Exhibit 2.1
Execution Copy
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AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
RALCORP HOLDINGS, INC.
AND
AGRIBRANDS INTERNATIONAL, INC.,
DATED AS OF
AUGUST 7, 2000
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Table of Contents
Page
ARTICLE I.FORMATION OF HOLDING COMPANY AND SUBSIDIARIES........................1
1.1. Organization of Holding Company.................................1
1.2. Directors and Officers of Holding Company.......................1
1.3. Organization of Merger Subsidiaries.............................2
1.4. Actions of Agribrands, Ralcorp and Holding Company..............2
ARTICLE II.THE MERGERS; CLOSING................................................2
2.1. The Mergers.....................................................2
2.2. Directors and Officers..........................................3
2.3. Certificate of Incorporation and Bylaws.........................3
ARTICLE III.EFFECT OF THE MERGERS ON SECURITIES OF AGRIBRANDS, RALCORP AND THE
MERGER SUBSIDIARIES................................................4
3.1. Conversion of Merger Subsidiaries Stock.........................4
3.2. Cancellation of Holding Company Capital Stock...................4
3.3. Conversion of Common Stock......................................4
3.4. Surrender and Payment...........................................6
3.5. Options.........................................................9
3.6. Fractional Shares...............................................9
3.7. Withholding Rights..............................................9
ARTICLE IV.REPRESENTATIONS AND WARRANTIES OF AGRIBRANDS.......................10
4.1. Organization and Good Standing.................................10
4.2. Capitalization.................................................10
4.3. Subsidiaries...................................................11
4.4. Authorization; Binding Agreement...............................11
4.5. Governmental Approvals.........................................11
4.6. No Violations..................................................12
4.7. Securities Filings and Litigation..............................12
4.8. Agribrands Financial Statements................................13
4.9. Absence of Certain Changes or Events...........................13
4.10. Related Party Transactions....................................14
4.11. Compliance with Laws..........................................14
4.12. Permits.......................................................14
4.13. Finders and Investment Bankers................................14
4.14. Material Contracts............................................14
4.15. Employee Benefit Plans........................................15
4.16. Taxes and Returns.............................................17
4.17. No Adverse Actions............................................18
4.18. Fairness Opinions.............................................19
4.19. Takeover Statutes and Charter.................................19
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4.20. Agribrands Rights Plan........................................19
ARTICLE V.REPRESENTATIONS AND WARRANTIES OF RALCORP...........................19
5.1. Organization and Good Standing.................................19
5.2. Capitalization.................................................20
5.3. Subsidiaries...................................................20
5.4. Authorization; Binding Agreement...............................21
5.5. Governmental Approvals.........................................21
5.6. No Violations..................................................21
5.7. Securities Filings and Litigation..............................22
5.8. Ralcorp Financial Statements...................................22
5.9. Absence of Certain Changes or Events...........................23
5.10. Related Party Transactions....................................23
5.11. Compliance with Laws..........................................23
5.12. Permits.......................................................23
5.13. Finders and Investment Bankers................................24
5.14. Material Contracts............................................24
5.15. Employee Benefit Plans........................................24
5.16. Taxes and Returns.............................................25
5.17. No Adverse Actions............................................26
5.18. Fairness Opinion..............................................26
5.19. Takeover Statutes and Charter.................................26
5.20. Ralcorp Rights Plan...........................................27
ARTICLE VI.ADDITIONAL COVENANTS OF AGRIBRANDS.................................27
6.1. Conduct of Business of Agribrands and the Agribrands
Subsidiaries...................................................27
6.2. Notification of Certain Matters................................29
6.3. Access and Information.........................................29
6.4. Shareholder Approval...........................................30
6.5. Reasonable Best Efforts........................................30
6.6. Public Announcements...........................................31
6.7. Compliance.....................................................31
6.8. Tax Treatment..................................................31
6.9. Agribrands Benefit Plans.......................................31
6.10. No Solicitation of Acquisition Proposal.......................31
6.11. SEC and Shareholder Filings...................................33
6.12. Affiliate Agreements..........................................33
6.13. Takeover Statutes.............................................33
6.14. Comfort Letters...............................................33
ARTICLE VII.ADDITIONAL COVENANTS OF RALCORP...................................34
7.1. Conduct of Business of Ralcorp and the Ralcorp Subsidiaries....34
7.2. Notification of Certain Matters................................36
7.3. Access and Information.........................................36
7.4. Shareholder Approval...........................................37
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7.5. Reasonable Best Efforts........................................37
7.6. Public Announcements...........................................37
7.7. Compliance.....................................................38
7.8. Tax Treatment..................................................38
7.9. Ralcorp Benefit Plans..........................................38
7.10. No Solicitation of Acquisition Proposal.......................38
7.11. SEC and Shareholder Filings...................................39
7.12. Affiliate Agreements..........................................40
7.13. Takeover Statutes.............................................40
7.14. Comfort Letters...............................................40
ARTICLE VIII.ADDITIONAL COVENANTS OF AGRIBRANDS AND RALCORP WITH RESPECT
TO HOLDING COMPANY...............................................40
8.1. Director and Officer Liability................................40
8.2. Listing of Stock..............................................41
8.3. Registration Statement; Prospectus/Proxy Statement............42
8.4. Tax Treatment.................................................43
8.5. Shareholder Rights Agreement..................................43
ARTICLE IX.CONDITIONS.........................................................43
9.1. Conditions to Each Party's Obligations........................43
9.1.1. Shareholder Approvals.................................43
9.1.2. No Injunction or Action...............................43
9.1.3. Governmental Approvals................................43
9.1.4. HSR Act...............................................44
9.1.5. Required Consents.....................................44
9.1.6. Registration Statement................................44
9.1.7. Spin-Off Covenant.....................................44
9.1.8. Tax Opinion...........................................45
9.1.9. Dissenting Shares.....................................45
9.1.10. Holding Company Acts.................................45
9.2. Conditions to Obligations of Agribrands.......................45
9.2.1. Ralcorp Representations and Warranties................45
9.2.2. Performance by Ralcorp................................45
9.2.3. No Material Adverse Change............................45
9.2.4. Certificates and Other Deliveries.....................46
9.2.5. Opinion of Ralcorp Counsel............................46
9.3. Conditions to Obligations of Ralcorp..........................46
9.3.1. Agribrands Representations and Warranties.............46
9.3.2. Performance by Agribrands.............................46
9.3.3. No Material Adverse Change............................46
9.3.4. Certificates and Other Deliveries.....................47
9.3.5. Opinion of Agribrands Counsel........................47
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ARTICLE X.TERMINATION AND ABANDONMENT.........................................47
10.1. Termination..................................................47
10.2. Effect of Termination........................................48
ARTICLE XI.MISCELLANEOUS......................................................50
11.1. Confidentiality..............................................50
11.2. Amendment and Modification...................................51
11.3. Waiver of Compliance; Consents...............................51
11.4. Survival of Representations and Warranties...................51
11.5. Notices......................................................51
11.6. Binding Effect; Assignment...................................53
11.7. Expenses.....................................................53
11.8. Governing Law................................................53
11.9. Counterparts.................................................53
11.10. Interpretation..............................................53
11.11. Entire Agreement............................................53
11.12. Specific Performance........................................54
11.13. Third Parties...............................................54
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GLOSSARY OF DEFINED TERMS
Page Where
Term Defined
Affiliate.....................................................................53
Agreement......................................................................1
Agribrands.....................................................................1
Agribrands Acquisition Proposal...............................................32
Agribrands Ancillary Agreements...............................................11
Agribrands Cash Consideration..................................................4
Agribrands Cash Election.......................................................4
Agribrands Common Stock........................................................4
Agribrands Dissenting Shares...................................................5
Agribrands Financial Statements...............................................13
Agribrands Holders.............................................................7
Agribrands Material Adverse Effect............................................10
Agribrands Material Contract..................................................15
Agribrands Merger..............................................................2
Agribrands Merger Agreement....................................................2
Agribrands Merger Consideration................................................4
Agribrands Options.............................................................9
Agribrands Permits............................................................14
Agribrands Preferred Stock....................................................10
Agribrands Proposals..........................................................30
Agribrands Rights Agreement...................................................19
Agribrands Securities Filings.................................................13
Agribrands Shareholders Meeting...............................................30
Agribrands Stock Consideration.................................................4
Agribrands Stock Election......................................................4
Agribrands Subsidiaries.......................................................10
Agribrands Superior Proposal..................................................32
Agribrands Termination Fee....................................................48
Articles of Merger.............................................................3
Benefit Plan..................................................................15
Cash Election..................................................................5
Certificates...................................................................5
Closing........................................................................3
Closing Date...................................................................3
Consent.......................................................................11
Continuing Directors..........................................................19
Dissenting Shares..............................................................5
Effective Time.................................................................3
Election Deadline..............................................................6
Election Form..................................................................6
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Enforceability Exceptions.....................................................11
ERISA.........................................................................15
Event.........................................................................13
Exchange Agent.................................................................6
Exchange Fund..................................................................6
Final Order...................................................................44
Form S-4......................................................................42
Governmental Authority........................................................12
Holding Company................................................................1
Holding Company Common Stock...................................................1
Holding Company Material Adverse Effect.......................................44
HSR Act.......................................................................12
Indemnified Losses............................................................41
Indemnified Person............................................................40
IRS...........................................................................12
Law...........................................................................12
Litigation....................................................................13
Merger Agreements..............................................................2
Merger Consideration...........................................................5
Merger Sub A...................................................................2
Merger Sub R...................................................................2
Merger Subsidiaries............................................................2
Mergers....................................................................... 3
Missouri Code..................................................................2
Multi-Employer Plan...........................................................15
New Agribrands Options.........................................................9
New Ralcorp Options............................................................9
NYSE..........................................................................12
person........................................................................53
Proxy Statement/Prospectus....................................................42
Ralcorp........................................................................1
Ralcorp Acquisition Proposal..................................................39
Ralcorp Ancillary Agreements..................................................21
Ralcorp Cash Consideration.....................................................5
Ralcorp Cash Election..........................................................5
Ralcorp Common Stock...........................................................5
Ralcorp Dissenting Shares......................................................5
Ralcorp Financial Statements..................................................22
Ralcorp Holders................................................................7
Ralcorp Material Adverse Effect...............................................20
Ralcorp Material Contract.....................................................24
Ralcorp Merger.................................................................3
Ralcorp Merger Agreement.......................................................2
Ralcorp Merger Consideration...................................................5
Ralcorp Options................................................................9
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Ralcorp Permits...............................................................23
Ralcorp Preferred Stock.......................................................20
Ralcorp Proposals.............................................................37
Ralcorp Rights Agreement......................................................27
Ralcorp Securities Filings....................................................22
Ralcorp Shareholders Meeting..................................................37
Ralcorp Stock Consideration....................................................5
Ralcorp Stock Election.........................................................5
Ralcorp Subsidiaries..........................................................19
Ralcorp Superior Proposal.....................................................39
Ralcorp Termination Fee.......................................................49
Ralston Purina................................................................33
Reorganization.................................................................1
Stock Election.................................................................5
subsidiary....................................................................53
Takeover Statute..............................................................19
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made and
entered into as of August 7, 2000, by and between Ralcorp Holdings, Inc., a
Missouri corporation ("Ralcorp") and Agribrands International, Inc., a Missouri
corporation ("Agribrands").
Recitals
A. The respective Special Committees of the Boards of Directors
of Agribrands and Ralcorp have recommended and the Boards of Directors of
Agribrands and Ralcorp have approved and deem it advisable and in the best
interests of their respective companies and shareholders to consummate the
reorganization (the "Reorganization") provided for herein, pursuant to which a
newly formed holding company ("Holding Company"), will acquire all of the common
stock of each of Agribrands and Ralcorp through mergers of separate subsidiaries
of Holding Company with and into each of Agribrands and Ralcorp (the "Mergers").
Upon consummation of the Reorganization, the shareholders of each of Agribrands
and Ralcorp will become shareholders of Holding Company.
B. For federal income tax purposes, it is intended that (i) the
Ralcorp Merger qualify as a reorganization described in Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code"), or, taken
together with the Agribrands Merger, qualifies as an exchange described in
Section 351(a) of the Code and (ii) the Agribrands Merger qualify as a
reorganization described in Section 368(a) of the Code or , taken together with
the Ralcorp Merger, qualifies as an exchange described in Section 351(a) of the
Code.
C. Agribrands and Ralcorp desire to make certain representations,
warranties, covenants and agreements in connection with the Mergers.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
FORMATION OF HOLDING COMPANY AND SUBSIDIARIES
1.1. Organization of Holding Company. As promptly as practicable
following the execution of this Agreement, Agribrands and Ralcorp will cause
Holding Company to be organized under Missouri law. The authorized capital stock
of Holding Company will consist of 100 shares of common stock, par value $ 0.01
per share (the "Holding Company Common Stock").
1.2. Directors and Officers of Holding Company. Agribrands and
Ralcorp agree that the directors of Holding Company will be as set forth on
Schedule 1.2 attached hereto and the officers of Holding Company will be as the
Holding Company Board of Directors shall determine.
1.3. Organization of Merger Subsidiaries. As promptly as
practicable following the execution of this Agreement, Agribrands and Ralcorp
shall cause the following companies to be organized for the sole purpose of
effectuating the Agribrands Merger and the Ralcorp Merger contemplated herein:
(i) Holding Company Subsidiary A, a corporation organized
under the laws of the State of Missouri ("Merger Sub A"). The authorized capital
stock of Merger Sub A shall initially consist of 100 shares of common stock,
$.01 par value per share, one share of which shall be issued to Holding Company
at a price of $1.00. Holding Company shall own directly all of the outstanding
capital stock of Merger Sub A.
(ii) Holding Company Subsidiary R, a corporation organized
under the laws of the State of Missouri ("Merger Sub R" and, together with
Merger Sub A, the "Merger Subsidiaries"). The authorized capital stock of Merger
Sub R shall initially consist of 100 shares of common stock, par value $.01 per
share, one share of which shall be issued to Holding Company at a price of
$1.00. Holding Company shall own directly all of the outstanding capital
stock of Merger Sub R.
1.4. Actions of Agribrands, Ralcorp and Holding Company. As
promptly as practicable following the execution of this Agreement, Agribrands
and Ralcorp shall cause (i) Holding Company to elect the directors of the Merger
Subsidiaries, (ii) the directors of Merger Sub A and Merger Sub R to elect their
respective officers, (iii) the directors of Holding Company to ratify and
approve this Agreement and to approve the forms of the Merger Agreements (as
hereinafter defined), (iv) the directors and officers of the Merger Subsidiaries
to take such steps as may be necessary or appropriate to complete the
organization of the Merger Subsidiaries and to approve the Merger Agreements;
and (v) the Merger Agreements to be executed on behalf of the parties thereto.
ARTICLE II.
THE MERGERS; CLOSING
2.1. The Mergers. Pursuant to plans of merger, each in
substantially the form attached hereto as Exhibit A (sometimes hereinafter
referred to individually as the "Agribrands Merger Agreement" and the "Ralcorp
Merger Agreement," respectively, and collectively as the "Merger Agreements"),
upon the terms and subject to the conditions set forth in this Agreement and in
the Merger Agreements:
(a) Merger Sub A shall be merged with and into Agribrands (the
"Agribrands Merger") in accordance with the applicable provisions of the General
and Business Corporation Law of Missouri (the "Missouri Code"). Agribrands shall
be the surviving corporation in the Agribrands Merger and shall continue its
2
corporate existence under the laws of the State of Missouri. As a result of the
Agribrands Merger, Agribrands shall become a direct, wholly owned Subsidiary of
Holding Company. The effects and consequences of the Agribrands Merger shall be
as set forth in the Agribrands Merger Agreement.
(b) Merger Sub R will be merged with and into Ralcorp (the
"Ralcorp Merger"), in accordance with the applicable provisions of the Missouri
Code. Ralcorp shall be the surviving corporation in the Ralcorp Merger and shall
continue its corporate existence under the laws of the State of Missouri. As a
result of the Ralcorp Merger, Ralcorp shall become a direct, wholly owned
Subsidiary of Holding Company. The effects and consequences of the Ralcorp
Merger shall be as set forth in the Ralcorp Merger Agreement. The term "Mergers"
shall mean, collectively, the Agribrands Merger and the Ralcorp Merger.
(c) Subject to the terms and conditions of this Agreement, the
closing of the Mergers (the "Closing") shall take place (a) at the offices of
Bryan Cave LLP, One Metropolitan Square, Suite 3600, St. Louis, Missouri, at
10:00 a.m. local time, on the fifth Business Day following the day on which the
last to be fulfilled or waived of the conditions set forth in Article IX
(excluding conditions that, by their terms cannot be satisfied until the Closing
Date, but subject to the fulfillment or waiver of such conditions) shall be
fulfilled or waived in accordance herewith or (b) at such other time, date or
place as Agribrands and Ralcorp may agree. The date on which the Closing occurs
is hereinafter referred to as the "Closing Date."
(d) As soon as practicable following the Closing, the parties
shall (i) file articles of merger with respect to each of the Mergers (the
"Articles of Merger") in such form as is required by and executed in accordance
with the Missouri Code and (ii) make all other filings or recordings required
under the laws of Missouri. The Mergers shall become effective at such time and
date (the "Effective Time") which is the later of (i) the date and time of the
filing of the Articles of Merger with respect to the Agribrands Merger (or such
other date and time as may be specified in such certificate as may be permitted
by the Missouri Code) and (ii) the date and time of the filing of the Articles
of Merger with respect to the Ralcorp Merger (or such other date and time as may
be specified in such certificate as may be permitted by the Missouri Code).
(e) The consummation of the Agribrands Merger shall be
conditioned on the simultaneous consummation of the Ralcorp Merger, and the
consummation of the Ralcorp Merger shall be conditioned on the simultaneous
consummation of the Agribrands Merger.
2.2 Directors and Officers. The directors and officers of Merger
Sub A and Merger Sub R immediately prior to the Effective Time shall be the
directors and officers of the surviving corporations of the Agribrands Merger
and the Ralcorp Merger, respectively, as of the Effective Time and until their
successors are duly appointed or elected in accordance with the laws of Missouri
or until their earlier death, resignation or removal.
2.3 Certificate of Incorporation and Bylaws. The articles of
incorporation and bylaws of Merger Sub A and Merger Sub R immediately prior to
the Effective Time shall be the articles of incorporation and bylaws of the
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surviving corporation of the Agribrands Merger and the Ralcorp Merger,
respectively, as of the Effective Time.
ARTICLE III.
EFFECT OF THE MERGERS ON SECURITIES OF AGRIBRANDS, RALCORP
AND THE MERGER SUBSIDIARIES
3.1 Conversion of Merger Subsidiaries Stock. At the Effective
Time, by virtue of the Agribrands Merger and without any action on the part of
any of the parties, each share of the common stock of Merger Sub A outstanding
immediately prior to the Effective Time shall be converted into and shall become
one share of common stock of the surviving corporation of the Agribrands Merger.
At the Effective Time, by virtue of the Ralcorp Merger and without any action on
the part of any of the parties, each share of the common stock of Merger Sub R
outstanding immediately prior to the Effective Time shall be converted into and
shall become one share of common stock of the surviving corporation of the
Ralcorp Merger.
3.2. Cancellation of Holding Company Capital Stock. At the
Effective Time, the shares of the capital stock of Holding Company issued and
outstanding immediately prior to the Effective Time shall be canceled and cease
to exist.
3.3. Conversion of Common Stock.
(a) Subject to the provisions of this Agreement, at the
Effective Time each issued and outstanding share of common stock, par value $.01
per share, of Agribrands together with the associated rights issued pursuant to
the Agribrands Rights Agreement (as hereinafter defined) (the "Agribrands Common
Stock"), shall be converted into, at the election of the holder thereof, one of
the following (as may be adjusted pursuant to Section 3.3(e), the "Agribrands
Merger Consideration"):
(i) for each such share of Agribrands Common Stock with
respect to which an election to receive cash has been effectively made and not
revoked or lost, pursuant to Section 3.3(c) and (d) (the "Agribrands Cash
Election"), the right to receive in cash from Holding Company, without interest,
an amount equal to $39.00 (the "Agribrands Cash Consideration");
(ii) for each such share of Agribrands Common Stock (other
than shares as to which an Agribrands Cash Election has been made) ("Agribrands
Stock Election"), the right to receive three (3) shares of Holding Company
Common Stock (the "Agribrands Stock Consideration").
(b) Subject to the provisions of this Agreement, at the
Effective Time each issued and outstanding share of common stock, par value $.01
per share, of Ralcorp together with the associated rights issued pursuant to the
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Ralcorp Rights Agreement (as hereinafter defined) (the "Ralcorp Common Stock"),
shall be converted into, at the election of the holder thereof, one of the
following (as may be adjusted pursuant to Section 3.3(e), the "Ralcorp Merger
Consideration", together with Agribrands Merger Consideration, the "Merger
Consideration"):
(i) for each such share of Ralcorp Common Stock with
respect to which an election to receive cash has been effectively made and not
revoked or lost, pursuant to Section 3.3(c) and (d) (the "Ralcorp Cash
Election", together with Agribrands Cash Election, the "Cash Election"), the
right to receive in cash from Holding Company, without interest, an amount equal
to $15.00 (the "Ralcorp Cash Consideration").
(ii) for each such share of Ralcorp Common Stock (other
than shares as to which a Ralcorp Cash Election has been made) (a "Ralcorp Stock
Election", together with Agribrands Stock Election, the "Stock Election"), the
right to receive one (1) share of Holding Company Common Stock (the "Ralcorp
Stock Consideration");
(c) As a result of the Agribrands Merger and the Ralcorp
Merger and without any action on the part of the holder thereof, at the
Effective Time all shares of Agribrands Common Stock and Ralcorp Common Stock
shall cease to be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of shares of Agribrands Common Stock and Ralcorp
Common Stock shall thereafter cease to have any rights with respect to such
shares of Agribrands Common Stock and Ralcorp Common Stock, except the right to
receive, without interest, the applicable Merger Consideration and cash for
fractional shares in accordance with Section 3.6 upon the surrender of a
certificate or an election form by Agribrands shareholders holding stock in
book-entry form representing such shares of Agribrands Common Stock and/or
Ralcorp Common Stock (the "Certificates"). To the extent that objecting
shareholders' rights are available under Section 351.455 of the Missouri Code,
shares of Agribrands Common Stock (the "Agribrands Dissenting Shares") or
Ralcorp Common Stock (the "Ralcorp Dissenting Shares") that are issued and
outstanding immediately prior to the Effective Time and that have not voted for
the adoption of this Agreement and with respect to which such rights have been
properly demanded in accordance with Section 351.455 of the Missouri Code
(collectively, the "Dissenting Shares") shall not be converted into the right to
receive Merger Consideration at or after the Effective Time unless and until the
holder of such shares becomes ineligible for such rights. If a holder of
Dissenting Shares becomes ineligible under Section 351.455, then, as of the
Effective Time or the occurrence of such event whichever later occurs, such
holder's Dissenting Shares shall cease to be Dissenting Shares and shall be
converted into and represent the right to receive the Merger Consideration upon
surrender of the Certificates representing such Dissenting Shares in accordance
with Section 3.4. Agribrands and Ralcorp shall give prompt notice to the other
of any demand received by Agribrands or Ralcorp, as the case may be, from an
objecting shareholder demanding fair value for the Agribrands Common Stock or
Ralcorp Common Stock. Prior to the Effective Time, except with the prior written
consent of the other, which consent shall not be unreasonably withheld or
delayed, or as may otherwise be required under applicable law, neither
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Agribrands nor Ralcorp, as the case may be, shall make any payment with respect
to, or settle or offer to settle, any such demands.
(d) Notwithstanding anything contained in this Section to the
contrary, each share of Agribrands Common Stock and Ralcorp Common Stock issued
and held in the respective company's treasury immediately prior to the Effective
Time shall, by virtue of the Agribrands Merger and the Ralcorp Merger, cease to
be outstanding and shall be canceled and retired without payment of any
consideration therefor and will not be deemed outstanding for purposes of
Section 3.4.
(e) Notwithstanding the foregoing, each share of Agribrands
Common Stock or Ralcorp Common Stock owned by Agribrands or Ralcorp or their
respective subsidiaries at the Effective Time shall, by virtue of the Agribrands
Merger and the Ralcorp Merger, be canceled and retired without payment of any
consideration therefor and will not be deemed outstanding for purposes of
Section 3.4.
(f) The Stock Election shall be subject to appropriate
adjustment in the event of a stock split, stock dividend or recapitalization
after the date of this Agreement applicable to the Ralcorp Common Stock or the
Agribrands Common Stock.
3.4 Surrender and Payment.
(a) Prior to the Effective Time, Agribrands and Ralcorp shall
cause Holding Company to appoint an agent as designated by Agribrands and
Ralcorp (the "Exchange Agent") for the purpose of exchanging the Certificates
for the Merger Consideration. Immediately after the Effective Time, Agribrands
and Ralcorp shall cause Holding Company to deposit with or make available to the
Exchange Agent the Merger Consideration to be paid in respect of the shares (the
"Exchange Fund"). If deposited, upon receipt, the Exchange Agent will invest the
cash portion of the Exchange Fund in United States government securities
maturing at the Election Deadline or such other investments as Holding Company
may direct. Promptly after the Effective Time, Holding Company will send, or
will cause the Exchange Agent to send, (A) to each record holder of shares of
Agribrands Common Stock and Ralcorp Common Stock, at the Effective Time, a
letter of transmittal and instructions (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) for use in such exchange,
and (B) to each record holder of shares of Agribrands Common Stock and Ralcorp
Common Stock, an election form (the "Election Form") providing for such holders
to make a Stock Election or a Cash Election. Any Stock Election or Cash Election
shall be validly made only if the Exchange Agent shall have received by 5:00
p.m., St. Louis time, on a date (the "Election Deadline") to be mutually agreed
upon by Agribrands and Ralcorp (which date shall not be later than the twentieth
Business Day after the Effective Time), an Election Form properly completed and
executed (with the signature or signatures thereon guaranteed to the extent
required by the Election Form) by such holder accompanied by such holder's
Certificates, or by an appropriate guarantee of delivery of such Certificates
from a member of any registered national securities exchange or of the National
6
Association of Securities Dealers, Inc. or a commercial bank or trust company in
the United States as set forth in such Election Form. Any holder of Agribrands
Common Stock or Ralcorp Common Stock who has made an election by submitting an
Election Form to the Exchange Agent shall be deemed to have irrevocably made
such election. Any holder of Agribrands Common Stock or Ralcorp Common Stock who
fails to properly make the required election shall be deemed to have made a
Stock Election with respect to the shares (other than Dissenting Shares) owned
by such holder for which no such election has been made.
(b) Upon surrender to the Exchange Agent of his Certificate
together with a properly completed letter of transmittal, each holder of shares
of Agribrands Common Stock (the "Agribrands Holders") or Ralcorp Common Stock
(the "Ralcorp Holders") will be entitled to receive promptly after the Election
Deadline the Merger Consideration in respect of the shares of the Agribrands
Common Stock or Ralcorp Common Stock represented by his Certificate. Until so
surrendered, each such Certificate shall represent after the Effective Time, for
all purposes, only the right to receive the Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to
a Person other than the Person in whose name the Certificate so surrendered is
registered, it shall be a condition to such payment that such Certificate shall
be properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such payment shall pay to the Exchange Agent any transfer or
other taxes required as a result of such payment to a Person other than the
registered holder of such Certificate, or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) Any portion of the Exchange Fund made available to or
deposited with the Exchange Agent pursuant to Section 3.4 that remains unclaimed
by the Agribrands Holders and Ralcorp Holders, six months after the Effective
Time shall be returned to Holding Company, upon demand, and any such holder who
has not exchanged his shares for the Merger Consideration in accordance with
this Section 3.4 prior to that time shall thereafter look only to Holding
Company for payment of such consideration, and any dividends and distributions
in respect of such shares, in each case without any interest thereon.
Notwithstanding the foregoing, Holding Company shall not be liable to any
Agribrands Holder or Ralcorp Holder for any amounts paid to a public official
pursuant to applicable abandoned property, escheat or similar laws. Any amounts
remaining unclaimed by the Agribrands Holders or Ralcorp Holders five years
after the Effective Time (or such earlier date, immediately prior to such time
when the amounts would otherwise escheat to or become property of any
Governmental Authority) shall become, to the extent permitted by applicable law,
the property of Holding Company free and clear of any claims or interest of any
Person previously entitled thereto.
(e) No dividends or other distributions with respect to any
Holding Company Common Stock and no cash payment in lieu of fractional shares as
provided in Section 3.6, shall be paid to the holder of any unsurrendered
Certificates until such Certificates are surrendered as provided in Section 3.4.
Following such surrender, there shall be paid, without interest, to the Person
in whose name such Holding Company Common Stock has been registered, (i) at the
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time of such surrender, (A) in the case of Certificates, the amount of any cash
payable in lieu of fractional shares to which such Person is entitled pursuant
to Section 3.6, and (B) the amount of all dividends or other distributions with
a record date after the Effective Time previously paid or payable on the date of
such surrender, with respect to such Holding Company Common Stock, and (ii) at
the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender, and with a
payment date subsequent to surrender, payable with respect to such Holding
Company Common Stock.
(f) (i) If the percentage of shares of Agribrands Common
Stock outstanding immediately prior to the Effective Time for which Agribrands
Stock Elections were made (the "Agribrands Stock Election Percentage") is equal
to or greater than 80%, then all shares of Agribrands Common Stock covered by
Agribrands Stock Elections shall be converted into the right to receive shares
of Holding Company Common Stock, and all shares of Agribrands Common Stock
covered by Agribrands Cash Elections shall be converted into the right to
receive the Agribrands Cash Consideration.
(ii) If the Agribrands Stock Election Percentage is less
than 80%, then all shares of Agribrands Common Stock covered by Agribrands Stock
Elections shall be converted into the right to receive shares of Holding Company
Common Stock, and the shares for which each holder made an Agribrands Cash
Election (the "Agribrands Cash Election Shares") shall be treated as follows:
(A) Such holder shall be deemed to have made the
Agribrands Stock Election in respect of a fraction (not greater than one) of
such holder's Agribrands Cash Election Shares, (x) the numerator of which is the
difference of 80% minus the Agribrands Stock Election Percentage, and (y) the
denominator of which is the percentage of shares of Agribrands Common Stock
outstanding immediately prior to the Effective Time for which Agribrands Cash
Elections were made; and
(B) The balance of such holder's Agribrands Cash
Election Shares shall be converted into the right to receive the Agribrands Cash
Consideration.
(g) (i) If the percentage of shares of Ralcorp Common Stock
outstanding immediately prior to the Effective Time for which Ralcorp Stock
Elections were made (the "Ralcorp Stock Election Percentage") is equal to or
greater than 80%, then all shares of Ralcorp Common Stock covered by Ralcorp
Stock Elections shall be converted into the right to receive shares of Holding
Company Common Stock, and all shares of Ralcorp Common Stock covered by Ralcorp
Cash Elections shall be converted into the right to receive the Ralcorp Cash
Consideration.
(ii) If the Ralcorp Stock Election Percentage is less
than 80%, then all shares of Ralcorp Common Stock covered by Ralcorp Stock
Elections shall be converted into the right to receive shares of Holding Company
Common Stock, and the shares for which each holder made a Ralcorp Cash Election
(the "Ralcorp Cash Election Shares") shall be treated as follows:
8
(A) Such holder shall be deemed to have made the
Ralcorp Stock Election in respect of a fraction (not greater than one) of such
holder's Ralcorp Cash Election Shares, (x) the numerator of which is the
difference of 80% minus the Ralcorp Stock Election Percentage, and (y) the
denominator of which is the percentage of shares of Ralcorp Common Stock
outstanding immediately prior to the Effective Time for which Ralcorp Cash
Elections were made; and
(B) The balance of such holder's Ralcorp Cash
Election Shares shall be converted into the right to receive the Ralcorp Cash
Consideration.
3.5. Options.
(a) At the Effective Time, each option granted by Agribrands
to purchase shares of Agribrands Common Stock (the "Agribrands Options") which
is outstanding and unexercised immediately prior to the Effective Time shall
either be assumed by Holding Company or converted into an option ("New
Agribrands Options") to purchase shares of Holding Company Common Stock having
the same terms and conditions as are in effect immediately prior to the
Effective Time (including such terms and conditions as may be incorporated by
reference into the agreements evidencing Agribrands Options pursuant to the
plans or arrangements pursuant to which such Agribrands Options were granted and
taking into account the provisions of Section 6.9 hereof) except that the
exercise price and number of shares issuable upon exercise shall be divided and
multiplied, respectively, by 3.00.
(b) At the Effective Time, each option granted by Ralcorp to
purchase shares of Ralcorp Common Stock (the "Ralcorp Options") which is
outstanding and unexercised immediately prior to the Effective Time shall either
be assumed by Holding Company or converted into an option ("New Ralcorp
Options") to purchase shares of Holding Company Common Stock having the same
terms and conditions as are in effect immediately prior to the Effective Time
(including such terms and conditions as may be incorporated by reference into
the agreements evidencing Ralcorp Options pursuant to the plans or arrangements
pursuant to which such Ralcorp Options were granted and taking into account the
provisions of Section 7.9 hereof) except that the exercise price and number of
shares issuable upon exercise shall be divided and multiplied, respectively, by
1.03.
3.6. Fractional Shares. No fractional shares of Holding Company
Common Stock shall be issued in the Mergers. All fractional shares of Holding
Company Common Stock that a holder of shares of Agribrands Common Stock or
Ralcorp Common Stock would otherwise be entitled to receive as a result of the
Mergers shall be aggregated and if a fractional share results from such
aggregation, such holder shall be entitled to receive, in lieu thereof, an
amount in cash without interest determined by multiplying the fraction of a
share of Holding Company Common Stock to which such holder would otherwise have
been entitled by $15.00.
9
3.7. Withholding Rights. Holding Company shall be entitled to
deduct and withhold from the consideration otherwise payable to any Person
pursuant to this Article 3 such amounts as it is required to deduct and withhold
with respect to the making of such payment under any provision of federal,
state, local or foreign tax law. If Holding Company so withholds amounts, such
amounts shall be treated for all purposes of this Agreement as having been paid
to the Agribrands Holder or Ralcorp Holder, as the case may be, in respect of
which Holding Company made such deduction and withholding.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AGRIBRANDS
Agribrands represents and warrants to Ralcorp that the statements
contained in this Article IV are true and correct, except as set forth in the
disclosure schedule delivered by Agribrands to Ralcorp prior to the execution of
this Agreement (the "Agribrands Disclosure Schedule") or as otherwise expressly
contemplated by this Agreement.
4.1. Organization and Good Standing. Agribrands is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Missouri. Each of the subsidiaries of Agribrands (the "Agribrands
Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of
Agribrands and the Agribrands Subsidiaries is qualified to do business as a
foreign corporation in each jurisdiction in which the failure to be so qualified
would have an Agribrands Material Adverse Effect. For purposes of this
Agreement, "Agribrands Material Adverse Effect" shall mean a material adverse
effect on (i) the business, assets, condition (financial or otherwise),
properties, liabilities or the results of operations of Agribrands and the
Agribrands Subsidiaries, taken as a whole, (ii) the ability of Agribrands to
perform its obligations set forth in this Agreement, or (iii) the ability of
Agribrands to timely consummate the transactions contemplated by this Agreement.
The Articles of Incorporation and Bylaws of Agribrands and the Agribrands
Subsidiaries will not be amended prior to the Closing Date. Agribrands and the
Agribrands Subsidiaries have all corporate power and all material governmental
licenses, authorizations, consents and approvals required to carry on their
respective businesses substantially as now being conducted and necessary to own,
operate and lease their properties and assets.
4.2. Capitalization. As of the date hereof, the authorized capital
stock of Agribrands consists of 50,000,000 shares of Agribrands Common Stock and
10,000,000 shares of preferred stock, par value $.01 per share (the "Agribrands
Preferred Stock"). Of such authorized shares, as of the date hereof, there are
issued and outstanding 9,813,101 shares of Agribrands Common Stock, 854,810
shares of Agribrands Common Stock are issued and held in the treasury of
Agribrands, no shares of the Agribrands Preferred Stock have been designated or
issued, and no other capital stock of Agribrands is issued or outstanding. All
issued and outstanding shares of Agribrands Common Stock are duly authorized,
validly issued and outstanding, fully paid and nonassessable and were issued
free of preemptive rights in compliance with applicable corporate and securities
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Laws. Except as set forth in the Agribrands Securities Filings (as hereinafter
defined), as of the date hereof there are no outstanding rights, subscriptions,
warrants, puts, calls, unsatisfied preemptive rights, options or other
agreements of any kind relating to any of the outstanding, authorized but not
issued, unauthorized or treasury shares of the capital stock or any other
security of Agribrands, and there is no authorized or outstanding security of
any kind convertible into or exchangeable for any such capital stock or other
security. Except as disclosed in the Agribrands Securities Filings, there are no
restrictions upon the transfer of or otherwise pertaining to the securities
(including, but not limited to, the ability to pay dividends thereon) or
retained earnings of Agribrands and the Agribrands Subsidiaries or the ownership
thereof other than those imposed by the Securities Act, the Securities Exchange
Act, applicable state securities Laws or applicable corporate Law.
4.3. Subsidiaries. Each Agribrands Subsidiary is wholly owned by
Agribrands and all of the capital stock and other interests of the Agribrands
Subsidiaries so held by Agribrands are directly or indirectly owned by it, free
and clear of any claim, lien, encumbrance, security interest or agreement with
respect thereto. All of the outstanding shares of capital stock in each of the
Agribrands Subsidiaries directly or indirectly held by Agribrands are duly
authorized, validly issued and outstanding, fully paid and nonassessable and
were issued free of preemptive rights in compliance with applicable corporate
and securities Laws. There are no irrevocable proxies or similar obligations
with respect to such capital stock of the Agribrands Subsidiaries held by
Agribrands and no equity securities or other interests of any of the Agribrands
Subsidiaries are or may become required to be issued or purchased by reason of
any options, warrants, rights to subscribe to, puts, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any capital stock of any Agribrands Subsidiary, and
there are no contracts, commitments, understandings or arrangements by which any
Agribrands Subsidiary is bound to issue additional shares of its capital stock,
or options, warrants or rights to purchase or acquire any additional shares of
its capital stock or securities convertible into or exchangeable for such
shares.
4.4. Authorization; Binding Agreement. Agribrands has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the other agreements and documents referred to herein to
which Agribrands is or will be a party or a signatory (the "Agribrands Ancillary
Agreements") and the consummation of the transactions contemplated hereby and
thereby, including, but not limited to, the Agribrands Merger, have been duly
and validly authorized by Agribrands' Board of Directors, and no other corporate
proceedings on the part of Agribrands or any Agribrands Subsidiary are necessary
to authorize the execution and delivery of this Agreement or to consummate the
transactions contemplated hereby (other than the approval and adoption of this
Agreement, the Agribrands Merger Agreement and the transactions contemplated
hereby and thereby by the shareholders of Agribrands in accordance with the
Missouri Code and the Articles of Incorporation and Bylaws of Agribrands). This
Agreement has been duly and validly executed and delivered by Agribrands and
constitutes, and upon execution and delivery thereof as contemplated by this
Agreement, the Agribrands Ancillary Agreements will constitute, the legal, valid
and binding agreements of Agribrands, enforceable against Agribrands in
11
accordance with its and their respective terms, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by principles of equity ("Enforceability Exceptions").
4.5. Governmental Approvals. No consent, approval, waiver or
authorization of, notice to or declaration or filing with ("Consent") any nation
or government, any state or other political subdivision thereof, any person,
authority or body exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government including, without
limitation, any governmental or regulatory authority, agency, department, board,
commission or instrumentality, any court, tribunal or arbitrator and any
self-regulatory organization ("Governmental Authority") on the part of
Agribrands or any of the Agribrands Subsidiaries is required in connection with
the execution or delivery by Agribrands of this Agreement or the consummation by
Agribrands of the transactions contemplated hereby other than (i) the filing of
the Articles of Merger with the Secretary of State of the State of Missouri in
accordance with the Missouri Code, (ii) filings with the SEC, state securities
laws administrators, and the New York Stock Exchange (the "NYSE"), (iii)
Consents from or with Governmental Authorities set forth on the Agribrands
Disclosure Schedule, (iv) filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), (v) the supplemental ruling from the Internal
Revenue Service (the "IRS") referred to in Section 6.15 below; and (vi) those
Consents that, if they were not obtained or made, do not or would not reasonably
be expected to have an Agribrands Material Adverse Effect.
4.6. No Violations. The execution and delivery of this Agreement
and the Agribrands Ancillary Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Agribrands with any of the
provisions hereof or thereof will not (i) conflict with or result in any breach
of any provision of the Articles and/or Certificate of Incorporation or Bylaws
or other governing instruments of Agribrands or any of the Agribrands
Subsidiaries, (ii) require any Consent under or result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration
or augment the performance required) under any of the terms, conditions or
provisions of any Agribrands Material Contract (as hereinafter defined) or other
material obligation to which Agribrands or any Agribrands Subsidiary is a party
or by which any of them or any of their properties or assets may be bound, (iii)
result in the creation or imposition of any lien or encumbrance of any kind upon
any of the assets of Agribrands or any Agribrands Subsidiary, or (iv) subject to
obtaining the Consents from Governmental Authorities referred to in Section 4.5,
above, contravene any applicable provision of any constitution, treaty, statute,
law, code, rule, regulation, ordinance, policy or order of any Governmental
Authority or other matters having the force of law including, but not limited
to, any orders, decisions, injunctions, judgments, awards and decrees of or
agreements with any court or other Governmental Authority ("Law") currently in
effect to which Agribrands or any Agribrands Subsidiary or its or any of their
respective assets or properties are subject, except in the case of clauses (ii),
12
(iii) and (iv) above, for any deviations from the foregoing which do not or
would not reasonably be expected to have an Agribrands Material Adverse Effect.
4.7. Securities Filings and Litigation. Agribrands has made
available to Ralcorp true and complete copies of (i) its Annual Reports on Form
10-K, as amended, for the years ended August 31, 1998 and 1999, as filed with
the SEC, (ii) its proxy statements relating to all of the meetings of
shareholders (whether annual or special) of Agribrands since April 1, 1998, as
filed with the SEC, and (iii) all other reports, statements and registration
statements and amendments thereto (including, without limitation, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as amended) filed by
Agribrands with the SEC since April 1, 1998. The reports and statements set
forth in clauses (i) through (iii), above, and those subsequently provided or
required to be provided pursuant to this Section, are referred to collectively
herein as the "Agribrands Securities Filings." As of their respective dates, or
as of the date of the last amendment thereof, if amended after filing, none of
the Agribrands Securities Filings (including all schedules thereto and
disclosure documents incorporated by reference therein), contained or, as to
Agribrands Securities Filings subsequent to the date hereof, will contain any
untrue statement of a material fact or omitted or, as to Agribrands Securities
Filings subsequent to the date hereof, will omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
the Agribrands Securities Filings was filed in a timely manner and at the time
of filing or as of the date of the last amendment thereof, if amended after
filing, complied or, as to Agribrands Securities Filings subsequent to the date
hereof, will comply in all material respects with the Securities Exchange Act or
the Securities Act, as applicable. There is no action, cause of action, claim,
demand, suit, proceeding, citation, summons, subpoena, inquiry or investigation
of any nature, civil, criminal, regulatory or otherwise, in law or in equity, by
or before any court, tribunal, arbitrator or other Governmental Authority
("Litigation") pending or, to the knowledge of Agribrands, threatened against
Agribrands or any of its subsidiaries, any officer, director, employee or agent
thereof, in his or her capacity as such, or as a fiduciary with respect to any
Agribrands Benefit Plan, as hereinafter defined, or otherwise relating to
Agribrands or any of its subsidiaries or the securities of any of them, or any
properties or rights of Agribrands or any of its subsidiaries or any Agribrands
Benefit Plan which is required to be described in any Agribrands Securities
Filing that is not so described. No event has occurred as a consequence of which
Agribrands would be required to file a Current Report on Form 8-K pursuant to
the requirements of the Securities Exchange Act as to which such a report has
not been timely filed with the SEC. Any reports, statements and registration
statements and amendments thereof (including, without limitation, Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
amended) filed by Agribrands with the SEC after the date hereof shall be
provided to Ralcorp on the date of such filing.
4.8. Agribrands Financial Statements. The audited consolidated
financial statements and unaudited interim financial statements of Agribrands
included in the Agribrands Securities Filings (the "Agribrands Financial
Statements") have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be indicated therein or
in the notes thereto) and present fairly, in all material respects, the
13
financial position of Agribrands and the Agribrands Subsidiaries as at the dates
thereof and the results of their operations and cash flows for the periods then
ended subject, in the case of the unaudited interim financial statements, to
normal year-end audit adjustments, any other adjustments described therein and
the fact that certain information and notes have been condensed or omitted in
accordance with the Securities Exchange Act.
4.9. Absence of Certain Changes or Events. Except as set forth in
the Agribrands Securities Filings, since August 31, 1999, there has not been:
(i) any event, occurrence, fact, condition, change, development or effect
("Event") (except for those Events caused by (x) conditions affecting national,
regional or world economies such as currency fluctuations (but excluding
extraordinary disruptions in regional or world economies or markets or
US/foreign currency exchange ratios involving multiple countries), (y)
conditions affecting the animal feed industry in the regions in which Agribrands
operates, or (z) the pendency or announcement of this Agreement, or the
transactions contemplated hereby) that has had or would reasonably be expected
to have an Agribrands Material Adverse Effect; (ii) any declaration, payment or
setting aside for payment of any dividend (except to Agribrands or an Agribrands
Subsidiary wholly owned by Agribrands) or other distribution or any redemption,
purchase or other acquisition of any shares of capital stock or securities of
Agribrands or any Agribrands Subsidiary; (iii) any return of any capital or
other distribution of assets to shareholders of Agribrands or any Agribrands
Subsidiary (except to Agribrands or an Agribrands Subsidiary wholly owned by
Agribrands); (iv) any acquisition (by merger, consolidation, acquisition of
stock or assets or otherwise) of any person or business; or (v) any other action
or agreement or undertaking by Agribrands or any Agribrands Subsidiary that, if
taken or done on or after the date hereof without Ralcorp's consent, would
result in a breach of Section 6.1, below, and that has had or would reasonably
be expected to have an Agribrands Material Adverse Effect.
4.10. Related Party Transactions. Except as set forth in the
Agribrands Securities Filings, since November 23, 1999, Agribrands has not
entered into any relationship or transaction of a sort that would be required to
be disclosed pursuant to Item 404 of Regulation S-K by Agribrands in a proxy
statement in connection with an annual meeting of shareholders.
4.11. Compliance with Laws. The business of Agribrands and each
Agribrands Subsidiary has been operated in compliance with all Laws applicable
thereto, except for any instances of non-compliance which do not and would not
reasonably be expected to have an Agribrands Material Adverse Effect. Without
limiting the generality of the foregoing, neither Agribrands nor any Agribrands
Subsidiary has conducted its business in violation of applicable Laws, tariffs,
rules and regulations in any jurisdiction, foreign or domestic, which violation
has had or would reasonably be expected to have an Agribrands Material Adverse
Effect.
4.12. Permits. Agribrands and the Agribrands Subsidiaries have all
material permits, certificates, licenses, approvals, tariffs and other
authorizations required in connection with the operation of their respective
businesses (collectively, "Agribrands Permits"), and neither Agribrands nor any
Agribrands Subsidiary is in violation of any Agribrands Permit, and no
proceedings are pending or, to the knowledge of Agribrands, threatened, to
14
revoke or limit any Agribrands Permit, except any such violation or proceeding
which does not and would not reasonably be expected to have an Agribrands
Material Adverse Effect.
4.13. Finders and Investment Bankers. Neither Agribrands nor any of
its officers or directors has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby other than pursuant to the agreements
with Wasserstein Perella & Co., Inc. and Houlihan Lokey Howard & Zukin, accurate
and complete copies of which have been provided to Ralcorp.
4.14. Material Contracts. Neither Agribrands nor any Agribrands
Subsidiary is a party or is subject to any note, bond, mortgage, indenture,
contract, lease, license, agreement, understanding, instrument, bid or proposal
that is required to be described in or filed as an exhibit to any Agribrands
Securities Filing ("Agribrands Material Contract") that is not so described in
or filed as required by the Securities Act or the Securities Exchange Act, as
the case may be. Agribrands has made available to Ralcorp true and accurate
copies of the Agribrands Material Contracts. All such Agribrands Material
Contracts are valid and binding and are in full force and effect and enforceable
against Agribrands or such subsidiary in accordance with their respective terms,
subject to the Enforceability Exceptions. Except as referenced in Section 4.6
above, (i) no Consent of any person is needed in order that each such Agribrands
Material Contract shall continue in full force and effect in accordance with its
terms without penalty, acceleration or rights of early termination by reason of
the consummation of the transactions contemplated by this Agreement, except for
Consents the absence of which would not have an Agribrands Material Adverse
Effect, and (ii) neither Agribrands nor any of its subsidiaries is in violation
or breach of or default under any such Agribrands Material Contract; nor to
Agribrands' knowledge is any other party to any such Agribrands Material
Contract in violation or breach of or default under any such Agribrands Material
Contract in each case where such violation or breach would have an Agribrands
Material Adverse Effect.
15
4.15. Employee Benefit Plans. (a) There are no Benefit Plans (as
defined below) or Foreign Plans (as defined below) maintained or contributed to
by Agribrands or an Agribrands Subsidiary under which Agribrands or an
Agribrands Subsidiary could incur any material liability. A "Benefit Plan" shall
include (i) an employee benefit plan as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, together with all
regulations thereunder ("ERISA"), even if, because of some other provision of
ERISA, such plan is not subject to any or all of ERISA's provisions, and (ii)
whether or not described in the preceding clause, (a) any pension, profit
sharing, stock bonus, deferred or supplemental compensation, retirement, thrift,
stock purchase, stock appreciation or stock option plan, or any other
compensation, welfare, fringe benefit or retirement plan, program, policy,
course of conduct, understanding or arrangement of any kind whatsoever, whether
formal or informal, oral or written, providing for benefits for or the welfare
of any or all of the current or former employees or agents of a specified person
or their beneficiaries or dependents, (b) a multi-employer plan as defined in
Section 3(37) of ERISA (a "Multi-Employer Plan"), or (c) a multiple employer
plan as defined in Section 413 of the Code.
(b) With respect to each Benefit Plan (where applicable):
Agribrands has made available to Ralcorp complete and accurate copies of (i) all
plan and trust texts and agreements, insurance contracts and other funding
arrangements; (ii) the most recent annual report on the Form 5500 series; (iii)
the most recent financial statement and/or annual and periodic accounting of
plan assets; (iv) the most recent determination letter received from the IRS;
and (v) the most recent summary plan description as defined in ERISA.
(c) With respect to each Benefit Plan while maintained or
contributed to by Agribrands: (i) if intended to qualify under Code Sections
401(a) or 403(a), such Benefit Plan has received a favorable determination
letter from the IRS that it so qualifies, and its trust is exempt from taxation
under Code Section 501(a) and, to the knowledge of Agribrands, nothing has since
occurred to cause the loss of the Benefit Plan's qualification; (ii) except for
payment of benefits made in the ordinary course of the plan administration, no
event has occurred and, to the knowledge of Agribrands, there exists no
circumstance under which Agribrands or Holding Company could incur liability
under ERISA, the Code or otherwise; (iii) no non-exempt prohibited transaction
as defined under ERISA and the Code has occurred; (iv) all contributions and
premiums due have fully been made and paid on a timely basis; and (v) all
contributions made or required to be made under any Benefit Plan meet the
requirements for deductibility under the Code, and all contributions accrued
prior to the Effective Time which have not been made have been properly recorded
on the Agribrands Financial Statements in a manner satisfying the requirements
of Financial Accounting Standards 87 and 88 except, in each case, for any
deviations from the foregoing which do not and would not reasonably be expected
to have an Agribrands Material Adverse Effect.
(d) No Benefit Plan is a pension plan subject to Title IV of
ERISA or Section 412 of the Code. Each of the Benefit Plans has been maintained
in compliance with its terms and all applicable Law, except where the failure to
do so would not reasonably be expected to have an Agribrands Material Adverse
16
Effect. Agribrands does not contribute to, or have any outstanding liability
with respect to, any Multi-employer Plan.
(e) With respect to each Benefit Plan which is a welfare plan
(as defined in ERISA Section 3(1)): (i) any liability for medical or death
benefits with respect to current or former employees beyond their termination of
employment (except as may be required by applicable Law) is provided for in the
Agribrands Financial Statements to the extent required by generally accepted
accounting principles; (ii) there are no reserves, assets, surplus or prepaid
premiums under any such plan; (iii) no term or provision of any such plan
prohibits the amendment or termination thereof; (iv) Agribrands has complied
with Code Section 4980B, except, in each case, for any deviations from the
foregoing which do not and would not reasonably be expected to have an
Agribrands Material Adverse Effect; and (v) each such Benefit Plan which is
intended to meet the requirements for tax-favored treatment under Subchapter B
of Chapter 1 of the Code meets such requirements.
(f) Except as provided in Section 6.9 below, the consummation
of the Agribrands Merger will not, either alone or in conjunction with another
Event under the terms of any Benefit Plan: (i) entitle any individual to
severance pay, (ii) accelerate the time of payment or vesting of benefits or
increase the amount of compensation due to any individual; or (iii) give rise to
the payment of any amount that would not be deductible pursuant to Section 280G
of the Code.
(g) With respect to each Benefit Plan which is contributed to
or required to be maintained by the law or applicable custom or rule of the
relevant jurisdiction outside of the United States (the "Foreign Plans") except,
in each case, for any deviations from the below which do not and would not
reasonably be expected to have an Agribrands Material Adverse Effect:
(i) Each of the Foreign Plans is in compliance with
the provisions of the laws of each jurisdiction in which each such Foreign Plan
is maintained, to the extent those laws are applicable to the Foreign Plans;
(ii) All contributions to, and payments from, the
Foreign Plans which may have been required to be made in accordance with the
terms of any such Foreign Plan, and, when applicable, the law of the
jurisdiction in which such Foreign Plan is maintained, have been timely made or
shall be made by the Closing Date. All such contributions to the Foreign Plans,
and all payments under the Foreign Plans, for any period ending before the
Closing Date that are not yet, but will be, required to be made, are reflected
as an accrued liability on the Balance Sheet;
(iii) All reports, returns and similar documents, if
any, with respect to any Foreign Plan required to be filed with any governmental
body or distributed to any Foreign Plan participant have been duly and timely
filed or distributed or will be filed or distributed by the Closing Date, and
all of the Foreign Plans have obtained from the governmental body having
jurisdiction with respect to such plans any required determinations, if any,
17
that such Foreign Plans are in compliance with the laws of the relevant
jurisdiction if such determinations are required in order to give effect to the
Foreign Plan;
(iv) Each of the Foreign Plans has been administered
at all times in accordance with its terms. To the knowledge of Agribrands, there
are no pending investigations by any governmental body involving the Foreign
Plans, and no pending claims (except for claims for benefits payable in the
normal operations of the Foreign Plans), suits or proceedings against any
Foreign Plan or asserting any rights or claims to benefits under any Foreign
Plan; and
(v) The consummation of the transactions contemplated
by this Agreement will not by itself create or otherwise result in any liability
with respect to any Foreign Plan other than the triggering of payment to
participants.
4.16. Taxes and Returns. (a) Agribrands and each of the Agribrands
Subsidiaries have timely filed or caused to be filed all material Tax Returns
required to be filed by it, and all Tax Returns filed by Agribrands and the
Agribrands Subsidiaries are true, complete and correct in all material respects.
(b) Agribrands and the Agribrands Subsidiaries have each
timely paid, collected or withheld, or caused to be timely paid, collected or
withheld, all material amounts of Taxes required to be paid, collected or
withheld, other than such Taxes for which adequate reserves in the Agribrands
Financial Statements have been established.
(c) There are no claims or assessments pending against
Agribrands or any of the Agribrands Subsidiaries for any alleged deficiency in
any Tax, and Agribrands has not been notified in writing of any proposed Tax
claims or assessments against Agribrands or any of the Agribrands Subsidiaries
(other than in each case, claims or assessments for which adequate reserves in
the Agribrands Financial Statements have been established or which are being
contested in good faith or are immaterial in amount).
(d) There are no material federal, state, local or foreign
audits or administrative proceedings pending with regard to any material amounts
of Tax or Tax Return of Agribrands or the Agribrands Subsidiaries and none of
them has received a written notice of any proposed material audit or proceeding.
(e) Neither Agribrands nor any of the Agribrands Subsidiaries
has any waivers or extensions of any applicable statute of limitations to assess
any material amount of Taxes.
(f) There are no outstanding requests by Agribrands or any of
the Agribrands Subsidiaries for any extension of time within which to file any
material Tax Return or within which to pay any material amounts of Taxes shown
to be due on any return.
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(g) There are no liens for material amounts of Taxes on the
assets of Agribrands or any of the Agribrands Subsidiaries except for statutory
liens for current Taxes not yet due and payable.
(h) Neither Agribrands nor any Agribrands Subsidiary is a
party to any agreement, contract, arrangement, or plan that has resulted or
would result, individually or in the aggregate, in connection with this
Agreement or any change of control of Agribrands or any of the Agribrands
Subsidiaries in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(i) For purposes of this Agreement, the term "Tax" shall mean
any federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
alternative or added minimum, ad valorem, withholding, estimated, transfer or
excise tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty imposed by any Governmental Authority. The term "Tax Return" shall mean
a report, return or other information (including any attached schedules or any
amendments to such report, return or other information) required to be supplied
to or filed with a governmental entity with respect to any Tax, including an
information return, claim for refund, amended return or declaration of estimated
Tax.
4.17. No Adverse Actions. There is no existing, pending or, to the
knowledge of Agribrands, threatened termination, cancellation, limitation,
modification or change in the business relationship of Agribrands or any of the
Agribrands Subsidiaries, with any supplier, customer or other person except such
as would not reasonably be expected to have an Agribrands Material Adverse
Effect. None of Agribrands, any Agribrands Subsidiary or, to the knowledge of
Agribrands, any director, officer, agent, employee or other person acting on
behalf of any of the foregoing has used any corporate funds for unlawful
contributions, payments, gifts or entertainment or for the payment of other
unlawful expenses relating to political activity, or made any direct or indirect
unlawful payments to governmental or regulatory officials or others, which would
reasonably be expected to have an Agribrands Material Adverse Effect.
4.18. Fairness Opinions. Agribrands' Board of Directors and the
Independent Committee of the Agribrands Board of Directors received from their
respective financial advisors, Wasserstein Perella & Co., Inc. and Houlihan
Lokey Howard & Zukin, opinions to the effect that the Merger Consideration is
fair to the holders of the Agribrands Shares (other than common directors of
both Agribrands and Ralcorp) from a financial point of view.
4.19. Takeover Statutes and Charter. No "business combination,"
"fair price," "moratorium," "control share acquisition" or other similar
antitakeover statute or regulation enacted under state or federal laws in the
United States (each a "Takeover Statute"), including, without limitation,
Sections 351.407 and 351.459 of the Missouri Code, applicable to Agribrands or
any of the Agribrands Subsidiaries is applicable to the Agribrands Merger, this
Agreement, the Agribrands Ancillary Agreements or the other transactions
contemplated hereby or thereby (inasmuch as Agribrands has approved the
19
transactions contemplated by this Agreement and the Agribrands Ancillary
Agreements for purposes of Section 351.459 of the Missouri Code and has taken
all other requisite corporate action under the Takeover Statutes). The
provisions of Article Four of the Articles of Incorporation of Agribrands are
not applicable to the Agribrands Merger, this Agreement, the Agribrands
Ancillary Agreements or the other transactions contemplated hereby or thereby
(inasmuch as there are one or more "Continuing Directors" (as defined in the
Articles of Incorporation of Agribrands) and the Agribrands Merger has been
approved by a majority of them).
4.20. Agribrands Rights Plan. Under the Rights Agreement between
Agribrands and Continental Stock Transfer & Trust Company, dated as of March 31,
1998 and as amended on August 7, 2000 (the "Agribrands Rights Agreement"),
neither Merger Sub A nor Holding Company will become an "Acquiring Person," no
"Shares Acquisition Date" or "Distribution Date" (as such terms are defined in
the Agribrands Rights Agreement) will occur, and the holders of any rights
issued pursuant to the Agribrands Rights Agreement will not be entitled to
receive any benefits under the Agribrands Rights Agreement as a result of the
approval, execution or delivery of this Agreement, the Agribrands Merger
Agreement or any of the Agribrands Ancillary Agreements or the consummation of
the transactions contemplated hereby and thereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF RALCORP
Ralcorp represents and warrants to Agribrands that the statements
contained in this Article V are true and correct, except as set forth in the
disclosure schedule delivered by Ralcorp to Agribrands prior to the execution of
this Agreement (the "Ralcorp Disclosure Schedule") or as otherwise expressly
contemplated by this Agreement.
5.1. Organization and Good Standing. Ralcorp is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Missouri. Each of the subsidiaries of Ralcorp (the "Ralcorp Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. Each of Ralcorp and the Ralcorp
Subsidiaries is qualified to do business as a foreign corporation in each
jurisdiction in which the failure to be so qualified would have a Ralcorp
Material Adverse Effect. For purposes of this Agreement, "Ralcorp Material
Adverse Effect" shall mean a material adverse effect on (i) the business,
assets, condition (financial or otherwise), properties, liabilities or the
results of operations of Ralcorp and the Ralcorp Subsidiaries, taken as a whole,
(ii) the ability of Ralcorp to perform its obligations set forth in this
Agreement, or (iii) the ability of Ralcorp to timely consummate the transactions
contemplated by this Agreement. The Articles of Incorporation and Bylaws of
Ralcorp and the Ralcorp Subsidiaries will not be amended prior to the Closing
Date. Ralcorp and the Ralcorp Subsidiaries have all corporate power and all
material governmental licenses, authorizations, consents and approvals required
20
to carry on their respective businesses substantially as now being conducted and
necessary to own, operate and lease their properties and assets.
5.2. Capitalization. As of the date hereof, the authorized capital
stock of Ralcorp consists of 300,000,000 shares of Ralcorp Common Stock and
10,000,000 shares of preferred stock, par value $.01 per share (the "Ralcorp
Preferred Stock"). Of such authorized shares, as of the date hereof, there are
issued and outstanding 29,859,907 shares of Ralcorp Common Stock, 3,151,410
shares of Ralcorp Common Stock are issued and held in the treasury of Ralcorp,
no shares of the Ralcorp Preferred Stock have been designated or issued, and no
other capital stock of Ralcorp is issued or outstanding. All issued and
outstanding shares of Ralcorp Common Stock are duly authorized, validly issued
and outstanding, fully paid and nonassessable and were issued free of preemptive
rights in compliance with applicable corporate and securities Laws. Except as
set forth in the Ralcorp Securities Filings (as hereinafter defined), as of the
date hereof there are no outstanding rights, subscriptions, warrants, puts,
calls, unsatisfied preemptive rights, options or other agreements of any kind
relating to any of the outstanding, authorized but not issued, unauthorized or
treasury shares of the capital stock or any other security of Ralcorp, and there
is no authorized or outstanding security of any kind convertible into or
exchangeable for any such capital stock or other security. Except as disclosed
in the Ralcorp Securities Filings, there are no restrictions upon the transfer
of or otherwise pertaining to the securities (including, but not limited to, the
ability to pay dividends thereon) or retained earnings of Ralcorp and the
Ralcorp Subsidiaries or the ownership thereof other than those imposed by the
Securities Act, the Securities Exchange Act, applicable state securities Laws or
applicable corporate Law.
5.3. Subsidiaries. Each Ralcorp Subsidiary is wholly owned by
Ralcorp and all of the capital stock and other interests of the Ralcorp
Subsidiaries so held by Ralcorp are directly or indirectly owned by it, free and
clear of any claim, lien, encumbrance, security interest or agreement with
respect thereto. All of the outstanding shares of capital stock in each of the
Ralcorp Subsidiaries directly or indirectly held by Ralcorp are duly authorized,
validly issued and outstanding, fully paid and nonassessable and were issued
free of preemptive rights in compliance with applicable corporate and securities
Laws. There are no irrevocable proxies or similar obligations with respect to
such capital stock of the Ralcorp Subsidiaries held by Ralcorp and no equity
securities or other interests of any of the Ralcorp Subsidiaries are or may
become required to be issued or purchased by reason of any options, warrants,
rights to subscribe to, puts, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any Ralcorp Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Ralcorp
Subsidiary is bound to issue additional shares of its capital stock, or options,
warrants or rights to purchase or acquire any additional shares of its capital
stock or securities convertible into or exchangeable for such shares.
5.4. Authorization; Binding Agreement. Ralcorp has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the other agreements and documents referred to herein to
which Ralcorp is or will be a party or a signatory (the "Ralcorp Ancillary
21
Agreements") and the consummation of the transactions contemplated hereby and
thereby, including, but not limited to, the Ralcorp Merger, have been duly and
validly authorized by Ralcorp's Board of Directors, and no other corporate
proceedings on the part of Ralcorp or any Ralcorp Subsidiary are necessary to
authorize the execution and delivery of this Agreement or to consummate the
transactions contemplated hereby (other than the approval and adoption of this
Agreement, the Ralcorp Merger Agreement and the transactions contemplated hereby
and thereby by the shareholders of Ralcorp in accordance with the Missouri Code
and the Articles of Incorporation and Bylaws of Ralcorp). This Agreement has
been duly and validly executed and delivered by Ralcorp and constitutes, and
upon execution and delivery thereof as contemplated by this Agreement, the
Ralcorp Ancillary Agreements will constitute, the legal, valid and binding
agreements of Ralcorp, enforceable against Ralcorp in accordance with its and
their respective terms, subject to the Enforceability Exceptions.
5.5. Governmental Approvals. No Consent from or with any
Governmental Authority on the part of Ralcorp or any of the Ralcorp Subsidiaries
is required in connection with the execution or delivery by Ralcorp of this
Agreement or the consummation by Ralcorp of the transactions contemplated hereby
other than (i) the filing of the Articles of Merger with the Secretary of State
of the State of Missouri in accordance with the Missouri Code, (ii) filings with
the SEC, state securities laws administrators, the NYSE and any securities
exchange on which the Ralcorp Common Stock is listed, (iii) Consents from or
with Governmental Authorities set forth on the Ralcorp Disclosure Schedule, (iv)
filings under the HSR Act, and (v) those Consents that, if they were not
obtained or made, do not or would not reasonably be expected to have a Ralcorp
Material Adverse Effect.
5.6. No Violations. The execution and delivery of this Agreement
and the Ralcorp Ancillary Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance by Ralcorp with any of the
provisions hereof or thereof will not (i) conflict with or result in any breach
of any provision of the Articles and/or Certificate of Incorporation or Bylaws
or other governing instruments of Ralcorp or any of the Ralcorp Subsidiaries,
(ii) require any Consent under or result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration or augment
the performance required) under any of the terms, conditions or provisions of
any Ralcorp Material Contract (as hereinafter defined) or other material
obligation to which Ralcorp or any Ralcorp Subsidiary is a party or by which any
of them or any of their properties or assets may be bound, (iii) result in the
creation or imposition of any lien or encumbrance of any kind upon any of the
assets of Ralcorp or any Ralcorp Subsidiary, or (iv) subject to obtaining the
Consents from Governmental Authorities referred to in Section 5.5, above,
contravene any Law currently in effect to which Ralcorp or any Ralcorp
Subsidiary or its or any of their respective assets or properties are subject,
except in the case of clauses (ii), (iii) and (iv) above, for any deviations
from the foregoing which do not or would not reasonably be expected to have a
Ralcorp Material Adverse Effect.
5.7. Securities Filings and Litigation. Ralcorp has made available
to Agribrands true and complete copies of (i) its Annual Reports on Form 10-K,
as amended, for the years ended September 30, 1998 and 1999, as filed with the
22
SEC, (ii) its proxy statements relating to all of the meetings of shareholders
(whether annual or special) of Ralcorp since January 31, 1997, as filed with the
SEC, and (iii) all other reports, statements and registration statements and
amendments thereto (including, without limitation, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as amended) filed by Ralcorp with the SEC
since January 31, 1997. The reports and statements set forth in clauses (i)
through (iii), above, and those subsequently provided or required to be provided
pursuant to this Section, are referred to collectively herein as the "Ralcorp
Securities Filings." As of their respective dates, or as of the date of the last
amendment thereof, if amended after filing, none of the Ralcorp Securities
Filings (including all schedules thereto and disclosure documents incorporated
by reference therein), contained or, as to Ralcorp Securities Filings subsequent
to the date hereof, will contain any untrue statement of a material fact or
omitted or, as to Ralcorp Securities Filings subsequent to the date hereof, will
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Each of the Ralcorp Securities Filings was filed in a
timely manner and at the time of filing or as of the date of the last amendment
thereof, if amended after filing, complied or, as to Ralcorp Securities Filings
subsequent to the date hereof, will comply in all material respects with the
Securities Exchange Act or the Securities Act, as applicable. There is no
Litigation pending or, to the knowledge of Ralcorp, threatened against Ralcorp
or any of its subsidiaries, any officer, director, employee or agent thereof, in
his or her capacity as such, or as a fiduciary with respect to any Ralcorp
Benefit Plan, as hereinafter defined, or otherwise relating to Ralcorp or any of
its subsidiaries or the securities of any of them, or any properties or rights
of Ralcorp or any of its subsidiaries or any Ralcorp Benefit Plan which is
required to be described in any Ralcorp Securities Filing that is not so
described. No event has occurred as a consequence of which Ralcorp would be
required to file a Current Report on Form 8-K pursuant to the requirements of
the Securities Exchange Act as to which such a report has not been timely filed
with the SEC. Any reports, statements and registration statements and amendments
thereof (including, without limitation, Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, as amended) filed by Ralcorp with
the SEC after the date hereof shall be provided to Ralcorp on the date of such
filing.
5.8. Ralcorp Financial Statements. The audited consolidated
financial statements and unaudited interim financial statements of Ralcorp
included in the Ralcorp Securities Filings (the "Ralcorp Financial Statements")
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and present fairly, in all material respects, the financial
position of Ralcorp and the Ralcorp Subsidiaries as at the dates thereof and the
results of their operations and cash flows for the periods then ended subject,
in the case of the unaudited interim financial statements, to normal year-end
audit adjustments, any other adjustments described therein and the fact that
certain information and notes have been condensed or omitted in accordance with
the Securities Exchange Act.
5.9. Absence of Certain Changes or Events. Except as set forth in
the Ralcorp Securities Filings, since September 30, 1999, there has not been:
(i) any Event (except for those Events caused by (y) conditions affecting the
23
store brand and value brand grocery product industry in the regions in which
Ralcorp operates, or (z) the pendency or announcement of this Agreement, or the
transactions contemplated hereby) that has had or would reasonably be expected
to have a Ralcorp Material Adverse Effect; (ii) any declaration, payment or
setting aside for payment of any dividend (except to Ralcorp or a Ralcorp
Subsidiary wholly owned by Ralcorp) or other distribution or any redemption,
purchase or other acquisition of any shares of capital stock or securities of
Ralcorp or any Ralcorp Subsidiary; (iii) any return of any capital or other
distribution of assets to shareholders of Ralcorp or any Ralcorp Subsidiary
(except to Ralcorp or a Ralcorp Subsidiary wholly owned by Ralcorp); (iv) any
acquisition (by merger, consolidation, acquisition of stock or assets or
otherwise) of any person or business; or (v) any other action or agreement or
undertaking by Ralcorp or any Ralcorp Subsidiary that, if taken or done on or
after the date hereof without Ralcorp's consent, would result in a breach of
Section 7.1, below, and that has had or would reasonably be expected to have a
Ralcorp Material Adverse Effect.
5.10. Related Party Transactions. Except as set forth in the Ralcorp
Securities Filings, since December 20, 1999, Ralcorp has not entered into any
relationship or transaction of a sort that would be required to be disclosed
pursuant to Item 404 of Regulation S-K by Ralcorp in a proxy statement in
connection with an annual meeting of shareholders.
5.11. Compliance with Laws. The business of Ralcorp and each Ralcorp
Subsidiary has been operated in compliance with all Laws applicable thereto,
except for any instances of non-compliance which do not and would not reasonably
be expected to have a Ralcorp Material Adverse Effect. Without limiting the
generality of the foregoing, neither Ralcorp nor any Ralcorp Subsidiary has
conducted its business in violation of applicable Laws, tariffs, rules and
regulations in any jurisdiction, foreign or domestic, which violation has had or
would reasonably be expected to have a Ralcorp Material Adverse Effect.
5.12. Permits. Ralcorp and the Ralcorp Subsidiaries have all
material permits, certificates, licenses, approvals, tariffs and other
authorizations required in connection with the operation of their respective
businesses (collectively, "Ralcorp Permits") and neither Ralcorp nor any Ralcorp
Subsidiary is in violation of any Ralcorp Permit, and no proceedings are pending
or, to the knowledge of Ralcorp, threatened, to revoke or limit any material
Ralcorp Permit, except any such violation or proceeding which does not and would
not reasonably be expected to have a Ralcorp Material Adverse Effect.
5.13. Finders and Investment Bankers. Neither Ralcorp nor any of its
officers or directors has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby other than pursuant to the agreements
with Banc of America Securities LLC and A.G. Edwards & Sons, Inc., accurate and
complete copies of which have been provided to Agribrands.
5.14. Material Contracts. Neither Ralcorp nor any Ralcorp Subsidiary
is a party or is subject to any note, bond, mortgage, indenture, contract,
lease, license, agreement, understanding, instrument, bid or proposal that is
24
required to be described in or filed as an exhibit to any Ralcorp Securities
Filing ("Ralcorp Material Contract") that is not so described in or filed as
required by the Securities Act or the Securities Exchange Act, as the case may
be. Ralcorp has made available to Agribrands true and accurate copies of the
Ralcorp Material Contracts. All such Ralcorp Material Contracts are valid and
binding and are in full force and effect and enforceable against Ralcorp or such
subsidiary in accordance with their respective terms, subject to the
Enforceability Exceptions. Except as referenced in Section 5.6 above, (i) no
Consent of any person is needed in order that each such Ralcorp Material
Contract shall continue in full force and effect in accordance with its terms
without penalty, acceleration or rights of early termination by reason of the
consummation of the transactions contemplated by this Agreement, except for
Consents the absence of which would not have a Ralcorp Material Adverse Effect,
and (ii) neither Ralcorp nor any of its subsidiaries is in violation or breach
of or default under any such Ralcorp Material Contract; nor to Ralcorp's
knowledge is any other party to any such Ralcorp Material Contract in violation
or breach of or default under any such Ralcorp Material Contract in each case
where such violation or breach would have a Ralcorp Material Adverse Effect.
5.15. Employee Benefit Plans. (a) There are no Benefit Plans
maintained or contributed to by Ralcorp or a Ralcorp Subsidiary under which
Ralcorp, a Ralcorp Subsidiary or the Surviving Corporation could incur any
material liability.
(b) With respect to each Benefit Plan (where applicable):
Ralcorp has made available to Agribrands complete and accurate copies of (i) all
plan and trust texts and agreements, insurance contracts and other funding
arrangements; (ii) the most recent annual report on the Form 5500 series; (iii)
the most recent financial statement and/or annual and periodic accounting of
plan assets; (iv) the most recent determination letter received from the IRS;
and (v) the most recent summary plan description as defined in ERISA.
(c) With respect to each Benefit Plan while maintained or
contributed to by Ralcorp or a Ralcorp Subsidiary: (i) if intended to qualify
under Code Sections 401(a) or 403(a), such Benefit Plan has received a favorable
determination letter from the IRS that it so qualifies, and its trust is exempt
from taxation under Code Section 501(a) and, to the knowledge of Ralcorp,
nothing has since occurred to cause the loss of the Benefit Plan's
qualification; (ii) except for payment of benefits made in the ordinary course
of the plan administration, no event has occurred and, to the knowledge of
Ralcorp, there exists no circumstance under which Ralcorp, a Ralcorp Subsidiary
or Holding Company could incur liability under ERISA, the Code or otherwise;
(iii) no accumulated funding deficiency as defined in Code Section 412 has
occurred or exists, whether or not waived; (iv) no non-exempt prohibited
transaction as defined under ERISA and the Code has occurred; (v) no reportable
event as defined in Section 4043 of ERISA has occurred or will occur by virtue
of consummation of the transaction contemplated by this Agreement (other than
events as to which the 30-day notice period is waived pursuant to Section 4043
of ERISA); (vi) all contributions and premiums due including premiums to the
PBGC have fully been made and paid on a timely basis; and (vii) all
contributions made or required to be made under any Benefit Plan meet the
requirements for deductibility under the Code, and all contributions accrued
25
prior to the Effective Time which have not been made have been properly recorded
on the Ralcorp Financial Statements in a manner satisfying the requirements of
Financial Accounting Standards 87 and 88; (viii) the present value of all
"benefit liabilities" (as defined in ERISA Section 4001(a)(16) and determined
based on the actuarial assumptions and methods used under such Benefit Plan for
the most recent Benefit Plan actuarial valuation and assuming for such purposes
that all benefits provided under the Benefit Plan are fully vested) under each
such Benefit Plan did not exceed as of the most recent Benefit Plan actuarial
valuation date, and will not exceed as of the Closing Date, the then current
value of the assets of such Benefit Plan as determined pursuant to Code Section
412, and (ix) neither Ralcorp nor any Ralcorp Subsidiary has completely or
partially withdrawn from a Plan that is a Multi-employer Plan, and Ralcorp would
not become subject to liability under ERISA if Ralcorp were to withdraw
completely from all multi-employer plans in which it currently participates,
except, in each case, for any deviations from the foregoing which do not and
would not reasonably be expected to have a Ralcorp Material Adverse Effect.
5.16. Taxes and Returns. (a) Ralcorp and each of the Ralcorp
Subsidiaries has timely filed or caused to be filed all material Tax Returns
required to be filed by it, and all Tax Returns filed by Ralcorp and the Ralcorp
Subsidiaries are true, complete and correct in all material respects.
(b) Ralcorp and the Ralcorp Subsidiaries have each timely
paid, collected or withheld, or caused to be timely paid, collected or withheld,
all material amounts of Taxes required to be paid, collected or withheld, other
than such Taxes for which adequate reserves in the Ralcorp Financial Statements
have been established.
(c) There are no claims or assessments pending against Ralcorp
or any of the Ralcorp Subsidiaries for any alleged deficiency in any Tax, and
Ralcorp has not been notified in writing of any proposed Tax claims or
assessments against Ralcorp or any of the Ralcorp Subsidiaries (other than in
each case, claims or assessments for which adequate reserves in the Ralcorp
Financial Statements have been established or which are being contested in good
faith or are immaterial in amount).
(d) There are no material federal, state, local or foreign
audits or administrative proceedings pending with regard to any material amounts
of Tax or Tax Returns of Ralcorp or the Ralcorp Subsidiaries and none of them
has received a written notice of any proposed material audit or proceeding.
(e) Neither Ralcorp nor any of the Ralcorp Subsidiaries has
any waivers or extensions of any applicable statute of limitations to assess any
material amount of Taxes.
(f) There are no outstanding requests by Ralcorp or any of
Ralcorp Subsidiaries for any extension of time within which to file any material
Tax Return or within which to pay any material amounts of Taxes shown to be due
on any return.
26
(g) There are no liens for material amounts of Taxes on the
assets of Ralcorp or any of Ralcorp Subsidiaries except for statutory liens for
current Taxes not yet due and payable.
(h) Neither Ralcorp nor any Ralcorp Subsidiary is a party to
any agreement, contract, arrangement, or plan that has resulted or would result,
individually or in the aggregate, in connection with this Agreement or any
change of control of Ralcorp or any of Ralcorp Subsidiaries in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
5.17. No Adverse Actions. There is no existing, pending or, to the
knowledge of Ralcorp, overtly threatened termination, cancellation, limitation,
modification or change in the business relationship of Ralcorp or any of the
Ralcorp Subsidiaries, with any supplier, customer or other person except such as
would not reasonably be expected to have a Ralcorp Material Adverse Effect. None
of Ralcorp, any Ralcorp Subsidiary or, to the knowledge of Ralcorp, any
director, officer, agent, employee or other person acting on behalf of any of
the foregoing has used any corporate funds for unlawful contributions, payments,
gifts or entertainment or for the payment of other unlawful expenses relating to
political activity, or made any direct or indirect unlawful payments to
governmental or regulatory officials or others, which would reasonably be
expected to have a Ralcorp Material Adverse Effect.
5.18. Fairness Opinion. Ralcorp's Board of Directors and the Special
Committee of the Ralcorp Board of Directors received from their respective
financial advisors, Banc of America Securities LLC and A.G. Edwards & Sons,
Inc., opinions to the effect that the Merger Consideration is fair to the
holders of Ralcorp Common Stock from a financial point of view.
5.19. Takeover Statutes and Charter. No Takeover Statute, including,
without limitation, Sections 351.407 and 351.459 of the Missouri Code,
applicable to Ralcorp or any of the Ralcorp Subsidiaries is applicable to the
Ralcorp Merger, this Agreement, the Ralcorp Ancillary Agreements or the other
transactions contemplated hereby or thereby (inasmuch as Ralcorp has approved
the transactions contemplated by this Agreement and the Ralcorp Ancillary
Agreements for purposes of Section 351.459 of the Missouri Code and has taken
all other requisite corporate action under the Takeover Statutes). The
provisions of Article Nine of the Articles of Incorporation of Ralcorp are not
applicable to the Ralcorp Merger, this Agreement, the Ralcorp Ancillary
Agreements or the other transactions contemplated hereby or thereby (inasmuch as
there are one or more "Continuing Directors" (as defined in the Articles of
Incorporation of Ralcorp) and the Ralcorp Merger has been approved by a majority
of them).
5.20. Ralcorp Rights Plan. Under the Rights Agreement between
Ralcorp and First Chicago Trust Company of New York (as successor Rights Agent
to Boatmen's Trust Company), dated as of December 27,1996, as amended as of July
1, 1997 and as amended on August 7, 2000 (the "Ralcorp Rights Agreement"),
neither Merger Sub R nor Holding Company will not become an "Acquiring Person,"
no "Stock Acquisition Date" or "Distribution Date" (as such terms are defined in
the Ralcorp Rights Agreement) will occur, and the holders of any rights issued
27
pursuant to the Ralcorp Rights Agreement will not be entitled to receive any
benefits under the Ralcorp Rights Agreement as a result of the approval,
execution or delivery of this Agreement, the Ralcorp Merger Agreement or any of
the Ralcorp Ancillary Agreements or the consummation of the transactions
contemplated hereby and thereby.
ARTICLE VI
ADDITIONAL COVENANTS OF AGRIBRANDS
Agribrands covenants and agrees as follows:
6.1. Conduct of Business of Agribrands and the Agribrands
Subsidiaries. Except as expressly contemplated by this Agreement, disclosed in
the Agribrands Securities Filings filed as of the date hereof or set forth in
the Agribrands Disclosure Schedule, during the period from the date of this
Agreement to the Effective Time, Agribrands shall conduct, and it shall cause
the Agribrands Subsidiaries to conduct, its or their respective businesses in
the ordinary course and consistent with past practice, subject to the
limitations contained in this Agreement, and Agribrands shall, and it shall
cause the Agribrands Subsidiaries to, use its or their respective reasonable
best efforts to preserve intact its or their respective business organizations,
to keep available the services of its or their respective officers, agents and
employees and to maintain satisfactory relationships with all persons with whom
any of them does business. Without limiting the generality of the foregoing, and
except as otherwise expressly provided in this Agreement, after the date of this
Agreement and prior to the Effective Time, neither Agribrands nor any Agribrands
Subsidiary will, without the prior written consent of Ralcorp, which shall not
be unreasonably withheld or delayed:
(i) amend or propose to amend its Articles or Certificate
of Incorporation or Bylaws (or comparable governing instruments) in
any material respect;
(ii) authorize for issuance, issue, grant, sell, pledge,
dispose of or propose to issue, grant, sell, pledge or dispose of any
shares of, or any options, warrants, commitments, subscriptions or
rights of any kind to acquire or sell any shares of, the capital stock
or other securities of Agribrands or any Agribrands Subsidiary
including, but not limited to, any securities convertible into or
exchangeable for shares of capital stock of any class of Agribrands or
any Agribrands Subsidiary, except for the issuance of shares of
Agribrands Common Stock pursuant to the exercise of Agribrands Options
outstanding on the date of this Agreement in accordance with their
present terms;
(iii) split, combine or reclassify any shares of its capital
stock or declare, pay or set aside any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock, other than dividends or distributions to
Agribrands or an Agribrands Subsidiary wholly owned by Agribrands, or
redeem, purchase or otherwise acquire or offer to acquire any shares of
its capital stock or other securities;
28
(iv) other than in the ordinary course of business consistent
with past practice, (a) create, incur or assume any debt or obligations
in respect of capital leases, except refinancings of existing
obligations on terms and conditions prevailing in the market; (b)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, indirectly, contingently or otherwise) for the
obligations of any person; (c) make any capital expenditures or make
any loans, advances or capital contributions to, or investments in, any
other person (other than to an Agribrands Subsidiary and customary
travel, relocation or business advances to employees) made in the
ordinary course of business consistent with past practice; (d) acquire
the stock or assets of, or merge or consolidate with, any other person;
(e) voluntarily incur any material liability or obligation (absolute,
accrued, contingent or otherwise); or (f) sell, transfer, mortgage,
pledge or otherwise dispose of, or encumber, or agree to sell,
transfer, mortgage, pledge or otherwise dispose of or encumber, any
assets or properties, real, personal or mixed material to Agribrands
and the Agribrands Subsidiaries taken as a whole other than to secure
debt permitted under (a) of this clause (iv), and except for transfers
made for fair and adequate consideration;
(v) increase in any manner the compensation of any of its
officers or employees or enter into, establish, amend or terminate any
employment, consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation, profit sharing,
health or other welfare, stock option or other equity, pension,
retirement, vacation, severance, deferred compensation or other
compensation or benefit plan, policy, agreement, trust, fund or
arrangement with, for or in respect of, any shareholder, officer,
director, other employee, agent, consultant or affiliate other than (a)
as required pursuant to the terms of agreements in effect on the date
of this Agreement, (b) with respect to non-officer employees, such as
are in the ordinary course of business consistent with past practice,
or (c) in connection with the acquisition by Agribrands of another
company or business.
(vi) enter into any lease or amend any lease of real property
other than in the ordinary course of business consistent with past
practice;
(vii) make or rescind any express or deemed election relating
to Taxes of Agribrands, unless required to do so by applicable Law;
(viii) settle or compromise any Tax liability of Agribrands or
agree to an extension of a statute of limitations with respect to the
assessment or determination of Taxes;
(ix) file or cause to be filed any amended Tax Return with
respect to Agribrands or any Agribrands Subsidiaries or file or cause
to be filed any claim for refund of Taxes paid by or on behalf of
Agribrands or any Agribrands Subsidiaries; or
29
(x) prepare or file any Tax Return of Agribrands inconsistent
with past practice in preparing or filing similar Tax Returns in prior
periods or, on any such Tax Return, take any position, make any
election, or adopt any method that is inconsistent with positions
taken, elections made or methods used in preparing or filing similar
Tax Returns in prior periods, in each case except to the extent
required by Law.
Furthermore, Agribrands covenants that from and after the date of this
Agreement, unless Ralcorp shall otherwise expressly consent in writing,
Agribrands shall, and Agribrands shall cause each of the Agribrands Subsidiaries
to, use its or their reasonable business efforts to comply in all material
respects with all Laws applicable to it or any of its properties, assets or
business and maintain in full force and effect all Agribrands Permits necessary
for, or otherwise material to, such business.
6.2. Notification of Certain Matters. Agribrands shall give prompt
notice to Ralcorp if any of the following occurs after the date of this
Agreement: (i) any notice of, or other communication relating to, a material
default or Event which, with notice or lapse of time or both, would become a
material default under any Agribrands Material Contract; (ii) receipt of any
notice or other communication in writing from any third party alleging that the
Consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement, other than a Consent disclosed
pursuant to Section 4.5 or 4.6 above or not required to be disclosed pursuant to
the terms thereof; (iii) receipt of any material notice or other communication
from any Governmental Authority (including, but not limited to, the NYSE or any
other securities exchange) in connection with the transactions contemplated by
this Agreement; (iv) the occurrence of an Event which would reasonably be
expected to have an Agribrands Material Adverse Effect; (v) the commencement or
threat of any Litigation involving or affecting Agribrands or any Agribrands
Subsidiary, or any of their respective properties or assets, or, to its
knowledge, any employee, agent, director or officer of Agribrands or any
Agribrands Subsidiary, in his or her capacity as such or as a fiduciary under a
Benefit Plan of Agribrands, which, if pending on the date hereof, would have
been required to have been disclosed in or pursuant to this Agreement or which
relates to the consummation of the Agribrands Merger, or any material
development in connection with any Litigation disclosed by Agribrands in or
pursuant to this Agreement or the Agribrands Securities Filings; (vi) the
occurrence of any Event that would reasonably be expected to cause a breach by
Agribrands of any provision of this Agreement, and (vii) the occurrence of any
Event that, had it occurred prior to the date of this Agreement without any
additional disclosure hereunder, would have constituted a breach by Agribrands
of any provision of this Agreement.
6.3. Access and Information. Between the date of this Agreement and
the Effective Time, Agribrands will give, and will cause each of the Agribrands
Subsidiaries to give, and shall direct its financial advisors, accountants and
legal counsel to give, upon reasonable notice, Ralcorp, its lenders, financial
advisors, accountants and legal counsel and their respective authorized
representatives at all reasonable times access to all offices and other
facilities and to all contracts, agreements, commitments, books and records of
or pertaining to Agribrands and the Agribrands Subsidiaries, will permit the
foregoing to make such reasonable inspections as they may require and will cause
30
its officers promptly to furnish Ralcorp with (a) such financial and operating
data and other information with respect to the business and properties of
Agribrands and the Agribrands Subsidiaries as Ralcorp may from time to time
reasonably request, including, but not limited to, data and information required
for inclusion in the Registration Statement and/or other Ralcorp securities Law
filings, and (b) a copy of each material report, schedule and other document
filed or received by Agribrands or any of the Agribrands Subsidiaries pursuant
to the requirements of applicable securities laws or the NYSE. The foregoing
access will be subject to restrictions contained in confidentiality agreements
to which Agribrands is subject; provided that Agribrands shall use its
reasonable best efforts to obtain waivers of such restrictions.
6.4. Shareholder Approval. As soon as practicable, Agribrands will
take all steps necessary to duly call, give notice of, convene and hold a
meeting of its shareholders (the "Agribrands Shareholders Meeting") for the
purpose of approving this Agreement and the Agribrands Merger and the
transactions contemplated hereby and thereby and for such other purposes as may
be necessary or desirable in connection with effectuating the transactions
contemplated hereby (the "Agribrands Proposals"). Except as otherwise
contemplated by this Agreement and subject to the exercise of their fiduciary
duties, the Board of Directors of Agribrands (i) will recommend to the
shareholders of Agribrands that they approve the Agribrands Proposals, and (ii)
will use its reasonable best efforts to obtain any necessary approval by
Agribrands' shareholders of the Agribrands Proposals including, without
limitation, voting the Agribrands Shares held by such Directors for such
adoption and approval.
6.5. Reasonable Best Efforts. Subject to the terms and conditions
herein provided, Agribrands agrees to use its reasonable best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the Agribrands Merger and the other transactions contemplated by
this Agreement including, but not limited to (i) obtaining any third party
Consent required in connection with the execution and delivery by Agribrands of
this Agreement or the consummation by Agribrands of the transactions
contemplated hereby, (ii) the defending of any Litigation against Agribrands or
any Agribrands Subsidiary challenging this Agreement or the consummation of the
transactions contemplated hereby, (iii) obtaining all Consents from Governmental
Authorities required for the consummation of the Agribrands Merger and the
transactions contemplated hereby, and (iv) timely making all necessary filings
under the HSR Act. Upon the terms and subject to the conditions hereof,
Agribrands agrees to use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary to
satisfy the other conditions of the Closing set forth herein. Agribrands will
consult with counsel for Ralcorp as to, and will permit such counsel to
participate in, at Ralcorp's expense, any Litigation referred to in clause (ii)
above brought against or involving Agribrands or any Agribrands Subsidiary.
6.6. Public Announcements. So long as this Agreement is in effect,
Agribrands shall not, and shall cause its affiliates not to, issue or cause the
publication of any press release or any other announcement with respect to the
Mergers, the Agribrands Proposals, the Ralcorp Proposals or the transactions
contemplated by this Agreement without the consent of Ralcorp which shall not be
31
unreasonably withheld or delayed, except when such release or announcement is
required by applicable Law or any applicable listing agreement with, or rules or
regulations of, the NYSE or any securities exchange, in which case Agribrands,
to the extent practicable, prior to making such announcement, shall consult with
Ralcorp regarding the same.
6.7. Compliance. In consummating the Agribrands Merger and the
transactions contemplated hereby, Agribrands shall comply, and/or cause the
Agribrands Subsidiaries to comply or to be in compliance, in all material
respects, with all applicable Laws.
6.8. Tax Treatment. Agribrands shall use its reasonable best
efforts to cause the Ralcorp Merger and the Agribrands Merger to qualify as
either, and will not take any action which to its knowledge could reasonably be
expected to prevent the Ralcorp Merger and the Agribrands Merger from qualifying
as either, a reorganization under Section 368(a) of the Code or an exchange
under Section 351(a) of the Code. Prior to the Effective Time, Agribrands shall
provide tax counsel to Agribrands and Ralcorp rendering an opinion under Section
9.1.8 below with such certificates concerning such factual matters as such
counsel identifies are relevant to its opinion and will use its reasonable best
efforts to obtain such a certificate from any shareholder of Agribrands
identified by such counsel.
6.9. Agribrands Benefit Plans. Between the date of this Agreement
and through the Effective Time, no discretionary award or grant under any
Benefit Plan of Agribrands or an Agribrands Subsidiary shall be made without the
consent of Ralcorp which shall not be unreasonably withheld or delayed, except
options for shares of Agribrands Common Stock (with exercise prices at or above
the fair market value of the underlying shares of Agribrands Common Stock on the
date of grant) granted to employees of Agribrands hired on or after the date of
this Agreement in the ordinary course of business consistent with past practice
as heretofore disclosed to Ralcorp; nor shall Agribrands or an Agribrands
Subsidiary take any action or permit any action to be taken to accelerate the
vesting of any warrants or options previously granted pursuant to any such
Benefit Plan except as specifically required pursuant to the terms thereof as in
effect on the date of this Agreement. Neither Agribrands nor any Agribrands
Subsidiary shall make any amendment to any Benefit Plan or any awards thereunder
without the consent of Ralcorp.
6.10. No Solicitation of Acquisition Proposal.
(a) Agribrands shall not, directly or indirectly, take any action
to (1) encourage (including by way of furnishing nonpublic information),
solicit, initiate or facilitate any Agribrands Acquisition Proposal (as defined
in Section 6.10(c)), (2) enter into any agreement with respect to any Agribrands
Acquisition Proposal or (3) participate in any way in discussions or
negotiations with, or furnish any information to, any person in connection with,
or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or could reasonably be expected to lead to, any
Agribrands Acquisition Proposal; provided, however, that if the Board of
Directors of Agribrands determines in good faith, after consultation with
outside counsel, that it is necessary to do so to discharge properly its
32
fiduciary duties to shareholders, Agribrands may, in response to an Agribrands
Acquisition Proposal that such Board determines in good faith is reasonably
likely to result in an Agribrands Superior Proposal (as defined in Section
6.10(c)), and subject to such party's compliance with Section 6.10(b), (A)
furnish information with respect to Agribrands to the person making such
Agribrands Acquisition Proposal pursuant to a customary confidentiality
agreement the terms of which are no more favorable to the other party to such
confidentiality agreement than those in place with Ralcorp and (B) participate
in discussions with respect to such Agribrands Acquisition Proposal. It is
expressly understood and agreed that with respect to the foregoing proviso,
Agribrands' legal and financial advisors shall be able to make inquiries, and
engage in discussions, with any party that has made an Agribrands Acquisition
Proposal (and such party's legal and financial advisors) in order to elicit
information to allow the Board of Directors of Agribrands to determine in good
faith if such Agribrands Acquisition Proposal is reasonably likely to result in
an Agribrands Superior Proposal.
(b) Agribrands will as promptly as practicable communicate to
Ralcorp any inquiry received by it relating to any potential Agribrands
Acquisition Proposal and the material terms of any proposal or inquiry,
including the identity of the person and its affiliates making the same, that it
may receive in respect of any such transaction, or of any such information
requested from it or of any such negotiations or discussions being sought to be
initiated with it.
(c) "Agribrands Acquisition Proposal" means any offer or proposal
concerning any (1) merger, consolidation, business combination, or similar
transaction involving Agribrands, (2) sale, lease or other disposition of assets
of Agribrands representing 20% or more of the consolidated assets of Agribrands
and the Agribrands Subsidiaries, (3) issuance, sale, or other disposition of
(including by way of merger, consolidation, business combination, share
exchange, joint venture, or any similar transaction) securities (or options,
rights or warrants to purchase, or securities convertible into or exchangeable
for, such securities) representing 20% or more of the voting power of Agribrands
or (4) transaction in which any person shall acquire beneficial ownership (as
such term is defined in Rule 13d-3 under the Exchange Act), or the right to
acquire beneficial ownership or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 20% or more of the outstanding voting capital
stock of Agribrands. "Agribrands Superior Proposal" means a bona fide Agribrands
Acquisition Proposal made by a third party which was not solicited by
Agribrands, its subsidiaries, representatives or other affiliates and which, in
the good faith judgment of Agribrands' Board of Directors, taking into account,
to the extent deemed appropriate by Agribrands' Board of Directors, the various
legal, financial and regulatory aspects of the proposal and the person making
such proposal (A) if accepted, is reasonably likely to be consummated, and (B)
if consummated, is reasonably likely to result in a transaction that is more
favorable to Agribrands' shareholders (in their capacity as shareholders), from
a financial point of view, than the transactions contemplated by this Agreement.
(d) If the Agribrands Board of Directors is prepared to accept
an Agribrands Superior Proposal, then Agribrands shall give Ralcorp 48 hours
notice that Agribrands is prepared to accept the Agribrands Superior Proposal,
33
provided that Agribrands may not definitively accept an Agribrands Superior
Proposal unless Agribrands concurrently therewith terminates this Agreement
pursuant to Section 10.1(f) and, concurrently with such termination, makes the
payment required by Section 10.2(d).
6.11. SEC and Shareholder Filings.
Agribrands shall send to Ralcorp a copy of all public reports and
materials as and when it sends the same to its shareholders, the SEC or any
state or foreign securities commission.
6.12. Affiliate Agreements. Agribrands shall use reasonable best
efforts to ensure that each person who is or may be an "affiliate" of Agribrands
within the meaning of Rule 145 promulgated under the Securities Act shall enter
into an agreement in customary form.
6.13. Takeover Statutes. If any Takeover Statute is or may become
applicable to the Agribrands Merger or the transactions contemplated hereby,
Agribrands and the members of its Board of Directors will grant such approvals
and will take such other actions as are necessary so that the Agribrands Merger
and the other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated hereby and will otherwise act
to eliminate or minimize the effects of any Takeover Statute on the Agribrands
Merger and any of the transactions contemplated hereby.
6.14. Comfort Letters. Upon the request of Ralcorp, Agribrands shall
use its reasonable best efforts to provide to Ralcorp on or prior to the Closing
Date "comfort letters" from the independent certified public accountants for
Agribrands dated the date on which the Registration Statement, or last amendment
thereto, shall become effective, and dated the Closing Date, addressed to the
Board of Directors of each of Agribrands and Ralcorp, covering such matters as
Ralcorp shall reasonably request with respect to facts concerning the financial
condition of Agribrands and the Agribrands Subsidiaries as are customary for
certified public accountants to deliver in connection with a transaction similar
to the Agribrands Merger.
6.15 Spin-Off Covenant. Agribrands shall satisfy its post spin-
off covenant to Ralston Purina Company ("Ralston Purina") by delivering to
Ralston Purina (i) an opinion of tax counsel in form and substance satisfactory
to Ralston Purina (which opinion shall recite that it may be relied upon by
Ralcorp) or (ii) a supplemental ruling from the IRS that the transactions
contemplated by this Agreement would not cause Agribrands' spin-off from Ralston
Purina to be a taxable transaction.
34
ARTICLE VII
ADDITIONAL COVENANTS OF RALCORP
Ralcorp covenants and agrees as follows:
7.1. Conduct of Business of Ralcorp and the Ralcorp Subsidiaries.
Except as expressly contemplated by this Agreement, disclosed in the Ralcorp
Securities Filings filed as of the date hereof or set forth in the Ralcorp
Disclosure Schedule, during the period from the date of this Agreement to the
Effective Time, Ralcorp shall conduct, and it shall cause the Ralcorp
Subsidiaries to conduct, its or their respective businesses in the ordinary
course and consistent with past practice, subject to the limitations contained
in this Agreement, and Ralcorp shall, and it shall cause the Ralcorp
Subsidiaries to, use its or their respective reasonable best efforts to preserve
intact its or their respective business organizations, to keep available the
services of its or their respective officers, agents and employees and to
maintain satisfactory relationships with all persons with whom any of them does
business. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, after the date of this Agreement
and prior to the Effective Time, neither Ralcorp nor any Ralcorp Subsidiary
will, without the prior written consent of Agribrands, which shall not be
unreasonably withheld or delayed:
(i) amend or propose to amend its Articles or Certificate
of Incorporation or Bylaws (or comparable governing instruments) in
any material respect;
(ii) authorize for issuance, issue, grant, sell,
pledge, dispose of or propose to issue, grant, sell, pledge or dispose
of any shares of, or any options, warrants, commitments, subscriptions
or rights of any kind to acquire or sell any shares of, the capital
stock or other securities of Ralcorp or any Ralcorp Subsidiary
including, but not limited to, any securities convertible into or
exchangeable for shares of capital stock of any class of Ralcorp or
any Ralcorp Subsidiary, except for the issuance of shares of Ralcorp
Common Stock pursuant to the exercise of Ralcorp Options outstanding
on the date of this Agreement in accordance with their present terms;
(iii) split, combine or reclassify any shares of its
capital stock or declare, pay or set aside any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, other than dividends or
distributions to Ralcorp or a Ralcorp Subsidiary wholly owned by
Ralcorp, or redeem, purchase or otherwise acquire or offer to acquire
any shares of its capital stock or other securities;
(iv) other than in the ordinary course of business
consistent with past practice, (a) create, incur or assume any debt or
obligations in respect of capital leases, except refinancings of
existing obligations on terms and conditions prevailing in the market;
(b) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, indirectly, contingently or otherwise)
for the obligations of any person; (c) make any capital expenditures
35
or make any loans, advances or capital contributions to, or
investments in, any other person (other than to an Ralcorp Subsidiary
and customary travel, relocation or business advances to employees)
made in the ordinary course of business consistent with past practice;
(d) acquire the stock or assets of, or merge or consolidate with, any
other person; (e) voluntarily incur any material liability or
obligation (absolute, accrued, contingent or otherwise); or (f) sell,
transfer, mortgage, pledge or otherwise dispose of, or encumber, or
agree to sell, transfer, mortgage, pledge or otherwise dispose of or
encumber, any assets or properties, real, personal or mixed material
to Ralcorp and the Ralcorp Subsidiaries taken as a whole other than to
secure debt permitted under (a) of this clause (iv), and except for
transfers made for fair and adequate consideration; provided that
subparagraphs (a), (c), (d) and (e) shall not apply to acquisitions of
businesses, whether by purchase of stock or assets or by merger or
consolidation, or to debt incurred in connection therewith, for cash
consideration in an aggregate amount for all such acquisitions of up
to $50 million;
(v) increase in any manner the compensation of any of its
officers or employees or enter into, establish, amend or terminate any
employment, consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation, profit sharing,
health or other welfare, stock option or other equity, pension,
retirement, vacation, severance, deferred compensation or other
compensation or benefit plan, policy, agreement, trust, fund or
arrangement with, for or in respect of, any shareholder, officer,
director, other employee, agent, consultant or affiliate other than
(a) as required pursuant to the terms of agreements in effect on the
date of this Agreement, (b) with respect to non-officer employees,
such as are in the ordinary course of business consistent with past
practice, or (c) in connection with the acquisition by Ralcorp of
another company or business.
(vi) enter into any lease or amend any lease of real
property other than in the ordinary course of business consistent with
past practice;
(vii) make or rescind any express or deemed election
relating to Taxes of Ralcorp, unless required to do so by applicable
Law;
(viii) settle or compromise any Tax liability of Ralcorp or
agree to an extension of a statute of limitations with respect to the
assessment or determination of Taxes;
(ix) file or cause to be filed any amended Tax Return with
respect to Ralcorp or any of Ralcorp Subsidiaries or file or cause to
be filed any claim for refund of Taxes paid by or on behalf of Ralcorp
or any of Ralcorp Subsidiaries; or
(x) prepare or file any Tax Return of Ralcorp
inconsistent with past practice in preparing or filing similar Tax
Returns in prior periods or, on any such Tax Return, take any
position, make any election, or adopt any method that is inconsistent
36
with positions taken, elections made or methods used in preparing or
filing similar Tax Returns in prior periods, in each case except to
the extent required by Law.
Furthermore, Ralcorp covenants that from and after the date of this
Agreement, unless Agribrands shall otherwise expressly consent in writing,
Ralcorp shall, and Ralcorp shall cause each of the Ralcorp Subsidiaries to, use
its or their reasonable business efforts to comply in all material respects with
all Laws applicable to it or any of its properties, assets or business and
maintain in full force and effect all Ralcorp Permits necessary for, or
otherwise material to, such business.
7.2. Notification of Certain Matters. Ralcorp shall give prompt
notice to Agribrands if any of the following occurs after the date of this
Agreement: (i) any notice of, or other communication relating to, a material
default or Event which, with notice or lapse of time or both, would become a
material default under any Ralcorp Material Contract; (ii) receipt of any notice
or other communication in writing from any third party alleging that the Consent
of such third party is or may be required in connection with the transactions
contemplated by this Agreement, other than a Consent disclosed pursuant to
Section 5.5 or 5.6 above or not required to be disclosed pursuant to the terms
thereof; (iii) receipt of any material notice or other communication from any
Governmental Authority (including, but not limited to, the NYSE or any other
securities exchange) in connection with the transactions contemplated by this
Agreement; (iv) the occurrence of an Event which would reasonably be expected to
have a Ralcorp Material Adverse Effect; (v) the commencement or threat of any
Litigation involving or affecting Ralcorp or any Ralcorp Subsidiary, or any of
their respective properties or assets, or, to its knowledge, any employee,
agent, director or officer of Ralcorp or any Ralcorp Subsidiary, in his or her
capacity as such or as a fiduciary under a Benefit Plan of Ralcorp, which, if
pending on the date hereof, would have been required to have been disclosed in
or pursuant to this Agreement or which relates to the consummation of the
Ralcorp Merger, or any material development in connection with any Litigation
disclosed by Ralcorp in or pursuant to this Agreement or the Ralcorp Securities
Filings; and (vi) the occurrence of any Event that would reasonably be expected
to cause a breach by Ralcorp of any provision of this Agreement, and (vii) the
occurrence of any Event that, had it occurred prior to the date of this
Agreement without any additional disclosure hereunder, would have constituted a
breach by Ralcorp of any provision of this Agreement.
7.3. Access and Information. Between the date of this Agreement and
the Effective Time, Ralcorp will give, and will cause each of the Ralcorp
Subsidiaries to give, and shall direct its financial advisors, accountants and
legal counsel to give, upon reasonable notice, Agribrands, its lenders,
financial advisors, accountants and legal counsel and their respective
authorized representatives at all reasonable times access to all offices and
other facilities and to all contracts, agreements, commitments, books and
records of or pertaining to Ralcorp and the Ralcorp Subsidiaries, will permit
the foregoing to make such reasonable inspections as they may require and will
cause its officers promptly to furnish Ralcorp with (a) such financial and
operating data and other information with respect to the business and properties
of Ralcorp and the Ralcorp Subsidiaries as Agribrands may from time to time
reasonably request, including, but not limited to, data and information required
37
for inclusion in the Registration Statement and/or other Ralcorp securities Law
filings, and (b) a copy of each material report, schedule and other document
filed or received by Ralcorp or any of the Ralcorp Subsidiaries pursuant to the
requirements of applicable securities laws or the NYSE. The foregoing access
will be subject to restrictions contained in confidentiality agreements to which
Ralcorp is subject; provided that Ralcorp shall use its reasonable best efforts
to obtain waivers of such restrictions.
7.4. Shareholder Approval. As soon as practicable, Ralcorp will
take all steps necessary to duly call, give notice of, convene and hold a
meeting of its shareholders (the "Ralcorp Shareholders Meeting") for the purpose
of approving this Agreement and the Ralcorp Merger and the transactions
contemplated hereby and thereby, for such other purposes as may be necessary or
desirable in connection with effectuating the transactions contemplated hereby
and for such other purposes as Ralcorp shall determine (the "Ralcorp
Proposals"). Except as otherwise contemplated by this Agreement and subject to
the exercise of their fiduciary duties, the Board of Directors of Ralcorp (i)
will recommend to the shareholders of Ralcorp that they approve the Ralcorp
Proposals, and (ii) will use its reasonable best efforts to obtain any necessary
approval by Ralcorp's shareholders of the Ralcorp Proposals, including, without
limitation, voting the Ralcorp Common Stock held by such Directors for such
approval.
7.5. Reasonable Best Efforts. Subject to the terms and conditions
herein provided, Ralcorp agrees to use its reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the Ralcorp Merger and the other transactions contemplated by this
Agreement including, but not limited to (i) obtaining any third party Consent
required in connection with the execution and delivery by Ralcorp of this
Agreement or the consummation by Ralcorp of the transactions contemplated
hereby, (ii) the defending of any Litigation against Ralcorp or any Ralcorp
Subsidiary challenging this Agreement or the consummation of the transactions
contemplated hereby, (iii) obtaining all Consents from Governmental Authorities
required for the consummation of the Ralcorp Merger and the transactions
contemplated hereby, and (iv) timely making all necessary filings under the HSR
Act. Upon the terms and subject to the conditions hereof, Ralcorp agrees to use
its reasonable best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary to satisfy the other conditions of
the Closing set forth herein. Ralcorp will consult with counsel for Agribrands
as to, and will permit such counsel to participate in, at Agribrands' expense,
any Litigation referred to in clause (ii) above brought against or involving
Ralcorp or any Ralcorp Subsidiary.
7.6. Public Announcements. So long as this Agreement is in effect,
Ralcorp shall not, and shall cause its affiliates not to, issue or cause the
publication of any press release or any other announcement with respect to the
Mergers, the Agribrands Proposals, the Ralcorp Proposals or the transactions
contemplated by this Agreement without the consent of Agribrands which shall not
be unreasonably withheld or delayed, except when such release or announcement is
required by applicable Law or any applicable listing agreement with, or rules or
regulations of, the NYSE or any securities exchange, in which case Ralcorp, to
the extent practicable, prior to making such announcement, shall consult with
Agribrands regarding the same.
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7.7. Compliance. In consummating the Ralcorp Merger and the
transactions contemplated hereby, Ralcorp shall comply and/or cause the Ralcorp
Subsidiaries to comply or to be in compliance, in all material respects, with
all applicable Laws.
7.8. Tax Treatment. Ralcorp shall use its reasonable best efforts
to cause the Ralcorp Merger and the Agribrands Merger to qualify as either, and
will not take any action which to its knowledge could reasonably be expected to
prevent the Ralcorp Merger and the Agribrands Merger from qualifying as either,
a reorganization under Section 368(a) of the Code or as an exchange under
Section 351(a) of the Code. Prior to the Effective Time, Ralcorp shall provide
tax counsel to Agribrands and Ralcorp rendering an opinion under Section 9.1.8
below with such certificates concerning such factual matters as such counsel
identifies are relevant to its opinion and will use its reasonable best efforts
to obtain such a certificate from any shareholder of Ralcorp identified by such
counsel.
7.9. Ralcorp Benefit Plans.
Between the date of this Agreement and through the Effective Time, no
discretionary award or grant under any Benefit Plan of Ralcorp or a Ralcorp
Subsidiary shall be made without the consent of Agribrands which shall not be
unreasonably withheld or delayed, except options for shares of Ralcorp Common
Stock (with exercise prices at or above the fair market value of the underlying
shares of Ralcorp Common Stock on the date of grant) granted to employees of
Ralcorp hired on or after the date of this Agreement in the ordinary course of
business consistent with past practice as heretofore disclosed to Agribrands;
nor shall Ralcorp or a Ralcorp Subsidiary take any action or permit any action
to be taken to accelerate the vesting of any warrants or options previously
granted pursuant to any such Benefit Plan except as specifically required
pursuant to the terms thereof as in effect on the date of this Agreement.
Neither Ralcorp nor any Ralcorp Subsidiary shall make any amendment to any
Benefit Plan or any awards thereunder without the consent of Agribrands.
7.10. No Solicitation of Acquisition Proposal.
(a) Ralcorp shall not, directly or indirectly, take any action to (1)
encourage (including by way of furnishing nonpublic information), solicit,
initiate or facilitate any Ralcorp Acquisition Proposal (as defined in Section
7.10(c)), (2) enter into any agreement with respect to any Ralcorp Acquisition
Proposal or (3) participate in any way in discussions or negotiations with, or
furnish any information to, any person in connection with, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or could reasonably be expected to lead to, any Ralcorp Acquisition
Proposal; provided, however, that if the Board of Directors of Ralcorp
determines in good faith, after consultation with outside counsel, that it is
necessary to do so to discharge properly its fiduciary duties to shareholders,
Ralcorp may, in response to a Ralcorp Acquisition Proposal that such Board
determines in good faith is reasonably likely to result in a Ralcorp Superior
Proposal (as defined in Section 7.10(c)), and subject to such party's compliance
with Section 7.10(b), (A) furnish information with respect to Ralcorp to the
person making such Ralcorp Acquisition Proposal pursuant to a customary
39
confidentiality agreement the terms of which are no more favorable to the other
party to such confidentiality agreement than those in place with Agribrands and
(B) participate in discussions with respect to such Ralcorp Acquisition
Proposal. It is expressly understood and agreed that with respect to the
foregoing proviso, Ralcorp's legal and financial advisors shall be able to make
inquiries, and engage in discussions, with any party that has made a Ralcorp
Acquisition Proposal (and such party's legal and financial advisors) in order to
elicit information to allow the Board of Directors of Ralcorp to determine in
good faith if such Ralcorp Acquisition Proposal is reasonably likely to result
in a Ralcorp Superior Proposal.
(b) Ralcorp will as promptly as practicable communicate to Agribrands
any inquiry received by it relating to any potential Ralcorp Acquisition
Proposal and the material terms of any proposal or inquiry, including the
identity of the person and its affiliates making the same, that it may receive
in respect of any such transaction, or of any such information requested from it
or of any such negotiations or discussions being sought to be initiated with it.
(c) "Ralcorp Acquisition Proposal" means any offer or proposal
concerning any (1) merger, consolidation, business combination, or similar
transaction involving Ralcorp, (2) sale, lease or other disposition of assets of
Ralcorp representing 20% or more of the consolidated assets of Ralcorp and the
Ralcorp Subsidiaries, (3) issuance, sale, or other disposition of (including by
way of merger, consolidation, business combination, share exchange, joint
venture, or any similar transaction) securities (or options, rights or warrants
to purchase, or securities convertible into or exchangeable for, such
securities) representing 20% or more of the voting power of Ralcorp or (4)
transaction in which any person shall acquire beneficial ownership (as such term
is defined in Rule 13d-3 under the Exchange Act), or the right to acquire
beneficial ownership or any "group" (as such term is defined under the Exchange
Act) shall have been formed which beneficially owns or has the right to acquire
beneficial ownership of, 20% or more of the outstanding voting capital stock of
Ralcorp. "Ralcorp Superior Proposal" means a bona fide Ralcorp Acquisition
Proposal made by a third party which was not solicited by Ralcorp, its
subsidiaries, representatives or other affiliates and which, in the good faith
judgment of Ralcorp's Board of Directors, taking into account, to the extent
deemed appropriate by Ralcorp's Board of Directors, the various legal, financial
and regulatory aspects of the proposal and the person making such proposal (A)
if accepted, is reasonably likely to be consummated, and (B) if consummated, is
reasonably likely to result in a transaction that is more favorable to Ralcorp's
shareholders (in their capacity as shareholders), from a financial point of
view, than the transactions contemplated by this Agreement.
(d) If the Ralcorp Board of Directors is prepared to accept a Ralcorp
Superior Proposal, then Ralcorp shall give Agribrands 48 hours notice that
Ralcorp is prepared to accept the Ralcorp Superior Proposal, provided that
Ralcorp may not definitively accept a Ralcorp Superior Proposal unless Ralcorp
concurrently therewith terminates this Agreement pursuant to Section 10.1(f)
and, concurrently with such termination, makes the payment required by Section
10.2(d).
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7.11. SEC and Shareholder Filings.
Ralcorp shall send to Agribrands a copy of all public reports and
materials as and when it sends the same to its shareholders, the SEC or any
state or foreign securities commission.
7.12. Affiliate Agreements.
Ralcorp shall use reasonable best efforts to ensure that each person
who is or may be an "affiliate" of Ralcorp within the meaning of Rule 145
promulgated under the Securities Act shall enter into an agreement in customary
form.
7.13. Takeover Statutes.
If any Takeover Statute is or may become applicable to the Ralcorp
Merger or the transactions contemplated hereby, Ralcorp and the members of its
Board of Directors will grant such approvals and will take such other actions as
are necessary so that the Ralcorp Merger and the other transactions contemplated
by this Agreement may be consummated as promptly as practicable on the terms
contemplated hereby and will otherwise act to eliminate or minimize the effects
of any Takeover Statute on the Ralcorp Merger and any of the transactions
contemplated hereby.
7.14. Comfort Letters. Upon the request of Agribrands, Ralcorp shall
use its reasonable best efforts to provide to Agribrands on or prior to the
Closing Date "comfort letters" from the independent certified public accountants
for Ralcorp and the Ralcorp Subsidiaries, dated the date on which the
Registration Statement, or last amendment thereto, shall become effective, and
dated the Closing Date, addressed to the Board of Directors of each of
Agribrands and Ralcorp, covering such matters as Agribrands shall reasonably
request with respect to facts concerning the financial condition of Ralcorp and
the Ralcorp Subsidiaries as are customary for certified public accountants to
deliver in connection with a transaction similar to the Ralcorp Merger.
ARTICLE VIII
ADDITIONAL COVENANTS OF AGRIBRANDS AND RALCORP WITH RESPECT TO HOLDING COMPANY
Agribrands and Ralcorp covenant and agree that they will take the
necessary actions prior to the Effective Time to cause Holding Company to do the
following:
8.1. Director and Officer Liability.
(a) Holding Company shall indemnify and hold harmless and
advance expenses to the present and former officers and directors of Agribrands
and Ralcorp, and each person who prior to the Effective Time becomes an officer
or director of Agribrands or Ralcorp (each an "Indemnified Person"), in respect
41
of acts or omissions by them in their capacities as such occurring at or prior
to the Effective Time (including, without limitation, for acts or omissions
occurring in connection with this Agreement and the consummation of the Mergers)
to the fullest extent permissible under applicable law (collectively, the
"Indemnified Losses"). Without limiting the generality of the foregoing, the
Indemnified Losses shall include reasonable costs of prosecuting a claim under
this Section 8.1(a). Holding Company shall periodically advance or reimburse
each Indemnified Person for all reasonable fees and expenses of counsel
constituting Indemnified Losses as such fees and expenses are incurred; provided
that such Indemnified Person shall agree to promptly repay to Holding Company
the amount of any such reimbursement if it shall be judicially determined by
judgment or order not subject to further appeal or discretionary review that
such Indemnified Person is not entitled to be indemnified by Holding Company in
connection with such matter.
(b) For six years after the Effective Time, Holding Company
shall provide officers' and directors' liability insurance in respect of acts or
omissions occurring prior to the Effective Time (including, without limitation,
for acts or omissions occurring in connection with this Agreement and the
consummation of the Mergers) covering each such Indemnified Person currently
covered by Agribrands' officers' and directors' liability insurance policy (with
respect to officers and directors of Agribrands) or by Ralcorp's officers' and
directors' liability insurance policy (with respect to officers and directors of
Ralcorp) on terms with respect to coverage and amount (including with respect to
the payment of attorney's fees) no less favorable than those of such policy in
effect on the date hereof (which policies have been made available by Agribrands
and Ralcorp to each other and to Holding Company); provided that if the
aggregate annual premiums for such insurance during such period shall exceed
200% of the per annum rate of premium paid by Agribrands (with respect to the
liability insurance policies of the officers and directors of Agribrands) or
Ralcorp (with respect to the liability insurance policies of the officers and
directors of Ralcorp) as of the date hereof for such insurance, then Holding
Company shall provide a policy with the best coverage as shall then be available
at 200% of such rate.
(c) The rights of each Indemnified Person and his or her heirs
and legal representatives under this Section 8.1 shall be in addition to any
rights such Person may have under the articles of incorporation or bylaws of
Agribrands (with respect to the Agribrands officers and directors) or Ralcorp
(with respect to the Ralcorp officers and directors), any agreement providing
for indemnification, or under the laws of the State of Missouri or any other
applicable Laws. These rights shall survive consummation of the Mergers and are
intended to benefit, and shall be enforceable by, each Indemnified Person.
8.2. Listing of Stock.
Holding Company shall use its reasonable best efforts to cause
(i) the shares of Holding Company Common Stock to be registered under the
Securities Act and issued in connection with the Mergers (and the shares of
Holding Company Common Stock underlying the securities to be issued pursuant to
Section 3.5) to be approved for listing on the NYSE, subject to official notice
42
of issuance, and (ii) the securities of Agribrands and Ralcorp to be de-listed
from NYSE in connection with the Closing.
8.3. Registration Statement; Prospectus/Proxy Statement.
Agribrands, Ralcorp and Holding Company shall cooperate and promptly prepare and
Holding Company shall file with the SEC as soon as practicable a Registration
Statement on Form S-4 or other applicable form (the "Form S-4") under the
Securities Act, with respect to Holding Company Common Stock issuable in the
Mergers, a portion of which Registration Statement shall also serve as the joint
proxy statement with respect to the Agribrands Shareholder Meeting and Ralcorp
Shareholder Meeting (the "Proxy Statement/Prospectus"). The respective parties
will cause the Proxy Statement/Prospectus and the Form S-4 to comply as to form
in all material respects with the applicable provisions of the Securities Act,
the Exchange Act and the rules and regulations thereunder. Holding Company shall
use all reasonable efforts, and Agribrands and Ralcorp will cooperate with
Holding Company, to have the Form S-4 declared effective by the SEC as promptly
as practicable and to keep the Form S-4 effective as long as is necessary to
consummate the Mergers. Holding Company shall, as promptly as practicable,
provide copies of any written comments received from the SEC with respect to the
Form S-4 to Agribrands and Ralcorp and advise Agribrands and Ralcorp of any
verbal comments with respect to the Form S-4 received from the SEC. Holding
Company shall use its best efforts to obtain, prior to the effective date of the
Form S-4, all necessary state securities law or "Blue Sky" permits or approvals
required to carry out the transactions contemplated by this Agreement and will
pay all expenses incident thereto. Holding Company agrees that the Proxy
Statement/Prospectus and each amendment or supplement thereto at the time of
mailing thereof and at the time of the Agribrands Shareholder Meeting and
Ralcorp Shareholder Meeting, or, in the case of the Form S-4 and each amendment
or supplement thereto, at the time it is filed or becomes effective, will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the foregoing shall not apply to the extent that any such untrue
statement of a material fact or omission to state a material fact was made by
Holding Company in reliance upon and in conformity with written information
concerning Agribrands and/or Ralcorp furnished to Holding Company by Agribrands
and/or Ralcorp specifically for use in the Proxy Statement/Prospectus.
Agribrands and Ralcorp agree that the written information provided by them for
inclusion in the Proxy Statement/Prospectus and each amendment or supplement
thereto, at the time of mailing thereof and at the time of the Agribrands
Shareholder Meeting and Ralcorp Shareholder Meeting, or, in the case of written
information concerning either Agribrands or Ralcorp for inclusion in the Form
S-4 or any amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No amendment or supplement to the Proxy Statement/Prospectus
will be made by Holding Company without the approval of Agribrands and Ralcorp.
Holding Company will advise Agribrands and Ralcorp, promptly after it receives
notice thereof, of the time when the Form S-4 has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Holding Company Common Stock issuable in
43
connection with the Mergers for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement/Prospectus or the Form
S-4 or comments thereon and responses thereto or requests by the SEC for
additional information. Whenever any event or condition affecting Agribrands or
Ralcorp occurs that is required to be set forth in an amendment or supplement to
the Proxy Statement/Prospectus, such party will promptly inform the other of
such occurrence and cooperate in filing with the SEC or its staff or any other
government officials, and in mailing to shareholders of Agribrands and Ralcorp,
such amendment or supplement.
8.4. Tax Treatment. Holding Company shall use its reasonable best
efforts to cause the Ralcorp Merger and the Agribrands Merger to qualify as
either, and will not take any action which to its knowledge could reasonably be
expected to prevent the Ralcorp Merger and the Agribrands Merger from qualifying
as either, a reorganization under Section 368(a) of the Code or as an exchange
under Section 351(a) of the Code. Prior to the Effective Time, Holding Company
shall provide tax counsel to Agribrands and Ralcorp rendering an opinion under
Section 9.1.8 below with such certificates concerning such factual matters as
such counsel identifies are relevant to its opinion.
8.5. Shareholder Rights Agreement. Holding Company shall use its
reasonable best efforts to have adopted prior to the Effective Time a
shareholder rights agreement so that the holders of Agribrands Common Stock and
Ralcorp Common Stock who receive shares of Holding Company Common Stock pursuant
to the terms hereof will also receive associated rights that are similar to the
rights as provided by the Agribrands Rights Agreement and the Ralcorp Rights
Agreement.
ARTICLE IX.
CONDITIONS
9.1. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Mergers shall be subject to the
fulfillment or waiver on or prior to the Closing Date of the following
conditions:
9.1.1. Shareholder Approvals. The Agribrands Proposals shall
have been approved at or prior to the Effective Time by the requisite
vote of the shareholders of Agribrands in accordance with the Missouri
Code and the Agribrands' Articles of Incorporation and the Ralcorp
Proposals shall have been approved by the requisite vote of the
shareholders of Ralcorp in accordance with the Missouri Code and
Ralcorp's Articles of Incorporation.
9.1.2. No Injunction or Action. No order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction shall
have been enacted, entered, promulgated or enforced by any court or
other Governmental Authority, which prohibits or prevents the
consummation of the Mergers and which has not been vacated, dismissed
44
or withdrawn by the Effective Time. Agribrands and Ralcorp shall use
their reasonable best efforts to have any of the foregoing vacated,
dismissed or withdrawn on or prior to the Effective Time.
9.1.3. Governmental Approvals. All Consents of any
Governmental Authority required for the consummation of the Mergers and
the transactions contemplated by this Agreement shall have been
obtained by Final Order (as hereafter defined), except as may be waived
by Agribrands and Ralcorp or those Consents the failure of which to
obtain will not have a Holding Company Material Adverse Effect (as
defined below). The term "Final Order" with respect to any Consent of a
Governmental Authority shall mean an action by the appropriate
Governmental Authority as to which: (i) no request for stay by such
Governmental Authority of the action is pending, no such stay is in
effect, and, if any deadline for filing any such request is designated
by statute or regulation, it has passed; (ii) no petition for rehearing
or reconsideration of the action is pending before such Governmental
Authority, and no appeal or comparable administrative remedy with such
or any other Governmental Authority is pending before such Governmental
Authority, and the time for filing any such petition, appeal or
administrative remedy has passed; (iii) such Governmental Authority
does not have the action under reconsideration on its own motion and
the time for such reconsideration has passed; and (iv) no appeal to a
court, or request for stay by a court, of the Governmental Authority
action is pending or in effect, and if any deadline for filing any such
appeal or request is designated by statute or rule, it has passed.
9.1.4. HSR Act. The waiting period applicable to the Mergers
under the HSR Act shall have expired or earlier termination thereof
shall have been granted, and no action, suit, proceeding or
investigation shall have been instituted by either the United States
Department of Justice or the Federal Trade Commission to prevent the
consummation of the transactions contemplated by this Agreement or to
modify or amend such transactions in any material manner, or if any
such action shall have been instituted, it shall have been withdrawn or
a Final Order having the effect of permitting the consummation of the
transactions contemplated by this Agreement shall have been entered
against such Department or Commission, as the case may be.
9.1.5. Required Consents. Any required Consents of any person
to the Mergers or the transactions contemplated hereby as described in
Sections 4.5, 4.6, 5.5 and 5.6 shall have been obtained and be in full
force and effect, except for those the failure of which to obtain will
not have a material adverse effect on the business, assets (including,
but not limited to, intangible assets), prospects, condition (financial
or otherwise), properties (including, but not limited to, intangible
properties), liabilities or the result of operations of the Holding
Company and its subsidiaries taken as a whole ("Holding Company
Material Adverse Effect").
9.1.6. Registration Statement. The Registration Statement
shall have been declared effective and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
45
no action, suit, proceeding or investigation for that purpose shall
have been initiated or threatened by any Governmental Authority.
9.1.7. Spin-Off Covenant. Agribrands shall have satisfied
its post spin-off covenant to Ralston Purina by delivering to Ralston
Purina (i) an opinion of tax counsel in form and substance satisfactory
to Ralston Purina (which opinion shall recite that it may be relied
upon by Ralcorp) or (ii) a supplemental ruling from the IRS that the
transactions contemplated by this Agreement would not cause Agribrands'
spin-off from Ralston Purina to be a taxable transaction.
9.1.8. Tax Opinion. Ralcorp shall have received an opinion
from its tax counsel, in form and substance reasonably satisfactory to
Ralcorp and on the basis of facts, representations and assumptions set
forth in such opinion, substantially to the effect that the Ralcorp
Merger will qualify either as a reorganization within the meaning of
Section 368(a) of the Code or, taken together with the Agribrands
Merger, as an exchange under Section 351(a) of the Code, and Agribrands
shall have received an opinion from its tax counsel, in form and
substance reasonably satisfactory to Ralcorp and on the basis of facts,
representations and assumptions set forth in such opinion,
substantially to the effect that the Agribrands Merger will qualify
either as a reorganization within the meaning of Section 368(a) of the
Code or, taken together with the Ralcorp Merger, as an exchange under
Section 351(a) of the Code.
9.1.9. Dissenting Shares. At the Effective Time, the
Agribrands Dissenting Shares shall not exceed 5% of the outstanding
shares of Agribrands Common Stock and the Ralcorp Dissenting Shares
shall not exceed 5% of the outstanding shares of Ralcorp Common Stock.
9.1.10. Holding Company Acts. Holding Company shall have done
each of the things required for it to do pursuant to Article VIII of
this Agreement.
9.2. Conditions to Obligations of Agribrands. The obligation of
Agribrands to effect the Agribrands Merger shall be subject to the fulfillment
on or prior to the Closing Date of the following additional conditions, any one
or more of which may be waived by Agribrands:
9.2.1. Ralcorp Representations and Warranties. As of the
Closing Date, none of the representations or warranties of Ralcorp
contained in this Agreement, disregarding any qualifications herein
regarding materiality or Ralcorp Material Adverse Effect, shall be
untrue or incorrect as of the Closing Date, except to the extent such
representations and warranties speak as of an earlier date, to the
extent that such untrue or incorrect representations or warranties,
when taken together as a whole, have had or would reasonably be
expected to have a Ralcorp Material Adverse Effect.
9.2.2. Performance by Ralcorp. Ralcorp shall have performed
and complied with all of the covenants and agreements in all material
respects and satisfied in all material respects all of the conditions
46
required by this Agreement to be performed or complied with or
satisfied by Ralcorp on or prior to the Closing Date.
9.2.3. No Material Adverse Change. There shall not have
occurred after the date hereof any Event (except for those Events
caused by (y) conditions affecting the store brand and value brand
grocery product industry in the regions in which Ralcorp operates or
(z) the pendency or announcement of this Agreement, or the transactions
contemplated hereby) that has had or reasonably would be expected to
have a Ralcorp Material Adverse Effect.
9.2.4. Certificates and Other Deliveries. Ralcorp shall have
delivered to Agribrands (i) a certificate executed on its behalf by its
Chief Executive Officer to the effect that the conditions set forth in
Subsections 9.2.1, 9.2.2 and 9.2.3, above, have been satisfied; (ii) a
certificate of good standing from the Secretary of State of the State
of Missouri stating that Ralcorp is a validly existing corporation in
good standing; (iii) duly adopted resolutions of the Board of Directors
of Ralcorp approving the execution, delivery and performance of this
Agreement and the instruments contemplated hereby and of the
shareholders of Ralcorp approving the Ralcorp Proposals, each certified
by the Secretary or an Assistant Secretary of Ralcorp; (iv) a true and
complete copy of the Articles of Incorporation of Ralcorp certified by
the Secretary of State of the State of Missouri, and a true and
complete copy of the Bylaws of Ralcorp certified by the Secretary or an
Assistant Secretary of Ralcorp; (v) the certificate referred to in
Section 8.5 hereof; and (vi) such other documents and instruments as
Agribrands reasonably may request.
9.2.5. Opinion of Ralcorp Counsel. Agribrands shall have
received a customary opinion of counsel to Ralcorp, in form and
substance reasonably satisfactory to Agribrands.
9.3. Conditions to Obligations of Ralcorp. The obligations of Ralcorp
to effect the Ralcorp Merger shall be subject to the fulfillment on or prior to
the Closing Date of the following additional conditions, any one or more of
which may be waived by Ralcorp:
9.3.1. Agribrands Representations and Warranties. As of the
Closing Date, none of the representations or warranties of Agribrands
contained in this Agreement, disregarding any qualifications herein
regarding materiality or Agribrands Material Adverse Effect shall be
untrue or incorrect as of the Closing Date, except to the extent such
representations and warranties speak as of an earlier date, to the
extent that such untrue or incorrect representations or warranties,
when taken together as a whole, have had or would reasonably be
expected to have an Agribrands Material Adverse Effect.
9.3.2. Performance by Agribrands. Agribrands shall have
performed and complied with all the covenants and agreements in all
material respects and satisfied in all material respects all the
47
conditions required by this Agreement to be performed or complied with
or satisfied by Agribrands on or prior to the Closing Date.
9.3.3. No Material Adverse Change. There shall have not
occurred after the date hereof any Event (except for those Events
caused by (x) conditions affecting national, regional or world
economies such as currency fluctuations (but excluding extraordinary
disruptions in regional or world economies or markets or US/foreign
currency exchange ratios involving multiple countries), (y) conditions
affecting the animal feed industry in the regions in which Agribrands
operates, or (z) the pendency or announcement of this Agreement, or the
transactions contemplated hereby) that has had or reasonably would be
expected to have an Agribrands Material Adverse Effect.
9.3.4. Certificates and Other Deliveries. Agribrands shall
have delivered, or caused to be delivered, to Ralcorp (i) a certificate
executed on its behalf by its Chief Executive Officer to the effect
that the conditions set forth in Subsections 9.3.1, 9.3.2 and 9.3.3,
above, have been satisfied; (ii) a certificate of good standing from
the Secretary of State of the State of Missouri stating that Agribrands
is a validly existing corporation in good standing; (iii) duly adopted
resolutions of the Board of Directors of Agribrands approving the
execution, delivery and performance of this Agreement and the
instruments contemplated hereby and of the shareholders of Agribrands
approving the Agribrands Proposals, certified by the Secretary or an
Assistant Secretary of Agribrands; (iv) a true and complete copy of the
Articles of Incorporation of Agribrands certified by the Secretary of
State of the State of Missouri, and a true and complete copy of the
Bylaws of Agribrands certified by the Secretary or an Assistant
Secretary of Agribrands; (v) the certificate referred to in Section 8.5
hereof; and (vi) such other documents and instruments as Ralcorp
reasonably may request.
9.3.5. Opinion of Agribrands Counsel. Ralcorp shall have
received the opinion of counsel to Agribrands, in form and substance
reasonably satisfactory to Ralcorp.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement
and the Mergers by the shareholders of Agribrands and the shareholders of
Ralcorp:
(a) by mutual consent of Agribrands and Ralcorp;
(b) (1) by Agribrands (provided that Agribrands is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein), if there has been a breach by Ralcorp of any of its
representations, warranties, covenants or agreements contained in this
48
Agreement, or any such representation and warranty shall have become untrue, in
any such case such that Section 9.2.1 or Section 9.2.2 will not be satisfied
and, in either such case, such breach or condition has not been promptly cured
within 30 days following receipt by Ralcorp of written notice of such breach;
(2) by Ralcorp (provided that Ralcorp is not then in material breach of any
representation, warranty, covenant or other agreement contained herein), if
there has been a breach by Agribrands of any of its representations, warranties,
covenants or agreements contained in this Agreement, or any such representation
and warranty shall have become untrue, in any such case such that Section 9.3.1
or Section 9.3.2 will not be satisfied and such breach or condition has not been
promptly cured within 30 days following receipt by Agribrands of written notice
of such breach;
(c) by either Ralcorp or Agribrands if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction, any arbitrator or any Governmental Authority preventing or
prohibiting consummation of the Mergers shall have become final and
nonappealable (so long as the party seeking termination is not in breach of
Section 6.5 or Section 7.5 hereof);
(d) by either Ralcorp or Agribrands if the Mergers shall not
have been consummated before March 31, 2001 unless the failure of the Effective
Time to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe in all material respects the
covenants and agreements of such party set forth herein;
(e) by either Ralcorp or Agribrands if the transactions
contemplated by this Agreement shall fail to receive the requisite vote for
approval and adoption (1) by the shareholders of Agribrands at the Agribrands
Shareholders Meeting or any adjournment or postponement thereof or (2) by the
shareholders of Ralcorp at the Ralcorp Shareholders Meeting or any adjournment
or postponement thereof; provided that the right to terminate this Agreement
under this Section 10.1(e) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of such approval to have been obtained;
(f) By either Agribrands or Ralcorp concurrently with its
acceptance of a Superior Proposal; or
(g) By either Agribrands or Ralcorp, if the Board of Directors
of the other shall have withdrawn, or modified or changed in a manner adverse to
the terminating party its approval or recommendation of the Agribrands or
Ralcorp Merger and/or the Agribrands or Ralcorp Proposals, each as the case may
be.
10.2. Effect of Termination.
(a) In the event of the termination of this Agreement by
either Agribrands or Ralcorp pursuant to Section 10.1, this Agreement shall
forthwith become void, there shall be no liability under this Agreement on the
part of Ralcorp or Agribrands, other than the provisions of this Section 10.2,
Section 11.1 and Section 11.7, and except to the extent that such termination
49
results from the willful and material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
(b) Agribrands and Ralcorp agree that Ralcorp shall pay to
Agribrands the sum of $5 million (the "Agribrands Termination Fee") solely as
follows: (1) if all of the following occur (A) Agribrands or Ralcorp shall
terminate this Agreement pursuant to Section 10.1(d) or (e)(2), in either case
where Ralcorp's shareholders have failed to approve the transactions
contemplated by this Agreement and, if the Agribrands Shareholders Meeting has
been held, Agribrands' shareholders have approved such transactions, (B) at any
time after the date of this Agreement and prior to Ralcorp Shareholders Meeting,
if any, there shall have been publicly announced a Ralcorp Acquisition Proposal,
(C) Agribrands shall not at any time prior to the Agribrands Shareholders
Meeting have withdrawn, or modified or changed in a manner adverse to Ralcorp,
its approval or recommendation of the Agribrands Merger and (D) within nine
months of the termination of this Agreement, Ralcorp enters into a definitive
agreement with respect to such Ralcorp Acquisition Proposal, (2) if Ralcorp
shall terminate this Agreement pursuant to Section 10.1(f), or (3) if Agribrands
shall terminate this Agreement pursuant to Section 10.1(g), unless Ralcorp's
Board of Directors' withdrawal, or modification or change to its approval or
recommendation of the Ralcorp Merger and/or the Ralcorp Proposals was as a
result of any Event (except for those Events caused by (x) conditions affecting
national, regional or world economies such as currency fluctuations (but
excluding extraordinary disruptions in regional or world economies or markets or
US/foreign currency exchange ratios involving multiple countries), (y)
conditions affecting the animal feed industry in the regions in which Agribrands
operates, or (z) the pendency or announcement of this Agreement, or the
transactions contemplated hereby) that has had or reasonably would be expected
to have an Agribrands Material Adverse Effect.
(c) The Agribrands Termination Fee required to be paid
pursuant to Section 10.2(b)(1) shall be paid to Agribrands not later than five
Business Days after Ralcorp enters into a definitive agreement with respect to a
Ralcorp Acquisition Proposal. The Agribrands Termination Fee to be paid to
Agribrands pursuant to Section 10.2(b)(2) shall be paid to Agribrands
concurrently with notice of termination of this Agreement by Ralcorp. The
Agribrands Termination Fee to be paid to Agribrands pursuant to Section
10.2(b)(3) shall be paid to Agribrands no later than five Business Days after
Ralcorp's receipt of notice of termination of this Agreement by Agribrands. All
payments under Section 10.2 (b) shall be made by wire transfer of immediately
available funds to an account designated by Agribrands.
(d) Agribrands and Ralcorp agree that Agribrands shall pay to
Ralcorp the sum of $5 million (the "Ralcorp Termination Fee") solely as follows:
(1) if all of the following occur (A) Agribrands or Ralcorp shall terminate this
Agreement pursuant to Section 10.1(d) or (e)(1), in either case where
Agribrands' shareholders have failed to approve the transactions contemplated by
this Agreement and, if the Ralcorp Shareholders Meeting has been held, Ralcorp's
shareholders have approved such transactions, (B) at any time after the date of
this Agreement and prior to Agribrands Shareholders Meeting, if any, there shall
have been publicly announced an Agribrands Acquisition Proposal, (C) Ralcorp
50
shall not at any time prior to the Ralcorp Shareholders Meeting have withdrawn,
or modified or changed in a manner adverse to Agribrands, its approval or
recommendation of the Ralcorp Merger and (D) within nine months of the
termination of this Agreement, Agribrands enters into a definitive agreement
with respect to such Agribrands Acquisition Proposal, (2) if Agribrands shall
terminate this Agreement pursuant to Section 10.1(f), or (3) if Ralcorp shall
terminate this Agreement pursuant to Section 10.1(g), unless Agribrands' Board
of Directors' withdrawal, or modification or change to its approval or
recommendation of the Agribrands Merger and/or the Agribrands Proposals was as a
result of any Event (except for those Events caused by (y) conditions affecting
the store brand and value brand grocery product industry in the regions in which
Ralcorp operates, or (z) the pendency or announcement of this Agreement, or the
transactions contemplated hereby) that has had or reasonably would be expected
to have a Ralcorp Material Adverse Effect.
(e) The Ralcorp Termination Fee required to be paid pursuant
to Section 10.2(d)(1) shall be paid to Ralcorp not later than five Business Days
after Agribrands enters into a definitive agreement with respect to an
Agribrands Acquisition Proposal. The Ralcorp Termination Fee to be paid pursuant
to Section 10.2(d)(2) shall be paid to Ralcorp concurrently with notice of
termination of this Agreement by Agribrands. The Ralcorp Termination Fee to be
paid to Ralcorp pursuant to Section 10.2(d)(3) shall be paid to Ralcorp no later
than five Business Days after Agribrands' receipt of notice of termination of
this Agreement by Ralcorp. All payments under Section 10.2(d) shall be made by
wire transfer of immediately available funds to an account designated by
Ralcorp.
ARTICLE XI.
MISCELLANEOUS
11.1. Confidentiality. Unless (i) otherwise expressly provided in
this Agreement, (ii) required by applicable Law, (iii) necessary to secure any
required Consents as to which the other party has been advised, or (iv)
consented to in writing by Ralcorp and Agribrands, this Agreement and any
information or documents furnished in connection herewith shall be kept strictly
confidential by Agribrands and the Agribrands Subsidiaries, Ralcorp and the
Ralcorp Subsidiaries, and their respective officers, directors, employees and
agents. Prior to any disclosure pursuant to the preceding sentence, the party
intending to make such disclosure shall consult with the other party to the
extent practicable regarding the nature and extent of the disclosure. Subject to
the preceding sentence, nothing contained herein shall preclude disclosures to
the extent necessary to comply with accounting, SEC and other disclosure
obligations imposed by applicable Law. To the extent required by such disclosure
obligations, Ralcorp or Agribrands, after consultation with the other party to
the extent practicable, may file with the SEC any written communications
relating to the Mergers and the transactions contemplated hereby pursuant to
Rule 425 promulgated under the Securities Act. Ralcorp and Agribrands shall
cooperate with the other and provide such information and documents as may be
required in connection with any such filings. In the event the Mergers are not
51
consummated, Ralcorp and Agribrands shall return to the other all documents
furnished by the other and all copies thereof made by such party and will hold
in absolute confidence all information obtained from the other party except to
the extent (i) such party is required to disclose such information by Law or
such disclosure is necessary in connection with the pursuit or defense of a
claim, (ii) such information was known by such party prior to such disclosure or
was thereafter developed or obtained by such party independent of such
disclosure, (iii) such party received such information on a non-confidential
basis from a source, other than the other party, which is not known by such
party to be bound by a confidentiality obligation with respect thereto or (iv)
such information becomes generally available to the public or is otherwise no
longer confidential. Prior to any disclosure of information pursuant to the
exception in clause (i) of the preceding sentence, the party intending to
disclose the same shall so notify the party which provided the same to the
extent practicable in order that such party may seek a protective order or other
appropriate remedy should it choose to do so.
11.2. Amendment and Modification. To the extent permitted by
applicable Law, this Agreement may be amended, modified or supplemented only by
a written agreement among Agribrands, Ralcorp and Holding Company, whether
before or after approval of this Agreement and the Merger Agreement by the
shareholders of Agribrands and Ralcorp, except that following approval by the
shareholders of either Agribrands or Ralcorp, there shall be no amendment or
change to the provisions hereof with respect to the Merger Consideration without
further approval by such approving shareholders, and no other amendment shall be
made which by law requires further approval by such shareholders without such
further approval.
11.3. Waiver of Compliance; Consents. Any failure of Agribrands on
the one hand, or Ralcorp on the other hand, to comply with any obligation,
covenant, agreement or condition herein may be waived by Ralcorp on the one
hand, or Agribrands on the other hand, only by a written instrument signed by
the party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Any failure of the Holding Company to comply with any obligation,
covenant, agreement or condition herein may be waived only by a written
instrument signed by both Ralcorp and Agribrands, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits consent
by or on behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in this Section 11.3.
11.4. Survival of Representations and Warranties. The respective
representations and warranties of Agribrands and Ralcorp contained herein or in
any certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement, notwithstanding any
investigation made or information obtained by the other party, but shall
terminate at the Effective Time.
52
11.5. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to Agribrands, to:
Agribrands International, Inc.
9811 South Forty Dr.
St. Louis, Missouri 63124
Attention: Chairman of the Board, Chief Executive
Officer and President
Telecopy: (314) 812-0409
with a copy to:
Latham & Watkins
633 West 5th Street, Suite 4000
Los Angeles, CA 90071
Attention: Gary Olson, Esq.
Telecopy: (213) 891-8763
and with a copy to:
Bryan Cave LLP
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
Attention: Don G. Lents, Esq.
Telecopy: (314) 259-2020
and
(ii) if to Ralcorp, to:
Ralcorp Holdings, Inc.
800 Market Street
St. Louis, Missouri 63101
Attention: Chief Executive Officer
and President
Telecopy: (314) 877-7663
53
with a copy to:
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, CA 90071
Attention: Andrew E. Bogen, Esq.
Telecopy: (213) 229-7520
and with a copy to:
Bryan Cave LLP
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
Attention: Don G. Lents, Esq.
Telecopy: (314) 259-2020
11.6. Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the other parties hereto.
11.7. Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses, provided, however, that each of Ralcorp
and Agribrands shall pay one-half of the expenses related to printing, filing
and mailing the Form S-4 and the Proxy Statement/Prospectus, the fees and
expenses of Bryan Cave LLP and all SEC and other regulatory filing fees incurred
in connection with the Mergers or the issuance of the Holding Company Common
Stock. Without limiting the generality of the foregoing, Agribrands agrees to
pay all fees and expenses incurred in connection with obtaining the IRS
supplemental ruling or opinion of tax counsel referred to in Section 6.15 above.
11.8. Governing Law. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed and governed by and in
accordance with the internal laws of, the State of Missouri, and the parties
hereto consent to the jurisdiction of the courts of or in the State of Missouri
in connection with any dispute or controversy relating to or arising out of this
Agreement and the transactions contemplated hereby.
11.9. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11.10. Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
54
interpretation of this Agreement. No rule of construction shall apply to this
Agreement which construes ambiguous language in favor of or against any party by
reason of that party's role in drafting this Agreement. As used in this
Agreement, (i) the term "person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a limited liability company, a
trust, an association, an unincorporated organization, a Governmental Authority
and any other entity; (ii) the term "Affiliate," with respect to any person,
shall mean and include any person controlling, controlled by or under common
control with such person; and (iii) the term "subsidiary" of any specified
person shall mean any corporation 50 percent or more of the outstanding voting
power of which, or any partnership, joint venture, limited liability company or
other entity 50 percent or more of the total equity interest of which, is
directly or indirectly owned by such specified person.
11.11. Entire Agreement. This Agreement and the other agreements,
documents or instruments referred to herein or executed in connection herewith
including, but not limited to, the Agribrands Disclosure Schedule and Ralcorp
Disclosure Schedule, which schedules are incorporated herein by reference,
embody the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants, or undertakings, other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and the understandings between the parties with respect to such
subject matter.
11.12. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions in this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches hereof or
thereof and to enforce specifically the terms and provisions hereof or thereof
in any court of the United States or any state having jurisdiction, this being
in addition to any other right or remedy to which such party may be entitled
under this Agreement, at law or in equity.
11.13. Third Parties. Nothing contained in this Agreement or in any
instrument or document executed by any party in connection with the transactions
contemplated hereby shall create any rights in, or be deemed to have been
executed for the benefit of, any person that is not a party hereto or thereto,
or, a successor or permitted assign of such a party; provided, however, that the
parties hereto specifically acknowledge that the provisions of Section 8.1
above, are intended to be for the benefit of, and shall enforceable by, the
officers and directors of Agribrands and/or the Agribrands Subsidiaries and of
Ralcorp and/or the Ralcorp Subsidiaries affected thereby and their heirs and
representatives.
[Remainder of Page Intentionally Left Blank]
55
IN WITNESS WHEREOF, Agribrands and Ralcorp have caused this Agreement
to be signed and delivered by their respective duly authorized officers as of
the date first above written.
AGRIBRANDS INTERNATIONAL, INC.
By: /s/ W.P. Stiritz
---------------------------------------
Name: W.P. Stiritz
-------------------------------------
Title: Chief Executive Officer and President
--------------------------------------
RALCORP HOLDINGS, INC.
By: /s/ J. R. Micheletto
-----------------------------------------
Name: J. R. Micheletto
---------------------------------------
Title: Chief Executive Officer and President
--------------------------------------
Schedule 1.2
DIRECTORS OF HOLDING COMPANY
William P. Stiritz - Chairman
David R. Banks
William D. George
Jack W. Goodall
M. Darrell Ingram
David W. Kemper
H. Davis McCarty
Joe R. Micheletto
Jay W. Brown
Martin K. Sneider
EXHIBIT A
FORM OF
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated _________, 2000,
between [Agribrands International, Inc./Ralcorp Holdings, Inc.], a Missouri
corporation (the "Company"), and Merger Sub ____, a Missouri corporation
("Merger Sub ___").
WHEREAS, the Company has entered into an Agreement and Plan of
Reorganization dated as of August __, 2000 by and between _____, Inc., a
Missouri corporation ("_____") and the Company (the "Reorganization Agreement")
pursuant to which the Company and _____ agreed to form a holding company (the
"Holding Company") and the Company and _____ each agreed to merge with separate
wholly owned subsidiaries of Holding Company; and
WHEREAS, Holding Company formed Merger Sub __ for such purpose; and
WHEREAS, the Board of Directors of Merger Sub ___ and the Board of
Directors of the Company deem it advisable and in the best interests of the
Company and Merger Sub ____ respectively that Merger Sub ___ merge with and into
the Company, in accordance with Section 351.410 of The General and Business
Corporation Law of Missouri (the "Missouri Code"), upon the terms and subject to
the conditions of the Reorganization Agreement and this Agreement, and have
approved and adopted the Reorganization Agreement and this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereby agree, subject to
the terms and conditions hereinafter set forth, as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and conditions hereof, and in
accordance with the provisions of the Missouri Code, Merger Sub ____ shall be
merged with and into the Company (the "Merger") and the Company shall be the
surviving entity in the Merger (in this capacity, the "Surviving Entity"). The
Company shall continue its corporate existence under the laws of the State of
Missouri and shall become a direct, wholly owned subsidiary of Holding Company.
SECTION 1.02. Effective Time. As soon as practicable after approval of
the transactions contemplated by the Reorganization Agreement, Articles of
Merger with respect to the Merger shall be filed with the Secretary of State of
Missouri in accordance with the provisions of Section 351.430 of the Missouri
Code. The Merger shall be effective at such time as the Articles of Merger are
duly filed with the Secretary of State of the State of Missouri in accordance
with Sections 351.435 and 351.440 of the Missouri Code or at such later time as
is specified in the Articles of Merger (the "Effective Time").
SECTION 1.03. Certain Effects of the Merger. After the Effective Time
of the Merger (i) the separate existence of Merger Sub ____ shall cease and
Merger Sub ____ shall be merged with and into the Company and (ii) the Merger
shall have all the effects set forth in Section 351.450 of the Missouri Code.
SECTION 1.04. Articles of Incorporation and By-Laws. The Articles of
Incorporation and By-Laws of Merger Sub ___ as in effect immediately prior to
the Effective Time shall be the Articles of Incorporation and By-Laws of the
Surviving Entity until further amended or supplemented in accordance with their
respective terms and the provisions of the Missouri Code.
SECTION 1.05. Directors and Officers of the Surviving Entity. The
directors and officers of Merger Sub ____ immediately prior to the Effective
Time shall be the directors and officers of the Surviving Entity, until their
respective successors are duly elected and appointed or until their earlier
death, resignation or removal.
ARTICLE II
EFFECT OF MERGER ON CAPITAL STOCK
OF THE CONSTITUENT ENTITIES
SECTION 2.01. Conversion of Merger Sub__ Stock. Pursuant to Section
3.1 of the Reorganization Agreement, at the Effective Time by virtue of the
Merger and without any action on the part of any of the parties, each issued and
outstanding share of common stock, par value $0.01 per share, of Merger Sub ___
shall be converted into and shall become one share of common stock of the
Company.
SECTION 2.02. Conversion of the Company's Common Stock. Subject to the
provisions of this Agreement and the Reorganization Agreement, at the Effective
Time each issued and outstanding share of common stock, par value $0.01 per
share, of the Company together with the associated rights issued pursuant to the
Company's Rights Agreement (the "Common Stock"), shall be converted into, at the
election of the holder thereof as provided in the Reorganization Agreement, one
of the following:
(a) for each such share of Common Stock with respect to which an
election to receive cash has been effectively made and not revoked or lost,
pursuant to Section 3.3 of the Reorganization Agreement (the "Cash Election"),
the right to receive in cash from Holding Company, without interest, an amount
equal to $____ (the "Cash Consideration");
(b) for each such share of Common Stock (other than shares as to
which a Cash Election has been made), the right to receive ____ share[s] of
Holding Company Common Stock (the "Stock Election").
If the percentage of shares of the Company's Common Stock outstanding
immediately prior to the Effective Time for which Stock Elections were made (the
"Stock Election Percentage") is equal to or greater than 80%, then all shares of
the Company's Common Stock covered by Stock Elections shall be converted into
the right to receive shares of Holding Company Common Stock, and all shares of
the Company's Common Stock covered by Cash Elections shall be converted into the
right to receive the Cash Consideration.
If the Stock Election Percentage is less than 80%, then all shares of
the Company's Common Stock covered by Stock Elections shall be converted into
the right to receive shares of Holding Company Common Stock, and the shares for
which each holder made a Cash Election (the "Cash Election Shares") shall be
treated as follows:
(x) Such holder shall be deemed to have made the Stock Election
in respect of a fraction (not greater than one) of such holder's Cash Election
Shares, (i) the numerator of which is the difference of 80% minus the Stock
Election Percentage, and (ii) the denominator of which is the percentage of
shares of the Company's Common Stock outstanding immediately prior to the
Effective Time for which Cash Elections were made; and
(y) The balance of such holder's Cash Election Shares shall be
converted into the right to receive the Cash Consideration.
SECTION 2.03. Other Effects. The Merger shall have such other effects
as provided in the Reorganization Agreement, including, but not limited to, the
conversion of options to purchase the Company's Common Stock as provided in
Section 3.5 of the Reorganization Agreement.
ARTICLE III
CLOSING CONDITIONS
SECTION 3.01. Conditions to Closing. The obligations of the Company
and Merger Sub ____ are subject to the satisfaction or waiver on or before the
Closing Date (as defined in the Reorganization Agreement) of all agreements and
conditions contained in the Reorganization Agreement.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Amendment. This Agreement may not be amended except by
an instrument in writing signed on behalf of both parties.
SECTION 4.02. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Missouri, without
regard to its conflict of laws principles.
SECTION 4.03. Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION 4.04. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 4.05. Parties in Interest. This Agreement shall be binding
upon and inure to the benefit of each party hereto and their respective
successors, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 4.06. Capitalized Terms. All terms capitalized but not
otherwise defined herein shall have the same meanings herein as in the
Reorganization Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the day and year first above written.
[Agribrands International, Inc./Ralcorp Holdings, Inc..]
By:
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Merger Sub _______
By:
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