Exhibit 10.13
PURCHASE AGREEMENT
THIS AGREEMENT is made effective the 27th day of January, 2006, between Osborne
Investments, L.L.C., a Missouri limited liability company ("OI") and Land
O'Lakes, Inc., a Minnesota corporation ("LOL").
RECITALS
A. Pursuant to a Joint Venture Agreement dated January, 2000, ("JV Agreement")
OI and LOL previously formed Moark, LLC, a Missouri limited liability
company (the "LLC"), for the purpose of engaging in the production and
marketing of eggs and egg products (the "Business").
B. Initially, and pursuant to the original Limited Liability Company Operating
Agreement of Moark LLC, ("Operating Agreement") OI and LOL each held a
fifty (50%) percent membership Interest in the LLC. Over time, and pursuant
to several amendments to the JV Agreement and the Operating Agreement and
agreements ancillary thereto, the parties admitted a new member to the LLC
and altered their respective membership Interests such that the current
members and their Interests (subject to the allocation agreement referenced
in the Second Amendment to the June 15, 2001 Agreement dated February 14,
2003 ("Second Amendment")) are as follows:
Member Membership Interest
- ------ -------------------
LOL Holdings, Inc Five (5%) percent
LOL Fifty-two and one half (52.5%) percent
OI Forty-two and one half (42.5%) percent
C. LOL desires to purchase from OI and OI desires to sell to LOL all of OI's
membership Interest in the LLC, including all rights represented thereby,
upon and subject to the terms and conditions provided in this Agreement.
TERMS AND CONDITIONS
In consideration of the foregoing Recitals which are made a contractual part of
this Agreement, and of the respective agreements and covenants contained herein,
and intending to be legally bound hereby, the parties further agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Purchase and Sale of OI's Membership Interest. Upon and subject to
the terms and conditions set forth in this Agreement, LOL shall purchase at the
Closing from OI and OI shall sell, transfer, assign and deliver to LOL, all of
OI's right, title and interest in and to all of its complete membership Interest
in the LLC as defined in (i) the Operating Agreement including but not limited
to the Definitions in Exhibit B of the Operating Agreement, and all amendments
and addendums thereof; (ii) the First Addendum to Limited Liability Company
Operating Agreement of Moark, LLC; (iii) the Agreement Substituting and
Replacing the June 15, 2001 Agreement, and (iv) the Second
Amendment to the June 15, 2001 Agreement, including all rights thereunder,
including, but not limited to, all governance rights and financial rights,
rights to capital accounts, rights to guaranteed payments, and rights to
undistributed earnings ("OI's Membership Interest").
Section 1.2 Consideration. The consideration for the sale of the Assets is as
follows:
a. Cash. Cash in the amount of Seventy-One Million Dollars
($71,000,000.00); and,
b. Assumption of Manager Payment Obligations. LOL shall assume, or
cause the LLC to assume, those obligations of OI to three of the
managers of the LLC as referenced in Schedule 1.2b hereto.
Section 1.3 Payment Process. At Closing, LOL shall pay to OI, by wire transfer
of immediately available funds to accounts as designated by OI, the amount of
cash as referenced in Section 1.2a above.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF LOL
LOL represents and warrants to OI as of the date hereof and as of the date of
Closing as follows:
Section 2.1 Due Incorporation and Qualification. LOL is a cooperative
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Minnesota, and has all requisite corporate power and
authority to own its properties and assets and to conduct its business as now
conducted.
Section 2.2 Authorization LOL has all requisite corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and performance of LOL's obligations
hereunder have been duly authorized by all necessary corporate action on the
part of LOL, and no other corporate proceedings on the part of LOL are necessary
to authorize the execution, delivery and performance of LOL hereunder. This
Agreement has been duly executed and delivered by LOL and constitutes LOL's
valid and binding obligation enforceable against LOL in accordance with its
terms.
Section 2.3 No Conflict. Assuming the consents/waivers referenced in Section
4.4b are received, then the execution, delivery and performance of LOL's
obligations hereunder, and the consummation of the transaction contemplated
thereby, will not (a) conflict with or violate any provision of the articles of
incorporation, bylaws, or other governing documents of LOL; (b) conflict with or
result in a breach or default under any of the terms, conditions or provisions
of any agreement or other instrument or obligation to which LOL is a party or by
which LOL or its assets or properties may be bound; (c) violate any judgment,
order, writ, injunction, or decree of any Governmental Authority applicable to
LOL or any of its assets or properties.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF OI
OI represents and warrants to LOL as of the date hereof and as of the date of
Closing as follows:
Section 3.1 Authorization. OI has all requisite power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement and the performance of OI's obligations hereunder
have been duly authorized by all necessary action on the part of OI. This
Agreement has been duly executed and delivered by OI and constitutes OI's valid
and binding obligation, enforceable against OI in accordance with its terms.
Section 3.2 No Conflict. The execution, delivery and performance of OI's
obligations hereunder, and the consummation of the transaction contemplated
hereby, will not (a) conflict with or result in a breach or default under any of
the terms, conditions or provisions of any agreement or other instrument or
obligation to which OI is a party or by which OI or any of its assets or
properties may be bound; or, (b) violate any judgment, order, writ, injunction,
or decree of any Governmental Authority applicable to OI or any of its assets or
properties.
Section 3.3 Title to OI's Membership Interest. There are no outstanding liens,
encumbrances, options, warrants, contracts, commitments or other agreements or
arrangements of any character whatsoever relating to OI's Membership Interest or
any part thereof or to which OI is a party, other than in favor of LOL or as
contemplated by this Agreement. LOL hereby acquires clear title to OI's complete
Membership Interest, free and clear of all liens or encumbrances of whatsoever
nature.
Section 3.4 No Undisclosed Liabilities. To the best knowledge of the principals
of OI, namely Hollis Osborne, Paul Osborne, and Jerry Wells, there are no debts,
liabilities, or obligations of any nature, whether fixed, absolute, accrued,
contingent or otherwise, except those which have been made known to LOL or to
the senior management of the LLC prior to the date hereof or prior to Closing
which could have a material adverse impact, individually or in the aggregate, on
the LLC or the Business, or OI's Membership Interest.
Section 3.5 No Other Management/Employee Obligations. Except for those
obligations described in Schedule 1.2b and to Craig Wells, OI has no obligations
to any of the former or current managers or any former or current employees of
the LLC or any of its subsidiaries. OI agrees to timely fulfill its obligations
to Craig Wells.
ARTICLE IV
CLOSING
Section 4.1 Closing. The Closing shall take place on January 27, 2006, at or
about 10:00 a.m. Central Standard Time, or such other time and in such fashion
as the parties may mutually agree.
Section 4.2 Deliveries By OI. OI shall deliver to LOL at Closing the following:
a. An assignment transferring all of OI's right, title and interest
in and to OI's Membership Interest, in the form attached hereto
as Schedule 4.2;
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b. A certificate of the Secretary of OI certifying resolutions of
the governing board of OI approving and authorizing the
execution, delivery and performance of this Agreement by OI and
the consummation of the transaction contemplated hereby;
c. A certificate, in the form prescribed by treasury regulations
under Section 1445 of the Tax Code, that OI is not a foreign
person within the meaning of Section 1445 of the Code;
d. Written resignation from the board and officerships of the LLC
and the boards and officerships of any LLC subsidiary from the
representatives of OI; and,
e. Such other documents and instruments as may be reasonably
required to consummate the transactions contemplated by this
Agreement.
Section 4.3 Deliveries by LOL. At the Closing, LOL shall make the payment
described in Section 1.2a and shall deliver to OI the following:
a. An assignment and assumption agreement for the Managers Contracts
in the form attached hereto as Schedule 4.3a;
b. A certificate dated the Closing, of the secretary or assistant
secretary of LOL certifying that all necessary actions have been
taken by LOL to approve and authorize this Agreement and the
consummation by LOL of the transactions contemplated hereby;
c. Copies of new signature cards for all banks of the LLC and its
subsidiaries and affiliates, which do not bear Hollis Osborne's,
Paul Osborne's, and Jerry Wells' names as having signature
authority, or alternatively a certificate dated the Closing of
LOL certifying that those individuals have been, or will promptly
be, removed from signature authority on all banks of the LLC and
its subsidiaries and affiliates; and,
d. Such other documents and instruments as may be reasonably
required to consummate the transactions contemplated by this
Agreement.
Section 4.4 Conditions to Closing. As conditions to Closing hereunder:
a. The LLC shall have received amendments to those Amended and
Restated Employment Agreements entered into by the LLC and Hollis
Osborne, Paul Osborne, and Jerry Wells in the forms as attached
hereto as Schedule 4.4.; and,
b. LOL shall have received consents, waivers, or the like from its
lenders and lenders to the LLC with respect to this transaction
in form and substance satisfactory to LOL.
Section 4.5 Termination of Rights. As of the Closing, OI shall cease to be a
member of the LLC, with no membership Interest in the LLC, and have no rights
pursuant to the JV Agreement, the Operating Agreement and the Second Amendment,
and all documents ancillary thereto. As of the Closing, any and all rights of OI
to guaranteed payments, rights to capital accounts, rights to undistributed
earnings, and rights pursuant to any put/call agreements pertaining to the
parties' membership interest in the LLC, shall be effectively terminated.
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ARTICLE V
POST CLOSING COVENANTS
Section 5.1 Further Assurances. From and after the effective date hereof, LOL,
the LLC and OI each shall promptly execute and deliver any other documents or
instruments reasonably required in order to comply with the terms of this
Agreement or give full effect to the transactions contemplated hereby.
Section 5.2 Survival of Representations; Indemnification. The representations
and warranties made by each party hereunder shall survive the closing
indefinitely. Each party agrees to defend, indemnify and hold harmless the other
party against all damages, claims, losses and expenses, including, without
limitation, litigation costs and fees of attorneys, arising out of, resulting
from or in connection with any misrepresentation or breach of representation,
warranty, covenant or undertaking hereunder of such party.
Section 5.3 Non-Competition; Non-Solicitation.
a. For a period of two years following the Closing hereunder, OI
agrees that it will not, and shall cause its affiliates to not, except in the
case of a Permitted Investment, directly or indirectly own, manage, operate,
join, or participate in the ownership, management, control of, any person or
entity involved in any Competitive Business in the United States.
b. "Competitive Business" shall mean any business which is engaged in
any activity which is competitive with any of the business activities in which
the LLC, or any LLC subsidiary, is currently engaged, or for which any of them
are actively developing plans. "Permitted Investment" shall mean those present
business operations (as listed on Schedule 5.3b) owned by or invested in by OI
or by Hollis Osborne, plus the ownership of not more than 3% of the outstanding
shares of common stock of a publicly traded entity which is engaged in a
Competitive Business.
c. It is understood and agreed that the restrictions imposed by the
provisions of the foregoing Section 5.3a are separate and severable, and it is
the intent of the parties hereto that in the event the restrictions imposed by
said Section should be determined by any court of competent jurisdiction to be
void for any reason whatsoever, the remaining provisions of this Agreement and
the restrictions imposed by the remainder of said Section shall remain valid and
binding upon the parties. It is also agreed and understood that in the event any
restriction contained in Section 5.3a should be considered by any court of
competent jurisdiction to be unenforceable because unreasonable either in length
of time or area to which said restriction applies, it is the intent of both
parties hereto that said court reduce and reform the provisions thereof so as to
apply to limits considered enforceable by said court.
d. Recognizing that irreparable damage may result to LOL and/or the
LLC in the event of breach of any of the foregoing covenants and assurances of
Section 5.3a by OI, LOL shall be entitled to an injunction to be issued by any
court of competent jurisdiction enjoining and restraining OI and each and every
person, firm, company, corporation or other entity acting in concert or
participating with OI from the continuation of such breach.
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e. For a period of two years following the Closing, OI shall not, and
shall cause its affiliates to not, directly or indirectly, solicit any salaried
employee of the LLC or any of its subsidiaries, who was employed by the LLC or
the subsidiary on the date hereof and who has not been involuntarily terminated
by the LLC or the subsidiary, as the case may be, to enter into any written or
oral agreement, arrangement, or understanding regarding employment or retention
as a consultant by OI or any affiliate thereof, provided that nothing herein
shall prohibit OI from hiring or engaging such an employee pursuant to general
advertising or posting through the efforts of a search firm not retained by OI.
Section 5.4 Confidentiality; Publicity.
OI agrees to keep confidential all information concerning the LLC, any of its
subsidiaries, the Business, and any past, current and future plans with respect
thereto, as well as the terms and conditions of this Agreement, (collectively,
"Confidential Information") and shall not disclose such Confidential Information
to any third party, except to those of its employees, officers and directors,
financial, tax and legal advisors, on an absolute need to know basis, and all
such third parties shall be advised of the confidential nature of this
information and agree to keep it confidential. OI shall be responsible for any
breach of this obligation of confidentiality by any such third party.
Except as may be required by law in the reasonable judgment of such party's
legal counsel, no public announcements or other publicity regarding this
transaction shall be made by LOL or OI or any of their respective officers,
directors, employees, representatives or agents, without the prior written
agreement of LOL and OI, respectively. Any announcement shall be agreed to by
the parties as to form, content, timing and manner of distribution or
publication. The parties agree that LOL may disclose such information as it
believes necessary to comply with any requirements of the Securities Exchange
Commission.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Definition of Certain Terms. Capitalized terms not defined herein
shall have the meaning ascribed to them in the JV Agreement and/or the Operating
Agreement.
Section 6.2 Amendment. This Agreement may be amended only by the written consent
of all parties hereto.
Section 6.3 Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter contained herein and
supersedes and replaces in whole any prior oral or written agreement of the
parties as to the subject matter contained herein.
Section 6.4 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the laws of the State of Minnesota, without
regard to the principles of conflicts of laws thereof.
Section 6.5 Assignment. This Agreement shall be binding on and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned without the prior written consent of
the other party hereto.
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Section 6.6 Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
Section 6.7 Incorporation of Recitals. The Recitals set forth above are
contractual in nature and are hereby incorporated into this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
OSBORNE INVESTMENTS, LLC LAND O'LAKES, INC.
By: /s/ Jerry E. Wells By: /s/ Daniel Knutson
--------------------------------- ------------------------------------
Print Name: Jerry E. Wells Print Name: Daniel Knutson
Its: Member Its: Senior Vice President, CFO
Consent of LOL Holdings, Inc.: LOL Holdings, Inc. hereby consents to the sale
and transfer of OI's Membership Interest in the LLC to LOL per this Agreement.
LOL HOLDINGS, INC.
By: /s/ Peter S. Janzen
---------------------------------
Print Name: Peter S. Janzen
Its: Assistant Secretary
LIST OF SCHEDULES
1.2b Manager Agreements to be assumed by LOL
4.2 Assignment by OI of Membership Interest to LOL
4.3a Assignment and Assumption Agreement re Manager Contracts
4.4 Amendments to Employment Agreements with Hollis Osborne, Paul Osborne and
Jerry Wells
5.3b Permitted Investments
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