SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): September 25, 1997
Agri-Nutrition Group Limited
(Exact name of registrant as specified in its charter)
Delaware 0-24312 43-1648680
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
Riverport Executive Center II
13801 Riverport Drive, Suite 111
Maryland Heights, Missouri 63043
(Address of principal executive offices, including zip code)
(314) 298-7330
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
On September 25, 1997 (the "Closing Date"), the registrant acquired the
business of Mardel Laboratories, Inc., a corporation that develops, manufactures
and markets pet care products ("Mardel"), through the merger of Mardel with and
into Mardel Acquisition Corporation, a wholly owned subsidiary of the
registrant. The purchase price for Mardel is (i) $1,000,000 in cash and 852,775
shares of the registrant's restricted common stock, which was paid on the
Closing Date; (ii) $49,000 payable in cash on each of the first, second and
third anniversary of the Closing Date, plus interest at the prime rate as
determined from time to time by the registrant's principal lender compounded
monthly on the 25th day of each month from the Closing Date to the date of
payment; and (iii) $51,000 equivalent value of the registrant's restricted
common stock payable on each of the first, second and third anniversary of the
Closing Date based on the weighted average of the registrant's common stock
trading price twenty trading days prior to each anniversary. The registrant used
a portion of the proceeds of its July 1994 initial public offering to fund the
$1,000,000 initial cash payment.
The terms of the merger were determined through arms-length
negotiations between the registrant and Mardel, considering, among other things,
Mardel's past earnings. Mardel's assets consist primarily of equipment and other
personal property and intellectual property, including certain trademarks and
licenses. The registrant intends to continue to operate Mardel's business
substantially as operated prior to the merger. The terms of the merger are more
fully described in the Agreement and Plan of Merger among Agri-Nutrition Group
Limited, Mardel Acquisition Corporation and Mardel Laboratories, Inc., dated
September 25, 1997, a copy of which is filed herewith.
Item 7. Financial Statements and Exhibits
(a) and (b). It is impractical to include the required Mardel financial
statements and pro forma financial information in this report. Such financial
statements and pro forma financial information will be filed under cover of Form
8-K\A as soon as they are available and not later than November 24, 1997.
(c). Exhibits. The following exhibits are filed with this report:
2.8 Agreement and Plan of Merger among Agri-Nutrition Group
Limited, Mardel Acquisition Corporation, and Mardel
Laboratories, Inc.
2.9 Indemnity Agreement
2.10 Share Transfer and Registration Rights Agreement
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Agri-Nutrition Group Limited
By: /S/ ROBERT J. ELFANBAUM
Robert J. Elfanbaum
Chief Financial Officer
Date: October , 1997
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Exhibit 2.8
AGREEMENT AND PLAN OF MERGER
AMONG
AGRI-NUTRITION GROUP LIMITED,
MARDEL ACQUISITION CORPORATION,
AND
MARDEL LABORATORIES, INC.
SEPTEMBER 25, 1997
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TABLE OF CONTENTS
Agreement
Page
Section 1. The Merger..................................................1
Section 2. Representations and Warranties of Mardel....................5
Section 3. Representations and Warranties of Agri-Nutrition...........12
Section 4. Covenants..................................................14
Section 5. Conditions Precedent to Mardel's Obligation
to Effect the Merger.......................................18
Section 6. Conditions Precedent to Agri-Nutrition's Obligation
to Effect the Merger.......................................19
Section 7. Conditions Precedent to Obligations of All Parties.........19
Section 8. Closing....................................................20
Section 9. Termination and Abandonment of the Merger..................20
Section 10. Miscellaneous..............................................21
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SCHEDULES
Schedule A Certificate of Merger
Schedule B Form of Share Transfer and Registration Rights Agreement
Schedule C Form of Indemnity Agreement
Schedule D Registered Holders of Mardel Common Stock
Schedule E Mardel's Material Contracts
Schedule F Mardel's Intellectual Property
Schedule G Mardel's Permits
Schedule H Mardel's Employee Benefit Plans
Schedule I Mardel's Insurance
Schedule J Form of Promissory Note
Form of Subordination and Standby Agreement
Schedule K Form of Opinion of Counsel for Agri-Nutrition
Schedule L Form of Opinion of Counsel for Mardel
Schedule M Forms of Employment Agreements
Schedule N Form of Lease
Schedule O Mardel's Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is entered into on this 25th day of
September, 1997, by and among Agri-Nutrition Group Limited, a Delaware
corporation ("Agri-Nutrition"), Mardel Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Agri-Nutrition ("Acquisition"), and
Mardel Laboratories, Inc., a Delaware corporation ("Mardel").
RECITALS
A. The Boards of Directors of Agri-Nutrition, Acquisition, and Mardel
deem it advisable to merge Mardel with and into Acquisition (the "Merger") as
provided in this Agreement.
B. Pursuant to the Merger, the holders of shares of Common Stock, par
value $10.00 per share, of Mardel (the "Mardel Common Stock") will receive
shares of Common Stock, par value $.01 per share, of Agri-Nutrition
("Agri-Nutrition Common Stock") and cash, all in the manner set forth in Section
1 of this Agreement and upon the terms and conditions otherwise set forth in
this Agreement.
C. To accomplish the foregoing, the parties desire to effectuate the
statutory merger of Mardel with and into Acquisition in accordance with the
provisions of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue
Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the representations, warranties,
conditions, and agreements hereinafter set forth, the parties hereto agree as
follows:
AGREEMENT
Section 1. THE MERGER
(a) Execution, Filing, and Effective Time. On the date of the closing
of the Merger referred to in Section 8 hereof (the "Closing"), and subject to
the terms and conditions hereinafter set forth, the parties hereto agree to
cause the Merger to be consummated by filing with the Delaware Secretary of
State a Certificate of Merger (the "Certificate of Merger") in the form attached
as Schedule A executed and acknowledged by Mardel and Acquisition and such other
documents as may be required by the provisions of the Delaware General
Corporation Law (the "Delaware Law") and as are necessary to cause the Merger to
become effective. The filing of the Certificate of Merger and such other
documents with the Delaware Secretary of State shall be performed as
expeditiously as possible following the Closing. The Merger shall become
effective when the Certificate of Merger and such other necessary documents are
so filed. The time at which the Merger becomes effective is referred to herein
as the "Effective Time."
(b) Constituent and Surviving Corporations. Mardel and Acquisition
shall be the constituent corporations in the Merger, and Acquisition shall be
the surviving corporation in the Merger (in such capacity, Acquisition is
sometimes hereinafter referred to as the "Surviving Corporation"), in accordance
with the Delaware Law. At the Effective Time,
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the identity and separate existence of Mardel shall cease. Upon the
effectiveness of the Merger (i) the Surviving Corporation shall possess all of
the rights, privileges, immunities, powers, franchises, and authority, whether
of a public or private nature, and be subject to all restrictions, liabilities,
obligations, and duties of Mardel, (ii) all assets and properties of every
description, real, personal, and mixed, and every interest therein, wherever
located, and all debts and other obligations belonging or due to Mardel on
whatever account, as well as all other things in action belonging or due to
Mardel, shall be vested in the Surviving Corporation, (iii) all rights of
creditors and all liens upon any property of Mardel shall be preserved
unimpaired, and (iv) any claims existing or action or proceeding pending by or
against Mardel may be prosecuted to judgment with right of appeal by the
Surviving Corporation as if the Merger had not taken place.
(c) Certificates of Incorporation and Bylaws. At the Effective Time,
the Certificate of Incorporation and the Bylaws of Acquisition as in effect at
the Effective Time shall remain in effect without change and shall constitute
the Certificate of Incorporation and the Bylaws of the Surviving Corporation.
(d) Officers and Boards of Directors. At the Effective Time, each of
the members of the Board of Directors and each of the officers of Mardel
immediately prior to the Effective Time shall be removed from office and,
concurrently with such removal, the directors and officers of Acquisition shall
become the directors and officers of the Surviving Corporation, each to serve in
accordance with the Bylaws of the Surviving Corporation until his successor is
duly elected and qualified.
(e) Conversion of Stock and Other Securities of the Constituent
Corporations. At the Effective Time, without any action on the part of the
holder thereof, subject to Section 1(f) hereof:
(i) Each share of Mardel Common Stock issued and outstanding
immediately prior to the Effective Time shall be canceled and
extinguished and shall be converted into the right to receive (A) that
number of shares of Agri-Nutrition Common Stock which, when valued in
the manner prescribed by subsection (e)(ii), shall have a value of
$2,200, payable at Closing, (B) cash in the amount of $2,000, payable
at Closing, (C) that number of shares of Agri-Nutrition Common Stock
which, when valued in the manner prescribed by subsection (e)(ii),
shall have a value of $306, one-third of which shall be payable on each
of the first, second, and third anniversaries of the Closing, and (D)
cash in the amount of $294, one-third of which shall be payable,
together with interest at the prime rate as determined from time to
time by Agri-Nutrition's principal lender compounded monthly on the
25th day of each month from the date of Closing to the date of payment,
on each of the first, second, and third anniversaries of the Closing.
(ii) For purposes of determining the number of shares of
Agri-Nutrition Common Stock payable pursuant to subsection (i) (A), the
value of such shares shall be calculated based upon the weighted
average price
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of Agri-Nutrition Common Stock on the NASDAQ National Market during the
period commencing on and including July 16, 1997 and ending on and
including the trading date immediately prior to the date of the
Closing. For purposes of determining the number of shares of
Agri-Nutrition Common Stock payable pursuant to subsection (i)(C), the
value of such shares shall be calculated based upon the weighted
average price of Agri-Nutrition Common Stock on the NASDAQ National
Market, or such other exchange or market upon which Agri-Nutrition
Common Stock may then be traded, for the 20 trading days prior to each
anniversary.
For purposes of this Agreement, the term "weighted average
price" for a given period shall mean (A) the sum of the product of (1)
each price for which Agri-Nutrition Common Stock is sold during the
period multiplied by (2) the number of shares sold at such price during
the period, divided by (B) the total number of shares sold during the
period.
(iii) The shares of Agri-Nutrition Common Stock payable
pursuant to subsections (i)(A) and (C) shall not be registered under
the Securities Act of 1933, as amended. The holders of such shares
shall be subject to the restrictions on transfer and shall have the
registration rights set forth in the Share Transfer and Registration
Rights Agreement, the form of which is attached as Schedule B.
(iv) The consideration set forth in subsections (i)(A) and (B)
is referred to herein as the "Base Merger Consideration," and the
consideration set forth in subsections (i)(C) and (D) is referred to
herein as the "Additional Merger Consideration." The Base Merger
Consideration and the Additional Merger Consideration together are
referred to herein as the "Merger
Consideration."
(v) The Additional Merger Consideration shall be reduced by
the combined excess, to the extent such excess exceeds $50,000, of:
(A)(1) Mardel's inventory reflected on Mardel's books
and records as of September 30, 1997, as adjusted for proper
accrual in accordance with generally accepted accounting
principals (applied in a manner consistent with Mardel's
historical financial practices), but without any other
adjustments (including adjustments with respect to valuation,
quantity or obsolescence), over (2) Mardel's inventory as
reflected on the balance sheet as of September 30, 1997, as
reviewed by Agri-Nutrition's independent public accountants,
prepared in accordance with generally accepted accounting
principles (applied in a manner consistent with Mardel's
historical financial practices and based on a physical count
of inventory on or about that date); and
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(B)(1) Mardel's accounts receivable less the
allowance for doubtful accounts as reflected on the May 31,
1997 balance sheet provided by Mardel to Agri-Nutrition over
(2) the amount of such accounts receivable actually collected
by Agri-Nutrition as of October 31, 1998. The Additional
Merger Consideration shall be increased by the amount of any
previous reduction in the Additional Merger Consideration
pursuant to this subsection 1(e)(v)(B) to the extent that
amounts related to such reduction are actually collected by
Agri-Nutrition after October 31, 1998.
In the event of any reduction in Additional Merger
Consideration as the result of adjustments made pursuant to Sections
1(e)(v)(A) or (B), Agri-Nutrition shall deliver to Mardel a certificate
that shall set forth the amount of such reduction and reasonably
detailed information relating to the calculation of such reduction.
Such certificate shall be certified correct by Agri-Nutrition's
independent accountants. Following delivery of such certificate,
Agri-Nutrition promptly shall provide any additional information
regarding the bases for calculation of such reduction as Mardel may
request. If Mardel in good faith disputes the calculation of the amount
of the reduction set forth in such certificate, Agri-Nutrition and the
former holders of Mardel Common Stock shall in good faith attempt to
agree on the appropriate amount of the reduction and Agri-Nutrition
promptly shall deliver to such holders Additional Merger Consideration
based upon such agreement promptly after such agreement is reached. In
the event that no such agreement can be reached, a nationally
recognized accounting firm, not retained at the time of the dispute by
either the former holders of Mardel Common Stock or Agri-Nutrition,
shall be retained to make the calculations set forth in Sections
1(e)(v)(A) and (B) and any resulting adjustments shall be made in
accordance with such calculations and shall be binding upon
Agri-Nutrition and the former holders of Mardel Common Stock. The cost
of retaining such accounting firm shall be split equally between (a)
Agri-Nutrition and (b) the former holders of Mardel Common Stock.
In addition to the adjustments to the Additional Merger
Consideration described in this subsection (v), Agri-Nutrition shall be
entitled to offset against payments of Additional Merger Consideration
any amounts owed to Agri-Nutrition by Mardel or the holders of Mardel
Common Stock under this Agreement or otherwise; provided, however, that
Agri-Nutrition's right of offset with respect any amounts owed to
Agri-Nutrition under the Indemnity Agreement, the form of which is
attached as Schedule C, is as set forth in that agreement.
Agri-Nutrition's right of offset set forth herein shall not be
construed so as to limit any rights or remedies otherwise available to
Agri-Nutrition at law or equity.
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(vi) Each share of the Common Stock of Acquisition issued and
outstanding immediately prior to the Effective Time shall be converted
into and become one share of Common Stock of the Surviving Corporation,
to be owned by Agri-Nutrition.
(f) Fractional Shares. No fractional shares of Agri-Nutrition Common
Stock will be issued, and, in lieu thereof, any holder of Mardel Common Stock
entitled to receive a fractional share of Agri-Nutrition Common Stock shall be
paid cash equal to the value of such fractional share.
(g) Exchange of Stock Certificates. The holders of certificates of
Mardel Common Stock shall surrender Mardel Common Stock certificates evidencing
all of the outstanding shares of Mardel Common Stock at the Closing. If any
portion of the Merger Consideration is to be issued or paid to a person other
than the person in whose name the certificate surrendered in exchange therefor
is registered, it shall be a condition of the issuance thereof that the
certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange shall either pay
to Surviving Corporation any transfer or other taxes required by reason of the
issuance of a certificate for shares of Agri-Nutrition Common Stock in any name
other than that of the registered holder of the certificate surrendered or
establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not payable.
Section 2. REPRESENTATIONS AND WARRANTIES OF MARDEL
Except as set forth on Mardel's Disclosure Schedule attached as
Schedule O, Mardel represents and warrants to Agri-Nutrition and Acquisition as
follows:
(a) Corporate Status. Mardel is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware, and is
duly qualified to do business as a foreign corporation and is in good standing
in all jurisdictions in which the nature of its business or the ownership of its
properties or both makes such qualification necessary. Mardel does not have any
subsidiaries and does not, directly or indirectly, own the capital stock of, or
control, any corporation, limited partnership, joint venture, general
partnership, or other business entity.
(b) Capitalization. The authorized capital stock of Mardel consists of
5,000 shares of Common Stock, $10.00 par value, of which 500 shares are
outstanding. The names and addresses of the registered holders of Mardel Common
Stock and number of shares held by each are set forth on Schedule D. Each
registered holder beneficially owns the shares registered in his or her name and
no registered holder is a foreign person, as defined by Section 1445(b)(2) of
the Code. All of the outstanding shares of Mardel Common Stock have been validly
issued and are fully paid and nonassessable. There are no outstanding options,
warrants, rights, or other agreements or commitments obligating Mardel to issue
or sell shares of its capital stock or any securities or obligations convertible
into or exchangeable for any shares of its capital stock. Mardel does not hold
in treasury any shares of Mardel Common Stock.
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(c) Authority for Agreement. Mardel has the corporate power to enter
into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement by Mardel, the performance by Mardel of its
obligations pursuant to this Agreement, and the consummation of the transactions
contemplated hereby have been duly authorized by Mardel's Board of Directors and
each of its stockholders, and, except for the filing described in Section 1(a)
hereof, no other corporate proceedings on the part of Mardel are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Mardel and
(assuming the valid authorization, execution, and delivery of this Agreement by
Agri-Nutrition and Acquisition) is a valid and binding obligation of Mardel,
enforceable against it in accordance with its terms.
(d) Absence of Breach; Consents and Approvals. No approval or consent
of, or filing with, any third party or governmental authority is required for
the execution or delivery of the Agreement by Mardel or for the performance of
its obligations hereunder. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not, (i)
conflict with the Certificate of Incorporation or Bylaws of Mardel, or (ii)
result in a breach or violation of any provision of, constitute a default or an
event which with notice or passage of time or both would constitute a default
under, or give rise to a right of termination, cancellation, or acceleration of
indebtedness under, any material indenture, mortgage, deed of trust, pledge
agreement, lease, license, evidence of indebtedness or other contract,
agreement, or instrument, or any material law, statute, rule or order, decree,
or restriction to which Mardel is party or by which it or its property is bound.
(e) Financial Statements. Mardel has delivered to Agri-Nutrition the
balance sheet of Mardel as of December 31, 1994, 1995, and 1996, and the related
statements of operations, retained earnings, and cash flows for the years ended
December 31, 1994, 1995, and 1996, all of which have been reviewed by Mardel's
independent public accountants, and the balance sheet of Mardel as of March 31
and June 30, 1997 and the related statements of operations, retained earnings
and cash flows for the three months ended March 31, 1997 and the six months
ended June 30, 1997. Such balance sheets fairly present the financial position
of Mardel as of their respective dates, and such other financial statements
fairly present the results of operations and other information included therein
of Mardel for the respective periods and as of the respective dates therein set
forth, in each case in accordance with generally accepted accounting principles
consistently applied and in keeping with Mardel's historical financial practices
during the periods involved. Except as reflected or disclosed in such financial
statements, other than liabilities incurred since June 30, 1997 in the ordinary
course of business or liabilities incurred in connection with the proposed
Merger or otherwise contemplated or permitted by this Agreement, Mardel is not
subject to any liabilities or obligations (whether accrued, absolute,
contingent, or otherwise and whether due or to become due, including liabilities
and obligations that may become known or arise after the date hereof that relate
to transactions entered into or any state of facts existing on or before June
30, 1997 that would be required under generally accepted accounting principles
consistently applied and
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in keeping with Mardel's historical financial practices to be shown on the
balance sheet of Mardel as of June 30, 1997 or disclosed in the related notes to
financial statements).
(f) Conduct of Business. Since June 30, 1997, Mardel has conducted its
operations according to its usual, regular, and ordinary course in substantially
the same manner as theretofore conducted and used its reasonable efforts to
preserve intact its business organization and goodwill, keep available the
services of its officers and employees, and maintain satisfactory relationships
with those persons having business relationships with it, and has not (i)
granted, conferred, awarded, or issued any shares of its capital stock, options,
warrants, conversion rights, or other rights to acquire shares of its capital
stock, (ii) paid any dividends or otherwise caused assets to be distributed to
stockholders, (iii) redeemed any securities, (iv) adopted any new employee
benefit plan or amended any existing employee benefit plan in any material
respect, or directly or indirectly, materially increased the level of
compensation or benefits of any employee, officer, director, or consultant or
entered into any employment, consulting, or retainer agreements, other than in
the ordinary course of conducting its business, (v) sold, leased, or otherwise
disposed of any of its assets that are material, individually or in the
aggregate, except in the ordinary course of business, (vi) borrowed any funds,
under existing lines of credit or otherwise, except as reasonably necessary for
the ordinary operation of the business in a manner, and in amounts, consistent
with historical financial practices, (vii) paid principal or interest on any
debt other than in the ordinary course of business, or (viii) made any change in
accounting principles and practices.
(g) Compliance with Applicable Law. The business of Mardel is not being
conducted in violation of any applicable law, ordinance, regulation, decree or
order of any governmental entity.
(h) Environmental Laws. Mardel has operated and continues to operate
its business in compliance with all Laws (as hereinafter defined) relating to
(i) pollution or protection of the environment, natural resources, or human
health from any Hazardous Substances (as hereinafter defined), or (ii) nuisance,
trespass, or "toxic tort," including Laws relating to emissions, discharges,
releases, or threatened releases of any Hazardous Substance or otherwise
relating to the manufacture, processing, importation, distribution, use,
generation, treatment, storage, disposal, transportation, or handling of any
Hazardous Substance (collectively, "Environmental Laws"). No property leased by
Mardel or real property contiguous thereto, is or has been designated by any
state, local or federal agency or body as a hazardous waste disposal site or a
site or location requiring investigation concerning, or management, clean-up or
removal of, any Hazardous Substance. There is no civil, criminal or
investigative action, suit, litigation, hearing, communication (written or
oral), demand, claim, citation, notice or notice of violation, warning, consent
decree, judgment, or order by any person or entity alleging, claiming,
concerning, or finding liability or potential liability arising out of, based on
or resulting from, in whole or in part, (a) the actual or alleged presence,
threatened release, release, emission, disposal, storage, treatment,
transportation, generation, manufacture, or use of any Hazardous Substance at or
from any location, or (b) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Laws (collectively,
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"Environmental Claims"), pending or threatened against Mardel or against any
person or entity whose liability for any Environmental Claim Mardel has or may
have retained or assumed either contractually or by operation of law. There are
no past or present actions, activities, circumstances, conditions, events,
incidents or practices, including the release, threatened release, emission,
discharge, disposal, storage, treatment, transportation, generation,
manufacture, or use of any Hazardous Substance that could form the basis of any
Environmental Claim against Mardel or against any person or entity whose
liability for any Environmental Claim Mardel has or may have retained or assumed
either contractually or by operation of law. As used herein, "Hazardous
Substance" means any chemical, pollutant, contaminant, waste (including toxic,
hazardous, infectious, sanitary, solid, radioactive and petroleum waste, toxic
substance, hazardous substance, extremely hazardous substance, hazardous
material, radioactive material, oil and petroleum product, as such terms, or any
similar terms, are or shall be used under any applicable federal, state, local,
and foreign laws, regulations, rules, ordinances, permits (including, without
limitation, authorizations, approvals, registrations and licenses),
administrative orders, judicial decisions or the like (collectively, "Laws")
relating to pollution or protection of the environment, natural resources, or
human health.
(i) Litigation. No investigation or review by any governmental entity
with respect to Mardel is pending or, to the best of Mardel's knowledge,
threatened, and there is no action, suit, or proceeding pending or, to the best
of Mardel's knowledge, threatened against or affecting Mardel at law or equity,
or before any federal, state, municipal or other governmental department,
commission, board, bureau, agency, or instrumentality.
(j) Title to Assets. Mardel has good, marketable, and undivided title
to and possession of all of its assets, free and clear of any, agreements,
liabilities, claims, assessments, security interests, liens, restrictions, and
encumbrances (collectively, "Claims"), except Claims that arise as the result of
the Contracts referred to in Section 2(n) and set forth in Schedule O.
(k) Property. Mardel owns no real property. The real property on which
Mardel's facility is located at 1958 Brandon Court in Glendale Heights, Illinois
is leased by Mardel and is owned by Ramon A. Mulholland free and clear of any
liens, except (i) the lien referred to in Section 4(m) and (ii) any lien that
has arisen as the result of real estate taxes that have accrued but have not
become due or payable. There are no pending or threatened condemnation or
similar proceedings or assessments affecting such property, nor, to the best of
Mardel's knowledge, is any such condemnation or assessment contemplated by any
governmental authority. The only other real property leased by Mardel is located
at 1260 Howard, Elk Grove Village, Illinois. All of Mardel's tangible personal
property is located at 1958 Brandon Court, Glendale Heights, Illinois, including
but not limited to Mardel's inventory, equipment and fixtures.
(l) Intellectual Property. Mardel owns, or is licensed or otherwise has
the full and unrestricted right to use, all patents, trademarks, trade names,
copyrights, technology, know-how, trade secrets, processes, formulae, and
techniques used in the operation of its business, including the intellectual
property described on Schedule F.
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Mardel has not granted to any other person any license or other right to use in
any manner any of its intellectual property, whether or not requiring the
payment of royalties, except as set forth in Schedule O. None of Mardel's
intellectual property is subject to any outstanding order, decree, judgment, or
stipulation, or, to the best of Mardel's knowledge, is being infringed by
others, and there are no claims or demands of any other person, and no
proceedings have been instituted, or are pending or, to the best of Mardel's
knowledge, threatened, relating to Mardel's intellectual property, except as set
forth in Schedule O.
(m) Licenses and Permits. Schedule G lists all licenses, permits,
product registrations, pending applications, consents, approvals, and
authorizations of or from any public or governmental agency, used in or
otherwise necessary for the conduct of Mardel's business (collectively, the
"Permits") together with any conditions imposed thereon, each of which is in
full force and effect. Mardel has complied with all conditions and requirements
imposed by the Permits and has not received any notice that any appropriate
authority intends to cancel, terminate, or suspend any of the Permits and has no
reason to believe that valid grounds for such cancellation, termination, or
suspension exist. No licenses or permits other than the Permits are necessary to
operate Mardel's business. Mardel owns or has the right to use the Permits in
accordance with the terms thereof without any conflict or infringement with the
rights of others and subject to no claim, and each Permit is valid and no Permit
will be subject to termination, terminated, or adversely affected by the Merger.
(n) Outstanding Commitments. The contracts listed on Schedule E
constitute all existing material contracts, agreements, leases, subleases,
commitments, licenses and franchises, whether written or oral, relating to
Mardel's business (the "Contracts"). Mardel has delivered or made available to
Agri-Nutrition true, correct, and complete copies of all written Contracts, and
Schedule E contains an accurate and complete description of all Contracts that
are not in writing. Except as set forth in Schedule O, all of the Contracts are
in full force and effect, Mardel and each other party to each of the Contracts
has performed all the obligations required to be performed by it to date, and
there is not under any of the Contracts any existing default that with notice or
lapse of time or both would constitute such a default. Mardel has no present
expectation or intention of not fully performing its obligations under each of
the Contracts and has no knowledge of any breach or anticipated breach by any
other party to any of the Contracts. Except as set forth in Schedule O, none of
the Contracts has been terminated nor has notice of termination been given with
respect thereto, no notice has been given by any party thereto of any alleged
default thereunder by any party thereto, and Mardel is aware of no intention or
right of any party to any Contract to declare a default by another party to any
Contract. There exists no actual or, to the best of Mardel's knowledge,
threatened termination, cancellation, or limitation of the business relationship
of Mardel with any party to any Contract. Except as set forth in Schedule O, no
customer of Mardel has notified Mardel that it intends to terminate or change
its business relationship with Mardel following the consummation of the
transactions contemplated hereby.
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(o) Labor and Employee Relations. Mardel is not party to or bound by
any collective bargaining agreement with any labor union, group, or association
covering any of its employees, and Mardel has no knowledge of any attempt to
organize any of their employees by any person, unit, or group seeking to act as
their bargaining agent. There are no pending or threatened charges (by
employees, their representatives or governmental authorities) of unfair labor
practices or of employment discrimination or of any other wrongful action with
respect to any aspect of employment of any employee of Mardel.
(p) Employee Benefits. Schedule H lists all pension, profit sharing,
retirement, deferred compensation, stock purchase, stock option, incentive,
bonus, vacation, severance, disability, hospitalization, medical insurance, life
insurance, fringe benefit, welfare, and other employee benefit plans, programs,
or arrangements to which Mardel's employees are or may be entitled. Each
"Employee Welfare Benefit Plan" (as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) covering any
present or former employee of Mardel subject to the requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") has complied
with all requirements for continuation coverage under group health benefit plans
under COBRA, and there are no claims against Mardel for a failure or alleged
failure to comply with the COBRA continuation requirements. Each employee plan
that is subject to ERISA conforms to, and its operation and administration are
in compliance with, all applicable requirements of ERISA, including funding
requirements. There are no actions, suits, or claims pending (other than routine
claims for benefits) or, to the best of Mardel's knowledge, threatened against
any employee plan or against the assets of any employee plan.
(q) Insurance. Schedule I describes (by type, carrier, policy number,
limits, premium and expiration date) the insurance coverage currently maintained
in force by Mardel with respect to its business, which insurance will remain in
full force and effect following the Closing with respect to all events occurring
prior to the Closing. Mardel (i) has not failed to give any notice or present
any claim under any such policy or binder in due and timely fashion, (ii) has
not received notice of cancellation or non-renewal of any such policy or binder,
(iii) is not aware of any threatened or proposed cancellation or non-renewal of
any such policy or binder, and (iv) has not received notice of and is not
otherwise aware of any insurance premiums that will be increased in the future.
There are no outstanding claims under any such policy which have gone unpaid for
more than 45 days, or as to which the insurer has disclaimed liability.
(r) Taxes. For periods prior to the Closing Date, all required tax
returns and reports of Mardel have been filed by Mardel with the federal
government and with the states in which Mardel is doing business and political
subdivisions thereof. Mardel has paid in full or made adequate provision for the
payment of all taxes, interest, penalties, assessments, or deficiencies shown to
be due or claimed to be due on such returns and reports. Mardel is not required
to file tax returns or reports with any other taxing jurisdiction. The provision
for taxes that is reflected in the June 30, 1997 balance sheet provided by
Mardel to Agri-Nutrition is in the aggregate adequate to cover any and all
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accrued and unpaid taxes of Mardel for the period ended on such date and all
prior periods, whenever the same may be assessed. Mardel is not being audited by
any Taxing Authority and no such audit is pending, or, to the best of Mardel's
knowledge, threatened, and Mardel has not agreed with any Taxing Authority to
extend any period during which an audit may be performed beyond that which is
prescribed by statute. Neither Mardel's status as a corporation taxed in
accordance with subchapter S of the Code prior to the Closing, the termination
of such status as a result of the Closing, nor Mardel's previous status as a
corporation taxed in accordance with subchapter C of the Code shall cause
Acquisition or Agri-Nutrition to be subject to any tax liabilities, except
liabilities disclosed on Mardel's June 30, 1997 balance sheet. During any period
in which Mardel has elected status as a corporation taxed in accordance with
subchapter S of the Code, no event has occurred that would cause Mardel to be
taxed other than as a corporation taxed in accordance with subchapter S of the
Code.
As used in this Agreement, "taxes" is defined to include all taxes,
charges, fees, levies or other assessment imposed by any Taxing Authority,
including income, gross receipts, excise, property, sale, use, ad valorem,
license, lease, service, severance, stamp, transfer, payroll, employment,
withholding, customs, duties, alternative, or add on minimum, estimated and
franchise taxes (including any interest, penalties, or additions attributable to
or imposed on or with respect to any such assessment).
As used in this Agreement, "tax return" is defined as any return,
report, information return or other document (including any related or
supporting information) filed or required to be filed with any federal, state,
or local or foreign governmental entity or other authority (individually or
collectively, a "Taxing Authority") in connection with determination,
assessment, or collection of any tax (whether or not such tax is imposed on
Mardel) or the administration of any laws, regulations, or administrative
requirements relating to any tax.
(s) Books and Records. The books, records, accounts, ledgers and files
of Mardel are accurate and complete and have been maintained in accordance with
good business and bookkeeping practices.
(t) Absence of Material Adverse Changes. Subsequent to June 30, 1997,
there has been no material adverse change in the financial condition, business,
operations, or prospects (a "Material Adverse Change") of Mardel.
(u) Finders. All compensation, expenses, and other amounts paid by
Mardel to Brakke Consulting, Inc. ("Brakke") pursuant to the Finder's Agreement
executed on January 3, 1997 between Mardel and Brakke (the "Finder's Agreement")
either (i) will have been paid by the stockholders of Mardel individually, or
(ii) if paid by Mardel, Mardel will have been reimbursed in full by such
stockholders prior to the Closing. Except as set forth in the Finder's
Agreement, all negotiations relating to this Agreement and the transactions
contemplated hereby have been carried on without the intervention of any person
as the result of any act of Mardel in such manner as to give rise to any claim
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against any of the parties hereto for a brokerage commission, finder's fee, or
other like payment.
(v) Security Interest Granted by Taesoon Park. Immediately following
the Closing, Acquisition will have a first priority perfected security interest
in the Collateral described in that certain Agreement To Purchase Assets, dated
March 5, 1997, by and between Mardel and Taesoon Park.
(w) Inventory. During the period beginning May 31, 1997 and ending
September 30, 1997,
(i) Mardel has accounted for any and all inventory
transactions (including valuation of its inventory) in its books and
records in a manner consistent with its accounting practices for prior
periods; and
(ii) Mardel has not disposed of any inventory, or made any
adjustments to the balance of its inventory in its books and records
(including write-offs, whether due to lost or missing inventory, or
inventory shrinkage, or otherwise), other than in the ordinary course
of business consistent with its practices for prior periods.
Section 3. REPRESENTATIONS AND WARRANTIES OF AGRI-NUTRITION AND
ACQUISITION
Agri-Nutrition and Acquisition each represent and warrant to Mardel as
follows:
(a) Corporate Status. Each of Agri-Nutrition and Acquisition is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of its incorporation, and is duly qualified to do business as
a foreign corporation and is in good standing in all jurisdictions in which the
nature of its business or the ownership of its properties or both makes such
qualification necessary.
(b) Capitalization. The authorized capital stock of Agri-Nutrition
consists of 20,000,000 shares of Common Stock, $.01 par value, of which
8,404,655 shares are outstanding, and 2,000,000 shares of Preferred Stock, par
value $.01 per share, of which none is outstanding. All of the outstanding
shares of Common Stock have been validly issued and are fully paid and
nonassessable. As of the date of this Agreement, there were outstanding options
to purchase an aggregate of 824,000 shares of Agri-Nutrition Common Stock (not
including any options granted to Jan A. Mulholland and Michael F. Mulholland)
with exercise prices ranging from $1.1875 to $4.25. As of such date, there were
no other outstanding options, warrants, rights, or other agreements or
commitments obligating Agri-Nutrition to issue or sell shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock. All of the issued and outstanding shares of capital
stock of Acquisition are owned by Agri-Nutrition.
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(c) Authority for Agreement. Each of Agri-Nutrition and Acquisition has
the corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by
Agri-Nutrition and Acquisition, the performance by each of its respective
obligations pursuant to this Agreement, and the consummation of the transactions
contemplated hereby have been duly authorized by the Boards of Directors of
Agri-Nutrition and Acquisition and by Agri-Nutrition as the sole stockholder of
Acquisition, except for the filing described in Section 1(a) hereof, no other
corporate proceedings on the part of Agri-Nutrition or Acquisition are necessary
to authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Agri-Nutrition and
Acquisition and (assuming the valid authorization, execution, and delivery of
this Agreement by Mardel) is a valid and binding obligation of Agri-Nutrition
and Acquisition, enforceable against each in accordance with its terms.
(d) Absence of Breach; Consents and Approvals. No approval or consent
of, or filing with, any third party or governmental authority is required for
the execution or delivery of the Agreement by Agri-Nutrition or Acquisition or
for the performance of its obligations hereunder. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby will not, (i) conflict with the Certificates of Incorporation or Bylaws
of Agri-Nutrition or Acquisition, (ii) result in a breach or violation of any
provision of, constitute a default or an event which with notice or passage of
time or both would constitute a default under, or give rise to a right of
termination, cancellation, or acceleration of indebtedness under, any material
indenture, mortgage, deed of trust, pledge agreement, lease, license, evidence
of indebtedness or other contract, agreement, or instrument, or any material
law, statute, rule or order, decree, or restriction to which Agri-Nutrition is a
party or by which it or its property is bound.
(e) Annual and Quarterly Reports. Agri-Nutrition has delivered to
Mardel copies of Agri-Nutrition's Annual Reports on Form 10-K for the years
ended October 31, 1995 and 1996 and its Quarterly Reports on Form 10-Q for the
quarters ended January 31, April 30, and July 31, 1997, as filed with the
Securities and Exchange Commission. None of said reports contains as of its date
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading. The balance sheets included in said reports fairly present the
consolidated financial position of Agri-Nutrition as of their respective dates,
and the other financial statements included in said reports fairly present the
consolidated results of operations or other information included therein of
Agri-Nutrition for the respective periods and as of the respective dates therein
set forth, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved (except, as to the
interim unaudited financial statements included in the 10-Q reports, for normal
year end adjustments and only as such principles apply to interim unaudited
statements). Except as reflected or disclosed in such financial statements,
other than liabilities incurred since July 31, 1997 in the ordinary course of
business or liabilities incurred in connection with the proposed Merger or
otherwise contemplated or permitted by this Agreement, neither
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Agri-Nutrition nor any of its consolidated subsidiaries is subject to any
liabilities or obligations (whether accrued, absolute, contingent, or otherwise
and whether due or to become due, including liabilities and obligations that may
become known or arise after the date hereof that relate to transactions entered
into or any state of facts existing on or before July 31, 1997 that would be
required under generally accepted accounting principals to be shown on the
consolidated balance sheet of Agri-Nutrition as of July 31, 1997 or disclosed in
the related notes to financial statements) that are material to Agri-Nutrition
and its consolidated subsidiaries taken as a whole.
(f) Compliance with Applicable Law. The business of Agri-Nutrition is
not being conducted in violation of any applicable law, ordinance, regulation,
decree, or order of any governmental entity.
(g) Litigation. Except as disclosed in Agri-Nutrition's Annual Report
on Form 10-K for fiscal year ended October 31, 1996, Agri-Nutrition's Proxy
Statement for the 1997 Annual Meeting of Stockholders, and Agri-Nutrition's
Quarterly Reports on Form 10-Q for its 1997 fiscal year, (i) no investigation or
review by any governmental entity with respect to Agri-Nutrition is pending or,
to the best of Agri-Nutrition's knowledge, threatened, and (ii) there is no
action, suit, or proceeding pending or, to the best of Agri-Nutrition's
knowledge, threatened against or affecting Agri-Nutrition at law or equity, or
before any federal, state, municipal or other governmental department,
commission, board, bureau, agency, or instrumentality.
(h) Absence of Material Adverse Changes. Subsequent to July 31, 1997,
there has been no Material Adverse Change with respect to Agri-Nutrition and its
subsidiaries taken as a whole.
(i) No Finders. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on without the intervention
of any person as the result of any act of Agri-Nutrition in such manner as to
give rise to any claim against any of the parties hereto for a brokerage
commission, finder's fee, or other like payment.
Section 4. COVENANTS
(a) Conduct of Businesses. Prior to the Effective Time, unless the
other party shall have consented in writing thereto, each of Mardel and
Agri-Nutrition:
(i) shall conduct its operations according to its usual,
regular, and ordinary course in substantially the same manner as
heretofore conducted;
(ii) shall use its reasonable efforts to preserve intact its
business organization and goodwill, keep available the services of its
officers and employees, and maintain satisfactory relationships with
those persons having business relationships with it;
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(iii) shall confer on a regular basis with representatives of
the other to report operational matters of materiality and any
proposals to engage in material transactions;
(iv) shall not amend its Certificate of Incorporation or
Bylaws, except as provided for in this Agreement;
(v) shall promptly notify the other of any material change in
its condition (financial or otherwise), business, properties, assets,
liabilities, prospects, or the normal course of its businesses or in
the operation of its properties and of any material litigation or
material governmental complaints, investigations, or hearings (or
communications indicating that the same may be contemplated); and
(vi) shall not (A) grant, confer, award, or issue any shares
of its capital stock, options, warrants, conversion rights, or other
rights to acquire shares of its capital stock, except that
Agri-Nutrition shall be permitted to grant, confer, award, or issue
shares of its capital stock or such other securities pursuant to any
warrant, or stock or other plan in existence as of the date of this
Agreement, (B) pay any dividends or otherwise cause assets to be
distributed to stockholders, (C) redeem any securities, (D) adopt any
new employee benefit plan or amend any existing employee benefit plan
in any material respect, (E) sell, lease, or otherwise dispose of any
of its assets that are material, individually or in the aggregate,
except in the ordinary course of business, (F) borrow any funds, under
existing lines of credit or otherwise, except as reasonably necessary
for the ordinary operation of its business in a manner, and in amounts,
consistent with historical financial practices, (G) pay principal or
interest on any debt other than in the ordinary course of business, or
(H) make any change in accounting principles and practices.
(b) Inspection of Records. From the date hereof to the Effective Time,
Mardel and Agri-Nutrition each shall allow all designated officers, attorneys,
accountants, and other representatives of the other access at all reasonable
times to records and files, correspondence, audit documentation, and properties,
as well as to all information relating to its commitments, contracts, titles,
and financial position, or otherwise pertaining to its business and affairs.
(c) Confidentiality. Any information respecting the businesses of
Mardel and Agri-Nutrition or its subsidiaries or the operation and management
thereof disclosed by either party to the other in connection with the proposed
Merger (the "Confidential Information") shall be maintained in strict
confidence. The Confidential Information is being provided solely for the
purpose of facilitating the Merger and shall not be used by either party for any
other purpose. In no event shall the Confidential Information received by either
party be used for its own commercial or financial advantage. Each party shall
take all steps necessary to insure compliance with the requirements of this
Section 4(c)
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by all persons having access to the Confidential Information, including any
person retained to provide advice relating to the Merger. Should the Merger not
be consummated, all copies of Confidential Information, in whatever form, shall
be returned to the originator by each party and its representatives.
(d) Anti-Dilution. In the event that subsequent to the date hereof, but
prior to the Effective Time, the outstanding shares of Mardel Common Stock or
Agri-Nutrition Common Stock shall be increased, decreased, changed into, or
exchanged for a different number or kind of shares or securities through
recapitalization, reclassification, reorganization, stock dividend, stock
rights, stock split, or reverse stock split (or if the record date for any such
transaction shall be fixed for a date during such period) then the number of
shares of Agri-Nutrition Common Stock to be issued pursuant to the Merger shall
be appropriately adjusted.
(e) Stockholder Approval. Mardel and Acquisition shall obtain approval
of the Merger, this Agreement, and the transactions contemplated thereby and
hereby by unanimous written consent of their stockholders.
(f) Third Party Consents. Mardel and Agri-Nutrition each shall make all
filings with, and use its best efforts to obtain all consents of, all
governmental agencies and third parties that are required to be filed or
obtained in order for the Merger, this Agreement, and the transactions
contemplated thereby and hereby to be effected, and each will otherwise use its
reasonable best efforts to cause the consummation of the Merger and the other
transactions contemplated herein, all in accordance with the terms of this
Agreement.
(g) Compensation and Benefits. Prior to the Effective Time, Mardel
shall not, directly or indirectly, materially increase the level of compensation
or benefits of any employee, officer, director, or consultant or enter into any
employment, consulting, or retainer agreements, other than in the ordinary
course of conducting its business.
(h) Public Announcements. Neither Mardel nor Agri-Nutrition shall make
any public announcement concerning the Merger without prior notice to, and the
approval of, the other; provided, however, that Mardel acknowledges that
Agri-Nutrition, as a public company, is subject to certain reporting
requirements under the rules of the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc., and nothing herein is intended
to prevent Agri-Nutrition from complying with such reporting requirements; and
provided further, that in the event Agri-Nutrition is required to make a
disclosure pursuant to such reporting requirements Agri-Nutrition will give
Mardel notice of the proposed disclosure and an opportunity to comment thereon.
(i) No Solicitation of Other Offers. Mardel shall not, directly or
indirectly, through any of its officers, directors, employees, agents or
otherwise (i) solicit, initiate or encourage submission of any inquiry,
proposal, or offer from any person or entity relating to any acquisition,
purchase, or sale of all or a material amount of assets of, or any securities
of, or any merger, consolidation or business combination, liquidation,
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reorganization, or similar transaction with, Mardel (an "Alternative
Transaction"), or otherwise cooperate in any way with, or assist or participate
in, or facilitate or encourage such proposal or offer, or (ii) participate in
any discussion or negotiations regarding, or furnish to any other person any
information with respect to, any effort or attempt by any other person to do or
seek any of the foregoing. Mardel shall not furnish or cause to be furnished any
confidential information concerning its business, properties, or assets to any
person or entity that is interested in any Alternative Transaction. Mardel
promptly shall notify Agri-Nutrition of any inquiry, proposal, or offer with
respect to an Alternative Transaction, or any inquiry or contact with any person
or entity with respect thereto, and shall, in any such notice, include a
description of the terms of any proposal or offer, or the nature of any such
inquiry or contact, and the identity of the person or entity making such
inquiry, proposal, or offer or other communication.
(j) Interim Financial Statements. Within 30 days after the end of each
calendar month that ends after the date of this Agreement and before the
Effective Time, Mardel shall deliver to Agri-Nutrition and Agri-Nutrition shall
deliver to Mardel unaudited balance sheets and summaries of earnings for such
calendar month and the year to date. All such financial statements shall fairly
present the financial position and results of operations of Mardel and
Agri-Nutrition and its consolidated subsidiaries, respectively.
(k) Satisfaction of Conditions. Each of Mardel and Agri-Nutrition
agrees that it will take all actions reasonably within its power and authority
duly and promptly to carry out all of its obligations under this Agreement. In
addition, Mardel and Agri-Nutrition each covenants and agrees to use its best
efforts to cause all of the conditions to the obligations of the other to effect
the Merger to be satisfied as promptly as possible.
(l) Distribution of Income. Within 45 days following the Effective
Time, Mardel shall deliver to Agri-Nutrition the income certificate described in
this Section 4(l) (the "Income Certificate"). The Income Certificate shall (i)
state that amount which constitutes 42.6 percent of Mardel's net income during
the period commencing on January 1, 1997 and ending on the date prior to the
date of the Closing, which amount shall reflect customary tax adjustments not
related to the sale of Mardel's Herp Care division (the "Aggregate Income
Amount"), (ii) set forth in reasonable detail information relating to
calculation of the Aggregate Income Amount, and (iii) be certified correct by
Dugan & Lopatka, Mardel's independent accountants. Following delivery of such
income certificate, Mardel promptly shall provide any additional information
regarding the bases for calculation of the Aggregate Income Amount as
Agri-Nutrition reasonably may request.
Within 30 days following receipt of the Income Certificate,
Agri-Nutrition shall distribute to the former holders of Mardel Common Stock,
pro rata based upon ownership, cash in an amount equal to the lesser of (i) the
Aggregate Income Amount set forth in the Income Certificate, and (ii) $100,000.
If Agri-Nutrition in good faith disputes the calculation of the Aggregate Income
Amount set forth in the Income Certificate, Agri-Nutrition shall pay the amount
set forth in such certificate and shall promptly notify Mardel of the basis for
such dispute. In the event that Agri-Nutrition and Mardel cannot agree on the
appropriate amount of the Aggregate Income Amount, a nationally recognized
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accounting firm, not retained at the time of the dispute by the former holders
of Mardel Common Stock and Agri-Nutrition, shall be retained to make the
necessary calculations in order to determine the Aggregate Income Amount and any
resulting adjustments shall be made in accordance with such calculations and
shall be binding upon Agri-Nutrition and the former holders of Mardel Common
Stock. The cost of such accounting firm shall be split equally between (i)
Agri-Nutrition and (ii) the former holders of Mardel Common Stock.
(m) Release of Lien. Agri-Nutrition shall cause the lien on the real
property on which Mardel's facilities are located at 1958 Brandon Court in
Glendale Heights, Illinois in favor of Mardel's primary lender to be released
and shall provide Mardel with proof of such release within two days following
the Effective Time.
Section 5. CONDITIONS PRECEDENT TO MARDEL'S OBLIGATION TO EFFECT THE
MERGER
The obligation of Mardel to effect the Merger shall be subject, at its
option, to the following conditions:
(a) Representations, Covenants, Certificate. The representations and
warranties of Agri-Nutrition set forth in Section 3 that are subject to a
materiality standard shall be true, and all other representations and warranties
of Agri-Nutrition contained herein shall be true in all material respects, as of
the Effective Time with the same effect as though made at the Effective Time;
and Agri-Nutrition shall in all material respects have performed all obligations
and complied with all covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time; and Mardel shall have
received a certificate, dated the Effective Time, as to the matters set forth in
this Section 5(a) and in Section 5(d) from the Chief Executive Officer of
Agri-Nutrition.
(b) Promissory Note. A Promissory Note payable to Ramon A. Mulholland
in the form attached as Schedule K shall have been executed and delivered by
Agri-Nutrition.
(c) Opinion of Counsel for Agri-Nutrition and Acquisition. Mardel shall
have received from Dyer Ellis & Joseph, counsel for Agri-Nutrition, an opinion,
dated the Effective Time, in the form attached as Schedule L.
(d) No Material Changes in Business. From the date of this Agreement
through the Effective Time, there shall not have occurred any Material Adverse
Change with respect to Agri-Nutrition and its subsidiaries, taken as a whole.
(e) First Bank Loan. First Bank shall have closed and funded a loan to
Agri-Nutrition on terms acceptable to Agri-Nutrition.
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Section 6. CONDITIONS PRECEDENT TO AGRI-NUTRITION'S AND ACQUISITION'S
OBLIGATIONS TO EFFECT THE MERGER
The obligations of Agri-Nutrition and Acquisition to effect
the Merger shall be subject, at the option of each, to the following conditions:
(a) Representations, Covenants, Certificate. The representations and
warranties of Mardel herein contained that are subject to a materiality standard
shall be true, and all other representations and warranties of Mardel contained
herein shall be true in all material respects, as of the Effective Time with the
same effect as though made at the Effective Time; Mardel shall in all material
respects have performed all obligations and complied with all covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time; and Agri-Nutrition shall have received a certificate, dated the
Effective Time, as to the matters set forth in this Section 6(a) and in Section
6(d) from the Chief Executive Officer of Mardel.
(b) Indemnity Agreement. An indemnity agreement in the form attached as
Schedule C shall have been executed by each of the holders of Mardel Common
Stock and Mardel and delivered to Agri-Nutrition.
(c) Opinion of Counsel for Mardel. Agri-Nutrition shall have received
from Huck, Bouma, Martin, Charlton & Bradshaw, P.C., counsel for Mardel, an
opinion, dated the Effective Time, in the form attached as Schedule M.
(d) No Material Changes in Business. From the date of this Agreement
through the Effective Time, there shall not have occurred any Material Adverse
Change with respect to Mardel.
Section 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES
The obligations of each party to this agreement to effect the Merger
shall be subject to the following conditions:
(a) Permits and Approvals. All permits, authorizations, and regulatory
approvals of governmental authorities necessary for the consummation of the
Merger by either party, and any required consents to the Merger under any
agreement or contract by which either party is bound, shall have been obtained.
(b) Action or Proceeding. There shall not be any action or proceeding
by or before any court or other governmental body that shall seek to restrain,
prohibit, or invalidate the transactions contemplated by this Agreement.
(c) Share Transfer and Registration Rights Agreement. The Share
Transfer and Registration Rights Agreement in the form attached as Schedule B
shall have been executed by each of the holders of Mardel Common Stock, Mardel,
and Agri-Nutrition and delivered to each of the signatories.
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(d) Employment Agreements. The employment agreements in the forms
attached as Schedule N shall have been executed by Acquisition and Jan A.
Mulholland and Michael F. Mulholland and delivered to the respective
signatories.
(e) Lease. The lease on Mardel's facility located at 1958 Brandon Court
in Glendale Heights, Illinois in the form attached as Schedule O shall have been
executed by Acquisition and Ramon A. Mulholland and delivered to each of the
signatories.
Section 8. CLOSING
The Closing of the Merger shall be completed by telephone conference
call on September 25, 1997, unless another date or manner of effecting the
Closing is agreed to in writing by the parties hereto, if all conditions to the
Merger have been satisfied or waived on or before such date, or as soon as
practicable following the satisfaction or waiver of all conditions to the Merger
if all such conditions have not been satisfied or waived on or before such date.
Section 9. TERMINATION AND ABANDONMENT OF THE MERGER
(a) Termination. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(i) by the mutual written consent of Mardel and Agri-
Nutrition; or
(ii) by Mardel or Agri-Nutrition if
(A) any court or governmental body of competent
jurisdiction shall have issued an order, decree, or ruling, or
taken any other action, permanently restraining, enjoining, or
otherwise prohibiting the transactions contemplated by this
Agreement, provided that no termination shall be permitted
under this paragraph unless the party seeking such termination
shall have used its reasonable best efforts to oppose such
issuance or taking; or
(B) other party commits any material breach of its
representations, warranties, or covenants set forth herein and
such breach has not been cured within seven days after notice
is given to terminate this Agreement as a result of such
breach; or
(iii) by Mardel or Agri-Nutrition if the conditions set forth
in Sections 5 and 6, respectively, have not been satisfied or waived by
December 31, 1997 or by such later date not more than three months
thereafter that Mardel and Agri-Nutrition shall mutually select.
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Upon the occurrence of any of the events specified in this Section 9(a)
(other than paragraph (i) hereof), written notice of such event shall forthwith
be given to the other party to this Agreement, whereupon this Agreement shall
terminate.
(b) Effect of Termination. In the event of the termination and
abandonment of this Agreement and the Merger, this Agreement shall become void
and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, except that the obligations of the parties
pursuant to Sections 4(c), 9(c) and 10(b) shall continue in full force and
effect to the extent provided therein and in accordance with their respective
terms.
(c) Employees. Mardel and Agri-Nutrition each agree that if this
Agreement is terminated and abandoned prior to the Effective Time, neither party
will, during the 12 months following such termination and abandonment, directly
or indirectly solicit any present employee of the other party to leave the
employment of such party.
Section 10. MISCELLANEOUS
(a) Survival of Representations and Warranties. Every representation
and warranty of the parties set forth in this Agreement and all of the rights
and remedies regarding misrepresentations and inaccuracies of such
representations and warranties shall survive, and not be deemed waived by, the
Closing, and shall be effective regardless of any investigation that may have
been made at any time by or on behalf of any party or its directors, officers,
employees, or agents.
(b) Expenses. The parties shall pay their respective expenses
(including the fees, disbursements, and expenses of their respective attorneys
and accountants) in connection with the negotiation and preparation of this
Agreement and the consummation of the transactions contemplated hereby.
(c) Notices. Each party hereto shall promptly give written notice to
the other parties upon becoming aware of the occurrence of, or any impending or
threatened occurrence of, any event that would cause or constitute a breach of
any of its representations, warranties, or covenants contained in this
Agreement, and such party shall use its best efforts to prevent or promptly
remedy the same. Any notice or other communication required or which may be
given hereunder shall be in writing and shall be either delivered personally
(including delivery by courier service) or deposited in the United States mail,
first class, certified, return receipt requested, postage prepaid, addressed as
follows:
If to Mardel, to:
Mardel Laboratories, Inc.
1958 Brandon Court
Glendale Heights, Illinois 60139
Attention: Jan A. Mulholland, President
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with a copy to:
Huck, Bouma, Martin, Charlton & Bradshaw, P.C.
1755 South Naperville Road, Suite 200
Wheaton, Illinois 60187
Attention: Ralph R. Bouma, Jr.
If to Agri-Nutrition or Acquisition, to:
Agri-Nutrition Group Limited
Riverport Executive Center II
13801 Riverport Drive, Suite 111
Maryland Heights, Missouri 63043
Attention: Bruce G. Baker, President
with a copy to:
Dyer Ellis & Joseph
600 New Hampshire Avenue
Washington, D.C. 20037
Attention: Linda Rosenthal
Any party may change its address to which notices or other communications are to
be sent by giving written notice of any such change in the manner provided
herein for giving notice.
(d) Modification or Waiver. This Agreement and the Certificate of
Merger may be amended, modified, or superseded at any time by a written
instrument executed by Mardel, Agri-Nutrition, and Acquisition, and any of the
terms, covenants, representations, warranties, or conditions hereof may be
waived by the party intended to be benefited hereby; provided, however, that the
terms of the Merger set forth in Section 1(e) may be amended, modified, or
superseded only with the additional approval of the stockholders of Mardel. No
waiver of any nature, in any one or more instances, shall be deemed to be or
construed as a further or continued waiver of any condition or any breach of any
other term, representation, or warranty in this Agreement.
(e) Binding Effect and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that prior to the Effective Time, no assignment
of any rights provided for herein may be made by any party without the written
consent of the other parties.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
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(g) Section Headings. The Section headings contained in this Agreement
are inserted for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
(h) Further Assurances. Subject to the terms and conditions herein
provided, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper, or advisable under applicable laws and regulations to
consummate and make effective the Merger in accordance with the terms of this
Agreement. In case at any time any further action is necessary or desirable to
carry out the purposes of this Agreement, the appropriate officers of each party
to this Agreement are hereby directed and authorized to use their best efforts
to effectuate all such action.
(i) Entire Agreement. This agreement embodies the entire agreement and
understanding between the parties hereto relating to the subject matter hereof
and supersedes any prior letters of intent, agreements, and understandings
relating to the subject matter hereof.
(j) No Third Party Beneficiaries. Nothing expressed or referred to in
this Agreement is intended or shall be construed to give any person other than
the parties to this Agreement or their respective successors or permitted
assigns any legal or equitable right, remedy, or claim under or in respect of
this Agreement or any provision contained herein, it being the intention of the
parties to this Agreement that this Agreement shall be for the sole and
exclusive benefit of such parties or such successors and assigns and not for the
benefit of any other person.
(k) Counterparts. Separate copies of this Agreement may be signed by
the parties hereto, with the same effect as though all of the parties had signed
one copy of this Agreement.
(l) Attorneys' Fees. If legal action is commenced to enforce this
Agreement, the prevailing party in such action shall be entitled to recover its
costs and reasonable attorneys' fees in addition to any other relief granted.
(m) Severability. If any provision of this Agreement shall be held
invalid under any applicable law, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision and, to this end, the provisions hereof are severable.
(n) Interpretation of Agreement. The parties hereto acknowledge and
agree that this Agreement has been negotiated at arm's length and between
parties equally sophisticated and knowledgeable in the matters dealt with in
this Agreement. Accordingly, any rule of law, court decision, or other legal
precedent that would require interpretation of any ambiguities in this Agreement
against the party that has drafted it is not applicable and is waived.
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IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first above written.
MARDEL LABORATORIES, INC.
By:
Jan A. Mulholland
President
ATTEST:
AGRI-NUTRITION GROUP LIMITED
By:
Bruce G. Baker
President
ATTEST:
MARDEL ACQUISITION CORPORATION
By:
Jan A. Mulholland
President
ATTEST:
24
Exhibit 2.9
INDEMNITY AGREEMENT
This Indemnification Agreement is entered into on this 25th day of
September, 1997, by and among Agri-Nutrition Group Limited, a Delaware
corporation ("Agri-Nutrition"), Mardel Laboratories, Inc., a Delaware
corporation ("Mardel") and the stockholders of Mardel listed on the signature
page hereof (the "Stockholders").
RECITALS
A. Agri-Nutrition, Mardel Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Agri-Nutrition ("Acquisition"), and
Mardel have entered into an Agreement and Plan of Merger dated September 25,
1997 (the "Merger Agreement") pursuant to which Mardel will merge with and into
Acquisition and the shares of Mardel Common Stock held by the Stockholders will
be canceled and extinguished and converted into the right to receive cash and
shares of Agri-Nutrition Common Stock pursuant to the terms of Section 1(e) of
the Merger Agreement.
B. Under the Merger Agreement, it is a condition precedent to
Agri-Nutrition's and Acquisition's obligations to consummate the Merger that the
Stockholders enter into this Agreement, and the Stockholders are willing to do
so in order to induce Agri-Nutrition and Acquisition to perform their
obligations under the Merger Agreement.
NOW, THEREFORE, in consideration of the premises hereinafter set forth
and intending to be legally bound thereby, the parties hereto agree as follows:
AGREEMENT
Section 1. INDEMNIFICATION BY THE STOCKHOLDERS
(a) Indemnification. From and after the Effective Date, as that term is
defined in the Merger Agreement, each of the Stockholders, jointly and
severally, agrees to indemnify and hold Agri-Nutrition, Acquisition, their
directors and officers, and the respective heirs, administrators, successors,
and assigns of each of the foregoing, harmless from any claims, damages, losses,
liabilities, judgments, fines, penalties, assessments, settlements, costs, or
expenses, including reasonable expenses of investigation, reasonable attorneys'
fees, and other reasonable legal costs and expenses incident to any of the
foregoing or to the enforcement of this Agreement (collectively herein referred
to as "Claims"), whether or not any suit is brought or, if brought, whether or
not such suit is successful, in whole or in part arising out of or relating to
any material misrepresentation or inaccuracy in any of the representations or
warranties made by Mardel in the Merger Agreement or the schedules thereto, or
in any agreement, instrument, certificate, or document delivered to
Agri-Nutrition or Acquisition by Mardel in connection with the Merger Agreement
or the transactions contemplated thereby; provided, however, that Rebecca A.
Blum and Kathleen R. Knatz shall not have any liability under this Section 1(a)
with respect to any Claims other than Claims arising out
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of or relating to any material misrepresentation or inaccuracy in the
representations and warranties with respect to their ownership of Mardel
securities; provided, further, that a Stockholder shall not have liability for
any Claim in excess of such Stockholder's pro rata portion of such Claim, based
on the number of shares of common stock of Mardel owned immediately prior to the
Effective Time (as defined in the Merger Agreement) by such Stockholder in
proportion to the total number of shares of such common stock owned immediately
prior to the Effective Time by all Stockholders who would otherwise have
liability for such Claim under this Section 1(a), until the date which is 30
days after the date that Agri-Nutrition provided notice of such Claim to each of
the Stockholders who would otherwise have liablity for such Claim under this
Section 1(a).
(b) Limitation on Indemnification. Notwithstanding the provisions of
Section 1(a), the liability of the Stockholders pursuant to this Agreement shall
be limited as follows:
(i) with respect to Claims arising during the period from the
date of the Closing through the first anniversary of the date of the
Closing, to $600,000;
(ii) with respect to Claims arising during the period from the
date following the first anniversary of the date of the Closing through
the second anniversary of the date of the Closing, to $400,000; and
(iii) with respect to Claims arising during the period from
the date following the second anniversary of the date of the Closing
through the third anniversary of the date of the Closing, to $200,000.
In addition, the Stockholders shall incur no liability under this
Agreement except to the extent that Claims hereunder exceed an aggregate of
$15,000.
(c) Right of Offset of Agri-Nutrition. In addition to any rights or
remedies otherwise available to Agri-Nutrition at law or in equity,
Agri-Nutrition may enforce its rights pursuant to this Agreement by offsetting
the amounts of any Claims arising under this Agreement against payments of
Additional Merger Consideration. In the event that Agri-Nutrition exercises its
right of offset set forth in this Section 1(c) and any Stockholder disagrees
with Agri-Nutrition as to the validity or amount of the related Claim,
Agri-Nutrition promptly shall deposit that portion of the offset amount that is
in dispute in an interest-bearing escrow account. Following a final
determination of the validity and amount of such Claim, Agri-Nutrition promptly
shall cause any portion of the escrowed funds exceeding the amount required to
satisfy such Claim in full in accordance with such determination to be
distributed to the Stockholders, along with interest thereon. Agri-Nutrition
shall be responsible for payment of all fees and expenses relating to the
establishment and maintenance of the escrow account. All escrowed funds shall be
invested in investments considered "investment grade" by either of Standard &
Poor's Corporation or Moody's Investor Services, Inc.
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(d) Payment. At the option of the Stockholders, up to 51 percent of any
amount due Agri-Nutrition under this Agreement may be paid in Agri-Nutrition
Common Stock. For purposes of calculating the number of shares payable
hereunder, the value of Agri-Nutrition Common Stock shall be calculated based
upon the closing price of Agri-Nutrition Common Stock on the NASDAQ National
Market, or such other exchange or market upon which Agri-Nutrition Common Stock
may then be traded, on the date that Agri-Nutrition provides written notice to
the Stockholders of its intent to exercise its right to indemnification
hereunder.
Section 2. INDEMNIFICATION BY AGRI-NUTRITION
From and after the Effective Date, Agri-Nutrition agrees to indemnify
and hold each Stockholder, and each of the Stockholder's heirs, administrators,
successors, and assigns, harmless from any Claims, whether or not suit is
brought or, if brought, whether or not such suit is successful, in whole or in
part arising out of or relating to any material misrepresentation or inaccuracy
in any of the representations or warranties made by Agri-Nutrition in the Merger
Agreement or the schedules thereto, or in any agreement, instrument,
certificate, or document delivered to Mardel by Agri-Nutrition or Acquisition in
connection with the Merger Agreement or the transactions contemplated thereby.
Section 3. THIRD PARTY CLAIMS
The obligations and liabilities of a party from which indemnification
is sought (an "Indemnifying Party") to a party seeking indemnification (an
"Indemnified Party") under this Agreement with respect to claims resulting from
the assertion of liability by third parties shall be subject to the following
conditions:
(a) The Indemnified Party shall give prompt written notice to the
Indemnifying Party of the nature of the assertion of liability by a third party
and the amount thereof to the extent known; provided, however, that the failure
of the Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of such party's obligations under this Agreement.
(b) Except as provided in Section 3(c), if any action, suit, or
proceeding (a "Legal Action") is brought by a third party against an Indemnified
Party, the Indemnifying Party shall be entitled to defend such Legal Action at
its own cost and expense by counsel reasonably acceptable to the Indemnified
Party, and such defense shall include all appeals or reviews that counsel for
the Indemnifying Party shall deem appropriate; provided, however, that, prior to
defending such Legal Action the Indemnifying Party must acknowledge in writing
its obligation to indemnify the Indemnified Party and give prompt notice to the
Indemnified Party of its intention to assume such defense. Until the
Indemnifying Party shall have assumed the defense of any such Legal Action, all
legal or other expenses reasonably incurred by the Indemnified Party shall be
borne by the Indemnifying Party. If there exists or is reasonably likely to
exist a conflict of interest that would make it inappropriate in the reasonable
judgment of the Indemnified Party for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then
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the Indemnified Party shall be entitled to retain its own counsel, in each
jurisdiction for which the Indemnified Party determines counsel is required, at
the expense of the Indemnifying Party.
(c) Notwithstanding the Indemnifying Party's rights to assume the
defense of a Legal Action set forth in Section 3(b), the Indemnified Party may
at any time elect, by written notice to the Indemnifying Party, to assume the
defense of such Legal Action by counsel reasonably acceptable to the
Indemnifying Party; provided, however, that in such event, the Indemnified Party
shall bear all expenses thereafter incurred by it in defending such Legal
Action, but the Indemnifying Party shall bear the costs of any damage, loss,
liability, judgment, fine, penalty, assessment, or settlement arising out of
such Legal Action.
(d) In any Legal Action initiated by a third party and defended by the
Indemnifying Party (i) the Indemnified Party shall have the right to be
represented by advisory counsel and accountants, at its own expense, (ii) the
Indemnifying Party shall keep the Indemnified Party fully informed as to the
status of such Legal Action at all stages thereof, whether or not the
Indemnified Party is represented by its own counsel, (iii) the Indemnified Party
shall make available to the Indemnifying Party, and its attorneys and
accountants, all books and records of the Indemnified Party relating to such
Legal Action, (iv) the parties shall render to each other such assistance as may
be reasonably required in order to ensure the proper and adequate defense of
such Legal Action, and (v) the Indemnifying Party shall not make any settlement
of any claim without the written consent of the Indemnified Party, which shall
not be unreasonably withheld. Without limiting the generality of the foregoing,
it shall not be deemed unreasonable for the Indemnified Party to withhold
consent to a settlement involving injunctive or other equitable relief against
the Indemnified Party or its assets, employees, or business.
(e) In any Legal Action initiated by a third party and defended by the
Indemnified Party, (i) the Indemnifying Party shall have the right to be
represented by advisory counsel and accountants, at its own expense, (ii) the
Indemnified Party shall keep the Indemnifying Party fully informed as to the
status of such Legal Action at all stages thereof, whether or not the
Indemnifying Party is represented by its own counsel, (iii) the Indemnifying
Party shall make available to the Indemnified Party, and its attorneys and
accountants, all books and records of the Indemnifying Party relating to such
Legal Action, (iv) the parties shall render to each other such assistance as may
be reasonably required in order to ensure the proper and adequate defense of
such Legal Action, and (v) the Indemnified Party shall not make any settlement
of any claim without the written consent of the Indemnifying Party, which shall
not be unreasonably withheld. Without limiting the generality of the foregoing,
it shall not be deemed unreasonable for the Indemnifying Party to withhold
consent to a settlement involving injunctive or other equitable relief against
the Indemnifying Party or its assets, employees, or business.
Section 4. INCORPORATION BY REFERENCE
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The Merger Agreement is hereby incorporated into this Agreement by
reference thereto and all terms and conditions included therein shall have the
same force and effect upon all of the parties hereto as if set forth in their
entirety herein. Capitalized terms used herein that are not otherwise defined
shall have the meanings set forth in the Merger Agreement. Any notice or other
communication required or which may be given under this Agreement shall be given
in accordance with the terms of Section 10(c) of the Merger Agreement and the
initial addresses of the Stockholders for such purposes shall be the addresses
set forth on Schedule D to the Merger Agreement.
Section 5. TERM
This Agreement shall expire on the day following the third anniversary
of the date of the Closing.
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first above written.
STOCKHOLDERS: MARDEL LABORATORIES, INC.
By:
Ramon A. Mulholland Jan A. Mulholland
President
AGRI-NUTRITION GROUP LIMITED
Jan A. Mulholland
By:
Michael F. Mulholland Bruce G. Baker
President
Rebecca A. Blum
Kathleen R. Knatz
5
Exhibit 2.10
SHARE TRANSFER AND REGISTRATION RIGHTS AGREEMENT
This Share Transfer and Registration Rights Agreement dated as of
September 25, 1997, by and between Agri-Nutrition Group Limited, a Delaware
corporation ("Agri-Nutrition") and the Stockholders of Mardel Laboratories,
Inc., a Delaware corporation ("Mardel") listed on the signature page hereof
(together with their permitted assigns, the "Stockholders").
RECITALS
A. Agri-Nutrition, Mardel Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Agri-Nutrition ("Acquisition"), and
Mardel have entered into an Agreement and Plan of Merger dated September 25,
1997 (the "Merger Agreement") pursuant to which Mardel will merge with and into
Acquisition and the shares of Mardel Common Stock held by the Stockholders will
be canceled and extinguished and converted into the right to receive cash and
shares of Agri-Nutrition Common Stock, $.01 par value per share, pursuant to the
terms of Section 1(e) of the Merger Agreement (the "Merger Shares"); and
B. Under the Merger Agreement, it is a condition precedent to the
obligation of each of the parties to the Merger Agreement to consummate the
Merger that Agri-Nutrition and the Stockholders execute and deliver this
Agreement, and the Stockholders and Agri-Nutrition are willing to do so in order
to induce the other parties to perform their obligations under the Merger
Agreement.
NOW, THEREFORE, in order to induce Agri-Nutrition and the Stockholders
to consummate the transactions contemplated by the Merger Agreement and in
consideration of the premises and agreements contained in this Agreement and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
AGREEMENT
Section 1. RESTRICTIONS ON TRANSFER OF MERGER SHARES
Each Stockholder hereby agrees not to sell, assign, pledge, grant a
security interest in, or otherwise transfer, dispose of, or encumber all or any
part of his or her right, title, or interest in the Merger Shares until the date
following the second anniversary of the date of the Closing without the prior
written consent of Agri-Nutrition; provided, however, that the Merger Shares may
be transferred hereunder (i) pursuant to will or the laws of intestacy, (ii)
pursuant to a transaction not involving the payment of consideration undertaken
for purposes of estate planning, (iii) by bona fide gift, or (iv) by operation
of law. Any transaction contrary to the terms of this Section 1 shall be void.
All certificates representing Merger Shares shall have inscribed thereon the
following legends:
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The shares represented by this certificate are subject to restrictions
on transfer pursuant to the Share Transfer and Registration Rights
Agreement dated September 25, 1997, a copy of which is available for
inspection at the principal office of the issuer, and no transfer of
the shares represented by this certificate shall be valid or effective
unless such transfer is effected in accordance with the terms of such
Agreements.
The shares represented by this certificate have not been registered
pursuant to the Securities Act of 1933, as amended, and are
transferable only upon such registration or delivery of an opinion of
counsel, reasonably satisfactory to the issuer, that such transfer may
be lawfully effected in the absence of such registration.
The restrictions on transfer set forth in this Section 1 shall be binding upon
the parties hereto and upon any permitted purchasers, assignees, beneficiaries,
heirs, fiduciaries, donees, pledgees, or other transferees, as if such parties
were a party to this Agreement.
Section 2. DEMAND REGISTRATION RIGHTS
(a) Request for Registration. Following the second anniversary of the
Closing, as such term is defined in the Merger Agreement, and prior to the tenth
anniversary of the Closing, upon which date the registration rights set forth in
this Section 2(a) shall expire, a Stockholder or Stockholders holding in the
aggregate at least 50% of the Merger Shares outstanding at the time a request is
made pursuant to this Section 2(a) shall have the right on two occasions to
request Agri-Nutrition, in writing, to effect the registration of Merger Shares
having an aggregate offering price of at least $100,000 (based on the closing
price of the Common Stock of Agri-Nutrition listed on the NASDAQ National Market
or such other exchange or market on which the Agri-Nutrition's Shares may be
listed on the day prior to the date of the request to register such Merger
Shares) on Form S-3 (or, if Form S-3 is not available, on such other form as may
be appropriate under the federal securities laws) with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Act of 1933,
as amended (the "Securities Act"). Such written request shall specify the number
of Merger Shares to be registered and the intended method of disposition of such
Merger Shares.
(b) Notice to Stockholders. Upon receipt of the written request
referred to in Section 2(a), Agri-Nutrition shall (i) promptly give written
notice of the requested registration to all other Stockholders (including
information regarding the intended method of disposition of the Merger Shares),
who may then elect to participate in such registration, and (ii) as soon as
practicable, use its best efforts to effect the registration on Form S-3 (or
such other appropriate form) of the Merger Shares for which the Stockholders
have requested registration.
(c) Limitations on Rights. If at the time of any request to register
Merger Shares pursuant to this Section 2, Agri-Nutrition is engaged or has plans
to engage within 60
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days of the time of the request in a registered public offering as to which the
Stockholders may include Merger Shares pursuant to Section 3 or is engaged in
any other activity which, in the good faith determination of Agri-Nutrition's
Board of Directors, would be adversely affected by the requested registration,
then Agri-Nutrition may at its option direct that such request be delayed for a
period not in excess of six months from the effective date of such offering or
the date of commencement of such other activity, as the case may be. In such
event, the Stockholders shall be deemed to have withdrawn their request for
registration and such request shall not be counted as a demand registration to
which such Stockholders are entitled pursuant to Section 2(a). Agri-Nutrition
may exercise its option to delay registration of the shares only one time in any
fiscal year.
Notwithstanding any other provisions of this Section 2, Agri-Nutrition
shall not be obligated to register Merger Shares if all of the Merger Shares for
which the Stockholders have requested registration are eligible for sale
pursuant to Rule 144 under the Securities Act without regard to the volume
limitations set forth in Rule 144 and Agri-Nutrition causes its agents promptly
to transfer shares eligible for sale under Rule 144.
(d) Underwriting. In the event the Stockholders requesting registration
intend to distribute the Merger Shares by means of an underwriting, the right of
any Stockholders to be included in such registration shall be conditioned upon
such Stockholders' agreement to pay their pro rata share of the underwriting
discounts and commissions.
Agri-Nutrition and the Stockholders holding the Merger Shares to be
registered shall enter into an underwriting agreement with an underwriter
selected by the Stockholders and approved by the Board of Directors of
Agri-Nutrition requesting the registration under Section 2(a). Such agreement
shall contain representations, warranties, and covenants and other terms as are
customarily contained in agreements of that type and shall be reasonably
satisfactory in form and substance to Agri-Nutrition and the Stockholders
holding the Merger Shares being registered.
Notwithstanding any other provisions of this Section 2, if the managing
underwriter advises Agri-Nutrition in writing that marketing factors require a
reduction in the number of Merger Shares to be underwritten, then Agri-Nutrition
shall so advise the Stockholders holding the Merger Shares to be registered, and
the number of Merger Shares that are included in the registration statement
shall be reduced in accordance with such requirements pro rata among
Stockholders in accordance with the number of Merger Shares being registered.
Section 3. PIGGYBACK REGISTRATION RIGHTS
(a) Request for Registration. After the second anniversary of the
Closing, and prior to the tenth anniversary of the Closing, if Agri-Nutrition
proposes to register any of its securities under the Securities Act on Form S-1,
S-2 or S-3 (or any equivalent general registration form then in effect),
Agri-Nutrition shall: (i) promptly give written notice of such registration to
each Stockholder, and (ii) include in such registration the Merger
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Shares specified in any written requests received from such Stockholders within
30 days following delivery of such notice.
(b) Limitation on Rights. Notwithstanding any other provisions of this
Section 3, if Agri-Nutrition's managing underwriter advises Agri-Nutrition in
writing that the number of Merger Shares requested to be included in the
registration statement exceeds the number of such Merger Shares that can be sold
in an orderly manner in the offering or that the inclusion of such Merger Shares
would adversely affect the offering, then Agri-Nutrition shall be required to
include only that number of Merger Shares that would not exceed such number or
have such adverse effect. In the event that it is necessary to reduce the number
of Merger Shares to be included in the registration statement, such reduction
shall be made pro rata among Stockholders in accordance with the number of
Merger Shares being registered.
Notwithstanding any other provisions of this Section 3, Agri-Nutrition
shall have the right at any time after it has given notice of the filing of a
registration pursuant to this Section 3 to elect not to proceed with such
registration.
Notwithstanding any other provisions of this Section 3, Agri-Nutrition
shall not be obligated to register Merger Shares if such Merger Shares are
eligible for sale pursuant to Rule 144 under the Securities Act without regard
to the volume limitations set forth in Rule 144.
Section 4. INFORMATION PROVIDED BY STOCKHOLDERS
Any Stockholder whose Merger Shares are included in any registration
statement hereunder shall furnish to Agri-Nutrition such information regarding
such Stockholder and the intended method of distribution of the Merger Shares as
Agri-Nutrition may request in writing.
Section 5. EXPENSES OF REGISTRATION
All fees and expenses in connection with any registration hereunder,
including registration fees, printing expenses, blue sky fees and expenses, and
Agri-Nutrition's legal and accounting fees and expenses, shall be paid by
Agri-Nutrition, except as hereinafter provided. All selling expenses, including
underwriting discounts, selling commissions, and stock transfer taxes in
connection with any registration, and all fees and expenses (but not including
the expenses described in the first sentence of this Section 5) of counsel and
other advisors to the Stockholders, shall be borne by the Stockholders pro rata
in accordance with the number of Merger Shares being registered.
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Section 6. REGISTRATION PROCEDURES
Whenever Agri-Nutrition shall be required to register any Merger Shares
hereunder, Agri-Nutrition shall, as expeditiously as possible:
(a) Filings. Prepare and file with the Commission, and use its best
efforts to cause to be declared and remain continuously effective for a period
of time not exceeding 120 days, the registration statement and any amendments
and supplements thereto and the prospectus used in connection therewith as may
be necessary to keep the registration statement current and to comply with the
provisions of the Securities Act with respect to the disposition of Merger
Shares covered by the registration statement; provided that in the event the
registration statement is filed on Form S-3, Agri-Nutrition shall use its best
efforts to cause such registration statement to remain continuously effective
for a period of time not exceeding two years.
Notwithstanding the other provisions of this Section 6(a), while any
such registration statement remains in effect, Agri-Nutrition may at any time
deliver to the Stockholders written notice to the effect that sales may not be
effected under the registration statement for a period of time (the "Blackout
Period") because of the existence of material facts not disclosed or
incorporated by reference in such registration statement and in the prospectus
included therein. Upon receipt of such of any such notice, each of the
Stockholders shall refrain from selling any shares of Agri-Nutrition Common
Stock under such registration statement until they have received notice from
Agri-Nutrition to the effect that such sales may then be effected. In no event
shall the Blackout Period be greater than any similar period of time during
which Agri-Nutrition restricts any of its executive officers, directors and
principal shareholders from effecting sales in Agri-Nutrition Common Stock
because of the existence of material facts not disclosed or incorporated by
reference in any then-effective registration statement and in the prospectus
included therein or otherwise not publicly disclosed. Following any public
disclosure of such material facts, Agri-Nutrition promptly shall update such
registration statement and the prospectus included therein in order to permit
the shares of Agri-Nutrition Common Stock to be sold, and the duration of
effectiveness of the registration statement hereunder shall be extended by the
aggregate number of days during which the Stockholders were instructed to
refrain from selling shares of Agri-Nutrition Common Stock during all Blackout
Periods.
(b) Copies of Documents. Furnish to each Stockholder participating in
the offering and each underwriter, if any, copies of the registration statement
and each amendment and supplement thereto and copies of the prospectus included
therein (including each summary, preliminary, final, amended or supplemented
prospectus) in conformity with the requirements of the Securities Act and copies
of such other documents as each such Stockholder and underwriters, if any, shall
reasonably require in order to facilitate the disposition of the Merger Shares,
but only while Agri-Nutrition is required under the provisions hereof to keep
the registration statement current.
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(c) Blue Sky Compliance. Use its best efforts to register or qualify
the Merger Shares covered by the registration statement under such other
securities or blue sky laws of such jurisdictions in the United States as
Agri-Nutrition or the managing underwriter, if any, determine is reasonably
necessary to enable each participating Stockholder to consummate the disposition
of the Merger Shares owned by it in compliance with the laws of such
jurisdiction; provided, however, that in no event shall Agri-Nutrition be
required to qualify to do business as a foreign corporation in any jurisdiction
where it is not so qualified, to conform the composition of its assets at the
time to the securities or blue sky laws of any jurisdiction, or to subject
itself to taxation or to any suit (other than suits arising in connection with
the sale of Merger Shares) in any jurisdiction where it has not theretofore done
so.
(d) Experts. Furnish to each underwriter participating in the offering
(i) an opinion of counsel to Agri-Nutrition dated the effective date of such
registration statement and the date of the closing under the underwriting
agreement, and (ii) a "cold comfort" letter dated the effective date of such
registration statement and the date of the closing under the underwriting
agreement signed by the independent public accountants who have issued a report
on Agri-Nutrition's financial statements included in such registration
statement, in each case covering substantially the same matters with respect to
such registration statement (and the prospectus included therein) and, in the
case of such accountant's letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountant's letters delivered to underwriters in underwritten
public offerings of securities.
(e) Material Information. Immediately (i) notify each Stockholder
participating in the offering and the managing underwriter, if any, of any event
that results in the prospectus included in the registration statement, as then
in effect, including any untrue statement of a material fact or omitting to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances then existing, not
misleading, and (ii) amend or supplant such prospectus as may be necessary so
that such prospectus shall not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances then existing, not
misleading, and so that such prospectus will comply with applicable law.
(f) Other Compliance With Law. Otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission.
(g) Transfer Agent and Registrar. Provide a transfer agent and
registrar (which may be the same entity) for the Merger Shares.
Section 7. SUBORDINATION OF REGISTRATION RIGHTS
Notwithstanding the other provisions of this Agreement, the
registration rights of the Stockholders set forth in this Agreement shall be
subordinate in all respects to the
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registration rights of holders of Agri-Nutrition securities that were granted to
such security holders by Agri-Nutrition prior to the date of this Agreement.
Section 8. LOCKUP AGREEMENT
In consideration for Agri-Nutrition agreeing to its obligations under
this Agreement, each Stockholder agrees, in connection with any registration of
the Merger Shares, upon request of Agri-Nutrition or the underwriters managing
any underwritten offering of Agri-Nutrition's securities, not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of any Merger Shares (other than those included in the registration and those
sold in a private transaction in which the purchaser agrees to be bound by the
terms of this agreement) without the prior written consent of Agri-Nutrition or
the underwriters, as the case may be, for such period of time (not to exceed 90
days) from the effective date of such registration statement as Agri-Nutrition
or the underwriters may specify. The Stockholders agree that Agri-Nutrition may
instruct its transfer agent to place stop-transfer notation in its records to
enforce the provisions of this Section 8.
Section 9. INDEMNIFICATION
(a) Agri-Nutrition will indemnify each Stockholder whose Merger Shares
are included in any registration hereunder and each of its officers, directors,
and partners and each person controlling such Stockholders within the meaning of
Section 15 of the Securities Act, and each underwriter, if any, and each of its
officers, directors and partners, and each person who controls any underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
claims, losses, damages, and liabilities (or actions in respect thereof)
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement or prospectus, or any amendment or supplement thereto, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by
Agri-Nutrition of any rule or regulation promulgated under the Securities Act
applicable to Agri-Nutrition and will reimburse each such Stockholder, each of
its officers, directors, and partners, and each person controlling such
Stockholder, each such underwriter, each of its officers, directors, and
partners and each person who controls any such underwriter, for any legal
expenses (provided that there shall be no more than one counsel for all
Stockholders) and any other expenses incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability, or action,
provided that Agri-Nutrition will not be liable in any such case to the extent
that any such claim, loss, damage, liability, or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with information furnished to
Agri-Nutrition by such Stockholder or underwriter for use therein.
(b) Each Stockholder whose Merger Shares are included in such
registration will indemnify Agri-Nutrition, and each of its directors and
officers, each underwriter, if any,
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and each of its officers, directors, and partners, and each person who controls
Agri-Nutrition or such underwriter within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages, and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement or prospectus, or any amendment or supplement thereto, or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statement therein not misleading, and will
reimburse Agri-Nutrition and such underwriters, directors, officers, partners,
or control persons for any legal expenses (provided that there shall be no more
that one counsel for all such persons) for any other expenses reasonably
incurred in connection with investigation or defending any such claim, loss,
damage, liability, or action, in each case to the extent that such untrue
statement (or alleged untrue statement) or omission (or alleged omission)
resulted from Agri-Nutrition's reliance upon information furnished by such
Stockholder.
(c) Each party entitled to indemnification under this Section 9 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any pending or threatened claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense (which participation shall be at such party's expense unless there are,
in the opinion of counsel for such party, actual or potential differing
interests between such party and the Indemnifying Party), and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Agreement, except to the extent that the Indemnifying Party's ability to defend
against such claim or litigation is substantially impaired as a result of such
failure to give notice.
Section 10. GENERAL
(a) Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by first class certified or registered mail, return receipt
requested, postage prepaid:
If to Agri-Nutrition:
Agri-Nutrition Group Limited
Riverport Executive Center II
13801 Riverport Drive, Suite 111
Maryland Heights, Missouri 63043
Attention: Bruce G. Baker, President
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with a copy to:
Dyer Ellis & Joseph
Watergate, Suite 1000
600 New Hampshire Avenue, NW
Washington, DC 20037
Attention: Linda K. Rosenthal
If to a Stockholder, at his or her address as set forth on
Exhibit A.
Any party may change its address to which notices or other communications are to
be sent by giving written notice of any such change in the manner provided
herein for giving notice. Notices provided in accordance with this Section 10
shall be deemed delivered upon personal delivery or two business days after
deposit in the mail.
(b) Assignment. The Stockholders may not assign any of the
rights granted to them pursuant to this Agreement without the written consent of
Agri-Nutrition.
(c) Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
(d) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of Agri-Nutrition and each of the
Stockholders. No waivers of or exceptions to any term, condition or provision of
this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.
(e) Counterparts. This Agreement may be executed in one or
more counterparts (including by facsimile signature), each of which shall be
deemed to be an original, but all of which shall be one and the same document.
(f) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not effect the validity or enforceability of
any other provision of this Agreement.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to any conflicts of law principles.
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IN WITNESS WHEREOF, the undersigned have executed this agreement as of
the date first set forth above.
STOCKHOLDERS AGRI-NUTRITION GROUP LIMITED
____________________ By:
Ramon A. Mulholland Bruce G. Baker
President
- --------------------
Jan A. Mulholland
- --------------------
Michael F. Mulholland
- --------------------
Rebecca A. Blum
- --------------------
Kathleen R. Knatz
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Exhibit A
A copy of any notice to be provided to the Stockholders under the
Agreement shall be sent to each Stockholder at the following addresses:
Ramon A. Mulholland
407 Windemere Circle
Wheaton, Illinois 60187
Jan A. Mulholland
151 Benton Lane
Bloomingdale, Illinois 60108
Michael F. Mulholland
28W770 Calumet Avenue
Warrenville, Illinois 60555
\
Rebecca A. Blum
37480 Avenida Bravura
Temecula, California 92592
Kathleen R. Knatz
3749 Canberra
Titusville, Florida 32780
with a copy to:
Huck, Bouma, Martin, Charlton & Bradshaw, P.C.
1755 South Naperville Road, Suite 200
Wheaton, Illinois 60187
Attn: Ralph R. Bouma, Jr., Esq.
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