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Exhibit 2
AGREEMENT AND PLAN OF MERGER
dated as of September 30, 1999
by and among
▇▇▇▇▇▇▇ COMPANY,
WF ACQUISITION INC.
and
WORTHINGTON FOODS, INC.
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to
which it is attached but is inserted for convenience only.
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No.
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ARTICLE I THE MERGER............................................................................1
1.01 The Merger......................................................................1
1.02 Closing.........................................................................1
1.03 Effective Time..................................................................1
1.04 Articles of Incorporation and Code of Regulations of the Surviving Corporation..2
1.05 Directors and Officers of the Surviving Corporation.............................2
1.06 Effects of the Merger...........................................................2
1.07 Further Assurances..............................................................2
ARTICLE II CONVERSION OF SHARES.................................................................2
2.01 Conversion of Capital Shares....................................................2
2.02 Exchange of Certificates........................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................6
3.01 Organization and Qualification..................................................6
3.02 Capitalization..................................................................6
3.03 Authority Relative to this Agreement............................................7
3.04 Non-Contravention; Approvals and Consents.......................................8
3.05 SEC Reports and Financial Statements............................................9
3.06 Absence of Certain Changes or Events............................................9
3.07 Absence of Undisclosed Liabilities.............................................10
3.08 Legal Proceedings..............................................................10
3.09 Information Supplied...........................................................10
3.10 Permits; Compliance with Laws and Orders.......................................11
3.11 Compliance with Agreements; Certain Agreements.................................11
3.12 Taxes..........................................................................12
3.13 Employee Benefit Plans; ERISA..................................................13
3.14 Labor Matters..................................................................16
3.15 Environmental Matters..........................................................16
3.16 Intellectual Property Rights...................................................18
3.17 Year 2000......................................................................18
3.18 Vote Required..................................................................18
3.19 Opinion of Financial Advisor...................................................18
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No.
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3.20 Company Rights Agreement.......................................................19
3.21 Anti-takeover Statutes Not Applicable..........................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB....................................19
4.01 Organization and Qualification.................................................19
4.02 Authority Relative to this Agreement...........................................19
4.03 Non-Contravention; Approvals and Consents......................................20
4.04 Information Supplied...........................................................20
4.05 Ownership of Company Common Shares.............................................21
4.06 Legal Proceedings..............................................................21
4.07 Capitalization of Sub..........................................................21
4.08 Financing......................................................................21
ARTICLE V COVENANTS OF THE COMPANY..............................................................21
5.01 Covenants of the Company.......................................................21
5.02 No Solicitations...............................................................24
5.03 Company Rights Agreement.......................................................25
5.04 Third Party Standstill Agreements..............................................26
ARTICLE VI ADDITIONAL AGREEMENTS................................................................26
6.01 Access to Information; Confidentiality.........................................26
6.02 Preparation of Proxy Statement.................................................26
6.03 Approval of Shareholders.......................................................27
6.04 Regulatory and Other Approvals.................................................27
6.05 Employee Matters...............................................................28
6.06 Indemnification; Directors' and Officers' Insurance............................29
6.07 Expenses.......................................................................30
6.08 Sub............................................................................30
6.09 Brokers or Finders.............................................................30
6.10 Takeover Statutes..............................................................30
6.11 Conveyance Taxes...............................................................31
6.12 Covenant to Continue Manufacture of Food Products..............................31
6.13 Notice and Cure................................................................31
6.14 Fulfillment of Conditions......................................................31
ARTICLE VII CONDITIONS..........................................................................32
7.01 Conditions to Each Party's Obligation to Effect the Merger.....................32
7.02 Conditions to Obligation of Parent and Sub to Effect the Merger................32
7.03 Conditions to Obligation of the Company to Effect the Merger...................33
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No.
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ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.................................................34
8.01 Termination....................................................................34
8.02 Effect of Termination..........................................................35
8.03 Amendment......................................................................36
8.04 Waiver.........................................................................36
ARTICLE IX GENERAL PROVISIONS..................................................................36
9.01 Survival of Representations, Warranties, Covenants and Agreements..............36
9.02 Notices........................................................................37
9.03 Entire Agreement; Incorporation of Exhibits....................................38
9.04 Public Announcements...........................................................38
9.05 No Third Party Beneficiary.....................................................38
9.06 No Assignment; Binding Effect..................................................38
9.07 Headings.......................................................................38
9.08 Invalid Provisions.............................................................38
9.09 Governing Law..................................................................39
9.10 Enforcement of Agreement.......................................................39
9.11 Certain Definitions............................................................39
9.12 Counterparts...................................................................40
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:
"affiliate" -- Section 9.11(a)
"Agreement" -- Preamble
"Alternative Proposal" -- Section 5.02
"Antitrust Division" -- Section 6.04
"beneficially" -- Section 9.11(b)
"business day" -- Section 9.11(c)
"CERCLA" -- Section 3.15(b)
"Certificate of Merger" -- Section 1.03
"Certificates" -- Section 2.02(b)
"Closing" -- Section 1.02
"Closing Date" -- Section 1.02
"Code" -- Section 2.02(e)
"Company" -- Preamble
"Company Common Shares" -- Section 2.01(b)
"Company Disclosure Letter" -- Section 3.01
"Company Employee Benefit Plans" -- Section 3.13(b)(i)
"Company Financial Statements" -- Section 3.05
"Company Options" -- Section 2.01(e)
"Company Option Plans" -- Section 3.02(a)
"Company Plan" -- Section 5.01(b)(D)
"Company Permits" -- Section 3.10
"Company Preferred Shares" -- Section 3.02(a)
"Company Rights" -- Section 3.02(a)
"Company Rights Agreement" -- Section 3.02(a)
"Company SEC Reports" -- Section 3.05
"Company Series A Preferred Shares" -- Section 3.02(a)
"Company Shareholders' Approval" -- Section 6.03
"Company Shareholders' Meeting" -- Section 6.03
"Confidentiality Agreement" -- Section 6.01
"Constituent Corporations" -- Section 1.01
"Contracts" -- Section 3.04(a)
"control," "controlling," "controlled
by" and "under common control with" -- Section 9.11(a)
"Dissenting Share" -- Section 2.01(d)(i)
"Effective Time" -- Section 1.03
"Environmental Law" -- Section 3.15(e)(i)
"Environmental Permits" -- Section 3.15(a)
"ERISA" -- Section 3.13(b)(i)
"Exchange Act" -- Section 3.04(b)
"FTC" -- Section 6.04
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"Governmental or Regulatory Authority" -- Section 3.04(a)
"group" -- Section 9.11(f)
"Hazardous Material" -- Section 3.15(e)(ii)
"HSR Act" -- Section 3.04(b)
"Intellectual Property" -- Section 3.16
"knowledge" -- Section 9.11(e)
"laws" -- Section 3.04(a)
"Lien" -- Section 3.02(b)
"material", "material adverse
effect" and "materially adverse" -- Section 9.11(d)
"Merger" -- Preamble
"Merger Price" -- Section 2.01(c)
"OGCL" -- Section 1.01
"Options" -- Section 3.02
"Option Amount" -- Section 2.01(e)
"orders" -- Section 3.04(a)
"Parent" -- Preamble
Payment Agent -- Section 2.02(a)
Payment Fund -- Section 2.02(a)
"person" -- Section 9.11(f)
"Plan" -- Section 3.13(b)(ii)
"Proxy Statement" -- Section 3.09
"Representatives" -- Section 9.11(g)
"SEC" -- Section 3.04(b)
"Secretary of State" -- Section 1.03
"Securities Act" -- Section 3.05
"Sub" -- Preamble
"Sub Common Shares" -- Section 2.01(a)
"Subsidiary" -- Section 9.11(h)
"Surviving Corporation" -- Section 1.01
"Surviving Corporation Common Shares" -- Section 2.01(a)
"Taxes" -- Section 3.12
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This AGREEMENT AND PLAN OF MERGER dated as of September 30, 1999
(this "Agreement") is made and entered into by and among ▇▇▇▇▇▇▇ Company, a
Delaware corporation ("Parent"), WF Acquisition Inc., an Ohio corporation wholly
owned by Parent ("Sub"), and Worthington Foods, Inc., an Ohio corporation (the
"Company").
WHEREAS, the Boards of Directors of Parent, Sub and the Company
have each determined that it is advisable and in the best interests of their
respective shareholders to consummate, and have approved, the business
combination transaction provided for herein in which Sub would merge with and
into the Company and the Company would become a wholly-owned subsidiary of
Parent (the "Merger");
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.03), Sub shall be
merged with and into the Company in accordance with the General Corporation Law
of the State of Ohio (the "OGCL"). At the Effective Time, the separate existence
of Sub shall cease and the Company shall continue as the surviving corporation
in the Merger (the "Surviving Corporation"). Sub and the Company are sometimes
referred to herein as the "Constituent Corporations". As a result of the Merger,
the outstanding shares of capital stock and the treasury shares of the
Constituent Corporations shall be converted or cancelled in the manner provided
in Article II.
1.02 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 8.01, and subject to the satisfaction or waiver (where applicable) of
the conditions set forth in Article VII, the closing of the Merger (the
"Closing") will take place at the offices of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., local
time, on the eleventh calendar day following satisfaction of the conditions set
forth in Article VII (or, if such day is not a business day, on the next
succeeding business day), unless another date, time or place is agreed to in
writing by the parties hereto (the "Closing Date"). At the Closing there shall
be delivered to Parent, Sub and the Company the certificates and other documents
and instruments required to be delivered under Article VII.
1.03 Effective Time. At the Closing, a certificate of merger (the
"Certificate of Merger") shall be duly prepared and executed by the Constituent
Corporations and thereafter delivered to the Secretary of State of the State of
Ohio (the "Secretary of State") for filing, as
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provided in Section 1701.81 of the OGCL, as soon as practicable on the Closing
Date. The Merger shall become effective at the time of the filing of the
Certificate of Merger with the Secretary of State (the date and time of such
filing being referred to herein as the "Effective Time").
1.04 Articles of Incorporation and Code of Regulations of the
Surviving Corporation. At the Effective Time, (i) the Articles of Incorporation
of Sub as in effect immediately prior to the Effective Time shall be amended so
that the name of Sub shall be changed to Worthington Foods, Inc., and, as so
amended, such Articles of Incorporation shall be the Articles of Incorporation
of the Surviving Corporation until thereafter amended as provided by law and
such Articles of Incorporation, and (ii) the Code of Regulations of Sub (the
"Regulations") as in effect immediately prior to the Effective Time shall be the
Regulations of the Surviving Corporation until thereafter amended as provided by
law, the Articles of Incorporation of the Surviving Corporation and such
Regulations.
1.05 Directors and Officers of the Surviving Corporation. The
directors and officers of Sub immediately prior to the Effective Time shall,
from and after the Effective Time, be the directors and officers, respectively,
of the Surviving Corporation until their successors shall have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Articles of Incorporation and
Regulations.
1.06 Effects of the Merger. Subject to the foregoing, the effects
of the Merger shall be as provided in the applicable provisions of the OGCL.
1.07 Further Assurances. Each party hereto will, either prior to
or after the Effective Time, execute such further documents, instruments, deeds,
bills of sale, assignments and assurances and take such further actions as may
reasonably be requested by one or more of the others to consummate the Merger,
to vest the Surviving Corporation with full title to all assets, properties,
privileges, rights, approvals, immunities and franchises of either of the
Constituent Corporations or to effect the other purposes of this Agreement.
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof:
(a) Conversion of Sub Shares. Each issued and outstanding common
share, without par value, of Sub ("Sub Common Shares") shall be converted into
and become one fully paid and nonassessable common share, without par value, of
the Surviving Corporation ("Surviving Corporation Common Shares"). Each
certificate representing outstanding Sub Common Shares shall at the Effective
Time represent an equal number of Surviving Corporation Common Shares.
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(b) Cancellation of Treasury Shares and Shares Owned by Parent
and Subsidiaries. All common shares, without par value, of the Company ("Company
Common Shares") that are owned by the Company as treasury shares and any Company
Common Shares owned by Parent, Sub or any other wholly-owned Subsidiary (as
defined in Section 9.11) of Parent shall be canceled and retired and shall cease
to exist and no stock of Parent or other consideration shall be delivered in
exchange therefor.
(c) Exchange Ratio for Company Common Shares. (i) Each issued and
outstanding Company Common Share (other than shares to be canceled in accordance
with Section 2.01(b) and other than Dissenting Shares (as defined in Section
2.01(d))) shall be converted into the right to receive $24.00 in cash (the
"Merger Price").
(ii) All Company Common Shares converted in accordance
with paragraph (i) of this Section 2.01(c) shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger Price per
share, upon the surrender of such certificate in accordance with Section 2.02,
without interest, subject to any applicable withholding tax.
(d) Dissenting Shares. (i) Notwithstanding anything in this
Agreement to the contrary, each outstanding Company Common Share that is held of
record by a holder who has properly exercised dissenters' rights with respect
thereto under Section 1701.85 of the OGCL (a "Dissenting Share"), shall not be
converted into or represent the right to receive the Merger Price pursuant to
Section 2.01(c), but the holder thereof shall be entitled to receive such
payment of the fair cash value of such Company Common Share from the Surviving
Corporation as shall be determined pursuant to Section 1701.85 of the OGCL;
provided, however, that if any such holder shall have failed to perfect or shall
withdraw or lose such holder's rights under Section 1701.85 of the OGCL, each
such holder's Company Common Shares shall thereupon be deemed to have been
converted as of the Effective Time into the right to receive the Merger Price,
without any interest thereon, pursuant to Section 2.01(c ).
(ii) The Company shall give Parent (x) prompt notice of
any written demands for payment of the fair cash value of shares, withdrawals of
such demands and any other instruments delivered pursuant to Section 1701.85 of
the OGCL and (y) the opportunity to jointly participate with the Company in all
negotiations and proceedings with respect to demands for payment under Section
1701.85 the OGCL. The Company will not voluntarily make any payment with respect
to any demands delivered to the Company pursuant to Section 1701.85 and will
not, except with the prior written consent of Parent, settle or offer to settle
any such demands.
(e) Stock Option Plans. (i) Subject to paragraph (ii) below,
immediately prior to the Effective Time, each outstanding option to acquire
Company Common Shares (the "Company Options") granted under any of the Company
Option Plans (as defined in Section 3.02(a)), whether or not then exercisable,
shall be cancelled by the Company, and in consideration of such cancellation,
the holder thereof shall be entitled to receive from the Company at the
Effective Time an amount in respect thereof equal to the product of (A) the
excess, if any, of the Merger Price per share over the per share exercise price
thereof and (B) the
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number of Company Common Shares subject thereto (the "Option Amount") (such
payment to be net of applicable withholding taxes). Prior to the Effective Time,
the Company shall deposit in a bank account not within the Company's control an
amount of cash equal to the Option Amount for each Company Option then
outstanding (subject to any applicable withholding tax), together with
instructions that such cash be promptly distributed following the Effective Time
to the holders of such Company Options in accordance with this Section 2.01(e).
(ii) After the date of this Agreement and prior to the Closing
Date, the Company shall use its reasonable best efforts and otherwise take all
actions reasonably necessary to implement the cash-out of the Company Options as
provided for in Section 2.01(e).
2.02 Exchange of Certificates.
(a) Payment Agent. At the Closing, Parent shall deposit with a
bank or trust company designated before the Closing Date by Parent and
reasonably acceptable to the Company (the "Payment Agent"), a cash amount equal
to the aggregate Merger Price to which holders of Company Common Shares shall be
entitled upon consummation of the Merger, to be held for the benefit of and
distributed to such holders in accordance with this Section. The Payment Agent
shall agree to hold such funds (such funds, together with earnings thereon,
being referred to herein as the "Payment Fund") for delivery as contemplated by
this Section and upon such additional terms as may be agreed upon by the Payment
Agent, the Company and Parent. If for any reason (including losses) the Payment
Fund is inadequate to pay the cash amounts to which holders of Company Common
Shares shall be entitled, Parent and the Surviving Corporation shall in any
event remain liable, and shall make available to the Payment Agent additional
funds, for the payment thereof. The Payment Fund shall not be used for any
purpose except as expressly provided in this Agreement.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Surviving Corporation shall cause the Payment Agent to
mail to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding Company Common Shares (the
"Certificates") whose shares are converted pursuant to Section 2.01(c) into the
right to receive the Merger Price (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Payment
Agent and shall be in such form and have such other provisions as the Surviving
Corporation may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Price. Upon
surrender of a Certificate for cancellation to the Payment Agent, together with
such letter of transmittal duly executed and completed in accordance with its
terms, the holder of such Certificate shall be entitled to receive in exchange
therefor a check representing the Merger Price per Company Common Share
represented thereby, subject to any applicable withholding tax, which such
holder has the right to receive pursuant to the provisions of this Article II,
and the Certificate so surrendered shall forthwith be canceled. In no event
shall the holder of any Certificate be entitled to receive interest on any funds
to be received in the Merger, including any interest accrued in respect of the
Payment Fund. In the event of a transfer of ownership of Company Common Shares
which is not registered in the transfer records of the Company, the Merger Price
may be issued to a transferee if the Certificate representing such
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Company Common Shares is presented to the Payment Agent accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Price per Company Common Share represented thereby as
contemplated by this Article II, together with the dividends, if any, which may
have been declared by the Company on the Company Common Shares in accordance
with the terms of this Agreement and which remain unpaid at the Effective Time.
Parent and the Surviving Corporation shall pay all fees and expenses of the
Payment Agent in connection with the distribution of the Merger Price.
(c) No Further Ownership Rights in Company Common Shares. All
cash paid upon the surrender for exchange of Certificates in accordance with the
terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Company Common Shares represented thereby, subject,
however, to the Surviving Corporation's obligation to pay any dividends which
may have been declared by the Company on such shares of Company Common Shares in
accordance with the terms of this Agreement and which remained unpaid at the
Effective Time. Unless otherwise required by Section 1701.85 of the OGCL, from
and after the Effective Time, the share transfer books of the Company shall be
closed and there shall be no further registration of transfers on the share
transfer books of the Surviving Corporation of the Company Common Shares which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates (other than Certificates representing Dissenting
Shares) are presented to the Surviving Corporation for any reason, they shall be
canceled and exchanged as provided in this Section.
(d) Termination of Payment Fund. Any portion of the Payment Fund
which remains undistributed to the shareholders of the Company for twelve (12)
months after the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any shareholders of the Company who have not theretofore
complied with this Article II shall thereafter look only to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) as
general creditors for payment of their claim for the Merger Price per share.
Neither Parent nor the Surviving Corporation shall be liable to any holder of
Company Common Shares for cash representing the Merger Price delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(e) Withholding Rights. Parent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Company Common Shares such amounts as Parent is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or any provision of state, local
or foreign tax law. To the extent that amounts are so withheld by Parent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Company Common Shares in respect of which such
deduction and withholding was made by Parent.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
3.01 Organization and Qualification. Each of the Company and its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties, except for such
failures to be so incorporated, existing and in good standing or to have such
power and authority which, individually or in the aggregate, are not having and
could not be reasonably expected to have a material adverse effect (as defined
in Section 9.11) on the Company and its Subsidiaries taken as a whole. Each of
the Company and its Subsidiaries is duly qualified, licensed or admitted to do
business and is in good standing in each jurisdiction in which the ownership,
use or leasing of its assets and properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary, except for
such failures to be so qualified, licensed or admitted and in good standing
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole. Section 3.01 of the letter dated the date hereof
and delivered to Parent and Sub by the Company concurrently with the execution
and delivery of this Agreement (the "Company Disclosure Letter") sets forth (i)
the name and jurisdiction of incorporation of each Subsidiary of the Company,
(ii) its authorized capital shares, (iii) the number of issued and outstanding
capital shares and (iv) the record owners of such shares. Except for interests
in the Subsidiaries of the Company and as disclosed in Section 3.01 of the
Company Disclosure Letter, the Company does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any equity or similar interest in, any corporation,
partnership, limited liability company, joint venture or other business
association or entity. The Company has previously delivered or made available to
Parent correct and complete copies of the certificate or articles of
incorporation and bylaws or code of regulations (or other comparable charter
documents) of the Company and its Subsidiaries.
3.02 Capitalization. (a) The authorized capital shares of the
Company consists solely of 30,000,000 Company Common Shares and 2,000,000
preferred shares, without par value ("Company Preferred Shares"). As of August
31, 1999, 12,385,576 Company Common Shares were issued and outstanding, 0 shares
were held in the treasury of the Company and the only Company Common Shares
reserved for issuance as of such date consisted of (a) 158,663 shares which were
reserved or held for issuance pursuant to stock options outstanding under the
Company's 1985 Stock Option Plan, as amended, (b) 603,090 shares which were
reserved or held for issuance pursuant to stock options outstanding under the
Company's Amended and Restated 1995 Stock Option Plan and (c) 92,221 shares
which were reserved or held for issuance pursuant to stock options outstanding
under the Company's 1993 Stock Option Plan for Non-Employee Directors (such
Plans, the "Company Option Plans"). Since such date, except as set forth in
Section 3.02 of the Company Disclosure Letter, there has been no change in the
number of issued and outstanding Company Common Shares or Company Common Shares
held in treasury or reserved for issuance. As of the date hereof, no Company
Preferred Shares are issued
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and outstanding and 300,000 shares are designated Series A Junior Participating
Preferred Shares ("Company Series A Preferred Shares") and are reserved for
issuance in accordance with the Rights Agreement dated as of June 13, 1995, as
amended, by and between the Company and National City Bank, as Rights Agent (the
"Company Rights Agreement"), pursuant to which the Company has issued rights
(the "Company Rights") to purchase Company Series A Preferred Shares. All of the
issued and outstanding Company Common Shares are, and all shares reserved for
issuance will be, upon issuance in accordance with the terms specified in the
instruments or agreements pursuant to which they are issuable, duly authorized,
validly issued, fully paid and nonassessable. Except pursuant to this Agreement
and the Company Rights Agreement, and except as set forth in Section 3.02 of the
Company Disclosure Letter, there are no outstanding subscriptions, options,
warrants, rights (including "phantom" stock rights), preemptive rights or other
contracts, commitments, understandings or arrangements, including any right of
conversion or exchange under any outstanding security, instrument or agreement
(together, "Options"), obligating the Company or any of its Subsidiaries to
issue or sell any capital shares of the Company or to grant, extend or enter
into any Option with respect thereto.
(b) Except as disclosed in Section 3.02 of the Company Disclosure
Letter, all of the outstanding capital shares of each Subsidiary of the Company
are duly authorized, validly issued, fully paid and nonassessable and are owned,
beneficially and of record, by the Company or a Subsidiary wholly owned,
directly or indirectly, by the Company, free and clear of any liens, claims,
mortgages, encumbrances, pledges, security interests, equities and charges of
any kind (each a "Lien"). Except as disclosed in Section 3.02 of the Company
Disclosure Letter, there are no (i) outstanding Options obligating the Company
or any of its Subsidiaries to issue or sell any capital shares of any Subsidiary
of the Company or to grant, extend or enter into any such Option or (ii) voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements in favor of any person other than the Company or a Subsidiary
wholly owned, directly or indirectly, by the Company with respect to the voting
of or the right to participate in dividends or other earnings on any capital
shares of any Subsidiary of the Company.
(c) Except as disclosed in Section 3.02 of the Company Disclosure
Letter, and except as may be needed to facilitate the distribution of benefits
from the Company's Employee Stock Ownership Plan, there are no outstanding
contractual obligations of the Company or any Subsidiary of the Company to
repurchase, redeem or otherwise acquire any Company Common Shares or any capital
shares of any Subsidiary of the Company or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
Subsidiary of the Company or any other person.
3.03 Authority Relative to this Agreement. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to obtaining the Company Shareholders' Approval (as defined in Section
6.03), to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of the Company, the Board of Directors of the Company has recommended
adoption of this Agreement by the shareholders of the Company and directed that
this Agreement be submitted to the shareholders of the Company for their
consideration, and no other corporate
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proceedings on the part of the Company or its shareholders are necessary to
authorize the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby, other than obtaining the Company Shareholders' Approval. This Agreement
has been duly and validly executed and delivered by the Company and, subject to
the obtaining of the Company Shareholders' Approval, constitutes a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.04 Non-Contravention; Approvals and Consents. (a) Except as
disclosed in Section 3.04 of the Company Disclosure Letter, the execution and
delivery of this Agreement by the Company do not, and the performance by the
Company of its obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in or give to any person any right of payment or reimbursement,
termination, cancellation, modification or acceleration of, or result in the
creation or imposition of any Lien upon any of the assets or properties of the
Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of (i) the certificates or articles of incorporation or regulations
or bylaws (or other comparable charter documents) of the Company or any of its
Subsidiaries, or (ii) subject to the obtaining of the Company Shareholders'
Approval and the taking of the actions described in paragraph (b) of this
Section, (x) any statute, law, rule, regulation or ordinance (together, "laws"),
or any judgment, decree, order, writ, permit or license (together, "orders"), of
any court, tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of the United States, any foreign country or any domestic
or foreign state, county, city or other political subdivision (a "Governmental
or Regulatory Authority") applicable to the Company or any of its Subsidiaries
or any of their respective assets or properties, or (y) any note, bond,
mortgage, security agreement, indenture, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind
(together, "Contracts") to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
respective assets or properties is bound, excluding from the foregoing clauses
(x) and (y) conflicts, violations, breaches, defaults, terminations,
cancellations, modifications, accelerations and creations and impositions of
Liens which, individually or in the aggregate, could not be reasonably expected
to have a material adverse effect on the Company and its Subsidiaries taken as a
whole or on the ability of the Company to consummate the transactions
contemplated by this Agreement.
(b) Except (i) for the filing of a premerger notification report
by the Company under, and any other actions required under, the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), (ii) for the filing of the Proxy
Statement (as defined in Section 3.09) with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Exchange Act"), (iii)
for the filing of the Certificate of Merger and other appropriate merger
documents required by the OGCL with the Secretary of State and appropriate
documents with the relevant authorities of other states in which the
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Constituent Corporations are qualified to do business, and (iv) as disclosed in
Section 3.04 of the Company Disclosure Letter, no consent, approval or action
of, filing with or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under any of the terms,
conditions or provisions of any law or order of any Governmental or Regulatory
Authority or any Contract to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
respective assets or properties is bound for the execution and delivery of this
Agreement by the Company, the performance by the Company of its obligations
hereunder or the consummation of the transactions contemplated hereby, other
than such consents, approvals, actions, filings and notices which the failure to
make or obtain, as the case may be, individually or in the aggregate, could not
be reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate the
transactions contemplated by this Agreement.
3.05 SEC Reports and Financial Statements. The Company delivered
or made available to Parent prior to the execution of this Agreement a true and
complete copy of each form, report, schedule, registration statement, definitive
proxy statement and other document (together with all amendments thereof and
supplements thereto) filed by the Company or any of its Subsidiaries with the
SEC since January 1, 1997 (as such documents have since the time of their filing
been amended or supplemented, the "Company SEC Reports"), which are all the
documents (other than preliminary material) that the Company and its
Subsidiaries were required to file with the SEC since such date. As of their
respective dates, the Company SEC Reports (i) complied as to form in all
material respects with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act"), or the
Exchange Act, as the case may be, and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements (including, in each case, the notes, if any, thereto) included in the
Company SEC Reports (the "Company Financial Statements") complied as to form in
all material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited interim financial statements, to normal,
recurring year-end audit adjustments (which are not expected to be, individually
or in the aggregate, materially adverse to the Company and its Subsidiaries
taken as a whole)) the consolidated financial position of the Company and its
consolidated subsidiaries as at the respective dates thereof and the
consolidated results of their operations and cash flows for the respective
periods then ended. Except as set forth in Section 3.05 of the Company
Disclosure Letter, each Subsidiary of the Company is treated as a consolidated
Subsidiary of the Company in the Company Financial Statements for all periods
covered thereby.
3.06 Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Reports filed prior to the date of this Agreement, (a) since
June 30, 1999 there has not been any change, event or development having, or
that could be reasonably expected to
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have, individually or in the aggregate, a material adverse effect on the Company
and its Subsidiaries taken as a whole, and (b) except as disclosed in Section
3.06 of the Company Disclosure Letter, between such date and the date hereof (i)
the Company and its Subsidiaries have conducted their respective businesses only
in the ordinary course consistent with past practice and (ii) neither the
Company nor any of its Subsidiaries has taken any action which, if taken after
the date hereof, would constitute a breach of any provision of clause (ii) of
Section 5.01(b).
3.07 Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the balance sheet for the period ended June 30,
1999 included in the Company Financial Statements or as disclosed in Section
3.07 of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries had at such date, or has incurred since that date, any liabilities
or obligations (whether absolute, accrued, contingent, fixed or otherwise, or
whether due or to become due) of any nature that would be required by generally
accepted accounting principles to be reflected on a consolidated balance sheet
of the Company and its consolidated subsidiaries (including the notes thereto),
except liabilities or obligations (i) which were incurred in the ordinary course
of business consistent with past practice or (ii) which have not been, and could
not be reasonably expected to be, individually or in the aggregate, materially
adverse to the Company and its Subsidiaries taken as a whole.
3.08 Legal Proceedings. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement or in Section 3.08 of the
Company Disclosure Letter, (i) there are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of the Company, threatened against,
relating to or affecting, nor to the knowledge of the Company are there any
Governmental or Regulatory Authority investigations or audits pending or
threatened against, relating to or affecting, the Company or any of its
Subsidiaries or any of their respective assets and properties which,
individually or in the aggregate, could be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole or
on the ability of the Company to consummate the transactions contemplated by
this Agreement, and (ii) neither the Company nor any of its Subsidiaries is
subject to any order of any Governmental or Regulatory Authority which,
individually or in the aggregate, is having or could be reasonably expected to
have a material adverse effect on the Company and its Subsidiaries taken as a
whole or on the ability of the Company to consummate the transactions
contemplated by this Agreement.
3.09 Information Supplied. The proxy statement relating to the
Company Shareholders' Meeting (as defined in Section 6.03), as amended or
supplemented from time to time (as so amended and supplemented, the "Proxy
Statement"), and any other documents to be filed by the Company with the SEC or
any other Governmental or Regulatory Authority in connection with the Merger and
the other transactions contemplated hereby will not, on the date of its filing
or, in the case of the Proxy Statement, at the date it is mailed to shareholders
of the Company and at the time of the Company Shareholders' Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to information
supplied in writing by or on behalf of Parent or Sub expressly for inclusion
therein
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and information incorporated by reference therein from documents filed by Parent
or any of its Subsidiaries with the SEC. The Proxy Statement filed by the
Company with the SEC under the Exchange Act relating to the Company
Shareholders' Meeting will comply as to form in all material respects of the
Exchange Act.
3.10 Permits; Compliance with Laws and Orders. The Company and
its Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental and Regulatory Authorities necessary for the
lawful conduct of their respective businesses (the "Company Permits"), except
for failures to hold such permits, licenses, variances, exemptions, orders and
approvals which, individually or in the aggregate, are not having and could not
be reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole. The Company and its Subsidiaries are in
compliance with the terms of the Company Permits, except failures so to comply
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement, the Company and its Subsidiaries are
not in violation of or default under any law or order of any Governmental or
Regulatory Authority, except for such violations or defaults which, individually
or in the aggregate, are not having and could not be reasonably expected to have
a material adverse effect on the Company and its Subsidiaries taken as a whole.
3.11 Compliance with Agreements; Certain Agreements. (a) Except
as disclosed in the Company SEC Reports filed prior to the date of this
Agreement, neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company, any other party thereto is in breach or violation of, or in
default in the performance or observance of any term or provision of, and no
event has occurred which, with notice or lapse of time or both, could be
reasonably expected to result in a default under, (i) the certificates or
articles of incorporation or bylaws or regulations (or other comparable charter
documents) of the Company or any of its Subsidiaries or (ii) any Contract to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their respective assets or properties is
bound, except in the case of clause (ii) for breaches, violations and defaults
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(b) Except as disclosed in Section 3.11 of the Company Disclosure
Letter or in the Company SEC Reports filed prior to the date of this Agreement
or as provided for in this Agreement, as of the date hereof, neither the Company
nor any of its Subsidiaries is a party to any oral or written (i) consulting
agreement not terminable on thirty (30) days' or less notice, (ii) union or
collective bargaining agreement, (iii) agreement with any executive officer or
other key employee of the Company or any of its Subsidiaries the benefits of
which are contingent or vest, or the terms of which are materially altered, upon
the occurrence of a transaction involving the Company or any of its Subsidiaries
of the nature contemplated by this Agreement, (iv) agreement with respect to any
executive officer or other key employee of the Company or any of its
Subsidiaries providing any term of employment or compensation guarantee or (v)
agreement or plan, including any stock option, stock appreciation right,
restricted stock or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of
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which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
3.12 Taxes. For purposes of this Agreement, "Taxes" (including,
with correlative meaning, the word "Tax") shall include any and all federal,
state, county, local, foreign or other taxes, charges, imposts, rates, fees,
levies or other assessments imposed by any Governmental or Regulatory Authority,
including, without limitation, all net income, alternative minimum, gross
income, sales and use, ad valorem, transfer, gains, profits, excise, franchise,
real and personal property, gross receipt, capital stock, production, business
and occupation, disability, employment, payroll, license, estimated, stamp,
custom duties, severance, withholding or other taxes, fees, assessments or other
similar charges of any kind whatsoever, together with any interest and penalties
(civil or criminal) on or additions to any such taxes. Except as specifically
identified in Section 3.12 of the Company Disclosure Letter:
(a) Each of the Company and its Subsidiaries has filed all
material Tax returns and reports required to be filed by it, or requests for
extensions to file such returns or reports have been timely filed or granted and
have not expired, and all such Tax returns and reports are complete and accurate
in all respects, except to the extent that such failures to file, have
extensions granted that remain in effect or be complete and accurate in all
respects, as applicable, individually or in the aggregate, would not have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
(b) The Company and each of its Subsidiaries has paid (or the
Company has paid on its behalf) all Taxes shown as due on such Tax returns and
reports.
(c) The accrual for Taxes on the most recent financial statements
contained in the Company SEC Reports reflects an adequate reserve for all Taxes
payable by the Company and its Subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements, and no
deficiencies for any Taxes have been proposed, asserted or assessed against the
Company or any of its Subsidiaries that are not adequately reserved for, except
for inadequately reserved Taxes and inadequately reserved deficiencies that
would not, individually or in the aggregate, have a material adverse effect on
the Company and its Subsidiaries taken as a whole.
(d) No requests for waivers of the time to assess any Taxes
against the Company or any of its Subsidiaries have been granted or are pending,
except for requests with respect to such Taxes that have been adequately
reserved for in the most recent financial statements contained in the Company
SEC Reports, or, to the extent not adequately reserved, the assessment of which
would not, individually or in the aggregate, have a material adverse effect on
the Company and its Subsidiaries taken as a whole.
(e) Prior to the date of this Agreement, the Company has provided
Parent with written schedules of (i) the Tax years of the Company and each of
its Subsidiaries for which any statute of limitations with respect to any
material Tax has not expired and (ii) with respect to any federal income Tax,
any material franchise Tax and any other material Tax based on net income, gross
receipts or gross income, for all Tax years of the Company and each of its
Subsidiaries for
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which the statutes of limitations have not yet expired, those years for which
examinations by a Governmental or Regulatory Authority have been completed,
those years for which examinations by a Governmental or Regulatory Authority are
presently being conducted, and those years for which examinations by a
Governmental or Regulatory Authority have not yet been initiated.
(f) No audits or other proceedings by any Governmental or
Regulatory Authority are presently pending, or, to the knowledge of the Company
or any of its Subsidiaries, threatened, with regard to any Taxes or Tax returns
or reports of the Company or any of its Subsidiaries, except to the extent that
such audits or proceedings, individually or in the aggregate, would not have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
(g) Each power of attorney currently in force that has been
granted by the Company or any of its Subsidiaries concerning any Tax matter is
disclosed in Section 3.12(g) of the Company Disclosure Letter.
(h) The Company has made available to Parent complete and
accurate copies of (i) all material Tax returns or reports for open years, and
any amendments thereto, filed by or on behalf of the Company or any of its
Subsidiaries, (ii) all audit reports or written proposed adjustments (whether
formal or informal) received from any Governmental or Regulatory Authority
relating to any Tax return or report filed by or on behalf of the Company or any
of its Subsidiaries and (iii) any Tax ruling or request for a Tax ruling
applicable to the Company or any of its Subsidiaries and closing agreements
entered into by the Company or any of its Subsidiaries.
(i) Neither the Company nor any of its Subsidiaries (i) is a
party to, is bound by, or has any obligation under, any agreement relating to
the allocation or sharing of Taxes or has any material liability for the Taxes
of any person other than the Company or its Subsidiaries, as a transferee, or
successor or otherwise (including, without limitation, any liability under
Treasury Regulations Section 1.1502-6 or any similar provision of state, local
or foreign law), (ii) has made any, or is obligated to make any, material
payments, or is a party to any agreement that under certain circumstances could
obligate it to make any material payments that under Code Section 280G will not
be deductible, or (iii) has ever been a member of an affiliated group of
corporations (within the meaning of Code Section 1504(a)) filing consolidated
Tax returns, other than the affiliated group of which the Company is the common
parent.
(j) To the knowledge of the Company, each of the Company and its
Subsidiaries has disclosed on its federal income Tax returns each position taken
therein that could give rise to a substantial understatement of United States
federal income Tax within the meaning of Code Section 6662.
3.13 Employee Benefit Plans; ERISA. (a) Except as disclosed in
Section 3.13 of the Company Disclosure Letter or as would not have a material
adverse effect on the Company and its Subsidiaries taken as a whole, (i) all
Company Employee Benefit Plans (as defined below) are and have been maintained
in compliance with all applicable requirements of law, including without
limitation ERISA (as defined below) and the Code, and (ii) neither the
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Company nor any of its Subsidiaries has any liabilities or obligations with
respect to any such Company Employee Benefit Plans, whether accrued, contingent
or otherwise, nor to the knowledge of the Company are any such liabilities or
obligations expected to be incurred other than contribution obligations and
payment of benefits arising in the normal course under any Company Employee
Benefit Plan. Section 3.13(a)(1) of the Company Disclosure Letter lists all
Company Employee Benefit Plans. Except as specifically disclosed in Section
3.13(a)(2) of the Company Disclosure Letter, the execution of, and performance
of the transactions contemplated in, this Agreement will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Benefit Plan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee. The only severance agreements or
severance policies applicable to the Company or any of its Subsidiaries are the
agreements and policies specifically referred to in Section 3.13(a)(3) of the
Company Disclosure Letter. Each Company Employee Benefit Plan intended to be
qualified under Section 401(a) of the Code is so qualified, has received a
favorable determination letter from the IRS, and nothing has occurred that could
adversely affect such determination.
(b) As used herein:
(i) "Company Employee Benefit Plan" means any Plan entered into,
established, maintained, sponsored, contributed to or required to be
contributed to by the Company or any of its Subsidiaries for the benefit
of the current or former employees or directors of the Company or any of
its Subsidiaries and existing on the date of this Agreement or at any
time subsequent thereto and on or prior to the Effective Time and, in
the case of a Plan which is subject to Part 3 of Title I of the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations thereunder ("ERISA"), Section 412 of the Code or Title IV of
ERISA, at any time during the five-year period immediately preceding the
date of this Agreement; and
(ii) "Plan" means any employment, bonus, incentive compensation,
deferred compensation, long term incentive, pension, profit sharing,
retirement, stock purchase, stock option, stock ownership, stock
appreciation rights, phantom stock, leave of absence, layoff, vacation,
day or dependent care, legal services, cafeteria, life, health, medical,
accident, disability, workmen's compensation or other insurance,
severance, separation, termination, change of control or other benefit
plan, agreement, practice, policy, program, scheme or arrangement,
whether written or oral, including, but not limited to any "employee
benefit plan" within the meaning of Section 3(3) of ERISA.
(iii) "ERISA Affiliate" means any person, who on or before the
Effective Time, is under common control with the Company within the
meaning of Section 414 of the Code.
(c) Complete and correct copies of the following documents have
been made available to Parent, as of the date of this Agreement: (i) all
material Company Employee Benefit Plans and any related trust agreements or
insurance contracts, (ii) the most current summary plan descriptions of each
Company Employee Benefit Plan subject to the requirement to give a
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summary plan description under ERISA, (iii) the most recent Form 5500 and
Schedules thereto for each Company Employee Benefit Plan subject to such
reporting, (iv) the most recent determination of the Internal Revenue Service
with respect to the qualified status of each Company Employee Benefit Plan that
is intended to qualify under Section 401(a) of the Code, (v) the most recent
accountings with respect to each Company Employee Benefit Plan funded through a
trust and (vi) the most recent actuarial report of the qualified actuary of each
Company Employee Benefit Plan with respect to which actuarial valuations are
conducted.
(d) Except as disclosed in Section 3.13(d) of the Company
Disclosure Letter, neither the Company nor any Subsidiary maintains or is
obligated to provide benefits under any life, medical or health Plan (other than
as an incidental benefit under a Plan qualified under Section 401(a) of the
Code) which provides benefits to retirees or other terminated employees other
than benefit continuations rights under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
(e) Except as set forth in Section 3.13(e) of the Company
Disclosure Letter, each Company Employee Benefit Plan covers only employees who
are employed by the Company or a Subsidiary (or former employees or
beneficiaries with respect to service with the Company or a Subsidiary) or
directors of the Company, so that the transactions contemplated by this
Agreement will require no spin-off of assets and liabilities or other division
or transfer of rights with respect to any such plan.
(f) Neither the Company, any Subsidiary, any ERISA Affiliate nor
any other corporation or organization controlled by or under common control with
any of the foregoing within the meaning of Section 4001 of ERISA has at any time
contributed to any "multiemployer plan", as that term is defined in Section 4001
of ERISA.
(g) No event has occurred, and there exists no condition or set
of circumstances in connection with any Company Employee Benefit Plan or any
Plan sponsored by an ERISA Affiliate, under which the Company or any Subsidiary,
directly or indirectly (through any indemnification agreement or otherwise),
could reasonably be expected to be subject to any risk of material liability
under Section 409 of ERISA, Section 502(i) of ERISA, Title IV of ERISA or
Section 4975 of the Code.
(h) No transaction contemplated by this Agreement will result in
liability to the Pension Benefit Guaranty Corporation ("PBGC") under Section
302(c)(11), 4062, 4063, 4064 or 4069 of ERISA, or otherwise, with respect to the
Company, any Subsidiary, Parent or any corporation or organization controlled by
or under common control with any of the foregoing within the meaning of Section
4001 of ERISA, and, to the knowledge of the Company, no event or condition
exists or has existed which would, or would reasonably be expected to result in
any material liability to the PBGC with respect to Parent, the Company, any
Subsidiary or any such corporation or organization. Except as set forth in
Section 3.13(h) of the Company Disclosure Schedule, no "reportable event" within
the meaning of Section 4043 of ERISA has occurred with respect to any Company
Employee Benefit Plan that is a defined benefit plan under Section 3(35) of
ERISA.
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(i) Except as set forth in Section 3.13(i) of the Company
Disclosure Letter, no employer securities, employer real property or other
employer property is included in the assets of any Company Employee Benefit
Plan.
3.14 Labor Matters. Except as disclosed in Section 3.14 of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a
party to any collective bargaining agreement with any labor union, confederation
or association and there are no discussions, negotiations, demands or proposals
that are pending or have been conducted or made with or by any labor union,
confederation or association regarding organizational activities since January
1, 1996. Except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement or in Section 3.14 of the Company Disclosure Letter, there are
no material controversies pending or, to the knowledge of the Company,
threatened between the Company or any of its Subsidiaries and any
representatives of its employees and, to the knowledge of the Company, there are
no material organizational efforts presently being made involving any of the now
unorganized employees of the Company or any of its Subsidiaries. Since June 30,
1999, there has been no work stoppage, strike or other concerted action by
employees of the Company or any of its Subsidiaries. During that period, the
Company and its Subsidiaries have complied in all material respects with all
applicable laws relating to the employment of labor, including, without
limitation those relating to wages, hours and collective bargaining.
3.15 Environmental Matters. (a) Each of the Company and its
Subsidiaries has obtained all licenses, permits, authorizations, approvals and
consents from Governmental or Regulatory Authorities which are required under
any applicable Environmental Law (as defined below) in respect of its business
or operations ("Environmental Permits"), except for such failures to have
Environmental Permits which, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole. Each of such Environmental Permits is in full
force and effect and, except as set forth in Section 3.15(a) of the Company
Disclosure Letter, each of the Company and its Subsidiaries is in compliance
with the terms and conditions of all such Environmental Permits and with any
applicable Environmental Law, except for such failures to be in compliance
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the Company and its Subsidiaries taken as a
whole.
(b) To the knowledge of the Company, no site or facility now or
previously owned, operated or leased by the Company or any of its Subsidiaries
is listed or proposed for listing on the National Priorities List promulgated
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and the rules and regulations thereunder ("CERCLA"), or
on any similar state or local list of sites requiring investigation or clean-up.
Except as disclosed in Section 3.15 of the Company Disclosure Letter, to the
knowledge of the Company, no Hazardous Material has been released at any site or
facility now or previously owned, operated or leased by the Company or any
Subsidiary, except for such releases which, individually or in the aggregate,
could not reasonably be expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole.
(c) Except as specifically discussed in Section 3.15(c) of the
Company Disclosure Letter, no Liens have arisen under or pursuant to any
Environmental Law on any site
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or facility owned, operated or leased by the Company or any of its Subsidiaries,
other than any such Liens (i) which individually or in the aggregate could not
be reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or (ii) which have been discharged or otherwise
released, and no action of any Governmental or Regulatory Authority has been
taken or, to the knowledge of the Company, is in process which could subject any
of such properties to such Liens, and neither the Company nor any of its
Subsidiaries would be required to place any notice or restriction relating to
the presence of Hazardous Materials at any such site or facility owned by it in
any deed to the real property on which such site or facility is located.
(d) Except as specifically disclosed in Section 3.15(d) of the
Company Disclosure Letter, there have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted since January 1,
1996 by, or which are in the possession of, the Company or any of its
Subsidiaries in relation to any site or facility now or previously owned,
operated or leased by the Company or any of its Subsidiaries which have not been
delivered or made available to Parent prior to the execution of this Agreement.
(e) As used herein:
(i) "Environmental Law" means any law or order of any
Governmental or Regulatory Authority applicable to the Company or any of
its Subsidiaries or any of their respective properties relating to the
regulation or protection of human health, safety or the environment or
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes into the environment (including, without limitation, ambient air,
soil, surface water, ground water, wetlands, land or subsurface strata),
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes; and
(ii) "Hazardous Material" means (A) any petroleum or
petroleum products, flammable explosives, radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde
foam insulation and transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls (PCBs);
(B) any chemicals or other materials or substances which are defined as
or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants" or
words of similar import under any Environmental Law; and (C) any other
chemical or other material or substance, exposure to which is
prohibited, limited or regulated by any Governmental or Regulatory
Authority under any Environmental Law.
(f) To the knowledge of the Company, neither the Company nor any
Subsidiary has transported or arranged for the transportation of any Hazardous
Material to any location that is (i) listed on the NPL under CERCLA, (ii) listed
for possible inclusion on the NPL by the Environmental Protection Agency in
CERCLIS or on any similar state or local list or
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(iii) the subject of enforcement actions by any Governmental or Regulatory
Authority that may lead to claims against the Company or any Subsidiary.
3.16 Intellectual Property Rights. The Company and its
Subsidiaries have all right, title and interest in, or a valid and binding
license to use, all Intellectual Property (as defined below) individually or in
the aggregate material to the conduct of the businesses of the Company and its
Subsidiaries taken as a whole. Except as set forth in Section 3.16 of the
Company Disclosure Letter, neither the Company nor any Subsidiary of the Company
is in default (or with the giving of notice or lapse of time or both, would be
in default) under any license to use such Intellectual Property, to the
Company's knowledge, such Intellectual Property is not being infringed by any
third party, and neither the Company nor any Subsidiary of the Company is
infringing any Intellectual Property of any third party, except for such
defaults and infringements which, individually or in the aggregate, are not
having and could not be reasonably expected to have a material adverse effect on
the Company and its Subsidiaries taken as a whole. For purposes of this
Agreement, "Intellectual Property" means patents and patent rights, trademarks
and trademark rights, trade names and trade name rights, service marks and
service ▇▇▇▇ rights, service names and service name rights, copyrights and
copyright rights and other proprietary intellectual property rights and all
pending applications for and registrations of any of the foregoing.
3.17 Year 2000. Except as set forth in Section 3.17 of the
Company Disclosure Letter, the Company and its Subsidiaries have put into effect
practices and programs which the Company believes will enable all material
software, hardware and equipment (including microprocessors) that are owned or
utilized by the Company or any of its Subsidiaries in the operations of its or
their respective business to be capable, by December 31, 1999, of accounting for
all calculations using a century and date sensitive algorithm for the year 2000
and the fact that the year 2000 is a leap year and to otherwise continue to
function without any interruption caused by the occurrence of the year 2000,
except for those failures which, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
3.18 Vote Required. (i) The Merger has been approved by the
requisite number of Continuing Directors (as defined in the Articles of
Incorporation) so that the supermajority vote contemplated by Article Ninth of
the Articles of Incorporation has been rendered inapplicable to the Merger.
(ii) Assuming the continuing accuracy of the representation and
warranty contained in Section 4.05, the affirmative vote of the holders
of record of at least a majority of the outstanding Company Common
Shares with respect to the adoption of this Agreement is the only vote
of the holders of any class or series of the capital shares of the
Company required to adopt this Agreement and approve the Merger and the
other transactions contemplated hereby.
3.19 Opinion of Financial Advisor. The Company has received the
opinion of U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ dated the date hereof, to the effect that,
as of the date hereof, the consideration to be received in the Merger by the
shareholders of the Company is fair from a
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financial point of view to the shareholders of the Company and a true and
complete copy of such opinion has been delivered (or promptly after execution,
will be delivered) to Parent.
3.20 Company Rights Agreement. As of the date hereof and after
giving effect to the execution and delivery of this Agreement, each Company
Right is represented by the certificate representing the associated Company
Common Shares and is not exercisable or transferable apart from the associated
Company Common Shares, and the Company has (i) taken all necessary actions so
that the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in a "Distribution Date" or a
"Shares Acquisition Date" (as defined in the Company Rights Agreement) and (ii)
amended the Company Rights Agreement to render it inapplicable to this
Agreement, the Merger and the other transactions contemplated hereby.
3.21 Anti-takeover Statutes Not Applicable. Assuming the
continuing accuracy of the representation and warranty contained in Section
4.05, no "fair price", "moratorium", "control share acquisition" or other
similar anti-takeover statute or regulation will apply to this Agreement, the
Merger or other transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
4.01 Organization and Qualification. Each of Parent and Sub is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has full corporate power and
authority to conduct its business as and to the extent now conducted and to own,
use and lease its assets and properties, except for such failures to be so
incorporated, existing and in good standing or to have such power and authority
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on Parent and its
Subsidiaries taken as a whole. Sub was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement, has engaged in no other
business activities, has conducted its operations only as contemplated hereby
and has no material liabilities. Parent has previously delivered to the Company
correct and complete copies of the certificate or articles of incorporation and
bylaws or regulations (or other comparable charter documents) of Parent and Sub.
4.02 Authority Relative to this Agreement. Each of Parent and Sub
has the requisite corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by each of Parent and Sub and the consummation by each of Parent and Sub of the
transactions contemplated hereby have been duly and validly approved by their
respective Boards of Directors and by Parent in its capacity as the sole
shareholder of Sub, and no other corporate proceedings on the part of either of
Parent or Sub or their respective stockholders are necessary to authorize the
execution, delivery and performance of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each
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of Parent and Sub and constitutes a legal, valid and binding obligation of each
of Parent and Sub enforceable against each of Parent and Sub in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.03 Non-Contravention; Approvals and Consents. (a) The execution
and delivery of this Agreement by each of Parent and Sub do not, and the
performance by each of Parent and Sub of its obligations hereunder and the
consummation of the transactions contemplated hereby will not, conflict with,
result in a violation or breach of, constitute (with or without notice or lapse
of time or both) a default under, result in or give to any person any right of
payment or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any Lien upon any of
the assets or properties of Parent or any of its Subsidiaries under, any of the
terms, conditions or provisions of (i) the certificates or articles of
incorporation or bylaws (or other comparable charter documents) of Parent or any
of its Subsidiaries, or (ii) subject to the taking of the actions described in
paragraph (b) of this Section, (x) any laws or orders of any Governmental or
Regulatory Authority applicable to Parent or any of its Subsidiaries or any of
their respective assets or properties, or (y) any Contracts to which Parent or
any of its Subsidiaries is a party or by which Parent or any of its Subsidiaries
or any of their respective assets or properties is bound, excluding from the
foregoing clauses (x) and (y) conflicts, violations, breaches, defaults,
terminations, cancellations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the ability of Parent
and Sub to consummate the transactions contemplated by this Agreement.
(b) Except (i) for the filing of a premerger notification report
by Parent under, and any other actions required under, the HSR Act and (ii) for
the filing of the Certificate of Merger and other appropriate merger documents
required by the OGCL with the Secretary of State and appropriate documents with
the relevant authorities of other states in which the Constituent Corporations
are qualified to do business, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority or other public or private
third party is necessary or required under any of the terms, conditions or
provisions of any law or order of any Governmental or Regulatory Authority or
any Contract to which Parent or any of its Subsidiaries is a party or by which
Parent or any of its Subsidiaries or any of their respective assets or
properties is bound for the execution and delivery of this Agreement by each of
Parent and Sub, the performance by each of Parent and Sub of its obligations
hereunder or the consummation of the transactions contemplated hereby, other
than such consents, approvals, actions, filings and notices which the failure to
make or obtain, as the case may be, individually or in the aggregate, could not
be reasonably expected to have a material adverse effect on the ability of
Parent and Sub to consummate the transactions contemplated by this Agreement.
4.04 Information Supplied. Neither the information supplied or to
be supplied in writing by or on behalf of Parent or Sub for inclusion, nor the
information incorporated by reference from documents filed by Parent or any of
its Subsidiaries with the SEC, in the Proxy Statement or any other documents to
be filed by Parent, Sub or the Company with the SEC or any other Governmental or
Regulatory Authority in connection with the Merger and the other
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transactions contemplated hereby will, on the date of its filing or, in the case
of the Proxy Statement, at the date it is mailed to shareholders of the Company
and at the time of the Company Shareholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
4.05 Ownership of Company Common Shares. Neither Parent nor any
of its Subsidiaries or other affiliates beneficially owns any Company Common
Shares.
4.06 Legal Proceedings. There are no actions, suits, arbitrations
or proceedings pending or, to the knowledge of Parent or Sub, threatened
against, relating to or affecting, nor to the knowledge of Parent or Sub are
there any Governmental or Regulatory Authority investigations or audits pending
or threatened against, relating to or affecting, Parent or any of its
Subsidiaries or any of their respective assets and properties which,
individually or in the aggregate, could be reasonably expected to have a
material adverse effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement, and neither Parent nor any of its
Subsidiaries is subject to any order of any Governmental or Regulatory Authority
which, individually or in the aggregate, could be reasonably expected to have a
material adverse effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement.
4.07 Capitalization of Sub. The authorized capital stock of Sub
consists of 850 shares of common stock, no par value per share, all of which
shares, as of the date of this Agreement, are validly issued and outstanding,
fully paid and nonassessable and are owned by Parent free and clear of all
Liens.
4.08 Financing. Parent has or immediately prior to the Closing
will have sufficient funds to perform its obligations under this Agreement.
ARTICLE V
COVENANTS OF THE COMPANY
5.01 Covenants of the Company. At all times from and after the
date hereof until the Effective Time, the Company covenants and agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement, or to the extent that Parent shall otherwise previously
consent in writing):
(a) Ordinary Course. The Company and each of its Subsidiaries
shall conduct their respective businesses only in, and neither the Company nor
any such Subsidiary shall take any action except in, the ordinary course
consistent with past practice.
(b) Without limiting the generality of paragraph (a) of this
Section, (i) the Company and its Subsidiaries shall use all commercially
reasonable efforts to preserve intact in all material respects their present
business organizations and reputation, to keep available the services of their
key officers and employees, to maintain their assets and properties in good
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working order and condition, ordinary wear and tear excepted, to maintain
insurance on their tangible assets and businesses in such amounts and against
such risks and losses as are currently in effect, to preserve their
relationships with customers and suppliers and others having significant
business dealings with them and to comply in all material respects with all laws
and orders of all Governmental or Regulatory Authorities applicable to them, and
(ii) the Company shall not, nor shall it permit any of its Subsidiaries to,
except as otherwise expressly provided for in this Agreement:
(A) amend or propose to amend its certificate or articles of
incorporation or bylaws or regulations (or other comparable corporate
charter documents);
(B) (w) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital shares, except that the
Company may continue the declaration and payment of regular quarterly
cash dividends on Company Common Shares, with usual record and payment
dates for such dividends in accordance with past dividend practice and
except for the declaration and payment of dividends by a wholly-owned
Subsidiary solely to its parent corporation, (x) split, combine,
reclassify or take similar action with respect to any of its capital
shares or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for its capital
shares, (y) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization or (z) other than repurchases and other
acquisitions in connection with the administration of employee benefit
and dividend reinvestment plans in the ordinary course of the operation
of such plans, directly or indirectly redeem, repurchase or otherwise
acquire any capital shares or any Option with respect thereto, except
that prior to the Effective Time the Company may redeem all then
outstanding Company Rights pursuant to the terms of the Company Rights
Agreement for a redemption price not to exceed $0.01 per Company Right;
(C) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any of its capital shares or any Option with
respect thereto, other than (i) the issuance of Company Common Shares or
share appreciation or similar rights, as the case may be, pursuant to
Options outstanding on the date of this Agreement and in accordance with
their present terms, (ii) the issuance of Options pursuant to Company
Option Plans, in each case in accordance with their present terms and
only in connection with the hiring of new employees, and the issuance of
Company Common Shares upon exercise of such options, (iii) the issuance
by a wholly-owned Subsidiary of its capital shares to its parent
corporation, (iv) the issuance of Company Rights and reservation of
Company Series A Preferred Shares pursuant to the Company Rights
Agreement in accordance with the terms thereof, (v) the issuance of
Company Common Shares pursuant to and in accordance with the terms of
the Company's Tax Savings and Profit Sharing Plan or (vi) the issuance
of Company Common Shares pursuant to and in accordance with the terms of
the Company's Incentive Stock Purchase Plan for Eligible Employees, or
modify or amend any right of any holder of outstanding capital shares
with respect thereto except as contemplated by this Agreement;
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(D) except for transactions provided for in or contemplated by
the most recent business operating plan of the Company furnished to
Parent (the "Company Business Plan"), acquire (by merging or
consolidating with, or by purchasing a substantial equity interest in or
a substantial portion of the assets of, or by any other manner) any
business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to
acquire any assets other than inventory and other assets to be sold or
used in the ordinary course of business consistent with past practice;
(E) sell, lease, grant any security interest in or otherwise
dispose of or encumber any of its assets or properties, other than (i)
sales of inventory in the ordinary course of business consistent with
past practice, (ii) to the extent provided for in the Company Business
Plan, (iii) to the extent such transactions are not material to the
Company or its Subsidiaries, and (iv) the transfer by the Company on the
Closing Date to the Worthington Foods Foundation as charitable
contributions of a house and land located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ and funds in the amount of $150,000, to satisfy
prior charitable commitments made by the Company;
(F) except to the extent required by applicable law or order or
changes in generally accepted accounting principles or as otherwise
provided for in or contemplated by the Company Business Plan , (x)
permit any material change in (A) any pricing, marketing, purchasing,
investment, accounting, financial reporting, inventory, credit,
allowance or tax practice or policy or (B) any method of calculating any
bad debt, contingency or other reserve for accounting, financial
reporting or tax purposes or (y) make any material tax election or
settle or compromise any material income tax liability with any
Governmental or Regulatory Authority;
(G) except (i) as set forth in Section 5.01(b)(G) of the Company
Disclosure Letter or (ii) to the extent provided for in or contemplated
by the Company Business Plan, incur any indebtedness for borrowed money
or guarantee any such indebtedness in an aggregate principal amount
exceeding $1,000,000 (net of any amounts of any such indebtedness
discharged during such period), or (y) voluntarily purchase, cancel,
prepay or otherwise provide for a complete or partial discharge in
advance of a scheduled repayment date with respect to, or waive any
right under, any indebtedness for borrowed money in an aggregate
principal amount exceeding $1,000,000;
(H) except for the vesting of all unvested Options as
contemplated by Section 2.01(e), enter into, adopt, amend in any
material respect (except as may be required by applicable law) or
terminate any Company Employee Benefit Plan or other agreement,
arrangement, plan or policy between the Company or one of its
Subsidiaries and one or more of its directors, officers or employees,
or, except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company and
its Subsidiaries taken as a whole, increase in any manner the
compensation or fringe benefits of any director, officer or employee or
pay any benefit not required by any plan or arrangement in effect as of
the date hereof;
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(I) enter into any Contract or amend or modify any existing
Contract, or engage in any new transaction outside the ordinary course
of business consistent with past practice or not on an arm's length
basis, with any affiliate of the Company or any of its Subsidiaries;
(J) make any capital expenditures or commitments for additions to
plant, property or equipment constituting capital assets, except as set
forth in Section 5.01(b)(J) of the Company Disclosure Letter or to the
extent provided for in the Company Business Plan;
(K) make any change in the lines of business in which it
participates or is engaged; or
(L) enter into any Contract, commitment or arrangement to do or
engage in any of the foregoing.
(c) Advice of Changes. The Company shall confer on a regular and
frequent basis with Parent with respect to its business and operations and other
matters relevant to the Merger, and shall promptly advise Parent, orally and in
writing, of any change or event, including, without limitation, any complaint,
investigation or hearing by any Governmental or Regulatory Authority (or
communication indicating the same may be contemplated) or the institution or
threat of litigation, known to the Company, having, or which, insofar as can be
reasonably foreseen, could have, a material adverse effect on the Company and
its Subsidiaries taken as a whole or on the ability of the Company to consummate
the transactions contemplated hereby.
5.02 No Solicitations. Prior to the Effective Time, the Company
agrees (a) that neither it nor any of its Subsidiaries or other affiliates
shall, and it shall use its best efforts to cause their respective
Representatives (as defined in Section 9.11) not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or implementation
of any proposal or offer (including, without limitation, any proposal or offer
to its shareholders) with respect to a merger, consolidation or other business
combination including the Company or any of its Subsidiaries or any acquisition
or similar transaction (including, without limitation, a tender or exchange
offer) involving the purchase of (i) all or any significant portion of the
assets of the Company and its Subsidiaries taken as a whole, (ii) 5% or more of
the outstanding Company Common Shares or (iii) 5% of the outstanding capital
shares of any Subsidiary of the Company (any such proposal or offer being
hereinafter referred to as an "Alternative Proposal"), or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person or group relating to an Alternative
Proposal (excluding the transactions contemplated by this Agreement), or
otherwise facilitate any effort or attempt to make or implement an Alternative
Proposal; (b) that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties with respect
to any of the foregoing, and it will take the necessary steps to inform such
parties of its obligations under this Section; and (c) that it will notify
Parent immediately if any such inquiries, proposals or offers are received by,
any such confidential information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, it or any of such
persons; provided, however, that nothing contained in this Section 5.02 shall
prohibit the Board of
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Directors of the Company from (i) furnishing information to (but only pursuant
to a confidentiality agreement in customary form and having terms and conditions
no less favorable to the Company than the Confidentiality Agreement (as defined
in Section 6.01)) or entering into discussions or negotiations with any person
or group that makes an unsolicited bona fide Alternative Proposal, if, and only
to the extent that, prior to receipt of the Company Shareholders' Approval, (A)
the Board of Directors of the Company, based on advice of outside counsel
determines in good faith that such action is required for the Board of Directors
to comply with its fiduciary duties to shareholders imposed by law, (B) the
Board of Directors has reasonably concluded in good faith, after consultation
with its financial advisor, that (1) if such Alternative Proposal contains cash
consideration, the person or group making such Alternative Proposal will have
adequate sources of financing to consummate such Alternative Proposal and (2)
such Alternative Proposal is more favorable to the Company's shareholders than
the Merger, and the Board of Directors has received a written opinion from a
nationally-recognized investment banking firm (a copy of which shall be provided
promptly to Parent) to the effect that the consideration to be received by the
Company's shareholders in connection with such Alternative Proposal is fair,
from a financial point of view, to the shareholders of the Company, (C) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or group, the Company provides written notice to Parent to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such person or group, which notice shall identify such person
or group in reasonable detail, and (D) the Company keeps Parent informed of the
status and substance of any such discussions or negotiations; and (ii) to the
extent required, complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Alternative Proposal. Nothing in this Section 5.02 shall (x)
permit the Company to terminate this Agreement (except as specifically provided
in Article VIII), (y) permit the Company to enter into any agreement with
respect to an Alternative Proposal for so long as this Agreement remains in
effect (it being agreed that for so long as this Agreement remains in effect,
the Company shall not enter into any agreement with any person or group that
provides for, or in any way facilitates, an Alternative Proposal (other than a
confidentiality agreement under the circumstances described above)), or (z)
affect any other obligation of the Company under this Agreement.
5.03 Company Rights Agreement. (a) Prior to the Effective Time,
without the prior written consent of Parent, the Company shall not amend the
Company Rights Agreement. Except to the extent required by applicable law or to
the extent that the Board of Directors of the Company, based on advice of
outside counsel, determines in good faith that such action is required in order
for the Board of Directors to comply with its fiduciary duties to shareholders
imposed by law, prior to the Effective Time, without the prior written consent
of Parent, the Company will not take any action with respect to, or make any
determination under, the Company Rights Agreement, except that immediately prior
to the Effective Time the Company shall redeem the Company Rights.
(b) In the event that, following the making of an Alternative
Proposal (including an unsolicited tender offer), the Company:
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(i) takes any action with respect to or makes any determination
under, the Company Rights Agreement which has the effect of
facilitating the consummation of such Alternative Proposal; or
(ii) permits a Distribution Date (as defined in the Company Rights
Agreement) to occur in connection with such Alternative Proposal,
and such Alternative Proposal is consummated at any time
thereafter;
then the Company shall pay to Parent, by wire transfer of same day funds
within two (2) business days following the date of such consummation, the
amounts referred to in Section 8.02(b).
5.04 Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, neither the Company nor
any of its Subsidiaries shall terminate, amend, modify or waive any provision of
any confidentiality or standstill agreement to which it is a party. During such
period, the Company shall enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreement, including, but not limited
to, by obtaining injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any court having
jurisdiction.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality. The Company shall,
and shall cause each of its Subsidiaries to, throughout the period from the date
hereof to the Effective Time, (i) provide Parent and its Representatives with
full access, upon reasonable prior notice and during normal business hours, to
all officers, employees, agents and accountants of the Company and its
Subsidiaries and their respective assets, properties, books and records, but
only to the extent that such access does not unreasonably interfere with the
business and operations of the Company and its Subsidiaries, and (ii) furnish
promptly to Parent (x) a copy of each report, statement, schedule and other
document filed or received by the Company or any of its Subsidiaries pursuant to
the requirements of federal or state securities laws and each material report,
statement, schedule and other document filed with any other Governmental or
Regulatory Authority, and (y) all other information and data (including, without
limitation, copies of Contracts, Company Employee Benefit Plans and other books
and records) concerning the business and operations of the Company and its
Subsidiaries as Parent or any of such other persons reasonably may request. No
investigation pursuant to this paragraph or otherwise shall affect any
representation or warranty contained in this Agreement or any condition to the
obligations of the parties hereto. Any such information or material obtained
pursuant to this Section 6.01 that constitutes "Evaluation Material" (as such
term is defined in the letter agreement dated as of July 8, 1999 between the
Company and Parent (the "Confidentiality Agreement")) shall be governed by the
terms of the Confidentiality Agreement.
6.02 Preparation of Proxy Statement. The Company shall prepare
and file with the SEC the Proxy Statement as soon as reasonably practicable
after the date hereof, and shall
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use its best efforts to have the Proxy Statement cleared by the SEC. If at any
time prior to the Effective Time any event shall occur that should be set forth
in an amendment of or a supplement to the Proxy Statement, the Company shall
prepare and file with the SEC such amendment or supplement as soon thereafter as
is reasonably practicable. Parent, Sub and the Company shall cooperate with each
other in the preparation of the Proxy Statement, and the Company shall notify
Parent of the receipt of any comments of the SEC with respect to the Proxy
Statement and of any requests by the SEC for any amendment or supplement thereto
or for additional information, and shall provide to Parent promptly copies of
all correspondence between the Company or any Representative of the Company and
the SEC with respect to the Proxy Statement. The Company shall give Parent and
its counsel the opportunity to review the Proxy Statement and all responses to
requests for additional information by and replies to comments of the SEC before
their being filed with, or sent to, the SEC. Each of the Company, Parent and Sub
agrees to use its best efforts, after consultation with the other parties
hereto, to respond promptly to all such comments of and requests by the SEC and
to cause the Proxy Statement to be mailed to the holders of Company Common
Shares entitled to vote at the Company Stockholders' Meeting at the earliest
practicable time.
6.03 Approval of Shareholders. (a) The Company shall, through its
Board of Directors, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Company Shareholders' Meeting") for the purpose of voting on
the adoption of this Agreement (the "Company Shareholders' Approval") as soon as
reasonably practicable after the date hereof. Subject to the exercise of
fiduciary obligations as advised by outside counsel, the Company shall, through
its Board of Directors, include in the Proxy Statement the recommendation of the
Board of Directors of the Company that the shareholders of the Company adopt
this Agreement, and shall use its best efforts to obtain such adoption. In the
event that the Company Shareholders' Approval is not obtained on the date on
which the Company Shareholders' Meeting is initially convened, the Company shall
adjourn such Company Shareholders' Meeting at least once for the purpose of
obtaining the Company Shareholders' Approval and use its best efforts during any
such adjournments to obtain the Company Shareholders' Approval.
(b) Unless this Agreement has been earlier terminated in
accordance with its terms, the Company shall not be relieved of its obligation
under the first sentence of paragraph (a) of this Section 6.03 in the event that
its Board of Directors withdraws its recommendation of this Agreement and the
Merger.
6.04 Regulatory and Other Approvals. Subject to the terms and
conditions of this Agreement and without limiting the provisions of Sections
6.02 and 6.03, each of the Company and Parent will proceed diligently and in
good faith to, as promptly as practicable, (a) obtain all consents, approvals or
actions of, make all filings with and give all notices to Governmental or
Regulatory Authorities or any other public or private third parties required of
Parent, the Company or any of their Subsidiaries to consummate the Merger and
the other matters contemplated hereby, and (b) provide such other information
and communications to such Governmental or Regulatory Authorities or other
public or private third parties as the other party or such Governmental or
Regulatory Authorities or other public or private third parties may reasonably
request in connection therewith. In addition to and not in limitation of the
foregoing, each of the parties will (x) take promptly all actions necessary to
make the filings required of
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Parent and the Company or their affiliates under the HSR Act, (y) comply at the
earliest practicable date with any request for additional information received
by such party or its affiliates from the Federal Trade Commission (the "FTC") or
the Antitrust Division of the Department of Justice (the "Antitrust Division")
pursuant to the HSR Act, and (z) cooperate with the other party in connection
with such party's filings under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the Merger or the other matters
contemplated by this Agreement commenced by either the FTC or the Antitrust
Division or state attorneys general.
6.05 Employee Matters.
(a) As of the Effective Time, the Company will amend its "Tax
Savings and Profit Sharing Plan" ("Code Section 401(k) Plan") to (i) eliminate
any investment fund comprised of Company Common Shares, (ii) prohibit any
additional contributions in the form of Company Common Shares and (iii) make all
participant accounts fully vested and nonforfeitable.
(b) As of the Effective Time, the Company will amend its Employee
Stock Ownership Plan ("ESOP") to provide that benefits will be distributed
solely in cash. Within thirty (30) days after the Effective Time, Parent will
cause the Surviving Corporation to terminate the ESOP and, as soon as
administratively practicable after that date, to take all action needed to
liquidate the ESOP by distributing its assets as provided by the terms of the
ESOP.
(c) Except for employees covered by any collective bargaining
contract, and except as otherwise expressly provided in this Agreement, Parent
will (i) cause the Company Employee Benefit Plans (other than the Company Option
Plans and other Plans providing equity or equity-based awards) in effect at the
date of this Agreement to remain in effect until the second anniversary of the
Effective Time or (ii) to the extent that such Company Employee Benefit Plans
are not so continued, cause the Company to maintain until such date benefit
plans which are substantially comparable, in the aggregate, to the employees
covered by such Company Employee Benefit Plans on the date of this Agreement.
(d) The Plans in which the Company's employees participate
following the Effective Time will (i) credit, for vesting and eligibility
purposes only, all service performed for the Company prior to the Effective
Time, (ii) waive any pre-existing condition exclusions and actively-at-work
requirements (other than pre-existing conditions that, as of the Effective Time,
have not been satisfied under any Company Employee Benefit Plan) and (iii)
provide that any covered expenses incurred on or before the Effective Time
during the plan year of the applicable Company Employee Benefit Plan will be
taken into account for purposes of satisfying applicable deductible, coinsurance
and maximum out-of-pocket provisions after the Effective Time to the same extent
that such expenses are taken into account for similarly situated employees of
the Parent.
(e) On or before the Closing Date, the Company will take the
following actions:
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(i) The Company will make a contribution to the Code Section
401(k) Plan for the benefit of the participants in such plan in an amount equal
to 3% of each participant's base salary paid from January 1, 1999 through the
Closing Date;
(ii) The Company will make bonus payments to the Vice Presidents,
Executive Vice President and President of the Company in amounts to be
determined as follows. If the Closing Date occurs in 1999, and as of such
Closing Date the Company has achieved its sales projections through the last day
of the month immediately preceding the month in which the Closing occurs, then
the Company will pay to each of the Vice Presidents of the Company a payment
equal to 20% of such individual's Base Salary Amount (as defined below), to the
Executive Vice President of the Company a payment equal to 30% of his Base
Salary Amount and to the President of the Company a payment equal to 40% of his
Base Salary Amount. If such sales projections are not met as provided in the
immediately preceding sentence, then the Company will pay to each of the Vice
Presidents, the Executive Vice President and the President of the Company an
amount equal to 10% of such individual's Base Salary Amount. If the Closing Date
occurs in 2000, the Company will make bonus payments to the Vice Presidents, the
Executive Vice President and the President of the Company in the manner set
forth in the immediately preceding two sentences based on whether or not the
Company's sales projections for the fiscal year ended December 31, 1999 were
achieved. For purposes of this Subsection 6.05(e)(ii), the Company's sales
projections as of the end of each month and for the fiscal year shall be based
on the latest fiscal 1999 sales projections delivered by the Company to Parent
on or before the date of this Agreement. For purposes hereof, the "Base Salary
Amount' for each relevant individual shall be the base salary paid to such
individual from January 1, 1999 through the earlier of (x) the Closing Date or
(y) December 31, 1999.
(f) Parent will provide, or will cause the Company to provide,
Typical Outplacement Services (as defined below) to each salaried employee of
the Company who is terminated by the Company (other than for cause) within 6
months of the Closing Date. Parent or the Company will select the firm or firms
to provide such Typical Outplacement Services. For purposes hereof, "Typical
Outplacement Services" as to each eligible terminated employee shall be those
outplacement services typically provided by Parent to similarly situated
employees (based on such factors as the terminated employee's compensation and
position prior to the Closing) for whom Parent provides outplacement services.
6.06 Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to indemnify, advance expenses to, and hold harmless the
present and former officers and directors of the Company and its Subsidiaries in
respect of the acts or omissions occurring prior to the Effective Time to the
extent provided under the Company's or Subsidiaries Articles (or Certificate) of
Incorporation or Regulations (or By-laws) on the date of this Agreement.
(b) Parent and the Surviving Corporation shall, until the sixth
anniversary of the Effective Time and for so long thereafter as any claim for
insurance coverage asserted on or prior to such date has not been fully
adjudicated, cause to be maintained in effect, at no cost to
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the beneficiaries thereof, to the extent available, the policies of directors'
and officers' liability insurance maintained by the Company and its Subsidiaries
as of the date hereof (or policies of at least the same coverage and amounts
containing terms that are no less advantageous to the insured parties) with
respect to acts or omissions occurring prior to the Effective Time; provided
that in no event shall Parent or the Surviving Corporation be obligated to
expend in order to maintain or procure insurance coverage pursuant to this
paragraph any amount per annum in excess of 200% of the amount set forth in
Section 6.06 of the Company Disclosure Letter and provided, further, that if
such insurance cannot be so maintained or obtained at such cost, Parent or the
Surviving Corporation shall maintain or obtain as much of such insurance as can
be so maintained or obtained at a cost equal to 200% of the amount set forth in
said Section 6.06 of the Disclosure Letter.
6.07 Expenses. Except as set forth in Section 8.02, whether or
not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such cost or expense. Parent shall pay the filing fee in
connection with the filings required under the HSR Act.
6.08 Sub. Prior to the Effective Time, Sub shall not conduct any
business or make any investments other than as specifically contemplated by this
Agreement and will not have any assets (other than a de minimis amount of cash
paid to Sub for the issuance of its stock to Parent) or any material
liabilities. Parent will take all action necessary to cause Sub to perform its
obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
6.09 Brokers or Finders. Each of Parent and the Company
represents, as to itself and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement except U.S. Bancorp
▇▇▇▇▇ ▇▇▇▇▇▇▇, whose fees and expenses will be paid by the Company in accordance
with the Company's agreement with such firm (a true and complete copy of which
has been delivered by the Company to Parent prior to the execution of this
Agreement), and each of Parent and the Company shall indemnify and hold the
other harmless from and against any and all claims, liabilities or obligations
with respect to any other such fee or commission or expenses related thereto
asserted by any person on the basis of any act or statement alleged to have been
made by such party or its affiliate.
6.10 Takeover Statutes. If any "fair price", "moratorium",
"control share acquisition" or other form of anti-takeover statute or regulation
shall become applicable to the transactions contemplated hereby, the Company and
the members of the Board of Directors of the Company shall, to the extent
permitted by law, grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and thereby and
otherwise act, to the extent permitted by law, to eliminate or minimize the
effects of such statute or regulation on the transactions contemplated hereby
and thereby.
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6.11 Conveyance Taxes. The Company and Parent shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated by this Agreement that
are required or permitted to be filed on or before the Effective Time.
6.12 Covenant to Continue Manufacture of Food Products. If Parent
should decide to discontinue or cause the discontinuance of the manufacture and
sale to Seventh-day Organizations of a line of at least 10 different vegetarian
products under the Loma ▇▇▇▇▇ trademark, containing no meat or
animal-derivatives and free from black pepper or other strong spices or flavor
enhancers, it shall give written notice of such decision to the General
Conference Corporation of Seventh-day Adventists (the "General Conference") at
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and offer to sell
ownership to the Loma ▇▇▇▇▇ trademark to the General Conference for a purchase
price of $1.00. Additionally, if for any reason, Parent and its affiliates shall
decide to discontinue the use of the Loma ▇▇▇▇▇ trademark, Parent shall also
offer to sell ownership of such trademark to the General Conference for $1.00.
"Seventh-day Organizations" shall mean the schools, hospitals, churches, retail
food stores and other organizations, entities and institutions sponsored by or
affiliated with the Seventh-day Adventist Church.
6.13 Notice and Cure. Each of Parent and the Company will notify
the other of, and will use all commercially reasonable efforts to cure before
the Closing, any event, transaction or circumstance, as soon as practical after
it becomes known to such party, that causes or will cause any covenant or
agreement of Parent or the Company under this Agreement to be breached or that
renders or will render untrue any representation or warranty of Parent or the
Company contained in this Agreement. Each of Parent and the Company also will
notify the other in writing of, and will use all commercially reasonable efforts
to cure, before the Closing, any violation or breach, as soon as practical after
it becomes known to such party, of any representation, warranty, covenant or
agreement made by Parent or the Company. No notice given pursuant to this
Section shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein.
6.14 Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, each of Parent and the Company will take or cause
to be taken all commercially reasonable steps necessary or desirable and proceed
diligently and in good faith to satisfy each condition to the other's
obligations contained in this Agreement and to consummate and make effective the
transactions contemplated by this Agreement, and neither Parent nor the Company
will, nor will it permit any of its Subsidiaries to, take or fail to take any
action that could be reasonably expected to result in the nonfulfillment of any
such condition.
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ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a) Shareholder Approval. This Agreement shall have been adopted
by the requisite vote of the shareholders of the Company under the OGCL and the
Company's Articles of Incorporation.
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
(c) No Injunctions or Restraints. No court of competent
jurisdiction or other competent Governmental or Regulatory Authority shall have
enacted, issued, promulgated, enforced or entered any law or order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making illegal or otherwise restricting, preventing or prohibiting
consummation of the Merger or the other transactions contemplated by this
Agreement.
(d) Governmental and Regulatory and Other Consents and Approvals.
Other than the filing provided for by Section 1.03, all consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
or any other public or private third parties required of Parent, the Company or
any of their Subsidiaries to consummate the Merger and the other matters
contemplated hereby, the failure of which to be obtained or taken could be
reasonably expected to have a material adverse effect on Parent and its
Subsidiaries or the Surviving Corporation and its Subsidiaries, in each case
taken as a whole, or on the ability of Parent and the Company to consummate the
transactions contemplated hereby shall have been obtained, all in form and
substance reasonably satisfactory to Parent and the Company.
7.02 Conditions to Obligation of Parent and Sub to Effect the
Merger. The obligation of Parent and Sub to effect the Merger is further subject
to the fulfillment, at or prior to the Closing, of each of the following
additional conditions (all or any of which may be waived in whole or in part by
Parent and Sub in their sole discretion):
(a) Representations and Warranties. The representations and
warranties made by the Company in this Agreement that are qualified by
materiality shall be true and correct and such representations and warranties
that are not so qualified shall be true and correct in all material respects, in
each case, as of the Closing Date as though made on and as of the Closing Date
or, in the case of representations and warranties made as of a specified date
earlier than the Closing Date, on and as of such earlier date, except as
affected by the transactions contemplated by this Agreement, and the Company
shall have delivered to Parent a certificate, dated the Closing Date and
executed in the name and on behalf of the Company by its Chairman of the Board,
President or any Vice President, to such effect.
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(b) Performance of Obligations. The Company shall have performed
and complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with by the
Company at or prior to the Closing, and the Company shall have delivered to
Parent a certificate, dated the Closing Date and executed in the name and on
behalf of the Company by its Chairman of the Board, President or any Vice
President, to such effect.
(c) Company Rights Agreement. On or prior to the Closing Date,
the Company Rights shall not have become exercisable or transferable apart from
the associated Company Common Shares, no "Shares Acquisition Date" or
"Distribution Date" (each as defined in the Company Rights Agreement) shall have
occurred and the Company Rights shall have been redeemed in accordance with the
terms of the Company Rights Agreement.
(d) Employment Agreements. B. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
shall each have entered into an agreement with Parent, substantially in the form
of Exhibits A, B, C, D, E and F attached hereto, respectively.
(e) Dissenting Shares. The aggregate number of Dissenting Shares
shall not exceed 10% of the total number of Company Common Shares outstanding on
the Closing Date.
(f) Proceedings. All proceedings to be taken on the part of the
Company in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Parent, and Parent shall have received copies of all such documents
and other evidences as Parent may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
7.03 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger is further subject to
the fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by the Company
in its sole discretion):
(a) Representations and Warranties. The representations and
warranties made by Parent and Sub in this Agreement that are qualified by
materiality shall be true and correct, and such representations and warranties
that are not so qualified shall be true and correct in all material respects, in
each case, as of the Closing Date as though made on and as of the Closing Date
or, in the case of representations and warranties made as of a specified date
earlier than the Closing Date, on and as of such earlier date, except as
affected by the transactions contemplated by this Agreement, and Parent and Sub
shall each have delivered to the Company a certificate, dated the Closing Date
and executed in the name and on behalf of Parent by its Chairman of the Board,
President or any Vice President and in the name and on behalf of Sub by its
Chairman of the Board, President or any Vice President, to such effect.
(b) Performance of Obligations. Parent and Sub shall have
performed and complied with, in all material respects, each agreement, covenant
and obligation required by this Agreement to be so performed or complied with by
Parent or Sub at or prior to the Closing, and
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Parent and Sub shall each have delivered to the Company a certificate, dated the
Closing Date and executed in the name and on behalf of Parent by its Chairman of
the Board, President or any Vice President and in the name and on behalf of Sub
by its Chairman of the Board, President or any Vice President, to such effect.
(c) Proceedings. All proceedings to be taken on the part of
Parent and Sub in connection with the transactions contemplated by this
Agreement and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Company, and the Company shall have received copies of
all such documents and other evidences as the Company may reasonably request in
order to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether prior to or after the Company Shareholders' Approval:
(a) By mutual written agreement of the parties hereto duly
authorized by action taken by or on behalf of their respective Boards of
Directors;
(b) By either the Company or Parent upon written notification to
the non-terminating party by the terminating party:
(i) at any time after March 31, 2000 if the Merger shall
not have been consummated on or prior to such date and such failure to
consummate the Merger is not caused by a breach of this Agreement by the
terminating party;
(ii) if the Company Shareholders' Approval shall not be
obtained by reason of the failure to obtain the requisite vote upon a
vote held at a meeting of such shareholders, or any adjournment thereof,
called therefor;
(iii) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the
non-terminating party set forth in this Agreement, which breach is not
curable or, if curable, has not been cured within thirty (30) days
following receipt by the non-terminating party of notice of such breach
from the terminating party; or
(iv) if any court of competent jurisdiction or other
competent Governmental or Regulatory Authority shall have issued an
order making illegal or otherwise restricting, preventing or prohibiting
the Merger and such order shall have become final and nonappealable;
(c) By the Company if the Board of Directors of the Company
determines in good faith, based upon advice from outside counsel, that
termination of the Agreement is
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required for the Board of Directors to comply with its fiduciary duties to
shareholders imposed by law by reason of an unsolicited bona fide Alternative
Proposal having been made which (i) meets the requirements of clauses (A) and
(B) of Section 5.02 and (ii) is not conditioned on the receipt of financing;
provided that the Company shall have complied with the provisions of clauses (C)
and (D) of Section 5.02 and shall notify Parent within three (3) business days
of its intention to terminate this Agreement or enter into a definitive
agreement with respect to such Alternative Proposal, but in no event shall such
notice be given less than forty-eight (48) hours prior to the public
announcement of the Company's termination of this Agreement; and provided
further that the Company's ability to terminate this Agreement pursuant to this
paragraph (c) is conditioned upon the prior payment by the Company to Parent of
any amounts owed by it pursuant to Section 8.02(b); or
(d) By Parent if the Board of Directors of the Company (or any
committee thereof) shall have withdrawn or modified in a manner adverse to
Parent its approval or recommendation of this Agreement or the Merger or shall
have recommended an Alternative Proposal to the shareholders of the Company or
failed to reconfirm its recommendation of this Agreement and the Merger within
five (5) business days following a reasonable written request for such
reconfirmation by Parent.
8.02 Effect of Termination. (a) If this Agreement is validly
terminated by either the Company or Parent pursuant to Section 8.01, this
Agreement will forthwith become null and void and there will be no liability or
obligation on the part of either the Company or Parent (or any of their
respective Representatives or affiliates), except (i) that the provisions of
6.07 and 6.09 and this Section 8.02 will continue to apply following any such
termination, (ii) that nothing contained herein shall relieve any party hereto
from liability for willful breach of its representations, warranties, covenants
or agreements contained in this Agreement and (iii) as provided in paragraph (b)
below.
(b) In the event that any person or group shall have made an
Alternative Proposal and thereafter (i) this Agreement is terminated (x) by the
Company pursuant to Section 8.01(c), or (y) by Parent pursuant to Section
8.01(d) or (ii) this Agreement is terminated for any other reason (other than by
reason of the breach of this Agreement by Parent or a termination by either
party pursuant to 8.01(b)(iv)) and, in the case of this clause (ii) only, a
definitive agreement with respect to such Alternative Proposal is executed
within one year after such termination, then the Company shall pay to Parent, by
wire transfer of same day funds, either on the date contemplated in Section
8.01(c) if applicable, or otherwise, within two (2) business days after such
amount becomes due, (x) a termination fee of $12,500,000 and (y) an amount up to
$500,000 to reimburse Parent and Sub for all documented out-of-pocket expenses
and fees incurred by them in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, fees and expenses payable to
all banks, investment banking firms and other financial institutions and persons
and their respective agents and counsel for acting as Parent's financial advisor
with respect to, or arranging or committing to provide or providing any
financing for, the Merger).
(c) The Company acknowledges that the agreements contained in the
preceding paragraph are an integral part of the transactions contemplated by
this Agreement and that, without these agreements, Parent and Sub would not
enter into this Agreement; accordingly,
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if the Company fails promptly to pay the amount due pursuant to such paragraph,
and in order to obtain such payment, Parent or Sub commences a suit which
results in a judgment against the Company for the fee set forth in such
paragraph, the Company shall pay to Parent or Sub, as the case may be, its cost
and expenses (including reasonable attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee at the prime
rate of Citibank N.A. in effect on the date such payment was required to be
made.
(d) In the event of a termination of this Agreement pursuant to
which a payment is made in full compliance with Section 8.02(b), the receipt of
such payment shall serve as liquidated damages with respect to any breach of
this Agreement by the party who has made such payment giving rise to such
termination, and the receipt of any such payment shall be the sole and exclusive
remedy (at law or in equity) with respect to any such breach. In the event any
action, suit, proceeding or claim is commenced or asserted by a party against
another party and/or any director or officer of such other party relating,
directly or indirectly, to this Agreement, it is expressly agreed that no party
shall be entitled to obtain any punitive, exemplary, treble, or consequential
damages of any type under any circumstances in connection with such action,
suit, proceeding or claim, regardless of whether such damages may be available
under law, the parties hereby waiving their rights, if any, to recover any such
damages in connection with any such action, suit, proceeding or claim
8.03 Amendment. This Agreement may be amended, supplemented or
modified by action taken by or on behalf of the respective Boards of Directors
of the parties hereto at any time prior to the Effective Time, whether prior to
or after the Company Shareholders' Approval shall have been obtained, but after
such adoption and approval only to the extent permitted by applicable law. No
such amendment, supplement or modification shall be effective unless set forth
in a written instrument duly executed by or on behalf of each party hereto.
8.04 Waiver. At any time prior to the Effective Time any party
hereto, by action taken by or on behalf of its Board of Directors, may to the
extent permitted by applicable law (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties hereto
contained herein or in any document delivered pursuant hereto or (iii) waive
compliance with any of the covenants, agreements or conditions of the other
parties hereto contained herein. No such extension or waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
party extending the time of performance or waiving any such inaccuracy or
non-compliance. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on any
future occasion.
ARTICLE IX
GENERAL PROVISIONS
9.01 Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements contained
in this Agreement shall not survive the Merger but shall terminate at the
Effective Time; provided, however, that this
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Section 9.01 shall not limit any covenant or agreement of the parties hereto,
which by its terms contemplates performance after the Effective Time or the
termination of this Agreement.
9.02 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Parent or Sub, to:
▇▇▇▇▇▇▇ Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
with a copy to:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Company, to:
Worthington Foods, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
with a copy to:
Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request
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or other communication is received by any other person to whom a copy of such
notice, request or other communication is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile number
or other information for the purpose of notices to that party by giving notice
specifying such change to the other parties hereto.
9.03 Entire Agreement; Incorporation of Exhibits. (a) This
Agreement supersedes all prior discussions and agreements among the parties
hereto with respect to the subject matter hereof, and contains, together with
the Confidentiality Agreement, the sole and entire agreement among the parties
hereto with respect to the subject matter hereof.
(b) The Company Disclosure Letter and any Exhibit attached to
this Agreement and referred to herein are hereby incorporated herein and made a
part hereof for all purposes as if fully set forth herein.
9.04 Public Announcements Except as otherwise required by law or
the rules of any applicable securities exchange or national market system, so
long as this Agreement is in effect, Parent and the Company will not, and will
not permit any of their respective Representatives to, issue or cause the
publication of any press release or make any other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld. Parent and
the Company will cooperate with each other in the development and distribution
of all press releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will furnish the other
with drafts of any such releases and announcements as far in advance as
practicable.
9.05 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and except as provided in Sections
6.06 and 6.12 (which are intended to be for the benefit of the persons entitled
to therein, and may be enforced by any of such persons), it is not the intention
of the parties to confer third-party beneficiary rights upon any other person.
9.06 No Assignment; Binding Effect. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so will be void, except that Sub may assign any or all of its rights,
interests and obligations hereunder to another direct or indirect wholly-owned
Subsidiary of Parent, provided that any such Subsidiary agrees in writing to be
bound by all of the terms, conditions and provisions contained herein. Subject
to the preceding sentence, this Agreement is binding upon, inures to the benefit
of and is enforceable by the parties hereto and their respective successors and
assigns.
9.07 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define, modify or limit
the provisions hereof.
9.08 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law or
order, and if the rights or obligations of any party hereto under this Agreement
will not be materially and adversely
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affected thereby, (i) such provision will be fully severable, (ii) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, and (iii) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom.
9.09 Governing Law. Except to the extent that the OGCL is
mandatorily applicable to the Merger and the rights of the shareholders of the
Constituent Corporations, this Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
9.10 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specified terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.11 Certain Definitions. As used in this Agreement:
(a) the term "affiliate," as applied to any person, shall mean
any other person directly or indirectly controlling, controlled by, or under
common control with, that person; for purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise;
(b) a person will be deemed to "beneficially" own securities if
such person would be the beneficial owner of such securities under Rule 13d-3
under the Exchange Act, including securities which such person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time);
(c) the term "business day" means a day other than Saturday,
Sunday or any day on which banks located in the States of Ohio or Michigan are
authorized or obligated to close;
(d) any reference to any event, change or effect being "material"
or "materially adverse" or having a "material adverse effect" on or with respect
to an entity (or group of entities taken as a whole) means such event, change or
effect is material or materially adverse, as the case may be, to the business,
properties, assets, liabilities, prospects, condition financial or otherwise) or
results of operations of such entity (or of such group of entities taken as a
whole);
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(e) the term "knowledge" or any similar formulation of
"knowledge" shall mean, with respect to the Company, the knowledge of (i) any of
the Company's executive officers or directors and (ii) the employees of the
Company listed on Section 9.11 of the Company Disclosure Letter.
(f) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act);
(g) the "Representatives" of any entity means such entity's
directors, officers, employees, legal, investment banking and financial
advisors, accountants and any other agents and representatives; and
(h) the term "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which more than fifty percent (50%) of either the equity interests in, or the
voting control of, such corporation or other organization is, directly or
indirectly through Subsidiaries or otherwise, beneficially owned by such party.
9.12 Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement
to be signed by its officer thereunto duly authorized as of the date first above
written.
▇▇▇▇▇▇▇ COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
WF ACQUISITION INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
WORTHINGTON FOODS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
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List of Sections of Company Disclosure Letter and of Exhibits to
Agreement and Plan of Merger
dated as of September 30, 1999
by and among
▇▇▇▇▇▇▇ Company, WF Acquisition Inc.
and Worthington Foods, Inc.
Sections of Company Disclosure Letter:
--------------------------------------
Section 3.01 -- Organization and Qualification
Section 3.02 -- Capitalization
Section 3.04 -- Non-Contravention; Approvals and Consents
Section 3.05 -- SEC Reports and Financial Statements
Section 3.06 -- Absence of Certain Changes or Events
Section 3.07 -- Absence of Undisclosed Liabilities
Section 3.08 -- Legal Proceedings
Section 3.11 -- Compliance with Agreements; Certain Agreements
Section 3.12 -- Taxes
Section 3.13 -- Employee Benefit Plans; ERISA
Section 3.14 -- Labor Matters
Section 3.15 -- Environmental Matters
Section 3.16 -- Intellectual Property Rights
Section 3.17 -- Year 2000
Section 5.01 -- Covenants of the Company
Section 6.06 -- Indemnification; Directors' and Officers' Insurance
Section 9.11 -- "Knowledge" of Company Employees
Exhibits:
---------
A -- Employment Agreement between ▇▇▇▇▇▇▇ Company and B. ▇▇▇▇▇▇ ▇▇▇▇▇
B -- Employment Agreement between ▇▇▇▇▇▇▇ Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
C -- Employment Agreement between ▇▇▇▇▇▇▇ Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
D -- Employment Agreement between ▇▇▇▇▇▇▇ Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
E -- Employment Agreement between ▇▇▇▇▇▇▇ Company and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
F -- Employment Agreement between ▇▇▇▇▇▇▇ Company and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
NOTE: The Company Disclosure Letter and the foregoing Exhibits are not
filed herewith. Worthington Foods, Inc. agrees to furnish a copy of
any omitted Exhibit or of the Company Disclosure Letter to the
Securities and Exchange Commission upon request.