SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [__]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[_] Confidential. For use of the Commission only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AGRIBRANDS INTERNATIONAL INC.
--------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials:
$106,971
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[GRAPHIC OMITTED]
Agribrands International, Inc.
9811 South Forty Drive
St. Louis, Missouri 63124
Dear Shareholder:
We will hold a special meeting of the shareholders of Agribrands
International, Inc. on Thursday, April 26, 2001 at 10:00 am Central Daylight
Time at the offices of Agribrands, 9811 South Forty Drive, St. Louis, Missouri
63124, to consider and vote on a proposal to approve an Agreement and Plan of
Merger, dated as of December 1, 2000, by and among Cargill, Incorporated, a
Delaware corporation, Agribrands and Abacus Acquisition, Corp., a Missouri
corporation and wholly-owned subsidiary of Cargill. Under the Merger Agreement:
o Abacus will merge with and into Agribrands;
o Agribrands will continue as the surviving corporation and will become
a wholly-owned subsidiary of Cargill; and
o each share of Agribrands common stock issued and outstanding at the
effective time of the merger (other than shares held by Agribrands
shareholders who properly exercise their dissenters' rights under
Missouri law) will be converted into the right to receive $54.50 per
share in cash, without interest.
Under the General and Business Corporation Law of Missouri, the affirmative
vote of holders of at least two-thirds of the outstanding shares of Agribrands
common stock is necessary to approve the merger.
Attached is a Notice of Special Meeting of Shareholders and a proxy
statement containing a discussion of the background of, reasons for and terms of
the merger. Please read this material carefully.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE SIGN AND
RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE. YOUR
FAILURE TO VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER WITH
CARGILL.
If you attend the special meeting, you may withdraw your proxy and vote in
person if you wish. Your vote is important regardless of the number of shares
you own.
AGRIBRANDS INTERNATIONAL, INC.
WILLIAM P. STIRITZ
William P. Stiritz
Chairman, Chief Executive Officer and President
This proxy statement is dated March 16, 2001, and is first being mailed to
shareholders of Agribrands on or about March 21, 2001.
Agribrands International, Inc.
9811 South Forty Drive
St. Louis, Missouri 63124
Notice of Special Meeting of Agribrands Shareholders
Thursday, April 26, 2001 at 10:00 am
at the offices of Agribrands,
9811 South Forty Drive, St. Louis, Missouri 63124
To the shareholders of Agribrands International, Inc.:
We will hold a special meeting of the shareholders of Agribrands International,
Inc. on April 26, 2001 at 10:00 a.m. Central Daylight Time at the offices of
Agribrands, 9811 South Forty Drive, St. Louis, Missouri 63124 for the following
purpose:
1. To consider and vote upon a proposal to approve an Agreement and Plan
of Merger dated December 1, 2000 by and among Cargill, Incorporated,
Abacus Acquisition Corp., a wholly-owned subsidiary of Cargill, and
Agribrands pursuant to which Abacus will merge with and into
Agribrands, and Agribrands will become a wholly-owned subsidiary of
Cargill as a result of the merger; and
2. To transact any other business that may properly come before the
special meeting or any adjournment or postponement of the special
meeting including, without limitation, potential adjournments or
postponements for the purpose of soliciting additional proxies in order
to approve proposal No. 1.
The proposed merger is described in the attached proxy statement. Holders of
record of Agribrands common stock at the close of business on March 16, 2001,
the record date, are entitled to vote at the special meeting and any
adjournments or postponements of the special meeting. The approval of the merger
will require the affirmative vote of the holders of two-thirds of the shares of
Agribrands common stock outstanding on the record date.
Your vote is very important, regardless of the number of shares you own. Please
vote as soon as possible to make sure that your shares are represented at the
special meeting. To vote your shares, you should complete and return the
enclosed proxy card. If you are a holder of record, you may also cast your vote
in person at the special meeting. If your shares are held in an account at a
brokerage firm or bank, you must instruct your bank or broker on how to vote
your shares. In almost all cases, if you do not vote or do not instruct your
broker or bank on how to vote, it will have the same effect as voting against
the merger.
By Order of the Board of Directors,
AGRIBRANDS INTERNATIONAL, INC.
MICHAEL J. COSTELLO
Michael J. Costello
General Counsel and Secretary
March 16, 2001
TABLE OF CONTENTS
Questions and Answers About The Merger.........................................1
Summary........................................................................3
The Companies................................................................3
The Special Meeting..........................................................3
Information About The Merger.................................................4
Comparative Market Information:..............................................4
The Merger Agreement.........................................................5
Agribrands Selected Historical Financial Data..................................6
Forward Looking Statements.....................................................7
Introduction...................................................................8
The Special Meeting............................................................8
Date, Time and Place of The Special Meeting..................................8
Purpose of The Special Meeting...............................................8
Shareholder Record Date, Outstanding Shares and Voting Rights................8
Vote Required for Approval of The Merger Agreement; Quorum...................8
Proxies, Abstentions, and Related Matters....................................8
Revoking A Proxy.............................................................9
Voting In Person.............................................................9
Other Matters At The Special Meeting.........................................9
Costs of Solicitation........................................................9
The Merger....................................................................10
Background of The Transaction...............................................10
Agribrands' Reasons for The Merger..........................................16
Merger Financing............................................................18
Interests of Certain Persons In The Merger; Possible Conflicts of
Interest..................................................................18
Indemnification of Directors and officers...................................20
Amendment to Agribrands Rights Agreement....................................20
Opinion of Financial Advisor................................................20
Completion of The Merger....................................................25
Structure of The Merger and Conversion of Agribrands Stock..................25
Exchange of Stock Certificates Or Shares In Book Entry form for Cash........25
Treatment of Agribrands Stock Options and Other Equity Based Awards.........25
Material United States Federal Income Tax Consequences of The Merger........26
Governmental Approvals......................................................27
Dissenters' Rights..........................................................28
Delisting and Deregistration of Agribrands Common Stock After The
Merger....................................................................29
Shareholder Lawsuit Challenging The Ralcorp Merger..........................29
Ownership by Principal Holders, Members of The Board of Directors
and Management............................................................29
The Merger Agreement........................................................31
Conditions to The Merger....................................................31
No Other Transactions Involving Agribrands..................................33
Termination.................................................................34
Termination Fee.............................................................34
Representations and Warranties..............................................35
Covenants...................................................................35
Independent Public Accountants................................................35
Other Matters.................................................................35
No Annual Shareholder Meeting.................................................35
Shareholder Proposals.........................................................36
Where You Can Find More Information...........................................36
Merger Agreement.......................................Annex A
Opinion of Wasserstein Perella & Co., Inc. ............Annex B
Section 351.455, Missouri Revised Statutes.............Annex C
ii
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q What will happen in the merger?
A. A subsidiary of Cargill will merge with and into Agribrands. Agribrands
will continue as the surviving corporation and will become a wholly-owned
subsidiary of Cargill.
Q: What will I receive in the merger?
A. You will receive $54.50 in cash, without interest, for each share of
Agribrands common stock you own, unless you exercise dissenters' rights.
For example, if you own 100 shares of Agribrands common stock, upon
completion of the merger, you will receive $5,450 in cash.
Q What are the advantages of the merger to me?
A. You will receive an immediate cash premium for your shares of Agribrands
common stock that you may not otherwise receive in the future. The merger
consideration of $54.50 per share represents a 24% premium over the $43.81
closing price on December 1, 2000, the business day prior to our
announcement of the proposed merger with Cargill, and a 50.3% premium over
the $36.25 closing price on August 7, 2000, the business day prior to the
announcement of our earlier proposed merger with Ralcorp Holdings, Inc.
Q What are the disadvantages of the merger to me?
A. You will not have the opportunity to participate in any future increase in
Agribrands' value, but you will also not bear the risk of any decrease in
Agribrands' value. In addition, your receipt of the merger consideration
will be taxable to you. Generally, you will recognize a gain or loss in an
amount equal to the difference between the adjusted tax basis of your
shares and the amount of cash you receive in the merger.
Q. What do I need to do now?
A. After carefully reading and considering the information contained in this
proxy statement, please respond by completing, signing and dating your
proxy card and returning it in the enclosed envelope as soon as possible so
that your shares may be represented at the special meeting.
Q. What if I don't vote?
A. If you fail to respond, it will have the same effect as a vote against the
merger. If you return a signed proxy card but do not indicate how you want
to vote, your shares will be treated as present at the special meeting for
purposes of determining whether we satisfied the quorum requirement and
your proxy will be counted as a vote in favor of the merger. If you abstain
from voting, your shares will be treated as present for quorum purposes but
your abstention will have the same effect as a vote against the merger.
Q. How do I vote my shares held by a broker or bank?
A. Your broker or bank will provide you with instructions on how to vote via
vote instruction form, telephone or the Internet. If you have any concerns
on how to vote such shares, please contact your broker or bank.
Q. Can I change my vote after I have delivered my proxy?
A. Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You can do this in one of three ways:
o you can revoke your proxy;
o you can submit a new proxy; or
o if you are a holder of record, you can attend the special meeting
and vote in person.
If you choose either of the first two methods, you must submit your notice
of revocation or your new proxy to the Secretary of Agribrands before the
special meeting. If your shares are held in an account at a brokerage firm
or bank, you should contact your brokerage firm or bank to change your
vote. If you submit your proxy, you can change your vote by submitting a
new proxy at a later date, using the same procedures, in which case your
later submitted proxy will be recorded and your earlier proxy revoked.
Q. Do I need to have share certificates to vote or receive the merger
consideration?
A. No. Most Agribrands shareholders hold their shares in book entry form. If
you hold your shares in book entry form, you received a share account
statement with the number of shares in your account from Continental Stock
Transfer & Trust Company, our transfer agent and registrar, at the time of
our spin-off from Ralston Purina. All shareholders should receive a proxy
card which indicates the number of shares you hold and may vote. If the
merger is approved and we complete the merger, the paying agent will pay
you the merger consideration based upon the number of shares in your
account, unless you exercise your rights to dissent from the merger.
Q. Should I send in my stock certificates now?
A. No. If you have requested and hold your shares in certificated form, then,
after the merger is completed, you will receive written instructions from
the paying agent on how to obtain the merger consideration. Please do not
send in your stock certificates with your proxy card. As noted above, if
you hold your shares in book entry form, it will not be necessary to submit
a stock certificate to receive the merger consideration.
Q. Who can help answer my questions?
A. If you have any questions about the merger or how to submit your proxy, or
if you need additional copies of this proxy statement or the enclosed proxy
card, you should contact:
Georgeson Shareholder Communications Inc.
17 State Street, 10th Floor
New York, New York 10004-1501
Telephone: 1-800-223-2064 or 1-212-440-9800
Also, you may contact the company directly:
Agribrands International, Inc.
Shareholder Relations
9811 South Forty Dr.
St. Louis, Missouri 63124-1103
1-314-812-0590
2
SUMMARY
You should carefully read this entire proxy statement and the other
documents we refer to for a more complete understanding of the merger. In
particular, you should read the documents attached to this proxy statement,
including the Agreement and Plan of Merger which is attached as Annex A. In
addition, we incorporate by reference important business and financial
information about Agribrands into this proxy statement. You may obtain the
information incorporated by reference into this proxy statement without charge
by following the instructions in the section entitled "Where You Can Find More
Information" that begins on page 36 of this proxy statement.
The Companies
Agribrands International, Inc. (NYSE:AGX)
9811 South Forty Drive
St. Louis, Missouri 63124-1103
(314) 812-0500
http://www.agribrands.com*
Agribrands is a leader in the development and sale of animal feed as well
as other products critical to animal nutrition. Substantially all Agribrands
products are made and are sold outside of the United States. Our agricultural
products are predominantly value-added premium offerings and are generally
marketed outside of the United States under the "Purina"(R) and "Chow"(R)
trademarks and the "Checkerboard"(R) logo, and product names such as
"Omolene"(R), "Hi-Octane"(R) and "Promote"(R).
Cargill, Incorporated
15407 McGinty Road, West
Wayzata, Minnesota 55391
(952) 742-7575
http://www.cargill.com*
Cargill is a privately-owned international marketer, processor and
distributor of agricultural, food, financial and industrial products and
services with 85,000 employees in 60 countries. Cargill provides distinctive
customer solutions in supply chain management, food applications and health and
nutrition.
Abacus Acquisition Corp.
c/o Cargill, Incorporated
15407 McGinty Road, West
Wayzata, Minnesota 55391
(952) 742-7575
Abacus is a newly formed Missouri corporation that has not, to date,
conducted any activities other than those incident to its formation, the matters
contemplated by the Merger Agreement and the preparation of this proxy
statement. All the outstanding capital stock of Abacus is owned by Cargill.
The Special Meeting
o Date, Time and Place. The special meeting will be held at the offices
of Agribrands, 9811 South Forty Drive, St. Louis, Missouri 63124 on
April 26, 2001, at 10:00 a.m., Central Daylight Time.
o Purpose. The special meeting is being held so that shareholders of
Agribrands may consider and vote upon a proposal to approve a Merger
Agreement pursuant to which Agribrands will become a wholly-owned
subsidiary of Cargill in a cash merger.
o Record Date; Outstanding Shares. You are entitled to vote at the
special meeting if you owned shares of Agribrands common stock at the
close of business on March 16, 2001, the record date for the special
meeting. 9,813,851 shares of common stock were outstanding and
entitled to be voted on the record date.
3
o Vote Required. The affirmative vote of the holders of two-thirds of
the outstanding shares of Agribrands common stock is required to
approve the Merger Agreement.
See "The Special Meeting" on page 8.
Information About the Merger
o Transaction Structure. Under the Merger Agreement, a wholly-owned
subsidiary of Cargill will merge with and into Agribrands. Agribrands
will remain in existence as a wholly-owned subsidiary of Cargill. Each
share of Agribrands common stock will be converted (subject to
dissenters' rights) into the right to receive $54.50 in cash. See
"Structure of the Merger and Conversion of Agribrands Stock" on page
25.
o Board Approval. The Agribrands Board has determined that the merger is
fair to and in the best interests of Agribrands and its shareholders
and has approved the merger with Cargill. See "Agribrands' Reasons for
the Merger" on page 16. Board members Joe R. Micheletto and William P.
Stiritz abstained from voting on this matter because of their
positions with Ralcorp Holdings, Inc. and the effect of this matter on
the previously proposed merger with Ralcorp Holdings, Inc.
o Interests of Certain Persons in the Merger; Possible Conflicts of
Interest. Some of the directors and officers of Agribrands may have
interests in the merger that are different from, or are in addition
to, the interests of its shareholders generally. The interests include
the effect of the merger on certain benefit arrangements, including
the exercisability of stock options, positions as executives with
Cargill, the right to severance payments under specified conditions
and the right to continued indemnification. The Agribrands chief
executive officer and the next four highest paid executive officers of
Agribrands will receive an aggregate payment of $36,883,138 for their
stock options and stock appreciation rights. In addition, under
existing management continuity agreements, the chief executive officer
and those four executive officers could receive up to approximately
$8,000,000 in the aggregate in the event of their termination after
the merger. The directors will receive an aggregate payment of
$984,300 for their stock options. See "Interests of Certain Persons in
the Merger; Possible Conflicts of Interest" on page 18.
o Opinion of Financial Advisor. The Agribrands Board of Directors
considered the opinion of its financial advisor, Wasserstein Perella &
Co., Inc., that, as of the date of its opinion and subject to the
considerations referred to in its opinion, the amount per share to be
received by Agribrands shareholders in the merger is fair, from a
financial point of view, to Agribrands shareholders. See "Opinion of
Financial Advisor" on page 20.
o Federal Income Tax Consequences. The merger will be a taxable
transaction to you. For United States federal income tax purposes, you
will generally recognize gain or loss in the merger in an amount
determined by the difference between the cash you receive and your
adjusted tax basis in your Agribrands common stock. Because
determining the tax consequences of the merger can be complicated, you
should consult your own tax advisor in order to understand fully how
the merger will affect you. See "Material United States Federal Income
Tax Consequences of the Merger" on page 26.
o Governmental Matters. The merger is conditioned upon Agribrands
receiving and delivering to Ralston Purina Company a ruling from the
Internal Revenue Service ("IRS") that the merger will not have an
adverse impact on the tax-free treatment of Agribrands' 1998 spin-off
from Ralston Purina. A request for a supplemental ruling was filed
with the IRS on December 21, 2000. We also filed the information and
materials required under U.S. antitrust laws to notify the Department
of Justice and the Federal Trade Commission of the merger on December
21, 2000. The applicable waiting period under such laws expired on
January 20, 2001. We filed the required information and materials to
notify the European Union and Canada of the merger on January 18, 2001
and February 5, 2001 respectively. The initial period for the European
Union expired on February 19, 2001, and the review period for the
4
Canadian authorities will expire on April 12, 2001. See "Governmental
Approvals" on page 27.
o Dissenters' Rights. Under Missouri law, holders of shares of
Agribrands common stock are entitled to dissenters' rights in the
merger. See "Dissenters' Rights" on page 28.
Comparative Market Information
Shares of Agribrands common stock have traded on the New York Stock
Exchange since 1998. Agribrands has never paid dividends. The following table
sets forth comparative market price information as of December 1, 2000, the last
trading day before the public announcement of the merger, and as of March 15,
2001, the most recent date for which information was available at the time of
printing this proxy statement.
Agribrands Per Share
Date Price
- ----------------------------------------------- --------------------
December 1, 2000............................... $43.81
March 15, 2001 ................................ $53.99
The Merger Agreement
o Conditions to the Merger. Before we can complete the merger, a number
of conditions must be satisfied, including shareholder approval, the
receipt of the IRS revenue ruling discussed above, antitrust approval
and other conditions customary in this type of transaction. We expect
to consummate the merger as promptly as practicable after all of the
conditions to the merger have been satisfied or waived.
o Soliciting Other Transactions. The Merger Agreement permitted
Agribrands to solicit other bids until December 31, 2000. No other
bids or expressions of interest were received. The Merger Agreement
provides that, after that date, Agribrands may not actively solicit
alternative transactions or bids.
o Termination. The Merger Agreement may be terminated under specified
circumstances. Agribrands may be required to pay a termination fee of
$10 million in the event that the Merger Agreement is terminated.
See "The Merger Agreement" on page 31.
5
AGRIBRANDS
Selected Historical Financial Data
The selected historical financial data of Agribrands we provide below has
been derived from the audited historical consolidated financial statements and
related notes of Agribrands for each of the fiscal years in the five-year period
ended August 31, 2000 and the unaudited historical consolidated financial
statements and related notes of Agribrands for the first quarters ended November
30, 2000 and 1999. The selected historical data is only a summary, and you
should read it in conjunction with the historical financial statements and
related notes contained in the annual and quarterly reports of Agribrands.
Selected Historical Financial Data
(in Millions, except per share data)
Three Months
Ended November 30, Year Ended August 31,
------------------- ---------------------------------------------------------
2000 1999 2000 1999 1998 1997 1996
------------------ ----------- ----------- ---------- ---------- -----------
Statement of Earnings and Cash Flows Data
Tons of feed product sold ............... 1.2 1.2 4.8 5.0 5.2 5.1 4.8
Net sales ............................... $ 302.0 $ 300.9 $1,193.1 $1,261.5 $1,410.1 $1,527.6 $1,401.3
Income over ingredient cost ............. 83.8 88.3 334.6 356.7 345.8 361.7 333.3
Depreciation and amortization 6.0 6.3 25.2 24.8 21.2 21.9 20.4
................................
Merger expenses ......................... 6.2 - - - - - -
Provisions for restructuring ............ .6 - 1.4 - 3.0 3.2 8.3
Gain on sale of property ................ - - - (2.3) - - (3.6)
Interest expense ........................ 8 .9 3.0 8.0 12.0 10.9 13.0
Investment income ....................... (2.3) (2.5) (9.1) (10.2) (5.2) (4.2) (3.6)
Foreign exchange (gain)/loss ............ 1.5 .3 (.1) 1.5 12.8 3.7 8.3
Earnings before income taxes ............ 7.7 21.0 66.9 70.4 34.2 33.1 24.9
Income taxes ............................ 2.8 7.1 21.9 26.4 20.4 24.4 14.0
Net earnings (a)(b)(c) .................. $ 4.9 $ 13.9 $ 45.0 $ 44.0 $ 13.8 $ 8.7 $ 10.9
Earnings per share:
Basic (d) ............................. $ 0.50 $ 1.34 $ 4.46 $ 4.16 $ 1.29 $ 0.82 $ 1.02
Diluted (d) ........................... $ 0.48 $ 1.29 $ 4.33 $ 4.11 $ 1.29 $ 0.82 $ 1.02
Weighted average shares outstanding:.....
Basic (d) ............................. 9.8 10.4 10.1 10.6 10.7 10.7 10.7
Diluted (d) ........................... 10.1 10.8 10.4 10.7 10.7 10.7 10.7
Cash provided (used) by
Operations ............................ $ 14.8 $ 16.3 $ 39.7 $ 110.6 $ 33.3 $ 67.8 $ (18.3)
Investing activities .................. (8.0) (11.6) (26.1) (25.5) (62.8) (38.5) (36.1)
Financing activities .................. (7.9) (1.6) (15.6) (43.9) 145.2 (21.1) 61.1
Balance Sheet Data
Working capital ......................... $ 206.4 $ 198.1 $ 205.0 $ 193.7 $ 153.7 $ 46.7 $ 59.4
Net property ............................ 160.8 173.4 168.4 174.0 176.6 156.9 145.6
Additions (during the period) ........... 5.6 6.5 22.3 25.9 44.6 44.1 28.5
Depreciation (during the period) ........ 5.4 5.7 22.9 22.7 19.3 19.6 19.1
Total assets ............................ 570.3 574.5 581.6 573.5 578.4 481.2 497.8
Long-term debt .......................... 9.6 11.4 10.7 11.5 14.2 22.8 41.3
Shareholders' equity .................... $ 389.8 $ 386.2 $ 393.5 $ 373.3 $ 339.4 $ 198.1 $ 190.3
---------------------------
(a) After-tax merger expenses reduced net earnings by $4.0 in the three months
ended November 30, 2000.
(b) After-tax provisions for restructuring reduced net earnings by $0.4 in the
three months ended November 30, 2000 and $1.4 in the year ended August 31,
2000, $1.7 in 1998, $3.2 in 1997 and $7.2 in 1996.
(c) After-tax gain on the sale of property increased net earnings by $1.5 in
the year ended August 31, 1999 and $2.9 in 1996.
(d) Assumes 10.7 million shares outstanding for all periods prior to the April
1, 1998 spin-off of Agribrands from Ralston Purina.
6
FORWARD LOOKING STATEMENTS
This proxy statement contains forward-looking statements based on our
estimates and assumptions. Forward-looking statements include statements
regarding our intent, belief, or current expectations, as well as the
assumptions on which we base such statements. These forward-looking statements
are not guarantees of future performance and these statements involve known and
unknown risks and uncertainties, including the risks and uncertainties set forth
in Agribrands' annual and quarterly reports filed with the SEC, which may cause
the:
o actual results,
o financial condition,
o performance, or
o achievements
of Agribrands to be different than the future results, conditions, performance
or achievements stated in, or implied by, those forward-looking statements. For
each of these statements, Agribrands claims the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995.
You are cautioned not to attribute undue certainty to any forward-looking
statements. Although we believe that the expectations reflected in these
forward-looking statements are reasonable, we cannot assure you that the actual
results or developments we anticipate will be realized, or even if realized,
that they would have the expected effects on the business or operations of
Agribrands.
7
INTRODUCTION
This proxy statement is being furnished to you in connection with the
solicitation of proxies by Agribrands' Board of Directors in connection with the
proposed merger. This proxy statement is first being furnished to shareholders
of Agribrands on or about March 21, 2001. Agribrands has filed important
financial statements and reports with the Securities and Exchange Commission.
Please see the section under the caption "Where You Can Find More Information"
beginning on page 36. That section lists our filings that may contain
information important to you.
THE SPECIAL MEETING
Date, Time and Place of the Special Meeting
The special meeting is scheduled to be held as follows:
April 26, 2001 at 10:00 a.m.
Agribrands International, Inc.
9811 South Forty Drive
St. Louis, Missouri 63124
Purpose of the Special Meeting
The special meeting is being held so that shareholders of Agribrands may
consider and vote upon a proposal to approve a Merger Agreement between Cargill,
a wholly-owned subsidiary of Cargill and Agribrands pursuant to which Agribrands
will become a wholly-owned subsidiary of Cargill, and to transact any other
business that properly comes before the special meeting or any adjournment or
postponement of the special meeting, including, without limitation, potential
adjournments or postponements for the purpose of soliciting additional proxies
in order to approve the merger. Approval of the Merger Agreement will also
constitute approval of the merger contemplated by the Merger Agreement.
Shareholder Record Date, Outstanding Shares and Voting Rights
The record date for determination of Agribrands shareholders entitled to
notice of and to vote at the Agribrands special meeting is March 16, 2001. On
the record date, there were 9,813,851 shares of Agribrands common stock
outstanding, held by approximately 10,242 holders of record. At the special
meeting, each share of Agribrands common stock outstanding is entitled to one
vote on all matters properly submitted to the shareholders.
Vote Required for Approval of the Merger Agreement; Quorum
Agribrands is a Missouri corporation. Under the Missouri corporation law, a
majority of the outstanding shares of the common stock of Agribrands must be
represented, either in person or by proxy, to constitute a quorum at the special
meeting. The affirmative vote of the holders of two-thirds of the outstanding
shares of Agribrands common stock outstanding as of the record date is required
to approve the Merger Agreement.
All of the directors and executive officers of Agribrands have expressed
their intention to vote their shares in favor of the merger. As of the record
date, Agribrands directors and executive officers and their affiliates owned
shares entitling them to cast approximately 0.5% of all votes entitled to be
cast.
Proxies, Abstentions, and Related Matters
The following description sets forth how proxies will be voted and the
effect of abstentions, broker non-votes and general failures to vote:
8
o All shares of common stock represented by properly executed proxy
cards received before the special meeting will be, unless revoked
properly, voted in accordance with the instructions indicated.
o If no instructions are indicated on a properly executed proxy card,
the shares will be voted FOR approval of the Merger Agreement.
o Shares represented by proxy cards that are marked "ABSTAIN" will be
treated as shares present for purposes of determining whether the
quorum requirement has been satisfied.
o If a broker or trustee indicates on the proxy card or voting
instructions that it does not have discretionary authority to vote as
to the merger, that will have the same effect as a vote against the
merger. Under the rules of the New York Stock Exchange, if you fail to
instruct your broker on how to vote Agribrands shares the broker holds
on your behalf, your broker will not have discretionary authority to
vote those shares with respect to the merger.
o A failure to vote or an abstention will have the same effect as a vote
against the merger.
o In the event any matter other than approval of the Merger Agreement is
properly brought before the special meeting, an event not anticipated,
persons named as proxies will vote in accordance with their judgment.
If, however, authority to so vote is withheld on a proxy card, the
persons named as proxies will not vote on any other matter.
Revoking a Proxy
A proxy or other voting instruction may be revoked at any time before it is
voted by:
o sending in another proxy after your original vote;
o notifying the Corporate Secretary before the special meeting of the
revocation; or
o voting in person at the special meeting.
Voting in Person
In lieu of voting by proxy, you may vote in person by attending the special
meeting. If you are not a record holder, you must bring a statement of ownership
from your bank or broker.
Other Matters at the Special Meeting
Agribrands' bylaws provide that only matters identified in a Notice of
Special Meeting can be considered and voted upon at special meetings. We know of
no other matters to be voted upon other than the approval of the Merger
Agreement. Consequently, we expect that only the approval of the Merger
Agreement will be considered and voted upon. Agribrands may adjourn or postpone
the special meeting in order to further solicit proxies. No proxy or voting
instructions to vote against the merger will be exercised on any proposal to
adjourn or postpone the special meeting that is submitted to a shareholder vote.
Costs of Solicitation
Agribrands will bear the expenses incurred in connection with the printing
and mailing of this proxy statement. Agribrands has retained Georgeson
Shareholder Communications Inc., for a fee of $10,000 plus additional charges
related to telephone calls and other services, to assist in the solicitation of
proxies. Agribrands and its proxy solicitor will also request banks, brokers and
other intermediaries holding shares of Agribrands stock beneficially owned by
others to send this proxy statement to, and obtain proxies from, the beneficial
owners and will reimburse the holders for their reasonable expenses in so doing.
Solicitation of proxies by mail may be supplemented by telephone, telegram and
other electronic means, advertisements and personal solicitation by the
directors, officers or employees of Agribrands. No additional compensation will
be paid to directors, officers or employees for such solicitation.
9
THE MERGER
This section of the proxy statement describes material aspects of the
proposed merger, including our reasons for the merger. While we believe that the
description covers the material terms of the merger, this summary may not
contain all of the information that is important to you. You should read this
entire proxy statement and the other documents we refer to carefully for a more
complete understanding of the merger. You should also read the Merger Agreement
attached as Annex A. In addition, we incorporate important business and
financial information about Agribrands into this proxy statement by reference.
You may obtain the information incorporated by reference into this proxy
statement without charge by following the instructions in the section entitled
"Where You Can Find More Information" that begins on page 36 of this proxy
statement.
Background of the Transaction
The Ralcorp Merger
After Agribrands' spin-off from Ralston Purina in April 1998, its
management focused on identifying growth opportunities and improving cash flow
generation from existing operations. During this period, management pursued
discussions with numerous potential partners and targets without success.
Ultimately, management concluded that attractive investment opportunities
related to Agribrands' core animal feed operations would be limited and
primarily in ancillary product lines and services (such as the animal health
business).
Meanwhile, Agribrands' cash reserves increased to $178.8 million on
November 30, 1999. Confident that existing operations would continue to produce
cash flows exceeding that needed for operating requirements and identified
agribusiness related investment opportunities, management began to consider
investments in unrelated enterprises. Between February and April, 2000, several
investment banks which were not formally engaged by Agribrands made
presentations based on publicly available information to Agribrands' management
regarding various strategic alternatives such as a leveraged buyout, a
significant share repurchase program and potential acquisitions.
On May 26, 2000, the Agribrands Board of Directors held a regularly
scheduled meeting and reviewed strategic options available to Agribrands,
including a potential business combination with Ralcorp Holdings, Inc. After the
review, the Board of Directors authorized management to engage the investment
banking firm Wasserstein Perella & Co., Inc. as Agribrands' financial advisor to
assist Agribrands in evaluating its strategic options. At this meeting, a
special committee of the Board of Directors, consisting of David R. Banks, Jay
W. Brown, M. Darrell Ingram, H. Davis McCarty and Martin K. Sneider, was
established to review any potential transaction. Mr. Banks was elected as its
chairman. The Agribrands special committee was granted the authority to make
recommendations to the Agribrands board with respect to any proposed transaction
and to review, negotiate and evaluate the terms and conditions and determine the
advisability of a potential business combination with Ralcorp.
On July 18, 21, 26 and 27, 2000, the Agribrands special committee held
telephonic meetings to discuss and review developments regarding a proposed
merger-of-equals transaction with Ralcorp, including the status of ongoing
negotiations, due diligence, financial aspects of the transaction, the terms
contained in drafts of the Merger Agreement and potential legal issues
pertaining to the proposed merger. The Agribrands special committee retained
Houlihan Lokey Howard & Zukin Capital to provide, if necessary, a fairness
opinion to the Agribrands special committee with respect to the proposed
merger-of-equals transaction. During this period, Banc of America Securities,
financial advisor to Ralcorp, and Wasserstein Perella engaged in discussions
regarding the structure of the proposed merger transaction and the merger
consideration while representatives from Houlihan Lokey conducted due diligence
meetings with the officers of Ralcorp.
After July 27, the respective chairmen of the special committees of each of
Agribrands and Ralcorp discussed telephonically various aspects of the merger
consideration in an effort to reach an agreement. Between July 28, 2000 and
10
August 5, 2000, the chairmen of the special committees and the financial and
legal advisors to Agribrands and Ralcorp, respectively, continued to negotiate
the merger consideration and to discuss the inclusion of a cash election option.
On August 5, 2000, the Agribrands special committee held a telephonic
meeting with Wasserstein Perella, Houlihan Lokey and Latham & Watkins. After
consideration of Ralcorp's merger consideration proposal, the Agribrands special
committee unanimously approved and accepted the proposed merger consideration,
and instructed Wasserstein Perella and Latham & Watkins to continue ongoing
negotiations with Ralcorp and its advisors with a view toward resolving any open
issues and finalizing the Ralcorp Reorganization Agreement.
On August 7, 2000, the Agribrands special committee held a telephonic
meeting with Wasserstein Perella, Houlihan Lokey and Latham & Watkins during
which the Agribrands special committee unanimously approved the merger and all
related transactions and resolved to recommend that the Agribrands board approve
the merger, an Agreement and Plan of Reorganization with Ralcorp (the "Ralcorp
Reorganization Agreement") providing for the merger and all related transactions
as negotiated by Agribrands' management, the Agribrands special committee and
their respective advisors. Following the meeting of the special committee, the
Agribrands Board of Directors held a telephonic meeting to discuss the proposed
merger and consider the recommendation of the special committee. Prior to the
conclusion of the board meeting, the Agribrands Board of Directors unanimously
adopted resolutions authorizing Agribrands to enter into the Ralcorp
Reorganization Agreement and to present to the Agribrands shareholders the
reorganization agreement for their approval with the Board of Directors'
recommendation that they approve the Ralcorp Reorganization Agreement.
On August 7, 2000, Agribrands and Ralcorp executed the Ralcorp
Reorganization Agreement pursuant to which (i) each of Agribrands and Ralcorp
agreed to form a holding company ("Newco") with two wholly-owned subsidiaries,
(ii) one of the Newco subsidiaries would merge into Agribrands with Agribrands
being the surviving corporation, (iii) the other Newco subsidiary would merge
into Ralcorp with Ralcorp being the surviving corporation, and (iv) as a result,
Agribrands and Ralcorp would each become a wholly-owned subsidiary of Newco.
Under the terms of the Ralcorp Reorganization Agreement, each share of
Agribrands common stock, except for dissenting shares, would have been
exchanged, pursuant to an election by each Agribrands shareholder, into three
shares of Newco common stock, or the right to receive $39.00 in cash (subject to
proration). Under the terms of the Ralcorp Reorganization Agreement, each share
of Ralcorp common stock, except for Ralcorp dissenting shares, would have been
exchanged, pursuant to an election by each Ralcorp shareholder, into one share
of Newco common stock, or the right to receive $15.00 in cash (subject to
proration). At least 80% of each company's outstanding stock would have to have
been exchanged for shares. Therefore, if the total number of shares of either
company that elected to be exchanged for shares would have been less than 80% of
our outstanding shares, then the cash elections of that company's shareholders
would have been reduced on a pro rata basis. As a result of the stock exchange
and assuming full use of the 20% cash election option for each company, former
shareholders of each of Agribrands and Ralcorp would have each held
approximately 50% of the outstanding common stock of Newco. The terms of the
Ralcorp Reorganization Agreement also provided for certain termination rights,
including a right to terminate in the event of a superior proposal and a $5
million termination fee in the event of such termination, to allow any competing
bids to come forward for a potential business transaction with Agribrands.
On September 29, 2000, Agribrands and Ralcorp filed a Preliminary Joint
Proxy Statement/ Prospectus with the Securities and Exchange Commission. On
September 29, 2000, Agribrands filed a Request for a Supplemental Ruling with
the IRS that the transactions contemplated by the Ralcorp Reorganization
Agreement would not jeopardize the continued validity of the rulings Ralston
Purina and Agribrands obtained from the IRS in connection with Agribrands' 1998
spin-off from Ralston Purina.
11
The Present Transaction
On September 29, 2000, Cargill made an unsolicited written offer addressed
to the Agribrands Board of Directors and the Agribrands special committee to
acquire all of the shares of Agribrands common stock at $50.00 per share (the
"Original Proposal"). No other proposals were received by the Agribrands Board
of Directors after execution of the Ralcorp Reorganization Agreement. The
Original Proposal, accompanied by a draft Merger Agreement, provided that
Cargill would cash out all outstanding options based on the transaction price
and honor all existing management continuity agreements and other severance
arrangements. The Original Proposal was subject to, among other conditions, (i)
obtaining consent from Ralston Purina under Agribrands' trademark and technology
license agreements with Ralston Purina to the acquisition of Agribrands by
Cargill, and (ii) the agreement of Ralston Purina to limit the applicability of
certain non-competition provisions contained in the reorganization agreement
between Agribrands and Ralston Purina (the "Ralston Purina Reorganization
Agreement") entered into in connection with Agribrands' 1998 spin-off from
Ralston Purina. Under the terms of the Ralston Purina Reorganization Agreement,
Agribrands was prohibited for a period of 5 years (from April 1, 1998 to March
31, 2003) from: (1) engaging in the manufacture, distribution or sale of foods
or feeds for pets, pet products, pet supplies, pet accessories, litter or
personal care products for cats, dogs or other pets, subject to certain
specified exceptions (such as distributing Ralston Purina pet products to the
Agribrands dealers or Agribrands, under specified conditions, producing a
non-Purina branded economy product for dogs and cats for distribution to the
Agribrands dealers); and (2) owning, operating, managing, participating as a
partner or co-venturer in, or otherwise engaging in (A) the business of the
manufacture, sale or distribution of primary or rechargeable batteries, lighting
products or devices, or (B) the manufacturing and marketing of certain soy
products.
On the same date, Cargill sent a letter to Ralston Purina requesting, among
other things, that Ralston Purina (i) grant consent to the merger under
provisions of the trademark and technology licenses granted by Ralston Purina to
Agribrands which require Ralston Purina's consent to a merger involving Cargill;
(ii) accept an opinion of Cargill's counsel that the merger of Agribrands and
Cargill would not adversely affect the tax free nature of the Agribrands
spin-off from Ralston Purina rather than requiring that Agribrands obtain a
ruling to that effect from the IRS; and (iii) agree that the non-compete
provisions applicable to Agribrands would not extend to Cargill's other
businesses.
On October 2, 2000, the Agribrands special committee held a telephonic
meeting to discuss the Original Proposal and the letter from Cargill to Ralston
Purina. William P. Stiritz, Chairman, Chief Executive Officer and President of
Agribrands, was invited to explain the Original Proposal and discuss the
contents of the letter from Cargill to Ralston Purina. Representatives of Latham
& Watkins discussed with the Agribrands special committee its legal duties
pertaining to the evaluation of the Original Proposal. At such meeting, the
Agribrands special committee, Agribrands senior management, Wasserstein Perella
and Latham & Watkins discussed the Original Proposal, and Agribrands'
obligations under the Ralcorp Reorganization Agreement with respect to the
Original Proposal. Under the terms of the Ralcorp Reorganization Agreement,
Agribrands was not permitted to solicit proposals or offers from other third
parties, but was permitted to respond to unsolicited proposals which the
Agribrands Board of Directors determined would be reasonably likely to result in
an "Agribrands Superior Proposal." We describe on the next page what would
constitute an Agribrands Superior Proposal. The Agribrands special committee
distinguished between the Ralcorp merger, a strategic transaction intended to
enhance shareholder value, and the Original Proposal, a sale of Agribrands,
under which the board of directors may have a duty to obtain the highest price
reasonably attainable for the Agribrands shares. In a strategic transaction, the
Agribrands shareholders would have a continuing interest in the combined
enterprise and may be able to benefit from any synergies which may result from
such a transaction. In a sale of the company, the Agribrands shareholders would
receive a cash payment but would not have a continuing interest in the combined
enterprise.
During its October 2 meeting, the Agribrands special committee also
discussed whether a more favorable price per share than currently contained in
the Original Proposal was obtainable, the potential effect of the Original
12
Proposal on Agribrands' ability to receive two-thirds shareholder approval of
the Ralcorp merger and whether Cargill's condition of obtaining Ralston Purina's
consent to the matters set forth in Cargill's September 29, 2000 letter to
Ralston Purina was feasible. Wasserstein Perella presented its financial
analysis of the Original Proposal. The special committee instructed Wasserstein
Perella to explore whether a higher price was attainable with the suggestion
that a price of $60.00 per share would be in the range that the special
committee would be interested in obtaining. The special committee also asked
certain members of Agribrands senior management to review the Original Proposal
and to compare it with a leveraged buyout of the company, a significant share
repurchase program and the Ralcorp merger. The special committee determined
that, in the current economic environment, it was not feasible to complete a
leveraged buyout at a price in excess of the Original Proposal, and that, while
a significant stock repurchase program may provide short-term growth on earnings
per share, it was unlikely to enhance long-term shareholder value. With respect
to the Ralcorp merger, the special committee determined that the uncertainties
of obtaining enhanced shareholder value outweighed the potential benefits. The
special committee noted that the benefits of the Ralcorp merger depended upon
the successful execution of an aggressive acquisition program designed to
consolidate the highly competitive private label foods business. In connection
with the foregoing, the special committee considered risks, including that
Ralcorp would be unable to successfully complete and integrate acquisitions or
that the combined companies might not be valued at a higher multiple. For
purposes of this discussion, "senior management" refers to William P. Stiritz,
David R. Wenzel, the Chief Financial Officer, Bill G. Armstrong, the Chief
Operating Officer, and Michael J. Costello, the General Counsel and Secretary of
Agribrands. On behalf of and at the request of the special committee,
Agribrands' senior management, representatives from Wasserstein Perella and
Latham & Watkins were the principal negotiators on behalf of Agribrands with
respect to Cargill's offer. The key items discussed with Cargill, and its
financial and legal representatives, were discussed with the Chairman of the
special committee.
On October 4, 2000, Ralston Purina responded to Cargill's September 29,
2000 letter by stating that it would not consent to any of Cargill's requests in
that letter because of Ralston Purina's belief that such a consent would be
detrimental to its business.
On October 10, 2000, the Agribrands special committee held a telephonic
meeting to discuss the status of Cargill's unsolicited proposal. Representatives
of Latham & Watkins discussed the terms of a confidentiality and standstill
agreement between Agribrands and Cargill. The Agribrands special committee,
after discussion with its financial and legal advisors, determined that the
Original Proposal was reasonably likely to result in an Agribrands Superior
Proposal, and Agribrands senior management and advisors were directed to
negotiate and execute a confidentiality agreement with Cargill. For purposes of
the Ralcorp Reorganization Agreement, an Agribrands Superior Proposal is a bona
fide unsolicited proposal which, in the good faith judgment of the Agribrands
Board of Directors, (i) if accepted, would reasonably be likely to be
consummated, and (ii) if consummated, would reasonably be 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 the Ralcorp Reorganization Agreement.
During the October 10, 2000 meeting of the Agribrands special committee,
Mr. Wenzel on behalf of senior management which includes Mr. Stiritz, a member
of the board, presented a proposal for an improvement of the existing severance
benefit arrangements in the event of a change of control. The proposal included:
(i) a benefit plan that would provide for the payment of severance compensation
to personnel located at Agribrands' St. Louis headquarters in the event any
individual is required to relocate outside of the St. Louis metropolitan area as
a condition to employment or is terminated due to a closure or relocation of the
headquarters within five years following a change of control; (ii) an extension
of the benefit period under existing management continuity agreements for an
additional year; (iii) new one year management continuity agreements for certain
key employees; and (iv) an indemnification for any taxes that may be imposed
under 280G of the U.S. Internal Revenue Code (an excess parachute excise tax of
20%). Without members of management present, the Agribrands special committee
13
and its financial and legal advisors discussed their views concerning the
severance benefit proposals. The consensus of the special committee was that the
relocation benefits, enhancement and extension of the management continuity
agreements, and tax indemnification appeared to be appropriate. The special
committee requested from senior management a more detailed analysis of the
impact of the severance benefit proposals, including the cost of the tax
indemnification for any taxes arising under Section 280G of the United States
Internal Revenue Code and confirmation from a compensation consultant that the
amount and type of benefits were consistent with industry practice.
On October 11, 2000, Cargill and Agribrands entered into a customary
confidentiality agreement (the "Confidentiality Agreement") with respect to the
due diligence information to be provided by Agribrands to Cargill. The
Confidentiality Agreement included a "standstill" provision which precluded
Cargill from (i) effecting, seeking, offering or proposing any acquisition,
merger, business combination or other extraordinary transaction with respect to
the assets, securities, business or voting securities of Agribrands; (ii) acting
to seek control of or influence over the management, Board of Directors or
policies of Agribrands; (iii) making any public announcement with respect to or
submitting a proposal for any transaction involving Agribrands, its securities
or its assets; (iv) forming, joining or participating in any group with respect
to the foregoing; or (v) entering into any discussion or arrangements with any
third party or assisting, advising or persuading others to take any action with
respect to any of the foregoing, during the "standstill" period. The
"standstill" period began on October 11 and was to conclude on the date which is
the earlier of (1) 90 days after termination of the Ralcorp Reorganization
Agreement, (2) the date on which the Agribrands board publicly announces its
approval of an acquisition, merger, asset sale or business combination proposal
between Agribrands and a third party (other than Ralcorp) in which the surviving
entity acquires or controls at 20% of the voting securities or assets of
Agribrands, or (3) April 30, 2001.
On October 11, representatives of Cargill and Agribrands held a due
diligence meeting in St. Louis, Missouri and discussed Agribrands' financial
plans and regional operations. At this meeting, Agribrands indicated to Cargill
that it was seeking a price in the range of $60 per share.
During October, Cargill, its financial advisor, J.P. Morgan & Co., and
legal counsel, Fried, Frank, Harris, Shriver & Jacobson, and other
representatives conducted a due diligence review of Agribrands. During this
period, Cargill's representatives and Wasserstein Perella engaged in numerous
discussions concerning revisions to the Original Proposal. During these
discussions, Cargill indicated its willingness to purchase all of the shares of
Agribrands common stock at a price in the mid-fifties and to permit Agribrands
to solicit bids from other prospective acquirers for 30 days following the
execution of a Merger Agreement, which 30-day period could be extended for
another 15-day period for those parties who inquire or make a proposal during
the 30-day period that could reasonably be expected to lead to an acquisition
proposal, and a breakup fee of $10 million. This revised proposal was subject to
a number of conditions, including completion of due diligence and the ability of
Agribrands, Cargill and Ralston Purina to reach a satisfactory resolution on the
issues raised by Cargill's September 29 letter to Ralston Purina.
On November 13, 2000, the Agribrands special committee held a telephonic
meeting to discuss the status of the transaction and Cargill's revised proposal
at $55.00 per share, subject to its continuing due diligence and negotiating a
binding agreement. Representatives of Wasserstein Perella discussed recent
developments regarding the status of negotiations, due diligence and the
financial aspects of the revised proposal. In addition, Wasserstein Perella and
Latham & Watkins discussed the terms of the revised proposal and how Cargill's
revised proposal compared to the terms of the Ralcorp merger with respect to
shareholder value. Wasserstein Perella presented its financial analysis based on
a $55 per share price. Upon conclusion of the meeting, the special committee
instructed Wasserstein Perella and Latham & Watkins to continue ongoing
negotiations and negotiate a Merger Agreement with Cargill and its
representatives.
14
On November 13, 2000, Fried, Frank provided Latham & Watkins with a revised
draft Merger Agreement, with the price per share left blank. On November 14,
2000, Latham & Watkins provided Cargill's counsel with initial comments to the
revised draft Merger Agreement.
On November 15, 2000, there was a regularly scheduled meeting of the
Agribrands Board of Directors at Agribrands' corporate headquarters in St.
Louis. The latest terms and conditions of the draft Merger Agreement were
presented to the Board, including Cargill's revised offer of $54.50 per share.
Cargill revised its offer based upon its due diligence of Agribrands. At the
meeting, Wasserstein Perella reviewed its financial analysis of Cargill's
proposal. Latham & Watkins was also in attendance (telephonically) and
summarized the terms of the draft Merger Agreement.
At the November 15, 2000 meeting, Mr. Wenzel provided the Agribrands
special committee with a detailed analysis of the cost of the severance benefit
proposals which were presented to the Agribrands special committee on October
10, 2000. In addition, the special committee received and reviewed data from
Arthur Andersen which compared the proposed changes with industry practices of
companies undergoing a change of control. The data furnished by Arthur Andersen
supported senior management's contention that: (i) companies across all
industries generally protect their most senior executives (i.e., officers and
other key executives) with a severance benefit equal to three times base salary
and bonus; and (ii) that the most senior executives are also provided with the
excise tax gross-up. Senior management estimated that Agribrands' current
severance benefits had an approximate maximum cost in the aggregate of $9
million, and with the proposed changes, the severance benefits would have an
approximate maximum cost in the aggregate $17 million. After due consideration,
the Board of Directors approved the foregoing proposals for severance benefits
in the event of a change of control and authorized Agribrands' officers to take
all necessary or advisable actions to carry out the terms and conditions of such
agreements.
Also on November 15, 2000, the Agribrands special committee held a meeting
to discuss the Cargill proposal and the state of the transaction. Wasserstein
Perella (via telephone) made a detailed presentation of its financial analysis
of Cargill's proposal. The Agribrands special committee considered the future
benefits and risks that the Ralcorp merger would provide to Agribrands and its
shareholders and contrasted those with the all cash acquisition of Agribrands by
Cargill. Representatives of Latham & Watkins (via telephone) then reviewed the
status of the negotiations and the open issues regarding the Merger Agreement
and the transaction, including the per share purchase price to be paid by
Cargill for each share of Agribrands common stock, the need for a supplemental
ruling from the IRS in connection with the proposed transaction with Cargill or
an indemnification from an adverse IRS ruling, the status of discussions between
Cargill and Ralston Purina concerning the matters set forth in Cargill's
September 29, 2000 letter to Ralston Purina, the details surrounding Agribrands'
ability to solicit other bids following the signing of a Merger Agreement, and
the amount of any break-up fee payable to Cargill should Agribrands solicit a
superior bid. Upon conclusion of the meeting, the Agribrands special committee
instructed Wasserstein Perella and Latham & Watkins to continue ongoing
negotiations with Cargill and its advisors.
The parties and their representatives had extensive telephonic discussions
relating to the Merger Agreement. Negotiations continued on the open issues
mentioned above through November 30, 2000. On November 30, 2000, Cargill's final
purchase price per share of $54.50 was presented to Agribrands and its
representatives. Cargill, Agribrands and Ralston Purina, after extensive
negotiations, entered into a Consent and Agreement dated December 1, 2000, which
resolved the issues set forth in Cargill's September 29, 2000 letter to Ralston
Purina to the parties' satisfaction. Cargill agreed that Agribrands, but not
Cargill's other businesses, would comply with the non-competition provisions
prohibiting the manufacturing, distribution and sales of pet products until
April 1, 2006. Ralston Purina agreed to comply with the non-competition
provisions in the Ralston Purina Reorganization Agreement prohibiting Ralston
Purina from manufacturing, distributing and selling animal feed products until
April 1, 2006. Ralston Purina consented to the merger under its license
agreements with Agribrands. In addition, the parties and their representatives
agreed that Agribrands would seek a supplemental ruling from the IRS that the
15
merger would not adversely affect the tax-free nature of Agribrands' spin-off
from Ralston Purina. Cargill also agreed to provide Agribrands with a 30-day
period in which to solicit other bids after signing the Merger Agreement in
exchange for Agribrands' agreement to include a provision for a break-up fee.
On December 1, 2000, a meeting of the Agribrands Board of Directors was
held at Agribrands' corporate headquarters in St. Louis with representatives of
Wasserstein Perella and Latham & Watkins present. Representatives of Wasserstein
Perella gave a presentation which included a description of the proposed
transaction and an analysis of the proposed cash offer. Wasserstein Perella
presented a comparison between the Ralcorp merger and the Cargill proposal. Upon
conclusion of Wasserstein Perella's presentation, representatives of Latham &
Watkins reviewed the principal terms of the Merger Agreement and related legal
issues. Agribrands' Board of Directors, senior management and legal and
financial representatives determined that the $10 million break-up fee, payable
to Cargill under the terms of the Merger Agreement as presented, was reasonable
in light of the $54.50 per share purchase price and the 30-day period in which
Agribrands was permitted to solicit other bids.
On December 1, 2000, the Board of Directors of Agribrands was provided with
the following internal financial projections for fiscal year 2001. This
projection was also provided on this date to Cargill.
Selected Financial Data For years ended August 31,
(In millions except per share data)
----------------------------------------------------------
Projected Actual
2001 2000
---------------------------
Net sales $ 1,250.3 $ 1,193.1
Net earnings $ 46.3 $ 45.0
Basic earnings per share $ 4.72 $ 4.46
EBITDA $ 92.7 $ 87.4
The information set forth above is a summary of information provided to Car
gill on December 1, 2000 pursuant to a confidentiality agreement.
These projections were not prepared with a view to public disclosure or in
compliance with published guidelines of the SEC or the guidelines established by
the American Institute of Certified Public Accountants regarding projections or
forecasts. These projections have been included in this proxy statement solely
because they were made available to the Agribrands board of directors and
Cargill contemporaneously with Cargill's offer and the Board's decision to
accept the offer.
Agribrands' independent auditors have not reviewed, examined or compiled
these projections and accordingly assume no responsibility for them.
Agribrands' internal projections, which are made on rolling 12-month basis
under a program implemented by Agribrands on September 1, 2000, reflect numerous
estimates and assumptions, all made by Agribrands' management, with respect to
general business, economic, market and industry conditions, company performance,
effective tax rates and other matters, all of which are difficult to predict and
many of which are beyond Agribrands' control. There can be no assurance that the
assumptions made in preparing the projections will prove accurate, and, based on
results to date, Agribrands management no longer expects to achieve the results
reflected in these projections.
On the same date and also at Agribrands' corporate headquarters, the
Agribrands special committee convened for a meeting to discuss the Cargill
proposal and the status of the transaction. Representatives of Latham & Watkins
discussed the special committee's fiduciary duties under applicable law with
respect to its consideration of the proposal. The special committee, Wasserstein
Perella and Latham & Watkins then discussed Wasserstein Perella's presentation
to the Board of Directors and the terms of the Merger Agreement and related
legal issues. Wasserstein Perella indicated to the Agribrands special committee
that Wasserstein Perella would be able to render an opinion to the Board of
Directors that, as of that date, based upon and subject to the considerations
16
stated in its opinion, Cargill's $54.50 cash offer price was fair, from a
financial point of view, to the Agribrands shareholders. Based on the Agribrands
special committee's review, it determined that the Cargill proposal was an
Agribrands Superior Proposal (as defined in the Ralcorp Reorganization
Agreement). After the Agribrands special committee satisfied itself as to the
principal terms and conditions of the proposed transaction as so presented, the
committee authorized its Chairman, in conjunction with Agribrands management,
Wasserstein Perella and Latham & Watkins, to finalize definitive agreements for
the proposed transaction. The Agribrands special committee then unanimously
approved the Merger Agreement and the merger and all related transactions and
resolved to recommend that the Agribrands Board of Directors approve the merger,
the Merger Agreement and all related transactions as negotiated by Agribrands
senior management, Agribrands' special committee and their respective advisors.
Following the meeting of the special committee, Agribrands' Board of
Directors reconvened its meeting to discuss the proposed transaction and
consider the recommendation of the special committee. Wasserstein Perella
rendered its opinion that it had indicated to the Agribrands special committee
that, as of that date, based upon and subject to the considerations stated in
its opinion, Cargill's $54.50 cash offer price was fair, from a financial point
of view, to the Agribrands shareholders. Prior to the conclusion of the board
meeting, the Agribrands Board of Directors adopted resolutions authorizing
Agribrands to enter into the Merger Agreement and to present to the Agribrands
shareholders the Merger Agreement for their approval with the Board of
Directors' recommendation that they approve the Merger Agreement.
On December 1, 2000, following approval by their boards, Agribrands and
Cargill executed the Merger Agreement. Also, on December 1, 2000, Agribrands
provided Ralcorp with the required notice to terminate the Ralcorp
Reorganization Agreement. Agribrands paid the Ralcorp Termination Fee of $5
million to Ralcorp on December 4, 2000 and there are no remaining contingent
liabilities relating to the proposed Ralcorp merger.
After Agribrands and Cargill executed the Merger Agreement, Agribrands had
a 30-day period in which it could solicit alternative acquisition proposals from
third parties. During this time, Agribrands and representatives of Wasserstein
Perella contacted eleven companies in order to solicit alternative acquisitions
proposals. Such companies did not receive any non-public information regarding
Agribrands. Agribrands did not receive any other indications of interest.
Agribrands' Reasons for the Merger
In reaching its conclusion to approve and recommend the merger with Cargill
and the Merger Agreement, the Agribrands board considered the recommendations of
the special committee and presentations by, and consultations with, members of
Agribrands' management as well as their financial advisors and outside and
internal legal counsel. In approving the merger with Cargill and the Merger
Agreement, the Agribrands board carefully considered a variety of reasons,
factors and information, including the following:
o the merger consideration of $54.50 cash per share represents a 24%
premium over the closing price of $43.81 per share of Agribrands'
common stock on December 1, 2000, the last trading day before the
announcement of the proposed merger, and a 50.3% premium over the
$36.25 closing price on August 7, 2000, the business day prior to the
announcement of the earlier proposed merger with Ralcorp;
o the merger consideration is an all cash offer with no financing
contingency, which provides certainty of value to holders of
Agribrands common stock compared to a transaction in which
shareholders would retain stock and whose benefits would be dependent
upon a program of consolidation of the private label foods businesses
and Ralcorp's ability to successfully integrate the acquired
businesses in a timely and synergistic manner;
17
o the financial presentation made to the Agribrands Board of Directors
and the opinion rendered by Wasserstein Perella that, as of the date
of the opinion and subject to various assumptions and limitations set
forth in such opinion, the merger consideration offered by Cargill was
fair to the Agribrands shareholders from a financial point of view;
o the unanimous opinion of the special committee of the Agribrands'
Board of Directors that the merger with Cargill is a superior proposal
to the merger with Ralcorp;
o the concern that there was a significant risk that if the Cargill
offer was not accepted by the Board of Directors of Agribrands, the
Ralcorp merger would not be approved by the necessary two-thirds
majority of the Agribrands shareholders;
o the concern that if the Ralcorp merger was rejected by the Agribrands
shareholders, the trading value for shares of Agribrands common stock
was unlikely to equal or exceed the Cargill merger consideration;
o the concern of senior management that the opportunities and
alternatives available to Agribrands (if the Cargill merger were not
to be undertaken), including pursuing a major share buyback, an
acquisition of, or business combination or joint venture with,
entities other than Cargill (including Ralcorp) may not yield greater
benefits in terms of shareholder value to the Agribrands shareholders
than the Cargill merger; and
o the terms and conditions of the Merger Agreement, including the
representations, warranties, covenants and conditions to consummate
the proposed transaction and the circumstances under which either
Agribrands or Cargill would have the right to terminate the Merger
Agreement, including the right of Agribrands to terminate the Merger
Agreement under specified circumstances if there were a superior
proposal, and the circumstances in which a termination fee would be
payable in the event that the Merger Agreement were terminated.
The Agribrands board also identified and considered several potentially
negative factors while deliberating the merger, including, but not limited to:
o Agribrands will no longer exist as a publicly traded independent
company and its stockholders will forego the upside opportunity
embedded in Agribrands' stand-alone business plan as well as possible
growth with potential combination partners and the risk of possible
severance payments to employees of Agribrands in the amount of
$15,000,000 that will be triggered under the change of control
provisions of various agreements and plans of Agribrands;
o the risk of not receiving a supplemental ruling from the IRS;
o the possibility that the merger may not be completed, even if approved
by the shareholders of Agribrands; and
o the merger consideration is at the low end of the equity value ranges
for transactions of this type.
The Agribrands board determined that these risks were outweighed by the
potential benefits of the merger with Cargill.
The Agribrands board also determined that the $10 million break-up fee
payable to Cargill was reasonable in light of the $54.50 per share purchase
price and the ability of Agribrands to solicit other bids for a 30-day period
after signing the Merger Agreement, despite the fact that it was more than the
break-up fee payable to Ralcorp under the Ralcorp Reorganization Agreement.
Therefore, the amount of the break-up fee was not a deterrent to entering into
the Merger Agreement with Cargill.
The above discussion of factors considered by the Agribrands board is not
intended to be exhaustive, but is believed to include all material factors
considered by the board. While the different members of the Agribrands board may
have given different weight to different factors, each member of the Agribrands
board (except W. Stiritz and J. Micheletto, who abstained) reached the same
conclusion that the merger with Cargill was more beneficial to Agribrands'
shareholders, in terms of financial value, than the Ralcorp merger. The
18
Agribrands board did not attempt to analyze the fairness of the merger
consideration in isolation from these other considerations.
Merger Financing
Cargill's obligation to complete the merger is not subject to its receipt
of financing. It is expected that Cargill will require approximately $580
million in order to complete the merger, including payments to be made to
Agribrands' shareholders, holders of Agribrands stock options, payments under
Agribrands employee benefit plans and management continuity agreements. Cargill
expects to finance the merger through the use of its existing unused debt
capacity and current cash flow.
Interests of Certain Persons in the Merger; Possible Conflicts of Interest
General. All of Agribrands executive officers, including one executive
officer who is also a director, have certain interests in the merger that are
different from or in addition to the interests of Agribrands shareholders
generally. These interests may create potential conflicts of interest. These
additional interests relate to provisions in the Merger Agreement or Agribrands
employee benefit plans and arrangements regarding:
o change in control severance provisions contained in management
continuity agreements; and
o the treatment of outstanding Agribrands stock options and stock
appreciation rights.
All of these additional interests, to the extent material, are described
below. Under each of the agreements and plans described below, completion of the
merger with Cargill will constitute a change of control, unless otherwise noted.
These individuals have, to the knowledge of Agribrands, no material interest in
the merger apart from those of the Agribrands shareholders generally except as
described below. The Agribrands special committee and the Agribrands Board of
Directors were aware of these interests, and considered them, in recommending
and approving the Merger Agreement and the transactions contemplated thereby.
Management Continuity Agreements. Agribrands is a party to management
continuity agreements with its executive officers and certain key employees. The
management continuity agreements provide each officer and key employee with the
right to receive severance compensation in the event of such person's voluntary
or involuntary termination after a change in control of Agribrands. The
compensation provided would be in the form of:
o a lump sum payment equal to the present value of continuing their
respective salaries and bonuses for a specified payment period
following termination of employment; and
o the continuation of other employee benefits for the same period.
The management continuity agreements with an initial group of officers and
key employees were entered into as of April 1, 1998. Certain of these officers
and employees had agreed to waive their rights to receive severance compensation
under these agreements in connection with the Ralcorp merger, and as a result,
these employees would not have received any severance compensation under the
management continuity agreements in the event of their voluntary or involuntary
termination after the Ralcorp merger. Due to the uncertainty of the proposed
merger with Ralcorp, the board of directors reviewed the existing arrangements
and approved the enhancement of the severance compensation due upon a change in
control. Accordingly, on November 15, 2000, the management continuity agreements
with that initial group of officers and certain key employees were amended to
increase by one year the payment period for severance compensation benefits
payable upon an involuntary termination. In addition, on November 15, 2000,
sixteen additional key employees were granted new management continuity
agreements, providing for the payment of severance compensation benefits for one
year.
Under all of the management continuity agreements, the compensation payment
periods are subject to reduction for periods the relevant individual remains
19
employed following a change in control. The management continuity agreements
also provide that Agribrands will indemnify the named executive officers and
certain key employees from any taxes which may become due under Section 4999 of
the Internal Revenue Code (excess parachute payment excise tax of 20%) as a
result of a termination following a change in control. No payments would be made
under a management continuity agreement if the executive officer's employment
terminates because of death, disability, normal retirement or for cause.
Payments would not continue with respect to any period beyond the executive
officer's normal retirement date.
As of the date of the Merger Agreement, 29 employees were parties to the
management continuity agreements, including the following five named executive
officers:
o William P. Stiritz, Chairman of the Board, Chief Executive Officer and
President (whose agreement was further amended on December 1, 2000, in
order to eliminate the indemnification for the Section 280G excess
parachute payment tax)
o Bill G. Armstrong, Chief Operating Officer
o Ki Yong Kim, Chief Operating Officer, North Asia Region
o Eric M. Poole, Executive Vice President Operations and Manufacturing
o David R. Wenzel, Chief Financial Officer
The approximate amounts that would be payable to these five named executive
officers under these agreements if they are terminated immediately following the
merger under circumstances entitling them to benefits are included in the table
below. The payments to be made to the directors and named executive officers in
connection with the merger in respect of unvested stock options and stock
appreciation rights that will vest as a result of the merger are captured in the
table below by including the gross amount each named executive officer and
director will receive in the merger for the shares of Agribrands common stock
owned by each of them.
Certain Other
MC Agreement MC Agreement Stock Accrued
Individual Compensation (1) Other Benefits (2) Compensation (3) Benefits (4) Total
- ---------------- -------------------- -------------------- -------------------- ---------------- ---------------
Armstrong $ 1,161,725 $ 1,107,687 $ 1,077,414 $ 81,166 $ 3,427,992
Kim $ 921,860 $ 178,832 $ 538,363 $ 1,163,911 (5) $ 2,802,966
Poole $ 822,017 $ 162,775 $ 224,150 $ 33,932 $ 1,242,874
Stiritz $ 0 $ 1,360,942 (6) $ 36,467,948 $ 0 $ 37,828,890
Wenzel $ 822,854 $ 218,189 $ 1,062,263 $ 49,500 $ 2,152,806
Banks $ 189,665 $ 189,665
Brown $ 326,242 $ 326,242
Ingram $ 238,497 $ 238,497
McCarty $ 214,245 $ 214,245
Micheletto $ 169,500 $ 169,500
Sneider $ 218,550 $ 218,550
Total: $ 3,728,456 $ 3,028,425 $ 40,726,837 $ 1,328,509 $ 48,812,227
<FN>
(1) Present value of continuation of salary and bonus during the longest
possible payment period specified in the agreements.
(2) Present value of continuation of benefits in each savings, life, health,
accident and disability plan and other fringe benefit arrangements on an
after-tax basis to the executive for the longest possible payment period
specified in the agreement. The agreements also entitle the employee to
reimbursement for tax preparation costs and attorney's fees and expenses
incurred to enforce the agreement.
(3) Includes stock options and common stock. Does not exclude basis for
purchase of common stock.
(4) These benefits would be triggered by termination of employment regardless
of whether the merger is consummated. Except as otherwise specified,
benefits include only accrued bonus, paid time off and severance.
(5) Includes accrued severance of $1,121,173.
(6) Includes estimate of residual value (using a 6.22% rate for present value
calculation) and death benefit value if Cargill prematurely terminates the
split dollar program. As a condition to Cargill's execution of the Merger
</FN>
20
As a condition to Cargill's execution of the Merger Agreement, William P.
Stiritz was required to sign an amendment to his management continuity agreement
by which he waived any right he may have to receive additional payments from
Agribrands if he is required to pay an excise tax pursuant to Section 4999 of
the Internal Revenue Code in connection with the Cargill merger.
Effect of the Merger on the Agribrands Incentive Stock Option Plans and
Common Stock Holdings. Under the Agribrands incentive stock option plan, upon a
change in control of Agribrands, the unvested stock options and stock
appreciation rights granted under the equity-based plans will become fully
vested. In connection with the Ralcorp merger, certain executive officers agreed
to exchange their stock options or stock appreciation rights for options or
rights in the newly-formed holding company. However, in the Cargill merger, the
change in control provisions will apply, and the aggregate numbers of shares of
stock options and stock appreciation rights held by the named executive officers
that will become vested are 1,577,500 and 20,000, respectively. Each of the
non-employee directors of Agribrands holds 5,000 (for a total of 30,000) stock
options that will become vested in connection with the Cargill merger. See the
table above for the gross amount each named executive officer and director will
receive in the merger for the shares of Agribrands common stock owned by each of
them. For a discussion of the consideration that holders of stock options and
stock appreciation rights will receive in the merger, pursuant to the Merger
Agreement, see "--Treatment of Agribrands Stock Options and Equity Based Awards"
beginning on page 25.
Indemnification of Directors and Officers
Agribrands has agreed to indemnify and hold each present and former
director and officer of Agribrands harmless from, and to advance related
expenses, to the fullest extent permitted under applicable law, for acts or
omissions by them in their capacities as such prior to the merger. The Merger
Agreement further requires that, for a period of six years after completion of
the merger, Agribrands will maintain in effect directors' and officers'
liability insurance on behalf of our directors and officers that provides
coverage no less favorable than currently in effect under Agribrands existing
directors' and officers' liability insurance or policies of at least the same
coverage, except that Agribrands is not required to pay aggregate annual
premiums in excess of 200% of the yearly premium currently paid by Agribrands.
Amendment to Agribrands Rights Agreement
In accordance with the Merger Agreement, Agribrands has amended its rights
agreement, dated March 31, 1998 and as amended on August 7, 2000, between
Agribrands and Continental Stock Transfer & Trust Company, to provide that
neither the execution of the Merger Agreement nor the completion of the Cargill
merger will cause the rights issued thereunder to become exercisable.
Opinion of Financial Advisor
Role of Financial Advisor. Agribrands' Board of Directors retained
Wasserstein Perella to provide investment banking advice and services in
connection with a possible sale of Agribrands to Cargill, including rendering
its opinion as to the fairness, from a financial point of view, to the
shareholders of Agribrands of the consideration to be received by the
shareholders of Agribrands pursuant to the Merger Agreement.
On December 1, 2000, Wasserstein Perella orally delivered its opinion to
the Agribrands Board of Directors, which it later confirmed in a written
opinion, to the effect that, as of the date of the opinion and based upon and
subject to various assumptions and limitations set forth in the opinion, the
consideration provided to Agribrands shareholders pursuant to the Merger
Agreement was fair to the shareholders of Agribrands from a financial point of
view. Wasserstein Perella also presented to the Agribrands Board of Directors
the analyses described below. Agribrands and Cargill determined the amount and
the form of consideration through arms-length negotiations and did not base this
determination on any recommendation by Wasserstein Perella, although Wasserstein
Perella provided advice to Agribrands from time to time during the course of the
negotiations and the Agribrands Board of Directors did take into consideration
21
the opinion of Wasserstein Perella, among other factors, in making its
determination to approve the Merger Agreement and recommend its approval to
Agribrands shareholders. Wasserstein Perella was engaged solely as advisor to
Agribrands and did not act as advisor to or agent of any other person.
The full text of Wasserstein Perella's opinion, which sets forth, among
other things, the procedures followed, assumptions made, matters considered and
limits on the review undertaken by Wasserstein Perella in rendering its opinion
is attached as Annex B to this proxy statement and is incorporated by this
reference. References to Wasserstein Perella's opinion in this proxy statement
and the summary of Wasserstein Perella's opinion in this section are qualified
in their entirety by reference to Annex B. Shareholders of Agribrands are urged
to, and should, read the Wasserstein Perella opinion carefully and in its
entirety. The Wasserstein Perella opinion was for the benefit of the Board of
Directors of Agribrands in its consideration of the merger. Wasserstein
Perella's opinion addressed only the fairness, from a financial point of view,
to the shareholders of Agribrands of the consideration provided for pursuant to
the Merger Agreement. Wasserstein Perella did not express any view on any other
aspect of the merger or any other terms of the Merger Agreement. Specifically,
the opinion did not address Agribrands' underlying business decision to enter
into the Merger Agreement or to effect the transaction contemplated by the
Merger Agreement. Wasserstein Perella's opinion does not constitute a
recommendation to any shareholder of Agribrands as to how such shareholder
should vote with respect to the merger, or otherwise act in respect of the
merger, and shareholders should not rely upon it as such.
Matters Reviewed. In arriving at its opinion, Wasserstein Perella reviewed
and analyzed the following:
o a draft of the Merger Agreement which, for purposes of the opinion,
was assumed not to differ in any material respect from the final form
thereof;
o publicly available business and financial information relating to
Agribrands for recent years and to the date of Wasserstein Perella's
opinion;
o certain financial and operating information, including financial
forecasts, analyses and projections prepared by or on behalf of
Agribrands;
o comparisons of the historical financial results and present financial
condition of Agribrands with that of other publicly traded companies
selected as being relevant or comparable in certain respects; and
o the financial terms of certain recent acquisitions and business
combination transactions in the food and animal feed industries
specifically, and in other industries generally, that were considered
comparable to the merger or otherwise relevant.
Wasserstein Perella also held discussions with the management of Agribrands
concerning its historic and current operations including its financial condition
and future prospects. Wasserstein Perella also performed such other financial
studies, analyses and investigations as it considered appropriate for purposes
of the Wasserstein Perella opinion.
Assumptions and Limitations. In its review and analysis and in rendering
its opinion, Wasserstein Perella, with Agribrands' consent, assumed and relied
without independent verification upon various matters including:
o the accuracy and completeness of all historical financial and other
information that was publicly available or furnished to Wasserstein
Perella by or on behalf of Agribrands;
o the reasonableness and accuracy of the financial projections,
forecasts and analyses provided to Wasserstein Perella by or on behalf
of Agribrands, which Wasserstein Perella assumed were reasonably
22
prepared in good faith and on bases reflecting the best currently
available judgment and estimates of Agribrands' management; and
o that the transaction described in the Merger Agreement would be
consummated without waiver or modification of any of the material
terms or conditions contained in the Merger Agreement.
The limitations on the opinion are that:
o the Wasserstein Perella opinion is for the use and benefit of the
Agribrands Board of Directors and was rendered to the Agribrands board
in connection with its consideration of the merger;
o the opinion of Wasserstein Perella does not address the merits of the
underlying business decision by Agribrands to effect the merger or the
effect on Agribrands of the merger;
o the Wasserstein Perella opinion is directed only to the fairness, from
a financial point of view, of the consideration to the holders of
Agribrands common stock to be received in connection with the merger
and does not constitute a recommendation to any Agribrands shareholder
as to how such shareholder should vote with respect to the merger and
should not be relied upon by any holder in respect of that matter;
o Wasserstein Perella did not review any of the books and records of
Agribrands; and
o Wasserstein Perella did not conduct a physical inspection of the
properties or facilities of Agribrands or obtain or make an
independent valuation or appraisal of the assets or liabilities of
Agribrands, and no such independent valuation or appraisal of that
type was provided to it.
The Wasserstein Perella opinion is necessarily based upon economic and
market conditions and other circumstances existing as of the date of the opinion
and, accordingly, does not address the fairness of the consideration to be
received by the Agribrands shareholders in the merger as of any other date.
Additionally, forecasts of future results of operations prepared by Agribrands
and relied on by Wasserstein Perella may not be indicative of future results,
which may be significantly more or less favorable than suggested by the
forecasts, because the forecasts contain assumptions as to industry performance,
general business and economic conditions and other matters beyond the control of
Agribrands.
Analyses Performed. In arriving at its opinion, Wasserstein Perella
performed quantitative analyses and considered a number of factors. The
preparation of opinions as to the fairness of a transaction from a financial
point of view involves various determinations as to the most appropriate and
relevant methods of financial and comparative analyses and the applications of
those methods to the particular circumstances. In arriving at its opinion,
Wasserstein Perella did not attribute any relative weight to any analysis or
factor considered but rather made qualitative judgments as to the significance
of each analysis and factor.
The following is a summary of the material financial analyses performed by
Wasserstein Perella in connection with providing its opinion to the Agribrands
Board of Directors. Certain of the summaries of financial analyses include
information presented in tabular form. In order to fully understand the
financial analyses used by Wasserstein Perella, the tables must be read together
with the text accompanying the tables. The tables alone do not constitute a
complete description of the financial analyses. Wasserstein Perella made
numerous assumptions with respect to industry performance, general business and
economic conditions, and other matters, many of which are beyond the control of
Agribrands. Accordingly, the analyses listed in the tables and described below
must be considered as a whole. Considering any one portion of the analyses and
the factors considered, without considering all analyses and factors considered,
could create a misleading or incomplete view of the process underlying the
Wasserstein Perella opinion.
23
Analysis of Comparable Acquisitions. Wasserstein Perella reviewed publicly
available information to determine the purchase prices and multiples paid in
certain other transactions recently effected involving target companies which
were similar to Agribrands, respectively, in terms of business mix, product
portfolio and/or markets served that Wasserstein Perella considered comparable.
The transactions reviewed by Wasserstein Perella are as follows:
Acquiror Acquired Company Announcement Date
- ------------------------------ --------------------- -----------------
Smithfield Foods IBP November 2000
FCW Holdings Sin Heng Chan July 2000
Ridley, Inc. Wayne Feeds February 2000
IAT Multimedia Inc. Petrinini SpA November 1999
Kemira and Avena Groups Svomen Rehu October 1999
Management Dalgety Agriculture May 1998
Koch Agricultural Company Purina Mills November 1997
Ridley Inc. Hubbard Milling Co. April 1997
Purina Mills Golden Sun Feeds November 1994
CIN Ven Baring Group BP Nutrition Ltd. March 1994
Sterling Group and Management Purina Mills June 1993
Using publicly available information, Wasserstein Perella calculated the
enterprise value of such comparable transactions and applied it to certain
historical financial criteria of the acquired business, including Net Sales,
EBITDA and EBIT for the trailing 12-month period. The following table presents
the mean, median and range of implied trailing 12-month Net Sales, EBITDA and
EBIT multiples from the selected transactions:
Mean Median Range
-------- ---------- -----------
Enterprise Value to Trailing 12-month Net
Sales (based on ten transactions) ........ .61x .50x .19x-1.54x
Enterprise Value to Trailing 12-month EBITDA
(based on seven transactions)............. 7.0x 5.9x 5.2x-12.5x
Enterprise Value to Trailing 12-month EBIT
(based on seven transactions)............. 9.5x 8.9x 6.2x-13.6x
Wasserstein Perella estimated an equity value range of $53.61 to $68.54 per
share for Agribrands common stock based on the analysis of comparable
acquisitions.
Because the circumstances surrounding each of the transactions analyzed
were so diverse and because of the inherent differences in the businesses,
operations, financial condition and prospects of Agribrands and the companies
included in the comparable transactions group, Wasserstein Perella believed that
a purely quantitative comparable transaction analysis would not be particularly
meaningful in the context of the merger. Instead, an analysis of the results of
the foregoing must take into account differences concerning financial and
operating characteristics of Agribrands and other factors that could affect the
public trading values of the companies to which it is being compared.
Comparable Companies Trading Analysis. Wasserstein Perella reviewed the
stock market trading multiples and certain other financial characteristics for
selected groups of companies that Wasserstein Perella deemed comparable to
Agribrands because of factors such as the businesses in which they are engaged
and their market capitalization. The comparable company groups that Wasserstein
Perella reviewed were as follows:
o companies in the feed business, which consisted of Nutreco Holdings
NV, Ridley (Canada) and Spigadoro (the "Feed Companies");
24
o companies in the commodity foods business, which consisted of Dole
Food Company, Chiquita Brands, Del Monte Foods, Seneca Foods and
Riviana Foods (the "Commodity Food Companies");
o companies in the meat and poultry business, which consisted of Tyson
Foods, Smithfield Foods, Hormel, Pilgrim's Pride and Sundersen Farms
(the "Meat/Poultry Companies");
o "mid-sized" food companies, which consisted of Suiza Foods, McCormick,
Hormel, Earthgrains, Dean Foods, Interstate Bakeries, J.M. Smucker,
Michael Foods, Lance, Riviana Foods and Tasty Bakery Company (the
"Mid-Cap Food Companies"); and
o "large-cap" food companies, which consisted of PepsiCo, General Mills,
Sara Lee, ConAgra, H.J. Heinz, Campbell Soup, Kellogg, Quaker Oats,
Wrigley, Hershey Foods, Unilever, Nestle, Danone and Cadbury Schweppes
(the "Large-Cap Food Companies").
Using publicly available information, Wasserstein Perella calculated and
analyzed the common equity market value multiples of certain historical and
projected financial criteria, such as net income, and the enterprise value
multiples of certain historical and financial criteria, such as revenues, EBITDA
and EBIT, as of November 30, 2000, the last trading day prior to the Agribrands
Board of Directors meeting to consider the potential merger.
The following table presents the mean, median and range of trailing
12-month Net Sales, EBITDA and EBIT multiples from the selected groups of
companies:
Feed Companies
Enterprise Value to Trailing 12-month Mean Median Range
- -------------------------------------- ------ ------- -------------
Net Sales .57x .58x .42x - .70x
EBITDA 8.3x 8.3x 6.9x - 9.7x
EBIT 12.6x 12.6x 10.3x - 15.0x
The Net Sales multiples were calculated based on three companies, and the
EBITDA and EBIT multiples were calculated based on two companies.
Commodity Food Companies
Enterprise Value to Trailing 12-month Mean Median Range
- -------------------------------------- ------ ------ -------------
Net Sales .59x .61x .30x - .87x
EBITDA 6.7x 6.5x 5.6x - 8.0x
EBIT 9.9x 8.7x 7.7x - 14.4x
The Net Sales multiples were calculated based on five companies, and EBITDA
and EBIT multiples we calculated based four companies.
Meat/Poultry Companies
Enterprise Value to Trailing 12-month Mean Median Range
- -------------------------------------- ------ ------ -------------
Net Sales .51x .51x .30x - .72x
EBITDA 6.3x 6.7x 3.7x - 8.0x
EBIT 9.1x 10.2x 5.3x - 10.6x
The Net Sales multiples were calculated based on five companies, and EBITDA
and EBIT multiples we calculated based on four companies.
Mid-Cap Food Companies
Enterprise Value to Trailing 12-month Mean Median Range
- -------------------------------------- ------ ------ -------------
Net Sales .75x .67x .39x - 1.6x
EBITDA 6.9x 6.3x 4.9x - 12.2x
EBIT 10.2x 9.9x 7.3x - 15.5x
The Net Sales, EBITDA and EBIT multiples were all calculated based on 11
companies.
25
Large-Cap Food Companies
Enterprise Value to Trailing 12-month Mean Median Range
- -------------------------------------- ------ ------ -------------
Net Sales 2.27x 2.12x .80x - 4.61x
EBITDA 12.3x 11.5x 8.9x - 19.4x
EBIT 16.5x 14.9x 11.8x - 23.4x
The Net Sales, EBITDA and EBIT multiples were all calculated based on 14
companies.
Wasserstein Perella estimated an equity value range of $53.61 to $68.54 per
share for Agribrands common stock based on the comparable companies trading
analysis.
Because of the inherent differences between the businesses, operations,
financial condition and prospects of Agribrands and the businesses, operations,
financial condition and prospects of the companies included in the comparable
company groups, Wasserstein Perella believed that it is inappropriate to, and
therefore Wasserstein Perella did not, rely solely on the quantitative results
of the comparable company analysis. Instead, an analysis of the results of the
foregoing must take into account differences between the financial and operating
characteristics of Agribrands and companies in the comparable company groups
that would affect the public trading values of Agribrands and such comparable
companies.
Discounted Cash Flow Analysis. Wasserstein Perella also performed a
discounted cash flow analysis to generate an estimate of the net present value
of the projected after-tax unlevered free cash flows based upon Agribrands'
financial forecasts. For this purpose, after-tax unlevered free cash flows are
defined as operating cash flow available after working capital, capital spending
including acquisitions, tax and other operating requirements. Utilizing the
financial forecasts furnished by Agribrands, Wasserstein Perella calculated a
range of present values for Agribrands, on a stand alone basis, of $52.14 to
$65.34 per share, using a range of after-tax discount rates from 11.0% to 13.0%
and an estimated terminal value based upon a range of perpetuity growth rates
from 0.0% to 2.0%
Other. In addition to the analyses outlined above, Wasserstein Perella
conducted such other financial studies, analyses and investigations and
considered such other factors it deemed appropriate for purposes of its opinion.
General Information. No company or transaction used in the foregoing
analyses is identical to Agribrands or the transaction contemplated by the
Merger Agreement. The analyses described above were performed solely as a part
of the analytical process utilized by Wasserstein Perella in connection with its
analysis of the transaction and do not purport to be appraisals or to reflect
the prices at which a company may enter into a business combination or sale
transaction.
Wasserstein Perella is an investment banking and advisory firm and, as part
of its investment banking activities, is regularly engaged in the valuation of
businesses and their securities in connection with:
o mergers and acquisitions;
o negotiated underwritings;
o competitive bids;
o secondary distributions of listed and unlisted securities;
o private placements; and
o valuations for corporate and other purposes.
Agribrands selected Wasserstein Perella as its financial advisor in
connection with the proposed merger because Wasserstein Perella is an
internationally recognized investment banking firm and members of Wasserstein
Perella have substantial experience in transactions similar to the merger and
the valuation of companies.
26
As compensation for its services in connection with the merger, Agribrands
has agreed to pay Wasserstein Perella fees of $5 million for providing financial
advisory services in connection with the merger, including providing the opinion
described above. $4.75 million of such transaction fee is contingent upon the
consummation of the merger. In addition, Agribrands has agreed, among other
things, to reimburse Wasserstein Perella for the expenses reasonably incurred in
connection with its engagement (including counsel fees and expenses) and to
indemnify Wasserstein Perella and certain related parties from certain
liabilities that may arise out of its engagement by Agribrands, which may
include certain liabilities under federal securities laws.
In addition, Wasserstein Perella has performed various investment banking
services for Agribrands from time to time in the past and has received customary
fees for rendering such services. Since September 1, 1998, Agribrands has made
payments to Wasserstein Perella totaling $759,105. In fiscal year 2000,
Agribrands paid Wasserstein Perella $509,105 for services rendered in connection
with a high-yield debt project, the Ralcorp merger and various other projects.
In December 2000, Agribrands paid Wasserstein Perella $250,000 pursuant to the
engagement letter dated October 4, 2000. This amount will be credited toward the
$5 million transaction fee payable to Wasserstein Perella upon consummation of
the merger.
Wasserstein Perella has also performed various investment banking services
for other entities for which Mr. Stiritz (Chairman, Chief Executive Officer and
President of Agribrands) serves as chairman and has received customary fees for
rendering such services.
In the ordinary course of its own business, Wasserstein Perella may
actively trade the debt and equity securities of Agribrands and Cargill for its
own account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in these securities.
Completion of the Merger
The merger will be completed when all of the conditions to completion of
the merger are satisfied or waived, including the approval of the Merger
Agreement by the shareholders of Agribrands. The merger with Cargill will become
effective upon the issuance of the certificate of merger by the Secretary of
State of the State of Missouri.
Structure of the Merger and Conversion of Agribrands Stock
To accomplish the combination of their businesses, Cargill formed a new
company, Abacus Acquisition Corp. At the time the merger is completed, Abacus
will be merged with and into Agribrands, and Agribrands will be the surviving
corporation. As a result, Agribrands will become a wholly-owned subsidiary of
Cargill.
In the merger, each share of Agribrands common stock issued and outstanding
immediately prior to the effective time of the merger, except for shares owned
by Cargill and its subsidiaries, Agribrands treasury stock or dissenting shares,
will be converted, at the election of the holder, into the right to receive an
amount in cash, without interest, equal to $54.50.
Exchange of Stock Certificates or Shares in Book Entry Form for Cash
When the merger is completed, the paying agent will mail the cash
consideration due to each holder of shares in book entry form or, if you hold
your shares in certificate form, instructions for surrendering your Agribrands
stock certificates in exchange for the cash consideration. When you deliver your
stock certificates to the paying agent along with any other required documents,
your stock certificates will be canceled.
You should not submit your Agribrands stock certificates for exchange until
you receive the instructions from the paying agent.
27
Treatment of Agribrands Stock Options and Other Equity Based Awards
When the merger is completed, each outstanding Agribrands stock option will
be converted into an amount of cash, without interest, equal to (i) the excess
of $54.50 over the exercise price per share subject to the option multiplied by
(ii) the number of shares subject to the option. In addition, each outstanding
stock appreciation right relating to Agribrands common stock will be similarly
converted into the right to receive an amount of cash, without interest, equal
to (i) the excess of $54.50 over the fair market value of the common stock on
the date of grant multiplied by (ii) the number of shares subject to the right.
Material United States Federal Income Tax Consequences of the Merger
The merger will be a taxable transaction. For United States federal income
tax purposes, you will generally recognize gain or loss in the merger in an
amount determined by the difference between the cash you receive and your
adjusted tax basis in Agribrands common stock.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS FOR A FULL UNDERSTANDING OF THE
TAX CONSEQUENCES OF THE MERGER TO YOU.
Certain U.S. Federal Income Tax Consequences
General. The following discussion summarizes the material federal income
tax considerations relevant to the merger that are generally applicable to
holders of Agribrands common stock. This discussion is based on currently
existing provisions of the Internal Revenue Code of 1986, as amended, existing
and proposed Treasury Regulations, published administrative rulings and court
decisions, all of which are subject to change or a change in interpretation. Any
such change, which may or may not be retroactive, could alter the tax
consequences to the holders of Agribrands common stock as described herein. It
is assumed that the shares of Agribrands common stock are held as capital assets
by United States persons (i.e., a citizen or resident of the United States or a
domestic corporation). This discussion does not address all aspects of United
States federal income taxation that may be relevant to a particular Agribrands
shareholder in light of such shareholder's personal circumstances or those
Agribrands shareholders subject to special treatment under United States federal
income tax laws (for example, financial institutions; broker-dealers; persons
who are not citizens or residents of the United States or who are foreign
corporations, partnerships, estates or trusts; tax exempt entities or traders in
securities that elect to mark-to-market), or investors who hold their Agribrands
common stock as part of a straddle, hedging, conversion or other integrated
transaction or investors whose functional currency is not the U.S. dollar.
Further, this discussion does not address the consequences to holders who
acquired their stock through the exercise of an employee stock option or other
compensation arrangements. This discussion does not address any aspect of state,
local or foreign taxation. You are urged to consult your tax advisor regarding
the federal, state, local and foreign tax consequences of the merger to you.
Your receipt of the merger consideration (including any cash received upon
exercise of dissenter's rights) will be a taxable transaction for United States
federal income tax purposes. In general, your gain or loss per share of
Agribrands common stock will be equal to the difference between the merger
consideration per share and your adjusted basis in that particular share of the
Agribrands common stock. It may also be a taxable transaction under applicable
state, local and other income tax laws. Such gain or loss generally will be a
capital gain or loss, unless you hold the Agribrands common stock as inventory
for sale in the ordinary course of business. In the case of individuals, trusts,
and estates, such capital gain will be subject to a maximum federal income tax
rate of 20% for shares of Agribrands common stock held for more than 12 months
prior to the date of disposition.
Backup withholding. Non-corporate holders of Agribrands common stock may be
subject to backup withholding at a rate of 31% on the cash merger consideration
or upon exercise of dissenter's rights. Backup withholding will not apply,
however, to a holder who:
28
o furnishes a correct taxpayer identification number and certifies under
penalty of perjury that he or she is not subject to backup withholding
on the substitute Form W-9 (or successor form) included in the letter
of transmittal to be delivered to holders of Agribrands common stock
following consummation of the merger,
o provides a certification of foreign status on Form W-8 (or successor
form), or
o is otherwise exempt from backup withholding.
Any amount withheld under these rules will be creditable against the
holder's U.S. federal income tax liability.
This section does not discuss all aspects of United States federal income
taxation that may be relevant to a particular Agribrands shareholder in light of
the shareholder's particular circumstances and income tax situation. Agribrands
shareholders should consult their own tax advisors to determine the United
States federal, state and local and foreign tax consequences of the merger to
them in view of their own particular circumstances.
Governmental Approvals
We have summarized below the material governmental approvals required for
the merger to be completed. Although we have not yet received all of the
required approvals, we expect that we will receive the governmental approvals in
sufficient time to complete the merger around April 2001.
IRS Supplemental Ruling
Under the Merger Agreement, it is a condition to Cargill's obligation to
close the merger that Agribrands obtain and deliver to Ralston Purina a
supplemental ruling from the IRS reasonably satisfactory to Cargill that the
merger will not have an adverse impact on the validity of the rulings Ralston
Purina and Agribrands obtained from the IRS in connection with Agribrands' 1998
spin-off, including the rulings that the spin-off was not taxable to Ralston
Purina or its shareholders. Although Cargill may, at its option, permit this
condition to be satisfied by delivery to Ralston Purina of a legal opinion of
Fried, Frank, Harris, Shriver & Jacobson, counsel to Cargill, rather than the
supplemental ruling, Cargill does not currently intend to do so.
On December 21, 2000, Agribrands filed a request with the IRS for the
supplemental ruling. Under the Merger Agreement, Agribrands has agreed to use
reasonable best efforts to obtain, and Cargill has agreed to use reasonable
efforts to cooperate in obtaining, the supplemental ruling from the IRS.
Although we believe the IRS should grant the requested supplemental ruling
around April 2001, we cannot be certain as to whether the IRS will grant the
supplemental ruling or the time frame under which it may do so.
Under a separate agreement with Ralston Purina, delivery to Ralston Purina
of either the supplemental ruling or a legal opinion of Fried, Frank
satisfactory to Ralston Purina is required before Cargill and Agribrands may
complete the merger.
Antitrust Considerations.
The merger is subject to the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, which prevents the merger from
being completed until the expiration of a 30-day waiting period following the
filing of certain information and materials with the Antitrust Division of the
Department of Justice and the Federal Trade Commission, or the earlier
termination of such waiting period. If the Department of Justice or the Federal
Trade Commission requests additional information, the waiting period will be
extended and the merger may not be completed until 20 days following both
parties' substantial compliance with the request, unless the waiting period is
terminated earlier. We filed the required information and materials with the
Department of Justice and the Federal Trade Commission on December 21, 2000. The
30-day waiting period expired on January 20, 2001.
29
The Antitrust Division of the Department of Justice or the Federal Trade
Commission may challenge the merger on antitrust grounds, either before or after
expiration of the waiting period. Accordingly, at any time before or after the
completion of the merger, either the Antitrust Division of the Department of
Justice or the Federal Trade Commission could take action under the antitrust
laws as it deems necessary or desirable in the public interest, or other persons
could take action under the antitrust laws, including seeking to enjoin the
merger. Additionally, at any time before or after the completion of the merger,
notwithstanding that the applicable waiting period expired or was terminated,
any state could take action under the antitrust laws as it deems necessary or
desirable in the public interest. There can be no assurance that a challenge to
the merger will not be made or that, if a challenge is made, we will prevail.
Foreign Regulatory Approval.
Cargill and/or Agribrands are in the process of filing the notices with the
antitrust and/or foreign investment authorities in certain foreign jurisdiction,
including the European Union, Canada, Hungary, Mexico and Turkey. We filed the
required information and materials to notify the European Union and Canada of
the merger on January 18, 2001 and February 5, 2001 respectively. The initial
period for the European Union expired on February 19, 2001, and the review
period for the Canadian authorities will expire on April 12, 2001. Although we
do not expect that there will be significant difficulty in securing foreign
approvals for the proposed merger with Cargill, we cannot be certain that we
will obtain all such approvals.
Reasonable Best Efforts
Upon the terms and subject to the conditions set forth in the Merger
Agreement, Agribrands and Cargill have each agreed to use their reasonable best
efforts to take, or cause to be taken, all actions necessary, proper or
advisable to complete the merger, including using their reasonable best efforts
to obtain all consents from governmental authorities and timely making all
necessary filings under the Hart-Scott-Rodino Act.
Dissenters' Rights
Under Section 351.455 of the Missouri General and Business Corporation Law,
Agribrands shareholders who do not vote to approve the Merger Agreement and who
follow the procedure summarized below will have the right to dissent from and
obtain payment in cash of the fair value of their shares of Agribrands common
stock, as of the day prior to the day of the special meeting, in the event of
the consummation of the merger. No holder of Agribrands common stock dissenting
from the merger will be entitled to the cash consideration unless and until the
holder fails to perfect or effectively withdraws or loses such holder's right to
dissent from the Merger Agreement.
The following is a summary of the procedures which must be followed by any
shareholder who wishes to dissent and demand payment for his or her shares in
the event of the consummation of the merger. The text of Section 351.455
contains the applicable procedures. It is set forth in Annex C to this proxy
statement. Holders of Agribrands common stock receiving cash upon exercise of
dissenters' rights may recognize income, gain or loss for U.S. federal income
tax purposes. See "--Material United States Federal Income Tax Consequences of
the Merger."
Agribrands shareholders may assert dissenters' rights only by complying
with all of the following requirements:
o The shareholder must deliver to Agribrands prior to or at the special
meeting a written objection to the Merger Agreement. Such objection
should be delivered or mailed in time to arrive before the special
meeting to the General Counsel of Agribrands. Such a written objection
must be made in addition to and separate from any proxy or other vote
against the approval of the Merger Agreement. Neither a vote against,
a failure to vote for, or an abstention from voting will satisfy the
requirement that a written objection be delivered to Agribrands before
the vote is taken. Unless a shareholder files a written objection as
30
provided above, he or she will not have any dissenters' rights of
appraisal.
o The shareholder must not vote to approve the Merger Agreement.
o The shareholder must deliver to Agribrands, as the surviving
corporation, within twenty days after the effective time of the
merger, a written demand for payment of the fair value of his or her
shares of Agribrands common stock as of the day prior to the date on
which the vote for the approval of the Merger Agreement was taken.
That demand must include a statement of the number of shares of common
stock owned. The demand must be mailed or delivered to the Secretary
of Agribrands at 9811 South Forty Drive, St. Louis, Missouri 63124.
Any shareholder who fails to make a written demand for payment within
the 20-day period after the effective time will be conclusively
presumed to have consented to the Merger Agreement and will be bound
by the terms thereof. Neither a vote against the Merger Agreement nor
the written objection referred to above will satisfy the written
demand requirement referred to in this paragraph.
A beneficial owner of shares of Agribrands common stock who is not the
record owner may not assert dissenters' rights. If the shares of Agribrands
common stock are owned of record in a fiduciary capacity, such as by a trustee,
guardian or custodian, or by a nominee, the written demand asserting dissenters'
rights must be executed by the fiduciary or nominee. If the shares of Agribrands
common stock are owned of record by more than one person, as in a joint tenancy
or tenancy in common, the demand must be executed by all joint owners. An
authorized agent, including an agent for two or more joint owners, may execute
the demand for a shareholder of record; however, the agent must identify the
record owner and expressly disclose the fact that, in executing the demand, he
is acting as agent for the record owner.
If within 30 days of the effective time the value of a dissenting
shareholder's shares of Agribrands common stock is agreed upon between the
shareholder and Agribrands, Agribrands will make payment to the shareholder
within 90 days of the effective time, upon the shareholder's surrender of his or
her shares. Upon payment of the agreed value, the dissenting shareholder will
cease to have any interest in such shares or in Agribrands.
If the dissenting shareholder and Agribrands do not agree on the fair value
of the shares within 30 days after the effective time, the dissenting
shareholder may, within 60 days after the expiration of 30 days, file a petition
in any court of competent jurisdiction within St. Louis County, Missouri, asking
for a finding and a determination of fair value of the shares. The dissenting
shareholder is entitled to judgment against Agribrands for the amount of such
fair value as of the day prior to the date on which the vote was taken approving
the Merger Agreement, together with interest thereon to the date of judgment.
The judgment is payable upon surrender of the share certificates or confirmation
that the shares are held in book entry form representing such Agribrands shares.
Upon payment of the judgment, the dissenting shareholders shall cease to have
any interest in such shares or in Agribrands. Unless the dissenting shareholder
files such petition within the time herein limited, such shareholder and all
persons claiming under such shareholder will be conclusively presumed to have
approved and ratified the Merger Agreement, and will be bound by the terms
thereof.
Delisting and Deregistration of Agribrands Common Stock After the Merger
When the merger is completed, Agribrands common stock will be delisted from
the New York Stock Exchange and will be deregistered under the Securities
Exchange Act of 1934.
Shareholder Lawsuit Challenging the Ralcorp Merger
Following the announcement of the Ralcorp merger, a shareholder complaint
was filed and is pending in the Circuit Court of St. Louis County, Missouri
naming as defendants Agribrands and the individual directors of Agribrands.
Counsel for the shareholder have advised the court that the substantive
allegations of the complaint have been rendered moot by virtue of the terms of
the proposed Cargill merger. Counsel for the shareholder have filed an
31
application for attorneys' fees and expenses in the amount of $1.5 million.
Agribrands intends to vigorously oppose the request for attorneys' fees and
expenses as unmerited in this instance.
Ownership by Principal Holders, Members of the Board of Directors and Management
The table below sets forth, as of March 15, 2001, the beneficial
ownership of shares of Agribrands common stock by (1) each person known by us to
be the beneficial owner of more than five percent of our issued and outstanding
stock on that date, (2) each of our current directors, (3) each executive
officer named in the Summary Compensation Table set forth in our Annual Report
on Form 10-K for our fiscal year ended August 31, 2000, individually, and (4)
all executive officers and directors as a group. Upon consummation of the
merger, the persons listed below will no longer beneficially own any shares of
Agribrands common stock.
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Owner Percent of Class (A)
-------------- ---------------------- -------------------- --------------------
Common Stock David R. Banks 470 *
Common Stock Jay W. Brown 2,976 *
Common Stock M. Darrell Ingram 1,366 (B) *
Common Stock H. Davis McCarty 921 (C) *
Common Stock Joe R. Micheletto 100 *
Common Stock Martin K. Sneider 1,000 *
Common Stock William P. Stiritz 41,155 (D) *
Common Stock Bill G. Armstrong 1,003 (E) *
Common Stock Ki Yong Kim 2,000 *
Common Stock Eric M. Poole 750 *
Common Stock David R. Wenzel 725 *
Common Stock O. Mason Hawkins 1,137,384 (F) 11.6%
Common Stock Southeastern Asset 1,137,384 (G) 11.6%
Management, Inc.
6410 Poplar Avenue,
Suite 900
Memphis, TN 38119
Common Stock Longleaf Partners 1,015,400 (H) 10.3%
Small-Cap Fund
6410 Poplar Avenue,
Suite 900
Memphis, TN 38119
Common Stock Highbridge Capital 950,000 (I) 9.7%
Corporation
767 Fifth Avenue
New York, NY 10153
Common Stock Highbridge Capital 950,000 (J) 9.7%
Management, LLC
767 Fifth Avenue
New York, NY 10153
Common Stock Daniel S. Loeb 505,400 (K) 5.1%
277 Park Avenue,
27th Floor
New York, NY 10019
32
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Owner Percent of Class (A)
-------------- ---------------------- -------------------- --------------------
Common Stock Third Point Management 505,400 (L) 5.1%
Company
277 Park Avenue,
27th Floor
New York, NY 10019
All Officers and Directors 52,836 *
"Beneficial ownership" includes those shares a director or executive
officer has the power to vote or transfer, as well as shares owned by immediate
family members that reside with the director or officer. The table above also
indicates shares that may be obtained within 60 days upon the exercise of
options. An asterisk in the column listing the percentage of shares beneficially
owned indicates the person owns less than 1% of the common stock as of March 15,
2001.
(A) The number of shares outstanding is the sum of (i) the number actually
outstanding on March 15, 2001, and (ii) the number of shares of common
stock which would be issued if all options exercisable within 60 days were
exercised (other than the options subject to acceleration by reason of the
merger).
(B) Includes 26 shares of common stock held by Mr. Ingram's wife.
(C) Includes 492 shares of common stock held in Mr. McCarty's wife's trust of
which he serves as co-trustee.
(D) Includes 4,615 shares of common stock owned by Mr. Stiritz's wife and 934
shares of Common stock owned by Mr. Stiritz's son. Mr. Stiritz disclaims
beneficial ownership of shares of Common stock owned by his wife and son.
(E) Includes 3 shares of Common stock owned by Mr. Armstrong's wife.
(F) Based on information contained in Amendment No. 2 to Schedule 13G filed
with the SEC on February 9, 2000 by Southeastern Asset Management, Inc.
("Southeastern"), an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, O. Mason Hawkins, Chairman of the Board
and Chief Executive Officer of Southeastern, and Longleaf Partners
Small-Cap Fund ("Longleaf"), a series of Longleaf Partners Funds Trust, an
investment company registered under Section 8 of the Investment Company Act
of 1940. In the event that Mr. Hawkins could be deemed to be a controlling
person of Southeastern as the result of his official positions with
Southeastern or his ownership of Southeastern's voting securities, Mr.
Hawkins has disclaimed beneficial ownership of all 1,137,384 of such
shares. Mr. Hawkins indicates that he does not own directly or indirectly
any shares for his own account.
(G) Based on information contained in Amendment No. 2 to Schedule 13G filed
with the SEC on February 9, 2000 by Southeastern Asset Management, Inc.
("Southeastern"), an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, O. Mason Hawkins, Chairman of the Board
and Chief Executive Officer of Southeastern, and Longleaf Partners
Small-Cap Fund ("Longleaf"), a series of Longleaf Partners Funds Trust, an
investment company registered under Section 8 of the Investment Company Act
of 1940. Southeastern has reported that it beneficially owned in the
aggregate 1,137,384 shares. Southeastern indicates that it has sole voting
power with respect to 101,384 of the shares and shared voting power with
Longleaf with respect to 1,015,400 of such shares and no voting power with
respect to 20,600 of such shares, has sole dispositive power with respect
to 121,984 of such shares and shared dispositive power with Longleaf with
respect to 1,015,400 of such shares. The filing indicates that all of the
shares are owned legally by Southeastern's investment advisory clients and
none are owned directly or indirectly by Southeastern.
(H) Based on information contained in Amendment No. 2 to Schedule 13G filed
with the SEC on February 9, 2000 by Southeastern Asset Management, Inc.
("Southeastern"), an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, O. Mason Hawkins, Chairman of the Board
and Chief Executive Officer of Southeastern, and Longleaf Partners
Small-Cap Fund ("Longleaf"), a series of Longleaf Partners Funds Trust, an
investment company registered under Section 8 of the Investment Company Act
of 1940. The filing indicates that Longleaf has sole voting power with
respect to none of the shares and shared voting power with Southeastern
with respect to 1,015,400 of such shares, and has sole dispositive power
with respect to none of such shares and shared dispositive power with
Southeastern with respect to 1,015,400 of such shares.
33
(I) Based on information contained in Amendment No. 1 to Schedule 13D filed by
Highbridge Capital Management, LLC ("Highbridge Management") and Highbridge
Capital Corporation ("Highbridge Capital") on December 5, 2000. The filing
indicates that each of Highbridge Capital and Highbridge Management has
shared voting power over all 950,000 shares and shared dispositive power
over all 950,000 shares.
(J) Based on information contained in Amendment No. 1 to Schedule 13D filed by
Highbridge Capital Management, LLC ("Highbridge Management") and Highbridge
Capital Corporation ("Highbridge Capital") on December 5, 2000. The filing
indicates that each of Highbridge Capital and Highbridge Management has
shared voting power over all 950,000 shares and shared dispositive power
over all 950,000 shares.
(K) Based on information contained in Schedule 13D which was filed with the SEC
on September 15, 2000 by Daniel S. Loeb and Third Point Management Company
L.L.C. ("Third Point"). The filing indicates that each of Mr. Loeb and
Third Point has shared voting power over all 505,400 shares and shared
dispositive power over all 505,400 shares.
(L) Based on information contained in Schedule 13D which was filed with the SEC
on September 15, 2000 by Daniel S. Loeb and Third Point Management Company
L.L.C. ("Third Point"). The filing indicates that each of Mr. Loeb and
Third Point has shared voting power over all 505,400 shares and shared
dispositive power over all 505,400 shares.
THE MERGER AGREEMENT
The following summary of the Merger Agreement describes the material
provisions of the Merger Agreement but does not attempt to describe all of the
terms of the Merger Agreement. The full text of the Merger Agreement is attached
to this proxy statement as Annex A and is incorporated in this proxy statement
by reference. We urge you to read the full text of the Merger Agreement.
Conditions to the Merger
Each of Agribrands' and Cargill's obligations to complete the merger are
subject to the satisfaction or waiver of specified conditions before completion
of the merger, including the following:
o the approval of the Merger Agreement by the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Agribrands
common stock;
o the absence of any law, order or injunction prohibiting the
consummation of the merger;
o the expiration or termination of the applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvement Acts of 1976; and
o the receipt of all governmental approvals necessary for completion of
the merger, except for those the failure of which to obtain will not
have a material adverse effect on Agribrands or on Cargill.
"Material adverse effect," when used in reference to Agribrands, means a
material adverse effect on:
o the business, assets, condition, financial or otherwise, properties,
liabilities or the results of operations of Agribrands and Agribrands'
subsidiaries, taken as a whole;
o the ability of Agribrands to perform its obligations set forth in the
Merger Agreement; or
o the ability of Agribrands to timely consummate the transactions
contemplated by the Merger Agreement.
"Material adverse effect," when used in reference to Cargill, means a
material adverse effect on:
o the ability of Cargill to perform its obligations set forth in the
Merger Agreement; or
o the ability of Cargill to timely consummate the transactions
contemplated by the Merger Agreement.
34
Agribrands' obligations to complete the merger are subject to the
satisfaction or waiver of the following additional conditions before completion
of the merger:
o Cargill's representations and warranties, disregarding all
qualifications contained in those representations and warranties
relating to materiality or to a material adverse effect on Cargill,
must be true and correct on the date of completion of the merger,
except for:
- representations and warranties that expressly address matters
only as of a particular date; and
- any failure of such representations and warranties to be true and
correct that would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on
Cargill.
o Cargill 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 required by the Merger Agreement to be
performed or complied with or satisfied by Cargill on or prior to the
closing date.
o There shall not have occurred after December 1, 2000, any event,
occurrence, fact, condition, change, development or effect that has
had or reasonably would be expected to have a material adverse effect
on Cargill.
Cargill's obligations to complete the merger are subject to the
satisfaction or waiver of the following additional conditions before completion
of the merger:
o Agribrands' representations and warranties, disregarding all
qualifications contained in those representations and warranties
relating to materiality or to a material adverse effect on Agribrands,
must be true and correct on the date of the completion of the merger,
except for:
- representations and warranties that expressly address matters
only as of a particular date; and
- any failure of such representations and warranties to be true and
correct that would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on
Agribrands.
o Agribrands shall have performed and complied with all the covenants
and agreements in all material respects and satisfied in all material
respects all the conditions required by the Merger Agreement to be
performed or complied with or satisfied by Agribrands on or prior to
the closing date.
o There shall not have occurred any event, occurrence, fact, condition,
change, development or effect that has had or reasonably would be
expected to have a material adverse effect on Agribrands, except for
those caused by:
- conditions affecting national, regional or world economies such
as currency fluctuations (but excluding extraordinary disruptions
in regional or world economies or markets or U.S./foreign
currency exchange ratios involving multiple countries);
- conditions affecting the animal feed industry in the regions in
which Agribrands operates; or
- the pendency or announcement of the Merger Agreement or the
transactions contemplated thereby.
o Agribrands must deliver to Ralston Purina the supplemental ruling of
the IRS described above under "The Merger -- Governmental Approvals --
IRS Supplemental Ruling" beginning on page 27.
o All consents, approvals, or completed filings or notices necessary for
the completion of the merger must have been obtained, except for any
the failure of which to obtain will not have a material adverse effect
on Agribrands or Cargill.
35
No Other Transactions Involving Agribrands
The Merger Agreement contains detailed provisions regarding the ability of
Agribrands to seek an alternative transaction. Prior to December 31, 2000,
Agribrands was free to encourage, including by way of furnishing non-public
information (subject to a customary confidentiality agreement, the terms of
which are no more favorable to the other party than the confidentiality
agreement in place between Agribrands and Cargill), solicit, initiate or
facilitate, an alternative "acquisition proposal", as long as it provides
information concerning any such proposal to Cargill as soon as practicable, but
in any event within two business days of receiving the proposal, including:
o the material terms of the acquisition proposal, including all
amendments;
o the identity of the person making the proposal; and
o the nature of requests for information from Agribrands for the
initiation of negotiations or discussions concerning such acquisition
proposal.
If Agribrands had received any inquiry or proposal that constituted, or
could reasonably lead to, an acquisition proposal prior to December 31, 2000,
then Agribrands, for an additional period of 15 days and subject to the
disclosure requirements described above, would have had the right to:
o continue to encourage and/or facilitate the making of an acquisition
proposal;
o continue to participate in discussions or negotiations with, or
furnish information to, the inquirors in connection with, or take any
other action to facilitate any inquiries or the making of any proposal
by the inquirors that constitutes, or could reasonably be expected to
lead to, an acquisition proposal; and
o permit its officers, directors, and financial and legal advisors to
engage in discussions with, and provide any information to, the
inquirors for the purpose of receiving acquisition proposals.
Agribrands did not receive any other proposals prior to December 31, 2000.
After December 31, 2000, Agribrands may not, directly or indirectly, take any
action to:
o encourage, including by way of furnishing nonpublic information,
solicit, initiate or facilitate any "acquisition proposal";
o enter into any agreement with respect to any acquisition proposal; or
o 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 making of any proposal that
constitutes, or could reasonably be expected to lead to, any
acquisition proposal.
However, the Merger Agreement does not prevent Agribrands, or its Board of
Directors, from responding, before Agribrands shareholders approve the Merger
Agreement, to an acquisition proposal that the Agribrands' Board of Directors
determines in good faith is reasonably likely to result in a "superior
proposal", as defined below, if the Board of Directors determines in good faith,
after consultation with outside counsel, that such response is necessary to
discharge properly its fiduciary duties to Agribrands' shareholders. In such an
instance, before Agribrands shareholders approve the Merger Agreement, the Board
of Directors may furnish information to the person making such an acquisition
proposal pursuant to a customary confidentiality agreement, terms of which are
no more favorable to the other party to such confidentiality agreement than
those in place between Agribrands and Cargill. Furthermore, the Board of
Directors as well as Agribrands' officers and financial and legal advisors may
participate in discussions with respect to such acquisition proposal.
A "superior proposal" is a bona fide acquisition proposal made by a third
party which was not solicited, except in accordance with the terms of the Merger
Agreement, by Agribrands, its subsidiaries, representatives or other affiliates
and which, in the good faith judgment of the Board of Directors, taking into
36
account, to the extent deemed appropriate by the Board of Directors, the various
legal, financial and regulatory aspects of the proposal and the person making
such proposal:
o if accepted, is reasonably likely to be consummated; and
o if consummated, is reasonably likely to result in a transaction that
is more favorable to Agribrands shareholders from a financial point of
view than the transactions contemplated by the Merger Agreement.
If the Board of Directors is prepared to accept a superior proposal or to
withdraw, or modify or change in a manner adverse to Cargill its approval or
recommendation of the completion of the merger, as set forth in the Merger
Agreement, then Agribrands shall give Cargill three business days' notice.
Cargill can then indicate that it may make an alternative proposal. If Cargill
so indicates, Agribrands will establish an auction procedure whereby Cargill and
the entity making the superior proposal will have the opportunity to make their
respective offers to the Agribrands' Board of Directors for a period of three
business days following the notice. Agribrands will accept the offer that the
Board of Directors determines is reasonably likely to result in a transaction
that is more favorable from a financial point of view to Agribrands'
shareholders if completed. Furthermore, Agribrands may not definitively accept a
superior proposal unless it concurrently terminates the Merger Agreement and,
concurrently with such termination, makes the termination payment described
below.
Termination
The Merger Agreement may be terminated at any time prior to the completion
of the merger, whether before or after the shareholder approvals have been
obtained:
o by mutual consent of Agribrands and Cargill;
o by Agribrands or Cargill, if there has been a material breach by the
non-terminating party of any of the representations, warranties,
covenants or agreements contained in the Merger Agreement, or any such
representation and warranty shall have become untrue, such that the
closing conditions shall not have been met, and in either such case,
such breach or condition has not been promptly cured, within 30 days
following receipt of written notice of such breach;
o by either Cargill 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 merger shall have become final and
non-appealable, provided that the company seeking to terminate has
used reasonable best efforts to cause the merger to be completed;
o by either Cargill or Agribrands if the transactions contemplated by
the Merger Agreement shall fail to receive the requisite vote for
approval by Agribrands shareholders;
o by Agribrands, before Agribrands shareholders approve the Merger
Agreement, concurrently with its acceptance of a superior proposal;
o by Cargill if Agribrands' Board of Directors withdraws, modifies, or
changes its approval or recommendation of the merger, Merger Agreement
and the transactions contemplated thereby; or
o by either Cargill or Agribrands if the merger shall not have been
consummated before an "end date" of April 30, 2001 unless extended by
Agribrands or Cargill as described below and the failure of the
effective time to occur by such date shall not be due to the failure
of the party seeking to terminate the Merger Agreement in performing
or observing in all material respects the covenants and agreements of
such party contained in the Merger Agreement.
If on April 30, 2001, Agribrands has not satisfied its obligation to
deliver a supplemental ruling from the IRS and Cargill has not waived this
obligation, but all other conditions have been satisfied or waived or shall be
37
capable of being satisfied, then either Cargill or Agribrands may extend the end
date to June 30, 2001. If the supplemental ruling letter has not been received
by June 30, 2001, but the supplemental ruling request is still pending, Cargill
(but not Agribrands) may extend the end date until August 31, 2001.
If at any time prior to August 31, 2001 the IRS communicates to Agribrands
that it declines to rule on the supplemental ruling request, or that it would
rule adversely, Agribrands must notify Cargill, and Cargill may terminate the
Merger Agreement and, if by the earlier of 30 days from the notification date or
by August 31, 2001, Cargill has not agreed that the condition may be satisfied
by an opinion of counsel, in form and substance reasonably acceptable to Cargill
and acceptable to Ralston Purina, then Agribrands may terminate the Merger
Agreement.
Termination Fee
As set forth in more detail below, the Merger Agreement requires Agribrands
to pay a termination fee to Cargill in specified circumstances.
Agribrands shall pay to Cargill the sum of $10,000,000 in the event of the
following:
o if all of the following occur:
- Agribrands or Cargill terminate the Merger Agreement due to the
occurrence of the "end date" or failure of Agribrands to obtain
the supplemental ruling or opinion of counsel discussed above, or
due to the failure of Agribrands to obtain the requisite
shareholder vote to approve the Merger Agreement; and
- prior to the special meeting, a third party announces an
acquisition proposal for Agribrands; and
- within twelve months of the termination of the Merger Agreement,
Agribrands enters into a definitive agreement with respect to
such acquisition proposal; or
o if, prior to the special meeting, Agribrands terminates the Merger
Agreement due to the acceptance of a superior proposal; or
o if Cargill shall terminate the Merger Agreement due to the withdrawal
or modification of, or change in, the recommendation of Agribrands
Board of Directors.
Representations and Warranties
The Merger Agreement contains customary representations and warranties of
Agribrands and Cargill. Agribrands made representations and warranties relating
to, among other things:
o documents filed with the SEC and financial statements included in
those documents;
o absence of certain changes or events; and
o related party transactions.
Covenants
The Merger Agreement provides that, until the merger is completed,
Agribrands will conduct its business in the ordinary course and consistent with
past practice. Agribrands has agreed to use its reasonable best efforts to:
o preserve its business organizations;
o retain the services of its officers, agents and employees; and
o maintain satisfactory existing business relationships.
38
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP, independent public accountants for
Agribrands, has advised Agribrands that it will have representatives present at
the special meeting. The representatives will have the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
OTHER MATTERS
Agribrands does not presently intend to bring any matters other than those
described in this proxy statement before its special meeting. Further,
Agribrands does not have any knowledge of any other matters that may be
introduced by other persons. If any other matters do properly come before the
special meeting or any adjournment or postponement of the special meeting, the
persons named in the enclosed proxy forms will vote the proxies in keeping with
their judgment on such matters.
NO ANNUAL SHAREHOLDER MEETING
Agribrands does not intend to hold a regular meeting of shareholders for
2001. Therefore, in accordance with the bylaws of Agribrands, the current
directors will continue in office as directors until the merger. If the
shareholders do not approve the merger with Cargill, then Agribrands will
schedule an annual meeting of shareholders and solicit proxies for the election
of directors at a date to be determined subsequent to the special meeting for
the approval of the Cargill merger.
SHAREHOLDER PROPOSALS
Under Rule 14a-8 under the Exchange Act, shareholders may present proper
proposals for inclusion in a company's proxy statement and for consideration at
the next annual meeting of its shareholders by submitting their proposals to us
in a timely manner. However, due to the contemplated merger, Agribrands does not
currently intend to hold a 2001 annual meeting of shareholders. In the event
Agribrands would hold such a meeting, the Secretary of Agribrands will announce
the date by which any such proposals must be received pursuant to the Agribrands
bylaws.
WHERE YOU CAN FIND MORE INFORMATION
All documents filed by Agribrands in accordance with Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this proxy statement and
before the date of Agribrands' special meeting are incorporated by reference
into and are deemed to be a part of this proxy statement from the date of filing
of those documents.
You should rely only on the information contained in this proxy statement
or that which we have referred you to. We have not authorized anyone to provide
you with any additional information.
This proxy statement incorporates documents by reference which are not
presented in or delivered with this proxy statement. We are also incorporating
by reference additional documents that we may file with the SEC between the date
of this proxy statement and the date of our special meeting. The SEC allows us
to "incorporate by reference" information into this proxy statement, which means
that we can disclose important information to you by referring you to another
document or report filed separately with the SEC. The information incorporated
by reference is deemed to be a part of this proxy statement, except to the
extent any information is superseded by this proxy statement.
Agribrands SEC Filings. The following documents which have been filed by
Agribrands with the Securities and Exchange Commission (SEC File Number
001-1347) and contain important information about Agribrands and its finances,
are incorporated into this proxy statement:
o Our Annual Report on Form 10-K for the fiscal year ended August
31, 2000, filed with the SEC on November 29, 2000
39
o Our Current Reports on Form 8-K dated October 26 and December 4, 2000
and March 7, 2001
o Our Quarterly Report on Form 10-Q for the fiscal quarter ended on
November 30, 2000 filed with the SEC on January 10, 2001
Any statement contained in a document incorporated or deemed to be
incorporated by reference into this proxy statement will be deemed to be
modified or superseded for purposes of this proxy statement to the extent that a
statement contained in this proxy statement or any other subsequently filed
document that is deemed to be incorporated by reference into this proxy
statement modifies or supersedes the statement. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this proxy statement. In the event that a disclosure
contained in this proxy statement becomes materially misleading or incomplete,
Agribrands will recirculate a proxy statement and resolicit proxies in
connection with the merger.
The documents incorporated by reference into this proxy statement are
available from us upon request. We will provide a copy of any and all of the
information that is incorporated by reference in this proxy statement to any
person, without charge, upon written or oral request. If exhibits to the
documents incorporated by reference in this proxy statement are not themselves
specifically incorporated by reference in this proxy statement, then the
exhibits will not be provided. Any request for documents should be made by April
9, 2001 to ensure timely delivery of the documents.
Requests for documents should be directed to:
Agribrands International, Inc.
9811 South Forty Drive
St. Louis, Missouri 63124-1103
Attention: Investor Relations
Telephone: (314) 812-0590
We file reports, proxy statements and other information with the SEC.
Copies of our reports, proxy statements and other information may be inspected
and copied at the public reference facilities maintained by the SEC at:
Reports, proxy statements and other information concerning Agribrands may
be inspected at:
New York Stock Exchange, Inc.
20 Broad Street
New York, New York 10005
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Room of the SEC, 450 Fifth Street, W., Washington,
D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC maintains a website
that contains reports, proxy statements and other information regarding
Agribrands. The address of the SEC website is http://www.sec.gov.
If you have any questions about the merger, please call Agribrands Investor
Relations at (314) 812-0590.
40
Annex A
AGREEMENT AND PLAN OF MERGER
by and between
CARGILL, INCORPORATED
ABACUS Acquisition Corp.
and
AGRIBRANDS INTERNATIONAL, INC.
dated as of December 1, 2000
Table of Contents
AGREEMENT AND PLAN OF MERGER...................................................1
Recitals..............................................................1
ARTICLE I THE MERGER; CLOSING.................................................1
1.1. The Merger.....................................................1
1.2. Directors and Officers.........................................2
1.3. Articles of Incorporation and Bylaws...........................2
ARTICLE II. EFFECT OF THE MERGER ON SECURITIES OF THE COMPANY.................2
2.1. Conversion of Merger Sub Stock.................................2
2.2. Conversion of Common Stock.....................................2
2.3. Surrender and Payment..........................................3
2.4. Options........................................................3
2.5. Withholding Rights.............................................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................4
3.1. Organization and Good Standing.................................4
3.2. Capitalization.................................................4
3.3. Subsidiaries...................................................5
3.4. Authorization; Binding Agreement...............................5
3.5. Governmental Approvals.........................................5
3.6. No Violations..................................................6
3.7. Securities Filings and Litigation..............................6
3.8. Financial Statements...........................................7
3.9. Absence of Certain Changes.....................................7
3.10. Related Party Transactions.....................................7
3.11. Compliance with Laws...........................................8
3.12. Permits........................................................8
3.13. Finders and Investment Bankers.................................8
3.14. Material Contracts.............................................8
3.15. Employee Benefit Plans.........................................8
3.16. Taxes and Returns.............................................10
3.17. No Adverse Actions............................................11
3.18. Fairness Opinion..............................................11
3.19. Takeover Statutes and Charter.................................11
3.20. Rights Plan...................................................12
3.21. Ralston Purina Consents.......................................12
3.22. WPS Amendment to Management Continuity Agreement..............12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT.........................12
4.1. Organization and Good Standing................................12
4.2. Authorization; Binding Agreement..............................12
4.3. Governmental Approvals........................................12
4.4. No Violations.................................................13
4.5. Financing.....................................................13
ARTICLE V. ADDITIONAL COVENANTS OF THE COMPANY...............................13
5.1. Conduct of Business of the Company and the Company
Subsidiaries................................................13
5.2. Notification of Certain Matters...............................15
5.3. Access and Information........................................15
5.4. Shareholder Approval..........................................15
5.5. Reasonable Best Efforts.......................................16
5.6. Public Announcements..........................................16
5.7. Compliance....................................................16
i
5.8. Company Benefit Plans.........................................16
5.9. Solicitation of Acquisition Proposal..........................16
5.10. SEC and Shareholder Filings...................................18
5.11. Takeover Statutes.............................................18
5.12. Spin-off Covenant.............................................19
ARTICLE VI. ADDITIONAL COVENANTS OF PARENT AND MERGER SUB....................19
6.1. Notification of Certain Matters...............................19
6.2. Reasonable Best Efforts.......................................20
6.3. Public Announcements..........................................20
6.4. Director and Officer Liability................................20
6.5. Company Employee Agreements...................................21
ARTICLE VII. PROXY STATEMENT.................................................21
ARTICLE VIII. CONDITIONS.....................................................21
8.1. Conditions to Each Party's Obligations........................21
8.1.1. Company Shareholder Approval..................................22
8.1.2. No Injunction or Action.......................................22
8.1.3. Governmental Approvals........................................22
8.1.4. HSR Act.......................................................22
8.2. Conditions to Obligations of the Company......................22
8.2.1. Parent Representation and Warranties..........................22
8.2.2. Performance by Parent.........................................22
8.2.3. No Material Adverse Change....................................23
8.2.4. Certificates and other Deliveries.............................23
8.3. Conditions to Obligations of Parent...........................23
8.3.1. Company Representations and Warranties........................23
8.3.2. Performance by the Company....................................23
8.3.3. No Material Adverse Change....................................23
8.3.4. Certificates and Other Deliveries.............................23
8.3.5. Required Consents.............................................23
8.3.6. Spin-off Covenant.............................................23
8.3.7. Effectiveness of WPS Company Options..........................24
8.3.8. Effectiveness of Consent and Agreement........................24
ARTICLE IX. TERMINATION AND ABANDONMENT......................................24
9.1. Termination...................................................24
9.2. Effect of Termination.........................................25
ARTICLE X. MISCELLANEOUS.....................................................26
10.1. Confidentiality...............................................26
10.2. Amendment and Modification....................................26
10.3. Waiver of Compliance; Consents................................26
10.4. Survival of Representations and Warranties....................26
10.5. Notices.......................................................27
10.6. Binding Effect; Assignment....................................28
10.7. Expenses......................................................28
10.8. Governing Law.................................................28
10.9. Counterparts..................................................28
10.10. Interpretation................................................28
10.11 Entire Agreement..............................................28
10.12 Specific Performance..........................................28
10.13 Third Parties.................................................28
ii
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of December 1, 2000, by and between Cargill, Incorporated, a Delaware
corporation ("Parent"), Abacus Acquisition Corp., a Missouri corporation and a
wholly owned subsidiary of Parent ("Merger Sub") and Agribrands International,
Inc., a Missouri corporation (the "Company").
Recitals
A. The Special Committee of the Board of Directors of the Company has
recommended and the Board of Directors of the Company has approved and deems it
advisable and in the best interests of the Company and its shareholders to
consummate the merger provided for herein (the "Merger"), pursuant to which
Parent will acquire all of the common stock of the Company through the merger of
Merger Sub with and into the Company upon the terms and subject to the
conditions set forth herein. The Boards of Directors of Parent and Merger Sub
have approved and deem it advisable and in the best interests of their
respective companies and their respective shareholders to consummate the Merger
upon the terms and subject to the conditions set forth herein.
B. Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
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
THE MERGER; CLOSING
1.1. The Merger. Upon the terms and subject to the conditions set forth in
this Agreement:
(a) At the Effective Time, Merger Sub shall be merged with and into the
Company in accordance with the applicable provisions of the General and Business
Corporation Law of Missouri (the "Missouri Code"). The Company shall be the
surviving corporation in the Merger (the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Missouri. As a
result of the Merger, the Company shall become a direct, wholly owned subsidiary
of Parent. After the Effective Time, the separate corporate existence of Merger
Sub shall cease. The Merger shall have the effects as set forth in Section
351.450 of the Missouri Code.
(b) The closing of the Merger (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 Parent and the Company may agree. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date."
(c) As soon as practicable following the Closing, the parties shall (i)
file articles of merger with respect to the Merger (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 Merger shall become effective at the date and time of the filing
of the Articles of Merger (or such other date and time as may be agreed to by
Parent and the Company and specified in the Articles of Merger as may be
permitted by the Missouri Code). The time at which the Merger becomes effective
is referred to in this Agreement as the "Effective Time."
A-1
1.2. Directors and Officers. The directors of Merger Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation, 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. The officers of the Company immediately prior to the Effective Time
shall continue as the officers of the Surviving Corporation and after the
Effective Time until such time as their successors shall be duly elected or
appointed in accordance with the laws of Missouri or until their earlier death,
resignation or removal.
1.3. Articles of Incorporation and Bylaws. The articles of incorporation
and bylaws of the Company immediately prior to the Effective Time shall be the
articles of incorporation and bylaws of the Surviving Corporation as of the
Effective Time.
ARTICLE II.
EFFECT OF THE MERGER ON SECURITIES OF THE COMPANYAND
MERGER SUB
2.1. Conversion of Merger Sub Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of any of the parties, each share
of the common stock of Merger Sub 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 Merger.
2.2. 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 the Company together with the associated
rights issued pursuant to the Rights Agreement (as hereinafter defined)
("Company Common Stock"), shall be converted into the right to receive in cash
from Parent, without interest, an amount equal to $54.50 (the "Merger
Consideration");
(b) As a result of the Merger and without any action on the part of the
holder thereof, at the Effective Time all shares of Company Common Stock shall
cease to be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of shares of Company Common Stock shall thereafter cease
to have any rights with respect to such shares of Company Common Stock, except
the right to receive, without interest, the Merger Consideration upon the
surrender of a certificate representing such shares of Company Common Stock,
together with a duly completed Letter of Transmittal (as defined below), or a
Letter of Transmittal with respect to shares of Company Common Stock held in
book-entry form (the "Certificates"). To the extent that objecting shareholders'
rights are available under Section 351.455 of the Missouri Code, shares of
Company Common Stock that are issued and outstanding immediately prior to the
Effective Time and that have not voted for the approval 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 2.3 of this Agreement. The Company
shall give prompt notice to Parent of any demand received by the Company from an
objecting shareholder of the Company demanding fair value for the shareholder's
Company Common Stock. Prior to the Effective Time, except with the prior written
consent of Parent, or as may otherwise be required under applicable law, the
Company shall not make any payment with respect to, or settle or offer to
settle, any such demands.
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(c) Notwithstanding anything contained in this section to the contrary,
each share of Company Common Stock issued and held in the Company's treasury or
by any of the Company's subsidiaries immediately prior to the Effective Time
shall, by virtue of the Merger, cease to be outstanding and shall be canceled
and retired without payment of any consideration therefor.
(d) Notwithstanding the foregoing, each share of Company Common Stock owned
by Parent or any of its subsidiaries ("Parent Subsidiaries") at the Effective
Time shall, by virtue of the Merger, be canceled and retired without payment of
any consideration therefor.
(e) The Merger Consideration 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 Company Common Stock.
2.3. Surrender and Payment. (a) Prior to the Effective Time, Parent shall
appoint an agent (the "Paying Agent") for the purpose of exchanging the
Certificates for the Merger Consideration. Immediately after the Effective Time,
Parent shall deposit with or make available to the Paying Agent the Merger
Consideration to be paid in respect of the shares of Company Common Stock (the
"Exchange Fund"). Promptly after the Effective Time, Parent will send, or will
cause the Paying Agent to send, to each record holder of shares of Company
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 Paying
Agent) for use in such exchange (a "Letter of Transmittal").
(b) Upon surrender to the Paying Agent of his Certificate together with a
properly completed Letter of Transmittal, each holder of shares of Company
Common Stock will be entitled to receive promptly the Merger Consideration in
respect of the shares of Company 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 Paying 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
Paying 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 Paying Agent pursuant to this Section 2.3 that remains unclaimed by the
holders of Company Common Stock six months after the Effective Time shall be
returned to Parent, upon demand, and any such holder who has not exchanged his
shares for the Merger Consideration in accordance with this Section 2.3 prior to
that time shall thereafter look only to Parent for payment of such consideration
without any interest thereon. Notwithstanding the foregoing, Parent shall not be
liable to any holder of Company Common Stock for any amounts paid to a public
official pursuant to applicable abandoned property, escheat or similar laws. Any
amounts remaining unclaimed by the holders of Company Common Stock 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 Parent free and clear of any claims or interest of any person
previously entitled thereto.
2.4. Options. (a) At the Effective Time, each option granted by the Company
to purchase shares of Company Common Stock (the "Company Options") which is
outstanding and unexercised immediately prior to the Effective Time shall be
fully vested and converted at the Effective Time into the right to receive an
amount of cash, without interest, equal to (1) the excess, if any, of the Merger
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Consideration over the exercise price per share of Company Common Stock subject
to such Company Option multiplied by (2) the number of shares of Company Common
Stock subject to such option immediately prior to the Effective Time.
(b) At the Effective Time, each stock appreciation right ("SAR") granted by
the Company which is outstanding and unexercised immediately prior to the
Effective Time shall be fully vested and converted at the Effective Time into
the right to receive an amount of cash, without interest, equal to (1) the
excess, if any, of the Merger Consideration over the fair market value on the
date of grant of each share of Company Common Stock subject to the SAR
multiplied by (2) the number of shares of Company Common Stock subject to such
SAR immediately prior to the Effective Time.
2.5. Withholding Rights. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable to any holder of Company Common Stock
or Company Options pursuant to this Article II 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 Parent so withholds
amounts, such amounts shall be treated for all purposes as having been paid to
the holder of Company Common Stock or Company Options, as the case may be, in
respect of which Parent made such deduction and withholding.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that the
statements contained in this Article III are true and correct, except as set
forth in the disclosure schedule delivered by the Company to Parent prior to the
execution of this Agreement (the "Company Disclosure Schedule") or as otherwise
expressly contemplated by this Agreement.
3.1. Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Missouri. Each of the Company's subsidiaries (the "Company Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. Each of the Company and the Company
Subsidiaries is qualified to do business as a foreign corporation in each
jurisdiction in which the failure to be so qualified would have a Company
Material Adverse Effect. For purposes of this Agreement, "Company 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 the Company and the Company Subsidiaries, taken as a
whole, (ii) the ability of the Company to perform its obligations set forth in
this Agreement, or (iii) the ability of the Company to timely consummate the
transactions contemplated by this Agreement. The Articles of Incorporation and
Bylaws of the Company and the Company Subsidiaries will not be amended prior to
the Closing Date. The Company and the Company 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.
3.2. Capitalization. As of the date hereof, the authorized capital stock of
the Company consists of 50,000,000 shares of Company Common Stock and 10,000,000
shares of preferred stock, par value $.01 per share (the "Company Preferred
Stock"). Of such authorized shares, as of the date hereof, there are issued and
outstanding 9,813,851 shares of Company Common Stock, 854,060 shares of Company
Common Stock are issued and held in the treasury of Company, no shares of the
Company Preferred Stock have been designated or issued, and no other capital
stock of Company is issued or outstanding. All issued and outstanding shares of
Company 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 (as hereinafter defined). Except
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as set forth in the Company Disclosure Schedule, as of the date hereof there are
no outstanding rights, including stock appreciation rights, subscriptions,
warrants, puts, calls, unsatisfied preemptive rights, options or other
agreements of any kind relating to, or the value of which is tied to the value
of, any of the outstanding, authorized but not issued, unauthorized or treasury
shares of the capital stock or any other security of the Company, 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 set forth
in the Company Disclosure Schedule, 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 the Company and the
Company Subsidiaries or the ownership thereof other than those imposed by the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder (the "Exchange Act"), applicable state
securities Laws or applicable corporate Law.
3.3. Subsidiaries. Each Company Subsidiary is wholly owned by the Company
and all of the capital stock and other interests of the Company Subsidiaries so
held by the Company 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 Company
Subsidiaries directly or indirectly held by the Company 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 Company Subsidiaries held by the Company and no equity
securities or other interests of any of the Company 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 Company Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Company
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.
3.4. Authorization; Binding Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, including, but not limited to, the Merger, have been duly
and validly authorized by the Company's Board of Directors, and no other
corporate proceedings on the part of the Company or any Company 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 and the transactions contemplated hereby by the
shareholders of Company in accordance with the Missouri Code and the Articles of
Incorporation and Bylaws of the Company). This Agreement has been duly and
validly executed and delivered by the Company and constitutes the legal, valid
and binding agreements of the Company, enforceable against the Company in
accordance with its 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").
3.5. 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 the
Company or any of the Company Subsidiaries is required in connection with the
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execution or delivery by the Company of this Agreement or the consummation 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 Securities and Exchange Commission
(the "SEC") and the New York Stock Exchange (the "NYSE"), (iii) Consents from or
with Governmental Authorities set forth on the Company 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) a Second Supplemental Ruling Letter (as defined in Section 1.4 of the
Consent and Agreement (as defined below)), and (vi) those Consents that, if they
were not obtained or made, do not or would not reasonably be expected to have a
Company Material Adverse Effect.
3.6. No Violations. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance by the
Company with any of the provisions hereof 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 the Company or any of
the Company 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 Material Contract (as hereinafter defined) or
other material obligation to which the Company or any Company 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 the Company or any Company Subsidiary, or (iv)
subject to obtaining the Consents from Governmental Authorities referred to in
Section 3.5, 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 the Company or any Company 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 Company Material Adverse
Effect. The Agreement and Plan of Reorganization, dated as of August 7, 2000, by
and between Ralcorp Holdings, Inc. ("Ralcorp") and the Company and the
agreements ancillary thereto to which the Company is a party have been
terminated and the Company shall have no further obligations thereunder (other
than the obligation to pay a termination fee of $5 million to Ralcorp in
connection with the Company's entering into this Agreement).
3.7. Securities Filings and Litigation. The Company has made available to
Parent true and complete copies of (i) its Annual Reports on Form 10-K, as
amended, for the years ended August 31, 1998, 1999 and 2000, as filed with the
SEC, (ii) its proxy statements relating to all of the meetings of shareholders
(whether annual or special) of the Company 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 the Company 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 "Securities
Filings." As of their respective dates, or as of the date of the last amendment
thereof, if amended after filing, none of the Securities Filings (including all
schedules thereto and disclosure documents incorporated by reference therein),
contained or, as to Securities Filings subsequent to the date hereof, will
contain any untrue statement of a material fact or omitted or, as to 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 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 Securities Filings subsequent to the date hereof, will comply in all
material respects with the Exchange Act or the Securities Act, as applicable.
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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 the Company, threatened against the Company 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 Benefit Plan of the
Company or any of its subsidiaries or otherwise relating to the Company or any
of its subsidiaries or the securities of any of them, or any properties or
rights of the Company or any of its subsidiaries or any Benefit Plan of the
Company or any of its subsidiaries which is required to be described in any
Securities Filing that is not so described. No event has occurred as a
consequence of which the Company would be required to file a Current Report on
Form 8-K pursuant to the requirements of the 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,
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K, as amended) filed by the Company with the SEC after the date hereof
shall be provided to Parent on the date of such filing.
3.8. Financial Statements. The audited consolidated financial statements
and unaudited interim financial statements of the Company included in the
Securities Filings (the "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 the Company and the Company
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 Exchange Act.
3.9. Absence of Certain Changes. Except as set forth in the Securities
Filings filed by the Company prior to the date of this Agreement, since August
31, 2000, 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 U.S./foreign currency exchange ratios involving multiple
countries), (y) conditions affecting the animal feed industry in the regions in
which Company 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 Company Material Adverse Effect; (ii) any declaration,
payment or setting aside for payment of any dividend (except to the Company or
any Company Subsidiary wholly owned by the Company) or other distribution or any
redemption, purchase or other acquisition of any shares of capital stock or
securities of the Company or any Company Subsidiary; (iii) any return of any
capital or other distribution of assets to shareholders of the Company or any
Company Subsidiary (except to the Company or any Company Subsidiary wholly owned
by the Company); (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 the Company or any Company Subsidiary that, if
taken or done on or after the date hereof without Parent's consent, would result
in a breach of Section 5.1, below, and that has had or would reasonably be
expected to have a Company Material Adverse Effect.
3.10. Related Party Transactions. Except as set forth in the Securities
Filings filed by the Company prior to the date of this Agreement, since August
31, 2000, the Company 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 the Company in a proxy statement in connection with an annual meeting of
shareholders.
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3.11. Compliance with Laws. The business of the Company and each Company
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 Company Material Adverse Effect. Without limiting the
generality of the foregoing, neither the Company nor any Company 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 Company Material Adverse Effect.
3.12. Permits. The Company and the Company Subsidiaries have all material
permits, certificates, licenses, approvals, tariffs and other authorizations
required in connection with the operation of their respective businesses
(collectively, "Permits"), and neither the Company nor any Company Subsidiary is
in violation of any Permit, and no proceedings are pending or, to the knowledge
of the Company, threatened, to revoke or limit any Permit, except any such
violation or proceeding which does not and would not reasonably be expected to
have a Company Material Adverse Effect.
3.13. Finders and Investment Bankers. Neither the Company 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 Parent.
3.14. Material Contracts. Neither the Company nor any Company 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 Securities Filing ("Material
Contract") that is not so described in or filed as required by the Securities
Act or the Exchange Act, as the case may be. The Company has made available to
Parent true and accurate copies of the Material Contracts. All such Material
Contracts are valid and binding and are in full force and effect and enforceable
against the Company or such subsidiary in accordance with their respective
terms, subject to the Enforceability Exceptions. Except as referenced in Section
3.6 above, (i) no Consent of any person is needed in order that each such
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 Company Material Adverse Effect,
and (ii) neither the Company nor any of its subsidiaries is in violation or
breach of or default under any such Material Contract; nor to the Company's
knowledge is any other party to any such Material Contract in violation or
breach of or default under any such Material Contract in each case where such
violation or breach would have a Company Material Adverse Effect. Except as set
forth in the Company Disclosure Schedule, neither the Company nor any Company
Subsidiary is a party to or is subject to any contract or agreement that limits
the ability of the Company or any Company Subsidiary, or would limit the ability
of Parent or any subsidiary of Parent after the Effective Time, to compete in or
conduct any line of business or compete with any person or in any geographic
area or during any period.
3.15. Employee Benefit Plans. (a) There are no Benefit Plans (as defined
below) or Foreign Plans (as defined below) maintained or contributed to by the
Company or a Company Subsidiary under which the Company or a Company Subsidiary
could incur any material liability other than the benefit obligations
thereunder. 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
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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
Internal Revenue Code of 1986, as amended (the "Code").
(b) With respect to each Benefit Plan (where applicable): the Company has
made available to Parent 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
the Company: (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 the Company, 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 the Company, there exists no circumstance
under which the Company or Parent 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 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 a Company 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 Laws, except where the failure to
do so would not reasonably be expected to have a Company Material Adverse
Effect. The Company 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 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) Company 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 a Company 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 5.8 below, the consummation of the 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
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amount that would not be deductible pursuant to Section 280G of the Code.
William P. Stiritz is not entitled to any additional payment or other
compensation as a result of the execution of this Agreement, the consummation of
the Merger or any of the actions contemplated hereunder.
(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 a Company 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, 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 the Company, 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.
3.16. Taxes and Returns. (a) The Company and each of the Company
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 the Company and the
Company Subsidiaries are true, complete and correct in all material respects.
(b) The Company and the Company 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 Financial Statements have been
established.
(c) There are no claims or assessments pending against the Company or any
of the Company Subsidiaries for any alleged deficiency in any Tax, and the
Company has not been notified in writing of any proposed Tax claims or
assessments against the Company or any of the Company Subsidiaries (other than
in each case, claims or assessments for which adequate reserves in the 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 the Company or the Company Subsidiaries and none of them has
received a written notice of any proposed material audit or proceeding.
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(e) Neither the Company nor any of the Company 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 the Company or any of the Company
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.
(g) There are no liens for material amounts of Taxes on the assets of the
Company or any of the Company Subsidiaries except for statutory liens for
current Taxes not yet due and payable.
(h) Neither the Company nor any Company 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 the Company or any of the Company 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.
3.17. No Adverse Actions. There is no existing, pending or, to the
knowledge of the Company, threatened termination, cancellation, limitation,
modification or change in the business relationship of the Company or any of the
Company Subsidiaries, with any supplier, customer or other person except such as
would not reasonably be expected to have a Company Material Adverse Effect. None
of the Company, any Company Subsidiary or, to the knowledge of the Company, 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 Company Material Adverse Effect.
3.18. Fairness Opinion. The Company's Board of Directors and the
Independent Committee of the Company's Board of Directors received from
Wasserstein Perella & Co., Inc. an opinion to the effect that the Merger
Consideration is fair to the holders of the shares of Company Common Stock from
a financial point of view.
3.19. 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 the Company or any of the Company
Subsidiaries is applicable to the Merger, this Agreement or the other
transactions contemplated hereby (inasmuch as Company has approved the
transactions contemplated by this Agreement 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 the Company are not applicable to the Merger, this Agreement or
the other transactions contemplated hereby (inasmuch as there are one or more
"Continuing Directors" (as defined in the Articles of Incorporation of the
Company) and the Merger has been approved by a majority of them).
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3.20. Rights Plan. Under the Rights Agreement between the Company and
Continental Stock Transfer & Trust Company, dated as of March 31, 1998 and as
amended on August 7, 2000 and on the date hereof (the "Rights Agreement"),
neither Merger Sub, Parent nor any of their affiliates will become an "Acquiring
Person," no "Shares Acquisition Date" or "Distribution Date" (as such terms are
defined in the Rights Agreement) will occur, and the holders of any rights
issued pursuant to the Rights Agreement will not be entitled to receive any
benefits under the Rights Agreement as a result of the approval, execution or
delivery of this Agreement or the consummation of the transactions contemplated
hereby, including, without limitation, the Merger.
3.21. Ralston Purina Consents. The Company and Ralston Purina Company
("RP") have duly executed and delivered a Consent and Agreement as of the date
set forth in the form attached as Exhibit A hereto (the "Consent and
Agreement"). The Consent and Agreement is valid and binding and in full force
and effect, and is enforceable against the parties (including by Parent) in
accordance with its terms.
3.22. WPS Amendment to Management Continuity Agreement. The Company and
William P. Stiritz have duly executed and delivered the Second Amendment to the
Management Continuity Agreement and Tax Indemnification Agreement in the form
attached as Exhibit B hereto (the "WPS Continuity Agreement Amendment").
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents a nd warrants to the Company that the statements
contained in this Article IV are true and correct, except as set forth in the
disclosure schedule delivered by Parent to Company prior to the execution of
this Agreement (the "Parent Disclosure Schedule") or as otherwise expressly
contemplated by this Agreement.
4.1. Organization and Good Standing. Parent and Merger Sub are each
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware and the State of Missouri, respectively. Each of
Parent and Merger Sub is qualified to do business as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a Parent
Material Adverse Effect. For purposes of this Agreement, "Parent Material
Adverse Effect" shall mean a material adverse effect on (i) the ability of
Parent and Merger Sub to perform their obligations set forth in this Agreement
or (ii) the ability of Parent and Merger Sub to timely consummate the
transactions contemplated by this Agreement.
4.2. Authorization; Binding Agreement. Parent and Merger Sub each have all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. This Agreement, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by each
of Parent's and Merger Sub's Board of Directors and by Parent in its capacity as
sole shareholder of Merger Sub, and no other corporate proceedings on the part
of Parent or Merger Sub are necessary to authorize the execution and delivery of
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of Parent and
Merger Sub and constitutes the legal, valid and binding agreements of both
Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance
with its terms, subject to the Enforceability Exceptions.
4.3. Governmental Approvals. No Consent from or with any Governmental
Authority on the part of Parent or Parent Subsidiaries is required in connection
with the execution or delivery by each of Parent and Merger Sub of this
Agreement or the consummation by each of Parent and Merger Sub 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 and state securities laws
administrators, (iii) Consents from or with Governmental Authorities set forth
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on the Parent 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 Parent Material Adverse Effect.
4.4. No Violations. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance by each of
Parent and Merger Sub with any of the provisions hereof 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 Parent or Merger
Sub, (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 material obligation to which Parent or any Parent 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 Parent or any Parent Subsidiary, or (iv) subject to
obtaining the Consents from Governmental Authorities referred to in Section 4.3
above, contravene any Law currently in effect to which Parent or any Parent
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
Parent Material Adverse Effect.
4.5. Financing. As of the Closing Date, Parent will have the funds, either
from its available cash and cash equivalents or from borrowings to be made under
its existing credit facilities or other financing sources, necessary to
consummate the Merger and the transactions contemplated hereby.
ARTICLE V.
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
5.1. Conduct of Business of the Company and the Company Subsidiaries.
Except as expressly contemplated by this Agreement, during the period from the
date of this Agreement to the Effective Time, the Company shall conduct, and it
shall cause the Company 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 the Company shall, and it shall
cause the Company 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 the Company nor any Company
Subsidiary will, without the prior written consent of Parent:
(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 the
Company or any Company Subsidiary including, but not limited to, any
securities convertible into or exchangeable for shares of capital stock of
any class of the Company or any Company Subsidiary, except for the issuance
of shares of Company Common Stock pursuant to the exercise of the Company
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 the Company or a
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Company Subsidiary wholly owned by the Company, or redeem, purchase or
otherwise acquire or offer to acquire any shares of its capital stock or
other securities;
(iv) (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 a Company Subsidiary
and customary travel, relocation or business advances to employees made in
the ordinary course of business consistent with past practice); provided
that, after notifying Parent, the Company and Company Subsidiaries may make
capital expenditures that are in the ordinary course of business consistent
with past practice and in accordance with the capital budget for the
Company previously furnished to Parent (provided, further that, without the
prior written consent of Parent, the capital expenditures made with respect
to any individual project shall not exceed $250,000 and total capital
expenditures in any three month period shall not exceed $5 million, in the
aggregate); (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 other than to secure debt permitted under (a) of
this clause (iv) and other than transfers in the ordinary course of
business consistent with past practice;.
(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, management continuity, 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, or (b) with respect to non-officer
employees, such as are in the ordinary course of business consistent with
past practice.
(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 the Company, unless required to do so by applicable Law;
(viii) settle or compromise any Tax liability of the Company 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
the Company or any Company Subsidiaries or file or cause to be filed any
claim for refund of Taxes paid by or on behalf of the Company or any
Company Subsidiaries; or
(x) prepare or file any Tax Return of the Company 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, the Company covenants that from and after the date of this
Agreement, unless Parent shall otherwise expressly consent in writing, the
Company shall, and the Company shall cause each of the Company Subsidiaries
to, use its or their reasonable best efforts to comply in all material
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respects with all Laws applicable to it or any of its properties, assets or
business and maintain in full force and effect all Permits necessary for,
or otherwise material to, such business.
5.2. Notification of Certain Matters. The Company shall give prompt notice
to Parent 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 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 3.5 or 3.6 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 Company
Material Adverse Effect; (v) the commencement or threat of any Litigation
involving or affecting the Company or any Company Subsidiary, or any of their
respective properties or assets, or, to its knowledge, any employee, agent,
director or officer of the Company or any Company Subsidiary, in his or her
capacity as such or as a fiduciary under a Benefit Plan of the Company, 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
Merger, or any material development in connection with any Litigation disclosed
by the Company in or pursuant to this Agreement or the Company Securities
Filings; (vi) the occurrence of any Event that would reasonably be expected to
cause a breach by the Company 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 the Company of any provision of this Agreement.
5.3. Access and Information. Between the date of this Agreement and the
Effective Time, the Company will give, and will cause each of the Company
Subsidiaries to give, and shall direct its financial advisors, accountants and
legal counsel to give, upon reasonable notice, Parent, 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, Tax Returns (and
supporting schedules), books and records of or pertaining to the Company and the
Company Subsidiaries, will permit the foregoing to make such reasonable
inspections as they may require and will cause its officers promptly to furnish
Parent with (a) such financial and operating data and other information with
respect to the business and properties of the Company and the Company
Subsidiaries as Parent may from time to time reasonably request and (b) a copy
of each material report, schedule and other document filed or received by the
Company or any of the Company 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 the Company is
subject; provided that the Company shall use its reasonable best efforts to
obtain waivers of such restrictions.
5.4. Shareholder Approval. As soon as practicable, the Company will take
all steps necessary to duly call, give notice of, convene and hold a meeting of
its shareholders (the "Company Shareholders Meeting") for the purpose of
approving this Agreement and the Merger and the transactions contemplated hereby
and for such other purposes as may be necessary or desirable in the opinion of
Parent and the Company in connection with effectuating the transactions
contemplated hereby (the "Company Proposal"). Except as otherwise contemplated
by this Agreement and subject to the exercise of their fiduciary duties, the
Board of Directors of the Company (i) will recommend to the shareholders of the
Company that they approve the Company Proposal, and (ii) will use its reasonable
best efforts to obtain any necessary approval by the Company's shareholders of
the Company Proposal, including, without limitation, voting the shares of
Company Common Stock held by such directors for such adoption and approval.
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5.5. Reasonable Best Efforts. Subject to the terms and conditions herein
provided, the Company 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 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 the Company of this Agreement or
the consummation by the Company of the transactions contemplated hereby, (ii)
the defending of any Litigation against the Company or any Company 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 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, the Company 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. The Company will consult with counsel for Parent as to, and will
permit such counsel to participate in, at Parent's expense, any Litigation
referred to in clause (ii) above brought against or involving the Company or any
Company Subsidiary.
5.6. Public Announcements. So long as this Agreement is in effect, the
Company 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
Merger, the Company Proposal or the transactions contemplated by this Agreement
without the consent of Parent 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 the Company, to the extent
practicable, prior to making such announcement, shall consult with Parent
regarding the same.
5.7. Compliance. In consummating the Merger and the transactions
contemplated hereby, the Company shall comply, and/or cause the Company
Subsidiaries to comply or to be in compliance, in all material respects, with
all applicable Laws.
5.8. Company Benefit Plans. Between the date of this Agreement and through
the Effective Time, no discretionary award or grant under any Benefit Plan of
the Company or a Company Subsidiary shall be made without the consent of Parent;
nor shall the Company or a Company 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 the Company nor any Company Subsidiary shall make any
amendment to any Benefit Plan or any awards thereunder without the consent of
Parent.
5.9. Solicitation of Acquisition Proposal. (a) Subject to compliance with
Section 5.9(c), for a period of thirty (30) days from the date of this Agreement
(the "Initial Solicitation Period"), the Company shall have the right to,
directly or indirectly, take action to (1) encourage (including by way of
furnishing nonpublic information), solicit, initiate or facilitate any
Acquisition Proposal (as defined in Section 5.9(d)), or (2) participate in
discussions or negotiations with, or furnish 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 Acquisition Proposal; provided, however, that the Company and its
advisors and representatives may furnish information only pursuant to a
customary confidentiality agreement the terms of which are no more favorable to
the other party to such confidentiality agreement than those then in place with
Parent. It is expressly understood and agreed that subject to compliance with
Section 5.9(c) and the proviso set forth in the prior sentence, during the
Initial Solicitation Period, the Company's officers, directors, and financial
and legal advisors shall be permitted to actively encourage and solicit
inquiries from, initiate and engage in discussions with, and provide any
information to, any party for the purpose of receiving any Acquisition Proposal
without violating this Agreement. In the event that during the Initial
Solicitation Period, the Company receives any inquiry or proposal that
constitutes, or could reasonably lead to, an Acquisition Proposal (any of the
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foregoing, an "Initial Period Acquisition Inquiry"), then, subject to compliance
with Section 5.9(c) and the proviso contained in the first sentence of this
Section 5.9(a), for fifteen days after the Initial Solicitation Period (and
prior to the Company Shareholders Meeting), the Company shall have the right to
(A) continue to encourage (including by way of furnishing nonpublic information)
and/or facilitate the making of Acquisition Proposals by persons that made
Initial Period Acquisition Inquiries (the "Initial Period Inquirors"), (B)
continue to participate in discussions or negotiations with, or furnish
information to, the Initial Period Inquirors in connection with, or take any
other action to facilitate any inquiries or the making of any proposal by the
Initial Period Inquirors that constitutes, or could reasonably be expected to
lead to, an Acquisition Proposal from such Initial Period Inquirors, and (C)
permit its officers, directors, and financial and legal advisors to engage in
discussions with, and provide any information to, the Initial Period Inquirors
for the purpose of receiving Acquisition Proposals from the Initial Period
Inquirors. In the event that, during the Initial Solicitation Period (or during
the subsequent 15 days, if from an Initial Period Inquiror), the Company
receives an Acquisition Proposal that the Board of Directors of the Company
determines in good faith is reasonably likely to result in a Superior Proposal
(as defined in Section 5.9(d)), then, subject to (x) compliance with Section
5.9(c) and the proviso contained in the first sentence of this Section 5.9(a)
and (y) if the Board of Directors of the Company determines in good faith, after
consultation with outside counsel, that it is reasonably likely to be necessary
to do so to discharge its fiduciary duties to the shareholders of the Company,
the Company may, following the Initial Solicitation Period and prior to the
Company Shareholders Meeting, (A) continue to encourage (including by way of
furnishing nonpublic information) and/or facilitate such Acquisition Proposal,
(B) continue to participate in discussions or negotiations with, or furnish any
information to, the person making such Acquisition Proposal, and (C) permit its
officers, directors, and financial and legal advisors to engage in discussions
with, and provide any information to, the person making such Acquisition
Proposal without violating this Agreement.
(b) Subject to Section 5.9(a) above, after the Initial Solicitation Period,
the Company shall not, directly or indirectly, take any action to (1) encourage
(including by way of furnishing nonpublic information), solicit, initiate or
facilitate any Acquisition Proposal, (2) enter into any agreement with respect
to any 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
Acquisition Proposal; provided, however, that if the Board of Directors of the
Company determines in good faith, after consultation with outside counsel, that
it is necessary to do so to discharge properly its fiduciary duties to
shareholders, the Company may, prior to the Company Shareholders Meeting, in
response to an Acquisition Proposal that the Board of Directors of the Company
determines in good faith is reasonably likely to result in a Superior Proposal
and subject to such party's compliance with Section 5.9(c), (A) furnish
information with respect to the Company to the person making such 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 then in place with Parent and (B) participate in discussions with respect
to such Acquisition Proposal. It is expressly understood and agreed that with
respect to the foregoing proviso, the Company's legal and financial advisors
shall be able to make inquiries, and engage in discussions, with any party that
has made an Acquisition Proposal (and such party's legal and financial advisors)
in order to elicit information to allow the Company's Board of Directors to
determine in good faith if such Acquisition Proposal is reasonably likely to
result in a Superior Proposal.
(c) The Company will as promptly as practicable (but in any event within
two business days) (x) communicate to Parent any Acquisition Proposal received
by the Company or any of its advisors or representatives (in each case, whether
written or oral), including the material terms of any such proposal (including
any changes or amendments thereto) and the identity of the person and its
affiliates making the same, and (y) inform Parent of any information requested
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from the Company or any of its advisors or representatives, and of any
negotiations or discussions being sought to be initiated with the Company or any
of its advisors or representatives, in each case in connection with any
Acquisition Proposal. The Company will keep Parent informed of the status of any
discussions, negotiations or further inquiries regarding any Acquisition
Proposal, including, without limitation, providing Parent with copies of (x) any
written Acquisition Proposals or written indications of interest with respect to
potential Acquisition Proposals received by the Company or any of its advisors
or representatives and (y) any information delivered to any person in connection
with any Acquisition Proposal or potential Acquisition Proposal which has not
been previously delivered to Parent.
(d) "Acquisition Proposal" means any offer or proposal concerning any (1)
merger, consolidation, business combination, or similar transaction involving
the Company, (2) sale, lease or other disposition of assets of the Company
representing 20% or more of the consolidated assets of the Company and the
Company 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 the Company 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
the Company. "Superior Proposal" means a bona fide Acquisition Proposal made by
a third party which was not solicited by the Company in violation of this
Agreement, its subsidiaries, representatives or other affiliates and which, in
the good faith judgment of the Company's Board of Directors, taking into
account, to the extent deemed appropriate by the Company'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 the Company's shareholders (in their
capacity as shareholders), from a financial point of view, than the transactions
contemplated by this Agreement.
(e) If the Company's Board of Directors is prepared to accept a Superior
Proposal or to withdraw, or modify or change in a manner adverse to Parent or
Merger Sub, its approval or recommendation of the Merger and/or the Company
Proposal, then the Company shall give Parent three business days notice thereof
and furnish Parent with a copy of an agreement the Company is prepared to
execute with respect to the transaction contemplated by such proposal. If Parent
indicates that it may make an alternative proposal, the Company will establish
an auction procedure whereby, for a period of three business days following the
day in which the Company shall have given the notice referred to in the prior
sentence, Parent and the party making the Superior Proposal will have the
opportunity to make their respective offers to be considered by the Company. The
Company shall accept the offer from such party that the Company's Board of
Directors shall have determined that, if consummated, is reasonably likely to
result in a transaction that is more favorable to the Company's shareholders (in
their capacity as shareholders) from a financial point of view. Notwithstanding
anything to the contrary contained herein, the Company may not definitively
accept a Superior Proposal unless the Company concurrently therewith terminates
this Agreement pursuant to Section 9.1(f) and, concurrently with such
termination, makes the payment required by Section 9.2(b).
5.10. SEC and Shareholder Filings. The Company shall send to Parent 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.
5.11. Takeover Statutes. If any Takeover Statute is or may become
applicable to the Merger or the transactions contemplated hereby, the Company
and the members of its Board of Directors will grant such approvals and will
take such other actions as are necessary so that the Merger and the other
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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 Merger and any of the
transactions contemplated hereby.
5.12 Second Supplemental Ruling Letter.
(a) The Company shall use reasonable best efforts to obtain from the
Internal Revenue Service (the "IRS") a Second Supplemental Ruling Letter (as
defined in Section 1.4 of the Consent and Agreement). In that regard, as
promptly as possible following the execution of this Agreement, the Company,
through its outside tax counsel, Sutherland Asbill & Brennan LLP ("SAB"), shall
prepare and file a request for a Second Supplemental Ruling Letter from the IRS.
The request for such supplemental ruling letter (including any subsequent
submissions) is hereafter referred to as the "Second Supplemental Ruling
Request." In addition, the Company, through SAB, shall engage in such
discussions with the IRS as are reasonably necessary to facilitate the obtaining
of the Second Supplemental Ruling.
(b) Parent agrees to use reasonable best efforts to cooperate fully and
promptly with the Company and SAB in reviewing drafts of the Second Supplemental
Ruling Request (which drafts shall be made available, when reasonably complete,
to Parent and its outside tax counsel, Fried, Frank, Harris, Shriver & Jacobson
("FF")), and in otherwise responding to any reasonable requests for information
that may be reasonably required in connection with the preparation or IRS
processing of the Second Supplemental Ruling Request. Prior to being filed with
the IRS, the Second Supplemental Ruling Request, and any subsequent written
submissions that may be required by the IRS in connection with its processing of
the Second Supplemental Ruling Request, shall be approved by Parent or FF, which
approval shall be communicated in writing to SAB and shall not be unreasonably
withheld. The Company, through SAB, shall promptly advise Parent, through FF, of
all communications with the IRS in connection with its processing of the Second
Supplemental Ruling Request and provide Parent and FF, with copies of all such
communications that are in writing. The Company shall provide Parent and FF
reasonable notice of any meeting or discussions with the IRS with respect to the
Second Supplemental Ruling Request and give Parent and FF the opportunity to
attend such meetings and participate in such discussions. In the event that
Parent seeks an opinion of counsel with respect to the tax effect of the Merger
on the Company's spin-off from RP, the Company shall provide such counsel with
such representations as are reasonably necessary to support such opinion.
(c) Notwithstanding anything to the contrary contained herein, subject to
Section 5.12(a), Parent in its sole discretion may at any time agree (by
providing written notice to the Company) that the condition set forth in Section
8.3.6 may be satisfied by delivery to RP of a Tax Opinion.
ARTICLE VI.
ADDITIONAL COVENANTS OF PARENT AND MERGER SUB
Parent and Merger Sub covenant and agree as follows:
6.1. Notification of Certain Matters. Parent shall give prompt notice to
the Company if any of the following occurs after the date of this Agreement: (i)
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 4.3 or 4.4 above or not required to be
disclosed pursuant to the terms thereof; (ii) 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; (iii) the occurrence of an Event
which would reasonably be expected to have a Parent Material Adverse Effect;
(iv) the commencement or threat of any Litigation involving or affecting Parent
or any Parent Subsidiary, or any of their respective properties or assets, or,
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to its knowledge, any employee, agent, director or officer of Parent or any
Parent Subsidiary, in his or her capacity as such or as a fiduciary under a
Benefit Plan of Parent, which relates to the consummation of the Merger; and (v)
the occurrence of any Event that would reasonably be expected to cause a breach
by Parent of any provision of this Agreement.
6.2. Reasonable Best Efforts. Subject to the terms and conditions herein
provided, Parent and Merger Sub agree to use their 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 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 Parent and
Merger Sub of this Agreement or the consummation by Parent and Merger Sub of the
transactions contemplated hereby, (ii) the defending of any Litigation against
Parent or any Parent 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 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, Parent
and Merger Sub agree to use their 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.
6.3. Public Announcements. So long as this Agreement is in effect, Parent
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 Merger, the
Company Proposal or the transactions contemplated by this Agreement without the
consent of the Company 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 Parent, to the extent practicable, prior to
making such announcement, shall consult with the Company regarding the same.
6.4. Director and Officer Liability. (a) The Surviving Corporation shall
indemnify and hold harmless and advance expenses to the present and former
officers and directors of the Company, and each person who prior to the
Effective Time becomes an officer or director of the Company (each an
"Indemnified Person"), in respect 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 Merger) 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 6.4(a). The Surviving
Corporation 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 the Surviving Corporation 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 the Surviving Corporation in connection
with such matter.
(b) For six years after the Effective Time, the Surviving Corporation 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 Merger) covering each Indemnified Person currently covered
by the Company's officers' and directors' liability insurance policy 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 the Company to Parent);
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 the Company as
of the date hereof for such insurance, then the Surviving Corporation shall
provide a policy with the best coverage as shall then be available at 200% of
such rate.
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(c) The rights of each Indemnified Person and his or her heirs and legal
representatives under this Section 6.4 shall be in addition to any rights such
Indemnified Person may have under the Articles of Incorporation or Bylaws of the
Company, 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 Merger and are intended to benefit, and shall be enforceable
by, each Indemnified Person.
6.5. Company Employee Agreements. From and after the Effective Time, Parent
shall cause the Surviving Corporation to honor, in accordance with its terms,
each existing management continuity agreement and other severance arrangement of
the Company or between the Company and any of its officers or employees.
ARTICLE VII.
PROXY STATEMENT
Parent and the Company shall cooperate and promptly prepare and the Company
shall file with the SEC as soon as practicable a proxy statement with respect to
the Company Shareholders Meeting (the "Proxy Statement"). The parties will cause
the Proxy Statement to comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder. The Company shall use all reasonable efforts, and Parent will
cooperate with the Company, to have the Proxy Statement cleared by the SEC as
promptly as practicable. The Company shall, as promptly as practicable, provide
copies of any written comments received from the SEC with respect to the Proxy
Statement to Parent and advise Parent of any verbal comments with respect to the
Proxy Statement received from the SEC. The Company agrees that the Proxy
Statement and each amendment or supplement thereto at the time of mailing
thereof and at the time of the Company Shareholders Meeting 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 the Company
in reliance upon and in conformity with written information concerning Parent
furnished to the Company by Parent specifically for use in the Proxy Statement.
Parent agrees that the written information provided by it for inclusion in the
Proxy Statement and each amendment or supplement thereto, at the time of mailing
thereof and at the time of the Company Shareholders Meeting, 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 will be made by the Company without the
approval of Parent. The Company will advise Parent promptly of any request by
the SEC for amendment of the Proxy Statement or comments thereon and responses
thereto or requests by the SEC for additional information. Whenever any event or
condition affecting the Company or Parent occurs that is required to be set
forth in an amendment or supplement to the Proxy Statement, 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 the Company, such amendment or supplement.
ARTICLE VIII.
CONDITIONS
8.1. Conditions to Each Party's Obligations. The respective obligations of
each party to effect the Merger shall be subject to the fulfillment or waiver on
or prior to the Closing Date of the following conditions:
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8.1.1. Company Shareholder Approval. The Merger shall have been
approved at or prior to the Effective Time by the requisite vote of the
shareholders of the Company in accordance with the Missouri Code and the
Company's Articles of Incorporation.
8.1.2. 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 Merger and which has not
been vacated, dismissed or withdrawn by the Effective Time. Parent and the
Company shall use their reasonable best efforts to have any of the foregoing
vacated, dismissed or withdrawn on or prior to the Effective Time.
8.1.3. Governmental Approvals. All Consents of any Governmental
Authority required for the consummation of the Merger and the transactions
contemplated by this Agreement shall have been obtained by Final Order (as
hereafter defined), except (x) as may be waived by Parent or (y) those the
failure of which to obtain will have neither a Company Material Adverse Effect
nor a Parent Material Adverse Effect. 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.
8.1.4. HSR Act. The waiting period applicable to the Merger 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.
8.2. Conditions to Obligations of the Company. The obligation of the
Company to effect the Company 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 the Company:
8.2.1. Parent Representation and Warranties. As of the Closing Date,
none of the representations or warranties of Parent contained in this Agreement,
disregarding any qualifications herein regarding materiality or Parent 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
Parent Material Adverse Effect.
8.2.2. Performance by Parent. Parent 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 required by this Agreement to be
performed or complied with or satisfied by Parent on or prior to the Closing
Date.
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8.2.3. No Material Adverse Change. There shall not have occurred after
the date hereof any Event that has had or reasonably would be expected to have a
Parent Material Adverse Effect.
8.2.4. Certificates and other Deliveries. Parent shall have delivered
to the Company a certificate executed on its behalf by its Chief Executive
Officer to the effect that the conditions set forth in Subsections 8.2.1, 8.2.2
and 8.2.3, above, have been satisfied.
8.3. Conditions to Obligations of Parent. The obligations of Parent to
effect the 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 Parent:
8.3.1. Company Representations and Warranties. As of the Closing Date,
none of the representations or warranties of the Company contained in this
Agreement, disregarding any qualifications herein regarding materiality or
Company 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 Company Material Adverse Effect.
8.3.2. Performance by the Company. The Company shall have performed and
complied with all the covenants and agreements in all material respects and
satisfied in all material respects all the conditions required by this Agreement
to be performed or complied with or satisfied by the Company on or prior to the
Closing Date.
8.3.3. 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 U.S./foreign currency exchange ratios involving multiple countries),
(y) conditions affecting the animal feed industry in the regions in which the
Company 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 Company Material Adverse Effect.
8.3.4. Certificates and Other Deliveries. The Company shall have
delivered, or caused to be delivered, to Parent (i) a certificate executed on
its behalf by its Chief Executive Officer to the effect that the conditions set
forth in Subsections 8.3.1, 8.3.2 and 8.3.3, above and 8.3.7 below, have been
satisfied; (ii) a certificate of good standing from the Secretary of State of
the State of Missouri stating that the Company is a validly existing corporation
in good standing; (iii) duly adopted resolutions of the Board of Directors of
the Company approving the execution, delivery and performance of this Agreement
and the instruments contemplated hereby and of the shareholders of the Company
approving the Company Proposal, certified by the Secretary or an Assistant
Secretary of the Company; (iv) a true and complete copy of the Articles of
Incorporation of the Company certified by the Secretary of State of the State of
Missouri, and a true and complete copy of the Bylaws of the Company certified by
the Secretary or an Assistant Secretary of the Company; and (v) such other
documents and instruments as Parent reasonably may request.
8.3.5. Required Consents. Any required Consents of any person to the
Merger or the transactions contemplated hereby as described in Sections 3.5,
3.6, 4.3 and 4.4 shall have been obtained and be in full force and effect,
except for those the failure of which to obtain will have neither a Company
Material Adverse Effect nor a Parent Material Adverse Effect.
8.3.6. Spin-Off Ruling/Opinion. The Company shall have delivered to RP
a Second Supplemental Ruling Letter from the IRS (in form and substance
reasonably acceptable to Parent) or, in the event that Parent has agreed that
the condition contained in this Section 8.3.6 may be satisfied by delivery to RP
of a Tax Opinion (as defined below) as contemplated by Sections 5.12(c) and/or
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9.1(d), RP shall have received an opinion of counsel (in form and substance
reasonably acceptable to Parent) as contemplated by Section 1.4 of the Consent
and Agreement (a "Tax Opinion").
8.3.7. Effectiveness of WPS Continuity Agreement Amendment. The WPS
Continuity Agreement Amendment shall be in full force and effect, and
enforceable against William P. Stiritz in accordance with its terms.
8.3.8. Effectiveness of Consent and Agreement. The Consent and
Agreement shall be in full force and effect, and enforceable against the parties
(including by Parent) in accordance with its terms.
ARTICLE IX.
TERMINATION AND ABANDONMENT
9.1. Termination
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of this Agreement and the Merger by the
shareholders of the Company:
(a) by mutual consent of the Company and Parent;
(b) (1) by the Company (provided that the Company is not then in
material breach of any representation, warranty, covenant or other
agreement contained herein), if there has been a breach by Parent 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 8.2.1 or Section 8.2.2 will not
be satisfied and, in either such case, such breach or condition has not
been promptly cured within 30 days following receipt by Parent of written
notice of such breach; (2) by Parent (provided that Parent is not then in
material breach of any representation, warranty, covenant or other
agreement contained herein), if there has been a breach by the Company 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 8.3.1 or Section 8.3.2
will not be satisfied and such breach or condition has not been promptly
cured within 30 days following receipt by the Company of written notice of
such breach;
(c) by either Parent or the Company 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 Merger shall have become final and
nonappealable (so long as the party seeking termination is not in breach of
Section 5.5 or Section 6.2 hereof);
(d) by either Parent or the Company if the Merger shall not have been
consummated before the "End Date", which shall be April 30, 2001; provided,
however, that if on April 30, 2001, the condition to closing set forth in
Section 8.3.6 shall not have been satisfied (or waived by Parent) but all
other conditions to consummation of the Merger shall have been satisfied
(or waived) or shall be capable of being satisfied, then either party shall
have the right to extend the End Date to June 30, 2001. If the Second
Supplemental Ruling Letter has not been received by June 30, 2001, but the
Second Supplemental Ruling Request is still pending at that date, Parent
shall have the right to extend the End Date until August 31, 2001 and shall
have the right until August 31, 2001 to agree (by providing a written
notice to the Company) that the condition set forth in Section 8.3.6 may be
satisfied by delivery to RP of a Tax Opinion; provided, however, that,
unless otherwise determined by Parent, efforts to obtain the Second
Supplemental Ruling Letter shall continue as provided in Section 5.12 at
least until August 31, 2001. If at any time prior to August 31, 2001 the
IRS communicates to the Company or SAB that (i) for any reason, the IRS
declines to rule on the Second Supplemental Ruling Request, or (ii) the IRS
has finally determined that it would rule adversely, Parent shall be
promptly notified of such communication and shall then have 30 days
(measured from the date Parent reasonably confirms based on discussion with
the IRS that the Company is unable to obtain either any ruling or a
favorable ruling (such date, the "IRS Ruling Notification Date")), or such
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lesser number of days until August 31, 2001, to nonetheless agree (by
providing a written notice to the Company) that the condition set forth in
Section 8.3.6 may be satisfied by delivery to RP of a Tax Opinion. If
Parent fails to so agree by the expiration of such 30 day period (or by
August 31, 2001, if earlier), the Company shall have the right to terminate
this Agreement pursuant to this paragraph (d), notwithstanding that the End
Date has not occurred. Parent shall have the right to terminate this
Agreement pursuant to this paragraph (d) at any time after the IRS Ruling
Notification Date, notwithstanding that the End Date has not occurred.
Notwithstanding the foregoing, a party shall not be permitted to extend the
End Date or terminate this Agreement pursuant to this paragraph (d) if the
failure of the Effective Time to occur by the End Date shall be due to the
failure of such party to perform or observe in all material respects the
covenants and agreements of such party set forth herein;
(e) by either Parent or the Company if the transactions contemplated by
this Agreement shall fail to receive the requisite vote for approval and
adoption by the shareholders of the Company at the Company Shareholders
Meeting or any adjournment or postponement thereof; provided that the right
to terminate this Agreement under this Section 9.1(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) prior to the Company Shareholders Meeting, by the Company
concurrently with its acceptance of a Superior Proposal; or
(g) by Parent, if the Board of Directors of the Company shall have
withdrawn, or modified or changed, in a manner adverse to Parent or Merger
Sub, its approval or recommendation of the Merger and/or the Company
Proposal.
9.2. Effect of Termination. (a) In the event of the termination of this
Agreement by either the Company or Parent pursuant to Section 9.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of Parent or the Company, other than the provisions of
this Section 9.2, Section 10.1 and Section 10.7, and except to the extent that
such termination 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) The Company and Parent agree that the Company shall pay to Parent
$10,000,000 (the "Termination Fee") solely as follows: (1) if all of the
following occur (A) the Company or Parent shall terminate this Agreement
pursuant to Section 9.1(d) or (e), (B) at any time after the date of this
Agreement and prior to the Company Shareholders Meeting there shall have been
publicly announced an Acquisition Proposal and (C) within 12 months of the
termination of this Agreement, the Company enters into a definitive agreement
with respect to an Acquisition Proposal, (2) if the Company shall terminate this
Agreement pursuant to Section 9.1(f), or (3) if Parent shall terminate this
Agreement pursuant to Section 9.1(g).
(c) The Termination Fee required to be paid pursuant to Section 9.2(b)(1)
shall be paid to Parent not later than five business days after the Company
enters into a definitive agreement with respect to an Acquisition Proposal. The
Termination Fee to be paid to Parent pursuant to Section 9.2(b)(2) shall be paid
to Parent concurrently with notice of termination of this Agreement by the
Company. The Termination Fee to be paid to Parent pursuant to Section 9.2(b)(3)
shall be paid to Parent no later than five business days after the Company's
receipt of notice of termination of this Agreement by Parent. All payments under
Section 9.2(b) shall be made by wire transfer of immediately available funds to
an account designated by Parent.
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ARTICLE X.
MISCELLANEOUS
10.1. 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 Parent and the Company, this Agreement and any
information or documents furnished in connection herewith shall be kept strictly
confidential by the Company and the Company Subsidiaries, Parent and the Parent
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, Parent or the Company, after consultation with the other party to
the extent practicable, may file with the SEC any written communications
relating to the Merger and the transactions contemplated hereby pursuant to
Regulation 14A promulgated under the Securities Act. Parent and the Company
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 Merger is not
consummated, Parent and the Company 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.
10.2. Amendment and Modification. To the extent permitted by applicable
Law, this Agreement may be amended, modified or supplemented only by a written
agreement among the Company, Parent and Merger Sub, whether before or after
approval of this Agreement and the Merger by the shareholders of the Company,
except that following approval by the shareholders of the Company, there shall
be no amendment or change to the provisions hereof with respect to the Merger
Consideration without further approval by the shareholders of the Company, and
no other amendment shall be made which by law requires further approval by such
shareholders without such further approval.
10.3. Waiver of Compliance; Consents. Any failure of the Company on the one
hand, or Parent or Merger Sub on the other hand, to comply with any obligation,
covenant, agreement or condition herein may be waived by Parent on the one hand,
or the Company 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. 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
10.3.
10.4. Survival of Representations and Warranties. The respective
representations and warranties of the Company and Parent 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.
A-26
10.5. 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 Parent or Merger Sub, to:
Cargill, Incorporated
P.O. Box 5624
Minneapolis, MN 55440
Attention: Linda L. Cutler, Esq.
Vice President, Assistant General Counsel and
Assistant Secretary
Telecopy: (952) 742-6349
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Gary P. Cooperstein, Esq.
Telecopy: (212) 859-4000
A-27
10.6. 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.
10.7. 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 Parent and the
Company shall pay one-half of the expenses related to printing, filing and
mailing the Proxy Statement and all SEC and other regulatory filing fees
incurred in connection with the Merger.
10.8. 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.
10.9. 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.
10.10. 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 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.
10.11. 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 Company Disclosure Schedule and Parent 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.
10.12. 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.
10.13. 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,
A-28
or, a successor or permitted assign of such a party; provided, however, that the
parties hereto specifically acknowledge that the provisions of Section 6.4 above
are intended to be for the benefit of, and shall enforceable by, the officers
and directors of the Company and/or the Company Subsidiaries affected thereby
and their heirs and representatives.
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed and delivered by their respective duly authorized
officers as of the date first above written.
CARGILL, INCORPORATED
By: /s/ Richard D. Frasch
Name: Richard D. Frasch
Title: President, Animal Nutrition
AGRIBRANDS INTERNATIONAL, INC.
By: /s/ William P. Stiritz
Name: William P. Stiritz
Title: Chairman, Chief Executive
Officer and President
ABACUS ACQUISITION CORP.
By: /s/ Richard D. Frasch
Name: Richard D. Frasch
Title: President
A-29
INDEX OF DEFINED TERMS
Page
Acquisition Proposal..........................................................18
affiliate.....................................................................28
Agreement......................................................................1
Articles of Merger.............................................................1
Benefit Plan...................................................................8
Certificates...................................................................2
Closing........................................................................1
Closing Date...................................................................1
Code...........................................................................9
Company........................................................................1
Company Common Stock...........................................................2
Company Disclosure Schedule....................................................4
Company Material Adverse Effect................................................4
Company Options................................................................3
Company Preferred Stock........................................................4
Company Proposal..............................................................15
Company Shareholders Meeting..................................................15
Company Subsidiaries...........................................................4
Consent........................................................................5
Dissenting Shares..............................................................2
Effective Time.................................................................1
Enforceability Exceptions......................................................5
ERISA..........................................................................8
Event..........................................................................7
Exchange Act...................................................................5
Exchange Fund..................................................................3
Final Order...................................................................22
Financial Statements...........................................................7
Foreign Plans.................................................................10
Governmental Authority.........................................................5
Indemnified Losses............................................................20
Indemnified Person............................................................20
Initial Period Acquisition Inquiry............................................17
Initial Period Inquirors......................................................17
Initial Solicitation Period...................................................16
Law............................................................................6
Letter of Transmittal..........................................................3
Litigation....................................................................7
Material Contract..............................................................8
Merger.........................................................................1
Merger Consideration...........................................................2
Merger Sub.....................................................................1
Missouri Code..................................................................1
Multi-Employer Plan............................................................9
NYSE...........................................................................6
Parent.........................................................................1
Parent Disclosure Schedule....................................................12
Parent Material Adverse Effect................................................12
A-30
Parent Subsidiaries........................................................3, 12
Paying Agent...................................................................3
Permits........................................................................8
person........................................................................28
Proxy Statement...............................................................21
Rights Agreement..............................................................12
RP............................................................................12
SAR............................................................................4
Securities Act.................................................................5
Securities Filings.............................................................6
subsidiary....................................................................28
Superior Proposal.............................................................18
Surviving Corporation..........................................................1
Takeover Statute..............................................................11
Tax...........................................................................11
Tax Return....................................................................11
Termination Fee...............................................................25
WPS Continuity Agreement Amendment............................................12
A-31
Annex B
Wasserstein Perella & Co., Inc.
31 West 52nd Street
New York, New York 10019-6118
Telephone 212-969-2700
Fax 212-969-7836
December 1, 2000
Board of Directors
Agribrands International, Inc.
9811 South Forty Drive
St. Louis, Missouri 63124
Members of the Board:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the stockholders of Agribrands International, Inc.
(the "Company") of the Merger Consideration (as defined below) provided for
pursuant to the terms of the Agreement and Plan of Merger, dated as of December
1, 2000 (the "Merger Agreement"), between Cargill, Incorporated ("Cargill"),
Abacus Acquisition Corp. ("Merger Sub") and the Company. Pursuant to the Merger
Agreement, the Merger Sub shall be merged with and into the Company which, as a
result of the Merger, shall become a direct, wholly owned subsidiary of Cargill.
Each share of common stock of the Company will be converted into the right to
receive $54.50 in cash (the "Merger Consideration").
In connection with rendering our opinion, we have reviewed drafts of
the Merger Agreement and, for purposes hereof, we have assumed that the final
form of the document will not differ in any material respect from the drafts
provided to us. We have also reviewed and analyzed certain publicly available
business and financial information relating to the Company for recent years and
interim periods to date, as well as certain internal financial and operating
information, including financial forecasts, analyses and projections prepared by
or on behalf of the Company and provided to us for purposes of our analysis, and
we have met with management of the Company to review and discuss such
information and, among other matters, the Company's business, operations,
assets, financial condition and future prospects.
We have reviewed and considered certain financial and stock market data
relating to the Company and we have compared that data with similar data for
certain other companies, the securities of which are publicly traded, that we
believe may be relevant or comparable in certain respects to the Company or one
or more of its businesses or assets, and we have reviewed and considered the
financial terms of certain recent acquisitions and business combination
transactions in the food and animal feed industries specifically, and in other
industries generally, that we believe to be reasonably comparable to the Merger
or otherwise relevant to our inquiry. We have also performed such other
Board of Directors
December 1, 2000
Page 2
financial studies, analyses, and investigations and reviewed such other
information as we considered appropriate for purposes of this opinion.
In our review and analysis and in formulating our opinion, we have
assumed and relied upon the accuracy and completeness of all of the historical
financial and other information provided to or discussed with us or publicly
available, and we have not assumed any responsibility for independent
verification of any of such information. We also have assumed and relied upon
the reasonableness and accuracy of the financial projections, forecasts and
analyses provided to us, and we have assumed that such projections, forecasts
and analyses were reasonably prepared in good faith and on bases reflecting the
best currently available judgments and estimates of the Company's management. We
express no opinion with respect to such projections, forecasts and analyses or
the assumptions upon which they are based. In addition, we have not reviewed any
of the books and records of the Company, or assumed any responsibility for
conducting a physical inspection of the properties or facilities of the Company,
or for making or obtaining an independent valuation or appraisal of the assets
or liabilities of the Company, and no such independent valuation or appraisal
was provided to us. We also have assumed that the transactions described in the
Merger Agreement will be consummated without waiver or modification of any of
the material terms or conditions contained therein by any party thereto. Our
opinion is necessarily based on economic and market conditions and other
circumstances as they exist and can be evaluated by us as of the date hereof.
In the ordinary course of our business, we may actively trade the debt
and equity securities of the Company and of Cargill for our own account and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
We are acting as financial advisor to the Company in connection with
the proposed Merger and will receive a fee for our services, a significant
portion of which is contingent upon the consummation of the Merger. In addition,
we have performed various investment banking services for the Company from time
to time in the past and have received customary fees for rendering such
services. In addition, from time to time in the past we have performed various
investment banking services for entities for which the Chairman of the Company
serves as Chairman and have received customary fees for rendering such services.
Our opinion addresses only the fairness from a financial point of view
to the stockholders of the Company of the Merger Consideration provided for
pursuant to the Merger Agreement, and we do not express any views on any other
term of the Merger. Specifically, our opinion does not address the Company's
underlying business decision to effect the transactions contemplated by the
Merger Agreement.
Board of Directors
December 1, 2000
Page 3
It is understood that this letter is for the benefit and use of the
Board of Directors of the Company in its consideration of the Merger, and except
for inclusion in its entirety in any proxy statement required to be circulated
to stockholders of the Company relating to the Merger, may not be quoted,
referred to or reproduced at any time or in any manner without our prior written
consent. This opinion does not constitute a recommendation to any stockholder as
to how such holder should vote with respect to the Merger, and should not be
relied upon by any stockholder as such.
Based upon and subject to the foregoing, including the various
assumptions and limitations set forth herein, it is our opinion that as of the
date hereof the Merger Consideration is fair to the stockholders of the Company
from a financial point of view.
Very truly yours,
/s/ WASSERSTEIN PERELLA & CO., INC.
WASSERSTEIN PERELLA & CO., INC.
Annex C
Missouri Revised Statutes
Section 351.455
Shareholder who objects to merger may demand value of shares, when.
351.455. 1. If a shareholder of a corporation which is a party to a merger
or consolidation shall file with such corporation, prior to or at the meeting of
shareholders at which the plan of merger or consolidation is submitted to a
vote, a written objection to such plan of merger or consolidation, and shall not
vote in favor thereof, and such shareholder, within twenty days after the merger
or consolidation is effected, shall make written demand on the surviving or new
corporation for payment of the fair value of his shares as of the day prior to
the date on which the vote was taken approving the merger or consolidation, the
surviving or new corporation shall pay to such shareholder, upon surrender of
his certificate or certificates representing said shares, the fair value
thereof. Such demand shall state the number and class of the shares owned by
such dissenting shareholder. Any shareholder failing to make demand within the
twenty day period shall be conclusively presumed to have consented to the merger
or consolidation and shall be bound by the terms thereof.
2. If within thirty days after the date on which such merger or
consolidation was effected the value of such shares is agreed upon between the
dissenting shareholder and the surviving or new corporation, payment therefor
shall be made within ninety days after the date on which such merger or
consolidation was effected, upon the surrender of his certificate or
certificates representing said shares. Upon payment of the agreed value the
dissenting shareholder shall cease to have any interest in such shares or in the
corporation.
3. If within such period of thirty days the shareholder and the surviving
or new corporation do not so agree, then the dissenting shareholder may, within
sixty days after the expiration of the thirty day period, file a petition in any
court of competent jurisdiction within the county in which the registered office
of the surviving or new corporation is situated, asking for a finding and
determination of the fair value of such shares, and shall be entitled to
judgment against the surviving or new corporation for the amount of such fair
value as of the day prior to the date on which such vote was taken approving
such merger or consolidation, together with interest thereon to the date of such
judgment. The judgment shall be payable only upon and simultaneously with the
surrender to the surviving or new corporation of the certificate or certificates
representing said shares. Upon the payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares, or in the surviving
or new corporation. Such shares may be held and disposed of by the surviving or
new corporation as it may see fit. Unless the dissenting shareholder shall file
such petition within the time herein limited, such shareholder and all persons
claiming under him shall be conclusively presumed to have approved and ratified
the merger or consolidation, and shall be bound by the terms thereof.
4. The right of a dissenting shareholder to be paid the fair value of his
shares as herein provided shall cease if and when the corporation shall abandon
the merger or consolidation.
Agribrands International, Inc.
P
R
O
X
Y
PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
APRIL 26, 2001 AT 10:00 A.M.
AT THE OFFICES OF AGRIBRANDS INTERNATIONAL, INC.,
9811 SOUTH FORTY DRIVE, ST. LOUIS, MISSOURI
The undersigned appoints William P. Stiritz and Michael J. Costello,
and each of them, lawful attorneys and proxies of the undersigned,
with power of substitution, to represent the undersigned at the
Special Meeting of Shareholders of Agribrands International, Inc. to
be held on April 26, 2001, and at any adjournments thereof, and to
vote in accordance with the instructions on the reverse side all
shares of Common Stock of the Company which the undersigned is
entitled to vote.
IMPORTANT -- PLEASE SIGN AND DATE ON BACK OF CARD.
RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE;
NO POSTAGE NECESSARY.
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DETACH AND RETURN PROXY CARD
IMPORTANT
PLEASE VOTE THE ABOVE PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS.
IF YOU REQUIRE SPECIAL ARRANGEMENTS TO PARTICIPATE AT THIS MEETING,
PLEASE CONTACT THE COMPANY'S INVESTOR RELATIONS DEPARTMENT
AT (314) 812-0504 PRIOR TO THE MEETING.
IF YOUR ADDRESS HAS CHANGED, PLEASE BE SURE TO NOTIFY
INVESTOR RELATIONS PROMPTLY.
RETAIN ADMISSION TICKET BELOW
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ADMISSION TICKET
PRESENT THIS CARD AT THE ENTRANCE TO THE MEETING ROOM.
AGRIBRANDS INTERNATIONAL, INC.
SPECIAL MEETING OF SHAREHOLDERS
9811 SOUTH FORTY DRIVE
ST. LOUIS, MISSOURI
THURSDAY, APRIL 26, 2001
10:00 A.M.
SIGNATURE_________________________________________
The proxies are directed to vote as specified.
Please mark your votes as indicated in this example [X]
If you sign but do not give voting directions, the proxies will vote FOR
approval and adoption of the Agreement and Plan of Merger, dated as of December
1, 2000, by and between Cargill, Incorporated, a Delaware corporation,
Agribrands and Abacus Acquisition, Corp., a Missouri corporation and
wholly-owned subsidiary of Cargill, whereby each share of Agribrands common
stock issued and outstanding at the effective time of the merger (other than
shares held by Agribrands shareholders who properly exercise their dissenters'
rights under Missouri law) will be converted into the right to receive $54.50
per share in cash, without interest, and in their discretion on all other
matters coming before the meeting and any adjournment thereof including, without
limitation, potential adjournments or postponements for the purpose of
soliciting additional proxies in order to approve the Agreement and Plan of
Merger. A failure to return a proxy or an abstention will have the same effect
as a vote against the merger.
The Board of Directors recommends a vote FOR the merger.
1. Approval of Merger
with Cargill: FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Discretionary authority to GRANT DENY
vote other matters properly [ ] [ ]
brought before the meeting:
Check here if you plan to attend the special meeting.
[ ]
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
-------------------------------------
-------------------------------------
Signature(s) Title(s) Date
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DETACH AND RETURN PROXY CARD
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT
THIS MEETING, WHETHER OR NOT YOU ATTEND THE
MEETING IN PERSON.
TO MAKE SURE YOUR SHARES ARE REPRESENTED,
WE URGE YOU TO COMPLETE AND MAIL THE PROXY CARD ABOVE.
IF YOU PLAN TO ATTEND THE MEETING,
PLEASE MARK THE BOX ON THE PROXY CARD ABOVE.
RETAIN ADMISSION TICKET
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ADMISSION TICKET