operation or control of
any business which involves: producing, importing, distributing or marketing
deli cheese or meat, dairy case cheese, foodservice cheese
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or meat; cheese trading; or producing, importing, distributing or marketing any
other product or product group which is part of the business of LOL or any of
its affiliates, including Company and its subsidiaries (all of which entities
together with LOL shall be collectively referred to for purposes of this
Agreement as "LOL Affiliates") at any time during the Term of this Agreement or
was part of the business of LOL Affiliates during the two (2) years immediately
preceding the effective date of this Agreement ("Effective Date"). Further, Carl
agrees that he will not induce or attempt to persuade any agent, employee, or
customer of one or more LOL Affiliates to terminate an existing employment,
agency, or business relationship with any of LOL Affiliates in order to enter
into any such relationship in competition with one or more LOL Affiliates. The
duration of this non-compete covenant shall be the five-year period commencing
on the Effective Date. The obligations of this paragraph 3 shall survive any
termination of this Agreement prior to the expiration of the Term. THE AGREED
UPON CONSIDERATION TO BE PAID TO CARL HEREUNDER HAS BEEN NEGOTIATED AND
BARGAINED FOR, AND IS TO BE RECEIVED IN FULL SATISFACTION OF CARL'S OBLIGATIONS
UNDER THIS AGREEMENT.
B. Carl acknowledges that the non-competition provisions of this
paragraph 3 constitute a material inducement to LOL to enter into this
Agreement, and LOL will be relying on the enforceability of the non-competition
provisions of this paragraph 3 in performing LOL's obligations under this
Agreement. Any reformation by any court of the scope, duration or other terms of
this non-compete covenant shall result in an appropriate and equitable
reformation of LOL's payment obligations under this Agreement.
C. The foregoing non-competition provision shall not preclude Carl from
owning less than two percent (2%) of any company, the stock of which is traded
on any national or regional exchange or any established over-the-counter trading
market, nor shall it preclude Carl from having any direct or indirect interest
in any wholesale foodservice business or retail grocery or foodservice business
or any restaurant to which LOL may consent in writing, which consent shall not
be unreasonably withheld.
4. Confidential Information. Carl shall carefully guard and keep secret all
trade secrets and confidential information concerning the business and affairs
of LOL Affiliates ("Confidential Information"). Further, Carl shall not, at any
time, whether during the Term of this Agreement or at a later time, directly or
indirectly, disclose such Confidential Information to any person, firm, or
corporation or other third party or use the same in any way unless he first
secures the prior written consent of LOL. Carl acknowledges and agrees that the
Confidential Information constitutes a unique and valuable asset of LOL acquired
at great time and expense by LOL and its predecessors, and that any disclosure
or use of the Confidential Information by Carl would be wrongful and would cause
irreparable harm to LOL. During the term of this Agreement and
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<PAGE>
at all times thereafter, Carl shall refrain from any acts or omissions that
would materially reduce the value of the Confidential Information to LOL.
In the event Carl becomes legally compelled to disclose any
Confidential Information, Carl shall provide LOL with notice as soon as
reasonably practicable so that LOL may seek a protective order or other
appropriate remedy. If a protective order or other remedy is not obtained by
LOL, Carl shall only furnish that portion of the Confidential Information which
is legally required and shall exercise his best efforts to obtain a protective
order or other reasonable assurance that LOL's Confidential Information shall be
accorded confidential treatment. The foregoing obligations of this paragraph 4
shall survive the termination of this Agreement.
The provisions of this paragraph 4 shall not apply to the following
information:
Information that was publicly available at the time Carl acquires
it from LOL Affiliates;
Information that subsequently becomes publicly available other
than by Carl's breach of this Agreement;
Information that was rightfully acquired by Carl from a source
other than LOL Affiliates, their directors, employees, agents, or
representatives, provided that such source is not, to the best of
Carl's knowledge, prohibited from transmitting such information
to Carl pursuant to any contractual, fiduciary, or legal
obligation;
Information that was independently developed by Carl without the
use of the Confidential Information, as evidenced by written
documentation; or
Information as generally disclosed by LOL to third parties
without similar obligations of confidentiality.
5. Return of Company Property. Carl represents and warrants that he has, as of
the date of this Agreement, returned to Company all of Company's property,
including, without limitation, all files, papers, and records of every kind, and
any and all copies thereof, in Carl's possession or used by Carl in the
performance of his employment by Company.
6. Indemnification and Release. Carl shall indemnify, defend, and hold harmless
all LOL Affiliates and their respective directors, officers, members, employees,
agents, representatives and consultants from and against any and all claims,
demands, actions, causes of action, penalties, fines, damages, losses,
liabilities, costs, and expenses (including, without limitation,
8
<PAGE>
court costs and reasonable fees of attorneys and other professionals) relating
to, arising out of, or in any way connected with the breach of any of the terms
of this Agreement by Carl. LOL shall indemnify, defend, and hold harmless Carl
from and against any and all claims, demands, actions, causes of action,
penalties, fines, damages, losses, liabilities, costs, and expenses (including,
without limitation, court costs and reasonable fees of attorneys and other
professionals) relating to, arising out of, or in any way connected with the
breach of any of the terms of this Agreement by LOL. Carl hereby releases all
LOL Affiliates, their officers, directors and members, from any and all claims
and causes of action now existing or hereinafter arising that result from his
being an officer, director, employee or shareholder of Company or any of its
subsidiaries, provided that nothing stated herein shall affect his rights to
indemnification as referenced in section 7.01 of the Merger Agreement. The
foregoing obligations of this paragraph 6 shall survive the termination of this
Agreement.
7. Notices. Any notices required hereunder shall be deemed to have been properly
given if a written notice has been delivered to the party to whom notice is
required to be given ("Addressee") by either (a) hand-delivering such notice to
Addressee; or (b) enclosing such notice in a sealed envelope and sending it by
certified mail, return receipt requested, postage prepaid, to Addressee at
Addressee's address shown below, or at such other address as Addressee may
hereafter designate in writing to the other party:
Carl Wolf Land O'Lakes, Inc.
627 Inwood Lane (i) if by personal delivery:
South Orange, NJ 07079 4001 Lexington Avenue N.
Arden Hills, MN 55126-2998
Attention: President
(ii) if by mail:
P.O. Box 64101
St. Paul, MN 55164-0101
Attention: President
With a copy to: Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-3901
Attention: Philip S. Garon
8. Construction. Whenever possible, each provision of this Agreement shall be
interpreted so that it is valid under applicable law. If any provision of this
Agreement is to any extent found to be invalid, illegal or unenforceable in any
respect under applicable law, that provision shall
9
<PAGE>
still be effective to the extent it remains valid, and the remainder of this
Agreement also will continue to be valid. If any restriction contained in this
Agreement is found to be too broad to permit enforcement of such restriction to
its fullest extent, then such restriction shall be construed or re-written so as
to be enforceable to the maximum extent permitted by law
9. Waiver. None of the provisions of this Agreement shall be considered waived
by either party hereto unless the waiver is given in writing to the other party.
A written waiver shall operate only as to the specific term or condition waived,
and no written waiver shall be deemed to be a continuing waiver unless
specifically stated to be continuing in effect.
10. Assignment. Carl may not assign, delegate, or transfer this Agreement or any
of his rights or obligations hereunder without the prior written consent of LOL.
11. Headings. Titles and headings in this Agreement are for the convenience of
reference only and do not form a part of this Agreement and shall in no way
affect the interpretation hereof.
12. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to any
choice or conflict of law provision or rule that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
13. Advice of Counsel. No party, representative, or counsel for either party has
acted as counsel for the other party with respect hereto. Each party represents
that such party has sought and obtained any legal advice deemed necessary prior
to entering into this Agreement. Each party hereto has had the opportunity to
fully negotiate the terms hereof and to modify the draftsmanship of this
Agreement. Therefore, the terms of this Agreement shall be construed and
interpreted without any presumption, inference, or rule requiring construction
or interpretation against the party causing this Agreement to be drafted. No
party or representative for such party shall act or be deemed to act as legal
counsel or representative for the other party.
14. Entire Agreement. This writing constitutes the entire understanding of LOL
and Carl and supersedes all previous agreements or negotiations with respect to
the subject matter hereof. No modification, alteration, or change in the terms
hereof shall be effective unless made in writing and signed by both LOL and
Carl.
15. No Adequate Remedy. Carl agrees and understands that a breach by him of any
provision of this Agreement may cause LOL irreparable injury and damage which
cannot be reasonably and adequately compensated by damages at law. Carl
therefore agrees that LOL shall be entitled, in addition to any other remedies
legally available, to injunctive and/or other equitable relief to
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<PAGE>
prevent a breach of this Agreement or any part hereof, and reasonable attorneys'
fees enforcing this Agreement.
16. Termination of Employment Agreement. The parties specifically and mutually
agree that the Employment Agreement is terminated effective immediately, and
that neither party hereto has any liability or obligation whatsoever to the
other under the terms of the Employment Agreement. In consideration of the
payments provided by LOL to Carl hereunder, Carl releases Company, LOL and
Acquisition from any and all claims or liabilities arising under the Employment
Agreement and forfeits all rights he may have, including but not limited to
rights to compensation and benefits, under the Employment Agreement.
17. Authorization. LOL represents and warrants that the execution, delivery and
performance of this Agreement has been duly authorized.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
LAND O'LAKES, INC.
__________________________________ By _______________________________
CARL WOLF
Its ______________________________
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Exhibit C
NON-COMPETE AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of _________,
199__ by and between Land O'Lakes, Inc., a Minnesota cooperative corporation
with its principal place of business at 4001 Lexington Avenue North, Arden
Hills, Minnesota 55126 (hereinafter referred to as "LOL"), and Marion Wolf, an
individual residing at 627 Inwood Land, South Orange, New Jersey 07079
(hereinafter referred to as "Marion").
WHEREAS, LOL, Alpine Lace Brands, Inc., a Delaware corporation
("Company"), and AVV Inc., a Delaware corporation and a wholly-owned subsidiary
of LOL ("Acquisition"), have entered into an Agreement and Plan of Merger dated
as of October 1, 1997 (the "Merger Agreement"), pursuant to which Acquisition
shall merge with and into the Company and the existing stockholders of Company
shall exchange their shares of capital stock of Company for cash; for purposes
of this Agreement, the transactions contemplated by the Merger Agreement shall
be referred to as "the Merger;"
WHEREAS, pursuant to the Merger Agreement, the execution and delivery
of this Agreement is a condition precedent to LOL's obligation to consummate the
Merger;
WHEREAS, Marion co-founded Company and was actively involved in the
creation and implementation of Company's Branded Products and Company's
marketing strategies;
WHEREAS, Marion has served as Vice-President, Food Service Division, of
Company; and
WHEREAS, Marion's efforts have been a significant factor in Company's
current name recognition and national prominence;
WHEREAS, LOL believes that Marion has the capability of using her
knowledge and skill to create a business enterprise which might be able to
effectively compete with LOL with respect to the business which LOL is acquiring
from Company;
WHEREAS, Marion and Company are parties to an employment agreement
dated January 4, 1993 ("Employment Agreement"), which LOL wishes to have
terminated;
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WHEREAS, LOL is willing to provide the payments described herein in
consideration of Marion's non-compete covenant and the termination of Marion's
Employment Agreement and Marion's forfeiture of all compensation, benefits and
other rights thereunder;
NOW, THEREFORE, in consideration of the premises and the respective
covenants and commitments of LOL and Marion set forth in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, LOL and Marion agree as follows:
1. Term and Termination.
A. Term. This Agreement shall have a term of five (5) years
commencing on the effective date of the Merger (hereinafter
referred to as the "Term").
B. Termination. Except as otherwise specifically provided herein,
this Agreement and the rights and obligations of LOL and Marion
hereunder shall terminate immediately upon the occurrence of any
of the following events , provided, however, that the payment
obligations of LOL under paragraph 2A. (but not under 2B.) of
this Agreement shall continue notwithstanding the occurrence of
an event set forth in clause (i) or (ii) of this paragraph 1B:
i. In the event of Marion's death; or
ii. In the event of a material breach of Marion's
obligations hereunder, provided that such breach is
not cured within thirty (30) days after Marion
receives written notice thereof from LOL.
2. Payment.
A. As consideration for the termination of the Employment Agreement
and Marion's forfeiture of all compensation, benefits and other
rights thereunder, LOL shall make monthly payments in arrears to
Marion in the amount of two thousand five hundred dollars
($2,500) per month during the Term of this Agreement.
B. As consideration for the non-compete covenant set forth in
paragraph 3, LOL shall make monthly payments in arrears to Marion
in the amount of ten thousand dollars ($10,000) per month during
the Term of this Agreement.
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3. Non-Compete Covenant.
A. Marion agrees that she will not, anywhere within the United
States, directly or indirectly own, manage, operate, control,
participate in, or be connected in any manner with the ownership,
management, operation or control of any business which involves:
producing, importing, distributing or marketing deli cheese or
meat, dairy case cheese, foodservice cheese or meat; cheese
trading; or producing, importing, distributing or marketing any
other product or product group which is part of the business of
LOL or any of its affiliates, including Company and its
subsidiaries (all of which entities together with LOL shall be
collectively referred to for purposes of this Agreement as "LOL
Affiliates") at any time during the Term of this Agreement or was
part of the business of LOL Affiliates during the two (2) years
immediately preceding the effective date of this Agreement
("Effective Date"). The parties specifically agree that the
business relationships described in Exhibit A do not constitute a
violation of this covenant. Further, Marion agrees that she will
not induce or attempt to persuade any agent, employee, or
customer of one or more LOL Affiliates to terminate an existing
employment, agency, or business relationship with any of LOL
Affiliates in order to enter into any such relationship in
competition with one or more LOL Affiliates. The duration of this
non-compete covenant shall be the five-year period commencing on
the Effective Date. The obligations of this paragraph 3 shall
survive any termination of this Agreement prior to the expiration
of the Term. THE AGREED UPON CONSIDERATION TO BE PAID TO MARION
HEREUNDER HAS BEEN NEGOTIATED AND BARGAINED FOR, AND IS TO BE
RECEIVED IN FULL SATISFACTION OF MARION'S OBLIGATIONS UNDER THIS
AGREEMENT.
B. Marion acknowledges that the non-competition provisions of this
paragraph 3 constitute a material inducement to LOL to enter into
this Agreement, and LOL will be relying on the enforceability of
the non- competition provisions of this paragraph 3 in performing
LOL's obligations under this Agreement. Any reformation by any
court of the scope, duration or other terms of this non-compete
covenant shall result in an appropriate and equitable reformation
of LOL's payment obligations under this Agreement.
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C. The foregoing non-competition provision shall not preclude Marion
from owning less than two percent (2%) of any company, the stock
of which is traded on any national or regional exchange or any
established over-the-counter trading market, nor shall it
preclude Marion from having any direct or indirect interest in
any wholesale foodservice business or retail grocery or
foodservice business to which LOL may consent in writing.
4. Confidential Information. Marion shall carefully guard and keep secret
all trade secrets and confidential information concerning the business
and affairs of LOL Affiliates ("Confidential Information"). Further,
Marion shall not, at any time, whether during the Term of this
Agreement or at a later time, directly or indirectly, disclose such
Confidential Information to any person, firm, or corporation or other
third party or use the same in any way, unless she first secures the
prior written consent of LOL. Marion acknowledges and agrees that the
Confidential Information constitutes a unique and valuable asset of
LOL acquired at great time and expense by LOL and its predecessors,
and that any disclosure or use of the Confidential Information by
Marion would be wrongful and would cause irreparable harm to LOL.
During the term of this Agreement and at all times thereafter, Marion
shall refrain from any acts or omissions that would materially reduce
the value of the Confidential Information to LOL.
In the event Marion becomes legally compelled to disclose any
Confidential Information, Marion shall provide LOL with notice as soon
as reasonably practicable so that LOL may seek a protective order or
other appropriate remedy. If a protective order or other remedy is not
obtained by LOL, Marion shall only furnish that portion of the
Confidential Information which is legally required and shall exercise
her best efforts to obtain a protective order or other reasonable
assurance that Confidential Information shall be accorded confidential
treatment. The foregoing obligations of this paragraph 4 shall survive
the termination of this Agreement.
The provisions of this paragraph 4 shall not apply to the following
information:
o Information that was publicly available at the time Marion
acquires it from LOL Affiliates;
o Information that subsequently becomes publicly available other
than by Marion's breach of this Agreement;
o Information that was rightfully acquired by Marion from a source
other than LOL Affiliates, their directors, employees, agents, or
representatives, provided that such source is not, to the best of
Marion's knowledge, prohibited from
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<PAGE>
transmitting such information to Marion pursuant to any
contractual, fiduciary, or legal obligation;
o Information that was independently developed by Marion without
the use of the Confidential Information, as evidenced by written
documentation; or
o Information as generally disclosed by LOL to third parties
without similar obligations of confidentiality.
5. Return of Company Property. Marion represents and warrants that she
has, as of the date of this Agreement, returned to Company all of
Company's property, including, without limitation, all files, papers,
and records of every kind, and any and all copies thereof, in Marion's
possession or used by Marion in the performance of her employment by
Company.
6. Indemnification and Release. Marion shall indemnify, defend, and hold
harmless all LOL Affiliates and their respective directors, officers,
members, employees, agents, representatives and consultants from and
against any and all claims, demands, actions, causes of action,
penalties, fines, damages, losses, liabilities, costs, and expenses
(including, without limitation, court costs and reasonable fees of
attorneys and other professionals) relating to, arising out of, or in
any way connected with the breach of any of the terms of this
Agreement by Marion. LOL shall indemnify, defend, and hold harmless
Marion from and against any and all claims, demands, actions, causes
of action, penalties, fines, damages, losses, liabilities, costs, and
expenses (including, without limitation, court costs and reasonable
fees of attorneys and other professionals) relating to, arising out
of, or in any way connected with the breach of any of the terms of
this Agreement by LOL. Marion hereby releases all LOL Affiliates,
their officers, directors and members, from any and all claims and
causes of action now existing or hereinafter arising that result from
her being an officer, director, employee or shareholder of Company or
any of its subsidiaries, provided that nothing stated herein shall
affect her rights to indemnification as referenced in section 7.01 of
the Merger Agreement. The foregoing obligations of this paragraph 6
shall survive the termination of this Agreement.
7. Notices. Any notices required hereunder shall be deemed to have been
properly given if a written notice has been delivered to the party to
whom notice is required to be given ("Addressee") by either (a)
hand-delivering such notice to Addressee; or (b) enclosing such notice
in a sealed envelope and sending it by certified mail, return receipt
requested, postage prepaid, to Addressee at Addressee's address shown
below, or at such other address as Addressee may hereafter designate in
writing to the other party:
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Marion Wolf Land O'Lakes, Inc.
627 Inwood Lane (i) if by personal delivery:
South Orange, NJ 07079 4001 Lexington Avenue N.
Arden Hills, MN 55126-2998
Attention: President
(ii) if by mail:
P.O. Box 64101
St. Paul, MN 55164-0101
Attention: President
With a copy to: Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-3901
Attention: Philip S. Garon
8. Construction. Whenever possible, each provision of this Agreement
shall be interpreted so that it is valid under applicable law. If any
provision of this Agreement is to any extent found to be invalid,
illegal or unenforceable in any respect under applicable law, that
provision shall still be effective to the extent it remains valid, and
the remainder of this Agreement also will continue to be valid. If any
restriction contained in this Agreement is found to be too broad to
permit enforcement of such restriction to its fullest extent, then
such restriction shall be construed or re-written so as to be
enforceable to the maximum extent permitted by law.
9. Waiver. None of the provisions of this Agreement shall be considered
waived by either party hereto unless the waiver is given in writing to
the other party. A written waiver shall operate only as to the specific
term or condition waived, and no written waiver shall be deemed to be a
continuing waiver unless specifically stated to be continuing in
effect.
10. Assignment. Marion may not assign, delegate, or transfer this
Agreement or any of her rights or obligations hereunder without the
prior written consent of LOL.
11. Headings. Titles and headings in this Agreement are for the
convenience of reference only and do not form a part of this Agreement
and shall in no way affect the interpretation hereof.
12. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving
effect to any choice or conflict
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of law provision or rule that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
13. Advice of Counsel. No party, representative, or counsel for either
party has acted as counsel for the other party with respect hereto.
Each party represents that such party has sought and obtained any
legal advice deemed necessary prior to entering into this Agreement.
Each party hereto has had the opportunity to fully negotiate the terms
hereof and to modify the draftsmanship of this Agreement. Therefore,
the terms of this Agreement shall be construed and interpreted without
any presumption, inference, or rule requiring construction or
interpretation against the party causing this Agreement to be drafted.
No party or representative for such party shall act or be deemed to
act as legal counsel or representative for the other party.
14. Entire Agreement. This writing constitutes the entire understanding of
LOL and Marion and supersedes all previous agreements or negotiations
with respect to the subject matter hereof. No modification,
alteration, or change in the terms hereof shall be effective unless
made in writing and signed by both LOL and Marion.
15. No Adequate Remedy. Marion agrees and understands that a breach by her
of any provision of this Agreement may cause LOL irreparable injury and
damage which cannot be reasonably and adequately compensated by damages
at law. Marion therefore agrees that LOL shall be entitled, in addition
to any other remedies legally available, to injunctive and/or other
equitable relief to prevent a breach of this Agreement or any part
hereof, and reasonable attorneys' fees enforcing this Agreement.
16. Termination of Employment Agreement. The parties specifically and
mutually agree that the Employment Agreement is terminated effective
immediately, and that neither party hereto has any liability or
obligation whatsoever to the other under the terms of the Employment
Agreement. In consideration of the payments provided by LOL to Marion
hereunder, Marion releases Company, LOL and Acquisition from any and
all claims or liabilities arising under the Employment Agreement and
forfeits all rights she may have, including but not limited to rights
to compensation and benefits, under the Employment Agreement.
17. Authorization. LOL represents and warrants that the execution,
delivery and performance of this Agreement has been duly authorized.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
LAND O'LAKES, INC.
____________________________________ By __________________________
MARION WOLF
Its _______________________
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EXHIBIT A
Marion Wolf may continue the business of Market Finders Brokerage, Inc.
("MFBI") only to the following extent:
1. MFBI may continue to receive commissions from Merkert
Enterprises based on the business it does with MFBI pursuant
to an existing agreement, as described in Schedule 6.01(y) to
the Merger Agreement, provided that nothing herein stated
shall limit the right of the Company to terminate its
relationship with such broker and thereby terminate the
commissions MFBI may otherwise receive from such broker.
2. MFBI may continue to purchase the products listed in Schedule
1 from the countries set forth beside the names of such
products in quantities per calendar year not to exceed those
set forth beside the lists of such products listed in Schedule
1 pursuant to the import licenses described in Schedule 1 or
any annual renewals of such import licenses.
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Schedule 1
Control Number: 13475
Date of Issue: March 11, 1997
IMPORTER NAME/ADDRESS
Marion Wolf
Market Finders Brokers, Inc.
637 Inwood Lane
South Orange, NJ 07079
The Firm named herein is responsible for the conditions set forth at the end of
this license.
The following licenses are valid beginning January 01, 1997 and will expire at
midnight on December 31, 1997 unless revoked prior thereto.
================================================================================
License HTS-Note Country Commodity License Fee
Number Number of Name Amount Paid
Origin Description Kilos
- --------------------------------------------------------------------------------
1-A-643-7 Note 19 N Zeal American-OT-CHD 4,535
- --------------------------------------------------------------------------------
1-C-105-7 Note 18 EEC Cheddar 4,764
- --------------------------------------------------------------------------------
1-6-297-7 Note 6 N Zeal Butter 542
- --------------------------------------------------------------------------------
1-SU-691-7 Note 25 EEC Swiss/Emmenthaler 4,574
- --------------------------------------------------------------------------------
2-OT-25A-7 Note 16 EEC Other Cheese-NSPF 38,000
- --------------------------------------------------------------------------------
2-OT-465-7 Note 16 Canada Other Cheese-NSPF 9,500
- --------------------------------------------------------------------------------
2-SU-509-7 Note 14 ANY Butter Substitutes 57,000
================================================================================
In accordance with Section 6.33 (7 CFR Part 6) of the import regulations, a fee
will be charged with each license issued to a person or firm by the Department
of Agriculture for costs incurred for administering the licensing system.
The fee for 1997 is $103.00 per license. Please remit the balance owed of
$721.00 no later than May 1. Fee payments should be made by certified check or
money order only, and made payable to the Treasurer of the United States.
Payments should be mailed to the Dairy Import Licensing Group.
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Exhibit D-1
SUBSTANCE OF OPINION OF THUY-NGA T. VO COUNSEL TO BUYER AND ACQUISITION
To the best of my knowledge after due inquiry, neither the execution
and delivery of the Agreement by Buyer and Acquisition, nor the consummation by
Buyer and Acquisition of the transactions contemplated thereby, will result in a
breach of or constitute a default or an event which, with the passage of time or
the giving of notice, or both, would constitute a default, give rise to a right
of termination, cancellation or acceleration, create any entitlement to any
payment or benefit, require the consent of any third party (except the filing
required and the expiration or termination of the applicable waiting periods
under the HSR Act, which have occurred on or prior to the date of this
Agreement) or result in the creation of any lien on the assets of Buyer or
Acquisition under, any material contract or agreement to which Buyer or
Acquisition is a party or by which either of them or any of the material
properties or assets of either may be bound, except those that would not,
individually or in the aggregate, have a material adverse effect on Buyer and
its subsidiaries, taken as a whole.
In rendering the foregoing opinion, such counsel may rely, to the
extent such counsel deems such reliance necessary or appropriate, as to matters
of fact, upon certificates of government officials and of any officer or
officers of the Buyer and Acquisition. Counsel may also assume the authenticity
of all documents represented to such counsel to be originals, the conformity to
original documents of all copies of documents submitted to such counsel, the
accuracy and completeness of all corporate records made available to such
counsel by Buyer and Acquisition and their agents and the genuineness of all
signatures not executed in such counsel's presence.
<PAGE>
Exhibit D-2
SUBSTANCE OF OPINION OF FAEGRE & BENSON LLP, SPECIAL COUNSEL TO BUYER AND
ACQUISITION
(i) Each of Buyer and Acquisition is a corporation duly incorporated,
validly existing and in good standing under the laws of its state of
incorporation;
(ii) Each of Buyer and Acquisition has the corporate power and
authority to execute and deliver the Agreement and to consummate the
transactions contemplated thereby; and the execution and delivery of the
Agreement, the consummation of the transactions contemplated thereby, and the
execution and filing of the Certificate of Merger have been duly authorized by
all requisite corporate action on the part of Buyer and Acquisition,
respectively;
(iii) The Agreement has been duly executed and delivered by each of
Buyer and Acquisition, and (assuming the valid authorization, execution and
delivery of the Agreement by the Company) is the legal, valid and binding
agreement of Buyer and Acquisition enforceable against Buyer and Acquisition in
accordance with its terms, except (A) as such enforcement may be limited by or
subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights, and (B) that the remedies of specific performance, injunction
and other forms of equitable relief are subject to certain tests of equity
jurisdiction, equitable defenses and the discretion of the court before which
any proceeding therefor may be brought;
(iv) Neither the execution and delivery of the Agreement by Buyer and
Acquisition, nor the consummation by Buyer and Acquisition of the transactions
contemplated thereby, will conflict with or result in a breach of the Articles
of Incorporation or By-Laws, as currently in effect, of Buyer or the Certificate
of Incorporation or By-Laws, as currently in effect, of Acquisition;
(v) Neither the execution and delivery of the Agreement by Buyer or
Acquisition, nor the consummation by Buyer or Acquisition of the transactions
contemplated thereby, are being challenged by or are the subject of any pending
or, to the best of our knowledge after due inquiry, threatened litigation or
governmental investigation or proceeding (except those in which the Company is a
plaintiff directly or derivatively) or, to the best of our knowledge after due
inquiry, will violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer or Acquisition or any of their properties or
assets;
(vi) Assuming all applicable requirements of the HSR Act have been
complied with, no consent, approval, authorization or order of, or any
registration, declaration or filing with,
<PAGE>
any federal, Minnesota or Delaware state governmental department, commission,
board, bureau, agency or instrumentality is required for the execution and
delivery by Buyer or Acquisition of, or the consummation by Buyer or Acquisition
of the transactions contemplated by, the Agreement, except such consents,
approvals, authorizations, orders, registrations, declarations or filings as
have been obtained or made and are in full force and effect and the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware;
and
(vii) Upon the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, the Merger will be effective in accordance
with the terms and provisions of the Agreement, the Certificate of Merger and
the laws of the State of Delaware.
In rendering the foregoing opinion, such counsel may rely, to the
extent such counsel deems such reliance necessary or appropriate, as to matters
of fact, upon certificates of government officials and of any officer or
officers of the Buyer and Acquisition. Counsel may also assume the authenticity
of all documents represented to such counsel to be originals, the conformity to
original documents of all copies of documents submitted to such counsel, the
accuracy and completeness of all corporate records made available to such
counsel by Buyer and Acquisition and their agents and the genuineness of all
signatures not executed in such counsel's presence.
2
