SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-K
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED] For the fiscal year ended September 30, 1996 OR
Commission file number 333-493
LAMCOR, INCORPORATED
(Exact name of registrant as specified in its charter)
Minnesota 41-1478017
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification number
Highway 169 North, P. O. Box 70, Le Sueur, Minnesota 56058
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (507) 332-1997
Securities registered under Section 12(b) of the Act
None
Name or each exchange on which registered
None
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __X__ No _____
Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained in this form, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [XX]
The aggregate market value of the voting stock held by non-affiliates of the
registrant on December 24, 1996, based on the average bid and asked prices of
Common Stock in the over-the-counter market on that date was $2,823,803.
As of December 23, 1996, 1,382,817 shares of the Common Stock of the registrant
were outstanding.
Documents incorporated by reference: None.
CONTENTS
Page
Part 1
Item 1 - Business 1
Item 2 - Properties 3
Item 3 - Legal Proceedings 3
Item 4 - Submission of Matters to a Vote of Security Holders 4
Part II
Item 5 - Market for Registrant's Common Equity and Related Stockholder
Matters 4
Item 6 - Selected Financial Data 6
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations 6
Item 8 - Financial Statements and Supplementary Data 9
Item 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 9
Part III
Item 10 - Directors and Executive Officers of the Registrant 9
Item 11 - Executive Compensation 10
Item 12 - Security Ownership of Certain Beneficial Owners and Management 13
Item 13 - Certain Relationships and Related Transactions 15
Part IV
Item 14 - Exhibits, Financial Statements and Reports on Form 8-K 17
PART I
Item 1. - BUSINESS
General
Lamcor, Incorporated ("Lamcor" or "Company"), a corporation organized
under the laws of Minnesota in 1983, manufactures flexible packaging products,
including laminated roll stock and pouches. The Company sells its products for
use principally in the food and medical industries.
Products and Markets
The Company produces laminated roll stock and pouches. The following
table shows the product mix, as a percentage of net sales, for each of the
Company's last three fiscal years:
Fiscal Year Ended September 30,
-------------------------------
Product 1996 1995 1994
------- ---- ---- ----
Laminated Roll Stock 23% 24% 36%
Pouches 77% 76% 64%
LAMINATED ROLL STOCK. The Company purchases rolls of barrier and
sealant films from approximately eight suppliers. These films have been readily
available from such suppliers at prices which vary based on quantity and market
conditions for petroleum-based products.
The Company laminates one substrate with another, resulting in greater
strength and a more effective barrier. The laminated roll stock is either sold
to other packaging companies or used for making the Company's other products.
The Company sells the laminated roll stock principally to packagers in the meat
and cheese industries.
POUCHES. The Company produces pouches by sealing the laminated rolls
using an automated process. The Company's production equipment seals each pouch
on three sides and cuts each pouch to a desired length. The Company produces
pouches with either standard or custom thickness and sizes, depending on the
customer's specifications.
These pouches are used for packaging products sold primarily in the
food or medical industries and which require a barrier from the environment to
preserve freshness or shelf-life. After a customer purchases the Company's
pouches, the customer typically inserts its product, removes air from the pouch
and seals the fourth side of the pouch. The removal of air causes the plastic
pouch to collapse around the product. In the Company's fiscal year ended
September 30, 1996 ("Fiscal 1996") approximately 70% of the pouches produced by
the Company were sold for the packaging of food.
The Company's business generally is not seasonal.
Sales and Marketing
The Company currently employs four sales persons who sell the Company's
products principally to businesses engaged in the food or medical industries in
the upper midwest. Sales outside this area are covered by a network of
manufacturer's representatives.
Government Regulation
The Food and Drug Administration ("FDA") sets standards for the type of
plastic film pouch used for cooking food products. The Company purchases plastic
film produced by suppliers pursuant to the FDA standards.
Management believes that the Company is in compliance with applicable
environmental laws concerning the handling and disposal of solvents used in the
lamination process of production.
Major Customer, Backlog and Exports
During fiscal 1996, the Company derived $940,737, or 12% of total net
sales, from one customer. No other customer accounted for more than 10% of net
sales during fiscal 1996.
At November 30, 1996, the Company had a backlog of approximately $2
million which is expected to be filled during fiscal 1997. The Company's backlog
at November 30, 1995 was approximately $1.7 million.
The Company's net sales included export sales of $257,771 in 1996;
$224,587 in 1995 and $212,430 in 1994.
Competition
The principal competitive factors in the Company's industry are price,
product quality and service. Competition continues to be a major factor in the
Company's business, including competitors with lower labor costs because of
production in Mexico. There are numerous competitors in the plastic packaging
industry, many of which have larger production facilities and greater net sales
than the Company. Lamcor's principal competitors include American National Can
Inc.; Curwood, a division of Bemis Inc.; C&H Packaging Inc., Clearlan Inc.; and
Winpak Inc.
Intellectual Property
The Company uses the trademarks "Lamcor" and "Savorloc" for use with
its pouches and does not own any issued issued patents or registered trademarks.
Employees
As of September 30, 1996, the Company employed 38 persons full time.
Pending Merger and Sale of the Company
On September 30, 1996, the Company, Packaging Acquisition Corporation
("PAC") and LI Acquisition Corporation, a wholly-owned subsidiary of PAC
("Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement")
pursuant to which, among other things, (i) Sub will be merged with and into the
Company, with the Company being the surviving corporation (the "Merger") and
(ii) each outstanding share of the common stock, no par value per share (the
"Common Stock"), of the Company (other than shares of Common Stock held by the
shareholders, if any, who properly exercise their dissenters' rights under
Minnesota law) will be converted into the right to receive $4.12 ("Merger
Consideration") less (a) $0.12, representing the pro rata portion of the funds
to be placed in escrow to satisfy claims by PAC against the Company for
breaching of representations and warranties or failure to perform covenants or
agreements of the Company in the Merger Agreement and for certain expenses of
the Company (the "Escrow Funds") and (b) applicable taxes required to be
withheld. The Merger is subject to several conditions, including approval of the
Merger Agreement by the shareholders of the Company. The Board of Directors of
the Company has given notice of a special meeting of shareholders to be held
December 31, 1996, at which the shareholders of record as of November 25, 1996
will vote on the Merger Agreement. If the Merger Agreement is approved by the
shareholders and all other conditions to the Merger are satisfied or waived, the
Company expects the Merger to be completed in early January 1997.
Item 2. - PROPERTIES
The Company owns its 23,668 square foot production and office facility
in Le Sueur, Minnesota, (the "Facility"), which is subject to a mortgage with
an outstanding balance of $460,000 as of September 30, 1996. The Company has
refinanced this mortgage with its other bank debt as described under Item 7 of
this report.
Management believes that the existing Facility is currently being used
at its maximum production capacity. In January 1996, the Company decided to
pursue a 24,000 square foot plant expansion project at the Facility. The
additional space will be used for warehousing and possibly future production
(the "Plant Expansion Project"). The Company intends to finance the Plant
Expansion Project through bank debt secured by the Facility and capital
equipment.
Item 3. - LEGAL PROCEEDINGS
In January 1996, the Company decided to pursue the Plant Expansion
Project and fund it by raising up to $962,500 of new equity capital and
borrowing the balance from a bank. On March 1, 1996, the Company commenced an
offering to its then-existing shareholders of rights to acquire up to an
aggregate of 350,000 shares of Common Stock at a price of $2.75 per share (the
"Rights Offering"). Under the terms of the Rights Offering, shareholders of the
Company wishing to subscribe for any of the offered shares were required to
deliver their subscription (together with payment of the subscription price for
the subscribed shares) to the Company on or before April 15, 1996. By April 15,
1996, the Company had received aggregate subscriptions for approximately 56,441
shares of Common Stock for an aggregate amount of approximately $155,213, which
was substantially less than the $962,500 desired for the equity portion of the
financing for the Plant Expansion Project. After PAC initiated merger
discussions with the Company in late March 1996, PAC informed the Company that
if a merger or sale proposal were to be presented by PAC, it would be
conditioned on the termination of the Rights Offering and the refund of any
subscriptions. Because the Company's directors did not want to jeopardize the
success of completing a merger at a favorable price to all Shareholders, on June
14, 1996, the Board of Directors of the Company terminated the Rights Offering
and, shortly thereafter, the Company refunded all subscriptions with interest.
On July 30, 1996, the Company received a letter from Loper & Seymour,
P.A. ("L&S"), counsel to 14 shareholders of the Company, demanding the issuance
of the Common Stock which had been subscribed for by those shareholders in the
Rights Offering. At the time the Rights Offering was terminated, the Company had
received subscriptions for the purchase of 56,441 shares (out of the 350,000
shares initially offered) from shareholders of record (the "Subscriber Group").
PAC expressed to the Company its willingness to proceed with the Merger without
a reduction in the Merger Consideration if, upon the closing of the Merger, the
Company paid each member of the Subscriber Group a settlement payment of $1.00
for each of the 56,441 shares subscribed for by such members (less certain legal
fees), and in exchange for such payment each such member would deliver a release
of all claims pertaining to the Rights Offering. On December 2, 1996, the
Company, PAC, L&S and another law firm representing 14 members of the Subscriber
Group entered into a Stipulation Agreement and Settlement Agreement (the
"Settlement Agreement") reflecting the foregoing terms. The Settlement Agreement
will only be effective if the Merger is consummated. In addition, as a condition
to the closing of the Merger: (i) the Company must have received releases from
all of the shareholders in the Subscriber Group who have previously asserted a
claim through legal counsel; (ii) the Company must have received releases from
at least 95% of the remaining shareholders in the Subscriber Group; and (iii)
the Company must have received releases from the holders of at least 800,000
shares of Common Stock who did not timely subscribe for Common Stock in the
Rights Offering.
Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of November 25, 1996, there were approximately 300 holders of record
of Common Stock. The Company has not paid dividends on its Common Stock during
the fiscal years ended September 30, 1996 and 1995. Dividends are generally
restricted under the Company's bank credit agreements. The Common Stock is
traded on the over-the-counter market. The following table sets forth for the
periods indicated the range of the reported high and low bid quotations, based
on information received from OTC Bulletin Board, Trading & Market Services, The
Nasdaq Stock Market, Inc. ("Nasdaq OTC"). These quotations represent
inter-dealer prices and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
BID PRICE
HIGH LOW
---- ---
Fiscal year ended September 30, 1996
<S> <C> <C>
First Quarter (October 1, 1995 through December 31, 1995)....... $3.00 $2.75
Second Quarter (January 1, 1996 through March 31, 1996)......... $2.75 $2.75
Third Quarter (April 1, 1996 through June 30, 1996)............. $2.75 $2.25
Fourth Quarter (July 1, 1996 through September 30, 1996)........ * *
Fiscal year ended September 30, 1995
First Quarter (October 1, 1994 through December 31, 1994)....... $3.50 $3.00
Second Quarter (January 1, 1995 through March 31, 1995)......... $2.50 $1.37
Third Quarter (April 1, 1995 through June 30, 1995)............. $3.37 $2.37
Fourth Quarter (July 1, 1995 through September 30, 1995)........ $3.00 $2.75
</TABLE>
* High and low bid prices are unavailable from Nasdaq OTC for the fiscal
quarter ended September 30, 1996 as there were no quotes posted on the OTC
Bulletin Board from market makers in Common Stock during this period.
Item 6. - SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Fiscal Years Ended September 30,
-------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Statements of Income Data
Net sales $8,006,710 $7,158,636 $4,817,411 $3,682,870 $3,190,502
Operating income 706,867 718,961 338,413 226,731 310,363
Interest income 8,981 5,181 8,996 8,054 4,052
Interest expense (143,390) (139,247) (66,141) (50,135) (35,592)
Net income $352,458 $358,795 $176,918 $127,450 $192,288
Earnings per share $.20 $.22 $.12 $.09 $.16
(primary)
Weighted average number
of shares outstanding
Primary 1,759,930 1,615,101 1,448,315 1,363,168 1,197,210
Full diluted 1,767,811 1,713,000 1,451,483 1,370,214 1,197,210
As of September 30,
-------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Balance Sheet Data
Working capital $1,469,697 $1,192,202 $693,467 $668,618 $567,467
Total assets 4,509,384 4,164,030 3,527,547 2,374,724 1,936,955
Current liabilities 1,046,321 930,523 1,185,440 518,360 513,310
Long-term debt, less
current maturities (1) 745,038 852,093 837,761 589,561 316,042
Stockholders' equity 2,171,280 1,809,858 1,407,346 1,211,803 1,074,603
</TABLE>
- --------------------
(1) Excludes capital lease obligations.
Item 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Company's audited financial statements and notes to the statements included at
the end of this report.
The following table sets forth for the fiscal years indicated the
percentage of net sales represented by items in the Statements of Income and the
percentage by which each item changed from year to year.
<TABLE>
<CAPTION>
Period to Period
Fiscal Years Ended September 30, Percentage Changes
------------ ------------------- ------------------
1996 1995 1994 Fiscal 1996 Fiscal 1995
---- ---- ---- over 1995 over 1994
--------- ---------
<S> <C> <C> <C> <C> <C>
Cost of goods sold 71.6% 72.6% 73.5% 10.4% 46.7%
Selling, general and 19.5 17.4 19.4 25.6 32.9
administrative expenses
Operating income 8.8 10.0 7.0 (1.7) 112.5
Interest income .11 .07 .18 73.3 (42.4)
Interest expense 1.8 1.9 1.4 3.0 110.5
Income taxes 2.7 3.2 2.2 (2.7) 116.4
Net income 4.4 5.0 3.7 (1.8) 102.8
</TABLE>
Pending Merger and Sale of the Company
On September 30, 1996, the Company, PAC and Sub entered into the Merger
Agreement pursuant to which, among other things, (i) Sub will be merged with and
into the Company, with the Company being the surviving corporation and (ii) each
outstanding share of Common Stock (other than shares of Common Stock held by the
shareholders, if any, who properly exercise their dissenters' rights under
Minnesota law) will be converted into the right to receive $4.12 ("Merger
Consideration") less (a) $0.12, representing the pro rata portion of the
Escrowed Funds and (b) applicable taxes required to be withheld. The Merger is
subject to several conditions, including approval of the Merger Agreement by the
shareholders of the Company. The Board of Directors of the Company has given
notice of a special meeting of shareholders to be held December 31, 1996, at
which the shareholders as of November 25, 1996 will vote on the Merger
Agreement. If the Merger Agreement is approved by the shareholders and all other
conditions to the Merger are satisfied or waived, the Company expects the Merger
to be completed in early January 1997.
Results of Operations
OVERVIEW
Net sales in fiscal 1996 increased 11.8% over net sales in the
Company's fiscal year ended September 30, 1995 ("Fiscal 1995"). Gross profit as
a percentage of net sales increased to 28.4% in fiscal 1996 compared to 27.4% in
fiscal 1995. However, because of additional staffing, write off of bad debt and
expenses attributable to the pending Merger, selling, general and administrative
expenses as a percentage of net sales increased to 19.5% compared to 17.4% in
Fiscal 1995. As a result, operating income and net income for Fiscal 1996
decreased by $12,094 and $6,337, respectively, in these periods. Increases in
resin pricing, which began in March 1996 also adversely affected this year's
results. Because of contractual commitments with customers and competitive
conditions, there is generally a lag between increases in resin prices and
increases in prices for the Company's products.
FISCAL 1996 VERSUS FISCAL 1995
NET SALES. Net sales increased $848,074 or 11.8% for Fiscal 1996
compared with Fiscal 1995. This increase was due primarily to gains in market
share for the Company's products. The Company's sales and marketing departments
continue to make proposals to new prospective customers and attend trade shows
to generate new leads. Competition continues to be a major factor in the
Company's business, including competitors with lower labor costs because of
production in Mexico.
COST OF GOODS SOLD. Cost of goods sold increased $541,458 or 10.4% for
Fiscal 1996 compared with Fiscal 1995. This increase was due primarily to the
higher levels of net sales in Fiscal 1996. The decrease in cost of goods sold as
a percentage of net sales was attributable to the increase in gross margin on
the sale of more value added products in Fiscal 1996. Value added products
include pouches with custom sizes or designs, or reclosable or stand-up
features. During Fiscal 1996, inventory has been kept at historical levels and
in line with projected sales. If raw material prices continue to escalate, it
may be necessary to increase these levels as a means of postponing or diluting
the effects of higher prices. The Company also monitors inventory levels for
cash flow purposes. The Company continues to inventory items for several
customers to satisfy their requirements and carry a certain amount of
"unattached" raw material to enable the Company to provide product for customers
with emergency needs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expense increased $318,710 or 25.6% for Fiscal 1996 compared with
Fiscal 1995. This increase was due primarily to the addition of sales and
support personnel, write off of bad debt, and costs connected with the proposed
Merger.
OTHER INCOME (EXPENSE). Interest expense increased $4,143 for Fiscal
1996 compared with Fiscal 1995 because of debt financing of a pouch machine put
into service in May 1995, which was slightly offset with a decrease in the use
of the Company's bank line of credit. This increase was also offset in part by
an increase of $3,800 of interest income during the comparable periods.
INCOME TAXES. Income taxes decreased $6,100 for Fiscal 1996 compared
with Fiscal 1995, resulting in part from a $12,437 decrease in income before
income taxes for Fiscal 1996. This decrease was offset by the Company's
effective tax rate increasing as more income is taxed at the maximum tax rates
and as deferred income taxes are being increased accordingly.
NET INCOME. Net income decreased $6,337 for Fiscal 1996 compared with
Fiscal 1995. Net income per share was $0.02 per share lower for Fiscal 1996
because of this decrease and an increase in the number of outstanding shares of
common stock and common share equivalents compared to the Fiscal 1995 period.
FISCAL 1995 VERSUS FISCAL 1994
NET SALES. Net sales increased $2,341,225 or 48.6% for Fiscal 1995
compared with the Company's fiscal year ended September 30, 1994 ("Fiscal
1994"). This increase was due to gains in market share for the Company's
products and the addition of a network of manufacturer's representatives in the
midwest and pacific coast regions.
COST OF GOODS SOLD. Cost of goods sold increased $1,652,570 or 46.7%
for Fiscal 1995 compared with Fiscal 1994, primarily because of higher levels of
net sales in Fiscal 1995. The decrease in cost of goods sold as a percentage of
net sales was attributable to the increase in gross margin on the sale of more
value added products in Fiscal 1995.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expense increased $308,107 or 32.9% for Fiscal 1995 compared with
Fiscal 1994. This increase was due primarily to the 48.6% increase in net sales
which resulted in additional sales commissions from both in-house sales staff
and manufacturer's representatives who represent the midwest and pacific coast
regions. During the second quarter of 1995, ten new offices were completed at
the Facility. The Company moved its sales personnel to those new offices, which
allowed the Company to terminate the office lease for its sales personnel.
OTHER INCOME (EXPENSE). Interest expense increased $77,106 for Fiscal
1995 compared with Fiscal 1994 because of a capital lease obligation and debt
financing for a plant expansion and purchase of a pouch machine during Fiscal
1995. Interest income decreased $3,815 for the Fiscal 1995 period because of the
expiration of a note receivable which existed in Fiscal 1994.
INCOME TAXES. Income taxes increased $121,600 or 116% for Fiscal 1995
compared with Fiscal 1994, resulting primarily from the 48.6% increase in net
sales and 108% increase in income before income taxes for the Fiscal 1995
period.
NET INCOME. Net income increased $181,877 or 103% for Fiscal 1995
compared with Fiscal 1994. Net income per share was $0.10 per share higher for
Fiscal 1995 principally because of this increase.
Inflation has not had a significant effect on the Company during the
Fiscal 1996, 1995 or 1994 periods. However, volatility of resin prices for the
raw material film purchased by the Company for use with its products continued
during these periods.
Liquidity and Capital Resources
At September 30, 1996, the Company had working capital of $1,469,697,
representing an increase of $277,495 since September 30, 1995. In Fiscal 1996,
the Company had $252,741 net cash provided by operating activities, consisting
of $352,458 in net income, $218,421 in depreciation and the remainder from the
net change in other working capital items. There were capital expenditures of
approximately $171,034 in Fiscal 1996, related to purchase of equipment, and
financing activities resulting in payments of debt of $623,352 and net cash used
in financing activities of $83,619. Management believes that the financial
resources available to the Company, including its bank line of credit, trade
credit and internally generated funds, will be sufficient to finance the
Company's operations in the foreseeable future. At September 30, 1996, the
Company had access to a $600,000 bank line of credit with all funds being
available to finance any future operating activity. During the first quarter of
fiscal 1997, the Company refinanced its existing mortgage and bank financing
with a new $864,000 bank credit arrangement. Approximately $460,000 of the new
bank credit facility was used to refinance the existing mortgage on the Facility
and the balance will be used to fund $404,000 of the $455,000 cost of the
building portion of the Plant Expansion Project. The Company intends to continue
with the building portion of the Plant Expansion Project whether or not the
Merger is completed. Management believes that its available cash and cash flow
from operations will be sufficient to fund its working capital needs for the
foreseeable future.
LAMCOR, INCORPORATED
FINANCIAL REPORT
SEPTEMBER 30, 1996, 1995 AND 1994
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Shareholders
Lamcor, Incorporated
We have audited the accompanying balance sheets of Lamcor, Incorporated
as of September 30, 1996 and 1995, and the related statements of income, changes
in stockholders' equity and cash flows for each of the three years in the period
ended September 30, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Lamcor, Incorporated
as of September 30, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended September 30, 1996,
in conformity with generally accepted accounting principles.
/s/ House, Nezerka & Froelich, P.A.
Bloomington, Minnesota
November 12, 1996, except for Note 5, as
to which the date is November 26, 1996
LAMCOR, INCORPORATED
<TABLE>
<CAPTION>
BALANCE SHEETS
September 30, 1996 and 1995
ASSETS (Notes 4 and 5) 1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and savings account $ 61,562 $ 62,872
Trade accounts receivable, less allowance for
doubtful accounts of $10,000 (Note 9) 1,145,402 1,046,302
Inventories (Note 2) 1,263,261 986,438
Prepaid expenses and other 31,793 14,498
Deferred tax assets (Note 10) 14,000 12,615
----------- -----------
Total current assets 2,516,018 2,122,725
OTHER ASSETS (Note 3) 3,092 4,158
PROPERTY, EQUIPMENT AND IMPROVEMENTS, at cost (Note 6):
Land 45,960 20,000
Building and improvements 773,340 753,862
Manufacturing equipment 2,088,102 1,981,743
Office equipment and other 147,402 128,165
----------- -----------
3,054,804 2,883,770
Less accumulated depreciation 1,064,530 846,573
----------- -----------
1,990,274 2,037,197
----------- -----------
$ 4,509,384 $ 4,164,080
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 5) $ 165,000 $ 97,000
Current maturities of capital lease obligations (Note 6) 64,000 57,103
Accounts payable 646,961 503,645
Accrued expenses (Note 11) 168,417 144,569
Income taxes payable (Note 10) 1,943 128,206
----------- -----------
Total current liabilities 1,046,321 930,523
LONG-TERM DEBT, less current maturities (Note 5) 745,038 852,093
CAPITAL LEASE OBLIGATIONS, less current maturities (Note 6) 361,745 425,706
DEFERRED INCOME TAXES (Note 10) 185,000 145,900
COMMITMENT, CONTINGENCY AND
SUBSEQUENT EVENT (Notes 13 and 14)
STOCKHOLDERS' EQUITY (Notes 7 and 8):
Undesignated shares; authorized 5,000,000 shares; none issued
Common stock, no par value; authorized 5,000,000 shares;
outstanding shares 1996 1,382,667; 1995 1,341,542 996,559 952,809
Notes receivable arising from the sale of common stock (101,219) (66,433)
Retained earnings 1,275,940 923,482
----------- -----------
2,171,280 1,809,858
----------- -----------
$ 4,509,384 $ 4,164,080
=========== ===========
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
LAMCOR, INCORPORATED
STATEMENTS OF INCOME
Years Ended September 30, 1996, 1995 and 1994
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Net sales (Note 9) $ 8,006,710 $ 7,158,636 $ 4,817,411
Cost of goods sold 5,736,439 5,194,981 3,542,411
----------- ----------- -----------
Gross profit 2,270,271 1,963,655 1,275,000
Selling, general and administrative expense 1,563,404 1,244,694 936,587
----------- ----------- -----------
Operating income 706,867 718,961 338,413
Other income (expense):
Interest income 8,981 5,181 8,996
Interest expense (143,390) (139,247) (66,141)
Other -- -- 150
----------- ----------- -----------
(134,409) (134,066) (56,995)
----------- ----------- -----------
Income before income taxes 572,458 584,895 281,418
Income taxes (Note 10) 220,000 226,100 104,500
----------- ----------- -----------
Net income $ 352,458 $ 358,795 $ 176,918
=========== =========== ===========
Earning per common share:
Primary $ .20 $ .22 $ .12
=========== =========== ===========
Fully diluted $ .20 $ .21 $ .12
=========== =========== ===========
Shares used in computing earnings per common equivalent shares:
Primary 1,759,930 1,615,101 1,448,315
=========== =========== ===========
Fully diluted 1,767,811 1,713,000 1,451,483
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
LAMCOR, INCORPORATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended September 30, 1996, 1995 and 1994
Common Stock Note Receivable
------------ from Sale of Retained
Shares Amount Common Stock Earnings Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, September 30, 1993 1,315,542 $ 931,534 $ (107,500) $ 387,769 $ 1,211,803
Stock issued for options 13,000 8,625 -- -- 8,625
Proceeds from notes receivable -- -- 10,000 -- 10,000
Net income -- -- -- 176,918 176,918
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1994 1,328,542 940,159 (97,500) 564,687 1,407,346
Stock issued for options/compensation 3,000 5,150 -- -- 5,150
Interest on notes receivable -- -- (7,683) -- (7,683)
Proceeds from notes receivable -- -- 46,250 -- 46,250
Stock issued for notes receivable/options 10,000 7,500 (7,500) -- --
Net income -- -- -- 358,795 358,795
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1995 1,341,542 952,809 (66,433) 923,482 1,809,858
Stock issued for options 16,125 12,500 -- -- 12,500
Interest on notes receivable -- -- (3,536) -- (3,536)
Stock issued for notes receivable/options 25,000 31,250 (31,250) -- --
Net income -- -- -- 352,458 352,458
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1996 1,382,667 $ 996,559 $ (101,219) $ 1,275,940 $ 2,171,280
=========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
LAMCOR, INCORPORATED
STATEMENTS OF CASH FLOWS
Years Ended September 30, 1996, 1995 and 1994
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 352,458 $ 358,795 $ 176,918
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 218,421 176,179 125,120
Deferred income taxes 37,715 36,285 42,000
Stock exchanged for compensation -- 2,150 --
Interest added to notes receivable (3,536) -- --
Changes in assets and liabilities:
Trade accounts receivable (99,100) (252,692) (181,959)
Inventories (276,823) 78,249 (628,786)
Prepaid expenses and other (17,295) (7,767) (1,317)
Refundable income taxes -- -- 37,124
Accounts payable 143,316 (135,338) 269,482
Accrued expenses 23,848 58,459 22,275
Income taxes payable (126,263) 98,770 29,436
----------- ----------- -----------
Net cash provided by (used in) operating activities 252,741 413,090 (109,707)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (171,034) (214,923) (294,491)
Other deposits 602 (1,777) (134,493)
----------- ----------- -----------
Net cash used in investing activities (170,432) (216,700) (428,984)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 705,000 1,000,000 545,000
Principal payments on short-term borrowings (705,000) (1,090,000) (455,000)
Principal payments on long-term debt and capital lease (623,552) (136,583) (85,766)
Proceeds from long-term debt 527,433 120,000 350,442
Collections on note receivable from common stock -- 46,250 10,000
Proceeds from exercise of stock options 12,500 3,000 8,625
Checks issued in excess of bank balance -- -- 82,381
Payments on checks issued in excess of bank balance -- (82,381) --
----------- ----------- -----------
Net cash provided by (used in) financing activities (83,619) (139,714) 455,682
----------- ----------- -----------
Net increase (decrease) in cash and savings account (1,310) 56,676 (83,009)
Cash and savings account:
Beginning 62,872 6,196 89,205
----------- ----------- -----------
Ending $ 61,562 $ 62,872 $ 6,196
=========== =========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital lease obligation for equipment/deposit $ -- $ 353,040 $ 157,030
=========== =========== ===========
Equipment deposit used for purchase of equipment $ -- $ 291,673 $ --
=========== =========== ===========
Stock issued for notes receivable $ 31,250 $ 7,500 $ --
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 146,694 $ 140,019 $ 61,346
=========== =========== ===========
Cash paid for income taxes $ 308,548 $ 91,045 $ 15,621
=========== =========== ===========
Cash refunded for income taxes $ -- $ -- $ 19,681
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
LAMCOR, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
Years Ended September 30, 1996, 1995 and 1994
Note 1. Nature of Business and Significant Accounting Policies:
Nature of business:
The Company is engaged in the business of laminating plastic and
manufacturing of plastic pouches used in the food and medical
industries with sales throughout the United States.
A summary of the Company's significant accounting policies
follows:
Credit risk and allowance for doubtful accounts:
The Company reviews customers' credit history before extending
credit and establishes an allowance for doubtful accounts based
upon factors surrounding the credit risk of specific customers,
historical trends and other information.
Inventories:
Inventories are stated at the lower of cost (using standard costs
for work in progress and finished goods) or market, computed on a
basis which approximates the first-in, first-out (FIFO) method.
Property, equipment and improvements:
Property, equipment and improvements are stated at cost. For
financial reporting purposes, depreciation is computed using the
straight-line method over the following estimated useful lives:
Years
Building and improvements 3-40
Manufacturing equipment 5-15
Office equipment and other 3-5
Depreciation on property, equipment and improvements was $217,957,
$175,715 and $124,805 for the years ended September 30, 1996, 1995
and 1994, respectively.
For income tax reporting purposes, other lives and methods are
used; deferred income taxes are provided for these differences.
Revenue recognition:
Revenues are recognized at the time of product shipment.
Income taxes:
Deferred tax assets and liabilities are recognized for the future
consequences attributable to temporary differences between the
financial statement carrying amounts of assets and liabilities and
their respective tax bases.
Earnings per share:
Earnings per share has been determined by dividing net income by
the weighted average common shares outstanding during each period
plus the effect of common shares contingently issuable, primarily
from stock options as computed using the modified treasury stock
method.
Estimates and assumptions:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
Fair value of financial instruments:
In 1995, the Company adopted Statement of Financial Accounting
Standards SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments," which requires disclosure of fair value information
about financial instruments when the fair value is different than
the book value of those financial instruments. Financial
instruments included in these financial statements, which
ordinarily are not recorded at market value, include long-term
debt. The estimated fair value amounts of these instruments have
been determined using available market information and appropriate
valuation methodologies. When the fair value is equal to the book
value, no additional disclosure is made.
Stock based compensation:
In October 1995, SFAS No. 123, "Accounting for Stock Based
Compensation," was issued. This statement establishes financial
accounting and reporting standards for stock based employee
compensation plans and is effective for fiscal years beginning
after December 15, 1995. The Company has not yet adopted or
calculated the financial statement impact of this pronouncement.
Note 2. Inventories:
The components of inventory are as follows:
1996 1995
-------------- --------------
Raw materials $ 183,428 $ 246,576
Work in progress 614,563 416,504
Finished goods 465,270 323,358
-------------- --------------
$ 1,263,261 $ 986,438
============== ==============
Note 3. Other Assets:
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Equipment deposits $ 1,175 $ 277
Refinancing costs, less accumulated
amortization 1996 $1,392; 1995 $928 1,917 2,381
Land deposit - 1,500
-------------- --------------
$ 3,092 $ 4,158
============== ==============
</TABLE>
Note 4. Bank Line of Credit:
The Company has a revolving line of credit in the maximum amount
of $600,000 which expires on January 22, 1998. Interest is payable
at 1.5% over the bank's reference rate which was 8.25% at
September 30, 1996. The note is payable on demand and
collateralized by substantially all assets except for building and
land. There were no outstanding balances due on the credit line at
September 30, 1996 and 1995.
Note 5. Long-Term Debt:
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Mortgage payable - bank, due in monthly installments of $3,285
including interest at 1.75% over the bank's reference rate,
paid off on September 25, 1996, collateralized by building and land $ - $ 384,772
Notes payable, due in monthly installments including interest from
either 9.5% to 9.6% or .5% to 1.5% over the bank's reference
rate which was 8.25% at September 30, 1996, balances are due
from June 2, 1998 to October 6, 2006, collateralized by
substantially all assets 910,038 564,321
-------------- --------------
910,038 949,093
Less current maturities 165,000 97,000
-------------- --------------
$ 745,038 $ 852,093
============== ==============
</TABLE>
Maturities for the next five years on long-term debt outstanding
at September 30, 1996 are as follows:
Year Ending September 30
1997 $ 165,000
1998 185,289
1999 194,344
2000 184,297
2001 88,384
After 92,724
==============
$ 910,038
On November 26, 1996, the Company received waivers of certain
demand payment features included in certain of the above
installment notes. The bank retained such demand payment rights in
the case of default, a more than 25% change in ownership and other
instances stipulated in the notes.
Note 6. Leases:
On August 11, 1994, the Company entered into a capital lease
agreement with a financing company to acquire $489,920 of
equipment. The financing company advanced the manufacturer
$157,030 for which the Company was directly obligated as of
September 30, 1994. Payments totaling $332,890 were made by the
financing company during the 1995 year. The lease began on May 1,
1995 and calls for 84 monthly payments of $8,147 including
interest at 10.33%.
On January 17, 1995, the Company entered into a capital lease
agreement to purchase a truck for $18,884. The lease requires 48
monthly payments of $400 including interest at 9.75%.
The Company also entered into a capital lease agreement to
purchase a computer for $4,304 which began on April 30, 1995 and
requires 36 monthly payments of $130.
The following is a schedule by year of the future minimum lease
payments due under capital leases together with the present value
of the net minimum lease payments:
Year Ended September 30:
1997 $ 104,125
1998 103,345
1999 99,360
2000 97,763
2001 97,763
After 2001 57,028
--------------
Total minimum lease payments 559,384
Less amount representing interest 133,639
--------------
Present value of minimum lease payments 425,745
Less current obligation under capital lease 64,000
--------------
Non-current obligation under capital lease $ 361,745
==============
Cost and accumulated amortization of leased assets are as follows:
1996 1995
-------------- --------------
Cost $ 513,108 $ 513,108
Accumulated amortization 76,920 23,290
-------------- --------------
$ 436,188 $ 489,818
============== ==============
Amortization of assets under capital leases is included in
depreciation expense and was $53,630 and $23,290 for the years
ended September 30, 1996 and 1995, respectively.
The Company rented space for a Minneapolis sales office under an
operating lease which commenced June 1, 1990 and expired May 31,
1995. Rent expense under all operating leases was $16,488 and
$14,810 for the years ended September 30, 1995 and 1994,
respectively.
Note 7. Stock Options:
The Company has reserved shares of common stock for issuance to
key employees and stockholders under incentive stock option and
purchase plans. Options are exercisable on a graduated scale
and/or expire based on the individual terms of the option
agreements. The options are exercisable at prices ranging from $
.50 to $2.00 per share. Other pertinent information related to the
plan is as follows:
<TABLE>
<CAPTION>
September 30
--------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Under option, beginning of year 590,000 598,000 576,000
Granted - 5,000 45,000
Terminated and canceled - - (10,000)
Exercised (40,000) (13,000) (13,000)
-------------- -------------- --------------
Under option, end of year 550,000 590,000 598,000
============== ============== ==============
Options exercisible, end of year 515,000 505,000 484,000
============== ============== ==============
</TABLE>
The options exercised during the years ended September 30, 1996,
1995 and 1994 were at an average price of $1.09, $.81 and $.66 per
share, respectively.
Note 8. Notes Receivable Arising From the Sale of Common Stock:
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Notes receivable from exercise of options for
the Company's common stock -
Due April 1, 1997, including interest at 6% $ 93,719 $ 58,933
Due August 2, 1996, including interest at 6% 7,500 7,500
-------------- --------------
$ 101,219 $ 66,433
============== ==============
</TABLE>
Issued shares are being held by the Company as collateral for the
above notes pending payment of the amounts due.
Note 9. Major Customers:
The Company derived more than 10% of its net sales from the
following unaffiliated customers and had receivable balances from
those customers in the amounts of:
<TABLE>
<CAPTION>
Year Ended September 30
---------------------------
1996 1995 1994
--------------------------- --------------------------- --------------------------
Customer Sales Receivable Sales Receivable Sales Receivable
-------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
A $ * $ * $ * $ * $ 528,983 $ 68,804
B 940,737 91,935 942,035 87,299 * *
</TABLE>
* The net sales to customers A and B were less than 10% of the total
net sales for the period indicated.
Note 10. Income Taxes:
The income tax components are as follows:
<TABLE>
<CAPTION>
Year Ended September 30
-----------------------
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Currently payable:
Federal $ 162,285 $ 165,815 $ 51,700
State 20,000 24,000 10,800
-------------- -------------- --------------
182,285 189,815 62,500
Deferred income taxes 37,715 36,285 42,000
-------------- -------------- --------------
$ 220,000 $ 226,100 $ 104,500
============== ============== ==============
</TABLE>
Net deferred tax liabilities consist of the following:
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation $ 185,000 $ 145,900
Deferred tax assets:
Allowance for doubtful accounts 3,400 3,400
Vacation accrual 4,000 4,018
Inventory capitalization 6,600 5,197
-------------- --------------
14,000 12,615
-------------- --------------
$ 171,000 $ 133,285
============== ==============
</TABLE>
Differences between income tax expense and the amount computed by
applying the statutory federal income tax rates to earnings before
income taxes are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Statutory rate applied to income at 34% $ 194,500 $ 198,900 $ 95,700
Incremental tax brackets - - 13,000
State taxes, net of federal tax benefit 13,200 18,100 10,500
Other 12,300 9,100 (14,700)
-------------- -------------- --------------
$ 220,000 $ 226,100 $ 104,500
============== ============== ==============
</TABLE>
Note 11. Other Accrued Expenses:
Other accrued expenses consist of the following:
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Accrued wages and related expenses $ 82,724 $ 42,820
Accrued commissions 32,387 46,189
Accrued profit sharing 26,000 18,000
Payable to chairman - 29,680
Other 27,306 7,880
-------------- --------------
$ 168,417 $ 144,569
============== ==============
</TABLE>
Note 12. Profit Sharing Plan:
The Company has a profit sharing plan under Section 401(k) of the
Internal Revenue Code for all eligible employees. The Plan
provides that Company contributions are at the discretion of the
Board of Directors. In addition, participants may elect to enter
into salary reduction agreements with the Company for a portion of
their compensation. Company contributions for the years ended
September 30, 1996, 1995 and 1994 were $26,000, $18,000 and
$15,300, respectively.
Note 13. Commitments and Contingency:
On October 2, 1996, the Company entered into an agreement for the
construction of additional warehouse space for approximately
$460,000.
On March 1, 1996, the Company commenced an offering to its then
existing shareholders of rights to acquire up to an aggregate of
350,000 shares of common stock at a price of $2.75 per share. On
June 14, 1996, the rights offering was terminated and shortly
thereafter, the Company refunded all subscriptions (for 56,441
shares), with interest.
On July 30, 1996, the Company received a letter from legal counsel
to 13 of such shareholders, demanding the issuance of the common
stock which had been subscribed for by those shareholders in the
Rights Offering. The Company, its merger candidate (see Note 14)
and respective law firms representing the subscribers are
currently negotiating a stipulation agreement and settlement
agreement under which a settlement payment of $1 (less certain
legal fees) would be paid for each of the shares subscribed for by
such members and in exchange for such payment, each member would
deliver a release of all claims pertaining to the rights offering.
There can be no assurance that the Rights Offering terms can be
settled under these terms and, accordingly, no liability has been
recorded concerning this matter.
Note 14. Merger:
The Company and its shareholders are considering a proposal to
approve and adopt an Agreement and Plan of Merger under which the
Company would be merged into another company. The proposal calls
for a purchase price of Company stock of $4.12 per share including
$.12 allocated to an escrow fund subject to terms as outlined in
the agreement. In addition, all outstanding Company stock options
would be purchased for $4.12 less the option exercise price and
would be subject to the above $.12 escrow.
Item 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Financial Statements and to each of the items
referred to therein, which are included at the end of this report.
Item 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information as of December 4,
1996 concerning the Company's directors and executive officers:
Name Age Position with Company
---- --- ---------------------
Leo Lund 67 Chairman of the Board, Secretary,
Chief Financial Officer and Director
Toby Jensen 44 President, Chief Executive Officer
and Director
Christopher Elliott 39 Director
Susan Jones 42 Director
David Stewart 54 Director
LEO LUND has served as Chairman of the Board, Secretary, Chief
Financial Officer and Director of the Company since 1985, and has rendered
financial and consulting services to the Company during that time. Mr. Lund was
a partner in the accounting firm of Lund & Associates, P.A. from 1955 to 1992.
Mr. Lund retired from that firm in 1992 and continues to provide part time
financial and consulting services to several different companies, including the
Company.
TOBY JENSEN has served as President, Chief Executive Officer and
Director of the Company since 1988. He has worked in management and sales in the
flexible packaging industry for more than 17 years.
CHRISTOPHER ELLIOTT has served as a Director of the Company since
January 1994. Mr. Elliott has been an attorney with the law firm of Christoffel,
Elliott & Albrecht, P.A. since 1989. Christoffel, Elliott & Albrecht, P.A. has
served as legal counsel to the Company.
SUSAN JONES has served as a Director of the Company since 1990. From
1981 until 1994, Ms. Jones was Vice President and General Manager of Strout
Plastics, Inc., a manufacturer of flexible packaging. Since 1994, Ms. Jones has
been an independent sales representative in the flexible packaging industry.
DAVID STEWART has served as a Director of the Company since 1985. Mr.
Stewart has been President of Paragon Enterprises, Inc., a real estate firm,
since 1974.
Item 11. - EXECUTIVE COMPENSATION
The following table provides certain summary information relating to
cash and other compensation awarded to, earned by or paid to the Company's
President and Chief Executive Officer. The annual compensation paid to the
Company's only other executive officer, Leo Lund who serves as Chief Financial
Officer and Chairman of the Board, is less than $100,000 and is paid him as an
independent consultant and not as an employee of the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation
------------------- Awards
----------------------
Securities
Name and Fiscal Underlying All Other
Principal Position Year(1) Salary($) Bonus($) Options (#) Compensation($)
------------------ ------- --------- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Toby Jensen, 1996 90,399 9,540 15,000 --
President and 1995 83,649 9,940 10,000 800(2)
Chief Executive Officer 1994 78,500 7,900 5,000 900(2)
</TABLE>
- ------------------
(1) The Company's fiscal year begins on October 1 and ends on September 30
each year.
(2) Contribution under the Company's 401(k) Profit Sharing Plan.
The following table sets forth information relating to stock options
granted to the executive officer named in the Summary Compensation Table under
the Company's stock option plans during the Fiscal 1996.
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1996
Individual Grants
------------------------------------------------------------------------- Potential Realizable Value at
Number of % of Total Assumed Annual Rates of
Securities Options Stock Price Appreciation for
Underlying Granted to Exercise or Option Term
Name Options Employees Base Price Expiration -----------------------------
---- Granted(#) in Fiscal 1996 ($/share) Date 5% 10%
---------- -------------- --------- ---- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Toby Jensen 5,000(1) 9% $0.6375 (1) $1,757 $4,328
</TABLE>
- -------------------
(1) The options for the purchase of 5,000 shares of common stock were
granted to Mr. Jensen on May 4, 1988, expiring April 1, 1989. Effective
March 31, 1989, the Company extended the exercise period for these
options until April 1, 1996. Effective March 31, 1996, the Company
extended the exercise period for these options through the closing of
the pending Merger with LI Acquisition Corporation, which is scheduled
to be completed on or before January 15, 1997 if all of the conditions
to the Merger are satisfied or waived. If the Merger is not completed,
the Company intends to extend the exercise period for these options for
a reasonable period of time.
The following table sets forth information relating to the exercise of
options during fiscal 1996 and unexercised options held as of September 30, 1996
by the executive officer named in the Summary Compensation Table.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1996
AND OPTION VALUES
Value of Unexercised
Number of Unexercised In-the Money
Shares Securities Underlying Options at Fiscal
Name Acquired Options at Fiscal Year End ($)
---- on Value Year End(#) Exercisable /
Exercise(#) Realized($) Exercisable / Unexercisable Unexercisable
----------- ----------- --------------------------- -------------
<S> <C> <C> <C> <C>
Toby Jensen 25,000 $37,500 183,000/0 $522,375
</TABLE>
- ------------------
(1) Based on the average of the bid ($3.25) and ask ($4.00) price per share on
September 28, 1996. Mr. Jensen will receive $612,960 for the cancellation
of these options effective upon the Merger, and $21,960 of the proceeds
from which will be held as part of the Escrowed Funds.
Of the 550,000 outstanding options to purchase shares of Common Stock
("Options") outstanding as of December 1, 1996, 49,000 Options were originally
scheduled to expire before the closing of the Merger, including 5,000 Options
held by Mr. Jensen. The Company has agreed to extend the exercise period of such
49,000 Options through the effective time of the Merger. If the Merger is not
completed, the Company intends to extend the exercise period for such Options
for a reasonable period of time.
<TABLE>
<CAPTION>
TEN-YEAR OPTION REPRICINGS
Number of
Securities Market Price of Length of
Underlying Options Stock at Time of Exercise Price New Original Option
Repriced or Repricing or at Time of Exercise Term Remaining
Amended Amendment Repricing or Price at Date of
Name Date (#) ($) Amendment ($) Repricing or
($) Amendment
- ---------------- -------------- -------------------- ------------------ ----------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Toby Jensen 3/31/90 10,000 $0.50 $0.6375 $0.6375 (1)
3/31/90 15,000 $0.50 $1.00 $1.00 (2)
11/30/94 25,000 $1-11/16 $0.75 $0.75 (3)
11/30/94 25,000 $1-11/16 $1.00 $1.00 (4)
11/30/94 25,000 $1-11/16 $1.25 $1.25 (5)
3/31/96 5,000 $2.75 $0.6375 $0.6375 (6)
</TABLE>
- ----------------
(1) Options for the purchase of 10,000 shares of common stock were granted
to Mr. Jensen on May 4, 1988, expiring April 1, 1989. Effective March
31, 1990, the Company extended the exercise period for these options
until April 1, 1997.
(2) Options for the purchase of 15,000 shares of common stock were granted
to Mr. Jensen on May 4, 1988, expiring April 1, 1989. Effective March
31, 1990, the Company extended the exercise period for these options
until April 1, 1998.
(3) Options for the purchase of 25,000 shares of common stock were granted
to Mr. Jensen on March 27, 1991, expiring December 1, 1994. Effective
November 30, 1994, the Company extended the exercise period for these
options until December 1, 1998.
(4) Options for the purchase of 25,000 shares of common stock were granted
to Mr. Jensen on March 27, 1991, expiring December 1, 1994. Effective
November 30, 1994, the Company extended the exercise period for these
options until December 1, 1999.
(5) Options for the purchase of 25,000 shares of common stock were granted
to Mr. Jensen on March 27, 1991, expiring December 1, 1994. Effective
November 30, 1994, the Company extended the exercise period for these
options until December 1, 2000.
(6) Options for the purchase of 5,000 shares of common stock were granted
to Mr. Jensen on May 4, 1988, expiring April 1, 1989. Effective March
31, 1989, the market price of the common stock was $0.625 and the
Company extended the exercise period for these options until April 1,
1996. Effective March 31, 1996, the Company extended the exercise
period for these options through the closing of the pending Merger with
LI Acquisition Corporation.
As a condition to the consummation of Merger (the "Closing"), each
holder of Options must deliver before Closing an Option Cancellation Agreement,
under which the Options will be canceled in exchange for the following payment:,
At the Closing, PAC will cause the Company to purchase each Option in exchange
for a cash payment equal to the product of (a) the difference (if positive)
between $4.12 and the price at which the holder of such Option could purchase
each share of Common Stock to which such Option relates, multiplied by (b) the
number of shares of Common Stock subject to such Option as if such Option was
then fully exercisable, less (y) the product of $0.12, representing the pro rata
portion of the Escrowed Funds allocable to each share of Common Stock subject to
such Option, multiplied by the number of shares referenced in clause (b) above,
and further less (z) any taxes required to be withheld. Pursuant to such an
agreement, at Closing Mr. Jensen is to receive $612,960 (less an aggregate
amount of $21,960 to be held as part of the Escrowed Funds) and Mr. Lund is to
receive $862,169 (less an aggregate amount of $30,360 to be held as a part of
the Escrowed Funds).
DIRECTOR COMPENSATION. Directors who are not employees of the Company
are reimbursed by the Company for expenses incurred as directors. Although, the
Company does not currently pay directors' fees, the Company has agreed to pay
the two members of a Special Committee of the Board of Directors (formed to
negotiate and evaluate the Merger Agreement on behalf of the Board) a fee of
$15,000 each upon the closing of the Merger in consideration for their
assistance in the negotiation of the Merger Agreement and consummation of the
Merger.
EMPLOYMENT AGREEMENT. When negotiations commenced concerning the Merger
with PAC, the Company did not have employment agreements with its executive
officers. However, as a condition to proceeding with the Merger, PAC requested
that the Company enter into an employment agreement with Mr. Jensen, which will
become effective upon the Closing of the Merger. Under that agreement dated
September 30, 1996, Mr. Jensen will serve as the Company's President for three
years and receive an annual base salary of $120,000 and become eligible for a
bonus of up to $75,000, payable by November 15, 1997, based on the Company
obtaining performance levels established by the Board of Directors elected by
PAC after the Closing of the Merger. Mr. Jensen will also receive an additional
one-time bonus of $75,000 upon the Closing of the Merger. Under the employment
agreement, Mr. Jensen has agreed that during the term of the agreement and for
two years following the termination or expiration of the agreement he will not
without the prior written consent of the Company (i) become financially
interested in (subject to certain limitations) or be employed as a consultant,
officer, director or executive or managerial employee of a business which
competes with the Company, (ii) solicit to a business that competes with the
Company persons or entities who were customers of the Company during the term of
the employment agreement, or (iii) solicit or hire to a business that competes
with the Company the Company's employees. If the employment agreement is
terminated by the Company after the Merger without cause, the Company would pay
Mr. Jensen a severance payment equal to the base salary payable during the
remaining term of the agreement. The employment agreement with Mr. Jensen takes
effect only if the Merger is successfully completed.
CONSULTING ARRANGEMENT. Leo Lund performs consulting services for the
Company and serves as its Chief Financial Officer and Chairman of the Board of
Directors, as an independent contractor and not as an employee of the Company.
The Company currently pays Mr. Lund consulting fees of approximately $2,100 per
month for his services. In consideration of Mr. Lund's consulting services to
the Company, commencing in 1989 and ending in 1993 the Company also granted
Options to Mr. Lund for the purchase of an aggregate of 253,000 shares of Common
Stock at a weighted average exercise price of $0.71 per share. All of these
Options are currently outstanding and will be canceled upon the closing of the
Merger. See "Certain Relationships and Related Transactions Treatment of
Options." Mr. Lund has also entered into a noncompetition and confidentiality
agreement to take effect upon the Closing of the Merger pursuant to which Lamcor
will be required to make a one-time payment of $58,400 to Mr. Lund.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; REPORT ON
EXECUTIVE COMPENSATION. There are no interlocks with other companies among any
of the officers or directors of the Company. The Company does not have a
compensation committee of the Board of Directors. The compensation of the
Company's President and Chief Executive Officer is determined by Leo Lund, the
Chairman of the Board, based on Mr. Lund's review of Lamcor's performance as it
relates to increases in gross sales and profit margins as well as market
conditions. The consulting fees paid to Mr. Lund for his services as Chief
Financial Officer and as a consultant to the Company are determined by Toby
Jensen, the Company's President and Chief Executive Officer.
Item 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock as of December 4, 1996, by (i) by each person or group
that is known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of its Common Stock, (ii) each of the executive officers and
directors of the Company and (iii) all executive officers and directors of the
Company as a group. Information with respect to beneficial ownership is based
upon information furnished by such persons to the Company.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Beneficial Ownership Outstanding Shares
-------------------- ------------------
Name
- ----
<S> <C> <C>
Christopher Elliott 156,333 11.3%
4900 First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402
Toby Jensen 253,050(1)(2) 16.2%
P.O. Box 70
Highway 169 North
Le Sueur, Minnesota 56058
Susan Jones 10,000(1)(3) *
18546 Vista Del Sol
Dallas, Texas 75287
Leo Lund 407,000(1)(4) 24.9%
P.O. Box 70
Highway 169 North
Le Sueur, Minnesota 56058
David Stewart 14,400(1) 1%
4900 First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402
Kathy Young 229,520 16.6%
4900 First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402
All directors and executive officers as a group 840,783(5) 46.1%
(5 persons)
</TABLE>
- -------------------------
* Less than 1%.
(1) These outstanding shares are subject to a Shareholder Voting Agreement
dated September 30, 1996, which requires that such shares be voted in
favor of the Merger. At the request of PAC and as a condition to PAC's
willingness to enter into the Merger Agreement, certain officers and
directors who together own 253,450 shares of Common Stock or 18.3% of
the outstanding shares as of November 25, 1996, have entered into a
Shareholder Voting Agreement pursuant to which each of them has agreed
to vote for approval and adoption of the Merger Agreement. Each of the
shareholders who have signed a Shareholder Voting Agreement has also
agreed not to: (i) transfer their shares of Common Stock other than in
the Merger or other than to a family member or charitable institution
who agrees to comply with the Shareholder Voting Agreement, (ii) grant
a proxy with respect to such shares, other than in connection with the
approval of the Merger, (iii) dissent to the Merger or (iv) solicit,
initiate or encourage the submission of any other takeover proposal
concerning the Company. Each Shareholder Voting Agreement grants a
proxy to representatives of PAC to vote in favor of the Merger and
against a competing transaction for the sale or merger of the Company.
The Shareholder Voting Agreements automatically terminate upon the
first to occur of (a) the effective time of the Merger or (b) the date
on which the Merger Agreement is terminated in accordance with its
terms.
(2) Includes 183,000 shares issuable upon the exercise of currently
exercisable Options.
(3) Includes 5,000 shares issuable upon the exercise of currently
exercisable Options.
(4) Includes 253,000 shares issuable upon the exercise of currently
exercisable Options.
(5) Includes 441,000 shares issuable upon the exercise of currently
exercisable Options.
Item 13. -CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EMPLOYMENT AGREEMENT WITH TOBY JENSEN. When negotiations commenced
concerning the Merger with PAC, the Company did not have employment agreements
with its executive officers. However, as a condition to proceeding with the
Merger, PAC requested that the Company enter into an employment agreement with
Mr. Jensen, which will become effective upon the Closing of the Merger. Under
that agreement dated September 30, 1996, Mr. Jensen will serve as the Company's
President for three years and receive an annual base salary of $120,000 and
become eligible for a bonus of up to $75,000, payable by November 15, 1997,
based on the Company obtaining performance levels established by the Board of
Directors elected by PAC after the Closing of the Merger. Mr. Jensen will also
receive an additional one-time bonus of $75,000 upon the Closing of the Merger.
Under the employment agreement, Mr. Jensen has agreed that during the term of
the agreement and for two years following the termination or expiration of the
agreement he will not without the prior written consent of the Company (i)
become financially interested in (subject to certain limitations) or be employed
as a consultant, officer, director or executive or managerial employee of a
business which competes with the Company, (ii) solicit to a business that
competes with the Company persons or entities who were customers of the Company
during the term of the employment agreement, or (iii) solicit or hire to a
business that competes with the Company the Company's employees. If the
employment agreement is terminated by the Company after the Merger without
cause, the Company would pay Mr. Jensen a severance payment equal to the base
salary payable during the remaining term of the agreement. The employment
agreement with Mr. Jensen takes effect only if the Merger is successfully
completed.
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT WITH LEO LUND. When
negotiations commenced concerning the Merger with PAC, the Company did not have
written agreements with its directors, officers or employees concerning
restrictions on competition with the Company. In connection with the Merger, PAC
requested that the Company enter into a noncompetition and confidentiality
agreement with Mr. Lund, which will become effective upon the Closing of the
Merger. Under that agreement dated September 30, 1996, Mr. Lund has agreed (i)
not to disclose any confidential information concerning Lamcor, (ii) not to
compete with the Company or solicit its customers for the purpose of competing
for two years after the date of the agreement and (iii) not to solicit the
Company's employees to leave the Company for two years after the date of the
agreement. In consideration of Mr. Lund's entry into that agreement, Lamcor will
pay Mr. Lund after the Closing a one-time payment of $58,400. The agreement with
Mr. Lund takes effect only if the Merger is successfully completed.
TREATMENT OF OPTIONS. Of the 550,000 outstanding options, 49,000
options were originally scheduled to expire before the closing of the Merger,
including 5,000 Options held by Mr. Jensen. The Company has agreed to extend the
exercise period of such 49,000 Options through the effective time of the Merger.
If the Merger is not completed, the Company intends to extend the exercise
period for such Options for a reasonable period of time.
As a condition to the Merger, each holder of Options must deliver
before Closing an Option Cancellation Agreement, under which the Options will be
canceled in exchange for the following payment. At the Closing, PAC will cause
the Company to purchase each option in exchange for a cash payment equal to the
product of (a) the difference (if positive) between $4.12 and the price at which
the holder of such Option could purchase each share of Common Stock to which
such Option relates, multiplied by (b) the number of shares of Common Stock
subject to such option as if such option was then fully exercisable, less (y)
the product of $0.12, representing the pro rata portion of the Escrowed Funds
allocable to each share of Common Stock subject to such option, multiplied by
the number of shares referenced in clause (b) above, and further less (z) any
taxes required to be withheld. Pursuant to such an agreement, at Closing Mr.
Jensen is to receive $612,956 (less an aggregate amount of $21,960 to be held as
part of the Escrowed Funds) and Mr. Lund is to receive $862,169 (less an
aggregate amount of $30,360 to be held as a part of the Escrowed Funds).
NO CLAIMS REPRESENTATIONS. As a condition to the Merger, PAC has
required that each of the directors and officers of the Company deliver a letter
to PAC, stating that such person has no claims against the Company and
disclosing any indebtedness of such person to the Company, which must be paid in
full as of the effective time of the Merger.
SHAREHOLDER VOTING AGREEMENTS. At the request of PAC and as a condition
to PAC's willingness to enter into the Merger Agreement, certain officers and
directors who together own 253,450 shares of Common Stock or 18.3% of the
outstanding shares as of November 25, 1996, have entered into a Shareholder
Voting Agreement pursuant to which each of them has agreed to vote for approval
and adoption of the Merger Agreement. Each of the shareholders who have signed a
Shareholder Voting Agreement has also agreed not to: (i) transfer their shares
of Common Stock other than in the Merger or other than to a family member or
charitable institution who agrees to comply with the Shareholder Voting
Agreement, (ii) grant a proxy with respect to such shares, other than in
connection with the approval of the Merger, (iii) dissent to the Merger or (iv)
solicit, initiate or encourage the submission of any other takeover proposal
concerning the Company. Each Shareholder Voting Agreement grants a proxy to
representatives of PAC to vote in favor of the Merger and against a competing
transaction for the sale or merger of the Company. The Shareholder Voting
Agreements automatically terminate upon the first to occur of (a) the effective
time of the Merger or (b) the date on which the Merger Agreement is terminated
in accordance with its terms.
INDEMNIFICATION. The Minnesota Business Corporation Act ("MBCA")
requires indemnification by the Company of directors, officers and employees for
liabilities incurred in that person's official capacity on behalf of the
Company, if the person acted in good faith, received no improper personal
benefit and reasonably believed that the conduct was in the best interests of
the Company. In the case of a criminal proceeding, the person must have had no
reasonable cause to believe the conduct was unlawful. Under the Merger
Agreement, PAC has agreed to cause the Company to indemnify the present and
former directors and officers of the Company for six years after the effective
time of the Merger to the extent provided in the MBCA, provided that such
present and former directors and officers are determined to have met the
applicable standard of care.
If the Company or any of its successors or assigns (i) reorganizes or
consolidates with or merges into or enters into another business combination
with any other person or entity and is not the resulting, continuing or
surviving corporation or entity of such consolidation, merger or transaction or
(ii) liquidates, dissolves or transfers all or substantially all of its
properties and assets to any person or entity, then proper provision will be
made so that the successor and assigns of the Company assume the foregoing
indemnification obligations.
FEES PAYABLE TO THE SPECIAL COMMITTEE AND FINANCIAL ADVISOR. The
Special Committee of the Company's Board of Directors was formed on June 12,
1996 to evaluate and negotiate the Merger Agreement and related transactions on
behalf of the Board of Directors. Messrs. Elliott and Stewart, who are not
employees or officers of the Company, were unanimously appointed by the Board of
Directors to serve as the sole members of the Special Committee because they are
located in Minneapolis, Minnesota. The only other outside director, Susan Jones,
resides in Texas. Ms. Jones was not appointed to the Special Committee but has
been available for consultation. Subject to the Closing of the Merger, Messrs.
Elliott and Stewart will each receive from the Company a fee of $15,000 at
Closing for their services on the Special Committee. In addition, the Company
has reimbursed Messrs. Elliott and Stewart for travel and other out-of-pocket
expenses incurred on behalf of the Company. R. J. Steichen & Company will be
paid a fee upon the consummation of the Merger equal to 1.0% of the aggregate
consideration received by the shareholders of the Company.
ACQUISITION OF PAC STOCK. Toby Jensen, Mark Steele and Timothy LaBonte,
who are each employees and officers of the Company, have expressed a desire to
acquire shares of the capital stock of PAC, and PAC has offered to accept shares
of Common Stock currently held by Messrs. Jensen, Steele and LaBonte in exchange
for shares of the capital stock of PAC, with the Common Stock valued per share
in the exchange no greater than the initial Merger Consideration. If this offer
is accepted by any such officer, such officer will transfer to PAC his shares of
Common Stock to PAC prior to Closing in exchange for capital stock of PAC.
PART IV
Item 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Attached are the Financial Statements and Independent
Auditor's Report on Examination of Financial Statements for the fiscal
years ended September 30, 1996, 1995 and 1994.
(b) No report was filed on Form 8-K during the fourth quarter
of fiscal 1996.
(c) See Exhibit Index following this Report.
(d) All schedules are omitted because they are not required or
not applicable or the information is shown in the consolidated
financial statements or notes thereto.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated December 27, 1996 LAMCOR, INCORPORATED
By /s/ Toby Jensen
--------------------------------
Toby Jensen,
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Leo Lund Chairman of the Board, Secretary, December 27, 1996
- --------------------------- Chief Financial Officer and Director
Leo Lund (Principal Financial Officer and
Principal Accounting Officer)
/s/ Toby Jensen President and Director December 27, 1996
- --------------------------- (Principal Executive Officer)
Toby Jensen
/s/ Christopher Elliott Director December 23, 1996
- ---------------------------
Christopher Elliott
/s/ Susan Jones Director December 27, 1996
- ---------------------------
Susan Jones
/s/ David Stewart Director December 27, 1996
- ---------------------------
David Stewart
</TABLE>
EXHIBIT INDEX
Exhibit Number
2.1 Agreement and Plan of Merger dated September 30, 1996 among the
Company, PAC and Sub
3.1 Articles of Incorporation of the Company, as amended
3.2 Proposed Amended and Restated Articles of Incorporation of the
Company, as submitted to the shareholders for approval at a
special meeting of shareholders to be held on December 31, 1996
3.3 Amended and Restated Bylaws of the Company
4.1 Specimen form of the Company's Common Stock certificate
4.2 Form of Shareholder Voting Agreement
4.3 Form of Escrow Agreement
10.1 Stock Option Plans
10.2 Employment Agreement with Toby Jensen
10.3 Noncompetition Agreement and Confidentiality Agreement with
Leo Lund
10.4 Form of Option Cancellation Agreement
10.5 Form of Promissory Notes for bank loans
10.6 Form of Agreement with Magnum Industriesp
11.1 Computation of Earnings Per Share.
13.1 [This Report on Form 10-K constitutes the 1996 Annual Report to
Shareholders]
21.1 Subsidiaries
27 Financial Data Schedule
Exhibit 2.1
Agreement and Plan of Merger dated September 30, 1996
among the Company, PAC and Sub
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LAMCOR, INCORPORATED,
LI ACQUISITION CORPORATION
AND
PACKAGING ACQUISITION CORPORATION
DATED AS OF SEPTEMBER 30, 1996
TABLE OF CONTENTS
Page
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER........................5
1.1 Merger..................................................5
1.2 Time and Place of Closing...............................5
1.3 Effective Time..........................................5
ARTICLE 2 TERMS OF MERGER.........................................6
2.1 Charter.................................................6
2.2 Bylaws..................................................6
2.3 Directors and Officers..................................6
2.4 Effect of Merger........................................6
ARTICLE 3 MANNER OF CONVERTING SHARES.............................6
3.1 Conversion of Shares....................................6
3.2 Anti-Dilution Provisions................................7
3.3 Shares Held by Lamcor or Buyer..........................7
3.4 Dissenting Shareholders.................................7
3.5 Conversion of Options and Convertible Securities........8
ARTICLE 4 EXCHANGE OF SHARES......................................8
4.1 Exchange Procedures.....................................8
4.2 Rights of Former Lamcor Shareholders....................9
4.3 Withholding Rights......................................9
4.4 Lost Certificates......................................10
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF LAMCOR...............10
5.1 Organization, Standing and Power.......................10
5.2 Authority; No Breach By Agreement......................10
5.3 Capital Stock..........................................11
5.4 Lamcor Subsidiaries....................................12
5.5 SEC Filings; Financial Statements......................12
5.6 Absence of Undisclosed Liabilities.....................12
5.7 Absence of Certain Changes or Events...................13
5.8 Tax Matters............................................13
5.9 Assets.................................................14
5.10 Intellectual Property..................................15
5.11 Environmental Matters and Permits......................15
5.12 Labor Relations........................................16
5.13 Employee Benefit Plans.................................17
5.14 Material Contracts.....................................18
5.15 Legal Proceedings......................................19
5.16 Reports................................................19
5.17 Statements True and Correct............................19
5.18 Regulatory Matters.....................................20
5.19 State Takeover Laws....................................20
5.20 Charter Provisions.....................................20
5.21 Shareholder Voting Agreement...........................20
5.22 Noncompetition Agreement...............................20
5.23 Knowledge Inquiry......................................20
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER................21
6.1 Organization, Standing, and Power......................21
6.2 Authority; No Breach By Agreement......................21
6.3 Compliance with Laws...................................22
6.4 Legal Proceedings......................................22
6.5 Statements True and Correct............................23
6.6 Authority of Sub.......................................23
6.7 Regulatory Matters.....................................23
6.8 Arrangements With Lamcor Personnel.....................24
6.9 Financing..............................................24
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION...............24
7.1 Affirmative Covenants of Lamcor........................24
7.2 Negative Covenants of Lamcor...........................24
7.3 Covenants of Buyer.....................................26
7.4 Adverse Changes in Condition...........................27
7.5 Reports................................................27
ARTICLE 8 ADDITIONAL AGREEMENTS..................................27
8.1 Proxy Statement; Shareholder Approval..................27
8.2 Applications; Antitrust Notification...................28
8.3 Filings with State Offices.............................28
8.4 Agreement as to Efforts to Consummate..................28
8.5 Investigation and Confidentiality......................28
8.6 Press Releases.........................................29
8.7 Certain Actions........................................29
8.8 State Takeover Laws....................................30
8.9 Charter Provisions.....................................30
8.10 Employees..............................................30
8.11 Indemnification........................................30
8.12 Certain Policies of Lamcor.............................32
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE......32
9.1 Conditions to Obligations of Each Party................32
9.2 Conditions to Obligations of Buyer.....................33
9.3 Conditions to Obligations of Lamcor....................34
ARTICLE 10 TERMINATION............................................35
10.1 Termination............................................35
10.2 Effect of Termination..................................36
10.3 Guaranty by PFC........................................37
ARTICLE 11 MISCELLANEOUS..........................................37
11.1 Definitions............................................37
11.2 Expenses and Fee.......................................44
11.3 Brokers and Finders....................................45
11.4 Entire Agreement.......................................46
11.5 Amendments.............................................46
11.6 Waivers................................................46
11.7 Assignment.............................................47
11.8 Notices................................................47
11.9 Governing Law..........................................47
11.10 Counterparts...........................................48
11.11 Captions; Articles and Sections........................48
11.12 Interpretations........................................48
11.13 Enforcement of Agreement...............................48
11.14 Severability...........................................48
11.15 Escrow.................................................48
11.16 Shareholders' Representative...........................49
11.17 Survival...............................................50
11.18 Arbitration............................................51
LIST OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
1. FORM OF SHAREHOLDER VOTING AGREEMENT. (ss. 5.21).
2. MATTERS AS TO WHICH GRAY, PLANT, MOOTY, MOOTY & BENNETT,
P.A. WILL OPINE. (ss. 9.2(D)).
3. FORM OF CLAIMS LETTER (ss. 9.2(E)).
4. MATTERS AS TO WHICH ALSTON & BIRD WILL OPINE (ss. 9.3(D)).
5. FORM OF ESCROW AGREEMENT. (ss. 9.1(E)).
6. FORM OF EMPLOYMENT AGREEMENT (JENSEN). (ss. 9.2(F))
7 FORM OF NONCOMPETITION AGREEMENT (LUND) (ss. 5.22)
8. FORM OF OPTION CANCELLATION AGREEMENT. (ss. 9.2(I))
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of September 30, 1996, by and among LAMCOR, INCORPORATED
("Lamcor"), a Minnesota corporation having its principal office located in Le
Sueur, Minnesota; LI ACQUISITION CORPORATION ("Sub"), a Georgia corporation
having its principal office located in Atlanta, Georgia; and PACKAGING
ACQUISITION CORPORATION ("Buyer"), a Georgia corporation having its principal
office located in Atlanta, Georgia.
PREAMBLE
The Boards of Directors of Lamcor, Sub and Buyer are of the opinion
that the transactions described herein are in the best interests of the parties
to this Agreement and their respective shareholders. This Agreement provides for
the acquisition of Lamcor by Buyer pursuant to the merger of Sub with and into
Lamcor. At the effective time of such merger, the outstanding shares of the
capital stock of Lamcor shall be convened into the right to receive a cash
payment from Buyer (except as provided herein). As a result, Lamcor shall
continue to conduct its business and operations as a wholly-owned subsidiary of
Buyer. The transactions described in this Agreement are subject to the approval
of the shareholders of Lamcor and the satisfaction of certain other conditions
described in this Agreement.
Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows;
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time, Sub shall be merged with and into Lamcor in accordance with
the provisions of Section 302A.65 1 of the MBCA with the effect provided in
Section 302A.641 of the MBCA and Section 14-2-1107 of the GBCC with the effect
provided in Section 14-2-1106 of the GBCC (the "Merger"). Lamcor shall be the
Surviving Corporation resulting from the Merger and shall become a wholly-owned
Subsidiary of Buyer and shall continue to be governed by the Laws of the State
of Minnesota. The Merger shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the respective Boards of
Directors of Lamcor, Sub and Buyer, and by Buyer, as the sole shareholder of
Sub.
1.2 TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated hereby (the "Closing") will take place at 9:00 A.M. on the date
that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their authorized officers, may mutually agree. The Closing shall
be held at such location as may be mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by
this Agreement shall become effective on the date and at the time the Articles
of Merger reflecting the Merger shall become effective with the Secretary of
State of the State of Minnesota and the Certificate of Merger reflecting the
Merger becomes effective with the Secretary of State of the State of Georgia
(the "Effective Time"). Subject to the terms and conditions hereof, unless
otherwise mutually agreed upon in writing by the authorized officers of each
Party, the Parties shall use their reasonable efforts to cause the Effective
Time to occur on the first business day following or, if practicable, the same
business day as the last to occur of (i) the effective date (including
expiration of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the
Merger, and (ii) the date on which the shareholders of Lamcor approve this
Agreement to the extent such approval is required by applicable Law.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Articles of Incorporation of Lamcor in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Lamcor in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until otherwise
amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Sub in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of Lamcor in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be elected, shall
serve as the officers of the Surviving Corporation from and after the Effective
Time in accordance with the Bylaws of the Surviving Corporation.
2.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the MBCA and the GBCC.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
Lamcor and Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of each of
Lamcor and Sub shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3,
at the Effective Time, by virtue of the Merger and without any action on the
part of Buyer, Lamcor, Sub or the shareholders of any of the foregoing, the
shares of the constituent corporations shall be converted as follows:
(a) Each share of Buyer Capital Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) Each share of Sub Common Stock issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding
and shall be converted into one share of Lamcor Common Stock.
(c) Each share of Lamcor Common Stock (excluding shares held
by Lamcor or any Buyer Company, in each case other than as a result of
debts previously contracted, and excluding shares held by shareholders
who perfect their statutory dissenters' rights as provided in Section
3.4) issued and outstanding immediately prior to the Effective Time
shall cease to be outstanding and shall be convened into and exchanged
for the right to receive from Buyer a cash payment in an amount equal
to $4.12 (the "Merger Consideration") less (i) $0.12 representing the
pro rata portion of the Escrowed Funds described in Section 11.15 and
allocable to each such share of Lamcor Common Stock, and (ii) any Taxes
required to be withheld pursuant to Section 4.3 (the "Cash Payment").
3.2 ANTI-DILUTION PROVISIONS. In the event Lamcor changes the number of
shares of Lamcor Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the amount of the Cash Payment shall be proportionately
adjusted.
3.3 SHARES HELD BY LAMCOR OR BUYER. Each of the shares of Lamcor Common
Stock held by Lamcor or by any Buyer Company shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange therefor.
3.4 DISSENTING SHAREHOLDERS.
(a) Notwithstanding any provision of this Agreement to the contrary,
shares of Lamcor Common Stock ("Shares") that are outstanding immediately prior
to the Effective Time and which are held by Shareholders who shall have not
voted in favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing the fair value for such Shares in accordance with
Section 302A.473 of the MBCA (collectively, the "Dissenting Shares") shall not
be converted into or represent the right to receive the Merger Consideration.
Such Shareholders shall be entitled to receive payment of the fair value of such
Dissenting Shares held by such Shareholders (with interest if required by the
MBCA) in accordance with the provisions of such Section 302A.473, except that
each Dissenting Share held by Shareholders who shall have failed to perfect or
who effectively shall have withdrawn or lost their rights to appraisal of such
Dissenting Shares under such Section 302A.473 shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of the Effective
Time the right to receive the Cash Payment, without any interest thereon, upon
surrender, in the manner provided in Section 4.1, of the certificate or
certificates that formerly evidenced such Dissenting Shares.
(b) Lamcor shall give Buyer (i) prompt notice of any demands for fair
value of Dissenting Shares received by Lamcor and withdrawals of any such
demands and (ii) the opportunity to participate in all negotiations and
proceedings with respect to each such demand. Lamcor shall not, except with the
prior written consent of Buyer, make any payment (except to the extent that any
such payment is made pursuant to a final, non-appealable court order) with
respect to any demands for the fair value of Dissenting Shares or offer to
settle or settle any such demands.
(c) Payments to the holders of Dissenting Shares pursuant to Section
302A.473, and any costs or expenses in connection therewith, which exceed the
amount of the Merger Consideration payable with respect to such Shares, shall
not be paid out of the Escrowed Funds.
3.5 CONVERSION OF OPTIONS AND CONVERTIBLE SECURITIES. At the Effective
Time, each option or warrant to purchase shares of Lamcor capital stock
outstanding at the Effective Time, whether or not exercisable ("Lamcor Options")
, and all other securities convertible into or exchangeable for shares of Lamcor
capital stock, whether or not convertible or exchangeable ("Lamcor Convertible
Securities"), shall be canceled. At the Closing, Buyer shall cause Lamcor to
make a cash payment for each Lamcor Option or Lamcor Convertible Security
("Option Settlement Payment") equal to the product of (a) the difference (if
positive) between the Merger Consideration and the price at which the holder of
such Lamcor Option or Lamcor Convertible Security could purchase each share of
Lamcor Common Stock to which such Lamcor Option or Lamcor Convertible Security
relates, multiplied by (b) the number of shares of Lamcor Common Stock subject
to such Lamcor Option or Lamcor Convertible Security as if such Lamcor Option
was then fully exercisable or such Lamcor Convertible Security was then fully
convertible or exchangeable, less (y) the product of $0.12, representing the pro
rata portion of the Escrowed Funds described in Section 11.15 allocable to each
such share of Lamcor Common Stock, multiplied by the number of shares referenced
in clause (b) above, and further less (z) any Taxes required to be withheld
pursuant to Section 4.3. At the Effective Time, each such Lamcor Option and each
such Lamcor Convertible Security shall no longer represent the right to purchase
shares of Lamcor Common Stock, but in lieu thereof shall represent only the
nontransferable right to receive the Option Settlement Payment referred to
above. The parties hereto agree that the Rights offered pursuant to the Rights
offering were terminated and cancelled effective upon the termination of the
Rights offering by the Company, are no longer outstanding and are therefore not
included in the respective definitions of "Lamcor Options" and "Lamcor
Convertible Securities" set forth above.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES
(a) At the Effective Time, Buyer shall deposit in trust with a bank or
trust company (the "Exchange Agent") selected by mutual agreement of Lamcor and
Buyer before the Closing Date cash in an aggregate amount equal to the product
of (i) the number of Shares issued and outstanding at the Effective Time (other
than Shares owned beneficially or of record by Sub or Buyer and other than the
Dissenting Shares) and (ii) the Merger Consideration (such amount is referred to
as the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, make payments provided for in Sections 4.1(b) and 11.15 out of the
Exchange Fund The Exchange Fund shall not be used for any other purpose, except
as provided in this Agreement or the Escrow Agreement.
(b) Promptly after the Effective Time, Buyer and Lamcor shall cause the
Exchange Agent to mail to the former Shareholders of Lamcor appropriate
transmittal materials which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing Shares of
Lamcor Common Stock (the "Certificates") shall pass, only upon proper delivery
of such Certificates to the Exchange Agent. The Exchange Agent may establish
reasonable and customary rules and procedures in connection with its duties.
After the Effective Time, each holder of Shares of Lamcor Common Stock (other
than shares to be canceled pursuant to Section 3.3 or as to which statutory
dissenters' rights have been perfected as provided in Section 3.4) issued and
outstanding at the Effective Time shall surrender the Certificate or
Certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the Cash Payment, together
with all undelivered dividends or distributions in respect of such shares
(without interest thereon) pursuant to Section 4.2. Buyer shall not be obligated
to deliver the consideration to which any former holder of Lamcor Common Stock
is entitled as a result of the Merger until such holder surrenders such holder's
Certificate or Certificates for exchange as provided in this Section 4.1. The
Certificate or Certificates so surrendered shall be duly endorsed as the
Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither Buyer, the Surviving Corporation nor the Exchange Agent
shall be liable to a holder of Lamcor Common Stock for any amounts paid or
property delivered in good faith to a public official pursuant to any applicable
abandoned property Law. Adoption of this Agreement by the Shareholders of Lamcor
shall constitute ratification of the appointment of the Exchange Agent.
4.2 RIGHTS OF FORMER LAMCOR SHAREHOLDERS. At the Effective Time, the
stock transfer books of Lamcor shall be closed as to holders of Lamcor Common
Stock immediately prior to the Effective Time, and no transfer of Lamcor Common
Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1, each
Certificate (other than Certificates representing shares to be canceled pursuant
to Section 3.3 or as to which statutory dissenters' rights have been perfected
as provided in Section 3.4) shall from and after the Effective Time represent
for all purposes only the right to receive the consideration provided in Section
3.1 in exchange therefor. However, upon surrender of such Certificate, any
undelivered cash payments payable hereunder (without interest) shall be
delivered and paid with respect to each share represented by such Certificate.
4.3 WITHHOLDING RIGHTS. Each of Surviving Corporation and Buyer shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Lamcor Common Stock, Lamcor Options,
or Lamcor Convertible Securities such Taxes as it is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Surviving Corporation or Buyer, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Lamcor Common Stock in respect of which such deduction and
withholding was made by Surviving Corporation or Buyer, as the case may be.
4.4 LOST CERTIFICATES. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will make payment pursuant to this Article 4 with respect to such
Certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF LAMCOR
Lamcor hereby represents and warrants to Buyer as follows:
5.1 ORGANIZATION, STANDING AND POWER. Lamcor is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Minnesota, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Assets. Lamcor is duly qualified
or licensed to transact business as a foreign corporation in good standing in
the States of the United States where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Lamcor.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Lamcor has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery, and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Lamcor, subject to the
adoption of this Agreement by the holders of a majority of the outstanding
shares of Lamcor Common Stock (excluding all Shares beneficially owned or owned
of record by Buyer or Buyer's Affiliates), which is the only shareholder vote
required for approval of this Agreement and consummation of the Merger by
Lamcor. Subject to such requisite Shareholder approval, and assuming the due
authorization execution and delivery of this Agreement by Buyer and Sub, this
Agreement represents a legal, valid, and binding obligation of Lamcor,
enforceable against Lamcor in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement by Lamcor, nor
the consummation by Lamcor of the transactions contemplated hereby, nor
compliance by Lamcor with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of Lamcor's Articles of Incorporation or
Bylaws, or (ii) except as disclosed in Section 5.2 of the Lamcor Disclosure
Memorandum, constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of Lamcor under,
any Contract or Permit of Lamcor or (iii) subject to receipt of the requisite
Consents referred to in Section 9.1(b), violate any Law or Order applicable to
Lamcor or any of its Material Assets; except with respect to subparagraphs (ii)
and (iii) above where any such breaches, defaults, violations or other
occurrences would not, individually or in the aggregate, have a Material Adverse
Effect on Lamcor's business or Assets.
(c) No notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by Lamcor of the Merger and the
other transactions contemplated in this Agreement, except (i) in connection or
compliance with the provisions of the Securities Laws, applicable state
corporate and securities Laws, and rules of the NASD, (ii) for Consents required
from Regulatory Authorities and other than notices to or filings with the
Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, or under the HSR Act, and (iii) where
failure to obtain such Consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay consummation of
the Merger, or otherwise prevent Lamcor from performing its obligations under
this Agreement, and would not, individually or in the aggregate, have a Material
Adverse Effect on Lamcor's business or Assets.
5.3 CAPITAL STOCK
(a) The authorized capital stock of Lamcor consists of 10,000,000
Shares of Lamcor Common Stock, of which 1,382,317 shares are issued and
outstanding as of the date of this Agreement and up to 550,000 shares are
reserved for issuance and issuable upon exercise of the Lamcor Options or upon
the conversion or exchange of Lamcor Convertible Securities. All of the issued
and outstanding Shares of Lamcor Common Stock are duly authorized, validly
issued and outstanding and are fully paid and nonassessable. No dividends have
been made or declared by Lamcor in respect of any shares of Lamcor Common Stock
which remain unpaid at the date hereof. No present or former Shareholder of
Lamcor has any preemptive rights with respect to shares of Lamcor Common Stock
under the MBCA or under the Articles of Incorporation of Lamcor as in effect on
the date of this Agreement and none of the outstanding shares of capital stock
of Lamcor has been issued in violation of any preemptive rights under the MBCA.
(b) Except as set forth in Section 5.3(a), or as disclosed in Section
5.3 of the Lamcor Disclosure Memorandum, no Rights or options exercisable for
and no debt or equity securities convertible into or exchangeable for shares of
capital stock or other equity securities of Lamcor are outstanding, and Lamcor
is under no obligation to issue any shares of its capital stock or other debt or
equity securities or any Rights, options or other debt or equity securities
exercisable for or convertible or exchangeable for shares of the capital stock
of Lamcor.
5.4 LAMCOR SUBSIDIARIES. Lamcor has no, and has never had any,
subsidiaries.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Lamcor has timely filed all SEC Documents required to be filed by
Lamcor since December 31, 1992. Section 5.5 of the Lamcor Disclosure Memorandum
lists SEC Documents filed by Lamcor since such date (the "Lamcor SEC Reports").
The Lamcor SEC Reports (i) at the time filed, complied in all Material respects
with the applicable requirements of the Securities Laws and (ii) did not, at the
time they were filed (or, if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such subsequent filing) contain any
untrue statement of a Material fact or omit to state a Material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.
(b) Each of the Lamcor Financial Statements (including, in each case,
any related notes) contained in the Lamcor SEC Reports, including any Lamcor SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all Material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q or 10-QSB of the SEC),
and fairly presented in all Material respects the financial position of Lamcor
as at the respective dates and the consolidated results of operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be Material in amount or effect.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. Lamcor has no Knowledge of
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Lamcor, except Liabilities which are
accrued or reserved against in the balance sheets of Lamcor as of September 30,
1995 and June 30, 1996, included in the Lamcor Financial Statements delivered
prior to the date of this Agreement or reflected in the notes thereto or the
Lamcor Disclosure Memorandum. Lamcor has not incurred or paid any Liability
since June 30, 1996, except for such Liabilities incurred or paid (i) in the
ordinary course of business consistent with past business practice and as to
incurred liabilities, are not, individually or in the aggregate, Material, (ii)
in connection with the transactions contemplated by this Agreement or (iii) as
shown in the Lamcor Disclosure Memorandum. Except as disclosed in Section 5.6 of
the Lamcor Disclosure Memorandum, Lamcor is not directly or indirectly liable,
by guarantee, indemnity, or otherwise, upon or with respect to, or obligated, by
discount or repurchase agreement or in any other way, to provide funds in
respect to or obligated to guarantee or assume any Liability of any Person for
any amount. Lamcor has terminated the offering of Rights to subscribe for up to
350,000 shares of Lamcor Common Stock initiated by Lamcor on March 1, 1996 (the
"Rights offering"), and returned any and all funds tendered pursuant to such
Rights offering. Section 5.6 of the Lamcor Disclosure Memorandum lists all
Lamcor Shareholders of record who tendered funds pursuant to such Rights
offering and had such tendered funds returned by Lamcor.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1995,
except as disclosed in the Lamcor Financial Statements delivered prior to the
date of this Agreement or as disclosed in the Lamcor Disclosure Memorandum and
except for such changes as are the result of general economic conditions or
general conditions in the industry in which Lamcor operates, (i) there have been
no events, changes, or occurrences which have had, or are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Lamcor, and
(ii) Lamcor has not taken any action, or failed to take any action, prior to the
date of this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a Material breach or violation of any of
the covenants and agreements of Lamcor provided in Article 7.
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of Lamcor have
been timely filed or requests for extensions have been timely filed, granted,
and have not expired for periods ended on or before September 30, 1995, and on
or before the date of the most recent fiscal year end immediately preceding the
Effective Time, and all Tax Returns filed are complete and accurate. All Taxes
shown on filed Tax Returns have been paid. There is no audit examination,
deficiency, or refund Litigation with respect to any Taxes, except as reserved
against in the Lamcor Financial Statements delivered prior to the date of this
Agreement or as disclosed in Section 5.8 of the Lamcor Disclosure Memorandum.
Lamcor's federal income Tax Returns have not been audited by the IRS. All Taxes
and other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid. There are no Liens with respect to Taxes
upon any of the Assets of Lamcor.
(b) Lamcor has not executed an extension or waiver of any statute of
limitations on the assessment or collection of any Tax due (excluding such
statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
(c) The provision for any Taxes due or to become due for Lamcor for the
period or periods through and including the date of the respective Lamcor
Financial Statements that has been made and is reflected on such Lamcor
Financial Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of Lamcor have been provided for in accordance with
GAAP.
(e) Lamcor (i) is not a party to any Tax allocation or sharing
agreement, (ii) has not been a member of an affiliated group filing a
consolidated federal income Tax Return and (iii) has no Liability for Taxes of
any Person under Treasury Regulation Section 1.502-6 (or any similar provision
of state, local or foreign Law) as a transferee or successor or by Contract or
otherwise.
(f) Lamcor is in compliance with, and its records contain all
information and documents (including properly completed IRS Forms W-9) necessary
to comply with, all applicable information reporting and Tax withholding
requirements under federal, state, and local Tax Laws, and such records identify
with specificity all accounts subject to backup withholding under Section 3406
of the Internal Revenue Code.
(g) Except as disclosed in Section 5.8 of the Lamcor Disclosure
Memorandum, Lamcor has not made any payments, is not obligated to make any
payments, or is not a party to any Contract that could obligate it to make any
payments that would be disallowed as a deduction under Section 280G or 162(m) of
the Internal Revenue Code.
(h) Through the Effective Time, there has not been nor shall there be
an ownership change, as defined in Internal Revenue Code Section 382(g), of
Lamcor that occurred during or after any Taxable Period in which Lamcor incurred
a net operating loss that carries over to any Taxable Period ending after
September 30, 1995, excluding the ownership change contemplated by the Merger.
5.9 ASSETS. Except as disclosed in Section 5.9 of the Lamcor Disclosure
Memorandum or as disclosed or reserved against in the Lamcor Financial
Statements delivered prior to the date of this Agreement, Lamcor has good and
marketable title, free and clear of all Liens, to all of its Assets. To the
Knowledge of Lamcor, (i) the machinery and equipment used in Lamcor's business
are in good working order and are usable in a manner consistent with past use,
reasonable wear and tear excepted, (ii) have been regularly and properly
maintained in accordance with reasonable and customary industry standards and
applicable regulations, and (iii) there are no defects or malfunctions in such
machinery and equipment, which alone or in the aggregate, are reasonably likely
to result in any disruption or interruption in Lamcor's business which would
have a Material Adverse Effect on Lamcor. All items of inventory of Lamcor
reflected on the most recent balance sheet included in the Lamcor Financial
Statements delivered prior to the date of this Agreement and prior to the
Effective Time consisted and will consist, as applicable, of items of a quality
and quantity usable and saleable in the ordinary course of business, are valued
at the lower of cost or net realizable market value and conform to generally
accepted standards in the industry in which Lamcor is a part. All Assets which
are Material to Lamcor's business held under leases or subleases by Lamcor, are
held under valid Contracts enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and neither Lamcor
nor to Lamcor's Knowledge any other party thereto is in Default in any Material
respect under any such Contract. Lamcor has not received notice from any
insurance carrier that (i) any policy of insurance will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs with
respect to such policies of insurance will be substantially increased. There are
presently no claims pending under such policies of insurance and Lamcor has no
Knowledge of any event that would cause Lamcor to be required to give notice
thereof in order to assert a claim under such policies. There are no assets used
in connection with the business of Lamcor other than (i) the Assets reflected on
the Lamcor Financial Statements, (ii) Assets owned by Lamcor but not required by
GAAP to be reflected on the Lamcor Financial Statements, and (iii) Assets
acquired by Lamcor since the date of the latest Lamcor Financial Statements,
less any Assets sold by Lamcor in the ordinary course of business since the
latest Lamcor Financial Statements.
5.10 INTELLECTUAL PROPERTY. Lamcor owns or has a license to use (or
will by the Effective Time own or have a license to use) all of the Intellectual
Property which is Material to and used in the course of its business. Lamcor is
the owner of or has a license to any Intellectual Property sold or licensed to a
third party in connection with its business operations, and has the right to
convey by sale or license any Intellectual Property so conveyed. Lamcor is not
in Default under any of its Intellectual Property licenses. No proceedings have
been instituted or are pending, or to the Knowledge of Lamcor threatened, which
challenge the rights of Lamcor with respect to Intellectual Property used, sold
or licensed by Lamcor in the course of its business, nor to the Knowledge of
Lamcor has any person claimed or alleged any rights to such Intellectual
Property. Lamcor is not obligated to pay any recurring royalties to any Person
with respect to any such Intellectual Property. No officer, director, or
employee of Lamcor is a party to a Contract which requires such officer,
director or employee to assign any interest in any Intellectual Property to
Lamcor and to keep confidential any trade secrets, proprietary data, customer
information, or other business information of Lamcor, and to the Knowledge of
Lamcor no such officer, director or employee is party to any Contract with any
Person other than Lamcor which requires such officer, director or employee to
assign any interest in any Intellectual Property to any Person other than Lamcor
or to keep confidential any trade secrets, proprietary data, customer
information, or other business information of any Person other than Lamcor.
Except as disclosed in Section 5.10 of the Lamcor Disclosure Memorandum, no
officer or director or, to the Knowledge of Lamcor, other employee of Lamcor is
party to any Contract which restricts or prohibits such officer, director or
employee from engaging in activities competitive with any Person, including
Lamcor.
5.11 ENVIRONMENTAL MATTERS AND PERMITS. Except as disclosed in Section
5.11 of the Lamcor Disclosure Memorandum:
(a) Lamcor is, and has been, in Material compliance with all
Environmental Laws.
(b) There is no Litigation pending or, to the Knowledge of Lamcor,
threatened before any court, governmental agency, or authority or other forum in
which Lamcor has been or, with respect to threatened Litigation, may be named as
a defendant (i) for alleged noncompliance (including by any predecessor) with
any Environmental Law or (ii) relating to the release, discharge, spillage, or
disposal into the environment of any Hazardous Material, whether or not
occurring at, on, under, adjacent to, or affecting (or potentially affecting) a
site owned, leased, or operated by Lamcor.
(c) To the Knowledge of Lamcor, during the period Lamcor's ownership or
operation of any of its current properties, there have been no releases,
discharges, spillages, or disposals of Hazardous Material in, on, under,
adjacent to, or affecting (or potentially affecting) such properties. Prior to
the period of Lamcor's ownership or operation of any of its respective current
properties, to the Knowledge of Lamcor, there were no releases, discharges,
spillages, or disposals of Hazardous Material in, on, under, or affecting any
such property.
Lamcor has in effect all Permits necessary for it to own, lease, or operate its
Material Assets and to carry on its business as now conducted, except for those
Permits the absence of which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Lamcor, and there has occurred no
Default under any such Permit. Except as disclosed in Section 5.11 of the Lamcor
Disclosure Memorandum, Lamcor:
(i) is not in Default under any of the provisions of its
Articles of Incorporation or Bylaws (or other governing instruments);
(ii) is not in Material Default under any Laws, Orders, or
Permits applicable to its business or employees conducting its
business; or
(iii) since January 1, 1993, has not received any notification
or communication from any agency or department of federal, state, or
local government or any Regulatory Authority or the staff thereof (1)
asserting that Lamcor is not in Material compliance with any of the
Laws or Orders which such governmental authority or Regulatory
Authority enforces, (2) threatening to revoke any Permits, or (3)
requiring Lamcor to enter into or consent to the issuance of a cease
and desist order, formal agreement, directive, commitment, or
memorandum of understanding, or to adopt any Board resolution or
similar undertaking.
Copies of all Material reports, correspondence, notices and other documents
relating to any inspection, audit, monitoring or other form of review or
enforcement action by a Regulatory Authority have been made available to Buyer.
5.12 LABOR RELATIONS. Lamcor is not now and has not been in the
preceding five (5) years the subject of any Litigation asserting that it has
committed an unfair labor practice (within the meaning of the National Labor
Relations Act or comparable state law) or seeking to compel it to bargain with
any labor organization as to wages or conditions of employment, nor is it party
to any collective bargaining agreement, nor is there any strike or other labor
dispute, pending or to the Knowledge of Lamcor threatened, or to the Knowledge
of Lamcor, is there any current activity involving any of its employees seeking
to certify a collective bargaining unit or engaging in any other organization
activity.
5.13 EMPLOYEE BENEFIT PLANS.
(a) Lamcor has disclosed in Section 5.13 of the Lamcor Disclosure
Memorandum, and has delivered or made available to Buyer prior to the execution
of this Agreement copies in each case of, all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written or
unwritten employee programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including "employee benefit plans" as
that term is defined in Section 3(3) of ERISA, which grant benefits to any
Person in excess of $500.00 on an annualized basis, currently adopted,
maintained by, sponsored in whole or in part by, or contributed to by Lamcor or
any ERISA Affiliate thereof for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries and under
which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate (collectively,
the "Lamcor Benefit Plans").
(b) Except for the Lamcor 401(k) Profit Sharing Plan and Trust dated
effective October 1, 1993, Lamcor does not have and has never maintained an
"employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA. Lamcor does not have and has never contributed to a multiemployer plan
within the meaning of Section 3(37) of ERISA.
(c) All Lamcor Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Lamcor. Each Lamcor ERISA Plan which
is intended to be qualified under Section 401(a) of the Internal Revenue Code
has received a favorable determination letter from the Internal Revenue Service,
and Lamcor is not aware of any circumstances likely to result in revocation of
any such favorable determination letter. Lamcor has not engaged in a transaction
with respect to any Lamcor Benefit Plan that, assuming the taxable period of
such transaction expired as of the date hereof, would subject Lamcor to a Tax
imposed by either Section 4975 of the Internal Revenue Code or Section 502(i) of
ERISA.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by Lamcor with respect to any ongoing, frozen, or terminated
single-employer plan or the single-employer plan of any ERISA Affiliate. Lamcor
has not incurred any withdrawal Liability with respect to a multiemployer plan
under Subtitle B of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate).
(e) Except as disclosed in Section 5.13 of the Lamcor Disclosure
Memorandum, Lamcor does not have any Liability for retiree health and life
benefits under any of the Lamcor Benefit Plans and there are no restrictions on
the rights of Lamcor to amend or terminate any such retiree health or benefit
Plan without incurring any Liability thereunder.
(f) Except as disclosed in Section 5.13 of the Lamcor Disclosure
Memorandum, neither the execution and delivery' of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of Lamcor from Lamcor
under any Lamcor Benefit Plan or otherwise, (ii) increase any benefits otherwise
payable under any Lamcor Benefit Plan, or (iii) result in any acceleration of
the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of Lamcor and its beneficiaries, other than entitlements accrued
pursuant to funded retirement plans subject to the provisions of Section 412 of
the Internal Revenue Code or Section 302 of ERISA, have been fully reflected on
the Lamcor Financial Statements to the extent required by and in accordance with
GAAP.
(h) Each Lamcor Benefit Plan designed to satisfy the requirements of
Section 125, Section 401, Section 401(k), Section 409, Section 501(c)(9),
Section 4975(e)(7), and/or Section 4980B of the Code, satisfies such section.
(i) All amounts required to be paid by Lamcor with respect to each
Lamcor Benefit Plan on or before the Effective Time have been paid.
(j) Neither the execution and delivery of this Agreement nor the
consummation of any of the transactions contemplated hereby will result in a
Material increase in the premium costs of any Lamcor Benefit Plan for which
benefits are insured or a Material increase in benefit costs of any Lamcor
Benefit Plan which provides self-insured benefits.
(k) No "leased employee," as that term is defined in Section 414(n) of
the Code, performs services for a Company.
(l) Lamcor has furnished to Buyer correct and complete copies of all
plan documents, trust agreements, summary plan descriptions, employee
informational materials, IRS Forms 5500 and participant listings for each Lamcor
Benefit Plan.
5.14 MATERIAL CONTRACTS. Except as disclosed in Section 5.14 of the
Lamcor Disclosure Memorandum or otherwise reflected in the Lamcor Financial
Statements delivered prior to the date of this Agreement, neither Lamcor nor any
of its assets, businesses, or operations is a party to, or is bound or affected
by, or receives benefits under, (i) any employment, severance, termination,
consulting, or retirement Contract providing for aggregate payments to any
Person in any calendar year in excess of $50,000, (ii) any Contract relating to
the borrowing of money by Lamcor or the guarantee by Lamcor of any such
obligation (other than Contracts evidencing trade payables and Contracts
relating to borrowings or guarantees made in the ordinary course of business),
(iii) any Contract which prohibits or restricts Lamcor from engaging in any
business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract involving Intellectual
Property (other than Contracts entered into in the ordinary course with
customers and "shrink-wrap" software licenses), (v) any Contract relating to the
provision of data processing, network communication, or other technical services
to or by Lamcor, (vi) any Contract relating to the purchase or sale of any goods
or services (other than Contracts entered into in the ordinary course of
business and involving payments under any individual Contract not in excess of
$100,000), and (vii) any other Contract or amendment thereto that would be
required to be filed as an exhibit to a Form 10-K filed by Lamcor with the SEC
as of the date of this Agreement (together with all Contracts referred to in
Sections 5.9 and 5.14(a), the "Lamcor Contracts"). With respect to each Lamcor
Contract: (i) the Contract is in frill force and effect; (ii) Lamcor is not in
Default thereunder; (iii) Lamcor has not repudiated or waived any Material
provision of any such Contract; and (iv) no other party to any such Contract is,
to the Knowledge of Lamcor, in Default in any respect or has repudiated or
waived any Material provision thereunder. All of the indebtedness of Lamcor for
money borrowed is prepayable at any time by Lamcor without penalty or premium.
5.15 LEGAL PROCEEDINGS. Except as described in Section 5.15 of the
Lamcor Disclosure Memorandum, there is no Litigation instituted or pending, or
to the Knowledge of Lamcor threatened (or unasserted but considered probable of
assertion and which if assessed would have at least a reasonable probability of
an unfavorable outcome), against Lamcor, or against any officer or director, or
employee benefit plan of Lamcor, or against any Asset, interest, or right of any
of them, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against Lamcor. Section
5.15 of the Lamcor Disclosure Memorandum contains a summary of all pending
Litigation as of the date of this Agreement to which Lamcor is a party and which
names Lamcor as a defendant or cross-defendant.
5.16 REPORTS. Since January 1, 1993 Lamcor has timely filed all
Material reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with Regulatory
Authorities (except as described in Section 5.16 of the Lamcor Disclosure
Memorandum or for failures to file or properly file which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Lamcor). As of their respective dates, each of such reports and documents,
including the financial statements, exhibits and schedules thereto, complied in
all Material respects with all applicable Laws, and did not contain any untrue
statement of a Material fact or omit to state a Material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
5.17 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument, or other writing furnished or to be furnished by Lamcor to Buyer
pursuant to this Agreement or any other document, agreement, or instrument
referred to herein contains or will contain any untrue statement of Material
fact or will omit to state a Material fact necessary to make the statements
therein, in light of the circumstances under which they were made) not
misleading. None of the information supplied or to be supplied by Lamcor for
inclusion in the Proxy Statement to be mailed to Lamcor's shareholders in
connection with the Shareholders' Meeting, and any other documents to be filed
by Lamcor with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
shareholders of Lamcor, be false or misleading with respect to any Material
fact, or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any Material fact, or omit to state any Material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
Lamcor is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all Material
respects with the provisions of applicable Law.
5.18 REGULATORY MATTERS. Lamcor has not taken or agreed to take any
action or has -any Knowledge of any fact or circumstance that is reasonably
likely to materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
5.19 STATE TAKEOVER LAWS. As of the Effective Time, Lamcor will have
taken, or cause to be taken, all necessary action required under Minnesota law
so that the provisions of the MBCA do not prevent the consummation of the Merger
or have a Material Adverse Effect on Sub or Buyer.
5.20 CHARTER PROVISIONS. Lamcor has not taken any action so that the
entering into of this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement do and will result in the grant of
any rights to any Person under the Articles of Incorporation, Bylaws or other
governing instruments of Lamcor or restrict or impair the ability of Buyer or
any of its Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, Shares of Lamcor that may be directly or indirectly
acquired or controlled by them.
5.21 SHAREHOLDER VOTING AGREEMENT. Each of the officers and directors
of Lamcor and Affiliates of such officers and directors who are Shareholders,
and each of the holders of 5% or more of the outstanding shares of Lamcor Common
Stock has executed and delivered to Buyer an agreement in substantially the form
of Exhibit 1.
5.22 NONCOMPETITION AGREEMENT. Leo Lund has executed and delivered the
Noncompetition Agreement attached as Exhibit 7.
5.23 KNOWLEDGE INQUIRY. As to any representation and warranty contained
in this Article 5 that is qualified as being to the "Knowledge" of Lamcor or
words of similar import, one or more of the persons named in the definition of
"Knowledge" in Section 11.1 as having actual knowledge on behalf of Lamcor of
the facts to which such representation and warranty relates either (a) has such
actual knowledge of the accuracy of such representation and warranty or (b) has
reviewed the text of such representation and warranty and all Schedules to this
Agreement relating thereto with the senior most management employee or employees
of Lamcor having management or supervisory responsibility for the operations and
affairs of Lamcor to which such representation and Warranty relates and has
inquired of such employee or employees as to the accuracy of such representation
and warranty and has not received any response to such review and inquiry which
would indicate that there are facts and circumstances not heretofore disclosed
to Buyer that would cause such representation and warranty to be inaccurate in
any Material respect.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Lamcor as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Buyer is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its Material Assets. Buyer is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Buyer.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Buyer has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Buyer. This Agreement
represents a legal, valid, and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms (except in all cases as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Buyer, nor
the consummation by Buyer of the transactions contemplated hereby, nor
compliance by Buyer with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of Buyer's Articles of Incorporation or
Bylaws, or (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any Buyer
Company under, any Contract or Permit of any Buyer Company or, (iii) subject to
receipt of the requisite Consents referred to in Section 9.1(b), violate any Law
or Order applicable to any Buyer Company or any of their respective Material
Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Buyer, no notice to filing with, or
Consent of, any public body or authority is necessary for the consummation by
Buyer of the Merger and the other transactions contemplated in this Agreement.
6.3 COMPLIANCE WITH LAWS. Each Buyer Company has in effect all Permits
necessary for it to own, lease or operate its Material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit. None of the Buyer Companies:
(a) is in Default under its Articles of Incorporation or
Bylaws (or other governing instruments); or
(b) is in Default under any Laws, Orders or Permits applicable
to its business or employees conducting its business; or
(c) since January 1, 1993, has received any notification or
communication from any agency or department of federal, state, or local
government or any Regulatory Authority or the staff thereof (i)
asserting that any Buyer Company is not in compliance with any of the
Laws or Orders which such governmental authority or Regulatory
Authority enforces, (ii) threatening to revoke any Permits, or (iii)
requiring any Buyer Company to enter into or consent to the issuance of
a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or
similar undertaking, which restricts materially the conduct of its
business.
6.4 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
or, to the Knowledge of Buyer, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any Buyer Company, or against any officer or
director, or employee benefit plan of any Buyer Company, or against an)' Asset,
interest, or right of any of them, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Buyer Company.
6.5 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument
or other writing furnished or to be furnished by any Buyer Company or any
Affiliate thereof to Lamcor pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of Material fact or will omit to state a Material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by any
Buyer Company or any Affiliate thereof for inclusion in the Proxy Statement to
be mailed to Lamcor's shareholders in connection with the Shareholders' Meeting,
and any other documents to be filed by any Buyer Company or any Affiliate
thereof with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
shareholders of Lamcor, be false or misleading with respect to any Material
fact, or omit to state any Material fact necessary' to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy' Statement or any amendment thereof or
supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any Material fact, or omit to state any Material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
any Buyer Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all Material respects with the provisions of
applicable Law.
6.6 AUTHORITY OF SUB. Sub is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Georgia as a wholly
owned Subsidiary of Buyer. The authorized capital stock of Sub shall consist of
1,000 shares of Sub Common Stock, all of which is validly issued and
outstanding, fully paid and nonassessable and is owned by Buyer free and clear
of any Lien. Sub has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Sub. This Agreement
represents a legal, valid, and binding obligation of Sub, enforceable against
Sub in accordance with its terms (except in all cases as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought). Buyer, as the sole shareholder of Sub, has voted
prior to the Effective Time the shares of Sub Common Stock in favor of approval
of this Agreement, as and to the extent required by applicable Law.
6.7 REGULATORY MATTERS. No Buyer Company or any Affiliate thereof has
taken or agreed to take any action or has any Knowledge of any fact or
circumstance that is reasonably likely to Materially impede or delay receipt of
any Consents of Regulatory Authorities referred to in Section 9.1(b) or result
in the imposition of a condition or restriction of the type referred to in the
last sentence of such Section.
6.8 ARRANGEMENTS WITH LAMCOR PERSONNEL. Prior to the date of this
Agreement, Buyer has disclosed to the Special Committee of the Board of
Directors of Lamcor all Material arrangements or agreements proposed by any
Buyer Companies or any Affiliate thereof to any officer, director or employee of
Lamcor and pertaining to (i) the services or compensation of such Person alter
the Effective Time or (ii) participation by any such officer, director or
employee of Lamcor in the equity ownership of any Buyer Company or any Affiliate
thereof at the Effective Time.
6.9 FINANCING. Prior to the date of this Agreement, Buyer has delivered
to Lamcor a letter from CGW Southeast Partners III, L.P. ("CGW") addressed to
Buyer to the effect that as of the date of this Agreement, CGW is highly
confident that Buyer will have sufficient assets and financing to fund the
Merger Consideration payable under this Agreement. On or before the last to
occur of twenty one (21) days after the date of this Agreement or the mailing of
the Proxy Statement to the Shareholders of Lamcor, Buyer will deliver to Lamcor
evidence that Buyer has entered into (a) a written agreement with CGW providing
for the investment by CGW in the equity securities of Buyer in the amount of not
less than Eight Million Dollars ($8,000,000) on the terms and subject to the
conditions set forth in that agreement and (b) an agreement and plan of merger
with Polyflex Film and Converting, Inc., a Georgia corporation ("PFC") pursuant
to which PFC shall, contemporaneously with the consummation of the Merger, merge
with and into a wholly owned subsidiary of Buyer on the terms and subject to the
conditions set forth in that agreement and plan of merger. Buyer agrees to use
commercially reasonable best efforts to cause the transactions to be provided
for in such agreement with CGW and such agreement and plan of merger with PFC to
be consummated.
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF LAMCOR. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
unless the prior written consent of Buyer shall have been obtained, and except
as otherwise expressly contemplated herein, Lamcor shall (a) operate its
business only in the usual, regular, and ordinary course, (b) preserve intact
its business organization and Assets and maintain its rights and franchises, and
(c) take no action which would (i) adversely affect the ability of any Party to
obtain any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentences of Section 9.1(b) or 9.1(c), or (ii) adversely affect the ability of
any Party to perform its covenants and agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF LAMCOR. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Lamcor
covenants and agrees that it will not do or agree or commit to do, any of the
following without the prior written consent of the President or Treasurer of
Buyer, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws or other
governing instruments of Lamcor; or
(b) except for that certain construction loan and related
security interests (the "Construction Loan") in a principal amount not
to exceed $480,000.00, which Construction Loan bears interest at a rate
not to exceed the highest rate currently charged to Lamcor by Valley
National Bank of Le Sueur for Lamcor's other outstanding indebtedness
and contains no prepayment penalty or premium, incur any additional
debt obligation or other obligation for borrowed money except in the
ordinary course of the business, consistent with past practices, or
impose, or suffer the imposition, on any Asset of any Lien or permit
any such Lien to exist (other than in connection with Liens in effect
as of the date hereof that are disclosed in the Lamcor Disclosure
Memorandum), or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of Lamcor, or declare
or pay any dividend or make any other distribution in respect of
Lamcor's capital stock; or
(d) except for this Agreement, or pursuant to the exercise of
stock options outstanding as of the date hereof and pursuant to the
terms thereof in existence on the date hereof, issue, sell, pledge,
encumber, authorize the issuance of, enter into any Contract to issue,
sell, pledge, encumber, or authorize the issuance of, or otherwise
permit to become outstanding, any additional shares of Lamcor Common
Stock or any other capital stock of Lamcor, or any stock appreciation
rights, or any option, warrant, or other Right; or
(e) adjust, split, combine or reclassify any capital stock of
Lamcor or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Lamcor Common Stock, or
sell, lease, mortgage or otherwise dispose of or otherwise encumber (x)
any shares of capital stock of any Lamcor Subsidiary (unless any such
shares of stock are sold or otherwise transferred to another Lamcor
Company) or (y) any Material Asset other than in the ordinary course of
business for reasonable and adequate consideration and other than in
connection with the Construction Loan; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of
three years or less, purchase any securities or make any Material
investment, either by purchase of stock of securities, contributions to
capital, Asset transfers, or purchase of any Assets, in any Person, or
otherwise acquire direct or indirect control over any Person, other
than in connection with (i) foreclosures in the ordinary course of
business, or (iii) the creation of new wholly owned Subsidiaries
organized to conduct or continue activities otherwise permitted by this
Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of Lamcor, except in accordance with past
practice disclosed in Section 7.2(g) of the Lamcor Disclosure
Memorandum or as required by Law, pay any severance or termination pay
or any bonus other than pursuant to written policies or written
Contracts in effect on the date of this Agreement and disclosed in
Section 7 2(g) of the Lamcor Disclosure Memorandum; and enter into or
amend any severance agreements with officers of Lamcor; grant any
Material increase in fees or other increases in compensation or other
benefits to directors of Lamcor except in accordance with past practice
disclosed in Section 7.2(g) of the Lamcor Disclosure Memorandum; or
(h) enter into or amend any employment Contract between Lamcor
and any Person; or
(i) adopt any new employee benefit plan of Lamcor or terminate
or withdraw from, or make any Material change in or to, any existing
employee benefit plans of Lamcor other than any such change that is
required by Law or that, in the opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan, or
make any distributions from such employee benefit plans, except as
required by Law, the terms of such plans or consistent with past
practice; or
(j) make any significant change in any Tax or accounting
methods or Systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of Lamcor for
Material money damages or restrictions upon the operations of Lamcor;
or
(l) enter into, modify, amend or terminate any Material
Contract or waive, release, compromise or assign any Material rights or
claims; or
(m) incur fees and expenses in connection with the negotiation
and preparation of this Agreement, in settlement of claims relating to,
based upon or arising out of the Rights offering or in consideration
for the Releases or in attorneys fees and expenses and other costs in
obtaining such settlement or Releases, and in connection with the
consummation of the transactions provided for herein in excess of
$275,000
7.3 COVENANTS OF BUYER. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Buyer
covenants and agrees that it shall take no action which would (i) materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of Section 9 1(b) or 9
1(c), or (ii) materially adversely affect the ability of any Party to perform
its covenants and agreements under this Agreement; provided, that the foregoing
shall not prevent any Buyer Company from acquiring any Assets or other
businesses or from discontinuing or disposing of any of its Assets or business
if such action (i) is, in the judgment of Buyer, desirable in the conduct of the
business of Buyer and its Subsidiaries; and (ii) does not adversely affect the
Buyer's ability to fund the Merger Consideration and the Option Settlement
Payment pursuant to Sections 3 1(c), 3 5 and 9 1(e)
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
Material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not Material). As of their
respective dates, such reports fled with the SEC will comply in all Material
respects with the Securities Laws and will not contain any untrue statement of a
Material fact or omit to state a Material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 PROXY STATEMENT; SHAREHOLDER APPROVAL. Lamcor shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after
execution of this Agreement, for the purpose of voting upon adoption of this
Agreement and such other related matters as it deems appropriate. In connection
with the Shareholders' Meeting, (i) Lamcor shall prepare and file with the SEC a
Proxy Statement and mail such Proxy Statement to its shareholders, (ii) the
Parties shall furnish to each other all information concerning them (including
information described in Section 6.8) that they may reasonably request in
connection with such Proxy Statement, and (iii) the Board of Directors of Lamcor
shall recommend to its shareholders the approval of the matters submitted for
approval. Buyer and Lamcor shall make all necessary filings with respect to the
Merger under the Securities Laws.
8.2 APPLICATIONS; ANTITRUST NOTIFICATION. Buyer shall prepare and file,
and Lamcor shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement. To the
extent required by the HSR Act, each of the Parties will file with the United
States Federal Trade Commission and the United States Department of Justice the
notification and report form required for the transactions contemplated hereby
and any supplemental or additional information which may reasonably be requested
in connection therewith pursuant to the HSR Act and will comply in all Material
respects with the requirements of the HSR Act. The Parties shall deliver to each
other copies of all filings, correspondence and orders to and from all
Regulatory Authorities in connection with the transactions contemplated hereby.
8.3 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, Lamcor shall execute and file the Articles of
Merger with the Secretary of State of the State of Minnesota and Sub shall
execute and file the Certificate of Merger with the Secretary of State of the
State of Georgia in connection with the Closing.
8.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9; provided, that nothing herein shall preclude either
Party from exercising its rights under this Agreement. Each Party shall use, and
shall cause each of its Subsidiaries to use, its reasonable efforts to obtain
all Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
8.5 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all Material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreement, which is hereby reaffirmed and adopted and
incorporated by reference herein, each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence relating to
the other Party which it has discovered through the course of its investigation
and which represents, or is reasonably likely to represent, either a Material
breach of any representation, warranty, covenant or agreement of the other Party
or which has had or is reasonably likely to have a Material Adverse Effect on
the other Party.
8.6 PRESS RELEASES. Prior to the Effective Time, Lamcor and Buyer shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.6
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.7 CERTAIN ACTIONS. Lamcor shall deal exclusively with Buyer with
respect to the sale of the Lamcor Common Stock or any assets or properties of
Lamcor (not made in the ordinary course of business), and Lamcor shall not (and
shall direct the officers, directors, financial advisors, accountants and
counsel of Lamcor not to); (i) solicit the submission of any Acquisition
Proposal; (ii) participate in any discussions or negotiations regarding, or
furnish any information to any person or entity other than the Buyer, or
otherwise cooperate in any way or assist, facilitate or encourage, any
Acquisition Proposal by any person or entity other than the Buyer; or (iii)
enter into any agreement or understanding, whether oral or written, that would
prevent the consummation of the transaction proposed herein; provided, however,
that the foregoing restrictions shall not apply to any Acquisition Proposal that
is received by Lamcor or its Representatives from a third party which the Board
of Directors of Lamcor determines is required in the exercise of its fiduciary
duties to consider, provided that Lamcor shall promptly notify Buyer thereof If
and only if Lamcor shall accept and close within one year after the date of this
Agreement any such other Acquisition Proposal first received before the
termination of this Agreement, Lamcor shall pay to Buyer, in reimbursement of
the expenses incurred by the Buyer in connection with the transaction proposed
herein and as liquidated damages to compensate the Buyer for the loss of the
benefit to be derived by the Buyer from the acquisition of the Lamcor Common
Stock and the consummation of the Merger and the transactions contemplated by
this Agreement, the lesser of (i) actual documented out-of-pocket expenses of
the Buyer incurred after June 14, 1996 in connection with the transaction
proposed herein or (ii) $250,000 (the "Expenses"); provided, however, that no
amount shall be paid pursuant to this Section 8 7 if the Agreement was
terminated by Lamcor pursuant to Sections 10.1(b), 10.1(c) or 10.1(f) (but only
on the basis of the failure of Buyer to satisfy the conditions set forth in
Sections 9.3(a), 9.3(b) or 9 3(c)) Upon payment of the Expenses and the Fee to
the extent required under Section 11.2, this Agreement shall terminate with no
further liability of Lamcor or at law or equity resulting therefrom.
8.8 STATE TAKEOVER LAWS. Before the Effective Time, Lamcor shall take
all necessary action so that the provisions of the MBCA do not prevent the
consummation of the Merger or have a Material Adverse Effect on Sub or Buyer.
8.9 CHARTER PROVISIONS. Lamcor shall take all necessary action to
ensure that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated hereby do not and will not result
in the grant of any rights to any Person under the Articles of Incorporation,
Bylaws or other governing instruments of Lamcor or restrict or impair the
ability of Buyer or any of its Subsidiaries to vote, or otherwise to exercise
the rights of a shareholder with respect to, shares of Lamcor that may be
directly or indirectly acquired or controlled by them.
8.10 EMPLOYEES. Following the Effective Time, Buyer intends to cause
Lamcor to retain substantially all of its current employees and shall provide
generally to officers and employees of Lamcor employee benefits under employee
benefit and welfare plans (other than stock option or other plans involving the
potential issuance of Buyer Common Stock), on terms and conditions which when
taken as a whole are substantially similar to those currently provided by Buyer
to its similarly situated officers and employees. For purposes of participation,
vesting and (except in the case of Buyer retirement plans) benefit accrual under
Buyer's employee benefit plans, the service of the employees of Lamcor prior to
the Effective Time shall be treated as service with a Buyer Company
participating in such employee benefit plans. Except as otherwise contemplated
herein, Buyer also shall cause the Surviving Corporation and its Subsidiaries to
honor in accordance with their terms all employment, severance, consulting and
other compensation Contracts disclosed in Section 8.10 of the Lamcor Disclosure
Memorandum to Buyer between Lamcor and any current or former director, officer,
or employee thereof, and all provisions for vested benefits or other vested
amounts earned or accrued through the Effective Time under the Lamcor Benefit
Plans.
8.11 INDEMNIFICATION.
(a) For a period of six years after the Effective Time, Buyer shall,
and shall cause the Surviving Corporation to, indemnify', defend and hold
harmless the present and former directors and officers of Lamcor (each, an
"Indemnified Party") against all Liabilities arising out of actions or omissions
arising out of the Indemnified Party's service or services as directors or
officers of Lamcor or, at Lamcor's request, of another corporation, partnership,
joint venture, trust or other enterprise occurring at or prior to the Effective
Time if (i) such Indemnified Party is determined to have met the relevant
standard of care and criteria set forth in subdivision 2 of Section 302A 521 of
the MBCA (or any successor statutory provisions) and otherwise to the extent and
as provided under Section 302A.521 of the MBCA (or any successor statutory
provisions) and (ii) such Indemnified Party notifies Buyer of each claim for
indemnification in accordance with Section 8.11(b) within the six-year period
following the Effective Time. Without limiting the foregoing, in any case in
which any determination of eligibility for such indemnification or for the
payment or reimbursement of expenses under such Section is required to be made
by the Surviving Corporation, the Surviving Corporation shall direct, at the
election of the Indemnified Party, that any such determination of eligibility
shall be made by independent counsel mutually agreed upon between Buyer and the
Indemnified Party. For a period of six (6) years after the Effective Time, Buyer
and the Surviving Corporation will not take any action, or permit any action to
be taken, which would change or amend the provisions of the Articles of
Incorporation or Bylaws of the Surviving Corporation in effect at the Effective
Time relating to indemnification provided under Section 302A.521 of the MBCA (or
any successor statutory' provisions) or limitation of liability, in any manner
that would adversely affect the rights of any Indemnified Party under Section
8.11. In the event the Surviving Corporation or any of its successors or assigns
(i) reorganizes or consolidates with or merges into or enters into another
business combination with any other Person and is not the resulting, continuing
or surviving corporation or entity of such consolidation, merger or transaction
or (ii) liquidates, dissolves or transfers all or substantially all of its
properties and assets to any Person, then, and in each such case, proper
provision will be made so that the successor and assigns of the Surviving
Corporation assume the obligations set forth in Section 8.11. Each Indemnified
Party shall be a third party beneficiary of Section 8.11 and shall be entitled
to enforce the provisions of Section 8.1.1.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 8.11, upon learning of any such Liability or
Litigation, shall promptly notify Buyer thereof In the event of any such
Litigation (whether arising before or after the Effective Time), (i) Buyer or
the Surviving Corporation shall have the obligation and right to assume the
defense thereof and neither Buyer nor the Surviving Corporation shall be liable
to such Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if counsel for the Indemnified Parties advises
that there are substantive issues which raise conflicts of interest between
Buyer or the Surviving Corporation and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and Buyer or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided, that
Buyer and the Surviving Corporation shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in
any jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of
any such Litigation, and (iii) neither Buyer nor the Surviving Corporation shall
be liable for any settlement effected without its prior written consent; and
provided further that neither Buyer nor the Surviving Corporation shall have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have become final,
that the indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law. The provisions of this Section 8.11 do
not and shall not modify the indemnification obligations of Lamcor provided
under Section 302A. 521 of the MBCA (or any successor statutory provisions).
8.12 CERTAIN POLICIES OF LAMCOR. Buyer and Lamcor also shall consult
with respect to the character, amount and timing of restructuring and
Merger-related expense charges to be taken by each of the Parties in connection
with the transactions contemplated by this Agreement and shall take such charges
in accordance with GAAP), prior to the Effective Time, as may be mutually agreed
upon by the Parties. Neither Party's representations, warranties, covenants or
agreements contained in this Agreement shall be deemed to be inaccurate or
breached in any respect as a consequence of any modifications or charges
undertaken solely on account of this Section 8.12.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6:
(a) SHAREHOLDER APPROVAL. The shareholders of Lamcor, by the
requisite approval required by Law and Lamcor's governing corporate
documents, shall have adopted this Agreement, and the consummation of
the transactions contemplated hereby, including the Merger, as and to
the extent required by Law, by the provisions of any governing
instruments, or by the rules of the NASD.
(b) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or
made and shall be in frill force and effect and all waiting periods
required by Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner
(including requirements relating to the raising of additional capital
or the disposition of Assets) which in the reasonable judgment of the
Board of Directors of Buyer would so materially adversely impact the
economic or business assumptions of the transactions contemplated by
this Agreement that, had such condition or requirement been known, such
Party would not, in its reasonable judgment, have entered into this
Agreement.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained any
and all Consents required for consummation of the Merger (other than
those referred to in Section 9.1(b)) or for the preventing of any
Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party. No Consent so
obtained which is necessary to consummate the transactions contemplated
hereby shall be conditioned or restricted in a manner which in the
reasonable judgment of the Board of Directors of Buyer would so
materially adversely impact the economic or business assumptions of the
transactions contemplated by this Agreement that, had such condition or
requirement been known, such Party would not, in its reasonable
judgment, have entered into this Agreement.
(d) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which prohibits,
restricts or makes illegal consummation of the transactions
contemplated by this Agreement.
(e) ESCROW AGREEMENT. Lamcor, Buyer, the Shareholders'
Representative and the Escrow Agent shall have entered into an Escrow
Agreement in substantially the form of Exhibit 5.
9.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Buyer pursuant to Section 11.6(a):
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Lamcor set forth in this Agreement shall be true and
correct on the date of this Agreement and as of the Effective Time with
the same effect as though all such representations and warranties had
been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date
shall speak only as of such date).
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the Material agreements and covenants of Lamcor to be performed and
complied with pursuant to this Agreement prior to the Effective Time
shall have been duly performed and complied with.
(c) CERTIFICATES. Lamcor shall have delivered to Buyer (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.1 as relates to
Lamcor and in Section 9.2(a) and 9.2(b) have been satisfied, and (ii)
certified copies of resolutions duly adopted by Lamcor's Board of
Directors and shareholders evidencing the taking of all corporate
action necessary to authorize the execution, delivery and performance
of this Agreement, and the consummation of the transactions
contemplated hereby.
(d) OPINION OF COUNSEL. Buyer shall have received an opinion
of Gray, Plant, Mooty, Mooty & Bennett, P.A., counsel to Lamcor, dated
as of the Closing, substantially in the form set forth in Exhibit 2.
(e) CLAIMS LETTERS. Each of the directors and officers of
Lamcor shall have executed and delivered to Buyer letters in
substantially the form of Exhibit 3, and all indebtedness of any such
director or officer outstanding as of the Effective Time shall have
been paid in full to Lamcor.
(f) EMPLOYMENT AGREEMENT. Toby Jensen shall have executed,
subject to delivery to Buyer at the Closing, an Employment Agreement in
substantially the form of Exhibit 6 hereto.
(g) DISSENTING SHAREHOLDERS. Not more than five percent (5%)
of the Lamcor Common Stock issued and outstanding immediately prior to
the Effective Time shall constitute Dissenting Shares.
(h) SETTLEMENT OF CLAIMS, RELEASES. Lamcor shall have
delivered to Buyer written releases (a "Release") in form and content
acceptable to Buyer and its counsel from the shareholders of Lamcor
identified below pursuant to which each such shareholder executing any
such Release, for good and sufficient consideration (which, to the
extent such consideration is the payment of money, shall be paid by
Lamcor), agrees to release Lamcor and Buyer and Sub and all officers,
directors, agents, attorneys and employees of Lamcor and/or Buyer and
Sub of, from and in respect of all claims, demands, actions, causes of
action, damages or other liabilities (including both those known or
unknown, accrued or yet to accrue and/or those arising out of federal
or state statutory or Common law) in any way relating to, based upon or
arising out of the commencement, conduct or termination by Lamcor of
the Rights offering. A Release shall be obtained from (i) each
shareholder of Lamcor that has heretofore asserted against Lamcor,
either directly or through an attorney, any claim in any way relating
to, based upon or arising out of the commencement, conduct or
termination of the Rights offering, (ii) not less than ninety-five
percent (95%) of the shareholders of Lamcor who timely subscribed to
shares of Lamcor Common Stock in the Rights offering, other than those
of such shareholders who are included within clause (i) of this
sentence, and (iii) the holders of not less than 800,000 shares of the
Lamcor Common Stock issued and outstanding on the date hereof, other
than holders of Lamcor Common Stock who are included within clauses (i)
and (ii) of this sentence.
(i) OPTION CANCELLATION AGREEMENT. Each of the holders of
Lamcor Options shall have executed, subject to delivery to Buyer at the
Closing, an Option Cancellation Agreement in substantially the form of
Exhibit 8 hereto (collectively, the "Option Cancellation Agreements").
9.3 CONDITIONS TO OBLIGATIONS OF LAMCOR. The obligations of Lamcor to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Lamcor pursuant to Section 11.6(b):
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer set forth in this Agreement shall be true and
correct on the date of this Agreement and as of the Effective Time with
the same effect as though all such representations and warranties had
been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date
shall speak only as of such date).
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of
the Material agreements and covenants of Buyer to be performed and
complied with pursuant to this Agreement prior to the Effective Time
shall have been duly performed and complied with.
(c) CERTIFICATES. Buyer shall have delivered to Lamcor (i) a
certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.1 as relates to Buyer
and in Section 9.3(a) and 9.3(b) have been satisfied, and (ii)
certified copies of resolutions duly adopted by Buyer's Board of
Directors and Sub's Board of Directors and sole shareholder evidencing
the taking of all corporate action necessary to authorize the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby.
(d) OPINION OF COUNSEL. Lamcor shall have received an opinion
of Alston & Bird, counsel to Buyer, dated as of the Effective Time,
substantially in the form set forth in Exhibit 4.
(e) FAIRNESS OPINION. Lamcor shall have received from R.J.
Steichen & Co. Corp. a letter, dated not more than five business days
prior to the date of the Proxy Statement, to the effect that, in the
opinion of such firm, the consideration to be received by Lamcor
shareholders in connection with the Merger is fair, from a financial
point of view, to such Shareholders.
(f) EXCHANGE AGENT CERTIFICATION. The Exchange Agent shall
have delivered to Lamcor a certificate, dated as of the Effective Time,
to the effect that the Buyer has deposited with the Exchange Agent the
Exchange Fund required pursuant to Section 4.1.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Lamcor, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time only as follows:
(a) By mutual written consent of the Board of Directors of
Buyer and the Board of Directors of Lamcor; or
(b) By the Board of Directors of either Party (provided that
the terminating Party is not then in Material breach of any
representation, warranty, covenant, or other agreement contained in
this Agreement) in the event of a Material breach by the other Party of
any representation, warranty, covenant or agreement (other than any
breach arising out of or based upon the failure of Buyer timely to
deliver to Lamcor the items described in the second sentence of Section
6.9 of this Agreement or the failure of Buyer to obtain the financing
at Closing sufficient to fund the Merger Consideration payable under
this Agreement) contained in this Agreement which cannot be or has not
been cured within 30 days after the giving of written notice to the
breaching Party of such breach; or
(c) By the Board of Directors of either Party (provided that
the terminating Party is not then in Material breach of any
representation, warranty, covenant, or other agreement contained in
this Agreement) in the event (i) any Consent of any Regulatory
Authority required for consummation of the Merger and the other
transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
shareholders of Lamcor fail to vote their approval of the matters
relating to this Agreement and the transactions contemplated hereby at
the Shareholders' Meeting where such matters were presented to such
shareholders for approval and voted upon; or
(d) By the Board of Directors of either Party in the event
that the Merger shall not have been consummated by January 15, 1997, if
the failure to consummate the transactions contemplated hereby on or
before such date is not caused by any breach of this Agreement by the
Party electing to terminate pursuant to this Section 10.1(d); or
(e) By the Board of Directors of either Party (provided that
the terminating Party is not then in Material breach of any
representation, warranty, covenant, or other agreement contained in
this Agreement) in the event that any of the conditions precedent to
the obligations of such Party to consummate the Merger cannot be
satisfied or fulfilled by the date specified in Section 10.1(d); or
(f) By the Board of Directors of Lamcor if Buyer shall fail
timely to deliver to Lamcor the items described in the second sentence
of Section 6.9 of this Agreement or if Buyer shall fail to obtain the
financing at Closing sufficient to fund the Merger Consideration
payable under this Agreement.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
10.2 and Sections 11.2, 11.16, 11.18 and 8.5(b) shall survive any such
termination and abandonment, and (ii) a termination pursuant to Section 10.1(b)
shall not relieve the breaching Party from Liability for an uncured willful
breach of a representation, warranty, covenant, or agreement giving rise to such
termination. In the event this Agreement shall be terminated pursuant to Section
10.1(f), Buyer shall pay and reimburse Lamcor for amounts actually paid by
Lamcor to third parties for legal and accounting fees and related costs in
connection with the negotiation, preparation and execution of this Agreement and
the preparation for the consummation of the transactions contemplated hereby
provided, however, that the maximum aggregate liability of Buyer for such
payment and reimbursement shall be $100,000.
10.3 GUARANTY BY PFC. Contemporaneously with the execution and delivery
by Buyer and Sub of this Agreement, Buyer has delivered to Lamcor the written
agreement of PFC guaranteeing the obligations of Buyer under the last sentence
of Section 10.2 above.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"ACQUISITION PROPOSAL" shall mean proposals or offers from any
Person or entity other than Buyer or any of Buyer's Affiliates relating
to (i) any acquisition, issuance or purchase (whether through a merger,
consolidation, share exchange, purchase of assets or similar
transaction, and whether effected in a single transaction or series of
related transactions) of an amount of the Lamcor capital stock which
results in a Change of Control, or (ii) the purchase of all or
substantially all of the assets and properties of Lamcor, or (iii) a
transaction of the type described in the preceding clauses (i) or (ii)
but relating to any corporation or other form of entity formed by
Lamcor or any Affiliate of Lamcor to which at least 51% of the
outstanding Lamcor Common Stock or substantially all of the assets or
properties of Lamcor may be contributed.
"AFFILIATE" of a Person shall means (i) any other Person
directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control such Person; (ii)
any officer, director, partner, employer, or direct or indirect
beneficial owner of any 10% or greater equity or voting interest of
such Person (on a fully diluted basis); or (iii) any other Person for
which a Person described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits hereto.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of
such Person and wherever located.
"ARTICLES OF MERGER" shall mean the Articles of Merger to be
executed by Lamcor and filed with the Secretary of State of the State
of Minnesota relating to the Merger as contemplated by Section 1.1.
"BUYER CAPITAL STOCK" shall mean the capital stock of Buyer.
"BUYER COMPANIES" shall mean, collectively, Buyer and all
Buyer Subsidiaries.
"BUYER SUBSIDIARIES" shall mean the Subsidiaries of Buyer,
which shall include any corporation or other organization acquired as a
Subsidiary of Buyer in the future and held as a Subsidiary by Buyer at
the Effective Time.
"CERTIFICATE OF MERGER" shall mean the Certificate of Merger
to be executed by Lamcor and filed with the Secretary of State of the
State of Georgia relating to the Merger as contemplated by Section 1.1.
"CHANGE OF CONTROL" shall have occurred if any "person" or
"group of persons" (as determined pursuant to Sections 13(d) and 14(d)
of the 1934 Act) (i) becomes the beneficial owner, directly or
indirectly, of voting securities of Lamcor, or securities convertible
into or exchangeable for such voting securities, representing more than
50% of the combined voting power of Lamcor's then outstanding
securities or (ii) acquires the right or power to nominate and/or
control, directly or indirectly, a majority of the members of Lamcor's
Board of Directors (or the Board of Directors of the resulting or
surviving entity with which Lamcor is merged or consolidated).
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"CONFIDENTIALITY AGREEMENT" shall mean that certain
Nondisclosure, Nonsolicitation and Standstill Agreement, dated June 10,
1996, between Lamcor and Buyer "Consent" shall mean any consent,
approval, authorization, clearance, exemption, waiver, or similar
affirmation by any Person pursuant to any Contract, Law, Order, or
Permit.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets or business.
"DEFAULT" shall mean (i) any breach or violation of or default
under any Contract, Law, Order, or Permit, (ii) any occurrence of any
event that with the passage of time or the giving of notice or both
would constitute a breach or violation of or default under any
Contract, Law, Order, or Permit, or (iii) any occurrence of any event
that with or without the passage of time or the giving of notice would
give rise to a right to terminate or revoke, change the current terms
of, or renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Law, Order, or Permit.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient
air, surface water, ground water, land surface, or subsurface strata)
and which are administered, interpreted, or enforced by the United
States Environmental Protection Agency and state and local agencies
with jurisdiction over, and including common law in respect of,
pollution or protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42
U.S.C. 9601 ET SEQ. ("CERCLA"), the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases, or threatened releases of
any Hazardous Material, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ESCROW AGREEMENT" shall mean the Escrow Agreement dated as of
the Closing Date by and among Buyer, Lamcor and the Shareholders'
Representative.
"EXHIBITS" 1 through 8, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof, and
may be referred to in this Agreement and any other related instrument
or document without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HSR ACT" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents,
trademarks, service marks, service names, trade names, applications
therefor, technology rights and licenses, computer software (including
any source or object codes therefor or documentation relating thereto),
trade secrets, franchises, know-how, inventions, and other intellectual
property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
"KNOWLEDGE" as used with respect to (i) Buyer, shall mean the
actual knowledge of William C. Beddingfield or Allen D. Barnes and (ii)
with respect to Lamcor, shall mean the actual knowledge of Toby Jensen,
Leo Lund, Mark Steele, and Dave Shonka.
"LAMCOR COMMON STOCK" shall mean the no par value capital
stock of Lamcor.
"LAMCOR DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Lamcor, Incorporated Disclosure Memorandum"
delivered prior to the date of this Agreement to Buyer describing in
reasonable detail the matters contained therein and, with respect to
each disclosure made therein, specifically referencing each Section of
this Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall be deemed to be disclosed
for purposes of any other Section not specifically referenced with
respect thereto.
"LAMCOR FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Lamcor as of June 30, 1996, and as of September 30, 1995 and 1994, and
the related statements of income, changes in shareholders' equity, and
cash flows (including related notes and schedules, if any) for the nine
months ended June 30, 1996, and for each of the three fiscal years
ended September 30, 1995, 1994 and 1993, as filed by Lamcor in SEC
Documents, and (ii) the consolidated balance sheets of Lamcor
(including related notes and schedules, if any) and related statements
of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) provided to Buyer or included in
SEC Documents filed with respect to periods ended subsequent to June
30, 1996.
"LAW" shall mean any code, law (including common law),
ordinance, regulation, reporting or licensing requirement, rule, or
statute applicable to a Person or its Assets, Liabilities, or business,
including those promulgated, interpreted or enforced by any Regulatory
Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or
expense (including costs of investigation, collection and defense),
claim, deficiency, guaranty or endorsement of or by any Person (other
than endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention or other security arrangement, or
any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due
and payable, and (iii) Liens which do not materially impair the use of
or title to the Assets subject to such Lien.
"LITIGATION" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other
proceeding relating to or affecting a Party, its business, its Assets
(including Contracts related to it), or the transactions contemplated
by this Agreement.
"LOSS" shall mean any and all direct or indirect demands,
claims, payments, obligations, recoveries, deficiencies, fines,
penalties, interest, assessments, actions, causes of action, suits,
losses, diminution in the value of Assets, punitive, exemplary or
consequential damages (including, but not limited to, lost income and
profits and interruptions of business), liabilities, costs, expenses,
and interest on any amount payable to a third party as a result of the
foregoing. This definition shall include all Losses, whether accrued,
absolute, contingent, known, unknown or otherwise.
"MATERIAL" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement
shall determine materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event,
change or occurrence which, individually or together with any other
event, change or occurrence, has a Material adverse impact on (i) the
financial position, business, or results of operations of such Party
and its Subsidiaries, taken as a whole, or (ii) the ability of such
Party to perform its obligations under this Agreement or to consummate
the Merger or the other transactions contemplated by this Agreement.
"MBCA" shall mean the Minnesota Business Corporation Act.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market System
of the National Association of Securities Dealers Automated Quotations
System.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"ORDER" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award,
ruling, or writ of any federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or Regulatory
Authority.
"PARTY" shall mean either Lamcor, Sub or Buyer, and "Parties"
shall mean Lamcor, Sub and Buyer.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by
Lamcor to solicit the approval of its shareholders of the transactions
contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the SEC,
the NASD, the United States Department of Justice, and all other
federal, state, county, local or other governmental or regulatory
agencies, authorities (including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having jurisdiction
over the Parties and their respective Subsidiaries.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a
Person.
"RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person or
may be bound to issue additional shares of its capital stock or other
Rights.
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended,
applicable state securities Laws, and the rules and regulations of any
Regulatory Authority promulgated thereunder.
"SHAREHOLDER" and "SHAREHOLDERS" shall mean the holders of
Lamcor Common Stock.
"SHAREHOLDERS' MEETING" shall mean the meeting of the
shareholders of Lamcor to be held pursuant to Section 8.1, including
any adjournment or adjournments thereof.
"SHAREHOLDERS' REPRESENTATIVE" shall mean David P. Stewart in
his capacity as the Shareholders' Representative pursuant to Section
11.16 of this Agreement.
"SUB COMMON STOCK" means the no par value common stock of Sub.
"SUBSIDIARIES" shall mean all those corporations,
associations, or other business entities of which the entity in
question either (i) owns or controls 50% or more of the outstanding
equity securities either directly or through an unbroken chain of
entities as to each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent (provided,
there shall not be included any such entity the equity securities of
which are owned or controlled in a fiduciary capacity), or (ii) in the
case of partnerships, serves as a general partner.
"SURVIVING CORPORATION" shall mean Lamcor as the surviving
corporation resulting from the Merger
"TAX" or "TAXES" shall mean any federal, state, county, local,
or foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income, gross receipts, excise, employment,
sales, use, transfer, license, payroll, franchise, severance, stamp,
occupation, windfall profits, environmental, federal highway use,
commercial rent, customs duties, capital stock, paid-up capital,
profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever,
imposes or required to be withheld by the United States or any state,
county, local or foreign government or subdivision or agency thereof,
including any interest, penalties, and additions imposed thereon or
with respect thereto.
"TAX RETURN" shall mean any report, return, information
return, or other information required to be supplied to a taxing
authority in Connection with Taxes, including any return of an
affiliated or combined or unitary group that includes a Party or its
Subsidiaries.
(b) The terms set forth below shall have the meanings ascribed thereto
in the referenced sections;
Business Combination Section 11.2(b)
Buyer Preamble
Cash Payment Section 3.1(c)
Certificates Section 4.1(b)
CGW Section 6.9
Closing Section 1.2
Construction Loan Section 7.2(b)
Dissenting Shares Section 3 4(a)
Effective Time Section 1.3
Escrow Claim Section 11.15
Escrowed Funds Section 11.15
Exchange Agent Section 4.1(a)
Exchange Fund Section 4.1(a)
Expenses Section 8.7
Fee Section 11.2(b)
Indemnified Party Section 8 11(a)
Lamcor Preamble
Lamcor Benefit Plans Section 5.13(a)
Lamcor Contracts Section 5.14
Lamcor Convertible Securities Section 3.5
Lamcor Options Section 3.5
Lamcor Expenses Section 11.15
Lamcor SEC Reports Section 5.5(a)
Merger Section 11
Merger Consideration Section 3 1(c)
Option Cancellation Agreements Section 9 2(i)
Option Settlement Payment Section 3 5
PFC Section 6 9
Release Section 9.2(h)
Representative's Expenses Section 11.16(e)
Rights offering Section 5.6
Shareholders' Representative Section 11.16(a)
Shares Section 3.4(a)
Steichen Section 113
Sub Preamble
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 EXPENSES AND FEE.
(a) Except as otherwise provided in this Section 11.2 or in Section
8.7, each of the Parties shall bear and pay all direct costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration and application fees, printing fees,
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel.
(b) In addition to the foregoing, if, after the date of this Agreement
and within twelve (12) months following:
(i) any termination of this Agreement by Buyer pursuant to
Sections 10.1(b) or 10.1(f) (but only on the basis of the failure of
Lamcor to satisfy any of the conditions enumerated in Section 9.2,
other than Section 9.2(d)); or
(ii) failure to consummate the Merger by reason of any failure
of Lamcor to satisfy the conditions enumerated in Section 9.2, other
than Section 9.2(d);
any third-party, in a single transaction or series of related transactions and
whether through a merger, consolidation, share exchange, purchase or similar
transaction, shall purchase all or substantially all of the Assets of Lamcor or
any corporation or business entity owned by Lamcor or its Affiliates and to
which such Assets are contributed or acquire or purchase an amount of the
capital stock of Lamcor or such other corporation or business entity that
results in a Change of Control (collectively, a "Business Combination"), then
Lamcor shall pay to Buyer upon consummation and closing of the Business
Combination an amount in cash equal to the sum of:
(x) the Expenses determined under Section 8.7 above (if not
previously paid by Lamcor), plus
(y) a fee ("Fee') equal to 2% of the aggregate fair market
value of the consideration received by the Shareholders of Lamcor in
such Business Combination;
which sum represents additional compensation for Buyer's loss as the result of
the transactions contemplated by this Agreement not being consummated; provided,
however, that no Expenses or Fee shall be paid to Buyer if the Agreement was
terminated by Lamcor pursuant to Sections 10.1(b) or 10.1(f) (but only on the
basis of the failure of Buyer to satisfy any of the conditions set forth in
Sections 9.3(a), 9.3(b) or 9.3(c)). Upon payment of the Expenses and the Fee,
this Agreement shall terminate with no further liability of Lamcor or such third
party at law or equity resulting therefrom In the event such third-party shall
refuse to pay such amounts within ten days of demand therefor by Buyer, the
amounts shall be an obligation of Lamcor and shall be paid by Lamcor promptly
upon notice to Lamcor by Buyer.
11.3 BROKERS AND FINDERS. Except for R.J. Steichen & Co. Corp.
("Steichen") as to Lamcor, each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In the event of a claim by any broker or finder based upon his or its
representing or being retained by or allegedly representing or being retained by
Lamcor or Buyer, each of Lamcor and Buyer, as the case may be, agrees to
indemnify and hold the other harmless of and from any Liability in respect of
any such claim; provided, however, the Surviving Corporation will pay upon the
Effective Time the balance of any fees payable to Steichen so long as Lamcor has
not breached the covenant set forth in Section 7.2(m).
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section
8.5(b), for the Confidentiality Agreement). Nothing in this Agreement expressed
or implied, is intended to confer upon any Person, other than the Parties or
their respective successors, any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, other than as provided in Sections 8.11.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
shareholder approval of this Agreement has been obtained; provided, that after
any such approval by the holders of Lamcor Common Stock, there shall be made no
amendment that pursuant to Section 302A.613 of the MBCA requires further
approval by such Shareholders without the further approval of such Shareholders.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, Buyer, acting through its Board
of Directors, chief executive officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by Lamcor, to waive or extend the time for the compliance or fulfillment by
Lamcor of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of Buyer under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of Buyer.
(b) Prior to or at the Effective Time, Lamcor, acting through its Board
of Directors, chief executive officer or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by Buyer, to waive or extend the time for the compliance or fulfillment by Buyer
of any and all of its obligations under this Agreement, and to waive any or all
of the conditions precedent to the obligations of Lamcor under this Agreement,
except any condition which, if not satisfied, would result in the violation of
any Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Lamcor.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Lamcor: Lamcor, Incorporated
P.O. Box 70
Highway 169 North
Le Sueur, Minnesota 56058
Telecopy Number: (612) 665-6390
Attention: Special Committee of the Board of Directors
Copy to Counsel: Gray, Plant, Mooty, Mooty & Bennett, P.A.
3400 City Center
33 South Sixth Street
Minneapolis, Minnesota 55402-3796
Telecopy Number: (612) 333-0066
Attention: Bruce B. McPheeters, Esq.
Buyer: Packaging Acquisition Corporation
1633 Mt. Vernon Road
Dunwoody, Georgia 30338
Telecopy Number: (770) 604-9077
Attention: William C. Beddingfield
Copy to Counsel: Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Telecopy Number: (404) 881-7777
Attention: Teri L. McMahon, Esq.
11.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Georgia and as to statutory
dissenters' rights, the MBCA, without regard to any applicable conflicts of
Laws.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS; ARTICLES AND SECTIONS. The captions contained in this
Agreement are for reference purposes only and are not part of this Agreement.
Unless otherwise indicated, all references to particular Articles or Sections
shall mean and refer to the referenced Articles and Sections of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
11.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
11.15 ESCROW. The Exchange Agent shall deliver to the Escrow Agent on
behalf of the Shareholders at the Effective Time an amount equal to Two Hundred
Thirty One Thousand Eight Hundred Seventy Eight Dollars and 04/100 ($23
1,878.04) (the "Escrowed Funds") representing the aggregate of (a) the amount
allocated to the Escrowed Fund with respect to each share of Lamcor Common Stock
issued and outstanding immediately prior to the Effective Time and (b) the
amount allocated to each share of Lamcor Common Stock that is subject to any
Lamcor Option or Lamcor Convertible Security purchased pursuant to Section 3.5.
The term "Escrow Claim" means any and all claims, individually or in the
aggregate, made by Buyer within one year after the Effective Time for the
purpose of compensating Buyer for Losses resulting from (x) the breach or
inaccuracy of any representation or warranty of Lamcor contained herein, (y) the
failure of Lamcor to perform any covenant or agreement of Lamcor under this
Agreement, and (z) all amounts in excess of $275,000 paid or incurred by Lamcor
in connection with the negotiation and preparation of this Agreement, in
settlement of claims relating to, based upon or arising out of the Rights
offering or in consideration for the Releases, or in attorneys fees and expenses
and other costs in obtaining such settlement or Releases, and in connection with
the consummation of the transactions provided for herein (collectively, the
"Lamcor Expenses"); provided, however, that Buyer shall not be entitled to
assert a claim against the Escrowed Funds for breaches of representations and
warranties pursuant to the preceding clause (x) if Buyer had actual knowledge of
the breach at the Effective Time; provided further, that Buyer shall not be
entitled to assert an Escrow Claim against the Escrowed Funds unless each such
Escrow Claim is in excess of $1,000.00. An Escrow Claim shall be satisfied or
liquidated only from the Escrowed Funds in accordance with the terms and
conditions of the Escrow Agreement; provided, however, that Buyer shall not be
entitled to receive any of the Escrowed Funds unless (i) the Surviving
Corporation is not in breach in any Material respect of any of its covenants or
agreements arising after the Effective Time and (ii) the aggregate amount of all
Escrow Claims arising out of clauses (x) and (y) of the preceding sentence
exceeds $50,000. Once such $50,000 threshold has been reached, Buyer shall be
entitled to hall payment for all Escrow Claims arising out of such clauses (x)
and (y) out of the Escrowed Funds as if no such limitation on payment had
existed, provided that the conditions of clause (i) of this sentence is
satisfied at the time of payment. Buyer shall pay all fees and expenses in
connection with the escrow and the Escrowed Funds, without reimbursement
therefor to Buyer from the Escrowed Funds. Notwithstanding the foregoing, any
amount of Lamcor Expenses in excess of $275,000 shall be paid to Buyer out of
the Escrowed Funds, to the extent thereof, without regard to such $50,000
threshold.
11.16 SHAREHOLDERS' REPRESENTATIVE.
(a) The Shareholders irrevocably make, constitute and appoint David P.
Stewart as their agent (the "Shareholders' Representative") and authorize and
empower him to fulfill the role of Shareholders' Representative hereunder and
under the Escrow Agreement. In the event of the resignation of the Shareholders'
Representative, the resigning Shareholders' Representative shall appoint a
successor from among the Shareholders and who shall agree in writing to accept
such appointment. If the Shareholders' Representative should die or become
incapacitated, his successor shall be appointed within 15 days of his death or
incapacity by a majority of the Shareholders, and such successor shall be a
Shareholder. The choice of a successor Shareholders' Representative appointed in
any manner permitted above shall be final and binding upon all of the
Shareholders. The decisions and actions of any successor Shareholders'
Representative shall be, for all purposes, those of a Shareholders'
Representative as if originally named herein.
(b) Each Shareholder has made, constituted and appointed and by the
approval of this Agreement hereby irrevocably makes, constitutes and appoints
the Shareholders Representative as such person's true and lawful attorney in
fact and agent, for such person and in such person's name, place and stead for
all purposes necessary or desirable in order for the Shareholders'
Representative to take the actions contemplated by this Agreement and the Escrow
Agreement on behalf of the Shareholders, with the ability to execute and deliver
all instruments, certificates and other documents of every kind incident to the
foregoing to all intents and purposes and with the same effect as such
Shareholder could do personally, and each such Shareholder hereby ratifies and
confirms as his, her or its own act, all that the Shareholders' Representative
shall do or cause to be done pursuant to the provisions hereof.
(c) The death or incapacity of any Shareholder shall not terminate the
authority and agency of the Shareholders' Representative.
(d) Buyer shall be entitled to rely exclusively upon any communication
given or other action taken by the Shareholders' Representative pursuant hereto
and shall not be liable for any action taken or not taken in reliance upon the
Shareholders' Representative. Buyer shall not be obligated to inquire as to the
authority of the Shareholders' Representative to take any action that the
Shareholders' Representative takes or purports to take on behalf of the
Shareholders.
(e) The Shareholders agree to indemnify the Shareholders'
Representative and to hold him or her harmless against any and all loss,
liability or expense incurred without bad faith on the part of the Shareholders'
Representative and arising out of or in connection with his or her duties as
Shareholders' Representative, including the reasonable costs and expenses
incurred by the Shareholders' Representative in defending against any claim or
liability in connection herewith (the "Representative's Expenses"), and
authorize the Shareholder's Representative to receive following the first
anniversary of the Effective Date a portion of the amount by which the then
remaining balance of the Escrowed Funds exceeds the sum of the Tentatively
Impounded Funds (as defined in the Escrow Agreement) equal to the
Representative's Expenses in accordance with Section 6(f) of the Escrow
Agreement, subject to Section 11.16(f) below; provided, however, that Buyer
shall pay all reasonable Representative's Expenses incurred by the Shareholders
Representative and its counsel in defending against any Escrow Claim in the
event that the Shareholders' Representative prevails in such defense, and the
Shareholders and Buyer authorize a maximum amount equal to the lesser of (i)
Five Thousand Dollars ($5,000.00), or (ii) the actual amount of the reasonable
Representative's Expenses incurred by the Shareholders' Representative and its
counsel in carrying out the provisions of this Section 11.16 and Section 6 of
the Option Cancellation Agreements (as evidenced by a written notice from the
Shareholders' Representative to Buyer setting forth the actual amount and a
description of such Representative's Expenses), to be remitted prior to the
first anniversary of the Effective Date to the Shareholders' Representative out
of the Escrowed Funds upon the Escrow Agent's receipt of written notice from
Buyer stating the amount to be so remitted
(f) Each Shareholder shall have the right to receive upon written
request therefor an accounting of the Representative's Expenses for which the
Shareholder's Representative is reimbursed from the Escrowed Funds pursuant to
Section 11.16(e) hereof.
11.17 SURVIVAL. Article 4, Sections 8.10 and 8.11, and Article 11
(other than Section 11.2) shall survive the Effective Time pursuant to their
respective terms. The representations and warranties found in Articles 5 and 6
shall survive until termination of the Escrow Agreement.
11.18 ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement, shall be settled by arbitration in accordance with
the then-prevailing Commercial Arbitration Rules of the American Arbitration
Association. Such arbitration shall be held in Minneapolis, Minnesota before a
panel of three arbitrators, one selected by Buyer and Sub, one selected by
Lamcor and the third selected by mutual agreement of the first two arbitrators.
Each arbitrator shall be independent and impartial. Judgment upon any award
rendered by the arbitrators may be entered into any court of competent
jurisdiction. The determinations of which Party (or combination of them) bears
the costs and expenses incurred in connection with any such arbitration
proceeding shall be made by the arbitrators.
(signatures appear on the following page)
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: LAMCOR, INCORPORATED
By:
- -------------------------------- -------------------------------------
Secretary President
[CORPORATE SEAL]
ATTEST: PACKAGING ACQUISITION CORPORATION
By:
- -------------------------------- -------------------------------------
Secretary President
[CORPORATE SEAL]
LI ACQUISITION CORPORATION
By:
- -------------------------------- -------------------------------------
Secretary President
[CORPORATE SEAL]
LIST OF EXHIBITS
TO
AGREEMENT AND PLAN OF MERGER
Exhibit 1 Form of Shareholder Voting Agreement
Exhibit 2 Matters as to which Gray, Plant, Mooty, Mooty & Bennett,
P.A. will opine
Exhibit 3 Form of Claims Letter
Exhibit 4 Matters as to which Alston & Bird will opine
Exhibit 5 Form of Escrow Agreement
Exhibit 6 Form of Employment Agreement (Jensen)
Exhibit 7 Form of Noncompetition Agreement (Lund)
Exhibit 8 Form of Option Cancellation Agreement
The Company has omitted the above Exhibits to the Agreement and Plan of Merger
and hereby agrees to furnish supplementally a copy of any omitted Exhibit to the
Commission upon request.
Exhibit 3.1
Articles of Incorporation of the Company, as amended
ARTICLES OF AMENDMENT
OF
LAMINATIONS INCORPORATED
The undersigned corporation hereby adopts the following Articles of
Amendment, which replace and supersede prior Articles filed:
ARTICLES OF INCORPORATION
OF
LAMINATIONS, INCORPORATED
The undersigned incorporated, being a natural person 18 years of age or
older, in order to form a corporate entity under Minnesota Statutes, Chapter
302A, hereby adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation is Lamcor, Incorporated.
ARTICLE II
The registered office of the corporation is located at 8900 Penn Avenue
South, Minneapolis, Minnesota 55431, and the registered agent at that address is
R. Tuck Aaker.
ARTICLE III
The name and address of the incorporator is L. Reid Martinson, 8900
Penn Avenue South, Minneapolis, MN 55431.
ARTICLE IV
The corporation is authorized to issue an aggregate total of 10,000,000
shares.
ARTICLE V
In addition to the powers granted to the Board of Directors by
Minnesota Statutes, Chapter 302A, the Board of Directors of this corporation
shall have the power and authority to fix by resolution any designation, class,
series, voting power, preference, right, qualification, limitation, restriction,
dividend, time and place of redemption, and conversion right with respect to any
stock of the corporation.
ARTICLE VI
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting by written action signed by a
majority of the Board of Directors then in office, except as to those matters
which require shareholder approval, in which case the written action shall be
signed by all members of the Board of Directors then in office.
ARTICLE VII
No holder of stock of this corporation shall be entitled to any
cumulative voting rights.
ARTICLE VIII
No holder of stock of this corporation shall have any preferential,
pre-emptive, or other rights of subscription to any shares of any class or
series of stock of this corporation alloted or sold or to be alloted or sold and
now or hereafter authorized, or to any obligations or securities convertible
into any class or series of stock of this corporation, nor any right of
subscription to any part thereof.
IN WITNESS WHEREOF, the incorporator has executed these Articles of
Amendment this _____ day of _______________, 1986.
------------------------------------------
R. Tuck Aaker, President
STATE OF MINNESOTA )
) ss:
COUNTY OF HENNEPIN )
Subscribed and sworn to before me
this _____ day of _______________, 1986.
- ----------------------------
Notary Public
The amendment was adopted by a unanimous vote of the shareholders, at a
duly called meeting on the _____ day of _______________, 1986.
------------------------------------------
R. Tuck Aaker, President
Proposed Amended and Restated Articles of Incorporation of the Company, as
submitted to the shareholders for approval at a special meeting of shareholders
to be held on December 31, 1996
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
LAMCOR, INCORPORATED
The undersigned hereby certifies that the shareholders of Lamcor,
Incorporated, pursuant to Minnesota Statutes Chapter 302A, have hereby adopted
the following Amended and Restated Articles of Incorporation:
ARTICLE I
The name of the corporation is Lamcor, Incorporated.
ARTICLE II
The registered office of the corporation is located at Highway 169,
Fire #107-C, LeSueur, Minnesota 56058.
ARTICLE III
The corporation is authorized to issue an aggregate total of 10,000,000
shares.
ARTICLE IV
In addition to the powers granted to the Board of Directors by
Minnesota Statutes, Chapter 302A, the Board of Directors of this corporation
shall have the power and authority to fix by resolution any designation, class,
series, voting power, preference, right, qualification, limitation, restriction,
dividend, time and place of redemption, and conversion right with respect to any
stock of the corporation.
ARTICLE V
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting by written action signed by a
majority of the Board of Directors then in office, except as to those matters
which require shareholder approval, in which case the written action shall be
signed by all members of the Board of Directors then in office.
ARTICLE VI
No holder of stock of this corporation shall be entitled to any
cumulative voting rights.
ARTICLE VII
No holder of stock of this corporation shall have any preferential,
pre-emptive, or other rights of subscription to any shares of any class or
series of stock of this corporation alloted or sold or to be alloted or sold and
now or hereafter authorized, or to any obligations or securities convertible
into any class or series of stock of this corporation, nor any right of
subscription to any part thereof.
IN WITNESS WHEREOF, the undersigned has set his hand this 31st day of
December, 1996.
------------------------------------------
Toby Jensen, President
Exhibit 3.2
Amended and Restated Bylaws of the Company
AMENDED AND RESTATED BYLAWS
OF
LAMCOR, INCORPORATED
ARTICLE 1.
OFFICES
Section 1. Principal Office. The principal office of the corporation
shall be located in the City of LeSueur, County of LeSueur, State of Minnesota.
Section 2. Registered Office. The registered office of the corporation
may be the same as the principal office of the corporation, but in any event
must be located in the State of Minnesota, as required by the Minnesota Business
Corporation Act.
Section 3. Other Business Offices. The corporation may have business
offices at such other places, either within or without the State of Minnesota,
as the Board of Directors may designate or as the business of the corporation
may require from time to time.
ARTICLE II.
SHAREHOLDERS
Section 1. Regular Meeting. Regular meetings of the shareholders of
this corporation may be held at the discretion of the Board of Directors on an
annual or less frequent periodic basis. The date, time and place of such
meetings may be designated by the Board of Directors in the notices of meeting.
At regular meetings the shareholders shall elect a Board of Directors and
transact such other business as may be appropriate for action by shareholders.
If a regular meeting of shareholders has not been held for a period of fifteen
(15) months, one or more shareholders holding not less than three percent (3%)
of the voting power of all shares of the corporation entitled to vote may call a
regular meeting of shareholders by delivering to the President or Vice President
written demand for a regular meeting. Within thirty (30) days after the receipt
of such a written demand by the chief executive officer or chief financial
officer, the Board of Directors shall cause a regular meeting of shareholders to
be called. Such a meeting shall be held on notice no later than ninety (90) days
after the receipt of such written demand. All of the expenses of this process
shall be paid by the corporation.
Section 2. Special Meetings of Shareholders. Special meetings of the
shareholders, for any purpose or purposes may be called by the President or Vice
President or by the Board of Directors, and shall be called by the President or
Vice President at the request of the holders of not less than ten percent (10%)
of all the outstanding shares of the corporation entitled to vote at the
meeting. A special meeting for the purpose of considering any action to directly
or indirectly facilitate or effect a business combination, including any action
to change or otherwise affect the composition of the Board of Directors for that
purpose, when called by shareholders, must be called by shareholders holding
twenty-five (25%) or more of the voting power of all shares entitled to vote.
Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Minnesota, as the place of meeting
for any regular meeting or for any special meeting. A waiver of notice signed by
all shareholders entitled to vote at a meeting may designate any place, either
within or without the State of Minnesota, as the place for the holding of such
meeting. If no designation is made, or if a special meeting be otherwise called,
the place of meeting shall be the principal office of the corporation in the
State of Minnesota.
Section 4. Notice of Meetings of Shareholders.
A. Regular Meetings and Special Meetings. Notice of the time and place
of all regular and special meetings shall be mailed by the Secretary to each
shareholder to the last known address of said shareholder as the same appears on
the books of the corporation at least ten (10) days before the date of all
regular and special meetings. In the event that a plan of merger or exchange is
to be considered at a meeting of shareholders, notice of such meeting shall be
given to every shareholder, whether or not entitled to vote, not less than
fourteen (14) days prior to the date of such meeting. Such notice shall state
the purpose of such meeting, and, where a plan of merger or exchange is to be
considered, shall include a copy or a short description of the plan.
B. Mailing. Every notice shall be deemed duly served when the same has
been deposited in the United States mail, with postage fully prepaid, addressed
to the shareholder at his, her or its address as it appears on the stock
transfer books of the corporation.
C. Waiver. Any shareholder may waive notice of any meeting of
shareholders. Waiver of notice shall be effective whether given before, at, or
after the meeting and whether given orally, in writing, or by attendance.
Attendance of a person at a meeting of shareholders, in person or by proxy,
shall constitute a waiver of such notice, except when attendance is for the
express purpose of objecting to the transaction of any business, at the
commencement of the meeting, because the meeting was not lawfully called or
convened.
Section 5. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
Section 6. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his or her duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting.
Section 7. Voting of Shares. Each Outstanding share of capital stock of
the corporation shall be entitled to one vote upon each matter submitted to a
vote at a meeting of shareholders except as the Articles of Incorporation
otherwise provide.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business, property and affairs of the
corporation shall be managed by its Board of Directors.
Section 2. Number. The number of Directors of the corporation shall be
five (5).
Section 3. Tenure. Each Director shall hold office until the next
regular meeting of shareholders following his or her nomination in the Articles
of Incorporation or his or her election, as the case may be, and until his or
her successor shall have been duly elected and qualified, or until his or her
prior death, resignation or removal.
Section 4. Qualifications. Directors need not be residents of the State
of Minnesota or shareholders of the corporation.
Section 5. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, each regular meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place, within or without the
State of Minnesota, for the holding of additional regular meetings without other
notice than such resolution.
Section 6. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the President, or in his or her absence,
the Vice President, or any Director. The person or persons authorized to call
special meetings of the Board of Directors may fix the place within or without
the State of Minnesota for holding any special meeting of the Board of Directors
called by them, and if no other place is fixed the place of meeting shall be the
principal business office of the corporation in the State of Minnesota.
All notices of special meetings shall state the purpose thereof.
Section 7. Notice of Meetings. If the date, time, and place of a
meeting of the Board of Directors has been announced at a previous meeting, no
notice is required. In all other cases, however, at least three (3) days' notice
of the meetings of the Board of Directors shall be given to each Director. Such
notice shall state the date and time of the meeting and any other information
required by law or desired by the person or persons calling such meeting. If
notice of the meeting is required and such notice does not state the place of
the meeting, such meeting shall be held at the principal executive office of the
corporation. Notice of meetings of the Board of Directors shall be given to
Directors in the same manner provided in these Bylaws for giving notice to
shareholders of meetings of the shareholders.
Any Director may waive notice of any meeting. A waiver of notice by a
Director is effective whether given before, at, or after the meeting, and
whether given orally, in writing, or by attendance. The attendance of a Director
at any meeting shall constitute a waiver of notice of such meeting, unless such
Director objects at the beginning of the meeting to the transaction of business
on grounds that the meeting is not lawfully called or convened and does not
participate thereafter in the meeting.
Section 8. Quorum. A majority of the members of the Board shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors, but if less than such a majority is present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice.
Section 9. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 10. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by appointment made by the remaining Directors. A Director elected
to fill a vacancy shall be a Director until his or her successor is elected by
the shareholders who may make such election at the next regular meeting of the
shareholders, or at any special meeting duly called for that purpose and held
prior thereto.
Section 11. Removal of Directors. The entire Board of Directors or any
Director or Directors may be removed from office, with or without cause, at any
special meeting of the shareholders duly called for that purpose as provided in
these Bylaws. Such a removal requires an affirmative vote of the shareholders
holding a majority of the shares entitled to vote at an election of Directors.
At such meeting, without further notice, the shareholders may fill any vacancy
or vacancies created by such removal as provided in Section 10.
In addition, any Director may be removed at any time, with or without
cause, by the other members of the Board of Directors if: (i) the Director was
appointed by the board to fill a vacancy; (ii) the shareholders have not elected
Directors in the interval between the time of the appointment and the time of
removal; and (iii) a majority of the remaining Directors present affirmatively
vote to remove the Director, even though said remaining Directors may be less
than a quorum.
Section 12. Executive Committee. The Directors may by resolution
appoint two or more members of the Board as an executive committee to manage the
business of the corporation during the interim between meetings of the Board.
Section 13. Action in Writing. Any action required or permitted to be
taken at a meeting of the Board of Directors or of a lawfully constituted
committee thereof, which requires the approval of the shareholders, may be taken
by written action signed by all of the Directors then in office or by all of the
members of such committee, as the case may be. However, if the Articles of
Incorporation authorize written action by less than all the Directors and the
action does not require shareholder approval, such action shall be effective if
signed by the number of Directors or members of such committee that would be
required to take the same action at a meeting at which all Directors or
committee members were present. If any written action is taken by less than all
Directors or members, all Directors or members shall be notified immediately of
its text and effective date. The failure to provide such notice, however, shall
not invalidate such written action. A Director who does not sign or consent to
the written action has no liability for the action or actions taken thereby.
Section 14. Meeting by Means of Electronic Communication. Members of
the Board of Directors of the corporation, or any committee designated by such
Board, may participate in a meeting of such Board or committee by means of
conference telephone or similar means of communication by which all persons
participating in the meeting can simultaneously hear each other. Such
participation in a meeting pursuant to this Section shall constitute presence in
person at such meeting. Meetings held pursuant to this Section, however, are
still subject to the notice, quorum, and voting requirements as provided in
Sections 7 and 8.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of this corporation shall be a
President, a Vice President, a Secretary and a Treasurer. Any two offices,
except those of President and Vice President, may be held by the same person.
Officers need not be Directors.
Section 2. Election and Term of Office. The officers of the corporation
to be elected by the Board of Directors shall be elected by the Board of
Directors at the regular meeting of the Board of Directors held immediately
following each regular meeting of the shareholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be. Each officer shall hold office until his or
her successor shall have been duly elected and shall have qualified or until his
or her death or until he shall resign or shall have been removed in the manner
hereinafter provided.
Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the corporation would be served thereby.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 5. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall have authority, subject to such rules as
may be prescribed by the Board of Directors, to appoint such agents and
employees of the corporation as he shall deem necessary, to prescribe their
powers, duties and compensation, and to delegate authority to them. Such agents
and employees shall hold office at the discretion of the President. He shall
have authority to sign, execute and acknowledge, on behalf of the corporation,
all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and
all other documents or instruments necessary or proper to be executed in the
course of the corporation's regular business, or which shall be authorized by
resolution of the Board of Directors; and, except as otherwise provided by law
or the Board of Directors, he may authorize any Vice President or other officer
or agent of the corporation to sign, execute and acknowledge such documents or
instruments in his or her place and stead. In general he shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 6. Vice President. In the absence of the President or in the
event of his or her death, inability or refusal to act, the Vice President shall
perform the duties of President, and when so acting, shall have all the powers
of and be subject to all the restrictions upon the President. The Vice President
shall perform such other duties as from time to time may be assigned to him or
her by the President or by the Board of Directors.
Section 7. Secretary. The Secretary shall: (a) keep the minutes of the
shareholders' and of the Board of Directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these Bylaws or as required by law; (c) be custodian of
the corporate records and of the seal of the corporation and see that the seal
of the corporation is affixed to all documents the execution of which on behalf
of the corporation under its seal is duly authorized; (d) keep a register of the
post office address of each shareholder which shall be furnished to the
Secretary by such shareholder; (e) have general charge of the stock transfer
books of the corporation; and (f) in general perform all duties incident to the
office of Secretary arid such other duties as from time to time may be assigned
to him or her by the President or by the Board of Directors.
Section 8. Treasurer. If required by the Board of Directors, the
Treasurer and any Assistant Treasurer selected by the Board of Directors shall
give a bond for the faithful discharge of his or her duties in such sum and with
such surety or sureties as the Board of Directors shall determine. He shall: (a)
have charge and custody of and be responsible for all funds and securities of
the corporation; receive and give receipts for moneys due and payable to the
corporation from any source whatsoever, and deposit all such moneys in the name
of the corporation in such banks, trust companies or other depositories as shall
be selected in accordance with the provisions of these Bylaws; and (b) in
general perform all of the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him or her by the President
or by the Board of Directors.
Section 9. Assistants and Acting Officers. The Assistant Secretaries
and Assistant Treasurers, if any, selected by the Board of Directors, shall
perform such duties and have such authority as shall, from time to time be
delegated or assigned to them by the Secretary or Treasurer, respectively, or by
the President or the Board of Directors. The Board of Directors shall have the
power to appoint any person to perform the duties of an officer whenever for any
reason it is impracticable for such officer to act personally. Such acting
officer so appointed shall have the powers of and be subject to all the
restrictions upon the officer to whose office he is so appointed except as the
Board of Directors may by resolution otherwise determine.
Section 10. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
corporation.
Section 11. Filling More Than One Office. Any two offices of the
corporation except those of President and Vice President may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument in
more than one capacity.
ARTICLE V
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares of
the corporation shall be in such form, consistent with law, as shall be
determined by the Board of Directors. Such certificates shall be signed by the
President and the Secretary and sealed with the seal of the corporation. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented thereby are
issued, with the number of shares and the date of issue, shall be entered on the
stock transfer books of the corporation. All certificates surrendered to the
corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and canceled.
Section 2. Restrictions on Transfer. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the corporation upon the transfer of such shares.
Section 3. Lost, Destroyed or Stolen Certificates. Where the owner
claims that his or her certificate for shares has been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if the
owner (a) so requests before the corporation has notice that such shares have
been acquired by a bona fide purchaser, and (b) files with the corporation a
sufficient indemnity bond, and (c) satisfies such other reasonable requirements
as the Board of Directors may prescribe.
ARTICLE VI
DIVIDENDS
Section 1. Declaration of Dividends. The Board of Directors may from
time to time declare dividends on its outstanding shares upon the following
terms and conditions:
(a) Dividends may be declared from earned surplus upon shares
of all classes, subject to restrictions, if any, contained in the
Articles of Incorporation.
(b) Dividends may be declared from any surplus upon preferred
shares only; provided that if such a dividend is declared and paid from
any surplus other than earned surplus, the shareholders receiving the
dividend shall be advised of that fact at the time of payment to them
and the next annual statement of accounts to be given to the
shareholders shall indicate the surplus from which such dividend was
paid;
(c) Stock dividends may be declared from appreciation of the
value of the assets of the corporation provided capital is not
impaired;
(d) In determining what is earned surplus, the judgment of the
Board of Directors shall be conclusive unless it shall be shown that
the Directors acted in bad faith or were grossly negligent.
ARTICLE VII
SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words, "Corporate Seal." Use of such seal
is not required.
ARTICLE VIII
AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted either by the affirmative vote of the shareholders representing a
majority of all the shares issued and outstanding, at any regular or special
shareholders' meeting or by the affirmative vote of the majority of the Board of
Directors at any regular or special meeting, if a notice setting the terms of
the proposal has been given in accordance with the notice requirements for
special meetings of shareholders or for special meetings of Directors, whichever
may be applicable. The Board of Directors may make and alter all Bylaws, except
those Bylaws Fixing their number, qualifications, classifications, or term of
office; provided, that any Bylaw amended, altered or repealed by the Director as
provided herein may thereafter be amended, altered, or repealed by the
shareholders.
ARTICLE IX.
FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of
October in each year.
These Amended and Restated Bylaws were adopted as and for the Bylaws
for LAMCOR, INCORPORATED, a Minnesota corporation, by written action signed by
all of the directors of the Company effective December 1, 1996.
/s/ Leo Lund
------------------------------------------
Secretary
Exhibit 4.1
[Front of Certificate]
[Border]
Common Stock Number: Common Stock Shares:
----------------------- -----------------------
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA
LAMCOR INCORPORATED
AUTHORIZED 10,000,000 SHARES COMMON
STOCK NO PAR VALUE
COMMON CUSIP 5134107
THIS CERTIFIES THAT IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK WITH NO PAR VALUE,
OF
***LAMCOR INCORPORATED***
TRANSFERABLE ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN PERSON OR
BY DULY AUTHORIZED ATTORNEY ON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.
THIS CERTIFICATE IS NOT VALID UNLESS COUNTERSIGNED BY THE TRANSFER AGENT AND
REGISTRAR.
WITNESS THE FACSIMILE SIGNATURES OF ITS DULY AUTHORIZED OFFICERS.
Dated: _____________ /s Leo W. Lund s/ Toby Jensen
-------------- --------------
Secretary President
CORPORATE STOCK TRANSFER, INC.
------------------------
Transfer Agent Authorized Signature
[Back of Certificate]
FOR VALUE RECEIVED _____ HEREBY SELL, ASSIGN, AND TRANSFER UNTO:
-------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE) SHARES OF THE
CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY
CONSTITUTE AND APPOINT ____________________________, ATTORNEY, TO TRANSFER THE
SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER
OF SUBSTITUTION IN THE PREMISES.
DATED: ______________________
Exhibit 4.2
Form of Shareholder Voting Agreement
SHAREHOLDER VOTING AGREEMENT
THIS SHAREHOLDER VOTING AGREEMENT (this "Agreement") is made and
entered into as of September ___, 1996 by and between Packaging Acquisition
Corporation, a Georgia corporation ("Buyer"), Lamcor, Incorporated, a Minnesota
corporation ("Lamcor"), and the undersigned (the "Shareholder").
WHEREAS, the Shareholder desires that Buyer, LI Acquisition
Corporation, a wholly owned subsidiary of Buyer ("Sub"), and Lamcor enter into
an Agreement and Plan of Merger dated the date hereof (as the same may be
amended or supplemented, the "Merger Agreement") with respect to the merger of
Sub with and into Lamcor (the "Merger"); and
WHEREAS, the Shareholder and Lamcor are executing this Agreement as an
inducement to Buyer to enter into and execute, and to cause Sub to enter into
and execute the Merger Agreement;
NOW, THEREFORE, in consideration of the execution and delivery by Buyer
and Sub of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
1. REPRESENTATIONS AND WARRANTIES. The Shareholder represents and
warrants to Buyer as follows:
(a) The Shareholder is the record and beneficial owner of the
number of shares (such "Shareholder's Shares") of common stock, no par
value, of Lamcor ("Lamcor Stock") set forth below such Shareholder's
name on the signature page hereof Except for the Shareholder's Shares,
the Shareholder is not the record or beneficial owner of any shares of
Lamcor Stock: This Agreement has been duly authorized, executed and
delivered by, and constitutes a valid and binding agreement of, the
Shareholder, enforceable in accordance with its terms.
(b) Neither the execution and delivery of this Agreement nor
the consummation by the Shareholder of the transactions contemplated
hereby will result in a violation of, or a default under, or conflict
with, any contract, trust, commitment, agreement, understanding,
arrangement or restriction of any kind to which the Shareholder is a
party or bound or to which the Shareholder's Shares are subject. If the
Shareholder is married and the Shareholder's Shares constitute
community property, this Agreement has been duly executed and delivered
by, and constitutes a valid and binding agreement of, the Shareholder's
spouse, enforceable against such person in accordance with its terms,
and reference herein to "Shareholder" shall, unless the context clearly
requires otherwise, also mean and include such spouse. Consummation by
the Shareholder of the transactions contemplated hereby will not
violate, or require any consent, approval, or notice under, any
provision of any judgment, order, decree, statute, law, rule or
regulation applicable to the Shareholder or the Shareholder's Shares.
(c) The Shareholder's Shares and the certificates representing
such Shareholder's Shares are now, and at all times during the term
hereof will be, held by the Shareholder, or by a nominee or custodian
for the benefit of such Shareholder, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever,
except for any such encumbrances or proxies arising hereunder.
(d) No broker, investment banker, financial adviser or other
person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Shareholder.
(e) The Shareholder understands and acknowledges that Buyer is
entering into, and causing Sub to enter into, the Merger Agreement in
reliance upon the Shareholder's execution and delivery of this
Agreement. The Shareholder acknowledges that the irrevocable proxy set
forth in Section 4 is granted in consideration for the execution and
delivery of the Merger Agreement by Buyer and Sub.
2. VOTING AGREEMENTS. The Shareholder agrees with, and covenants to,
Buyer as follows:
(a) At any meeting of Shareholders of Lamcor called to vote
upon the Merger and the Merger Agreement or at any adjournment thereof
or in any other circumstances upon which a vote, consent or other
approval with respect to the Merger and the Merger Agreement is sought
(the "Shareholders' Meeting"), the Shareholder shall vote (or cause to
be voted) the Shareholder's Shares in favor of the Merger, the
execution and delivery by Lamcor of the Merger Agreement, and the
approval of the terms thereof and each of the other transactions
contemplated by the Merger Agreement.
(b) At any meeting of Shareholders of Lamcor or at any
adjournment thereof or in any other circumstances upon which their
vote, consent or other approval is sought, the Shareholder shall vote
(or cause to be voted) such Shareholder's Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by
Lamcor or (ii) any amendment of Lamcor 5 Articles of Incorporation or
Bylaws or other proposal or transaction involving Lamcor or any of its
subsidiaries which amendment or other proposal or transaction would in
any manner impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger
Agreement (each of the foregoing in clause (i) or (ii) above, a
"Competing Transaction").
3. COVENANTS. The Shareholder agrees with, and covenants to, Buyer as
follows:
(a) The Shareholder shall not (i) transfer (which term shall
include, without limitation, for the purposes of this Agreement, any
sale, offer for sale, solicitation of offer to purchase, gift, pledge
or other disposition), or consent to any transfer of; any or all of the
Shareholder's Shares or any interest therein, except pursuant to the
Merger; (ii) enter into or agree to enter into any contract, option or
other agreement or understanding with respect to any transfer of any or
all of such Shareholder's Shares or any interest therein, (ill) grant
any proxy, power of attorney or other authorization in or with respect
to such Shareholder's Shares, except for this Agreement, or (iv)
deposit such Shareholder's Shares into a voting trust or enter into or
agree to enter into a voting agreement or arrangement with respect to
such Shareholder's Shares; provided, however, that the Shareholder may
transfer (as defined above) any of the Shareholder's Shares to any
other person who is on the date hereof; or to any family member of a
person or charitable institution which prior to the Shareholders
Meeting and prior to such transfer becomes, a party to this Agreement
bound by all the obligations of the "Shareholder" hereunder.
(b) If a majority of the holders of Lamcor Stock approve the
Merger and the Merger Agreement, the Shareholder's Shares shall,
pursuant to the terms of the Merger Agreement, be exchanged for the
consideration provided in the Merger Agreement. The Shareholder hereby
waives any rights of appraisal, or rights to dissent from the Merger,
that such Shareholder may have.
(c) The Shareholder shall not, nor shall it permit any person
who is an adviser or representative of the Shareholder to, directly or
indirectly, alone or in concern with others (i) solicit, initiate or
encourage the submission of; any Takeover Proposal (as defined below)
or (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal; provided, however, that such restrictions shall not
apply to the extent required by the fiduciary duties of the Shareholder
arising out of his or her status as a director of Lamcor Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any person who is
an adviser or representative of the Shareholder, whether or not such
person is purporting to act on behalf of the Shareholder, shall be
deemed to be in violation of this Section 3(c) by the Shareholder. For
all purposes hereof; "Takeover Proposal" means any proposal for a
merger, consolidation, share exchange or other business combination
involving Lamcor or any of its subsidiaries or any proposal, tender or
other offer to acquire in any manner, directly or indirectly, an equity
interest in any voting securities of; or a substantial portion of the
assets of Lamcor or any of its subsidiaries, other than the Merger and
the other transactions contemplated by the Merger Agreement.
4. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY.
(a) The Shareholder hereby irrevocably grants to, and appoints, Buyer
and Allen D. Barnes, President of Buyer, and William C. Beddingfield, Executive
Vice President, Treasurer and Secretary of Buyer, in their respective capacities
as officers of Buyer, and any individual who shall hereafter succeed to any such
office of Buyer, and each of them individually, the Shareholder's proxy and
attorney-in-fact (with frill power of substitution), for and in the name, place
and stead of the Shareholder, to vote the Shareholder's Shares, or grant a
consent or approval in respect of such Shareholder's Shares (i) in favor of the
Merger, the execution and delivery of the Merger Agreement and approval of the
terms thereof and each of the other transactions contemplated by the Merger
Agreement and (ii) against any Competing Transaction.
(b) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) The Shareholder hereby affirms that the irrevocable proxy set forth
in this Section 4 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Shareholder under this Agreement. The Shareholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. The Shareholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 302A.449 of the Minnesota Business
Corporation Act.
5. CERTAIN EVENTS. The Shareholder agrees that this Agreement and the
obligations hereunder shall attach to the Shareholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shareholder's Shares shall pass, whether by operation of law or otherwise,
including without limitation the Shareholder's successors or assigns. In the
event of any stock split, stock dividend, merger, reorganization,
recapitalization or other change in the capital structure of Lamcor affecting
the Lamcor Stock, or the acquisition of additional shares of Lamcor Stock or
other voting securities of Lamcor by any Shareholder, the number of
Shareholder's Shares subject to the terms of this Agreement shall be adjusted
appropriately and this Agreement and the obligations hereunder shall attach to
any additional shares of Lamcor Stock or other voting securities of Lamcor
issued to or acquired by the Shareholder.
6. STOP TRACER. Lamcor agrees with, and covenants to, Buyer that Lamcor
shall not register the transfer of any certificate representing any of the
Shareholder's Shares, unless such transfer is made to Buyer or Sub or otherwise
in compliance with this Agreement. The Shareholder agrees that the Shareholder
will tender to Lamcor, within five business days after the date thereof; any and
all certificates representing such Shareholder's Shares and Lamcor will inscribe
upon such certificates the following legend:
"The shares of Common Stock, no par value, of Lamcor,
Incorporated represented by this certificate are subject
to a Shareholder Voting Agreement dated as of
__________, 1996, and may not be sold or otherwise
transferred, except in accordance therewith. Copies of
such Agreement may be obtained at the principal
executive offices of Lamcor, Incorporated."
In the event that this Agreement is terminated in accordance with Section 9
hereof; Lamcor or its legal counsel may cause the foregoing legend to be removed
from such certificates.
7. REGULATORY APPROVALS. Each of the provisions of this Agreement is
subject to compliance with applicable regulatory conditions and receipt of any
required regulatory approvals.
8. FURTHER ASSURANCES. The Shareholder shall, upon request of Buyer,
execute and deliver any additional documents and take such further actions as
may reasonably be deemed by Buyer to be necessary or desirable to carry out the
provisions hereof and to vest the power to vote such Shareholder's Shares as
contemplated by Section 4 in Buyer and the other irrevocable proxies described
therein at the expense of Buyer.
9. TERMINATION. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the first to occur of (x) the Effective
Time of the Merger or (y) the date upon which the Merger Agreement is terminated
in accordance with its terms.
10. MISCELLANEOUS.
(a) Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to them in the Merger Agreement.
(b) All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice): (i) if to Buyer, to the address set forth in
Section 11.8 of the Merger Agreement; and (ii) if to the Shareholder; to its
address shown below its signature on the last page hereof.
(c) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(d) This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement.
(e) This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Minnesota, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior written
consent of the other parties, except as expressly contemplated by Section 3(a).
Any assignment in violation of the foregoing shall be void.
(h) The Shareholder agrees that irreparable damage would occur and that
Buyer would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that Buyer
shall be entitled to an injunction or injunctions to prevent breaches by the
Shareholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Minnesota or in Minnesota state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (i) consents to submit such party to the personal
jurisdiction of any Federal court located in the State of Minnesota or any
Minnesota state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) agrees that such Party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Minnesota or a Minnesota state court.
(i) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in frill force and
effect, shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Shareholder Voting Agreement as of the day and year first above written.
PACKAGING ACQUISITION CORPORATION
By
-------------------------------------
President
LAMCOR, INCORPORATED
By
-------------------------------------
President
SHAREHOLDER:
-----------------------------------------
Name:
-----------------------------------
Address:
--------------------------------
Number of Shares
Beneficially Owned:
---------------------
Exhibit 4.3
Form of Escrow Agreement
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of January __, 1997
by and among PACKAGING ACQUISITION CORPORATION, a Georgia corporation ("Buyer"),
LAMCOR, INCORPORATED ("Lamcor"), DAVID P. STEWART (the "Shareholders'
Representative"), on behalf of the shareholders of Lamcor and the holders of
Lamcor Options and Lamcor Convertible Securities (as such terms are defined in
the Merger Agreement referenced below), and Norwest Bank Minnesota, N.A. (the
"Escrow Agent").
BACKGROUND
A. Contemporaneously with the execution and delivery hereof, Buyer has
acquired Lamcor pursuant to the merger of LI Acquisition Corporation, a wholly
owned subsidiary of Buyer ("Sub"), with and into Lamcor pursuant to the terms of
that certain Agreement and Plan of Merger dated as of September 30, 1996 (the
"Merger Agreement") among Buyer, Lamcor and Sub. Capitalized terms used but not
defined herein shall have the meaning set forth in the Merger Agreement.
B. The Merger Agreement contemplates the establishment of an escrow
fund to satisfy claims by Buyer against Lamcor for (i) the breach or inaccuracy
of any representation or warranty of Lamcor contained in the Merger Agreement,
(ii) the failure of Lamcor to perform any covenant or agreement of Lamcor under
the Merger Agreement and (iii) all Lamcor Expenses in excess of $275,000.00.
C. Pursuant to the Merger Agreement, the shareholders of Lamcor (the
"Shareholders") have appointed the Shareholders' Representative as their
respective agent and attorney-in-fact to execute and deliver this Escrow
Agreement on their behalf and to act for them hereunder. Pursuant to Option
Cancellation and Purchase Agreements between Lamcor and each holder of Lamcor
Options or Lamcor Convertible Securities (together with the Shareholders, the
"Holders"), such holders have appointed the Shareholders' Representative as
their respective agent and attorney-in-fact to execute and deliver this Escrow
Agreement on their behalf and to act for them hereunder.
D. Escrow Agent is willing to accept the escrow fund and to hold and
distribute the escrow fund in accordance with the terms and conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Appointment of Escrow Agent. Lamcor, Buyer and the Shareholders'
Representative hereby designate and appoint Escrow Agent to serve as escrow
agent hereunder, and Escrow Agent hereby confirms its agreement to act as escrow
agent upon the terms, conditions, and provisions of this Agreement.
2. Creation of Escrow Fund. Concurrently with the execution and
delivery of this Agreement, the Exchange Agent has deposited with Escrow Agent
on behalf of the Holders the sum of Two Hundred Thirty One Thousand Eight
Hundred Seventy Eight and 04/100 Dollars ($231,878.04) (the "Escrowed Funds") to
satisfy claims by Buyer against Lamcor for (i) the breach or inaccuracy of any
representation or warranty of Lamcor contained in the Merger Agreement, (ii) the
failure of Lamcor to perform any covenant or agreement of Lamcor under the
Merger Agreement and (iii) all Lamcor Expenses in excess of $275,000.00, subject
to the limitations of Section 11.15 of the Merger Agreement. The Escrowed Funds
shall be invested as set forth in SCHEDULE A. Any investment income earned on
the Escrowed Funds shall be added to and shall become a part of the Escrowed
Funds. The Escrowed Funds are to be held, administered, and paid by Escrow Agent
as provided herein. Escrow Agent acknowledges receipt of the Escrowed Funds and
agrees to hold, administer, and pay the same in accordance with the terms of
this Agreement and not permit any withdrawal thereof except pursuant to the
terms hereof.
3. Claims Against Escrowed Funds. At any time prior to the close of
business on the first anniversary hereof (the "First Anniversary"), the Buyer
may give to Escrow Agent an Indemnification Claim, with a copy being
contemporaneously delivered to the Shareholders' Representative. The
Shareholders' Representative shall have thirty (30) days following receipt of
such Indemnification Claim by the Escrow Agent to give to Escrow Agent a written
objection thereto (the "Objection"), with a copy being contemporaneously
delivered to Buyer. If no Objection is timely given to the Escrow Agent by the
Shareholders' Representative, such Indemnification Claim is an "Uncontested
Claim." If an Objection is timely given to the Escrow Agent by the Shareholders'
Representative, such Claim is a "Contested Claim." The Buyer may withdraw,
either wholly or partially, and either before or after the filing of an
Objection, any Indemnification Claim filed by Buyer hereunder, and the
Shareholders' Representative may withdraw, either wholly or partially, any
Objection timely filed by it hereunder. Any such Withdrawal Notice shall be in
writing and shall be given by the party making such withdrawal to the other
parties hereto.
4. Arbitration.
(a) Any Contested Claim that cannot be resolved by the Buyer and the
Shareholders' Representative within twenty (20) days after Buyer's receipt of an
Objection thereto, shall be submitted to arbitration in accordance with this
Section 4 and such arbitration shall be the sole remedy for such matter. Such
arbitration shall be heard and conducted at a place in the metropolitan
Minneapolis, Minnesota area as may be specified by the arbitrator (or any place
agreed to by Buyer, the Shareholders' Representative and the arbitration panel),
and shall be conducted expeditiously and confidentially in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"), as
such rules shall be in effect on the date of delivery of demand for arbitration,
with the exception that the arbitration panel may not award any punitive or
exemplary damages or any damages other than compensatory, and except as such
rules may be otherwise inconsistent with the express provisions of this Section
4.
(b) To initiate arbitration, either Buyer or the Shareholders'
Representative shall file a written demand for arbitration by filing a written
notice with the AAA and with the other party, complying with the AAA's
prescribed procedures for such notices. Within fifteen (15) days of delivery of
such demand for arbitration, each party shall appoint one arbitrator, and the
arbitrators so selected shall, within fifteen (15) days of their appointment,
appoint an additional arbitrator. In the event that the arbitrators selected by
the parties are unable to agree upon the selection of the additional arbitrator
after reasonable efforts within such fifteen (15) day period, a list of seven
(7) qualified and available persons shall be requested from the AAA. The parties
shall take turns striking one person each from the list with the last remaining
person being the additional selected arbitrator. Once selected, the arbitration
panel shall meet as expeditiously as possible, select a chairman, schedule the
arbitration hearing, and notify the parties in writing of the date, time and
place of the hearing.
(c) All conclusions of law reached by the arbitrators shall be made in
accordance with the internal laws of the State of Georgia without regard for its
conflict of laws doctrine. Any award rendered by the arbitrators shall be
accompanied by a written opinion setting forth the findings of fact and
conclusions of law relied upon in reaching their decision. The award rendered by
the arbitrators shall be final, binding and non-appealable, and judgment upon
such award may be entered by any court having jurisdiction thereof. The parties
agree that the existence, conduct and content of any such arbitration shall be
kept confidential and no party shall disclose to any person any information
about such arbitration, except as may be required by this Agreement, by law or
for financial reporting purposes.
(d) All costs and expenses incurred in connection with any such
arbitration proceeding (including reasonable attorneys fees) shall be borne by
the party against which the decision is rendered, or , if no decision is
rendered, such costs and expenses shall be borne equally by Lamcor as one party
and the Holders as the other party. If the arbitrators' decision is a
compromise, the determination of which party or parties bears the costs and
expenses incurred in connection with any such arbitration proceeding shall be
made by the arbitrators on the basis of the arbitrators' assessment of the
relative merits of the parties' positions.
5. Tentatively Impounded Funds. With respect to each Indemnification
Claim received by Escrow Agent, Escrow Agent shall make a notation on its
records setting aside from the Escrowed Funds the amount asserted by the Buyer
as a Loss (the "Tentatively Impounded Funds"). Upon notification of
determination of the exact amount of the Loss with respect to each
Indemnification Claim (whether by Notice of Release or by Award Notice), the
Tentatively Impounded Funds shall be decreased or increased by the Escrow Agent
as necessary to reflect the difference (if any) between the amount of the Loss
asserted in the Indemnification Claim and the amount of the Loss actually
payable to the Buyer asserting the Indemnification Claim pursuant to Section 6
hereof.
6. Disbursement of Escrowed Funds. Escrow Agent shall pay and disburse
the Escrowed Funds and the Tentatively Impounded Funds as follows:
(a) If the Indemnification Claim is an Uncontested Claim, then
to Buyer in the amount of the Indemnification Claim;
(b) If the Indemnification Claim is a Contested Claim and the
Shareholders' Representative delivers a Withdrawal Notice to Escrow
Agent with respect to such Contested Claim, then to Buyer in the amount
of the Indemnification Claim to which such Objection was withdrawn;
(c) If a Notice of Release is received by the Escrow Agent
with respect to a Contested Claim, then as specified in such Notice of
Release;
(d) If an Award Notice is received by the Escrow Agent with
respect to an Indemnification Claim, then as specified in such Award
Notice;
(e) To the Shareholders' Representative prior to the First
Anniversary in an amount specified in a written notice from Buyer to
the Escrow Agent in accordance with the provisions of Section 11.16(e)
of the Merger Agreement and Section 6(e) of the Option Cancellation
Agreements;
(f) With respect to the excess of the then remaining balance
of the Escrowed Funds over the sum of Tentatively Impounded Funds, as
of the close of business on the First Anniversary, to the Escrow Agent
or Buyer and/or Holders in an amount equal to the amount of the Section
10 Expenses described in a written notice from the Buyer and the
Shareholder's Representative to the Escrow Agent;
(g) With respect to the excess of the then remaining balance
of the Escrowed Funds over the sum of Tentatively Impounded Funds, as
of the close of business on the First Anniversary, to the Shareholders'
Representative in an amount equal to the amount of Representative's
Expenses described in a written notice from the Shareholder's
Representative to the Escrow Agent, less any amount disbursed to the
Escrow Agent pursuant to Section 6(f) above;
(h) To each of the Holders, in Proportionate Shares, following
the First Anniversary in an amount equal to the amount by which the
then remaining balance of the Escrowed Funds exceeds the sum of
Tentatively Impounded Funds, as of the close of business on the First
Anniversary, less any amount disbursed to the Escrow Agent pursuant to
Section 6(f) above and any amount disbursed to the Shareholders'
Representative pursuant to Section 6(g) above; and
(i) To each of the Holders, in Proportionate Shares, and/or
the Buyer as set forth in any Notice of Release or Award Notice
received by Escrow Agent after the First Anniversary.
All disbursements hereunder shall be made by Escrow Agent within three
(3) business days following the events described above. All payments that are to
be made to the Holders hereunder shall be delivered by Escrow Agent to the
Shareholders' Representative, who agrees to promptly distribute any such funds
received by him to the Holders in their respective Proportionate Shares.
7. Escrow Agent's Duties. Escrow Agent shall be obligated to perform
only such duties as are expressly set forth in this Escrow Agreement and the
Schedules hereto, and shall not be required, in carrying out its duties under
this Escrow Agreement, to refer to the Merger Agreement or determine or verify
any party's compliance with the terms of the Merger Agreement. The Escrow Agent
may conclusively rely upon and shall be protected in acting upon any statement,
certificate, notice, request, consent, order or other document believed by it be
genuine and to have been signed or presented by the proper party or parties. The
Escrow Agent shall have no duty or liability to verify any such statement,
certificate, notice, request, consent, order or other document, and its sole
responsibility shall be to act only as expressly set forth in this Agreement.
The Escrow Agent shall be under no obligation to institute or defend any action,
suit or proceeding in connection with this Agreement unless first indemnified to
its satisfaction. The Escrow Agent may consult counsel in respect of any
question arising under this Agreement and the Escrow Agent shall not be liable
for any action taken or omitted in good faith upon advice of such counsel.
8. Remedies of Escrow Agent.
(a) In the event of any disagreement or controversy hereunder, or if
conflicting demands or notices are made upon Escrow Agent, or in the event
Escrow Agent in good faith is in doubt as to what action it should take
hereunder, the parties expressly agree and consent that Escrow Agent shall have
the absolute right, at its option, to do either or both of the following things:
(i) stop all further proceedings in, and performance of, this Agreement and of
all instructions received hereunder; and (ii) file a suit in interpleader and
obtain an order from a court of competent jurisdiction requiring all persons
involved to interplead their several claims and rights among themselves and with
Escrow Agent.
(b) While any interpleader proceeding arising out of or relating to
this Agreement is pending, whether the same be initiated by Escrow Agent or by
others, Escrow Agent shall have the right, at its option, to stop all further
proceedings in, and performance of, this Agreement and instructions received
hereunder until all differences shall have been resolved by agreement or until
the rights of all parties shall have been fully and finally determined by the
interpleader proceedings. The rights of Escrow Agent under this Section 8 are in
addition to all other rights which it may have by law or otherwise.
9. Escrow Agent's Fees and Expenses. The reasonable compensation of
Escrow Agent as set forth in SCHEDULE B hereto shall be paid by Buyer.
10. Indemnification. Buyer and the Holders, jointly and severally,
agree to indemnify, protect and save and hold Escrow Agent and its successors
and assigns harmless from all liabilities, obligations, losses, damages,
penalties, claims, actions, suits, costs and expenses (including reasonable
attorneys' fees) of whatsoever kind or nature imposed on, incurred by or
asserted against Escrow Agent which in any way relate to or arise out of the
execution and delivery of this Agreement or any action taken hereunder;
provided, however, that neither Buyer nor any Holder shall have any such
obligation to indemnify and save and hold Escrow Agent harmless from any
liability incurred by, imposed upon or asserted against Escrow Agent resulting
from the gross negligence or bad faith of Escrow Agent.
11. Resignation by or Termination of Escrow Agent. Escrow Agent may
resign as such by delivering written notice to such effect at least thirty (30)
days prior to the effective date of such resignation to Buyer and the
Shareholders' Representative. Buyer and the Shareholders' Representative, acting
jointly, may terminate Escrow Agent from its position as such by delivering
written notice to Escrow Agent to such effect executed by Buyer and the
Shareholders' Representative at least thirty (30) days prior to the effective
date of such termination (unless such termination is as a result of Escrow
Agent's breach of its obligations hereunder, in which case the effective date of
such termination shall be any date specified in such notice by Buyer and the
Shareholders' Representative). In the event of such resignation by or
termination of Escrow Agent, a successor Escrow Agent shall be appointed by
mutual agreement between Buyer and the Shareholders' Representative, and Escrow
Agent which has been so terminated or has so resigned shall promptly deliver to
the successor Escrow Agent the entire Escrowed Funds (together with copies of
all records pertaining thereto) upon presentation of evidence reasonably
satisfactory to it of the appointment and authorization of such successor Escrow
Agent by Buyer and the Shareholders' Representative. From and after the
appointment of a successor Escrow Agent pursuant to this Section 11, all
references herein to Escrow Agent shall be deemed to be to such successor Escrow
Agent. Should Buyer and the Shareholders' Representative fail to appoint a
successor Escrow Agent within thirty (30) days of the effective date of any
resignation or termination pursuant to this Section 11, then Escrow Agent may
institute suit in a court of competent jurisdiction to have a successor Escrow
Agent appointed.
12. Definitions. As used herein:
(a) "AWARD NOTICE" means a true copy of the award of the
arbitrators entered in any dispute resolved by arbitration pursuant to
Section 4.
(b) "INDEMNIFICATION CLAIM" means a written declaration by the
Buyer stating (i) that the Buyer has a right to assert an Escrow Claim
under the Merger Agreement, (ii) the facts, circumstances or events
giving rise to such Escrow Claim, and (iii) the amount of the asserted
Loss.
(c) "NOTICE OF RELEASE" means a written declaration, executed
by Buyer and the Shareholders' Representative, specifying the
resolution of a Contested Claim and the disposition to be made of the
Escrowed Funds or any portion thereof that was the subject of such
Contested Claim.
(d) "OBJECTION" means a written objection by the Shareholders'
Representative to an Indemnification Claim stating in reasonable detail
the basis for such objection.
(e) "PROPORTIONATE SHARES" means the respective interest of
each Holder in any amount disbursed to the Holders hereunder, which
interest shall be equal to a fraction, the numerator of which shall be
the sum of (i) the number of such Holder's shares of Lamcor Common
Stock converted into and exchanged for the right to receive a cash
payment from Buyer in accordance with Section 3.1(c) of the Merger
Agreement and (ii) the number of shares of Lamcor Common Stock subject
to such Holder's Lamcor Options or Lamcor Convertible Securities
canceled pursuant to Section 3.5 of the Merger Agreement, and the
denominator of which shall be the sum of (i) the aggregate number of
shares of Lamcor Common Stock so converted and exchanged and (ii) the
aggregate number of shares of Lamcor Common Stock subject to Lamcor
Options or Lamcor Convertible Securities so canceled.
(f) "SECTION 10 EXPENSES" means all amounts paid or payable by
Buyer and/or Holders to the Escrow Agent in accordance with Section 10
hereof.
(g) "WITHDRAWAL NOTICE" means an irrevocable written
declaration (x) withdrawing an Indemnification Claim executed by the
Buyer, or (y) withdrawing an Objection executed by the Shareholders'
Representative.
13. General Provisions.
(a) Assignment. Neither this Agreement nor any right or benefit of any
party hereunder may be assigned or transferred by such party without the prior
written consent of all other parties hereto.
(b) Amendment. This Agreement may not be amended or modified without
the prior written consent of all parties.
(c) Waiver. Failure to insist upon strict compliance with any of the
terms or conditions of this Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time; nor shall any waiver or
relinquishment of any right or power granted herein at any time be deemed a
waiver or relinquishment of the same or any other right or power at any other
time.
(d) Governing Law. Notwithstanding the place where this Agreement may
be executed by any of the parties, the parties expressly agree that this
Agreement shall in all respects be governed by, and construed in accordance
with, the laws of the State of Georgia, without regard for its conflict of laws
doctrine.
(e) Notices. Any notice or other communication to be given hereunder
shall be in writing and shall be deemed sufficient when (i) mailed by United
States certified mail, return receipt requested, (ii) mailed by overnight
express mail, (iii) delivered in person or (iv) transmitted by telecopy, at the
address or telecopy number set forth below, or such other address as a party may
provide to the other in accordance with the procedure for notices set forth in
this Section:
If to the Buyer or Lamcor:
Lamcor, Incorporated
Highway 169 North
Le Sueur, Minnesota 56058
Attn: Special Committee of the Board of Directors
Telephone: (612) 665-6658
Telecopy: (612) 665-6390
with a copy (which shall not constitute notice) to:
Alston & Bird
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: Teri L. McMahon, Esq.
Telephone: (404) 881-7266
Telecopy: (404) 881-7777
If to the Shareholders' Representative:
David P. Stewart
4900 First Bank Place
601 Second Avenue South
Minneapolis, Minnesota 55402
Telephone: (612) 341-9395
Telecopy: (612) 341-2835
with a copy (which shall not constitute notice) to:
Gray, Plant, Mooty, Mooty & Bennett, P.A.
3400 City Center
33 South Sixth Street
Minneapolis, Minnesota 55402-3796
Attention: Bruce McPheeters, Esq.
Telephone: (612) 343-2866
Telecopy: (612) 333-0066
If to Escrow Agent:
Norwest Bank Minnesota, N.A.
Norwest Bank Investment Management Trust
6th & Marquette
Minneapolis, Minnesota 55479
Attn: William Bard
Telephone (612) 667-571
Telecopy: (612) 667-5767
(f) Invalid Provision. If any provision of this Agreement shall be
determined to be invalid or unenforceable, this Agreement shall be deemed
amended to delete such provision and the remainder of this Agreement shall be
enforceable by its terms.
(g) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted successors and
assigns.
(h) Further Assurances. Each party agrees to execute and deliver all
such further instruments and do all such further acts as may be reasonably
necessary or appropriate to effectuate this Agreement.
(i) Headings. Headings and captions contained in this Agreement are
inserted only as a matter of convenience and for reference and in no way define,
limit, extend or prescribe the scope of this Agreement or the intent of any
provision.
(j) Person and Gender. The masculine gender shall include the feminine
and neuter genders and the singular shall include the plural.
(k) Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to matters set forth in this Agreement, and
supersedes any prior understanding or agreement, oral or written, with respect
to such matters.
(l) Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party hereto,
whether under any rule of construction or otherwise. No party shall be
considered the draftsman. On the contrary, this Agreement has been reviewed,
negotiated and accepted by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.
(m) Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, and all such
counterparts shall constitute one and the same Agreement, binding on all the
parties notwithstanding that all the parties are not signatories to the same
counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PACKAGING ACQUISITION LAMCOR INCORPORATED
CORPORATION
By:____________________________________ By_________________________________
Name:__________________________________ Name:______________________________
Title:_________________________________ Title:_____________________________
NORWEST BANK MINNESOTA, N.A.,
as Escrow Agent
By:________________________________
Name:______________________________
Title:_____________________________
-----------------------------------
David P. Stewart,
as Shareholders' Representative
-----------------------------------
David P. Stewart,
as attorney-in-fact for the Holders
SCHEDULE A
The Escrowed Funds shall be invested in the Norwest Ready Cash Investment Fund
Institutional Shares (a money market fund).
SCHEDULE B
The fees and expenses of the Escrow Agent include a one-time fee of $3,000.00,
plus reimbursement of reasonable out-of-pocket expenses of the Escrow Agent
incurred in connection with this Agreement and approved in advance by Buyer.
Exhibit 10.1
STOCK OPTION INCENTIVE PLAN
LAMCOR INCORPORATED
1. Purpose
The purpose of this Plan is to further the growth and general
prosperity of Lamcor Incorporated, the Company, by enabling the key employees
and Directors of the Company, who have been or will be given responsibility for
the affairs of the Company, to acquire shares of its common stock under the
terms and conditions and in the manner set forth by this Plan, increasing their
personal involvement in the Company and to enable the Company to obtain and
retain the services of those employees and Directors.
2. Administration
This Plan shall be administered by the Chairman of the Board of
Directors (CB) of the Company, subject to such orders and resolutions not
inconsistent with the provisions of the Plan, the resolutions will from time to
time be issued or adopted by the Board of Directors. The CB shall have full
power and authority to interpret the Plan, although each participant and the
options awarded in the Plan shall be approved by the Board of Directors.
Each option granted will be evidenced by a written agreement (Stock
Option Agreement) and a document containing the terms and conditions of the
Plan.
3. Eligibility and Participation
Employees and Directors eligible to receive options under the Plan
shall be key personnel including officers and members of the Board of Directors.
The CB shall allot to such participants options to purchase shares in such
amount as the Board of Directors shall from time to time determine: provided,
however, that no employee shall be allotted an option for any greater number of
shares than would result in him owning directly or indirectly more than 10% of
the total combined voting power or value of the stock of the Company or any of
its subsidiaries unless the option price is at least the market value of the
stock on the date of the grant, and the option is by its terms not exercisable
after six years from the date of grant.
4. Shares Subject to Plan
Subject to adjustments provided in section 5, an aggregate of up to
700,000 of the authorized and unissued shares of the common stock of the Company
shall be subject to the Plan as of the date the Plan is adopted. The number and
kind of shares shall be appropriately adjusted in the event of stock splits,
reverse stock splits or stock dividends paid or declared with respect to the
stock. If prior to the termination of the Plan, shares issued shall have been
repurchased by the Company pursuant to the Plan, such repurchased shares shall
again become available for issuance under the Plan.
Any shares which, after the effective date of the Plan shall become
subject to valid outstanding options under the Plan may, to the extent of the
release of any such shares from option by termination or expiration of option
without valid exercise be made subject to additional options under the Plan.
5. Adjustments Upon Changes in Capitalization
In the event of a merger, consolidation, reorganization, stock
dividend, stock split, or any other change in corporate structure or
capitalization affecting the Company's common shares, appropriate adjustment
shall be made in the maximum number of shares available under the Plan or to any
one individual and in the number, kind, option, price, etc. of shares subject to
options granted under the Plan.
6. Terms and Conditions of Options
The CB as approved by the Board of Directors shall have power subject
to the limitations contained in the Plan, to prescribe any terms and conditions
in respect to the granting or exercise of any option under the Plan and in
particular shall prescribe the following terms and conditions:
(a) Each option shall state the number of shares to which it
pertains.
(b) Each option shall be granted within ten years of the date the
Plan is adopted.
(c) Each is exercisable only within six years of the date of the
grant.
(d) The purchase price shall be the fair market value of the shares at
such time as the option is granted and shall not be less than the par value of
the shares sold.
(e) An option shall be exercisable with respect to the shares included
on the date after the date of the grant of the option. An option may be
exercised at any time thereafter subject to the provision of 6(f) of the Plan
within a period determined by the date of the grant of up to 6 years from the
date of the grant of the options with respect to all or part of the shares
covered by the option. An option may not be exercised for fractional shares of
stock. Unless with approval of the Board of Directors.
In the event the Company or the stockholders of the Company enter into
an agreement to dispose of all or substantially all of the assets or stock of
the Company by means of a sale, merger, reorganization, liquidation or
otherwise, an option shall become immediately exercisable with respect to the
full number of shares. The shares are subject to option during the period
commencing the date of such agreement and ending when the disposition of assets
or stock contemplated by the agreement is consummated or the agreement
terminates.
(f) No option shall be exercisable by any employee or Director while
there is outstanding any other stock option issued under the Plan by the
Company, which was granted at a prior time, to the employee or Director.
(g) An option shall be exercised when written notice of such exercise
has been given to the Company at its principle business office by the person
entitled to exercise the option and full payment for the shares has been
received by the Company. Until the stock certificates are issued, no right to
vote, receive dividends, or any other rights as a shareholder shall exist with
respect to optioned shares notwithstanding the exercise of the option.
(h) An option may be exercised by the optionee only while he is, and
has continually been, since the date of the grant of the option, an employee or
Director of the Company or within three months following termination of
employment (for reasons other than death or disability).
If the continuous employment of an optionee terminates by reason of his
death such option of the deceased employee as he would be entitled to exercise
as of the date of death may be exercised within one year following the date of
death, but no later than six years after the date of grant of the option by the
person to whom his rights under such option shall have passed by will or by the
laws of descent and distribution.
If the continuous employment of an optionee terminates by reason of
disability, such option as the disabled employee would be entitled to exercise
as of the date of termination of employment must be exercised within one year
following the date of termination, but in no event more than six years after the
date of grant of the option.
7. Options not Transferable
Options under the Plan may not be sold, pledged, assigned or
transferred in any manner other than as provided in paragraph 6 and may be
exercised during the lifetime of an optionee only by the optionee.
8. Amendment or Termination of the Plan
The Board of Directors may amend the Plan from time to time as they may
deem advisable. The Board of Directors may at any time terminate the Plan
provided that any termination of the Plan shall not affect options already
granted. The options shall remain in full force and effect as if the Plan had
not been terminated.
9. Agreement and Representation of Employee
As a condition to the exercise of any option or portion, the Company
may require the person exercising the option to represent and warrant at the
time of any exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute the shares if in the opinion
of counsel for the Company such representation is required under the Securities
Act of 1933, or any other applicable law, regulation or rule of any governmental
agency.
In the event legal counsel to the Company renders an opinion to the
Company that shares for options exercised pursuant to this Plan cannot be issued
to the optionee because such act would violate the applicable Federal or State
securities law, then and in that event, the optionee agrees that the Company
shall not be required to issue the shares to the optionee tendered to the
Company upon exercise of the option.
10. Effectiveness and Termination of the Plan
The Plan shall become effective upon adoption by the Board of Directors
and shall be subject to approval of the stockholders of Lamcor incorporated
within 12 months of adoption. The Plan shall terminate on the earliest of:
(a) the date when all the common shares available under the Plan shall
have been acquired through exercising the options granted under the Plan,
(b) ten years after the date of adoption of the Plan by the Board,
(c) such other date as the Board may determine.
11. Form of Option
Options may be issued by the execution of the Control Products, Inc.
form entitled "Stock Option Agreement."
Lamcor Incorporated
STOCK OPTION AGREEMENT
Lamcor Incorporated hereby grants to_______________________________________ an
option to purchase_______________ an option to purchase__________________shares
of its common stock, at $________ per share in accordance with and
subject to all the terms of the Lamcor Incorporated 1991 Stock Option Incentive
Plan adopted by the resolution of the Board of Directors on______________, 1991.
The Plan, of which the Optionee has received a copy, and the resolutions of
adoption are made a part hereof by reference.
In accepting this option, the Optionee agrees to be bound by all the
terms of the Plan.
Dated
Lamcor Incorporated
by________________________________
Board Chairman
Accepted
_________________________________________
Optionee
STOCK OPTION INCENTIVE PLAN
LAMCOR, INC.
1. Purpose
The purpose of this Plan is to further the growth and general
prosperity of Lamcor, Inc., the Company, by enabling the employees and Directors
of the Company, who have been or will be given responsibility of the affairs of
the Company, to acquire shares of its common stock tinder the terms and
conditions and in the manner set forth by this Plan, increasing their personal
involvement in the Company and to enable the Company to obtain and retain the
services of those employees and Directors.
2. Administration
This Plan shall be administered by the Chief Financial Officer (CEO) of
the Company, subject to such orders and resolutions not inconsistent with the
provisions of the Plan, the resolutions will from time to time be issued or
adopted by the Board of Directors. The CEO shall have full power and authority
to interpret the Plan, although each participant and the options awarded in the
Plan shall be approved by the Board of Directors.
Each option granted will be evidenced by a written agreement (Stock
Option Agreement) and a document containing the terms and conditions of the
Plan.
3. Eligibility and Participation
Employees and Directors eligible to receive options under the Plan
shall be those key personnel including officers and members of the Board of
Directors. The CEO shall allot to such participants options to purchase shares
in such amount as the Board of Directors shall from time to time determine:
provided, however, that no employee shall be allotted an option for any greater
number of shares than would result in him owning directly or indirectly more
than 10% of the total combined voting power or value of the stock of the Company
or any of its subsidiaries unless the option price is at least 85% of the market
value of the stock on the date of the grant, and the option is by its terms not
exercisable after six years from the date of grant.
4. Shares Subject to Plan
Subject to adjustment as provided in section 5, an aggregate of up to
35% of the issued and outstanding shares of the common stock of the Company
shall be subject to the Plan as of the date the Plan is adopted. Such number and
kind of shares shall be appropriately adjusted in the event of stock splits,
reverse stock splits or stock dividends paid or declared with respect to such
stock. If prior to the termination of the Plan, shares issued shall have been
repurchased by the Company pursuant to the Plan, such repurchased shares shall
again become available for issuance under the Plan.
Any shares which, after the effective date of the Plan, shall become
subject to valid outstanding options under the Plan may, to the extent of the
release of any such shares from option by termination or expiration of option
without valid exercise be made subject to additional options under the Plan.
5. Adjustments Upon Changes in Capitalization
In the event of a merger, consolidation, reorganization, stock
dividend, stock split, or any other change in corporate structure or
capitalization affecting the Company's common shares, appropriate adjustment
shall in the maximum number of shares available under the Plan or to any one
individual and in the number, kind, option, price, etc. of shares subject to
options granted under the Plan.
6. Terms and Conditions of Options
The CEO as approved by the Board of Directors shall have power subject
to the limitations contained in the Plan, to prescribe any terms and conditions
in respect to the granting or exercise of any option under the Plan and in
particular shall prescribe the following terms and conditions:
(a) Each option shall state the number of shares to which it pertains.
(b) Each option shall be granted within ten years of the date the Plan
is adopted.
(c) Each is exercisable only within six years of the date of the grant.
(d) The purchase price shall be 85% of the fair market value of the
shares at such time as the option is granted and shall not be less than the par
value of the shares sold.
(e) An option shall be exercisable with respect to the shares included
on the date after the date of the grant of the option. An option may be
exercised at any time thereafter subject to the provision of 6(f) of the Plan
within a period determined by the date of the grant of up to 6 years from the
date of the grant of the options with respect to all or part of the shares
covered by the option. An option may not be exercised for fractional shares of
stock.
In the event the Company or the stockholders of the Company enter into
an agreement to dispose of all or substantially all of the assets or stock of
the Company by means of a sale, merger, reorganization, liquidation or
otherwise, an option shall become immediately exercisable with respect to the
full number of shares. The shares are subject to option during the period
commencing the date of such agreement and ending when the disposition of assets
or stock contemplated by the agreement is consummated or the agreement
terminates.
f) No option shall be exercisable by any employee or Director while
there is outstanding any other stock option issued under the Plan by the
Company, which was granted at a prior time, to the employee or Director.
g) An option shall be exercised when written notice of such exercise
has been given to the Company at its principle business office by the person
entitled to exercise the option and full payment for the shares has been
received by the Company. Until the stock certificates are issued, no right to
vote, receive dividends, or any other rights as a shareholder shall exist with
respect to optioned shares notwithstanding the exercise of the option.
h) An option may be exercised by the optionee only while he is, and has
continually been, since the date of the grant of the option, an employee or
Director of the Company or within three months following termination of
employment (for reasons other than death or disability).
If the continuous employment of an optionee terminates by reason of his
death such option of the deceased employee as he would be entitled to exercise
as of the date of death may be exercised within one year following the date of
death, but no later than six years after the date of grant of the option by the
person to whom his rights under such option shall have passed by will or by the
laws of descent and distribution.
If the continuous employment of an optionee terminates by reason of
disability, such option as the disabled employee would be entitled to exercise
as of the date of termination of employment must be exercised within one year
following the date of termination, but in no event more than six years after the
date of grant of the option.
7. Options not Transferable
Options under the Plan may not be sold, pledged, assigned or
transferred in any manner other than as provided in paragraph 6 and may be
exercised during the lifetime of an optionee only by the optionee.
8. Amendment or Termination of the Plan
The Board of Directors may amend the Plan from time to time as they may
deem advisable. The Board of Directors may at any time terminate the Plan
provided that any such termination of the Plan shall not affect options already
granted. The options shall remain in full force and effect as if the Plan had
not been terminated.
9. Agreement and Representation of Employee
As a condition to the exercise of any option or portion, the Company
may require the person exercising the option to represent and warrant at the
time of any exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute the shares if in the opinion
of counsel for the Company such representation is required under the Securities
Act of 1933, or any other applicable law, regulation or rule of any governmental
agency.
In the event legal counsel to the Company renders an opinion to the
Company that shares for options exercised pursuant to this Plan cannot be issued
to the optionee because such act would violate the applicable Federal or State
securities law, then and in that event, the optionee agrees that the Company
shall not be required to issue the shares to the optionee tendered to the
Company upon exercise of the option.
10. Effectiveness and Termination of the Plan
The Plan shall become effective upon adoption by the Board of Directors
and shall be subject to approval of the stockholders of Lamcor, Inc., within 12
months of adoption. The Plan shall terminate on the earliest of:
(a) the date when all the common shares available under the Plan shall
have been acquired through exercising the options granted under the Plan,
(b) six years after the date of adoption of the Plan by the Board,
(c) such other date as the Board may determine.
11. Form of Option
Options may be issued by the execution of the Lamcor, Inc. form
entitled " Stock Option Agreement."
Exhibit 10.2
Employment Agreement with Toby Jensen
EMPLOYMENT AND
CONFIDENTIALITY AGREEMENT
THIS EMPLOYMENT AND CONFIDENTIALITY AGREEMENT (this "Agreement") is
made September 30, 1996, between LAMCOR, INCORPORATED, a Minnesota corporation
(the "Company"), and TOBY JENSEN, a resident of the State of Minnesota
("Executive").
BACKGROUND
Executive is currently employed by the Company as its President. On the
date of this Agreement and pursuant to that certain Agreement and Plan of Merger
(the "Merger Agreement" dated September 30, 1996 by and among the Company,
Packaging Acquisition Corporation, a Georgia corporation ("Buyer") and LI
Acquisition Corporation, a wholly owned subsidiary of Buyer ("Sub"), Buyer has
agreed to acquire the Company through the merger of Sub with and into the
Company. Upon the effectiveness of the Merger contemplated in the Merger
Agreement (the "Effective Time"), the Company desires to continue the employment
of Executive in the capacities and on the terms and conditions set forth below.
Executive desires to accept employment on the terms and conditions set forth
below.
AGREEMENT
NOW, THEREFORE, for and in consideration of the employment and
continued employment of Executive by the Company, the premises, and the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Definitions. The following terms used herein shall have the
definitions set forth below:
(a) "Affiliate" means any person or entity directly or indirectly
controlling, controlled by, or under common control with another person.
(b) "Area" means the territorial United States and Canada.
(c) "Business" or "Business of the Company" means the business of
flexible packaging, pouch-making, slitting and lamination.
(d) "Cause" means (i) conduct amounting to fraud or dishonesty against
the Company; (ii) Executive's willful misconduct, repeated refusal to follow the
reasonable directions of the Board of Directors of the Company, or knowing
violation of law in the course of performance of the duties of Executive's
employment with the Company, (iii) repeated absences from work without a
reasonable excuse, (iv) repeated intoxication with alcohol or drugs, (v) a
conviction or plea of guilty or NOLO CONTENDERE to a felony or a crime involving
dishonesty against the Company; or (vi) a breach or violation by the Executive
of the terms of this Agreement or any other agreement to which Executive and the
Company are a party.
(e) "Competing Enterprise" means any person or any business
organization of whatever form, engaged directly or indirectly within the Area in
the Business of the Company.
(f) "Disability" means (i) the inability of Executive to perform the
duties of Executive's employment due to physical or emotional incapacity or
illness, where such inability is expected to be of long-continued and indefinite
duration, or (ii) Executive shall be entitled to (x) disability retirement
benefits under the federal Social Security Act or (y) recover benefits under any
long-term disability plan or policy maintained by the Company. In the event of a
dispute, the determination of Disability shall be made reasonably by the Board
of Directors of the Company and shall be supported by advice of a physician
competent in the area to which such Disability relates.
(g) "Effective Date of Termination" means the later of the last day on
which Executive performs any duties of his employment as a full-time employee of
the Company hereunder or the effective date of the termination of Executive's
employment hereunder specified in any notice of termination of such employment
given by the Company as permitted herein.
(h) "Excluded Information" means any data or information that is a
Trade Secret hereunder (i) that has been voluntarily disclosed to the public by
the Company or any Affiliate thereof or has become generally known to the public
(except where such public disclosure has been made by or through Executive or by
a third person or entity with the knowledge of Executive without authorization
by the Company); (ii) that has been independently developed and disclosed by
parties other than Executive or the Company or any Affiliate thereof to
Executive or to the public generally without a breach of any obligation of
confidentiality by any such person running directly or indirectly to the Company
or any Affiliate thereof; or (iii) that otherwise enters the public domain
through lawful means.
(i) "Subsidiary" means any subsidiary of Buyer.
(j) "Trade Secrets" means information which derives economic value,
actual or potential, from not being generally known and not being readily
ascertainable to other persons who can obtain economic value from its disclosure
or use and which is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy or confidentiality. Trade Secrets may
include either technical or non-technical data, including without limitation,
(i) any useful process, machine, chemical formula, composition of matter, or
other device which (A) is new or which Executive has a reasonable basis to
believe may be new, (B) is being used or studied by the Company or any Affiliate
thereof and is not described in a printed patent or in any literature already
published and distributed externally by the Company or any Affiliate thereof,
and (C) is not readily ascertainable from inspection of a product of the Company
or any Affiliate thereof; (ii) any engineering, technical, or product
specifications including those of features used in any current product of the
Company or any Affiliate thereof or to be used, or the use of which is
contemplated, in a future product of the Company or any Affiliate thereof; (iii)
any application, operating system, communication system, or other computer
software (whether in source or object code) and all flow charts, algorithms,
coding sheets, routines, subroutines, compilers, assemblers, design concepts,
test data, documentation, or manuals related thereto, whether or not
copyrighted, patented or patentable, related to or used in the Business of the
Company or any Affiliate thereof; or (iv) information concerning the customers,
suppliers, products, pricing strategies of the Company or any Affiliate thereof,
personnel assignments and policies of the Company, or matters concerning the
financial affairs and management of the Company or any Affiliate thereof;
provided however, that Trade Secrets shall not include any Excluded Information.
2. Terms of Engagement Duties
(a) The Company hereby employs Executive as President of the Company.
In such capacity Executive shall report to the Board of Directors of the
Company, and shall perform such duties and responsibilities relating to the
Business of the Company as may be assigned or delegated to him from time to time
by the Board of Directors of the Company. Executive shall also be elected to
serve as a Senior Vice President of Buyer and shall perform such duties as may
be requested from time to time by the Board of Directors of Buyer. The Executive
shall not be relocated from the Minneapolis, Minnesota area without the prior
consent of Executive.
(b) Executive accepts such employment and agrees to:
(i) devote substantially all of Executive's effort, time,
energy, and skill (reasonable vacations and reasonable absences due to
illness excepted) during regular business hours to the duties of his
employment hereunder;
(ii) faithfully, loyally, and industriously perform such
duties, subject to the supervision of the Board of Directors of the
Company; and
(iii) diligently follow and implement all lawful management
policies and decisions of the Company that are communicated to
Executive.
(c) During the Term of this Agreement, Executive shall not engage
(whether or not during normal business hours) in any other business or
professional activity, whether or not such activity is pursued for gain, profit
or other pecuniary advantage; but this shall not be construed as preventing
Executive from (i) investing his personal assets in businesses which do not
compete with the Business of the Company or any Affiliate thereof in such form
or manner as will not require any services on the part of Executive in the
operation or the affairs of the entities in which such investments are made and
in which his participation is solely that of an investor, or (ii) purchasing
securities in any corporation whose securities are regularly traded on a
national securities exchange, provided that such purchase does not result in
Executive collectively owning beneficially at any time five (5%) percent or more
of the voting securities of any Competing Enterprise or any Affiliate thereof
3. Compensation.
(a) In consideration of the services rendered by Executive pursuant to
this Agreement, the Company shall pay to Executive a base salary of One Hundred
Twenty Thousand Dollars ($120,000) per annum (the "Base Salary"), which Base
Salary will be reviewed periodically and may be increased by the Company from
time to time. The Base Salary shall be paid in accordance with the Company's
standard payroll practices in effect from time to time. Executive shall also be
paid in cash on the date hereof a signing bonus in the amount of Seventy Five
Thousand Dollars ($75,000). All amounts payable to Executive hereunder shall be
subject to such deductions and withholdings as are required by law or by
policies of the Company.
(b) On September 30, 1997, Executive shall become eligible to receive a
cash bonus of up to $75,000 payable by November 15, 1997, based upon performance
criteria to be established by the Board of Directors of the Company. After
September 30, 1997, Executive shall be eligible to participate in an executive
incentive plan to be established by the Company's Board of Directors.
(c) Executive shall also have the right to participate in any medical,
hospitalization, dental, disability income, life or other similar insurance
plans maintained by the Company from time to time to the extent that Executive's
position, tenure, salary, age, health and other qualifications make him eligible
to participate, and such other fringe benefits as are provided to the other
senior management employees of the Company, provided that the Company shall not
be required to adopt or continue any insurance plans or fringe benefit plans.
(d) The Company shall reimburse Executive for all reasonable business
expenses incurred by Executive in connection with the business of the Company
subject to compliance with the expense reimbursement policies established by the
Company and in sufficient detail to comply with Internal Revenue Service
Regulations. Executive shall also be entitled to receive a monthly car allowance
of Four Hundred Dollars ($400.00) for the term of this Agreement.
(e) Except for stock incentive awards which may be granted from time to
time to Executive, the remuneration and benefits set forth in this Section 3
shall be the only compensation payable to Executive with respect to his
employment hereunder, and Executive shall not be entitled to receive any
compensation in addition to that set forth in this Section 3 or under such stock
incentive awards for any services rendered by him in any capacity to the Company
or any Affiliate thereof unless agreed to in writing by the Company or such
Affiliate thereof
4. Term and Termination of this Agreement. The term of employment of
Executive (the "Term") pursuant to this Agreement shall commence on the date
hereof and shall continue for a term of three (3) years from the date hereof
(the "Term").
(a) Executive's employment hereunder shall be terminated during the
Term upon the death or Disability of Executive.
(b) Executive's employment hereunder may be terminated during the Term
by the Company (i) with Cause at any time without notice to Executive, and (ii)
without Cause upon thirty (30) days written notice to Executive, provided that
Executive shall immediately cease the performance of his duties hereunder if the
Company shall so request following the date of such notice. In the event
Executive's employment is terminated without Cause, Executive shall receive,
commencing on the Effective Date of Termination without Cause, an aggregate
amount equal to his Base Salary as severance pay through the Term, payable in
accordance with the Company's standard payroll practices.
(c) Upon termination of Executive's employment hereunder pursuant to
subsection 4(a) or for Cause pursuant to subsection 4(b), or upon voluntary
termination by Executive of Executive's employment hereunder, the Company shall
have no further obligation to Executive or his personal representative with
respect to remuneration due under this Agreement, except for Base Salary earned
but unpaid at the Effective Date of Termination and, in the case of termination
of employment under subsection 4(a), a pro rata portion based on the number of
days of the fiscal year of the Company in which such termination occurred during
which this Agreement was in effect) of the bonus payable under Section 3(b) with
respect to such fiscal year.
(d) If Executive's employment hereunder is terminated during the Term
by the Company without Cause pursuant to subsection 4(b), the Company shall have
no obligation to Employee with respect to renumeration due under this Agreement
or such termination other than (i) Base Salary earned but unpaid at the
Effective Date of Termination, and (ii) a pro rata portion (based on the number
of days of the fiscal year of the Company in which the Effective Date of
Termination occurred during which this Agreement was in effect) of the bonus
payable under Section 3(b) with respect to such fiscal year, and (iii) the
severance pay described in subsection 4(b). Payment pursuant to clause (ii) of
the preceding sentence shall be made when such bonuses are paid to other
executive officers receiving bonus payments with respect to such fiscal year.
(e) Notwithstanding anything to the contrary expressed or implied
herein, the covenants and agreements of Executive in Sections 5 and 6 of this
Agreement shall survive the termination of Executive's employment hereunder.
5. Ownership Non-Disclosure, and Non-Use of Trade Secrets.
(a) Executive acknowledges and agrees that all Trade Secrets, and all
physical embodiments thereof, are confidential to and shall be and remain the
sole and exclusive property of the Company and any Affiliate thereof and that
any Trade Secrets produced by Executive during the period of Executive's
employment by the Company shall be considered "work for hire" as such term is
defined in 17 U.S.C. Section 101, the ownership and copyright of which shall be
vested solely in the Company. Executive agrees (i) immediately to disclose to
the Company all Trade Secrets developed in whole or part by Executive during the
Term of Executive's employment by the Company, and (ii) at the request and
expense of the Company, to do all things and sign all documents or instruments
reasonably necessary in the opinion of the Company to eliminate any ambiguity as
to the rights of the Company in such Trade Secrets including, without
limitation, providing to the Company Executive's full cooperation in any
litigation or other proceeding to establish, protect, or obtain such rights.
Upon request by the Company, and in any event upon termination of Executive's
employment by the Company for any reason, Executive shall promptly deliver to
the Company all property belonging to the Company or any of its Affiliates,
including, without limitation, all Trade Secrets (and all embodiments thereof)
then in Executive's custody, control, or possession.
(b) Executive agrees that all Trade Secrets of the Company or any
Affiliate thereof received or developed by Executive as a result of Executive's
employment with the Company will be held in trust and strictest confidence, that
Executive will protect such Trade Secrets from disclosure, and that Executive
will make no use of such Trade Secrets, except in connection with Executive's
employment hereunder, without the Company's prior written consent. The
obligations of confidentiality contained in this Agreement will apply during
Executive's employment by the Company and (i) with respect to all Trade Secrets
consisting of scientific or technical data, at any and all times after
expiration or termination (for whatever reason) of such employment; and (ii)
with respect to all other Trade Secrets, for a period of five (5) years after
such expiration or termination, unless a longer period of protection is provided
by law.
6. Non-Compete: Non-Solicitation Covenants.
(a) In consideration of the amounts to be paid to Executive hereunder,
Executive covenants that Executive shall, during the Term of this Agreement, and
for two (2) years following the termination or expiration of the Term of this
Agreement or Executive's employment hereunder, observe the following separate
and independent covenants:
(i) Neither Executive nor any Affiliate will, without the
prior written consent of the Company, within the Area, either directly
or indirectly, (A) become financially interested in a Competing
Enterprise (other than as a holder of less than five percent (5%) of
the outstanding voting securities of any entity whose voting securities
are listed on a national securities exchange or quoted by the National
Association of Securities Dealers, Inc. National Market System), or,
(B) engage in or be employed by any Competing Enterprise as a
consultant, officer, director, or executive or managerial employee.
(ii) Neither Executive nor any Affiliate will, without the
prior written consent of the Company, either directly or indirectly, on
Executive's own behalf or in the service or on behalf of others,
solicit, divert, or appropriate, or attempt to solicit, divert, or
appropriate, to any Competing Enterprise within the Area, any person or
entity that was a customer of the Company during the Term of this
Agreement.
(iii) Neither Executive nor any Affiliate will, without the
Company's prior written consent, either directly or indirectly, on
Executive's own behalf or in the service or on behalf of others,
solicit, divert, or hire away, or attempt to solicit, divert, or hire
away, to any Competing Enterprise, any person employed by the Company
or one of its Affiliates, whether or not such employee is a full-time
or a temporary employee of the Company or such Affiliate and whether or
not such employment is pursuant to written agreement and whether or not
such employment is at will.
7. Remedies. Executive acknowledges and agrees that the Company is
engaged in the Business of the Company in and throughout the Area, that by
virtue of the training, duties, and responsibilities attendant with Executive's
employment by the Company and the special knowledge of the Business and
operations of the Company that Executive will have as a consequence of
Executive's employment by the Company, great loss and irreparable damage would
be suffered by the Company if Executive should breach or violate any of the
terms or provisions of the covenants and agreements set forth herein, and that
by virtue of Executive' 5 senior management position with the Company Executive
has been and will be throughout the Term of this Agreement directly and
indirectly involved in servicing the accounts of the Company's customer.
Executive further acknowledges and agrees that each such covenant and agreement
is reasonably necessary to protect and preserve the interest of the Company.
Therefore, in addition to all the remedies provided at law or in equity,
Executive agrees and consents that the Company shall be entitled to a temporary
restraining order and a permanent injunction to prevent a breach or threatened
breach of any of the covenants or agreements of Executive contained herein. The
existence of any claim, demand, action or cause of action of Executive against
the Company shall not constitute a defense to the enforcement by the Company of
any of the covenants or agreements herein whether predicated upon this Agreement
or otherwise, and shall not constitute a defense to the enforcement by the
Company of any of its rights hereunder.
8. General Provisions.
(a) In the event that any one or more of the provisions, or parts of
any provisions, contained in the Agreement shall for any reason be held to be
invalid, illegal, or unenforceable in any respect by a court of competent
jurisdiction, the same shall not invalidate or otherwise affect any other
provision hereof; and this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
Specifically, but without limiting the foregoing in any way, each of the
covenants of the parties to this Agreement contained herein shall be deemed and
shall be construed as a separate and independent covenant and should any part or
provision of any of such covenants be held or declared invalid by any court of
competent jurisdiction, such invalidity shall in no way render invalid or
unenforceable any other part or provision thereof or any other covenant of the
parties not held or declared invalid.
(b) This Agreement and the rights and obligations of the Company
hereunder may be assigned by the Company to any Subsidiary or to any successor
to the Company, and shall inure to the benefit of; shall be binding upon, and
shall be enforceable by any such assignee, provided that any such assignee shall
agree to assume and be bound by this Agreement. This Agreement and the rights
and obligations of Executive hereunder may not be assigned by Executive.
(c) The waiver by the Company of any breach of this Agreement by
Executive shall not be effective unless in writing, and no such waiver shall
operate or be construed as a waiver of the same or another breach on a
subsequent occasion.
(d) This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of Georgia.
(e) This Agreement embodies the entire agreement of the parties
relating to the employment of Executive by the Company. No amendment or
modification of this Agreement shall be valid or binding upon the Company or
Executive unless made in writing and signed by the parties. All prior
understandings and agreements relating to the employment of Executive by the
Company are hereby expressly terminated. In the event the Effective Time does
not occur, this Agreement shall be null and void and of no force and effect.
(f) Any notice, request, demand, or other communication required to be
given hereunder shall be made in writing and shall be deemed to have been fully
given if personally delivered or if mailed by overnight delivery (the date on
which such notice, request, demand, or other communication is received shall be
the date of delivery) to the parties at the following addresses (or at such
other addresses as shall be given in writing by any party to the other party
hereto):
If to Executive:
Toby Jensen
10646 First Timberlane Drive
Northfield, Minnesota 55057
Telephone: (507) 663-1663
If to Company:
Lamcor, Incorporated
P.O. Box 70
Highway 169 North
Le Sueur, Minnesota 56058
Telephone: (507) 665-6658
Telecopy: (507) 665-2870
with copies (which shall not constitute notice) to:
Packaging Acquisition Corporation
1633 Mt. Vernon Road
Dunwoody, Georgia 30338
Attn: William C. Beddingfield
Telephone: (770) 604-9000
Telecopy: (770) 604-9077
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: Teri L. McMahon
Telephone: (404) 881-7266
Telecopy: (404) 881-7777
(g) This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, and it shall not be necessary for the
same counterpart of this agreement to be signed by all of the undersigned in
order for the agreements set forth herein to be binding upon all of the
undersigned in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company and Executive have each executed and
delivered this Agreement as of the date first above written.
COMPANY:
LAMCOR, INCORPORATED
By:______________________________________
Name:____________________________________
Title:___________________________________
EXECUTIVE:
____________________________________(SEAL)
Toby Jensen
Exhibit 10.3
Noncompetition Agreement and Confidentiality
Agreement with Leo Lund
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT
THIS NONCOMPETITION AND CONFIDENTIALITY AGREEMENT (this "Agreement") is
made and entered into as of September 30, 1996 by and between LAMCOR,
INCORPORATED, a Minnesota corporation (the "Company") and LEO LUND (the
"Seller").
BACKGROUND
A. Pursuant to that certain Agreement and Plan of Merger (the "Merger
Agreement") dated September 30, 1996 by and among the Company, Packaging
Acquisition Corporation, a Georgia corporation ("Buyer"), and LI Acquisition
Corporation, a wholly owned subsidiary of Buyer ("Sub"), Buyer has agreed to
acquire the Company through the merger of Sub with and into the Company.
B. Prior to the consummation of the transactions contemplated by the
Merger Agreement, the Seller was a shareholder of the Company.
C. The Seller will receive substantial consideration for the
transactions contemplated by the Merger Agreement.
D. The Company is engaged in the business of flexible packaging
pouch-making, slitting and lamination (the "Business") throughout the
territorial United States and Canada (the "Territory").
E. The Seller has acquired intimate knowledge of the Business, which,
if exploited by the Seller in contravention of this Agreement, would seriously,
adversely and irreparably affect the ability of Buyer to derive benefit from its
acquisition of the Company and for the Company to continue to operate the
Business.
F. The Merger Agreement requires the Seller to enter into this
Agreement with the Company as a condition precedent to the consummation of the
transactions contemplated by the Merger Agreement, and Buyer would be unwilling
to consummate the transactions contemplated by the Merger Agreement without this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises contained
herein and in the Merger Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
CASH PAYMENT TO SELLER
In consideration of the covenants of the Seller contained herein, the
Company agrees to pay to the Seller on the date hereof in cash the sum of Fifty
Eight Thousand Four Hundred Dollars ($58,400), payable on January 3, 1997.
ARTICLE II
CONFIDENTIALITY
2.1 Definitions. As used in this Article 2, the term "Confidential
Information" shall mean any and all information regarding the organization,
business or finances of the Company, including, without limitation, any and all
business plans and strategies, financial information, proposals, reports,
marketing plans and information, cost information, customer information, sales
volume and other sales statistics, personnel data, pricing information, concepts
and ideas, information respecting existing and proposed investments and
acquisitions, and information regarding providers and suppliers, but the term
"Confidential Information" shall not include information which prior to receipt
thereof by the Seller (i) was generally publicly available, or (ii) was in the
possession of the Seller free of any restrictions on its use or disclosure and
from a source other than the Company or any of its affiliates.
2.2 Non-Disclosure. Seller covenants and agrees that he will not use or
disclose any of the Confidential Information for any reason or purpose
whatsoever, except that Seller may disclose Confidential Information to
authorized representatives of the Company or as directed or authorized by the
Company or use such Confidential Information so long as such disclosure and use
is in connection with the proper and lawful performance of his services to the
Company.
2.3 Records of the Company. The Seller shall not remove any records,
documents or any other tangible items (excluding items of personal property
owned by the Seller) from the premises of the Company, in either original or
duplicate form, except as needed in the ordinary course of performing services
to the Company. Upon the request of the Company, the Seller shall promptly
deliver to the Company or destroy any such records, documents or other tangible
items removed from the premises of the Company by the Seller or his
representatives.
ARTICLE III
COVENANT NOT TO COMPETE
The Seller covenants and agrees that, for a period of two (2) years
after the date of this Agreement, the Seller shall not, for himself or in
conjunction with any person, firm or corporation, engage in, acquire, establish
or own any financial, beneficial or other interest in any entity engaged in a
Restricted Business (as hereinafter defined) within any part of the Territory,
or be employed by or render any managerial, marketing or other advice within any
part of the Territory for or in connection with a Restricted Business, other
than for the Company; provided, however, that the foregoing shall not prohibit
the Seller from owning less than five percent (5%) of any class of securities of
a publicly held corporation. As used in this Agreement, the term "Restricted
Business" shall mean any person or entity that is engaged, directly or
indirectly, in any business or enterprise which is like the Business.
ARTICLE IV
NONSOLICITATION OF CUSTOMERS
The Seller covenants and agrees that, for a period of two (2) years
after the date of this Agreement, the Seller shall not, for his own benefit or
the benefit of others, other than for the Company, solicit or induce, or attempt
to solicit or induce, any Restricted Business Customer (as hereinafter defined)
to purchase from a Restricted Business goods or services like or similar to the
goods and services manufactured or performed by the Company. As used in this
Agreement, the term "Restricted Business Customer" means any person or entity
located in the Territory to whom the Company has sold, or attempted to sell,
within the three (3) year period preceding the date hereof; products or services
manufactured or performed by the Company.
ARTICLE V
NONSOLICITATION OF EMPLOYEES
The Seller covenants and agrees that, for a period of two (2) years
after the date of this Agreement, he will not solicit or induce, or attempt to
solicit or induce, any employee of the Company to terminate his or her
employment with the Company, whether or not such employment is for a specified
term or is at will, and whether or not such employment is pursuant to an oral or
written agreement.
ARTICLE VI
REASONABLENESS; INJUNCTIVE RELIEF
The restrictions contained in this Agreement arise out of the
acquisition by Buyer of the Company, and are made and given to protect and
preserve unto Buyer the benefit of its acquisition thereof and the good will of
the business associated therewith. The Seller acknowledges and agrees that he
has entered into this Agreement in consideration of Buyer's entering into the
Merger Agreement. The Seller further acknowledges and agrees that such
restrictions are fair and reasonable, that such restrictions are necessary to
protect and preserve unto Buyer the benefit of its bargain in the acquisition of
the Company, and that such restrictions are necessary for the protection of the
legitimate business interests of the Company. Each of the restrictive covenants
contained in this Agreement are independent of each other and of any other
provision of this Agreement, and the existence of a claim which the Seller may
have against the Company, whether based on this Agreement or otherwise, will not
prevent the enforcement of any of these restrictive covenants. The Seller agrees
that the Company's remedies at law for any breach or threat of breach by the
Seller of the provisions of this Agreement, or any part hereof; will be
inadequate, and that the Company shall be entitled to an injunction or
injunctions to prevent a breach or threatened breach of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof. The
Company agrees that injunctive relief shall be the sole and exclusive remedy for
Seller's breach of any of the restrictive covenants contained herein. The length
of time for which these restrictive covenants shall be in force shall be
extended by any period of violation or any other period required for litigation
during which the Company seeks to enforce these covenants. Should any provision
of these covenants be held invalid, illegal or unenforceable, in whole or in
part, the validity, legality or enforceability of the remaining part of such
provision, and the validity, legality and enforceability of the other provisions
hereof; shall not be affected thereby. If any invalidity shall be caused by the
length of any period of time, the size of any area, or the scope of activities
set forth in any provision hereof; such period of time, such area, such scope or
all of such factors, shall be considered to be reduced to a period, area or
scope which would cure such invalidity. Any provision of this Agreement which is
held invalid, illegal or unenforceable in any jurisdiction shall not be deemed
invalid, illegal or unenforceable in any other jurisdiction.
ARTICLE VII
MISCELLANEOUS
7.1 Assignment. This Agreement and the rights and obligations of the
Company hereunder may be assigned by the Company and shall inure to the benefit
of; shall be binding upon and shall be enforceable by any such assignee,
provided that any such assignee shall agree to assume and be bound by this
Agreement. This Agreement and the rights and obligations of the Seller hereunder
may not be assigned or delegated by the Seller without the prior written consent
of the Company, and any such assignment without consent shall be deemed to be
void and of no effect. The Company and the Seller acknowledge and agree that
Buyer is intended to be a third party beneficiary under this Agreement. Subject
to the foregoing, this Agreement shall be binding upon the parties hereto and
shall inure to the benefit of the parties hereto, Buyer and their respective
successors and assigns, and no other person shall have any right, benefit or
obligation hereunder.
7.2 Notices Agents. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to the
others shall be in writing and delivered in person or by courier (effective when
delivered), telegraphed, telexed or by facsimile transmission (effective when
received) or mailed by certified mail, postage prepaid, return receipt requested
(such mailed notice to be effective on the date such receipt is acknowledged),
as follows:
If to Seller: Leo Lund
8900 Penn Avenue South, Suite 101
Bloomington, Minnesota 55431-2099
Telephone: (612) 881-3000
Telecopier: (612) 8814902
With a copy (which Gray, Plant, Mooty, Mooty & Bennett, P.A.
shall not constitute 3400 City Center
notice) to: 33 South Sixth Street
Minneapolis, Minnesota 55402-3796
Attn: Bruce B. McPheeters, Esq.
Telephone: (612) 343-2866
Telecopier: (612) 333-0066
If to the Company: Lamcor, Incorporated
P.O. Box 70
Highway 169 North
LeSueur, Minnesota 56058
Attn: Toby Jensen
Telephone: (507) 665-6658
Telecopier: (507) 665-2870
With copies (which Packaging Acquisition Corporation
shall not constitute 1633 Mount Vernon Road
notice) to: Dunwoody, Georgia 30338
Attn: William C. Beddingfield
Telephone: (770) 604-9000
Telecopier: (770) 604-9077
and
Alston & Bird
1201 West Peachtree Street
Atlanta, Georgia 30309
Attn: Teri L. McMahon, Esq.
Telephone: (404) 881-7266
Telecopier: (404) 881-7777
in any manner other than by facsimile transmission, such party shall also give a
notice by facsimile transmission.
7.3 Choice of Law. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State of
Georgia applicable to contracts made and wholly performed within such state,
except with respect to matters of law concerning the internal corporate or trust
affairs of any corporate or trust entity which is a party to or subject of this
Agreement, as to those matters of law of the jurisdiction under which the
respective entity derives its powers shall govern.
7.4 Entire Agreement; Amendments and Waivers. This Agreement
constitutes the entire agreement among the parties and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties provided, however, that the Company acknowledges that it
continues to owe Seller Thirty Six Thousand Five Hundred Dollars ($36,500.00)
for accrued but unpaid salary as of August 31, 1996. No supplement, modification
or waiver of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a waiver of waiver
unless otherwise expressly provided. The Company, on the one hand, and the
Seller, on the other hand, may by written instrument only (a) waive compliance
with any of the covenants of the other party contained in this Agreement and (b)
waive the other party's performance of any of the obligations set out in this
Agreement. In the event the Merger is not consummated, this Agreement shall be
null and void and of no force and effect, and no payment as described in Article
I shall be due and owing.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.6 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
7.7 Construction. The provisions of this Agreement have been carefully
negotiated and bargained for between the parties hereto, and the fact that one
party may have taken the lead in drafting this Agreement shall not cause any
supposed ambiguities or other defects in any provisions hereof to be construed
against the drafting party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LAMCOR, INCORPORATED
By:___________________________________
Name:_________________________________
Title:________________________________
--------------------------------------
Leo Lund
Exhibit 10.4
Form of Option Cancellation Agreement
OPTION CANCELLATION AGREEMENT
This Option Cancellation Agreement (the "Agreement") is entered into as
of , 1996, between Lamcor, Incorporated, a Minnesota corporation ("Lamcor"), and
, a resident of the State of ("Option Holder").
RECITALS
A. As of the date hereof; Option Holder holds options (collectively,
the "Lamcor Options") for the purchase of shares of the common stock of Lamcor,
no par value per share ("Lamcor Common Stock"), at an exercise price per share
stated in Schedule A hereto.
B. The Lamcor Options are evidenced by those certain stock option
agreements dated _________________________ and ______________________________ ,
respectively, all of which are attached hereto as Exhibit A (each such
agreement, an "Option Agreement").
C. Lamcor, Packaging Acquisition Corporation ("Buyer") and LI
Acquisition Corporation, a wholly owned subsidiary of Buyer ("Sub"), have
entered into an Agreement and Plan of Merger dated September ___, 1996 (the
"Merger Agreement"), pursuant to which at the "Effective Time" (as defined in
the Merger Agreement) Sub will merge with and into Lamcor and Lamcor, as the
surviving corporation, will become a wholly owned subsidiary of Buyer (the
"Merger"). Capitalized terms used herein and undefined shall have the meaning
given such terms in the Merger Agreement.
D. Pursuant to the terms of the Merger Agreement, promptly after the
Effective Time each shareholder of Lamcor ("Shareholder") will receive $4.12 per
share of Lamcor Common Stock, less $0.12 per share to be held in escrow for one
year following the closing of the Merger (the "Closing").
E. As a condition to the Closing, at the Effective Time each option or
warrant to purchase shares of Lamcor capital stock will be canceled in exchange
for a cash payment to the holder of each such option, including the Option
Holder (collectively, the "Holders").
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, the parties hereby agree
as follows:
1. Determination of the Number of Lamcor Options Canceled. The Option
Holder represents and warrants that the number of Lamcor Options stated in
Schedule A are the only options or rights for the purchase of Lamcor capital
stock held or exercisable by the Option Holder as of the date hereof; and that
no such options or rights have been sold, transferred, assigned, hypothecated or
otherwise disposed of by the Option Holder prior to the date hereof. The number
of Lamcor Options to be surrendered, canceled and terminated pursuant to Section
2 of this Agreement shall be all Lamcor Options outstanding and in effect as of
the Effective Time (whether or not exercisable). This Agreement does not expand
or extend the rights of the Option Holder. If the Option Holder's employment
with Lamcor is terminated or the Option Holder dies or becomes disabled prior to
the Closing, the rights of the Option Holder or his estate will be as provided
in the applicable Option Agreements, subject to surrender, cancellation and
termination thereof pursuant to Section 2 of this Agreement if the Lamcor
Options to which such rights relate are outstanding at the Effective Time.
2. Cancellation of Lamcor Options Release. At the Effective Time (and
without any further action by the parties hereto), all of the Lamcor Options,
the Option Agreements and all rights of the Option Holder thereunder or with
respect thereto shall be automatically surrendered, canceled and terminated in
consideration for the Cash Payment (as defined in Section 3 below). The Option
Holder hereby releases and discharges Lamcor and Buyer and their respective
parents, subsidiaries or affiliate corporations and each officer, director,
agent, attorney and employee of the foregoing from and in respect of all claims,
demands, remedies, actions, causes of action, rights of action, damages or other
liabilities, known or unknown and whether or not asserted or accrued, in any way
relating to, based upon or arising out of the Lamcor Options, the Option
Agreements and all rights of the Option Holder arising thereunder or with
respect thereto. Upon receipt of the Cash Payment at the Closing, the Option
Holder shall deliver to Buyer all executed original Option Agreements marked
"Canceled." In the event that the Option Holder is unable to locate all executed
original Option Agreements, Option Holder agrees to execute at Lamcor's request
an appropriate affidavit to the effect that such executed originals have been
misplaced and that neither such executed originals nor any interest therein have
been sold, transferred, assigned, hypothecated or otherwise disposed of prior to
the loss thereof. The Option Holder's agreement to cancel the Lamcor Options in
exchange for the Cash Payment is irrevocable, subject only to Section 8 below.
3. Cash Payment. In consideration for the cancellation of the Lamcor
Options, Lamcor will pay to the Option Holder at the Closing for each Lamcor
Option an amount in cash (the "Cash Payment") equal to the product of (a) the
difference (if positive) between $4.12 and the price at which the Option Holder
could purchase each share of Lamcor Common Stock to which such Lamcor Option
relates, multiplied by (b) the number of shares of Lamcor Common Stock subject
to such Lamcor Option as if such Lamcor Option was then fully exercisable, less
(y) the product of $0.12 multiplied by the number of shares referenced in clause
(b) above, and less (z) any taxes required to be withheld pursuant to Section 4
below.
4. Tax Withholding. Lamcor may deduct and withhold from the Cash
Payment the amount of any taxes required to be withheld pursuant to applicable
federal, state and local laws. To the extent that amounts are so withheld by
Lamcor, such withheld amounts shall be treated for the purposes of this
Agreement as having been paid to the Option Holder.
5. Escrow Arrangements. Lamcor shall cause to be delivered to the
Escrow Agent at the Effective Time on behalf of the Option Holder and all other
Holders an amount equal to (a) $0.12 multiplied by (b) the number of shares of
Lamcor capital stock subject to such options or warrants (together with funds
delivered to the Escrow Agent on behalf of the Shareholders, the "Escrowed
Funds"). The term "Escrow Claim" means any and all claims, individually or in
the aggregate, made by Buyer within one year after the Effective Time for the
purpose of compensating Buyer for Losses resulting from (x) the breach or
inaccuracy of any representation or warranty of Lamcor contained in the Merger
Agreement, (y) the failure of Lamcor to perform any covenant or agreement of
Lamcor under the Merger Agreement, and (z) all Lamcor Expenses in excess of
$275,000; provided, however, that Buyer shall not be entitled to assert a claim
against the Escrowed Funds for breaches of representations and warranties
pursuant to the preceding clause (x) if Buyer had actual knowledge of the breach
at the Effective Time; provided further, that Buyer shall not be entitled to
assert an Escrow Claim against the Escrowed Funds unless each such Escrow Claim
is in excess of $1,000.00. An Escrow Claim shall be satisfied or liquidated only
from the Escrowed Funds in accordance with the terms and conditions of the
Escrow Agreement; provided, however, that Buyer shall not be entitled to receive
any of the Escrowed Funds unless (i) the Surviving Corporation is not in breach
in any Material respect of any of its covenants or agreements arising after the
Effective Time and (ii) the aggregate amount of all Escrow Claims arising out of
clauses (x) and (y) of the preceding sentence exceeds $50,000. Once such $50,000
threshold has been reached, Buyer shall be entitled to full payment for all
Escrow Claims arising out of such clauses (x) and (y) out of the Escrowed Funds
as if no such limitation on payment had existed, provided that the conditions of
clause (i) of the preceding sentence is satisfied at the time of payment. Buyer
shall pay all fees and expenses in connection with the escrow and the Escrowed
Funds, without reimbursement therefor to Buyer from the Escrowed Funds.
Notwithstanding the foregoing, any amount of Lamcor Expenses in excess of
$275,000 shall be paid to Buyer out of the Escrowed Funds, to the extent
thereof; without regard to such $50,000 threshold.
6. Holders' Representative.
(a) The Option Holder irrevocably makes, constitutes and appoints David
P. Stewart as its agent (the "Holders' Representative") and authorizes and
empowers him to fulfill the role of Holders' Representative hereunder and under
the Escrow Agreement. In the event of the resignation of the Holders'
Representative, the resigning Holders' Representative shall appoint a successor
from among the Holders and who shall agree in writing to accept such
appointment. If the Holders' Representative should die or become incapacitated,
his successor shall be appointed within 15 days of his death or incapacity by a
majority of the Shareholders pursuant to Section 11.16 of the Merger Agreement.
The choice of a successor Holders' Representative appointed in any manner
permitted above shall be final and binding upon all of the Holders. The
decisions and actions of any successor Holders' Representative shall be, for all
purposes, those of a Holders' Representative as if originally named herein.
(b) Each Holder other than the Option Holder has made, constituted and
appointed and by the execution of this Agreement the Option Holder hereby
irrevocably makes, constitutes and appoints the Holders' Representative as such
person's true and lawful attorney in fact and agent, for such person and in such
person's name, place and stead for all purposes necessary or desirable in order
for the Holders' Representative to take the actions contemplated by this
Agreement and the Escrow Agreement on behalf of the Option Holder, with the
ability to execute and deliver all instruments, certificates and other documents
of every kind incident to the foregoing to all intents and purposes and with the
same effect as the Option Holder could do personally, and the Option Holder
hereby ratifies and confirms as his, her or its own act, all that the Holders'
Representative shall do or cause to be done pursuant to the provisions hereof.
(c) The death or incapacity of the Option Holder shall not terminate
the authority and agency of the Holders' Representative.
(d) Buyer shall be entitled to rely exclusively upon any communication
given or other action taken by the Holders' Representative pursuant hereto and
shall not be liable for any action taken or not taken in reliance upon the
Holders' Representative. Buyer shall not be obligated to inquire as to the
authority of the Holders' Representative to take any action that the Holders'
Representative takes or purports to take on behalf of the Option Holder.
(e) The Option Holder agrees to indemnify the Holders' Representative
and to hold him or her harmless against any and all loss, liability or expense
incurred without bad faith on the part of the Holders' Representative and
arising out of or in connection with his or her duties as Holders'
Representative, including the reasonable costs and expenses incurred by the
Holders' Representative in defending against any claim or liability in
connection herewith (the "Representative's Expenses"), and authorize the
Holder's Representative to receive following the first anniversary of the
Effective Date a portion of the amount by which the then remaining balance of
the Escrowed Funds exceeds the sum of the Tentatively Impounded Funds (as
defined in the Escrow Agreement) equal to the Representative's Expenses in
accordance with Section 6(f) of the Escrow Agreement; provided, however, that
Buyer shall pay all reasonable Representative's Expenses incurred by the
Holders' Representative and its counsel in defending against any Escrow Claim in
the event that the Holders' Representative prevails in such defense, and the
Holder authorizes a maximum amount equal to the lesser of (i) Five Thousand
Dollars ($5,000.00), or (ii) the actual amount of the reasonable
Representative's Expenses incurred by the Holders' Representative and its
counsel in carrying out the provisions of Section 11.16(e) of the Merger
Agreement and this Section 6(e) (as evidenced by a written notice from the
Holders' Representative to Buyer setting forth the actual amount and a
description of such Representative's Expenses), to be remitted prior to the
first anniversary of the Effective Date to the Holders' Representative out of
the Escrowed Funds upon the Escrow Agent's receipt of written notice from Buyer
stating the amount to be so remitted.
7. Prohibition on Transfer. Except as contemplated herein, the Option
Holder agrees not to sell, transfer, assign, hypothecate or otherwise dispose of
any of the Lamcor Options, the Option Agreements or any rights of the Option
Holder thereunder or with respect thereto.
8. All Obligations Contingent upon Closing. All of the rights and
obligations of the parties to this Agreement are subject to the Closing. If the
Merger Agreement is terminated for any reason, the Lamcor Options shall remain
in effect pursuant to their respective terms, this Agreement shall terminate and
no party hereto shall have any liability to any other party under this
Agreement.
9. General. This Agreement shall be governed by the laws of the State
of Minnesota. This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof and may be amended only in writing
signed by the parties hereto. This Agreement may be signed in multiple
counterparts, each of which shall constitute an original and all of which shall
constitute one and the same Agreement, and shall be binding upon and inure to
the benefit of the parties and their respective heirs, successors, assigns and
personal representatives.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the latest date indicated below.
LAMCOR, INCORPORATED: OPTION HOLDER:
By:_________________________________ Signature:_____________________________
Its:________________________________ Name:__________________________________
Date:_______________________________ Date:__________________________________
SCHEDULE A
# of Shares of
Issuable upon
Exercise of Option
Name of Date of Option Lamcor Expiration Exercise Price
Option Holder Agreement Options Date ($/Share)
- ------------- --------- ------- ---- ---------
Exhibit 10.5
PROMISSORY NOTE
Borrower: Lamcor, Incorporated Lender: First Farmers &
P.O. Box 70 Merchants National Bank
Le Sueur, MN 56058 112 South Main Street
Le Sueur, MN 56058
Principal Amount: $ Initial Rate: Date of Note:
PROMISE TO PAY. Lamcor, Incorporated ("Borrower") promises to pay First Farmers
& Merchants National Bank ("Lender"), or order, in lawful money of the United
States of America, the principal amount of _____________ & 00/100 Dollars
($____________.00) together with Interest on the unpaid principal balance from
___________, until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan on demand, or if no demand is made, in ___ payments
of $_________ each payment. Borrower's first payment is due ___________, and all
subsequent payments are due on the same day of each month after that. Borrower's
final payment will be due on ___________, and will be for all principal and all
accrued Interest not yet paid. Payments include principal and Interest. Interest
on this Note is computed on a 365/365 simple interest basis; that is, by
applying the ratio of the annual interest rate over the number of days in a
year, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount of any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject of change from
time to time based on changes in an index which is the First Farmers & Merchants
National Bank Inter Rate (the "Index"). The Index is not necessarily the lower
rate charged by Lender on its loans and is set by Lender in its sole discretion.
If the Index becomes unavailable during the term of this loan, Lender may
designate a substitute index after notifying Borrower. Lender will tell Borrower
the current Index rate upon Borrower's request. Borrower understands that Lender
may make loans based on other rates as well. The interest rate change will not
occur more often than each MONTH. The Index currently is _____% per annum. The
interest rate to be applied to the unpaid principal balance of this Note will be
at a rate of _____ percentage points over the Index, resulting in an initial
rate of _____% per annum. NOTICE: Under no circumstances will the interest rate
on this Note be more than the maximum rate allowed by applicable law. Whenever
increases occur in the interest rate, Lender, at its option, may do one or more
of the following: (a) increase Borrower's payments to ensure Borrower's loan
will pay off by its original final maturity date, (b) increase Borrower's
payments to cover accruing interest, (c) increase the number of Borrower's
payments, and (d) continue Borrower's payments of the same amount and increase
Borrower's final payment.
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event even upon full prepayment of
this Note, Borrower understands that Lender is entitled to a minimum Interest
charge of $10.00. Other than Borrower's obligation to pay any minimum interest
charge, Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
under the payment schedule. Rather, they will reduce the principal balance due
and may result in Borrower making fewer payments.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other terms, obligation, covenant, or condition contained in this Note
or any agreements related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other agreement,
in favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the indebtedness is impaired. (i) Lender
in good faith deems itself insecure.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and not event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within fifteen (15) days; or (b) if
the cure requires more than fifteen (15) days, immediately initiates steps which
Lender deems in Lender's sole discretion to be sufficient to cure the default
and thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Lender may hire or pay someone
else to help collect this Note if Borrower does not pay. Borrow also will pay
Lender that amount. This includes subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses whether or not there is a
lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. If not
prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Lender in the State of Minnesota. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of the
courts of Le Sueur County, the State of Minnesota. This Note shall be governed
by and construed in accordance with the laws of the State of Minnesota.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
COLLATERAL. This Note is secured by a Security Agreement from Lamcor,
incorporated to First Farms & Merchants National Bank dated ____________,
covering ______________________ and existing collateral already on file with
First Farmers & Merchants National Bank.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay of forgo enforcing
any of its rights of remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive presentment, demand for payment, protest and notice of
dishonor. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
Lamcor, Incorporated
By: _______________________________
Leo W. Lund, Board Chairman
Exhibit 10.6
AGREEMENT
This shall serve as an agreement between Lamcor Incorporated and Magnum
Industries (or certain services to be performed by Magnum for Lamcor. These
services will include but not necessarily be limited to the following:
A. The full inspection and labeling of coffee pouches for Lamcor's
Savor-loc system. Magnum in turn agrees to perform such services for a cost of
$35.00/m throughout the entire term of this agreement.
B. The cutting and inspection of those pouches produced for 3M referred
to as the Chevron Program. Cost to Lamcor for these services shall be $50.00/m.
Lamcor currently passes on a cost of $60.00/m to 3M in addition to the normal
costs of producing the basic pouch. Magnum will guarantee above set price for
duration of agreement.
The duration of this agreement shall be for a period of three years.
Any changes shall require mutual consent of both parties. This agreement may be
renewed with both party's consent.
Changes to this agreement may be made if unforeseen events change the
basic intent of the services required. Events may include but not be limited to
loss of business, unacceptable performance, or conflicts of interest arising
from Magnum's desire to provide services for a competing operation. Lamcor
reserves the first right of refusal if it deems a particular Magnum operation to
be detrimental to the well being of Lamcor Incorporated.
[SIGNATURES]
<TABLE>
<CAPTION>
Exhibit 11.1
Lamcor, Incorporated
Computation of Earnings Per Share
Fiscal Years Ended September 30,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Primary
Average shares outstanding 1,382,667 1,341,542 1,328,542
Net effect of dilutive stock options, based
on the treasury stock using method
average market price 377,263 273,559 119,773
Total 1,759,930 1,615,101 1,448,315
========= ========= =========
Net income $352,458 $358,795 $176,918
Net income per share $.20 $.22 $.12
Fully Diluted
Average shares outstanding 1,382,667 1,341,542 1,328,542
Net effect of dilutive stock options, based
on the treasury stock method using
average market price 385,144 371,458 122,941
Total 1,767,811 1,713,000 1,451,483
========= ========= =========
Net income $352,458 $358,765 $176,918
Net income per share .20 .21 .12
</TABLE>
Exhibit 21.1
Subsidiaries
None.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 61,562
<SECURITIES> 0
<RECEIVABLES> 1,155,402
<ALLOWANCES> 10,000
<INVENTORY> 1,263,261
<CURRENT-ASSETS> 2,516,018
<PP&E> 3,054,804
<DEPRECIATION> 1,064,530
<TOTAL-ASSETS> 4,509,384
<CURRENT-LIABILITIES> 1,046,321
<BONDS> 1,106,783
0
0
<COMMON> 996,559
<OTHER-SE> (101,219)
<TOTAL-LIABILITY-AND-EQUITY> 4,509,384
<SALES> 8,006,710
<TOTAL-REVENUES> 8,006,710
<CGS> 5,736,439
<TOTAL-COSTS> 5,736,439
<OTHER-EXPENSES> (8,981)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 143,390
<INCOME-PRETAX> 572,458
<INCOME-TAX> 220,000
<INCOME-CONTINUING> 352,458
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 352,458
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
