AGREEMENT AND PLAN OF MERGER BY AND BETWEEN GREEN PLAINS RENEWABLE ENERGY, INC., GREEN PLAINS GRAIN MERGER SUB, INC. and GREAT LAKES COOPERATIVE Dated as of August 15, 2007Agreement and Plan of Merger |
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Exhibit 99.1
AGREEMENT AND PLAN OF MERGER BY AND BETWEEN GREEN PLAINS RENEWABLE ENERGY, INC., GREEN PLAINS GRAIN MERGER SUB, INC. and GREAT LAKES COOPERATIVE Dated as of August 15, 2007
TABLE OF CONTENTS Page Articles of Incorporation and Bylaws. Board of Directors and Officers. No Further Ownership Rights in Shares. ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY Obligations With Respect to Shares. Authority; Non-Contravention; Necessary Consents. Absence of Certain Changes or Events; No Undisclosed Liabilities. Assets; Real and Personal Property. Compliance with Laws; Permits. Employee Benefit Plans; Employee Matters. Agreements, Contracts and Commitments. Information in Registration Statement and Prospectus/Proxy Statement. Approval of Board of Directors. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB Organization of Parent and Merger Sub. Authority; Non-Contravention; Necessary Consents. Information in Registration Statement and Prospectus/Proxy Statement. SEC Filings; Parent Financial Statements. Facts Affecting Regulatory Approvals. ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME Conduct of Business by the Company. ARTICLE V ADDITIONAL AGREEMENTS Prospectus/Proxy Statement; Registration Statement. Company Members’ Meeting; Board of Directors Recommendation. Confidentiality; Access to Information.
ii Company Affiliates; Restrictive Legend. Regulatory Filings; Reasonable Efforts. Notification of Certain Matters. Subsequent Financial Statements. Company’s Indemnification Obligations Limitation on Company’s Indemnification Obligations Parent’s Indemnification Covenants ARTICLE VI CONDITIONS TO THE MERGER Conditions to the Obligations of Each Party to Effect the Merger. Additional Conditions to the Obligations of the Company. Additional Conditions to the Obligations of Parent. ARTICLE VII TERMINATION, AMENDMENT AND WAIVER Notice of Termination; Effect of Termination. Fees and Expenses; Termination Fee. ARTICLE VIII GENERAL PROVISIONS Non-Survival of Representations and Warranties. Interpretation; Certain Defined Terms. Entire Agreement; Third Party Beneficiaries. Other Remedies; Specific Performance. No Waiver; Remedies Cumulative.
iii INDEX TO DEFIND TERMS
iv INDEX OF EXHIBITS Exhibit A Per Share Consideration Exhibit B Opinion Requirements Exhibit C Escrow Agreement
v AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), is entered into as of August 15, 2007 by and among Green Plains Renewable Energy, Inc., an Iowa corporation (“ Parent ”), Green Plains Grain Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Parent (“ Merger Sub ”), and Great Lakes Cooperative, an Iowa cooperative association (the “ Company ”). RECITALS A. The Board of Directors of Parent, the Board of Directors of Company and the Board of Directors of Merger Sub have approved, and deem it advisable and in the best interests of their respective stockholders and members to consummate a business combination between the Company and Parent upon the terms and subject to the conditions set forth herein. B. The Board of Directors of Parent, the Board of Directors of Company and the Board of Directors of Merger Sub have approved this Agreement and the transactions contemplated hereby, including the Merger (as defined in Section 1.1 ). E. The Company’s Board of Directors has resolved to recommend to its members the approval and adoption of this Agreement and approval of the Merger and the transactions contemplated hereby. F. Parent, as the sole member of Merger Sub, has approved and adopted this Agreement and approved the Merger. G. Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe certain conditions to the Merger. NOW, THEREFORE, in consideration of the foregoing and the respective covenants, agreements, representations and warranties set forth herein, the parties agree as follows:
1 ARTICLE I THE MERGER 1.1 The Merger At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the Iowa Cooperative Associations Act (the “ ICA ”), 2007 Iowa Code Chapter 499, 2007 Iowa Code Section 501A.1101 and Delaware General Corporation Law Title 8, Merger Sub shall be merged with and into the Company (the “ Merger ”), the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving entity. The Company, as the surviving entity after the Merger, is hereinafter sometimes referred to as the “ Surviving Company .” The address of the Surviving Company’s principal place of business is set forth in Section 8.2(b) . 1.2 Effective Time; Closing Subject to the provisions of this Agreement, the parties hereto shall cause the Merger to be consummated by filing Articles of Merger with the Secretary of State of the State of Iowa in accordance with the relevant provisions of the ICA, 2007 Iowa Code Chapter 499, and 2007 Iowa Code Section 501A.1101 and the Secretary of State of the State of Delaware in accordance with the relevant provisions of Delaware General Corporation Law, as the case may be, (the “ Articles of Merger ”) (the time of such filing with the Secretary of State of the State of Iowa and the State of Delaware (or such later time as may be agreed in writing by the Company and Parent and specified in the Articles of Merger) being the “ Effective Time ”) as soon as practicable on or after the Closing Date, but in no event later than the next business day following the Closing Date. The closing of the Merger (the “ Closing ”) shall take place at the offices of Blackwell Sanders LLP, 1620 Dodge St., Suite 2100, Omaha NE 68102, at a time and date to be specified by the parties, which shall be no later than the second business day after the satisfaction or waiver of the conditions set forth in Article VI (other than those conditions which by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof), or at such other time, date and location as the parties hereto agree in writing (the “ Closing Date ”). 1.3 Effect of the Merger At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of the ICA and Delaware General Corporation Law. 1.4 Articles of Incorporation and Bylaws . At the Effective Time, the Articles of Incorporation of the Company shall be amended and restated in their entirety to be identical to the Articles of Incorporation of Merger Sub, as in effect immediately prior to the Effective Time, until thereafter amended in accordance with the ICA and as provided in such Articles of Incorporation; provided , however , that at the Effective Time, Article 1 of the Articles of Incorporation of the Surviving Company shall be amended and restated in its entirety to read as follows: “The name of the surviving company is Green Plains Grain Cooperative.” At the Effective Time, the bylaws of the Company shall be amended and restated in its entirety to be identical to the bylaws of Merger Sub, as in effect immediately prior to the Effective Time, until thereafter amended in accordance with the ICA and as provided in such bylaws. 1.5 Board of Directors and Officers . The initial board of directors of the Surviving Company shall be the board of directors of Merger Sub immediately prior to the Effective Time, until their respective successors are duly elected or appointed and qualified. The initial officers of the Surviving Company shall be the officers of Merger Sub immediately prior to the Effective Time, until their respective successors are duly appointed. 1.6 Effect on Capital Shares Subject to the terms and conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of shares of the Company, the following shall occur:
2 (a) Company Shares . (i) Each of the Company’s Common Stock A shares (“ Common Stock A Shares ”), Common Stock B shares (“ Common Stock B Shares ”) and Preferred Stock shares (“ Preferred Shares ” and, together with the Common Stock A Shares and Common Stock B Shares, “ Shares ”) issued and outstanding immediately prior to the Effective Time, other than any Shares to be canceled pursuant to Section 1.6(b), will, at the Effective Time, be canceled and extinguished and automatically converted (subject to Section 1.6(d) ) into the right to receive the “ Per Share Consideration ”). (ii) The applicable Per Share Consideration to be paid in exchange for each Share as provided in Section 1.6(a)(i) shall include shares of common stock of Parent, par value [$0.01] per share (“ Parent Common Stock ”) and/or cash (“ Cash Consideration ”) as provided on Exhibit A hereto. (b) Cancellation of Treasury Shares . Each Share held by the Company or any direct or indirect wholly-owned subsidiary of the Company immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof. (c) Capital Stock of Merger Sub . Each unit of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and nonassessable share of the Surviving Company (d) Fractional Shares . No fraction of a share of Parent Common Stock will be issued by virtue of the Merger, but in lieu thereof each holder of Shares who would otherwise be entitled to a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock that otherwise would be received by such holder) shall, upon surrender of such holder’s Shares in accordance with Section 1.7(c) , receive from Parent an amount of cash (rounded to the nearest whole cent), without interest, less the amount of any withholding taxes as contemplated by Section 1.7(f) , which are required to be withheld with respect thereto, equal to the product of: (i) such fraction multiplied by (ii) the Per Share Consideration. Fractional share valuation shall be based upon the cash consideration price of $16.636 per share. (e) Adjustments to Per Share Consideration . The applicable Per Share Consideration shall be adjusted to reflect fully the appropriate effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Parent Common Stock), reorganization, recapitalization, reclassification or other like change with respect to Parent Common Stock having a record date on or after the date hereof and prior to the Effective Time. (f) Cash out Option. Notwithstanding the foregoing, the parties hereto shall use their best efforts, prior to Closing, to arrive upon a methodology and process to provide for a cashing out of Shareholders entitled to receive Shares of a de minimis amount, as mutually agreed and defined by the parties hereto. 1.7 Exchange Procedures . (a) Exchange Agent . Parent shall designate such party as Parent and the Company shall mutually agree upon to act as the exchange agent (the “ Exchange Agent ”) in the Merger.
3 (b) Parent to Provide Cash and/or Common Stock . Prior to the Effective Time (and in any event not less than one (1) day prior to the Closing), Parent shall enter into an agreement with the Exchange Agent, reasonably satisfactory to the Company, which shall provide that Parent shall make available to the Exchange Agent for exchange in accordance with this Article I , the shares of Parent Common Stock issuable and cash payable in exchange for outstanding Shares pursuant to Section 1.6(a) . In addition, Parent shall make available as necessary from time to time after the Effective Time as needed, cash in an amount sufficient for payment in lieu of fractional shares pursuant to Section 1.6(d) and any dividends or distributions which holders of Shares may be entitled pursuant to Section 1.7(d) . Any cash and/or Parent Common Stock deposited with the Exchange Agent shall hereinafter be referred to as the “ Exchange Fund .” (c) Exchange Procedures . Promptly after the Effective Time but in any event within two (2) business days, Parent shall cause the Exchange Agent to mail to each holder of record (as of the Effective Time) of a Share or Shares that were converted into the right to receive the applicable Per Share Consideration pursuant to Section 1.6(a) , cash in lieu of any fractional shares pursuant to Section 1.6(d) and any dividends or other distributions pursuant to Section 1.7(d) : (i) a letter of transmittal (which shall specify that surrender of Shares shall be effected only upon delivery of the letter of transmittal to the Exchange Agent and shall be in such form and have such other provisions as Parent may reasonably specify) (the “ Letter of Transmittal ”) and (ii) instructions for use in effecting the surrender of the Shares in exchange for (1) the applicable Per Share Consideration, (2) cash in lieu of any fractional shares pursuant to Section 1.6(d) and (3) any dividends or other distributions pursuant to Section 1.7(d) . Upon delivery of such Letter of Transmittal to the Exchange Agent or to such other agent or agents as may be appointed by Parent, duly completed and validly executed in accordance with the instructions thereto and such other documents as may reasonably be required by the Exchange Agent, the holder of such Shares surrendered by such Letter of Transmittal shall be entitled to receive in exchange for each such Share the applicable Per Share Consideration (after taking into account all Shares surrendered by such holder) to which such holder is entitled pursuant to Section 1.6(a) , payment in lieu of fractional shares which such holder has the right to receive pursuant to Section 1.6(d) and any dividends or distributions payable pursuant to Section 1.7(d) , and the Shares so surrendered shall forthwith be canceled. Any shares of Parent Common Stock issued in exchange for Shares shall be in uncertificated book entry form unless a physical certificate is requested or is otherwise required by applicable law or regulation. Until so surrendered, each Share will be deemed from and after the Effective Time, for all corporate purposes, to evidence the ownership of the applicable Per Share Consideration (which shall include Cash Consideration and/or the number of full shares of Parent Common Stock into which such Shares shall have been so converted) and the right to receive an amount in cash in lieu of the issuance of any fractional shares in accordance with Section 1.6(d) and any dividends or distributions payable pursuant to Section 1.7(d) . (d) Distributions With Respect to Unexchanged Shares . No dividends or other distributions declared with a record date after the Effective Time with respect to shares of Parent Common Stock with a record date after the Effective Time will be paid to the holder of any Share with respect to the shares of Parent Common Stock represented thereby until the holder of record of such Share shall surrender such Share pursuant to Section 1.7(c) . Subject to applicable law, following surrender of any such Share, there shall be paid to the record holder of the Shares evidencing full shares of Parent Common Stock that may be issued in exchange therefore pursuant to Section 1.6(a) , without interest, at the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such full shares of Parent Common Stock.
4 (e) Transfers of Ownership . If shares of Parent Common Stock are to be issued in the name of, and/or Cash Consideration paid to, a person other than the person in whose name the Shares surrendered in exchange therefor are registered, it will be a condition of the issuance thereof that (i) the appropriate transfer forms be presented for transferring Shares, (ii) such transfer complies with applicable Legal Requirements, the and the procedures established by the Company for transferring Shares as in effect on the date hereof and (iii) the persons requesting such exchange will have paid to Parent or any agent designated by it any transfer or other Taxes required by reason of the issuance of shares of Parent Common Stock in the name of, or payment of Cash Consideration to, any person other than the registered holder of the Shares surrendered, or established to the satisfaction of Parent or any agent designated by it that such Tax has been paid or is not payable. (f) Required Withholding . Each of the Exchange Agent and the Surviving Company shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement to any holder or former holder of Shares such amounts as are required to be deducted or withheld therefrom under the Internal Revenue Code of 1986, as amended (the “ Code ”) or under any provision of state, local or foreign Tax law or under any other applicable Legal Requirement. To the extent such amounts are so deducted or withheld, the amount of such consideration shall be treated for all purposes under this Agreement as having been paid to the person to whom such consideration would otherwise have been paid. (g) No Liability . Notwithstanding anything to the contrary in this Section 1.7 , none of the Exchange Agent, the Surviving Company or any party hereto shall be liable to a holder of Shares for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law. (h) Investment of Exchange Fund . The Exchange Agent shall invest any cash included in the Exchange Fund as directed by Parent on a daily basis; provided that no such investment or loss thereon shall affect the amounts payable to Company shareholders pursuant to this Article I . Any interest and other income resulting from such investment shall become a part of the Exchange Fund, and any amounts in excess of the amounts payable to Company shareholders pursuant to this Article I shall promptly be paid to Parent. (i) Termination of Exchange Fund . Any portion of the Exchange Fund which remains undistributed to the holders of Shares twelve (12) months after the Effective Time shall, at the request of the Surviving Company, be delivered to the Parent, and any holders of the Shares who have not surrendered such Shares in compliance with this Section 1.7 shall after such delivery to the Parent look only to the Parent for the applicable Per Share Consideration pursuant to Section 1.6(a) , cash in lieu of any fractional shares pursuant to Section 1.6(d) and any dividends or other distributions pursuant to Section 1.7(d) with respect to the Shares. Any such portion of the Exchange Fund remaining unclaimed by holders of Shares immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Entity shall, to the extent permitted by law, become the property of Parent free and clear of any claim or interest of any person previously entitled thereto. 1.8 No Further Ownership Rights in Shares All shares of Parent Common Stock issued and/or Cash Consideration paid upon the surrender for exchange of Shares in accordance with the terms hereof (including any cash paid in respect thereof pursuant to Section 1.6(d) ) shall be deemed to have been issued and/or paid in full satisfaction of all rights pertaining to such Shares, and there shall be no further registration of transfers on the records of the Surviving Company of Shares which were outstanding immediately prior to the Effective Time.
5 1.9 Further Action . At and after the Effective Time, the officers and directors of Parent and the officers and managers of the Surviving Company will be authorized to execute and deliver, in the name and on behalf of the Company and Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company and Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Company any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Company as a result of, or in connection with, the Merger. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Parent and Merger Sub, subject to the exceptions specifically disclosed in writing in the disclosure letter delivered by the Company to Parent dated as of the date hereof (the “ Company Disclosure Letter ”), as set forth below. Each exception set forth in the Company Disclosure Letter is identified by reference to, or has been grouped under a heading referring to, a specific individual section of this Agreement and relates only to such section. Organization of the Company . (a) The Company (i) is a cooperative association that is duly organized and validly existing under the laws of the State of Iowa; (ii) has the requisite power and authority to own, lease and operate its assets and property and to carry on its business as now being conducted or as anticipated to be conducted; and (iii) is duly qualified or licensed to do business in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary. (b) The Company does not own, directly or indirectly, any capital stock or other equity securities of any Person or have any direct or indirect ownership interest in any business, other than the Regional Equity. (c) The Company has delivered or made available to Parent a true and correct copy of the Certificate of Organization and Bylaws of the Company and any Certificate of Designations for the Preferred Shares, each as amended to date, and each such instrument, as amended, is in full force and effect. The Company is not in violation of any of the provisions of its Certificate of Organization and Bylaws or equivalent governing instruments.
6 2.2 Company Capital Structure The authorized shares of the Company consist of Common Stock A Shares, Common Stock B Shares and up to eight classes of Preferred Shares, and the Company has not issued or redeemed any Shares since June 29, 2007. At the close of business on August 10, 2007, 1,504 Common Stock A Shares, 614 Common Stock B Shares and 11,604,722.7 Preferred Shares were issued and outstanding. All outstanding Shares are duly authorized, validly issued, fully paid and nonassessable and are not subject to preemptive rights created by statute, the Articles of Incorporation and Bylaws of the Company or any agreement or document to which the Company is a party or by which it or its assets is bound. All Common Stock A and B Shares subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. All Preferred Shares subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. The Company’s Articles of Incorporation provide that the Company will not issue certificates representing Preferred Shares, and the Company will only issue certificates representing Common Stock A Shares or Common Stock B Shares upon the written request of the owner of such Common Stock shares. The Company has not received a written request from any owner of its Common Stock shares, and has not issued any certificates representing Common Stock shares. Obligations With Respect to Shares Except as otherwise set forth in Section 2.2 , there are no equity securities or other similar interests in the Company or any securities or interests exchangeable or convertible into or exercisable for such equity securities or other interests issued, reserved for issuance or outstanding. There are no subscriptions, options, warrants, securities, calls, rights (including preemptive rights), commitments or agreements of any character to which the Company is a party or by which it is bound obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of ownership interests of the Company or obligating the Company to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement. There are no registration rights and there is no voting trust, proxy, rights plan, antitakeover plan or other agreement or understanding to which the Company is a party or by which it is bound with respect to any equity or similar interest in the Company. There are no bonds, debentures, notes or other indebtedness having the right to vote on any matters on which shareholders of the Company may vote of the Company issued and outstanding. Except as otherwise set forth in Section 2.2 , there are no outstanding contractual commitments of the Company which obligate the Company to make any investment (in the form of a loan, capital contribution or otherwise) in any other person. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar rights with respect to the Company. None of the outstanding Shares have been issued in violation of any federal or state securities laws.
7 2.4 Authority; Non-Contravention; Necessary Consents . (a) The Company has all requisite power and authority to enter into this Agreement and to consummate the Merger and the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the Merger and the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company, subject only to the approval and adoption of this Agreement and the approval of the Merger by the Company’s members and the filing of the Articles of Merger pursuant to the ICA, 2007 Iowa Code Chapter 499, and 2007 Iowa Code Section 501A.1101. The approval and adoption of this Agreement and the approval of the Merger by the Company’s members as contemplated in Section 5.2 is the only vote of the holder of any class or series of shares of the Company necessary to approve and adopt this Agreement and approve the Merger and consummate the Merger and the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming the due execution and delivery by Parent and Merger Sub, constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except (i) the approval and adoption of this Agreement and the approval of the Merger by the Company’s members as contemplated in Section 5.2 , (ii) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (iii) general principles of equity. (b) The execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company and the consummation of the Merger and the transactions contemplated hereby will not, (i) conflict with or violate the Company’s Articles of Incorporation or Bylaws, (ii) subject to obtaining the approval and adoption of this Agreement and the approval of the Merger by the Company’s members as contemplated in Section 5.2 and compliance with the requirements set forth in Section 2.4(d) below, conflict with or violate any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, guidance, code, order, judgment, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity (“ Legal Requirement ”) applicable to the Company or by which the Company or any of its properties is bound or affected, or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the Company’s rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any lien, charge, security interest, option, claim, mortgage, title defect or objection, lease, chattel mortgage, conditional sales contract, collateral security arrangement or other title or interest retention arrangement, pledge, restriction on transfer or other encumbrance or restriction of any nature whatsoever (each, a “ Lien ”) on any of the properties or assets of the Company pursuant to any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise, concession, or other instrument or obligation to which the Company is a party or by which the Company or any of its assets is bound or affected. (c) Section 2.4(c) of the Company Disclosure Letter lists all consents, waivers and approvals under any of the Company’s agreements, contracts, arrangements, licenses or leases required to be obtained in connection with the consummation of the Merger.
8 (d) No consent, approval, order or authorization of, or registration, declaration or filing with any supranational, national, state, municipal, local or foreign government, any instrumentality, subdivision, court, administrative agency or commission or other governmental authority or instrumentality, any arbitral body or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority (a “ Governmental Entity ”) is required to be obtained or made by the Company in connection with the execution and delivery of this Agreement or the consummation of the Merger and the transactions contemplated hereby, except for: (i) the filing of the Articles of Merger with the Secretary of State of the State of Iowa and appropriate documents with the relevant authorities of other states in which the Company and/or Merger Sub is qualified to do business, (ii) the filing of the Prospectus/Proxy Statement with the SEC in accordance with the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and the filing and effectiveness of the Registration Statement, (iii) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable federal, foreign and state securities (or related) laws, (iv) the consents listed on Section 2.4(d) of the Company Disclosure Letter , and (v) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable state securities or “blue sky” laws and the securities laws of any foreign country. The consents, approvals, orders, authorizations, registrations, declarations and filings set forth in (i) through (v) are referred to herein as the “ Necessary Consents .” No state takeover statute or similar statute is applicable to the Merger and the transactions contemplated hereby. There are no contractual “dissenters” or “appraisal” rights available to holders of Shares in connection with the transactions contemplated by this Agreement; and the statutory dissenters’ rights are worth less than the Cash Consideration. 2.5 Company Financial Statements The Company has delivered to Parent true and complete copies of (i) the audited balance sheet of the Company as of August 31, 2006 and the related audited statements of operations, changes in shareholders’ equity and cash flows for the fiscal year ended August 31, 2006 (including the related notes and independent auditors report thereon) and (ii) the unaudited balance sheet of the Company as of May 31, 2007 and the related statements of operations, changes in shareholders’ equity and cash flows for the nine months ended May 31, 2007 (collectively, the “ Financial Statements ”). The Financial Statements (i) have been prepared from, are in accordance with and accurately reflect the books and records of the Company, (ii) were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and (iii) fairly present the financial position and the results of operations and cash flows (subject, in the case of unaudited interim financial statements, to normal year-end adjustments, none of which are material) of the Company as of the times and for the periods referred to therein. 2.6 Absence of Certain Changes or Events; No Undisclosed Liabilities . (a) Except as set forth in Section 2.6(a) of the Company Disclosure Letter , since August 31, 2006, (i) the Company has conducted its business only in the ordinary course of business consistent with past practice, (ii) the Company has not suffered any Material Adverse Effect or become aware of any change, event, effect or circumstance that may, individually or in the aggregate, cause the Company to suffer any Material Adverse Effect in the foreseeable future, and (iii) the Company has not taken any action, which if taken after the date hereof, would violate the provisions of Section 4.1 . (b) Except for liabilities and obligations (i) stated or reserved against in the Financial Statements, (ii) incurred since August 31, 2006 in the ordinary course of business consistent with past practice or (iii) disclosed in Section 2.6(b) of the Company Disclosure Letter , the Company has no liabilities or obligations of any nature, whether or not known, unknown, accrued, contingent, absolute or otherwise.
9 2.7 Taxes . (a) The Company has at all times since its formation been classified for U.S. Federal and state Tax purposes as a cooperative and not as an association taxable as a corporation; neither the Internal Revenue Service nor any applicable state Governmental Entity has challenged the status of the Company as a cooperative for U.S. Federal or state income Tax purposes (and it has at all times taken the position on all of its Tax Returns that it is treated as a cooperative for U.S. Federal and state income tax purposes); for purposes of this Agreement, “ Taxes ” or “ Tax ” shall mean any federal, state, county, local or foreign taxes, charges, fees, levies, other assessments, or similar governmental charges, including, without limitation, all net income, gross income, sales and use, ad valorem, transfer, gains, profits, rental, service, service use, excise, franchise, real and personal property, gross receipt, capital stock, share, production, business and occupation, disability, employment, payroll, license, estimated, stamp, custom duties, severance or withholding taxes or charges imposed by any Governmental Entity, and includes any interest and penalties (civil or criminal) on or additions to any such Taxes, and “ Tax Return ” shall mean any return, report, form, declaration, statement or other information, whether submitted or sent in writing or electronically, relating to Taxes, including, but not limited to, income tax returns, employee wage and withholding statements and statements to partners and independent contractors. (b) The Company is not and at no time since its formation has it been, a “publicly traded partnership” within the meaning of Section 7704 of the Code. (c) The Company has timely filed (including all proper extensions) all Tax Returns required to be filed under applicable law and all such Tax Returns are true, correct and complete; the Company has paid all Taxes required to be paid by it, other than any Taxes set forth in Section 2.7(c) of the Company Disclosure Letter . (d) The Company has not received any written notice of audit or investigation that is currently pending, and the Company is not currently under any audit or investigation relating to Taxes that has not been resolved as of the date hereof. (e) No deficiencies for any Taxes have been proposed, asserted or assessed against the Company, and there is no outstanding waiver of the statute of limitations with respect to any Taxes or Tax Returns of the Company. (f) To the extent necessary, the Company has reflected on its Financial Statements reserves adequate to pay all Taxes not yet due and reserves for deferred income Taxes in accordance with generally accepted accounting principals consistently applied (“ GAAP ”). (g) There are no liens for Taxes upon the Company or any property or assets of the Company, except liens for Taxes not yet due. (h) The Company has complied with the provisions of the Code relating to the withholding of Taxes, as well as similar provisions under any other laws, and has withheld and paid over to the proper Governmental Entities all amounts required within the time and in the manner prescribed by law. (i) The Company is not a party to, bound by, or has any obligation under, any Tax sharing agreement, Tax indemnification agreement or similar contract or arrangement, whether written or unwritten, or any potential liability or obligation to any person as a result of, or pursuant to, any such agreement, contract or arrangement.
10 (j) The Company does not have any liability for Taxes of any Person other than itself, including indemnification for Taxes. (k) No Governmental Entity has ever claimed that the Company is required to file any Tax Return in a jurisdiction in which it does not pay Taxes or file Tax Returns. (l) The Company has not ever engaged in a trade or business, or owned or operated any property located, outside the United States. (m) The Company has not engaged in any transaction that gives rise to (i) a registration obligation with respect to any person under Section 6111 of the Code or Treasury Regulations thereunder, (ii) a list maintenance obligation with respect to any Person under Section 6112 of the Code or Treasury Regulations thereunder, or (iii) a disclosure obligation as a “reportable transaction” under the Code and Treasury Regulations thereunder. (n) The Company is not and has not been a United States real property holding company within the meaning of Section 897(c)(2) of the Code. 2.8 Assets; Real and Personal Property . (a) Except as disclosed in Section 2.8(a) of the Company Disclosure Letter , the Company has good and marketable title to, or in the case of leased personal property and assets, valid leasehold interests in, all of its personal property and assets, free and clear of all Liens. (b) Except as disclosed in Section 2.8(b) of the Company Disclosure Letter , the Company owns all of the real property that it uses in connection with its business. (c) The Company owns fee simple title to the Real Property, free and clear of any Liens, except for (i) matters identified on Section 2.8(c) of the Company Disclosure Letter , (ii) Liens for Taxes that are not yet due and payable, or, if due, are not delinquent or are being contested in good faith by appropriate proceedings during which collection or enforcement is stayed and provided that adequate reserves (based on good faith estimates of management) have been set aside for the payment thereof; (iii) mechanic’s, materialman’s, carrier’s, worker’s, repairer’s, warehouseman’s and other similar Liens arising or incurred in connection with the operation of the business with respect to amounts that are not yet due and payable or, if due, are not delinquent; and (iv) easements, rights-of-way, restrictions and other similar non-monetary encumbrances which do not and would not reasonably be expected to, individually or collectively, materially interfere with the operation of the business on the Real Property or adversely affect the value or marketability of the Real Property. (d) The Company shall order the preparation of correct and complete abstracts of title to the Real Property and the Company shall direct the abstract companies that prepare such abstracts to deliver the updated abstracts to the Parent’s legal counsel for examination. (e) The Company is not a party to any lease, assignment or similar arrangement under which the Company is a lessor, sublessor, assignor or otherwise makes available for use by any third party any portion of the Real Property. There are no option agreements or rights of first refusal or any other rights in favor of any party to purchase or otherwise acquire the Real Property or any portion thereof.
11 (f) The obligations of the Company with regard to all applicable covenants, easements and restrictions encumbering the Real Property have been and are being performed in a proper and timely manner by the Company. The Company is not currently in default under any agreement, order, judgment or decree relating to the Real Property, and no conditions or circumstances exist which, with the giving of notice or passage of time, would constitute a default or breach with respect to the foregoing. (g) The Real Property consists of a separate tax lot or lots independent of any other lands or improvements. The Company has not received notice of or become aware of any proposed special assessment which would affect the Real Property nor any notice of increased taxes or assessments relating to the Real Property. (h) Except as disclosed in Section 2.8(h) of the Company Disclosure Letter , the Company has not received notice of, nor does the Company have knowledge of, any proceedings, claims or disputes, whether pending or threatened, affecting the Real Property (including, without limitation, any condemnation or rezoning proceedings). The Real Property complies with all subdivision and platting requirements, if any. (i) The Real Property is zoned so as to permit the current use of such Real Property, and the operations on the Real Property are not dependent on a nonconforming use or other waiver from a Governmental Entity, the absence of which would limit the operations on the Real Property. (j) There is free and uninterrupted ingress and egress to the Real Property from a public street, road or highway (which ingress and egress may in some cases be via recorded, irrevocable rights-of-way or easements) suitable for the operations on the Real Property. All utility services necessary for the operations on the Real Property are or will be available in appropriate and sufficient quantity and quality at the boundaries of the Real Property either in the public rights-of-way abutting the Real Property (which are connected so as to serve the Real Property without passing over other real property) or in recorded easements serving the Real Property, and the Company has obtained all necessary permits and licenses necessary for unrestricted access to and use of such services. 2.9 Intellectual Property . (a) As used herein, the term “ Intellectual Property ” means all intellectual property and industrial property rights of any kind or nature, including all U.S. and foreign: (i) trademarks, service marks, trade names, trade dress, Internet domain names, designs, logos, slogans and general intangibles of like nature, together with goodwill, registrations and applications for any of the foregoing; (ii) issued patents, pending patent applications and patent disclosures and any divisions, continuations, continuations-in-part, reissues, re-examinations, substitutions and extensions thereof, and any U.S. or foreign counterparts claiming priority therefrom; (iii) copyrights, copyrightable subject matter and mask works, including registrations and applications for any of the foregoing; (iv) computer programs, including any and all software implementations of algorithms, models and methodologies whether in source code or object code form, databases and compilations, including any and all data and collections of data, all documentation, including user manuals and training materials, related to any of the foregoing and the content and information contained on any Internet web site; (v) trade secrets, confidential information, technology, know-how, research and development, data, drawings, plans, specifications, designs, inventions, proprietary processes, formulae, algorithms, models and methodologies; (vi) any licenses to use any of the foregoing; (vii) all rights in the foregoing and in other similar intangible assets; and (viii) all rights and remedies against past, present and future infringement, misappropriation or other violation thereof.
12 (b) Except as set forth in Section 2.9 of the Company Disclosure Letter : (i) The Company owns, or has a valid right to use, free and clear of all Liens, all Intellectual Property used or held for use in, or necessary to conduct, the business of the Company as presently conducted or as anticipated to be conducted. (ii) The conduct of the business of the Company (including the products and services of the Company) as presently conducted or as anticipated to be conducted does not infringe, misappropriate, or otherwise violate any Person’s Intellectual Property rights, and there has been no such claim asserted or threatened in the past three (3) years against the Company or, to the Knowledge of the Company, any other Person. (iii) To the Knowledge of the Company, there is no valid basis for a claim of infringement, misappropriation, or other violation of Intellectual Property rights against the Company. (iv) There are no pending or threatened challenges to the validity of the Intellectual Property owned, or to the Knowledge of the Company, used or anticipated to be used, by the Company in the conduct of the business of the Company as presently conducted or as anticipated to be conducted. (v) To the Knowledge of the Company, no Person is infringing, misappropriating, or otherwise violating any Intellectual Property owned, used, or held for use by the Company, and no such claims have been asserted or threatened against any Person by the Company or, to the Knowledge of the Company, any other Person, in the past three (3) years. 2.10 Compliance with Laws; Permits (a) Except as set forth in Section 2.10(a) of the Company Disclosure Letter , the Company is not in violation of, or in conflict with, or in default of any Legal Requirements applicable to the Company, any of its assets or properties or by which the Company, any of its assets or properties is bound or affected. No investigation or review by any Governmental Entity is pending or, to the Knowledge of the Company, has been threatened against the Company, any of its assets or properties, nor, to the Knowledge of the Company, has any Governmental Entity indicated an intention to conduct an investigation of the Company, any of its assets or properties. There is no judgment, injunction, order or decree binding upon the Company, any of its assets or properties or otherwise affecting or relating to the assets or properties of the Company. (b) Except as set forth in Section 2.10(b) of the Company Disclosure Letter , the Company holds all permits, licenses, authorizations, variances, exemptions, orders, consents, certificates, registrations and approvals from Governmental Entities required for the operation of the business of the Company as currently conducted and as anticipated to be conducted (collectively, the “ Company Permits ”). The Company is in material compliance with the terms of the Company Permits. The Company Permits are in full force and effect and, to the Knowledge of the Company, no suspension, revocation or cancellation thereof has been threatened. 2.11 Litigation Except as set forth in Section 2.11 of the Company Disclosure Letter, there are no claims, suits, actions, charges, inquiries, proceedings or investigations by or before any Governmental Entity pending or, to the Knowledge of the Company, threatened against, relating to or affecting the Company, any of its properties or assets, and the Company does not know or have any reason to know of any valid basis for any such suit, claim, action, proceeding or investigation.
13 2.12 Employee Benefit Plans; Employee Matters Neither the Company nor any trade or business, whether or not incorporated (an “ ERISA Affiliate ”), that together with the Company would be deemed a “single employer” within the meaning of section 4001(b) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), is a party to, sponsors, maintains, contributes to, is required to contribute to or otherwise has any liability with respect to any deferred compensation, bonus or other incentive compensation, stock purchase, stock option or other equity compensation plan, program, agreement or arrangement, severance or termination pay, medical, surgical, hospitalization, life insurance or other “welfare” plan, fund or program (within the meaning of section 3(1) of ERISA), or profit-sharing, stock bonus or other “pension” plan, fund or program (within the meaning of section 3(2) of ERISA), or employment, termination or severance agreement or other employee benefit plan, fund, program, agreement or arrangement (each, a “ Benefit Plan ”), other than as disclosed in the Financial Statements and set forth in Section 2.12 of the Company Disclosure Letter . The Company does not have any employees or independent contractors, nor does the Company have any liability, actual or contingent, with respect to any Benefit Plan sponsored by another entity. 2.13 Environmental Matters . (a) The following terms shall have the following meanings for the purposes of this Agreement: (i) “ Environmental Laws ” shall mean all federal, interstate, state and local laws, regulations, rules and ordinances relating to pollution or protection of the environment or human health and safety, including laws, regulations, rules and ordinances relating to emissions, discharges, releases or threatened releases of Hazardous Substances into the environment or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, transport or handling of Hazardous Substances; all laws and regulations with regard to record-keeping, notification, disclosure and reporting requirements respecting Hazardous Substances; all laws relating to endangered or threatened species of fish, wildlife and plants and the management or use of natural resources; and common law to the extent it relates to or applies to exposure to or impact of Hazardous Substances on persons or property. (ii) “ Environmental Claim ” shall mean any claim, action, cause of action, investigation or notice (written or oral) by any person or entity alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resource damages, property damages, personal injuries or penalties) arising out of, based on or resulting from (a) the presence, or release into the environment, of any Hazardous Substance at any location, whether or not owned or operated by the Company or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. (iii) “ Hazardous Substances ” means all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, all substances defined as Hazardous Substances in the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) at 42 U.S.C. 9601, et. seq., toxic mold, or defined as such by, or regulated as such under, any Environmental Law.
14 Except as set forth in Section 2.13 of the Company Disclosure Letter and the report on the Phase I environmental examination obtained by Parent: (i) The Company is and has been in full compliance with all applicable Environmental Laws, which compliance includes, but is not limited to, the possession by the Company of all permits and governmental authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof. The Company has not received any communication (written or oral), whether from a governmental authority, citizens group, employee or otherwise, that alleges that the Company is not in such full compliance, and there are no circumstances that may prevent or interfere with such full compliance, or with securing any permits that may be needed, in the future. All permits and other governmental authorizations currently held by the Company pursuant to the Environmental Laws are identified in Section 2.13(b)(i) of the Company Disclosure Letter . The Company has delivered to Parent all reports, assessments, investigations, studies, analytical results, audits, tests, sampling results and monitoring data relating to (1) the discharge, release or threatened release of Hazardous Substances by the Company or affecting the Real Property or any former properties of the Company, (2) relating to any Environmental Claim against the Company; or (3) otherwise relating to the Company’s liability under or compliance with Environmental Laws, in each case, that are in the Company’s possession or control. (ii) There is no Environmental Claim pending or threatened against the Company or, to the Knowledge of the Company, against any person or entity whose liability for any Environmental Claim the Company has or may have retained or assumed either contractually or by operation of law. (iii) There are no past or present actions, activities, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Hazardous Substance that could form the basis of any Environmental Claim against the Company or against any person or entity whose liability for any Environmental Claim the Company has or may have retained or assumed either contractually or by operation of law. (iv) Without in any way limiting the generality of the foregoing, (A) all on-site and off-site locations where the Company has stored, disposed or arranged for the disposal of Hazardous Substances are identified in Section 2.13(b)(iv) of the Company Disclosure Letter , (B) all underground storage tanks, and the capacity and contents of such tanks, located on property owned, operated, or leased by the Company are identified in Section 2.13(b)(iv) of the Company Disclosure Letter , (C) except as set forth in Section 2.13(b)(iv) of the Company Disclosure Letter , there is no asbestos contained in or forming part of any building, building component, structure or office space owned or leased by the Company, (D) except as set forth in Section 2.13(b)(iv) of the Company Disclosure Letter , no polychlorinated biphenyls (PCB’s) are used or stored at any property owned or leased by the Company, (E) except as set forth in Section 2.13(b)(iv) of the Company Disclosure Letter , all underground storage tanks owned, operated, or leased by the Company and which are subject to regulation under the federal Resource Conservation and Recovery Act (or equivalent state or local law regulating underground storage tanks) meet the technical standards prescribed at Title 40 Code of Federal Regulations Part 280 which became effective December 22, 1998 (or any applicable state or local law requirements which are more stringent than such technical standards or which became effective before such date), and (F) all properties formerly owned or operated by the Company or any affiliate, or predecessor thereof, are identified in Section 2.13(b)(iv) of the Company Disclosure Letter . (v) The Company has not received any request for information from any Person, including but not limited to any Governmental Entity, related to liability under or compliance with any applicable Environmental Law.
15 (vi) There have been no spills, discharges or releases (as such term is defined by the Comprehensive Environmental Response, Compensation and Liability Act, 42, U.S.C. 9601, et seq. (“ CERCLA ”)) of Hazardous Substances or any other contaminant or pollutant on or underneath the Real Property or any former properties of the Company that could require investigation or clean-up. (vii) The Company has not disposed or arranged for the disposal of Hazardous Substances (or any waste or substance containing Hazardous Substances) at any location that is: (i) listed on the Federal National Priorities List (“ NPL ”) or identified on the Comprehensive Environmental Response, Compensation, and Liability Information System (“ CERCLIS ”), each established pursuant to CERCLA; (ii) listed on any state or foreign list of hazardous waste sites that is analogous to the NPL or CERCLIS; or (iii) has been subject to environmental investigation or remediation. 2.14 Agreements, Contracts and Commitments . (a) Section 2.14 of the Company Disclosure Letter sets forth all notes, bonds, mortgages, indentures, contracts, agreements, leases, licenses, agreements granting, obtaining or restricting rights to use any Intellectual Property, permits, franchises, concessions or other instruments or obligations to which the Company is a party or by which the Company or any of its assets or properties is bound or relating to the operation of the business (collectively, “ Contracts ”). (b) All of the Contracts are valid and binding agreements of the Company and are in full force and effect, and neither the Company nor, to the Knowledge of the Company, any other party thereto, is in default in any respect under the terms of the Contracts. The Company has made available to Parent true and correct copies of all of the Contracts. The Company has not received any notice from any other party to any of the Contracts, and otherwise has no knowledge that such a third party intends to terminate, or not renew, any of the Contracts.
16 2.15 Information in Registration Statement and Prospectus/Proxy Statement None of the information supplied or to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the registration statement on Form S-4 (or similar successor form) to be filed with the SEC by Parent in connection with the issuance of Parent Common Stock in the Merger (including amendments or supplements thereto) ( the “ Registration Statement ”) will, at the time the Registration Statement becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the Prospectus/Proxy Statement to be filed with the SEC as part of the Registration Statement (the “ Prospectus/Proxy Statement ”), will, at the time the Prospectus/Proxy Statement is mailed to the members of the Company, at the time of the Company Stockholders’ Meeting or as of the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Prospectus/Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations promulgated by the SEC thereunder. Notwithstanding the foregoing, no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein about Parent or Merger Sub supplied by Parent or Merger Sub for inclusion or incorporation by reference in the Registration Statement or the Prospectus/Proxy Statement. 2.16 Insurance The Company has policies of insurance and bonds of the type and in amounts customarily carried by persons conducting businesses or owning assets similar to those of the Company. There is no claim pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums due and payable under all such policies and bonds have been paid and the Company is otherwise in compliance with the terms of such policies and bonds. The Company has no knowledge of any threatened termination of, or material premium increase with respect to, any such policies. Section 2.16(a) of the Company Disclosure Letter contains an accurate and complete description of all material policies of fire, liability, workers’ compensation, and other forms of insurance owned or held by the Company. Section 2.16(b) of the Company Disclosure Letter identifies all risks that the Company and its Board of Directors and officers have designated as being self-insured. 2.17 Affiliate Transactions Except as set forth on Section 2.17 of the Company Disclosure Letter , since January 1, 2007 there have been no transactions or relationships (a) between the Company and any present or former director or officer thereof or any member of such director’s or officer’s family, or any Person controlled by such officer or director or his or her family, or (b) that would be required to be disclosed pursuant to Item 404 of SEC Regulation S-K. 2.18 Approval of Board of Directors |
AGREEMENTS / CONTRACTS
CLAUSES
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