-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MBmqUopLRPLxRk4f/rGCHMhPgf08fgVhKmPItLr3H8GWWE2jA6G0t5c8j0de8K2i CURVsIyODMVe/4kWwlcbvw== 0000950131-01-502128.txt : 20010704 0000950131-01-502128.hdr.sgml : 20010704 ACCESSION NUMBER: 0000950131-01-502128 CONFORMED SUBMISSION TYPE: SC TO-T PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20010703 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EARTHGRAINS CO /DE/ CENTRAL INDEX KEY: 0001004985 STANDARD INDUSTRIAL CLASSIFICATION: BAKERY PRODUCTS [2050] IRS NUMBER: 363201045 STATE OF INCORPORATION: DE FISCAL YEAR END: 0326 FILING VALUES: FORM TYPE: SC TO-T SEC ACT: SEC FILE NUMBER: 005-46087 FILM NUMBER: 1674328 BUSINESS ADDRESS: STREET 1: 8400 MARYLAND AVE CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3142597000 MAIL ADDRESS: STREET 1: 8400 MARYLAND AVE CITY: ST LOUIS STATE: MO ZIP: 63105 FORMER COMPANY: FORMER CONFORMED NAME: CAMPBELL TAGGART INC /DE/ DATE OF NAME CHANGE: 19960328 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LEE SARA CORP CENTRAL INDEX KEY: 0000023666 STANDARD INDUSTRIAL CLASSIFICATION: FOOD & KINDRED PRODUCTS [2000] IRS NUMBER: 362089049 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC TO-T BUSINESS ADDRESS: STREET 1: THREE FIRST NATIONAL PLZ STREET 2: STE 4600 CITY: CHICAGO STATE: IL ZIP: 60602 BUSINESS PHONE: 3127262600 MAIL ADDRESS: STREET 1: THREE FIRST NATL PLZ STREET 2: SUITE 4600 CITY: CHICAGO STATE: IL ZIP: 60602 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED FOODS CORP DATE OF NAME CHANGE: 19850402 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED GROCERD CORP DATE OF NAME CHANGE: 19731220 SC TO-T 1 dsctot.txt SCHEDULE TO - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- SCHEDULE TO (Rule 14d-100) Tender Offer Statement Under Section 14(d)(1) or Section 13(e)(1) of the Securities Exchange Act of 1934 THE EARTHGRAINS COMPANY (Name of Subject Company (Issuer)) SLC ACQUISITION CORP. a wholly owned subsidiary of SARA LEE CORPORATION (Names of Filing Persons (Offerors)) ---------------- COMMON STOCK, PAR VALUE $0.01 PER SHARE (Title of Class of Securities) ---------------- 270319-10-6 (CUSIP Number of Class of Securities) Roderick A. Palmore, Esq. Senior Vice President, General Counsel and Secretary Sara Lee Corporation Three First National Plaza Chicago, Illinois 60602-4260 (312) 726-2600 (Name, address and telephone number of person authorized to receive notices and communications on behalf of filing persons) With a copy to: Charles W. Mulaney, Jr., Esq. Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 West Wacker Drive Chicago, Illinois 60606 Telephone: (312) 407-0700 CALCULATION OF FILING FEE - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------
Amount of Transaction Filing Valuation* Fee ----------- -------- $1,836,427,954 $367,286 - ------------------------------------------------------------------------------
* Estimated for purposes of calculating the filing fee only. The filing fee calculation assumes the purchase of 42,648,084 outstanding shares of common stock (together with the associated rights to purchase preferred stock) of The Earthgrains Company at a purchase price of $40.25 per share. The transaction value also includes the offer price of $40.25 per share, less $15.92 which is the average exercise price of outstanding options, multiplied by 4,925,712, the estimated number of options outstanding under The Earthgrains Company's employee stock option plans. The amount of the filing fee calculated in accordance with Rule 0-11 of the Securities Exchange Act of 1934, as amended, equals 1/50 of 1% of the transaction value. [_]Check the box if any part of the fee is offset as provided by Rule 0- 11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number or the Form or Schedule and the date of its filing. Amount Previously Paid: ___________ Filing party: _____________________ Form or Registration No.: _________ Date Filed: _______________________ [_]Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. [_]Check the appropriate boxes below to designate any transactions to which the statement relates: [X] third-party tender offer subject to Rule 14d-1. [_] issuer tender offer subject to Rule 13e-4. [_] going-private transaction subject to Rule 13e-3. [_] amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer: [_] - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Item 1. Summary Term Sheet The information set forth in the section of the Offer to Purchase entitled "Summary Term Sheet" is incorporated herein by reference. Item 2. Subject Company Information. (a) The name of the subject company is The Earthgrains Company, a Delaware corporation ("Earthgrains" or the "Company"), and the address is 8400 Maryland Avenue, St. Louis, Missouri 63105-3668. The telephone number of the Company is (314) 259-7000. (b) This Statement relates to the offer by SLC Acquisition Corp. (the "Purchaser"), a Delaware corporation and a wholly owned subsidiary of Sara Lee Corporation, a Maryland corporation ("Sara Lee"), to purchase all outstanding shares of common stock of the Company, par value $0.01 per share (the "Shares"), at $40.25 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(l) and (a)(2) (which are herein collectively referred to as the "Offer"). The information set forth in the introduction to the Offer to Purchase (the "Introduction") is incorporated herein by reference. (c) The information concerning the principal market in which the Shares are traded and certain high and low sales prices for the Shares in such principal market is set forth in "Price Range of Shares; Dividends" in the Offer to Purchase and is incorporated herein by reference. Item 3. Identity and Background of the Filing Person. (a), (b), (c) The information set forth in "Certain Information Concerning Sara Lee and the Purchaser" and Schedule I in the Offer to Purchase is incorporated herein by reference. Item 4. Terms of the Transaction. (a)(1) (i)-(viii), (xii) The information set forth under "Introduction," "Background of the Offer; Past Contacts or Negotiations with the Company," "Purpose of the Offer; Plans for the Company," "The Merger Agreement," "Certain Information Concerning the Company," "Certain Effects of the Offer" and "Source and Amount of Funds" in the Offer to Purchase is incorporated herein by reference. (a)(1) (ix) Not applicable (a)(1) (x) Not applicable (a)(1) (xi) Not applicable (a)(2) (i)-(iv), (vii) The information set forth under "Introduction," "Background of the Offer; Past Contacts or Negotiations with the Company," "Purpose of the Offer; Plans for the Company," "The Merger Agreement," "Certain Information Concerning the Company," "Certain Effects of the Offer" and "Source and Amount of Funds" in the Offer to Purchase is incorporated herein by reference. (a)(2) (v) Not applicable (a)(2) (vi) Not applicable Item 5. Past Contacts, Transactions, Negotiations and Agreements. The information set forth in "Background of the Offer; Past Contacts or Negotiations with the Company," "The Merger Agreement," "Certain Information Concerning Sara Lee and the Purchaser" and "Purpose of the Offer; Plans for the Company" in the Offer to Purchase is incorporated herein by reference. Item 6. Purpose of the Tender Offer and Plans or Proposals. (a), (c)(1), (c)(3-7) The information set forth in "Introduction," "The Merger Agreement," "Purpose of the Offer; Plans for the Company," and "Price Range of Shares; Dividends" in the offer to Purchase is incorporated herein by reference. (c)(2) None 2 Item 7. Source and Amount of Funds or Other Consideration. (a), (d) The information set forth in "Source and Amount of Funds" in the Offer to Purchase is incorporated herein by reference. (b) Not applicable Item 8. Interest in Securities of the Subject Company. The information set forth in "Introduction," "Certain Information Concerning the Company," "Certain Information Concerning Sara Lee and the Purchaser" and Schedule I in the Offer to Purchase is incorporated herein by reference. Item 9. Persons/Assets, Retained, Employed, Compensated or Used. The information set forth in "Introduction" and "Fees and Expenses" of the Offer to Purchase is incorporated herein by reference. Item 10. Financial Statements. Not applicable Item 11. Additional Information. The information set forth in "The Merger Agreement" and "Certain Legal Matters; Regulatory Approvals" in the Offer to Purchase is incorporated herein by reference. Item 12. Exhibits. (a)(1) Offer to Purchase dated July 3, 2001. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Press Release issued by Sara Lee on July 2, 2001, incorporated herein by reference to the pre-commencement Schedule TO filed by Sara Lee on July 2, 2001. (a)(8) Summary Advertisement as published in The Wall Street Journal on July 3, 2001. (b)(1) Financing Commitment Letter dated June 29, 2001, to Sara Lee Corporation from J.P. Morgan Securities Inc. and The Chase Manhattan Bank. (d)(1) Agreement and Plan of Merger, dated as of June 29, 2001, by and among Sara Lee, SLC Acquisition Corp. and Earthgrains. (d)(2) Confidentiality Agreement dated May 29, 2001, between Sara Lee and Earthgrains. (g) Not applicable. (h) Not applicable.
3 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. SLC Acquisition Corp. /s/ Helen Kaminski By: _________________________________ Name: Helen Kaminski Title: Vice President and Secretary Sara Lee Corporation /s/ Richard Oberdorf By: _________________________________ Name: Richard Oberdorf Title: Vice President-Corporate Development Dated: July 3, 2001 4 EXHIBIT INDEX
Exhibit No. Exhibit Name ----------- ------------ (a)(1) Offer to Purchase dated July 3, 2001. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Press Release issued by Sara Lee on July 2, 2001, incorporated herein by reference to the Schedule TO filed by Sara Lee on July 2, 2001. (a)(8) Summary Advertisement as published in The Wall Street Journal on July 3, 2001. (b)(1) Financing Commitment Letter dated June 29, 2001, to Sara Lee Corporation from J.P. Morgan Securities Inc. and The Chase Manhattan Bank. (d)(1) Agreement and Plan of Merger, dated as of June 29, 2001, by and among Sara Lee, SLC Acquisition Corp. and Earthgrains. (d)(2) Confidentiality Agreement dated May 29, 2001, between Sara Lee and Earthgrains. (g) Not applicable. (h) Not applicable.
5 EX-99.A1 2 dex99a1.txt OFFER TO PURCHASE Offer To Purchase For Cash All Outstanding Shares of Common Stock (Including the Associated Rights to Purchase Preferred Stock) of The Earthgrains Company $40.25 Net Per Share by SLC Acquisition Corp. a wholly owned subsidiary of Sara Lee Corporation THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JULY 31, 2001 UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE, OF THE EARTHGRAINS COMPANY (THE "COMPANY"), INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK (COLLECTIVELY, THE "SHARES"), THAT REPRESENTS AT LEAST A MAJORITY OF THE THEN OUTSTANDING SHARES ON A FULLY DILUTED BASIS, AND (II) THE WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, THE EUROPEAN COMMUNITY MERGER REGULATION, AS AMENDED, AND ANY OTHER COMPARABLE PROVISIONS UNDER ANY PRE-MERGER NOTIFICATION LAWS OR REGULATIONS OF FOREIGN JURISDICTIONS HAVING EXPIRED OR BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO OTHER CONDITIONS. SEE SECTION 15--"CERTAIN CONDITIONS OF THE OFFER." THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED AS OF JUNE 29, 2001 (THE "MERGER AGREEMENT"), AMONG SARA LEE CORPORATION ("SARA LEE"), SLC ACQUISITION CORP. (THE "PURCHASER") AND THE COMPANY. -------------- THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY (I) DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, (II) APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER AND (III) RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER AND APPROVE AND ADOPT THE MERGER AGREEMENT. -------------- IMPORTANT Any stockholder of the Company wishing to tender Shares in the Offer must (i) complete and sign the Letter of Transmittal (or a manually signed facsimile thereof) in accordance with the instructions in the Letter of Transmittal and mail or deliver the Letter of Transmittal and all other required documents to the Depositary (as defined herein) together with certificates representing the Shares tendered or follow the procedure for book-entry transfer set forth in Section 3--"Procedures for Accepting the Offer and Tendering Shares" or (ii) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for the stockholder. A stockholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person if such stockholder wishes to tender such Shares. Any stockholder of the Company who wishes to tender Shares and cannot deliver certificates representing such Shares and all other required documents to the Depositary on or prior to the Expiration Date (as defined herein) or who cannot comply with the procedures for book-entry transfer on a timely basis may tender such Shares pursuant to the guaranteed delivery procedure set forth in Section 3--"Procedures for Accepting the Offer and Tendering Shares." Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other related materials may be obtained from the Information Agent or the Dealer Manager. Stockholders may also contact their broker, dealer, commercial bank, trust company or other nominee for copies of these documents. -------------- The Dealer Manager for the Offer is: [JPMorgan logo] J.P.Morgan Securities Inc. 60 Wall Street New York, New York 10260-0060 Call: (212) 648-1995 July 3, 2001 TABLE OF CONTENTS SUMMARY TERM SHEET........................................................ S-1 INTRODUCTION.............................................................. 1 THE TENDER OFFER.......................................................... 2 1.Terms of the Offer..................................................... 2 2.Acceptance for Payment and Payment for Shares.......................... 5 3.Procedures for Accepting the Offer and Tendering Shares................ 5 4.Withdrawal Rights...................................................... 8 5.Certain United States Federal Income Tax Consequences.................. 9 6.Price Range of Shares; Dividends....................................... 10 7.Certain Information Concerning the Company............................. 10 8.Certain Information Concerning Sara Lee and the Purchaser.............. 12 9.Source and Amount of Funds............................................. 13 10.Background of the Offer; Past Contacts or Negotiations with the Company.................................................................. 13 11.The Merger Agreement................................................... 14 12.Purpose of the Offer; Plans for the Company............................ 23 13.Certain Effects of the Offer........................................... 24 14.Dividends and Distributions............................................ 24 15.Certain Conditions of the Offer........................................ 25 16.Certain Legal Matters; Regulatory Approvals............................ 26 17.Fees and Expenses...................................................... 28 18.Miscellaneous.......................................................... 29
SCHEDULE I Directors and Executive Officers of Sara Lee and the Purchaser i SUMMARY TERM SHEET SLC Acquisition Corp. is offering to purchase all of the outstanding shares of common stock of The Earthgrains Company for $40.25 per share in cash. The following are some of the questions you, as a stockholder of Earthgrains, may have and answers to those questions. We urge you to read carefully the remainder of this Offer to Purchase and the Letter of Transmittal because the information in this summary term sheet is not complete. Additional important information is contained in the remainder of this Offer to Purchase and the Letter of Transmittal. Who is offering to buy my securities? Our name is SLC Acquisition Corp. We are a Delaware corporation formed for the purpose of making a tender offer for all of the common stock of Earthgrains. We are a wholly owned subsidiary of Sara Lee Corporation, a Maryland corporation. See the "Introduction" to this Offer to Purchase and Section 8--"Certain Information Concerning Sara Lee and the Purchaser." What are the classes and amounts of securities sought in the offer? We are seeking to purchase all of the outstanding shares of common stock of Earthgrains and the rights to purchase preferred stock associated with those shares. See the "Introduction" to this Offer to Purchase and Section 1--"Terms of the Offer." How much are you offering to pay? What is the form of payment? Will I have to pay any fees or commissions? We are offering to pay $40.25 per share, net to you, in cash. If you are the record owner of your shares and you tender your shares to us in the offer, you will not have to pay brokerage fees or similar expenses. If you own your shares through a broker or other nominee, and your broker tenders your shares on your behalf, your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine whether any charges will apply. See the "Introduction" to this Offer to Purchase. Do you have the financial resources to make payment? Sara Lee, our parent company, will provide us with approximately $1.8 billion to purchase shares in the offer and to provide funding for the merger, which is expected to follow the successful completion of the offer in accordance with the terms and conditions of the merger agreement. Sara Lee will borrow a majority of these funds pursuant to a commitment letter which it has received from J.P. Morgan Securities Inc. and The Chase Manhattan Bank. The loan commitment is subject to normal and customary conditions. The offer, however, is not conditioned upon any financing arrangements. See Section 9-- "Source and Amount of Funds." Is your financial condition relevant to my decision to tender in the offer? We do not think our financial condition is relevant to your decision whether to tender shares and accept the offer because: . the offer is being made for all outstanding shares solely for cash, . the offer is not subject to any financing condition, and . if we consummate the offer, we will acquire all remaining shares for the same cash price in the merger. See Section 9--"Source and Amount of Funds." How long do I have to decide whether to tender in the offer? You will have at least until 12:00 Midnight, New York City time, on Tuesday, July 31, 2001, to tender your shares in the offer. Further, if you cannot deliver everything that is required in order to make a valid tender S-1 by that time, you may be able to use a guaranteed delivery procedure, which is described later in this Offer to Purchase. See Sections 1--"Terms of the Offer" and 3--"Procedures for Accepting the Offer and Tendering Shares." Can the offer be extended and under what circumstances? We have agreed in the merger agreement that: . Without the consent of Earthgrains, we may extend the offer beyond the scheduled expiration date if at that date any of the conditions to our obligation to accept for payment and to pay for the shares are not satisfied or, to the extent permitted by the merger agreement, waived. . Without the consent of Earthgrains, we may generally extend the offer for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission or its staff thereof applicable to the offer. . If, on the expiration date of the offer, (1) any applicable waiting period under each of the Hart-Scott-Rodino Antitrust Improvements Act, the European Community Merger Regulation, and any other comparable provisions under any pre-merger notification laws or regulations of foreign jurisdictions has not expired or been terminated or (2) (A) there is any banking moratorium, limitation on the extension of credit or any change which materially and adversely affects the ability of financial institutions in the United States to extend credit or (B) subject to Sara Lee's obligations under the Merger Agreement, there is any pending proceeding by a foreign or domestic governmental entity against Sara Lee, the Purchaser or Earthgrains or any statute, law or regulation is enacted or promulgated, which has certain specified adverse effects on Sara Lee, the Purchaser, Earthgrains or their ability to consummate the transactions contemplated by the Merger Agreement, then we have agreed to extend the Offer from time to time until March 31, 2002 (or June 30, 2002 if additional time is required in connection with obtaining the required anti-trust approvals). . Without the consent of Earthgrains, we may elect to provide a "subsequent offering period" for the offer. A subsequent offering period, if one is included, will be an additional period of not less than three or more than twenty business days beginning after we have purchased shares tendered during the offer, during which stockholders may tender, but not withdraw, their shares and receive the offer consideration. See Section 1--"Terms of the Offer" of this Offer to Purchase for more details on our ability to extend the offer. How will I be notified if the offer is extended? If we extend the offer, we will inform Mellon Investor Services LLC (the depositary for the offer) of that fact and will make a public announcement of the extension not later than 9:00 a.m., New York City time, on the next business day after the day on which the offer was scheduled to expire. See Section 1--"Terms of the Offer." What are the most significant conditions to the offer? . We are not obligated to purchase any shares that are validly tendered unless the number of shares validly tendered and not withdrawn before the expiration date of the offer represents at least a majority of the then outstanding shares on a fully diluted basis. We call this condition the "minimum condition." . We are not obligated to purchase shares that are validly tendered if, among other things, there is a material adverse change in Earthgrains or its business. . Subject to our obligation to extend of the offer described above, we are not obligated to purchase shares that are validly tendered if, among other things, the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act, the European Community Merger Regulation, and any other comparable provisions under any pre-merger notification laws or regulations of foreign jurisdictions have not expired or been terminated. S-2 The offer is also subject to a number of other conditions. We can waive some of the conditions to the offer without Earthgrains' consent. We cannot, however, waive the minimum condition. See Section 15--"Certain Conditions of the Offer." How do I tender my shares? To tender shares, you must deliver the certificates representing your shares, together with a completed letter of transmittal and any other documents required by the letter of transmittal, to Mellon Investor Services LLC, the depositary for the offer, not later than the time the tender offer expires. If your shares are held in street name, the shares can be tendered by your nominee through The Depository Trust Company. If you are unable to deliver any required document or instrument to the depositary by the expiration of the tender offer, you may gain some extra time by having a broker, a bank or other fiduciary that is an eligible institution guarantee that the missing items will be received by the depositary within three New York Stock Exchange trading days. For the tender to be valid, however, the depositary must receive the missing items within that three trading day period. See Section 3--"Procedures for Accepting the Offer and Tendering Shares." Until what time may I withdraw previously tendered shares? You may withdraw shares at any time until the offer has expired and, if we have not accepted your shares for payment by Friday, August 31, 2001, you may withdraw them at any time after that date until we accept shares for payment. This right to withdraw will not apply to any subsequent offering period, if one is provided. See Section 4--"Withdrawal Rights." How do I withdraw previously tendered shares? To withdraw shares, you must deliver a written notice of withdrawal, or a facsimile of one, with the required information to the depositary while you still have the right to withdraw shares. See Section 4--"Withdrawal Rights." What does the Earthgrains Board of Directors think of the offer? We are making the offer pursuant to the merger agreement, which has been approved by the board of directors of Earthgrains. The board of directors of Earthgrains unanimously (1) determined that the terms of the offer and the merger are fair to and in the best interests of the stockholders of Earthgrains, (2) approved the merger agreement and the transactions contemplated thereby, including the offer and the merger, and (3) recommends that Earthgrains's stockholders accept the offer and tender their shares pursuant to the offer and approve and adopt the merger agreement. See the "Introduction" to this Offer to Purchase. If a majority of the shares are tendered and accepted for payment, will Earthgrains continue as a public company? No. Following the purchase of shares in the offer we expect to consummate the merger. If the merger takes place, Earthgrains no longer will be publicly owned. Even if for some reason the merger does not take place, if we purchase all of the tendered shares, there may be so few remaining stockholders and publicly held shares that Earthgrains common stock will no longer be eligible to be traded through The New York Stock Exchange or other securities exchange, there may not be a public trading market for Earthgrains common stock, and Earthgrains may no longer be required to make filings with the Securities and Exchange Commission or otherwise comply with the SEC rules relating to publicly held companies. See Section 13--"Certain Effects of the Offer." Will the tender offer be followed by a merger if all of the Earthgrains shares are not tendered in the offer? Yes. If we accept for payment and pay for at least a majority of the shares of Earthgrains on a fully diluted basis, SLC Acquisition Corp. will be merged with and into Earthgrains. If that merger takes place, Sara Lee will own all of the shares of Earthgrains and all remaining stockholders of Earthgrains (other than Sara Lee and stockholders properly exercising dissenters' rights) will receive $40.25 per share in cash (or any higher price per share that is paid in the offer). See the "Introduction" to this Offer to Purchase. S-3 If I decide not to tender, how will the offer affect my shares? If the merger described above takes place, stockholders not tendering in the offer will receive the same amount of cash per share that they would have received had they tendered their shares in the offer, subject to any dissenters' rights properly exercised under Delaware law. Therefore, if the merger takes place, the only difference to you between tendering your shares and not tendering your shares is that you will be paid earlier if you tender your shares. If the merger does not take place, however, the number of stockholders and the number of shares of Earthgrains that are still in the hands of the public may be so small that there no longer will be an active public trading market (or, possibly, there may not be any public trading market) for Earthgrains common stock. Also, as described above, Earthgrains may no longer be required to make filings with the Securities and Exchange Commission or otherwise comply with the SEC rules relating to publicly held companies. See the "Introduction" and Section 13--"Certain Effects of the Offer" of this Offer to Purchase. What is the market value of my shares as of a recent date? On June 29, 2001, the last trading day before we announced the acquisition, the last sale price of Earthgrains common stock reported on The New York Stock Exchange was $26.00 per share. On July 2, 2001, the last trading day before we commenced the tender offer, the last sale price of Earthgrains common stock reported on The New York Stock Exchange was $39.82. We encourage you to obtain a recent quotation for shares of Earthgrains common stock in deciding whether to tender your shares. See Section 6--"Price Range of Shares." Who should I talk to if I have questions about the tender offer? You may call Morrow & Co. at (800) 607-0088 (toll free) or J.P. Morgan Securities Inc. at (866) 262-0777 (toll free). Morrow & Co. is acting as the information agent and J.P. Morgan Securities Inc. is acting as the dealer manager for our tender offer. See the back cover of this Offer to Purchase. S-4 To the Holders of Shares of Common Stock of The Earthgrains Company INTRODUCTION SLC Acquisition Corp. (the "Purchaser"), a Delaware corporation and a wholly owned subsidiary of Sara Lee Corporation, a Maryland corporation ("Sara Lee"), hereby offers to purchase all outstanding shares of common stock, par value $0.01 per share (the "Common Stock"), of The Earthgrains Company, a Delaware corporation (the "Company"), and the associated rights to purchase preferred stock (the "Rights") issued pursuant to the Rights Agreement, dated as of February 22, 1996, as amended (the "Rights Agreement"), between the Company and Boatmen's Trust Company, as rights agent (the shares of Common Stock and any associated Rights are referred to as the "Shares"), at a price of $40.25 per Share, net to the seller in cash (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments or supplements hereto or thereto, collectively constitute the "Offer"). The Offer is being made pursuant to an Agreement and Plan of Merger dated as of June 29, 2001 (the "Merger Agreement"), among Sara Lee, the Purchaser and the Company. The Merger Agreement provides that the Purchaser will be merged with and into the Company (the "Merger ") with the Company continuing as the surviving corporation (the "Surviving Corporation"), wholly owned by Sara Lee. Pursuant to the Merger, at the effective time of the Merger (the "Effective Time"), each Share outstanding immediately prior to the Effective Time (other than Shares owned by the Company or Sara Lee or any of their respective subsidiaries, all of which will be cancelled, and other than Shares that are held by stockholders, if any, who properly exercise their dissenters' rights under the Delaware General Corporation Law (the "DGCL")), will be converted into the right to receive $40.25 or any greater per Share price paid in the Offer in cash, without interest (the "Merger Consideration"). The Merger Agreement is more fully described in Section 11--"The Merger Agreement," which also contains a discussion of the treatment of stock options. Tendering stockholders who are record owners of their Shares and tender directly to the Depositary (as defined below) will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes with respect to the purchase of Shares by the Purchaser pursuant to the Offer. Stockholders who hold their Shares through a broker or bank should consult such institution as to whether it charges any service fees. Sara Lee or the Purchaser will pay all charges and expenses of J.P. Morgan Securities Inc., as dealer manager ("J.P. Morgan" or "Dealer Manager"), Mellon Investor Services LLC, as depositary (the "Depositary"), and Morrow & Co., as information agent (the "Information Agent"), incurred in connection with the Offer. See Section 17--"Fees and Expenses." The Board of Directors of the Company (the "Company Board") has unanimously (i) determined that the terms of the Offer and the Merger are fair to and in the best interests of the stockholders of the Company, (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, and (iii) recommends that the Company's stockholders accept the Offer and tender their shares pursuant to the Offer and approve and adopt the Merger Agreement. UBS Warburg LLC, the Company's financial advisor, has delivered to the Company Board its written opinion, dated June 29, 2001, to the effect that, as of such date and based on and subject to the matters stated in such opinion, the consideration to be received by holders of Shares pursuant to the Offer and the Merger Agreement is fair from a financial point of view to such holders. The full text of UBS Warburg's written opinion, which describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken, is included as an annex to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which is being mailed to stockholders with this Offer to Purchase. Stockholders are urged to read the full text of such opinion carefully and in its entirety. The Offer is conditioned upon, among other things, (i) there being validly tendered in accordance with the terms of the Offer and not withdrawn prior to the expiration date of the Offer that number of Shares that represents at least a majority of then outstanding Shares on a fully diluted basis (the "Minimum Condition") 1 and (ii) the expiration or termination of the waiting periods under the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations thereunder (the "HSR Act"), the European Community Merger Regulation, as amended, the ("ECMR") and any other comparable provisions under any pre-merger notification laws or regulations of foreign jurisdictions. The Offer is also subject to the satisfaction of certain other conditions. See Section 15--"Certain Conditions of the Offer." For purposes of the Offer, "on a fully diluted basis" means, as of any time, on a basis that includes the number of Shares that are actually issued and outstanding plus the maximum number of Shares that the Company may be required to issue pursuant to obligations under stock options, warrants and other rights or securities convertible into shares of Common Stock, whether or not currently exercisable. The Company has advised Sara Lee that, on July 2, 2001, 42,648,084 Shares were issued and outstanding and 4,925,712 Shares were subject to stock option grants. Neither Sara Lee, the Purchaser nor any person listed on Schedule I hereto beneficially owns any Shares. Accordingly, the Purchaser believes that the Minimum Condition would be satisfied if approximately 23,786,900 Shares were validly tendered and not withdrawn prior to the expiration of the Offer. The Merger Agreement provides that, promptly upon the purchase of and payment for Shares pursuant to the Offer, Sara Lee will be entitled to elect or designate such number of directors, rounded up to the next whole number, on the Company Board that equals the product of (i) the total number of directors on the Company Board (giving effect to the directors designated by Sara Lee pursuant to the Merger Agreement) and (ii) the percentage that the number of Shares so purchased and paid for bears to the total number of Shares then outstanding (on a fully-diluted basis). The Company has agreed, upon request of the Purchaser, promptly to increase the size of the Company Board, secure the resignations of such number of directors, or any combination of the foregoing, as is necessary to enable Sara Lee designees to be so elected or designated to the Company Board and, in accordance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in connection therewith, to cause Sara Lee designees to be so elected; provided, however, that until the Effective Time there shall be at least three members of the Company Board who were directors as of the date of the Merger Agreement. The Company and the Rights Agent under the Rights Agreement amended the Rights Agreement as of June 29, 2001 to provide, among other things, that (i) neither Sara Lee, the Purchaser nor any of their respective Affiliates or Associates shall become an Acquiring Person (in each case, as such terms are defined in the Rights Agreement) either individually or collectively, (ii) no Distribution Date, Stock Acquisition Date (as defined in the Rights Agreement) or Triggering Event (as defined in the Rights Agreement) shall occur, (iii) no Rights shall separate from the Shares or otherwise become exercisable, (iv) no holder of Rights or any other person shall have any legal or equitable rights, remedy or claim under the Rights Agreement, and (v) no exercise price adjustment shall be made, in each case solely by virtue of (A) the announcement of the Offer, (B) the acquisition of Shares pursuant to the Offer, the Merger or the Merger Agreement, (C) the execution and delivery of the Merger Agreement or (D) the consummation of the Offer, the Merger or any of the other transactions set forth in the Merger Agreement. The Merger is subject to the satisfaction or waiver of certain conditions, including, if required, the approval and adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding Shares. If the Minimum Condition is satisfied, the Purchaser would have sufficient voting power to approve the Merger without the affirmative vote of any other stockholder of the Company. The Company has agreed, if required, to cause a meeting of its stockholders to be held as promptly as practicable following consummation of the Offer for the purposes of considering and taking action upon the approval and adoption of the Merger Agreement. Sara Lee and the Purchaser have agreed to vote their Shares in favor of the approval and adoption of the Merger Agreement. See Section 11--"The Merger Agreement." This Offer to Purchase and the related Letter of Transmittal contain important information that should be read carefully before any decision is made with respect to the Offer. THE TENDER OFFER 1. Terms of the Offer. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the Purchaser will accept for payment and pay for all 2 Shares validly tendered prior to the Expiration Date and not properly withdrawn as permitted under Section 4--"Withdrawal Rights." The term "Expiration Date" means 12:00 midnight, New York City time, on Tuesday, July 31, 2001, unless the Purchaser, in accordance with the Merger Agreement, extends the period during which the Offer is open, in which event the term "Expiration Date" means the latest time and date on which the Offer, as so extended (other than any extension with respect to the Subsequent Offering Period described below), expires. The Offer is conditioned upon the satisfaction of the Minimum Condition and the other conditions set forth in Section 15--"Certain Conditions of the Offer." Subject to the provisions of the Merger Agreement, the Purchaser may waive any or all of the conditions to its obligation to purchase Shares pursuant to the Offer (other than the Minimum Condition). If by the initial Expiration Date or any subsequent Expiration Date any or all of the conditions to the Offer have not been satisfied or waived, subject to the provisions of the Merger Agreement, the Purchaser may elect to (i) terminate the Offer and return all tendered Shares to tendering stockholders, (ii) waive all of the unsatisfied conditions (other than the Minimum Condition) and, subject to any required extension, purchase all Shares validly tendered by the Expiration Date and not properly withdrawn, (iii) extend the Offer and, subject to the right of stockholders to withdraw Shares until the new Expiration Date, retain the Shares that have been tendered until the expiration of the Offer as extended or (iv) amend the offer. The Purchaser has agreed that, without the prior written consent of the Company, it will not make any change to the Offer that (i) waives, reduces or amends the Minimum Condition, (ii) decreases the price per Share payable in the Offer, (iii) changes the form of consideration to be paid in the Offer, (iv) decreases the number of Shares to be purchased in the Offer, (v) imposes conditions to the Offer in addition to the conditions set forth in Section 15--"Certain Conditions of the Offer," or (vi) makes any other changes in conditions of the Offer that are in any manner adverse to the holders of Shares. Subject to the terms of the Merger Agreement, the Purchaser may, without the consent of the Company, (i) extend the Offer beyond the scheduled Expiration Date if any of the conditions to the Purchaser's obligation to accept for payment and to pay for the Shares are not satisfied or, to the extent permitted by the Merger Agreement, waived, (ii) extend the Offer for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the "SEC") or its staff applicable to the Offer or (iii) increase the Offer Price and extend the Offer to the extent required by law in connection with such increase. The Merger Agreement provides that if, at the scheduled Expiration Date of the Offer, (i) any applicable waiting period under each of the HSR Act, the ECMR, and any other comparable provisions under any pre-merger notification laws or regulations of foreign jurisdictions has not expired or been terminated or (ii) (A) any of the events set forth in clause (c) of Section 15--"Certain Conditions of the Offer" shall have occurred and be continuing (unless such condition has been waived by the Purchaser) or (B) any of the events set forth in clause (a) or (b) of Section 15--"Certain Conditions of the Offer" shall have occurred and be continuing and Sara Lee and Parent shall be contesting such event to the extent required by the Merger Agreement (unless such conditions are waived by the Purchaser), Purchaser will extend the Offer from time to time until March 31, 2002 (or June 30, 2002 in the event that there is issued a "second request" under the HSR Act or commenced a "second phase investigation" under ECMR or similar request or investigation is made in connection with the review by any Governmental Entity (as defined in Section 15--"Certain Conditions of the Offer") of the transactions contemplated by the Merger Agreement under any comparable law of foreign jurisdictions). The Merger Agreement also provides that, if the Minimum Condition is satisfied and the Purchaser purchases Shares in the Offer, the Purchaser may, in its sole discretion, provide a subsequent offering period in accordance with Rule 14d-11 of the Exchange Act (a "Subsequent Offering Period"). A Subsequent Offering Period is an additional period of time from three to 20 business days in length, beginning after the Purchaser purchases Shares tendered in the Offer, during which time stockholders may tender, but not withdraw, their Shares and receive the Offer Price. Rule 14d-11 provides that the Purchaser may include a Subsequent Offering Period so long as, among other things, (i) the Offer remained open for a minimum of 20 business days and has expired, (ii) all conditions to the Offer are deemed satisfied or waived by the Purchaser on or before the Expiration Date, (iii) the Purchaser accepts and promptly pays for all Shares tendered during the Offer prior to Expiration Date (iv) the Purchaser announces the results of the Offer, including the approximate number and percentage of Shares deposited in the Offer, no later than 9:00 a.m. Eastern time on the next business day after the Expiration Date and immediately begins the Subsequent Offering Period, and (v) the Purchaser immediately 3 accepts and promptly pays for Shares as they are tendered during the Subsequent Offering Period. In the event that the Purchaser elects to provide a Subsequent Offering Period, it will provide an announcement to that effect by issuing a press release to a national news service on the next business day after the previously scheduled Expiration Date. Subject to the applicable rules and regulations of the SEC and the provisions of the Merger Agreement, the Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, (i) to terminate the Offer if any of the conditions set forth in Section 15 have not been satisfied, (ii) to waive any condition to the Offer (other than the Minimum Condition) or otherwise amend the Offer in any respect, in each case by giving oral or written notice of such extension, termination, waiver or amendment to the Depositary and by making a public announcement thereof. The rights reserved by the Purchaser by the preceding paragraph are in addition to the Purchaser's rights pursuant to Section 15. Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement thereof, such announcement in the case of an extension to be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date, in accordance with the public announcement requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law (including Rules 14d-4(d) and 14d- 6(c) under the Exchange Act, which require that material changes be promptly disseminated to stockholders in a manner reasonably designed to inform them of such changes) and without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release to a national news service. If the Purchaser extends the Offer or if the Purchaser (whether before or after its acceptance for payment of Shares) is delayed in its acceptance for payment of or payment for Shares or it is unable to pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may retain tendered Shares on behalf of the Purchaser, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to withdrawal rights as described herein under Section 4--"Withdrawal Rights." However, the ability of the Purchaser to delay the payment for Shares that the Purchaser has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of stockholders promptly after the termination or withdrawal of such bidder's offer. If the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Purchaser will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The minimum period during which an offer must remain open following material changes in the terms of the Offer, other than a change in price, percentage of securities sought or inclusion of or changes to a dealer's soliciting fee, will depend upon the facts and circumstances, including the materiality, of the changes. In the SEC's view, an offer should remain open for a minimum of five business days from the date the material change is first published, sent or given to stockholders and, if material changes are made with respect to information that approaches the significance of price and share levels, a minimum of ten business days may be required to allow for adequate dissemination and investor response. Accordingly, if, prior to the Expiration Date, the Purchaser decreases the number of Shares being sought or increases the consideration offered pursuant to the Offer, and if the Offer is scheduled to expire at any time earlier than the tenth business day from the date that notice of such increase or decrease is first published, sent or given to stockholders, the Offer will be extended at least until the expiration of such tenth business day. As used in this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1 under the Exchange Act. The Company has provided the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares whose names appear on the Company's stockholder list and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing. 4 2. Acceptance for Payment and Payment for Shares. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment) and the satisfaction or earlier waiver of all the conditions to the Offer set forth in Section 15--"Certain Conditions of the Offer," the Purchaser will accept for payment and will pay for all Shares validly tendered prior to the Expiration Date and not properly withdrawn pursuant to the Offer promptly after the Expiration Date. Subject to the Merger Agreement and compliance with Rule 14e-1(c) under the Exchange Act, the Purchaser expressly reserves the right to delay payment for Shares in order to comply in whole or in part with any applicable law, including, without limitation, the HSR Act, the ECMR and any comparable provisions under any applicable pre-merger notification laws or regulations of foreign jurisdictions. See Section 16--"Certain Legal Matters; Regulatory Approvals." In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares (the "Share Certificates") or confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3--"Procedures for Accepting the Offer and Tendering Shares," (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an Agent's Message (as defined below) in lieu of the Letter of Transmittal and (ii) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when Share Certificates or Book-Entry Confirmations with respect to Shares are actually received by the Depositary. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the Offer Price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from the Purchaser and transmitting such payments to tendering stockholders whose Shares have been accepted for payment. If, for any reason whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer is delayed, or the Purchaser is unable to accept for payment Shares tendered pursuant to the Offer, then, without prejudice to the Purchaser's rights under the Offer hereof, the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn, except to the extent that the tendering stockholders are entitled to withdrawal rights as described in Section 4--"Withdrawal Rights" and as otherwise required by Rule 14e-1(c) under the Exchange Act. Under no circumstances will interest on the Offer Price for Shares be paid, regardless of any delay in making such payment. If any tendered Shares are not accepted for payment for any reason pursuant to the terms and conditions of the Offer, or if Share Certificates are submitted evidencing more Shares than are tendered, Share Certificates evidencing unpurchased Shares will be returned, without expense to the tendering stockholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3--"Procedures for Accepting the Offer and Tendering Shares," such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), as promptly as practicable following the expiration or termination of the Offer. 3. Procedures for Accepting the Offer and Tendering Shares. Valid Tenders. In order for a stockholder validly to tender Shares pursuant to the Offer, either (i) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal) and any other documents required by the Letter of Transmittal must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either the Share 5 Certificates evidencing tendered Shares must be received by the Depositary at such address or such Shares must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary, in each case prior to the Expiration Date (except with respect to any Subsequent Offering Period, if one is provided), or (2) the tendering stockholder must comply with the guaranteed delivery procedures described below. Book-Entry Transfer. The Depositary will establish an account with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make a book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer at the Book-Entry Transfer Facility, either the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date (except with respect to any Subsequent Offering Period, if one is provided), or the tendering stockholder must comply with the guaranteed delivery procedure described below. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary. The term "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, that states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant. For Shares to be validly tendered during any Subsequent Offering Period, the tendering stockholder must comply with the foregoing procedures, except that required documents and certificates must be received during the Subsequent Offering Period. Signature Guarantees. No signature guarantee is required on the Letter of Transmittal (i) if the Letter of Transmittal is signed by the registered holder (which term, for purposes of this Section 3 includes any participant in the Book-Entry Transfer Facility's systems whose name appears on a security position listing as the owner of the Shares) of the Shares tendered therewith, unless such holder has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal or (ii) if the Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program or any other "eligible grantor institution," as such term is defined in Rule 17Ad-15 of the Exchange Act (each an "Eligible Institution" and collectively "Eligible Institutions"). In all other cases, all signatures on a Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a Share Certificate is registered in the name of a person or persons other than the signer of the Letter of Transmittal, or if payment is to be made or delivered to, or a Share Certificate not accepted for payment or not tendered is to be issued, in the name of a person other than the registered holder(s), then the Share Certificate must be endorsed or accompanied by appropriate duly executed stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the Share Certificate, with the signature(s) on such Share Certificate or stock powers guaranteed by an Eligible Institution as provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to the Offer and the Share Certificates evidencing such stockholder's Shares are not immediately available or such stockholder cannot deliver the Share Certificates and all other required documents to the Depositary prior to the Expiration Date, or such stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered; provided that all of the following conditions are satisfied: (i) such tender is made by or through an Eligible Institution; 6 (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, is received prior to the Expiration Date by the Depositary as provided below; and (iii) the Share Certificates (or a Book-Entry Confirmation) evidencing all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal are received by the Depositary within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or mailed to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the form of Notice of Guaranteed Delivery made available by the Purchaser. Notwithstanding any other provision of this Offer, payment for Shares accepted pursuant to the Offer will in all cases only be made after timely receipt by the Depositary of (i) Share Certificates or a Book-Entry Confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedures set forth in this Section 3, (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal and (ii) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when Share Certificates or Book- Entry Confirmations with respect to Shares are actually received by the Depositary. Under no circumstances will interest be paid on the Offer Price to be paid by the Purchaser for the Shares, regardless of any extension of the Offer or any delay in making such payment. The method of delivery of Share Certificates, the Letter of Transmittal and all other required documents, including delivery through the Book-Entry Transfer Facility, is at the option and risk of the tendering stockholder, and the delivery will be deemed made only when actually received by the Depositary (including, in the case of a book-entry transfer, receipt of a Book-Entry Confirmation). If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. The tender of Shares pursuant to any one of the procedures described above will constitute the tendering stockholder's acceptance of the Offer, as well as the tendering stockholder's representation and warranty that such stockholder has the full power and authority to tender and assign the Shares tendered, as specified in the Letter of Transmittal. The Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser in its sole discretion, which determination shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of which may, in the opinion of its counsel, be unlawful. The Purchaser also reserves the absolute right to waive any defect or irregularity in the tender of any Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived to the satisfaction of the Purchaser. None of the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. Appointment. By executing the Letter of Transmittal as set forth above, the tendering stockholder will irrevocably appoint designees of the Purchaser, and each of them, as such stockholder's attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent 7 of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Purchaser and with respect to any and all other Shares or other securities or rights issued or issuable in respect of such Shares. All such proxies will be considered coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, the Purchaser accepts for payment Shares tendered by such stockholder as provided herein. Upon such appointment, all prior powers of attorney, proxies and consents given by such stockholder with respect to such Shares or other securities or rights will, without further action, be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given by such stockholder (and, if given, will not be deemed effective). The designees of the Purchaser will thereby be empowered to exercise all voting and other rights with respect to such Shares and other securities or rights, including, without limitation, in respect of any annual, special or adjourned meeting of the Company's stockholders, actions by written consent in lieu of any such meeting or otherwise, as they in their sole discretion deem proper. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares and other related securities or rights, including voting at any meeting of stockholders. Backup Withholding. Under the "backup withholding" provisions of United States federal income tax law, the Depositary may be required to withhold and pay over to the Internal Revenue Service a portion of the amount of any payments pursuant to the Offer. In order to prevent backup federal income tax withholding with respect to payments to certain stockholders of the Offer Price of Shares purchased pursuant to the Offer, each such stockholder must provide the Depositary with such stockholder's correct taxpayer identification number ("TIN") and certify that such stockholder is not subject to backup withholding by completing the Substitute Form W-9 in the Letter of Transmittal. Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. If a stockholder does not provide its correct TIN or fails to provide the certifications described above, the Internal Revenue Service may impose a penalty on the stockholder and payment of cash to the stockholder pursuant to the Offer may be subject to backup withholding. All stockholders surrendering Shares pursuant to the Offer should complete and sign the Substitute Form W-9 included in the Letter of Transmittal to provide the information necessary to avoid backup withholding. Non-corporate foreign stockholders should complete and sign a Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (a copy of which may be obtained from the Depositary) in order to avoid backup withholding. See Instruction 8 of the Letter of Transmittal. 4. Withdrawal Rights. Except as otherwise provided in this Section 4, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after August 31, 2001. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If Share Certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the serial numbers shown on such Share Certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3--"Procedures for Accepting the Offer and Tendering Shares," any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. If the Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as described herein. 8 Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered at any time prior to the Expiration Date or during the Subsequent Offering Period (if any) by following one of the procedures described in Section 3--"Procedures for Accepting the Offer and Tendering Shares." No withdrawal rights will apply to Shares tendered into a Subsequent Offering Period and no withdrawal rights apply during the Subsequent Offering Period with respect to Shares tendered in the Offer and accepted for payment. See Section 1--"Terms of the Offer." All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. None of the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any other person will be under duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. Certain United States Federal Income Tax Consequences. The following is a summary of certain United States federal income tax consequences of the Offer and the Merger to stockholders of the Company whose Shares are tendered and accepted for payment pursuant to the Offer or whose Shares are converted into the right to receive cash in the Merger. The discussion is for general information only and does not purport to consider all aspects of United States federal income taxation that might be relevant to stockholders of the Company. The discussion is based on current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), existing, proposed and temporary regulations promulgated thereunder and administrative and judicial interpretations thereof, all of which are subject to change, possibly with a retroactive effect. The discussion applies only to stockholders of the Company in whose hands Shares are capital assets within the meaning of Section 1221 of the Code. This discussion does not apply to Shares received pursuant to the exercise of employee stock options or otherwise as compensation, or to certain types of stockholders (such as insurance companies, tax-exempt organizations, financial institutions and broker-dealers) who may be subject to special rules. This discussion does not discuss the United States federal income tax consequences to any stockholder of the Company who, for United States federal income tax purposes, is a non-resident alien individual, a foreign corporation, a foreign partnership or a foreign estate or trust, nor does it consider the effect of any foreign, state or local tax laws. Because individual circumstances may differ, each stockholder should consult his or her own tax advisor to determine the applicability of the rules discussed below and the particular tax effects of the Offer and the Merger on a beneficial holder of Shares, including the application and effect of the alternative minimum tax and any state, local and foreign tax laws and of changes in such laws. The exchange of Shares for cash pursuant to the Offer or the Merger will be a taxable transaction for United States federal income tax purposes and possibly for state, local and foreign income tax purposes as well. In general, a stockholder who sells Shares pursuant to the Offer or receives cash in exchange for Shares pursuant to the Merger will recognize gain or loss for United States federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received and the stockholder's adjusted tax basis in the Shares sold pursuant to the Offer or exchanged for cash pursuant to the Merger. Gain or loss will be determined separately for each block of Shares (i.e., Shares acquired at the same cost in a single transaction) tendered pursuant to the Offer or exchanged for cash pursuant to the Merger. Such gain or loss will be long-term capital gain or loss provided that a stockholder's holding period for such Shares is more than one year at the time of consummation of the Offer or the Merger, as the case may be. Capital gains recognized by an individual upon a disposition of a Share that has been held for more than one year generally will be subject to a maximum United States federal income tax rate of 20%. In the case of a Share that has been held for one year or less, such capital gains generally will be subject to tax at ordinary income tax rates. Certain limitations apply to the use of a stockholder's capital losses. A stockholder whose Shares are purchased in the Offer may be subject to backup withholding unless certain information is provided to the Depositary or an exemption applies. See Section 3--"Procedures for Accepting the Offer and Tendering Shares." 9 6. Price Range of Shares; Dividends. The Shares trade on The New York Stock Exchange under the symbol "EGR." The following table sets forth, for the periods indicated, the high and low sale prices per Share as well as the dividends paid to stockholders for the periods indicated. The Rights trade together with the Common Stock. Share prices are as reported on The New York Stock Exchange based on published financial sources.
Common Stock ----------------------- High Low Dividends ------ ------ --------- Twelve Months Ended March 28, 1999: First Quarter......................................... $30.13 $21.44 $.025 Second Quarter........................................ $35.00 $26.75 $ .04 Third Quarter......................................... $37.25 $28.69 $ .04 Fourth Quarter........................................ $32.25 $20.50 $ .04 Fiscal Year 1999-2000: First Quarter......................................... $25.38 $20.13 $ .04 Second Quarter........................................ $29.00 $23.50 $ .05 Third Quarter......................................... $24.44 $15.31 $ .05 Fourth Quarter........................................ $16.44 $13.31 $ .05 Fiscal Year 2000-2001 First Quarter......................................... $21.00 $13.50 $ .05 Second Quarter........................................ $21.94 $16.44 $ .06 Third Quarter......................................... $24.00 $14.94 $ .06 Fourth Quarter........................................ $21.20 $15.13 $ .06 Fiscal Year 2001-2002: First quarter (through July 2)........................ $39.82 $19.74 $ .06
On June 29, 2001, the last full day of trading before the public announcement of the execution of the Merger Agreement, the closing price of the Shares on The New York Stock Exchange was $26.00 per Share. On July 2, 2001, the last full day of trading before the commencement of the Offer, the closing price of the Shares on The New York Stock Exchange was $39.82 per Share. Stockholders are urged to obtain a current market quotation for the Shares. 7. Certain Information Concerning the Company. General. The Company is a Delaware corporation with its principal offices located at 8400 Maryland Avenue, St. Louis, Missouri 63105. The telephone number for the Company is (314) 259-7000. According to the Company's Form 10-K for the fiscal year ended March 27, 2001, the Company is an international manufacturer, distributor and consumer marketer of packaged fresh bread and baked goods and refrigerated dough products. The Company's operations are divided into two principal businesses: bakery products and refrigerated dough products. Available Information. The Shares are registered under the Exchange Act. Accordingly, the Company is subject to the informational reporting requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports, proxy statements and other information with the SEC relating to its business, financial condition and other matters. Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the SEC's regional offices located at Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. The Company's filings are also available to the public on the SEC's Internet site (http://www.sec.gov/). Copies of such materials may also be obtained by mail from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Summary Financial Information. Set forth below is certain summary financial information for the Company and for its last two fiscal years as excerpted from the Company's Annual Reports on Form 10-K for the periods ended March 28, 2000 and March 27, 2001. More comprehensive financial information is included 10 in such reports and other documents filed by the Company with the SEC, and the following summary is qualified in its entirety by reference to such reports and other documents and all of the financial information and notes contained therein. Copies of such reports and other documents may be examined at or obtained from the SEC in the manner set forth above.
2001 2000 -------- -------- Operating Data Net sales............................................... $2,582.1 $2,039.3 Operating income........................................ 102.9 110.1 Net earnings............................................ 17.4 54.5 Basic net earnings/share................................ 0.30 1.34 Diluted net earnings/share.............................. 0.30 1.30 Balance Sheet Data Total assets............................................ $2,255.9 $2,339.8 Total liabilities....................................... 1,597.4 1,684.6 Shareholder equity...................................... 658.5 654.9
Certain Projections. The Company does not, as a matter of course, make public any forecasts as to its future financial performance. However, in connection with Sara Lee's review of the transactions contemplated by the Merger Agreement, the Company provided Sara Lee with certain projected financial information concerning the Company. Sara Lee analyzed the information in the projections, certain publicly available information and additional information obtained in Sara Lee's due diligence review of the Company, along with Sara Lee's own estimates of potential cost savings and benefits in evaluating the Offer and the Merger. The projections provided to Sara Lee by the Company included, among other things, the following forecasts of the Company's net sales; earnings before interest, taxes, depreciation and amortization; net income; and net income per share, respectively (in millions, except per share data): $2,707, $340.5, $68.5, and $1.61 in fiscal 2002, $2,817, $370.2, $87.8 and $2.04 in fiscal 2003; $2,913, $393.4, $105.2 and $2.42 in fiscal 2004; $3,021, $417.8, $123.0 and $2.80 in fiscal 2005; and $3,128, $433.3, $135.8 and $3.15 in fiscal 2006. These projections should be read together with the financial statements of the Company that can be obtained from the SEC as described above. It is the understanding of Sara Lee and the Purchaser that the projections were not prepared with a view to public disclosure or compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants regarding projections or forecasts and are included herein only because such information was provided to Sara Lee and the Purchaser. The projections do not purport to present operations in accordance with generally accepted accounting principles, and the Company's independent auditors have not examined or compiled the projections presented herein and accordingly assume no responsibility for them. These forward- looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995) are subject to certain risks and uncertainties that could cause actual results to differ materially from the projections. The Company has advised the Purchaser and Sara Lee that its internal financial forecasts (upon which the projections provided to Sara Lee and the Purchaser were based in part) are, in general, prepared solely for internal use and capital budgeting and other management decisions and are subjective in many respects and thus susceptible to interpretations and periodic revision based on actual experience and business developments. The projections also reflect numerous assumptions (not all of which were provided to Sara Lee and the Purchaser), all made by management of the Company, with respect to industry performance, general business, economic, market and financial conditions and other matters, including effective tax rates consistent with historical levels for the Company, all of which are difficult to predict, many of which are beyond the Company's control, and none of which is subject to approval by Sara Lee or the Purchaser. Accordingly, there can be no assurance that the assumptions made in preparing the projections will prove accurate. It is expected that there will be differences between actual and projected results, and actual results may be materially greater or less than those contained in the projections. The inclusion of the projections herein should not be regarded as an indication that any of Sara Lee, the Purchaser, the Company or their respective affiliates or representatives considered or consider the projections to be a reliable prediction of future events, and the projections should not be relied upon as such. None of Sara Lee, the Purchaser, the Company or any of their respective affiliates or representatives has made or makes any representation to any person regarding the ultimate performance of the Company compared to the information contained in the projections, and none of them has or intends to update or otherwise revise the projections to reflect circumstances existing after the date when made or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the projections are shown to be in error. 11 Except as otherwise stated in this Offer to Purchase, the information concerning the Company contained herein has been taken from or is based upon reports and other documents on file with the SEC or otherwise publicly available. Although neither the Purchaser nor Sara Lee has any knowledge that would indicate that any statements contained herein based upon such reports and documents are untrue, neither the Purchaser nor Sara Lee takes any responsibility for the accuracy or completeness of the information contained in such reports and other documents or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but that are unknown to the Purchaser or Sara Lee. 8. Certain Information Concerning Sara Lee and the Purchaser. General. Sara Lee is a Maryland corporation with its principal offices located at Three First National Plaza, Chicago, Illinois, 60602. The telephone number of Sara Lee is (312) 726-2000. Sara Lee Corporation is a global manufacturer and marketer of brand-name products for consumers throughout the world. Sara Lee has operations in more than 40 countries and markets branded consumer products in more than 170 nations. Sara Lee has three major global business segments-Sara Lee Food and Beverage, Intimates and Underwear, and Household Products. The Purchaser is a Delaware corporation with its principal offices located at Three First National Plaza, Chicago, Illinois, 60602. The telephone number of the Purchaser is (312) 726-2000. The Purchaser is a wholly owned subsidiary of Sara Lee. The Purchaser was formed for the purpose of making a tender offer for all of the common stock of the Company. The name, citizenship, business address, business phone number, principal occupation or employment and five-year employment history for each of the directors and executive officers of Sara Lee and the Purchaser and certain other information are set forth in Schedule I hereto. Except as described in this Offer to Purchase, (i) none of Sara Lee, the Purchaser nor, to the best knowledge of Sara Lee and the Purchaser, any of the persons listed in Schedule I to this Offer to Purchase or any associate or majority-owned subsidiary of Sara Lee or the Purchaser or any of the persons so listed beneficially owns or has any right to acquire, directly or indirectly, any Shares and (ii) none of Sara Lee, the Purchaser nor, to the best knowledge of Sara Lee and the Purchaser, any of the persons or entities referred to above nor any director, executive officer or subsidiary of any of the foregoing has effected any transaction in the Shares during the past 60 days. Except as provided in the Merger Agreement or as otherwise described in this Offer to Purchase, none of Sara Lee, the Purchaser nor, to the best knowledge of Sara Lee and the Purchaser, any of the persons listed in Schedule I to this Offer to Purchase, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of such securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, guarantees of profits, division of profits or loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, none of Sara Lee, the Purchaser nor, to the best knowledge of Sara Lee and the Purchaser, any of the persons listed on Schedule I hereto, has had any business relationship or transaction with the Company or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the SEC applicable to the Offer. Except as set forth in this Offer to Purchase, there have been no contracts, negotiations or transactions between Sara Lee or any of its subsidiaries or, to the best knowledge of Sara Lee, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets. None of the persons listed in Schedule I has, during the past five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). None of the persons listed in Schedule I has, during the past five years, been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. 12 Available Information. Pursuant to Rule 14d-3 under the Exchange Act, Sara Lee and the Purchaser filed with the SEC a Tender Offer Statement on Schedule TO (the "Schedule TO"), of which this Offer to Purchase forms a part, and exhibits to the Schedule TO. Additionally, Sara Lee is subject to the informational reporting requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports, proxy statements and other information with the SEC relating to its business, financial condition and other matters. The Schedule TO and the exhibits thereto, and such reports, proxy statements and other information, can be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the SEC's regional offices located at Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. Sara Lee filings are also available to the public on the SEC's Internet site (http://www.sec.gov/). Copies of such materials may also be obtained by mail from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. 9. Source and Amount of Funds. The Offer is not conditioned upon any financing arrangements. Sara Lee and the Purchaser estimate that the total amount of funds required to purchase all of the outstanding Shares pursuant to the Offer and the Merger and to pay related fees and expenses will be approximately $1.8 billion. The Purchaser expects to obtain the funds necessary to consummate the Offer and the Merger from Sara Lee. Sara Lee has received a letter from J.P. Morgan Securities Inc. and The Chase Manhattan Bank ("Chase") providing for the structure, arrangement and syndication of senior unsecured loans (the "Loans") pursuant to a commitment from Chase, either on a revolving credit or a competitive advance basis, of up to $3.0 billion, the initial proceeds of which will be used to acquire Shares in the Offer and the Merger or to provide liquidity in connection with the issuance and sale of commercial paper, to refinance certain outstanding debt of the Company, to pay any related fees and expenses and for general corporate purposes. The Loans will be in the form of a 364-day Revolving Credit Facility and a separate Bridge Revolving Credit Facility, each in an aggregate maximum principal amount of $1.5 billion. Each of the facilities will be an unsecured senior credit facility and will contain usual and customary affirmative and negative covenants and a financial covenant relating to interest coverage. Events of Default will include (i) failure to pay principal, interest, fees or other amounts, (ii) material inaccuracy of representations and warranties, (iii) breach of covenants, (iv) bankruptcy events, (v) cross default, (vi) certain ERISA matters, (vii) certain judgments and (viii) change in control events, which will be defined in the final documents for the Loans. Interest rates for Loans which are revolving credit Loans will be Adjusted LIBOR (which will at all times include statutory reserves) or the Adjusted Base Rate (defined as the higher of Chase's Prime Rate and the Federal Funds Effective Rate plus 0.5%), at the election of Sara Lee, in the case of Adjusted LIBOR plus spreads depending upon a schedule of certain specified Standard & Poor's and Moody's Investor Services ratings of Sara Lee. Interest rates for Loans which are competitive advance Loans will be set in an auction process. Sara Lee may elect periods of one, two, three or six months for Adjusted LIBOR borrowings under the Loans. It is expected that the Loan documents will be negotiated while the Offer is outstanding and signed on or before the Expiration Date. No alternate financing plans exist. 10. Background of the Offer; Past Contacts or Negotiations with the Company. In May 2000, Sara Lee announced plans to reshape its business and to look for opportunities to acquire companies that would enhance its three major global businesses, including its food and beverage business. In connection with this plan, in early April 2001, Steve McMillan, President and Chief Executive Officer of Sara Lee, telephoned Barry Beracha, Chairman and Chief Executive Officer of the Company, to request a meeting where the two might discuss business opportunities between Sara Lee and the Company. On April 30, Mr. McMillan met with Mr. Beracha in St. Louis to discuss business opportunities, including a possible acquisition of the Company by Sara Lee. On May 1, Mr. McMillan met with Blair Effron of UBS Warburg LLC, in Chicago to discuss a potential transaction with the Company. 13 On May 22, Mr. McMillan met with Mr. Beracha in New York and they agreed that the Company would provide to Sara Lee additional information and management presentations regarding the Company during the following month to permit Sara Lee to further evaluate a possible acquisition. Mr. Beracha and Mr. McMillan also discussed the significant terms of any transaction, including valuation, the headquarters of the Company after the consummation of a transaction and management issues. On May 29, Mr. McMillan met with Mr. Effron in New York to further discuss a possible acquisition. On the same day, Sara Lee and the Company entered into a confidentiality agreement relating to the discussions among their management and advisors. On June 6, 2001, in connection with continuing discussions relating to a potential merger, members of the Company's management made a presentation to management of Sara Lee concerning the Company, its current and historic financial performance and prospects. Additional meetings between certain members of the Company's management and Sara Lee's management occurred on June 8 regarding potential cost synergies in connection with a transaction. Between June 7 and June 27, Sara Lee and its representatives reviewed and discussed with management of the Company the business and financial condition of the Company and undertook its legal due diligence of the Company. On June 19, counsel for Sara Lee provided a draft of a merger agreement to counsel for the Company. Between June 23 and June 29, representatives of Sara Lee and the Company negotiated the provisions of the proposed merger agreement. On June 28, the Board of Directors of Sara Lee unanimously approved the transaction and authorized proceeding with the Offer, the Merger and the transactions contemplated thereby. Following the meeting Mr. McMillan met with Mr. Beracha in St. Louis. At that meeting, Mr. McMillan proposed to Mr. Beracha a price of $40.25 in cash for each outstanding Share. On June 29, the Company Board unanimously approved the merger, determined it to be fair to, and in the best interests of, the stockholders of the Company and agreed to recommend it to its stockholders. Later that day, the Merger Agreement was executed by Sara Lee, the Purchaser and the Company. On July 2, Sara Lee and the Company each issued press releases announcing the transaction. On July 3, the Purchaser commenced the Offer. During the Offer, Sara Lee and the Purchaser intend to have ongoing contacts with the Company and its directors, officers and stockholders. 11. The Merger Agreement. The following is a summary of the material provisions of the Merger Agreement, a copy of which is filed as an exhibit to the Schedule TO. The summary is qualified in its entirety by reference to the Merger Agreement, which is incorporated by reference herein. Capitalized terms used herein and not otherwise defined have the meanings assigned to them in the Merger Agreement. The Offer. The Merger Agreement provides for the making of the Offer. The obligation of the Purchaser to accept for payment and pay for Shares tendered pursuant to the Offer is subject to the satisfaction of the Minimum Condition and certain other conditions that are described in Section 15--"Certain Conditions of the Offer." Directors. The Merger Agreement provides that promptly upon the purchase of and payment for Shares pursuant to the Offer, Sara Lee will be entitled to elect or designate such number of directors, rounded up to the next whole number, on the Company Board as is equal to the product of (i) the total number of directors on the Company Board (giving effect to the directors designated by Sara Lee pursuant to the Merger Agreement) and (ii) the percentage that the number of Shares so purchased and paid for bears to the total number of Shares then 14 outstanding (on a fully-diluted basis). The Company, at Sara Lee's request, must either take all actions necessary to promptly increase the size of the Company Board, secure the resignations of such number of directors or any combination of the foregoing, as is necessary to enable Sara Lee designees to be elected or designated to the Company's Board and will cause Sara Lee designees to be so elected or designated. The Company's obligations relating to the Company Board are subject to Section 14(f) of the Exchange Act and Rule 14f-1 under the Exchange Act. Each of Sara Lee, the Purchaser and the Company agrees to use its reasonable best efforts to ensure that at least three of the members of the Company Board are, at all times before the Effective Time, directors of the Company who were members of the Company Board on the date of the Merger Agreement (the "Continuing Directors"). If, however, there are in office fewer than three Continuing Directors for any reason, the Company Board will take all action necessary to cause a person designated by the remaining Continuing Directors to fill such vacancy, which person shall be deemed to be a Continuing Director, or if no Continuing Directors remain, the other directors of the Company then in office will designate two persons to fill the vacancies who are not officers or employees or affiliates of the Company, Sara Lee or the Purchaser or any of their respective subsidiaries or affiliates and such persons will be deemed to be Continuing Directors. Following the election or appointment of Sara Lee's designees to the Company Board and until the Effective Time, the approval of a majority of the Continuing Directors will be required to authorize any: (i) termination of the Merger Agreement by the Company; (ii) amendment of the Merger Agreement by the Company Board; (iii) extension by the Company of time for performance of any obligation or action under the Merger Agreement by Sara Lee or the Purchaser; (iv) waiver by the Company of compliance with any of the agreements or conditions contained in the Merger Agreement for the benefit of the Company or its stockholders; (v) consent by the Company Board under the Merger Agreement, or (vi) other action of the Company under the Merger Agreement or in connection with the transactions contemplated by the Merger Agreement that adversely affects the holders of Shares (other than Sara Lee and the Purchaser). The Merger. The Merger Agreement provides that not later than the later of (i) as soon as practicable (taking into consideration the exercise of Options (as defined below) (but in no event later than five business days) after the expiration of the Offer (or the expiration of any "subsequent offering period" if the Purchaser elects to provide such a "subsequent offering period") and (ii) the second business day after satisfaction or waiver of all of the conditions set forth in the Merger Agreement. At the Effective Time, the Purchaser will be merged with and into the Company with the Company being the surviving corporation in the Merger (the "Surviving Corporation"). Following the Merger, the separate existence of the Purchaser will cease, and the Company will continue as the Surviving Corporation, wholly owned by Sara Lee. If required by the DGCL, the Company will call and hold a meeting of its stockholders promptly following consummation of the Offer for the purpose of voting upon the approval of the Merger Agreement. At any such meeting all Shares then owned by Sara Lee or the Purchaser or any other subsidiary of Sara Lee will be voted in favor of approval of the Merger Agreement. Pursuant to the Merger Agreement, each Share outstanding at the Effective Time (other than Shares owned by Sara Lee or any of its subsidiaries or by the Company or any of its subsidiaries, all of which will be cancelled, and other than Shares that are held by stockholders, if any, who properly exercise their dissenters' rights under the DGCL) will be converted into the right to receive the Merger Consideration. Stockholders who perfect their dissenters' rights under the DGCL will be entitled to the amounts determined pursuant to such proceedings. Representations and Warranties. Pursuant to the Merger Agreement, the Company has made customary representations and warranties to Sara Lee and the Purchaser, including representations relating to: organization; subsidiaries and affiliates; capitalization; corporate authorizations; board approvals; vote required; consents and approvals, no violations; SEC filings; financial statements; absence of certain changes; absence of undisclosed liabilities; litigation; employee benefit plans; taxes; contracts; real and personal property; intellectual property; labor; compliance with laws; condition of assets; customers and suppliers; environmental matters; the opinion of the Company's financial advisor; insurance; brokers and investment bankers; and the Rights Agreement. Certain representations and warranties in the Merger Agreement made by the Company are qualified as to "materiality," "Company Material Adverse Effect" or "Company Material Adverse Change." For purposes of 15 the Merger Agreement and this Offer to Purchase, the term "Company Material Adverse Effect" or "Company Material Adverse Change" means any change, event or effect, as the case may be, that is materially adverse to (i) the business, operations, properties (including intangible properties), financial condition, results of operations, assets or liabilities of the Company and its subsidiaries, taken as a whole, or (ii) the Company's ability to consummate each of the transactions contemplated by the Merger Agreement; provided, that in no event shall any of the following (alone or in combination with another event identified in this proviso) be deemed to constitute, nor shall any of the following be taken into account in determining whether there has been or will be, a Company Material Adverse Effect: any change, event, violation, inaccuracy, circumstance or effect that results from or arises out of the public announcement or pendency of the Offer, the Merger or the other transactions contemplated in the Merger Agreement. Pursuant to the Merger Agreement, Sara Lee and the Purchaser have made customary representations and warranties to the Company, including representations relating to: organization; corporate authorizations; consents and approvals, no violations; brokers and financing. Certain representations and warranties in the Merger Agreement made by Sara Lee and the Purchaser are qualified as to "materiality." Company Conduct of Business Covenants. The Merger Agreement provides that, except as expressly contemplated by the Merger Agreement, required by applicable law, or consented to in writing by Sara Lee (which consent will not be unreasonably withheld or delayed) after the date of the Merger Agreement, and prior to the earlier of (i) the termination of the Merger Agreement in accordance with its terms and (ii) the time the designees of Sara Lee constitute a majority of the Company Board: (a) the business of the Company and it subsidiaries will be conducted only in the ordinary course of business consistent with past practice, and each of the Company and its subsidiaries will use its reasonable efforts to preserve its present business organization intact and maintain good relations with customers, suppliers, employees, contractors, distributors and others having business dealings with it; (b) the Company will not, directly or indirectly, (i) except upon exercise of the options or other rights to purchase Shares pursuant to the option plan outstanding on the date of the Merger Agreement or for the issuance of Shares pursuant to the terms of Options outstanding under the plans in effect on the date of the Merger Agreement, issue, sell, transfer or pledge or agree to sell, transfer or pledge any treasury stock of the Company or any capital stock of any of its subsidiaries beneficially owned by it, (ii) amend its Certificate of Incorporation or Bylaws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of the Company; (c) neither the Company nor any of its subsidiaries will: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock, except, with respect to the Company, for regular quarterly dividends in an amount not to exceed $0.07 per Share; (ii) issue, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants or rights of any kind to acquire, any shares of capital stock of the Company or any of its subsidiaries, other than Shares reserved for issuance on the date of the Merger Agreement pursuant to the exercise of the Options outstanding on the date of the Merger Agreement; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any of its material assets, or incur or modify any material indebtedness or other liability, other than in the ordinary course of business consistent with past practice; or (iv) redeem, purchase or otherwise acquire any shares of its capital stock, or any instrument which includes a right to acquire such shares except in connection with the exercise of repurchase rights or rights of first refusal in favor of the Company with respect to shares of Common Stock issued upon exercise of Options granted under the option plan; (d) neither the Company nor any of its subsidiaries will change the compensation or benefits payable or to become payable to any of its officers, directors or employees (other than increases in wages to employees who are not directors or affiliates, in the ordinary course of business consistent with past practice, as required by any collective bargaining agreement), enter into or amend any employment, severance, consulting, termination or other agreement or employee benefit plan or make any loans to any of its officers, directors, employees or affiliates or change its existing borrowing or lending arrangements for or on behalf of any of such persons pursuant to an employee benefit plan or otherwise, other than such actions taken in the ordinary course of business consistent with past practice; 16 (e) neither the Company nor any of its subsidiaries will pay or arrange for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or affiliate or pay or make any arrangement for payment to any officers, directors, employees or affiliates of the Company of any amount relating to unused vacation days, except payments and accruals made in the ordinary course of business consistent with past practice; adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any Company director, officer or employee, whether past or present, or amend in any material respect any such existing plan, agreement or arrangement in a manner inconsistent with the foregoing; (f) the Company will not, in any material respect, modify, amend or terminate any of its material agreements, and neither the Company nor any of its subsidiaries will waive, release or assign any material rights or claims under any such agreements; (g) neither the Company nor any of its subsidiaries will permit any material insurance policy naming it as a beneficiary or a loss payee to be cancelled or terminated without notice to Sara Lee; (h) neither the Company nor any of its subsidiaries will (i) incur or assume any long-term indebtedness or any short-term indebtedness (which will not include trade payables) (except for short-term indebtedness for working capital in the ordinary course of business not to exceed $50,000,000 in the aggregate); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, other than in an immaterial amount; (iii) make any loans, advances or capital contributions to, or investments in, any other person other than in an immaterial amount; (iv) acquire (by merger, consolidation or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof or any equity interest therein; or (v) enter into any material commitment or transaction (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets or real estate); (i) neither the Company nor any of its subsidiaries will enter into or modify any collective bargaining agreement or any successor collective bargaining agreement to any collective bargaining agreement other than in the ordinary course of business; (j) the Company and each of its subsidiaries will timely and properly file, or timely and properly file requests for extensions to file, all federal, state, local and foreign tax returns which are required to be filed, and pay or make provision for the payment of all taxes owed by them; (k) the Company will not waive, amend or otherwise alter the Rights Agreement or redeem the Rights; (l) neither the Company nor any of its subsidiaries will change any of the accounting methods used by it except for such changes required by GAAP or make any tax election or change any tax election already made, adopt any tax accounting method, change any tax accounting method, enter into any closing agreement or settle any material claim or material assessment relating to taxes or consent to any claim or assessment relating to taxes or any waiver of the statute of limitations for any such claim or assessment; (m) neither the Company nor any of its subsidiaries will pay, discharge or satisfy any claims, liabilities or obligations (whether absolute, accrued, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligations, in the ordinary course of business consistent with past practice, or of claims, liabilities or obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company; (n) neither the Company nor any of its subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries (other than the Merger); 17 (o) neither the Company nor any of its subsidiaries will take, or agree in writing or otherwise to take, any action that would or is reasonably likely to result in any of the conditions to the Merger or any of the conditions to the Offer not being satisfied, or would make any representation or warranty of the Company in the Merger Agreement inaccurate in any material respect at or prior to the Effective Time, or that would materially impair the ability of the Company to consummate the Merger in accordance with the terms of the Merger Agreement or materially delay such consummation; (p) neither the Company nor any of its subsidiaries will make any capital expenditure which is not in all material respects in accordance with the annual budget for the fiscal year 2002; and (q) neither the Company nor any of its subsidiaries will enter into any agreement, contract, commitment or arrangement to do any of the foregoing, or authorize, recommend, propose, in writing or announce an intention to do any of the foregoing. The Merger Agreement does not prohibit any wholly-owned direct or indirect subsidiary of the Company from paying cash dividends or making other cash distributions to the Company or any wholly-owned direct or indirect subsidiary of the Company in the ordinary course of business consistent with the Companys's cash management procedures. No Solicitation. The Company agreed to immediately cease any and all existing discussions, negotiations and communications with any person with respect to any Acquisition Proposal (as defined below). Except as provided in the Merger Agreement with respect to a Superior Proposal, from the date of the Merger Agreement until the earlier of the termination of the Merger Agreement or the Effective Time, the Company will not and it will not authorize or permit its officers, directors, employees, investment bankers, attorneys, accountants or other agents to directly or indirectly (i) initiate, solicit or knowingly encourage, or knowingly take any action to facilitate the making of, any offer or proposal which constitutes or which may be reasonably likely to lead to any third-party Acquisition Proposal or (ii) enter into any agreement with respect to any Acquisition Proposal, or (iii) in the event of an unsolicited Acquisition Proposal for the Company, engage in negotiations or discussions with, or provide any information or data to, any person (other than Sara Lee or any of its affiliates or representatives) relating to any Acquisition Proposal. Notwithstanding the foregoing, the Merger Agreement does not prevent the Company or the Company Board from (i) in the event of an unsolicited Acquisition Proposal, requesting from the third party such information as may be reasonably necessary for the Company Board to inform themselves as to the material terms of such Acquisition Proposal for the sole purpose of determining whether such Acquisition Proposal constitutes a Superior Proposal, provided, that the Company Board has determined, in good faith after being advised by outside legal counsel, that taking such action with respect to an Acquisition Proposal from such third party is necessary in order for the Company Board to discharge its fiduciary duties under applicable law and upon receipt of such information requested from the third party, neither the Company nor any of its representatives will be permitted to engage in any further discussion or negotiations with any such third party in violation of the Merger Agreement, (ii) taking (and disclosing to the Company's stockholders) its position with respect to a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 under the Exchange Act or (iii) making such disclosure to the Company's stockholders as in the good-faith judgment of the Company Board, after receipt of advice from outside legal counsel to the Company, that such disclosure is necessary for the Company Board to comply with its fiduciary duties under applicable law. As used in the Merger Agreement, "Acquisition Proposal" means any tender or exchange offer involving the Company, any proposal for a merger, consolidation or other business combination involving the Company, or any proposal or offer to acquire in any manner a substantial equity interest in, or a substantial portion of the business or assets of, the Company, any proposal or offer with respect to any recapitalization or restructuring with respect to the Company or any proposal or offer with respect to any other transaction similar to any of the foregoing with respect to the Company. Notwithstanding the foregoing, prior to the acceptance of Shares pursuant to the Offer, the Company may furnish information concerning its business, properties or assets to any person pursuant to a confidentiality agreement with terms no less favorable to the Company than those contained in its confidentiality agreement with Sara Lee (other than with respect to any standstill provision contained therein), and may negotiate and participate in discussions and negotiations with such person concerning an Acquisition Proposal if, but only if, (i) such Acquisition Proposal is reasonably likely to be consummated (taking into account the legal aspects of the proposal, the person making the Acquisition Proposal and approvals required in connection therewith); 18 (ii) such entity or group has on an unsolicited basis, and in the absence of any violation of these restrictions by the Company, submitted a bona fide, fully financed, written proposal to the Company relating to any such transaction which the Board of Directors determines in good faith, after receiving advice from the Company's financial advisors, is more favorable than the Offer to the Company's stockholders from a financial point of view, and (iii) in the good faith opinion of the Company Board, after consultation with outside legal counsel to the Company, providing such information or access or engaging in such discussions or negotiations is in the best interests of the Company and its stockholders and necessary in order for the Company Board to discharge its fiduciary duties to the Company's stockholders under applicable law (an Acquisition Proposal which satisfies clauses (i), (ii) and (iii) is referred to in the Merger Agreement as a "Superior Proposal"). The Company shall promptly, and in any event within two business days following receipt of a Superior Proposal and prior to providing any such party with any material non-public information, notify the Company of the receipt of the same. The Company shall promptly provide to Sara Lee any material non-public information regarding the Company provided to any other party which was not previously provided to Sara Lee, such additional information to be provided no later than the date its is provided to the other party. The Merger Agreement provides that neither the Company Board nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to the transactions contemplated by the Merger Agreement, to Sara Lee or to the Purchaser, the approval or recommendation by the Company Board of the Offer, the Merger Agreement or the Merger, (ii) approve or recommend or propose to approve or recommend, any Acquisition Proposal or (iii) enter into any agreement with respect to any Acquisition Proposal. Notwithstanding the foregoing, prior to the time of acceptance for payment of Shares in the Offer, the Company Board may withdraw or modify its approval or recommendation of the Offer, the Merger Agreement or the Merger, approve or recommend a Superior Proposal, or enter into an agreement with respect to a Superior Proposal (an "Acquisition Agreement"), in each case at any time after the third business day following the Company's delivery to Sara Lee of written notice advising Sara Lee that the Company Board has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal and identifying the person making such Superior Proposal. The Company may not enter into an agreement with respect to a Superior Proposal unless the Company complies with the procedures for terminating the Merger Agreement described below. The Company may terminate the Merger Agreement and enter into an Acquisition Agreement with respect to a Superior Proposal, if, prior to any such termination, (i) the Company has provided Sara Lee with written notice that it intends to terminate the Merger Agreement to enter into a Superior Proposal, identifying the Superior Proposal and the parties thereto and delivering a copy of the Acquisition Agreement for such Superior Proposal in the form to be entered into, (ii) within a period of three business days following the delivery of this notice, Sara Lee does not propose adjustments in the terms and conditions of the Merger Agreement and the Company shall have caused its financial and legal advisors to negotiate with Sara Lee in good faith such proposed adjustments in the terms and conditions of the Merger Agreement which the Company Board determines in its good faith judgment (after receiving the advice of its financial advisor) to be as favorable to the Company's stockholders as such Superior Proposal, and (iii) at least three full business days after the Company has provided the notice referred to above, the Company delivers to Sara Lee (A) a written notice of termination of the Merger Agreement and (B) a wire transfer of immediately available funds in the amount of the termination fee described below. The Merger Agreement also provides that the Company agrees to promptly notify Sara Lee of any inquiry or request for negotiations or discussions in connection with an Acquisition Proposal. The Company also may not terminate, amend, modify or waive any standstill or confidentiality agreements between the Company and any other party entered into prior to the date of the Merger Agreement. Insurance and Indemnification. The Merger Agreement provides that, for a period of six years after the Effective Time, Sara Lee will, or will cause the Surviving Corporation (or any successor to the Surviving Corporation) to indemnify, defend and hold harmless the present and former directors and officers of the Company and its subsidiaries, and persons who become any of the foregoing prior to the Effective Time (each an "Indemnified Party") against all losses, claims, damages, liabilities, costs, fees and expenses (including reasonable fees and disbursements of counsel) and judgments, fines, losses, claims, liabilities and amounts paid in settlement arising out of or in connection with any claim, action, suit, proceeding, or investigation, whether criminal, civil, administrative or investigative, arising out of any acts or omissions occurring at or prior to the 19 Effective Time (including the transactions contemplated by the Merger Agreement). Sara Lee is not required to indemnify any Indemnified Party if it is determined that the Indemnified Party acted in bad faith and not in a manner such party believed to be in or not opposed to the best interests of the Company. Sara Lee will also advance expenses as incurred to the fullest extent permitted under applicable law, provided the person to whom such advances are made provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification. The Merger Agreement provides that Sara Lee or the Surviving Corporation will maintain the Company's existing officers' and directors' liability insurance ("D&O Insurance") for a period of not less than three years after the Effective Time. Sara Lee may, however, substitute policies of substantially equivalent coverage and amounts containing terms no less favorable to such former directors or officers; provided, further, that if the existing D&O Insurance expires or is terminated or cancelled during such period, then Sara Lee or the Surviving Corporation will use reasonable best efforts to obtain substantially similar D&O Insurance. In no event, however, will Sara Lee be required to pay aggregate premiums for such insurance in excess of 150% of the average of the aggregate premiums paid by the Company in 1998, 1999 and 2000 on an annualized basis for such purpose (the "Average Premium"). If Sara Lee or the Surviving Corporation is unable to obtain the amount of insurance required for such Average Premium, Sara Lee or the Surviving Corporation must obtain as much insurance as can be obtained for an annual premium not in excess of 150% of the Average Premium. Consents and Approvals. The Merger Agreement provides that Sara Lee, the Purchaser and the Company will take all reasonable actions necessary to comply promptly with all legal requirements which may be imposed on it with respect to the Merger Agreement, including furnishing all information required under the HSR Act, under the ECMR and in connection with approvals of or filings with any other Governmental Entity and will promptly cooperate with and, subject to such confidentiality agreements as may be reasonably necessary or requested, furnish information to each other or their counsel in connection with any such requirements imposed upon any of them or any of their subsidiaries in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement. The Merger Agreement further provides that each of the Company, Sara Lee and the Purchaser will, and will cause their respective subsidiaries to, take all reasonable actions necessary to obtain (and shall cooperate with each other in obtaining) any consent, authorization, order or approval of, or any exemption by, any Governmental Entity or other public or private third party required to be obtained or made by Sara Lee, the Purchaser, the Company or any of their respective subsidiaries in connection with the transactions contemplated by the Merger Agreement or the taking of any action contemplated by the Merger Agreement. The Merger Agreement provides that each of the Company, the Purchaser and Sara Lee will take all reasonable actions necessary to file as soon as practicable notifications under the HSR Act, under the ECMR or under comparable merger notification laws under foreign jurisdictions, and to respond as promptly as practicable to any inquiries received from the Federal Trade Commission or the Antitrust Division of the Department of Justice or any authorities of such other foreign jurisdictions for additional information or documentation and to respond as promptly as practicable to all inquiries and requests received from any State Attorney General or other Governmental Entity in connection with antitrust or competition matters. Sara Lee, the Purchaser and the Company further agree to cooperate and to take promptly any and all commercially reasonable steps to resolve any issues arising under the HSR Act, the ECMR or any other comparable laws of foreign jurisdictions so as to enable the parties to expeditiously close the transactions contemplated by the Merger Agreement. If any administrative or judicial action or proceeding, including any proceeding by a private party, is instituted (or threatened to be instituted) challenging any of the transactions contemplated by the Merger Agreement as violative of any such laws, Sara Lee, the Purchaser and the Company will cooperate in all respects with each other and use their respective reasonable best efforts to contest and resist any such action or proceeding so as to permit consummation of the transactions contemplated by the Merger Agreement, including defending against any litigation brought by a Governmental Entity seeking to prevent the consummation of the transactions. Notwithstanding the foregoing or any other covenant in the Merger Agreement, in connection with the receipt of any necessary approvals under the HSR Act, the ECMR or any other comparable laws of foreign jurisdictions, neither Sara Lee nor the Company will be required to divest or hold separate or otherwise take or commit to take any action that limits Sara Lee's or the Company's freedom of action with respect to, or their ability to retain, the Company or any material portions thereof or any of the businesses, product lines, material properties or material assets of the Company or Sara Lee. 20 The Merger Agreement also provides that the parties will use reasonable best efforts to obtain in a timely manner all other necessary waivers, consents and approvals and to effect all necessary registrations and filings, and to use reasonable best efforts to take, or cause to be taken, all other actions and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by the Merger Agreement. However, no party is required to waive or exercise any right that is waivable or exercisable in the party's sole discretion. Employee Stock Options and Other Employee Benefits. The Merger Agreement provides that, prior to the Effective Time, the Company shall have taken all necessary actions so that at the Effective Time, each unexpired and unexercised stock option under the Company's option plan, or otherwise granted by the Company outside of such option plan (the "Options"), will be assumed by Sara Lee as of the Effective Time. At the Effective Time, each Option will be automatically converted into an option (the "New Parent Option") to purchase common stock, par value $0.01 per share, of Sara Lee (the "Parent Common Shares"). With respect to each such New Parent Option (i) the number of Parent Common Shares subject to such New Parent Option will be determined by multiplying the number of Shares subject to such Option immediately prior to the Effective Time by the Option Exchange Ratio (as defined below), and rounding any fractional share up to the nearest whole share (except as otherwise required by law), and (ii) the per share exercise price of such New Parent Option will be determined by dividing the exercise price per share specified in the Option by the Option Exchange Ratio, and rounding the exercise price thus determined up to the nearest whole cent. New Parent Options will otherwise be subject to the same terms and conditions as such Option. The "Option Exchange Ratio" means the Offer Price divided by the average of the closing prices per Parent Common Share as reported on the New York Stock Exchange composite transactions reporting system for each of the ten consecutive trading days in the period ending five days prior to the Effective Time. For the purposes of its employee benefit plans, Sara Lee will cause such plans to waive any preexisting condition which was waived under the terms of any of the Company's employee benefit plans immediately prior to the closing of the Merger or waiting period limitation which would otherwise be applicable to a Company employee on or after the closing of the Merger. Pursuant to the Merger Agreement, Sara Lee has agreed (i) from the Effective Time through and including December 31, 2002, that the Company employees will be provided with salary and employee benefit plans (other than plans providing for retiree medical benefits, incentive pay plans, plans involving the issuance of equity and plans that provide for payments or benefits upon a change in control) that are no less favorable in the aggregate than the benefits currently provided by the Company or any of its subsidiaries, provided, however, that during such period, the employees of the Company will be provided with salary and benefits that are no less favorable in the aggregate than the benefits, including, but not limited to, retiree medical benefits, provided by Sara Lee to its similarly-situated employees (except in the case of employees covered by a collective bargaining agreement who shall be subject to the applicable collective bargaining agreement); (ii) to cause the Company to honor all agreements and arrangements with respect to any current and former employees, officers and directors of the Company or its subsidiaries; (iii) to recognize time served with the Company or any of its subsidiaries for all purposes under the applicable benefit plans of Sara Lee or its subsidiaries (but not for level of benefit accrual under any defined benefit plans or as would result in duplication of benefits); and (iv) to cause the Company to provide to any employee terminated on or before December 31, 2002 severance benefits on terms and conditions and in amounts that are not less favorable than those provided by the Company. The Company also agrees to use its best efforts to eliminate, prior to the Effective Time, any requirement for funding a rabbi trust in connection with a change of control of the Company. Conditions to the Merger. The Merger Agreement provides that the obligations of Sara Lee, the Purchaser and the Company to consummate the Merger are subject to the satisfaction of the following conditions at or prior to the Effective Time, any and all of which may be waived in whole or in part by Sara Lee, the Purchaser and the Company: (a) If required under the DGCL, the Certificate of Incorporation or Bylaws of the Company, the approval of the Merger by the requisite vote of the Company's stockholders shall have been obtained. (b) The absence of any injunction or action entered by any Governmental Entity which prohibits the consummation of the Merger. (c) The Purchaser shall have purchased Shares pursuant to the Offer. 21 Neither Sara Lee nor the Purchaser may invoke the last condition if the Purchaser has failed in violation of the terms of the Merger Agreement or the Offer to purchase Shares tendered and not withdrawn. Termination. The Merger Agreement may be terminated at any time prior to the Effective Time: (a) any time before the Effective Time, whether before or after stockholder approval, by mutual written consent of Sara Lee and the Company; (b) by either Sara Lee or the Company (i) if, prior to the purchase of the Shares in the Offer, a court of competent jurisdiction or other Governmental Entity has issued an order, decree or ruling or taken any other action, in each case permanently restraining, enjoining or otherwise prohibiting any of the transactions contemplated by the Merger Agreement, (ii) if the Offer expires without any Shares being purchased, or (iii) if the Offer has not been consummated by March 31, 2002; provided, however, that in the event that there is issued a "second request" under the HSR Act or commenced a "second phase investigation" under ECMR or similar request or investigation is made in connection with the review by any Governmental Entity of the transactions contemplated by the Merger Agreement under any comparable law of foreign jurisdictions, such date shall be extended to June 30, 2002; provided further, however, that the right to terminate the Merger Agreement pursuant to clause (ii) or (iii) above will not be available to any party whose failure to fulfill any obligation under the Merger Agreement has been the cause of, or resulted in, the failure of the Offer to be consummated by such date; (c) by Sara Lee, at any time prior to the purchase of the Shares pursuant to the Offer, if (i) the Company Board withdraws, modifies, or changes its recommendation in respect of the Merger Agreement, the Offer or the Merger in a manner adverse to the transactions contemplated by the Merger Agreement, to Sara Lee or to the Purchaser, (ii) the Company Board has recommended any proposal other than by Sara Lee or the Purchaser in respect of an Acquisition Proposal, (iii) the Company Board fails to affirm its recommendation in respect of the transactions contemplated by the Merger Agreement within five days of a request to do so by Sara Lee, (iv) the Company violates or breaches any of its non-solicitation obligations described above, or (v) the Company shall have breached any representation, warranty, covenant or other agreement contained in the Merger Agreement which (A) would give rise to the failure of a condition set forth in paragraph (f) or (g) described below in Section 15--"Certain Conditions of the Offer" and (B) cannot be or has not been cured, in all material respects, within 30 days after the giving of written notice to the Company; or (d) by the Company (i) to accept a Superior Proposal as described above, (ii) if the Purchaser shall have failed to commence the Offer within 7 business days following the date of the Merger Agreement, unless such failure to commence the Offer is due to any action or failure to act on the part of the Company or (iii) if, at any time prior to the purchase of the Shares in the Offer, Sara Lee or the Purchaser shall have breached in any material respect any of the representations, warranties, covenants or agreements contained in the Merger Agreement and such breach cannot be or has not been cured, in all material respects, within 30 days after the giving of written notice to Sara Lee. Fees and Expenses. If Sara Lee terminates the Merger Agreement (x) pursuant to paragraph (c) parts (i)-(iv) above under "-Termination" or (y) pursuant to paragraph (b) part (ii) or (iii) above under "-Termination" and at the time of such termination there is an outstanding Acquisition Proposal and within 9 months following such termination, the Company executes a definitive agreement with respect to an Acquisition Proposal or another person becomes the beneficial owner of more than 15% of the Shares, then the Company must pay Sara Lee promptly a termination fee of $67 million. In the case of a termination pursuant to part (y) above, the termination fee must be made on the date the definitive agreement is executed and delivered or the date such person becomes the beneficial owner of such Shares. The Company must pay Sara Lee the termination fee prior to such termination if the Company terminates the Agreement pursuant to paragraph (d) part (i) above under "-Termination." Amendment. The Merger Agreement may be amended by written agreement of the parties, but, after the purchase of Shares pursuant to the Offer, any amendment must be approved by a majority of the Continuing Directors as described above and, after the approval of the Merger Agreement by the stockholders of the Company, no amendment may be made which by law requires further approval by such stockholders without obtaining such further approval. 22 12. Purpose of the Offer; Plans for the Company. Purpose of the Offer. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. The purpose of the Merger is to acquire all outstanding Shares not tendered and purchased pursuant to the Offer. If the Offer is successful, the Purchaser intends to consummate the Merger as promptly as practicable. The Company Board has approved the Merger and the Merger Agreement. Depending upon the number of Shares purchased by the Purchaser pursuant to the Offer, the Company Board may be required to submit the Merger Agreement to the Company's stockholders for approval at a stockholder's meeting convened for that purpose in accordance with the DGCL. If stockholder approval is required, the Merger Agreement must be approved by a majority of all votes entitled to be cast at such meeting. If the Minimum Condition is satisfied, the Purchaser will have sufficient voting power to approve the Merger Agreement at the Company stockholders' meeting without the affirmative vote of any other stockholder. If the Purchaser acquires at least 90% of then outstanding Shares pursuant to the Offer, the Merger may be consummated without a stockholder meeting and without the approval of the Company's stockholders. The Merger Agreement provides that the Purchaser will be merged into the Company and that the certificate of incorporation and bylaws of the Company will be the certificate of incorporation and bylaws of the Surviving Corporation following the Merger. Under the DGCL, holders of Shares do not have dissenters' rights as a result of the Offer. In connection with the Merger, however, stockholders of the Company may have the right to dissent and demand appraisal of their Shares under the DGCL. Dissenting stockholders who comply with the applicable statutory procedures under the DGCL will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash. Any such judicial determination of the fair value of the Shares could be based upon considerations other than or in addition to the price per Share paid in the Merger and the market value of the Shares. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among other things, that "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered in an appraisal proceeding. Stockholders should recognize that the value so determined could be higher or lower than the price per Share paid pursuant to the Offer or the consideration per Share to be paid in the Merger. Moreover, the Purchaser may argue in an appraisal proceeding that, for purposes of such a proceeding, the fair value of the Shares is less than the price paid in the Offer or the Merger. Plans for the Company. Pursuant to the terms of the Merger Agreement, promptly upon the purchase of and payment for any Shares by the Purchaser pursuant to the Offer, Sara Lee currently intends to seek maximum representation on the Company Board, subject to the requirement in the Merger Agreement regarding the presence of at least three Continuing Directors on the Company Board until the Effective Time. The Purchaser currently intends, as soon as practicable after consummation of the Offer, to consummate the Merger. Except as otherwise provided herein, it is expected that, initially following the Merger, the business and operations of the Company will, except as set forth in this Offer to Purchase, be continued substantially as they are currently being conducted. The Merger Agreement provides that, for a period of at least two years after the Effective Date, the Company's executive headquarters will remain in St. Louis, Missouri. Sara Lee will continue to evaluate the business and operations of the Company during the pendency of the Offer and after the consummation of the Offer and the Merger and will take such actions as it deems appropriate under the circumstances then existing. Thereafter, Sara Lee intends to review such information as part of a comprehensive review of the Company's business, operations, capitalization and management with a view to optimizing development of the Company's baked goods potential in conjunction with Sara Lee's existing food and beverage business. Except as described above or elsewhere in this Offer to Purchase, the Purchaser and Sara Lee have no present plans or proposals that would relate to or result in (i) any extraordinary corporate transaction involving the Company or any of its subsidiaries (such as a merger, reorganization, liquidation, relocation of any operations or sale or other transfer of a material amount of assets), (ii) any sale or transfer of a material amount of assets of 23 the Company or any of its subsidiaries, (iii) any change in the Company Board or management of the Company, (iv) any material change in the Company's capitalization or dividend policy, (v) any other material change in the Company's corporate structure or business, (vi) a class of securities of the Company being delisted from a national securities exchange or ceasing to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association or (vii) a class of equity securities of the Company being eligible for termination of registration pursuant to Section 12(g) of the Exchange Act. 13. Certain Effects of the Offer. Market for the Shares. The purchase of Shares pursuant to the Offer will reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly, which could adversely affect the liquidity and market value of the remaining Shares held by stockholders other than the Purchaser. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares or whether such reduction would cause future market prices to be greater or less than the Offer Price. Stock Quotation. The Shares are listed on The New York Stock Exchange (the "NYSE"). According to the published guidelines of the NYSE, the Shares might no longer be eligible for listing on the NYSE if, among other things, the number of publicly held Shares falls below 600,000 or the number of record holders falls below 400 (or below 1,200 if the average monthly trading volume is below 100,000 for the last twelve months). Shares held by officers or directors of the Company or their immediate families, or by any beneficial owner of 10% or more of the Shares, ordinarily will not be considered to be publicly held for this purpose. If the Shares cease to be listed on the NYSE, the market for the Shares could be adversely affected. It is possible that the Shares would be traded on other securities exchanges (with trades published by such exchanges), the Nasdaq SmallCap Market, the OTC Bulletin Board or in a local or regional over- the-counter market. The extent of the public market for the Shares and the availability of such quotations would, however, depend upon the number of holders of Shares and the aggregate market value of the Shares remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act, as described below, and other factors. Margin Regulations. The Shares are currently "margin securities" under the Regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. Depending upon factors similar to those described above regarding the market for the Shares and stock quotations, it is possible that, following the Offer, the Shares would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and therefore could no longer be used as collateral for loans made by brokers. Exchange Act Registration. The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of the Company to the SEC if the Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its stockholders and to the SEC and would make certain provisions of the Exchange Act no longer applicable to the Company, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with stockholders' meetings and the related requirement of furnishing an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, may be impaired or eliminated. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or be eligible for trading on the NYSE. Sara Lee and the Purchaser currently intend to seek to cause the Company to terminate the registration of the Shares under the Exchange Act as soon after consummation of the Offer as the requirements for termination of registration are met. 14. Dividends and Distributions. As discussed in Section 11, the Merger Agreement provides that from the date of the Merger Agreement to the Effective Time, without the prior written approval of Sara Lee, the Company will not, and will not allow its 24 subsidiaries to, repatriate funds, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock, except for (i) with respect to the Company, regular quarterly dividends in an amount not to exceed $0.07 per Share and (ii) certain cash payments or other cash distributions by wholly owned subsidiaries of the Company to the Company or one of its subsidiaries. 15. Certain Conditions of the Offer. Notwithstanding any other provisions of the Offer, and in addition to (and not in limitation of) the Purchaser's right to extend and amend the Offer at any time in its sole discretion (subject to the provisions of the Merger Agreement), the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered Shares after termination or withdrawal of the Offer), pay for, and may delay the acceptance for payment of or, subject to the restriction referred to above, the payment for, any validly tendered Shares if by the expiration of the Offer (as it may be extended in accordance with the requirements of the Merger Agreement), (i) the Minimum Condition shall not be satisfied, (ii) the applicable waiting periods under the HSR Act, the ECMR or any other comparable provisions under any applicable pre-merger notification laws or regulations of foreign jurisdictions have not expired or terminated, or (iii) at any time on or after June 29, 2001 and prior to the acceptance for payment of Shares pursuant to the Offer, any of the following events shall occur, and be continuing: (a) there shall be pending any suit, action or proceeding by any court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency, foreign or domestic (a "Governmental Entity") against the Purchaser, Sara Lee, the Company or any of its subsidiaries (i) seeking to restrain or prohibit Sara Lee's or the Purchaser's ownership or operation (or that of any of their respective subsidiaries or affiliates) of all or a material portion of their or the Company's and its subsidiaries' businesses or assets, or to compel Sara Lee or the Purchaser or their respective subsidiaries and affiliates to dispose of or hold separate any material portion of the business or assets of the Company or Sara Lee and their respective subsidiaries, (ii) challenging the acquisition by Sara Lee or the Purchaser of any Shares under the Offer, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or the performance of any of the other transactions contemplated by the Merger Agreement, or seeking to obtain from the Company, Sara Lee or the Purchaser any damages that are material in relation to the Company and its subsidiaries, taken as a whole, (iii) seeking to impose material limitations on the ability of the Purchaser, or render the Purchaser unable, to accept for payment, pay for or purchase some or all of the Shares pursuant to the Offer and the Merger, or (iv) seeking to impose limitations on the ability of the Purchaser or Sara Lee to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by it on all matters properly presented to the Company's stockholders; (b) there shall be any statute, rule, regulation, judgment, order or injunction enacted, entered, enforced, promulgated or deemed applicable, to the Offer or the Merger, that is reasonably likely to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (iv) of paragraph (a) above; (c) there shall have occurred (i) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (ii) any limitation (whether or not mandatory) by any United States Governmental Entity on the extension of credit generally by banks or other financial institutions, or (iii) a change in general financial or bank conditions which materially and adversely affects the ability of financial institutions in the United States to extend credit or syndicate loans; (d) since March 27, 2001, there shall have occurred any events or changes which have had, or would have or constitute, individually or in the aggregate, a Company Material Adverse Change or a Company Material Adverse Effect; (e) the Company Board shall have (i) withdrawn, or modified or changed in a manner adverse to the transactions contemplated by the Merger Agreement, to Sara Lee or to the Purchaser (including by amendment of its Solicitation/Recommendation Statement on Schedule 14D-9), its recommendation of 25 the Offer, the Merger Agreement, or the Merger, (ii) recommended any Acquisition Proposal, (iii) resolved to do any of the foregoing or (iv) taken a neutral position or made no recommendation with respect to an Acquisition Proposal Interest (other than by Sara Lee or the Purchaser) after a reasonable amount of time (and in no event more than 5 business days following receipt thereof) has elapsed; (f) any of the representations and warranties of the Company contained in the Merger Agreement, disregarding all qualifications and exceptions contained therein relating to materiality or Company Material Adverse Effect or any similar standard or qualification, shall not be true and correct in all respects as of the date of determination, as if made at and as of such time, except to the extent expressly made as of an earlier date, in which case as of such earlier date, and except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, have a Company Material Adverse Effect; (g) the Company shall have breached or failed, in any material respect, to perform or to comply with its agreements and covenants to be performed or complied with by it under the Merger Agreement; (h) all consents, permits and approvals of Governmental Entities and other persons shall not have been obtained other than those the failure of which to obtain, individually or in the aggregate, would not have a Company Material Adverse Effect; or (i) the Merger Agreement shall have been terminated in accordance with its terms. The foregoing conditions are for the benefit of Sara Lee and the Purchaser, may be asserted by Sara Lee or the Purchaser regardless of the circumstances giving rise to such condition, and may be waived by Sara Lee or the Purchaser in whole or in part at any time and from time to time, subject in each case to the terms of the Merger Agreement. The failure by Sara Lee or the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and, each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. 16. Certain Legal Matters; Regulatory Approvals. General. The Purchaser is not aware of any pending legal proceeding relating to the Offer. Except as described in this Section 16, based on its examination of publicly available information filed by the Company with the SEC and other publicly available information concerning the Company, the Purchaser is not aware of any governmental license or regulatory permit that appears to be material to the Company's business that might be adversely affected by the Purchaser's acquisition of Shares as contemplated herein or of any approval or other action by any governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of Shares by the Purchaser or Sara Lee as contemplated herein. Should any such approval or other action be required, the Purchaser currently contemplates that, except as described below under "State Takeover Statutes," such approval or other action will be sought. While the Purchaser does not currently intend to delay acceptance for payment of Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that if such approvals were not obtained or such other actions were not taken, adverse consequences might not result to the Company's business, or certain parts of the Company's business might not have to be disposed of, any of which could cause the Purchaser to elect to terminate the Offer without the purchase of Shares thereunder under certain conditions. See Section 15--"Certain Conditions of the Offer." State Takeover Statutes. A number of states have adopted laws that purport, to varying degrees, to apply to attempts to acquire corporations that are incorporated in, or that have substantial assets, stockholders, principal executive offices or principal places of business or whose business operations otherwise have substantial economic effects in, such states. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted such laws. In Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover Statute which, as a matter of state securities law, made takeovers of corporations 26 meeting certain requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana could, as a matter of corporate law, constitutionally disqualify a potential acquiror from voting shares of a target corporation without the prior approval of the remaining stockholders where, among other things, the corporation is incorporated in, and has a substantial number of stockholders in, the state. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal District Court in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as they apply to corporations incorporated outside Oklahoma in that they would subject such corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a Federal District Court in Tennessee ruled that four Tennessee takeover statutes were unconstitutional as applied to corporations incorporated outside Tennessee. This decision was affirmed by the United States Court of Appeals for the Sixth Circuit. The Company is incorporated under the laws of the State of Delaware. In general, Section 203 of the DGCL ("Section 203") prevents an "interested stockholder" (including a person who has the right to acquire 15% or more of the corporation's outstanding voting stock) from engaging in a "business combination" (defined to include mergers and certain other actions) with a Delaware corporation for a period of three years following the date such person became an interested stockholder. The Company Board approved for purposes of Section 203 the entering into by the Purchaser, Sara Lee and the Company of the Merger Agreement and the consummation of the transactions contemplated thereby and has taken all appropriate action so that Section 203, with respect to the Company, will not be applicable to Sara Lee and the Purchaser by virtue of such actions. The Purchaser is not aware of any state takeover laws or regulations which are applicable to the Offer or the Merger and has not attempted to comply with any state takeover laws or regulations. If any government official or third party should seek to apply any state takeover law to the Offer or the Merger or other business combination between the Purchaser or any of its affiliates and the Company, the Purchaser will take such action as then appears desirable, which action may include challenging the applicability or validity of such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover statutes is applicable to the Offer or the Merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Merger, the Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities or holders of Shares, and the Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer or the Merger. In such case, the Purchaser may not be obligated to accept for payment or pay for any tendered Shares. See Section 15 --"Certain Conditions of the Offer." United States Antitrust Compliance. Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the FTC and certain waiting period requirements have been satisfied. The purchase of Shares pursuant to the Offer is subject to such requirements. Pursuant to the requirements of the HSR Act, the Purchaser expects to file a Notification and Report Form with respect to the Offer and Merger with the Antitrust Division and the FTC on or about July 5, 2001. As a result, the waiting period applicable to the purchase of Shares pursuant to the Offer is scheduled to expire at 11:59 p.m., New York City time, 15 days after such filing. However, prior to such time, the Antitrust Division or the FTC may extend the waiting period by requesting additional information or documentary material relevant to the Offer from the Purchaser. If such a request is made, the waiting period will be extended until 11:59 p.m., New York City time, on the tenth day after substantial compliance by the Purchaser with such request. Thereafter, such waiting period can be extended only by court order. The Antitrust Division and the FTC scrutinize the legality under the antitrust laws of transactions such as the acquisition of Shares by the Purchaser pursuant to the Offer. At any time before or after the consummation of any such transactions, the Antitrust Division or the FTC could take such action under the antitrust laws of the United States as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or seeking divestiture of the Shares so acquired or divestiture of substantial assets of Sara Lee or the Company. Private parties (including individual States) may also bring legal actions under the antitrust laws of the United States. The Purchaser does not believe that the consummation of the Offer will result in a violation of any applicable anti- trust laws. However, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made, or if such a challenge is made, what the result will be. See Section 15 27 - --"Certain Conditions of the Offer," including conditions with respect to litigation and certain governmental actions. EEA and European National Merger Regulation. Sara Lee and the Company each conduct substantial operations in the European Economic Area. Council Regulation (EEC) 4064/89, as amended (also known as the "European Community Merger Regulation" or "ECMR"), and Article 57 of the European Economic Area Agreement require that concentrations with a "Community or EFTA dimension" be notified in prescribed form to the Commission of the European Communities for review and approval. In these cases, the European Commission, as opposed to the individual countries within the European Economic Area, will, with certain exceptions, have exclusive jurisdiction to review the concentration. Approval by the European Commission is, with certain very limited exceptions, required prior to completion of transactions, with "Community or EFTA dimensions." Sara Lee and the Company have determined that the Offer and the Merger have a "community dimension," and thus, intend to file notification in the prescribed form with the European Commission in accordance with the European Community Merger Regulation promptly. This filing will trigger a one-month review period in which the European Commission is required to determine whether the proposed merger is compatible with the European common market or that there is sufficiently "serious doubt" about the proposed merger's compatibility with the common market to require a more complete review of the proposed merger. The one-month review period can be extended to six weeks if the parties offer undertakings to address certain concerns the European Commission may have. If after the initial one-month (or six weeks) review period, the European Commission continues to have serious doubts regarding the compatibility of the merger with the European common market, the total review period can be as long as five months from the date of complete notification. During the review process, conditions can be imposed and obligations by the parties may become necessary. Other Filings. Sara Lee and the Company each conduct operations in a number of foreign countries, and filings may have to be made with foreign governments under their pre-merger notification statutes. The filing requirements of various nations are being analyzed by the parties and, where necessary, such filings will be made. 17. Fees and Expenses. J.P. Morgan Securities Inc. has acted as financial advisor to Sara Lee in connection with the proposed acquisition of the Company and is acting as the Dealer Manager in connection with the Offer. J.P. Morgan Securities Inc. will receive reasonable and customary compensation for its services as financial advisor and as the Dealer Manager and will be reimbursed for certain out-of- pocket expenses. Sara Lee and the Purchaser will indemnify J.P. Morgan Securities Inc. and certain related persons against certain liabilities and expenses in connection with its engagement, including certain liabilities under the federal securities laws. Sara Lee and the Purchaser have retained Morrow & Co. to be the Information Agent and Mellon Investor Services LLC to be the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telecopy, telegraph and personal interview and may request banks, brokers, dealers and other nominees to forward materials relating to the Offer to beneficial owners of Shares. The Information Agent and the Depositary each will receive reasonable and customary compensation for their respective services in connection with the Offer, will be reimbursed for reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under federal securities laws. Neither of Sara Lee nor the Purchaser will pay any fees or commissions to any broker or dealer or to any other person (other than to the Dealer Manager, the Depositary, and the Information Agent) in connection with the solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers. 28 18. Miscellaneous The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. However, the Purchaser may, in its discretion, take such action as it may deem necessary to make the Offer in any such jurisdiction and extend the Offer to holders of Shares in such jurisdiction. No person has been authorized to give any information or to make any representation on behalf of Sara Lee or the Purchaser not contained herein or in the Letter of Transmittal, and, if given or made, such information or representation must not be relied upon as having been authorized. The Purchaser has filed with the SEC a Tender Offer Statement on Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, together with exhibits furnishing certain additional information with respect to the Offer, and may file amendments thereto. In addition, the Company has filed with the SEC a Solicitation/ Recommendation Statement on Schedule 14D-9, together with exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth the recommendation of the Company Board with respect to the Offer and the reasons for such recommendation and furnishing certain additional related information. A copy of such documents, and any amendments thereto, may be examined at, and copies may be obtained from, the SEC (but not the regional offices of the SEC) in the manner set forth under Section 7 --"Certain Information Concerning the Company" above. SLC Acquisition Corp. July 3, 2001 29 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF SARA LEE AND THE PURCHASER 1. Directors and Executive Officers of Sara Lee. The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and executive officer of Sara Lee. Unless otherwise indicated, the current business address of each person is Three First National Plaza, Chicago, Illinois 60602 and the current phone number is (312) 426-2600. Unless otherwise indicated, each such person is a citizen of the United States of America.
Present Principal Occupation or Employment; Name Material Positions Held During the past Five Years - ---- -------------------------------------------------- Paul A. Allaire Chairman of the Board and Chief Executive Officer of Xerox Corporation (information processing) since May 2000; Chairman and Chief Executive Officer of Xerox Corporation from 1991 until April 1999. Mr. Allaire became a director of Sara Lee in 1989. He also serves as a director of Lucent Technologies, priceline.com and GlaxoSmithKline Beecham plc. Frans H.J.J. Andriessen Professor (Emeritus), European Integration, University of Utrecht, the Netherlands. Mr. Andriessen is a former Minister of Finance of the Netherlands. He is a member of the board of SHV (Steenkool en Handelsvereniging), DHV Beheer BV, DELA Cooperatie and Robeco. He became a director of Sara Lee in 1993. Mr. Andriessen is a member of the Supervisory Board of Sara Lee/DE N.V., a Dutch subsidiary of Sara Lee. He is honorary advisor to KPMG Netherlands. He is a citizen of the Netherlands. John H. Bryan Chairman of the Board of Sara Lee Corporation since 1976; Chief Executive Officer of Sara Lee Corporation from 1976 to July 2000. Mr. Bryan became a director of Sara Lee in 1974. He is a director of BP Amoco p.l.c., Bank One Corporation, General Motors Corporation and Goldman Sachs Group, Inc. Duane L. Burnham Chairman and Chief Executive Officer of Abbott Laboratories (health care products and services) from 1990 to 1999 (retired). Mr. Burnham became a director of Sara Lee in 1991. Mr. Burnham is also a director of Northern Trust Corporation. He is also a member of the board of the Lyric Opera (Chicago) and Chairman of the Chicago Council on Foreign Relations. Mr. Burnham is a trustee of Northwestern University and a member of the Advisory Board of the J.L. Kellogg Graduate School of Management at Northwestern University. Charles W. Coker Chairman of the Board of Sonoco Products Company (packaging products manufacturer) since 1990; Chairman and Chief Executive Officer of Sonoco Products Company from 1990 to 1998. Mr. Coker became a director of Sara Lee in 1986. He also serves as a director of Bank of America Corporation, Springs Industries, Inc. and Carolina Power and Light Company. He is Chairman of the Board of Hollings Cancer Center. James S. Crown General Partner of Henry Crown and Company (Not Incorporated) (diversified investments) since 1985. Mr. Crown became a director of Sara Lee in 1998. He also serves as a director of General Dynamics Corporation and Bank One Corporation, and as a trustee of the University of Chicago, the Chicago Symphony Orchestra and the Museum of Science and Industry (Chicago).
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Present Principal Occupation or Employment; Name and Address Material Positions Held During the past Five Years - ---------------- -------------------------------------------------- Willie D. Davis President of All-Pro Broadcasting, Inc. (radio stations), a privately owned company since 1978. Mr. Davis became a director of Sara Lee in 1983. He also is a director of The Dow Chemical Company, Kmart Corporation, Alliance Bank (Culver City, California), Johnson Controls Inc., MGM Grand, Inc., Strong Fund, Checkers Hamburgers, Inc., Bassett Furniture, Manpower Foundation, MGM Inc. and Wisconsin Energy, Inc. Mr. Davis also serves on the board of directors of the Green Bay Packers and the Kauffman Foundation. Mr. Davis is a trustee of the University of Chicago and Marquette University. Vernon E. Jordan, Jr. Senior Managing Director of Lazard Freres & Co. LLC (investment bank) and of counsel to Akin, Gump, Strauss, Hauer & Feld L.L.P. (law firm) since January 2000. He was a senior partner of Akin, Gump, Strauss, Hauer & Feld L.L.P. in Washington, D.C. from 1982 to 1999. Mr. Jordan became a director of Sara Lee in 1989. Mr. Jordan also serves as a director of America Online Latin America, Inc., American Express Company, Callaway Golf Company, Clear Channel Communications, Inc., Dow Jones & Company, Inc., FirstMark Communications International, LLC, J.C. Penney Company, Inc., Revlon, Inc., Shinsei Bank, Ltd., Xerox Corporation, Fuji Bank and Barrick Gold. He is also a director of the LBJ Foundation and serves on the International Advisory Board of DaimlerChrysler. Mr. Jordan is a trustee of Howard University. James L. Ketelsen Chairman of the Board and Chief Executive Officer of Tenneco Inc. (diversified industrial corporation) from 1978 to 1992 (retired). Mr. Ketelsen became a director of Sara Lee in 1982. Hans B. van Liemt Chairman of the Board of Management of DSM NV (chemicals) from 1984 to 1993 (retired). Mr. van Liemt became a director of Sara Lee in 1994. He is Chairman of the Supervisory Board of Sara Lee/DE N.V., a Dutch subsidiary of Sara Lee. Mr. van Liemt is Chairman of the Supervisory Boards of Gamma Holding NV and Oce-Van der Grinten NV. He is also Vice Chairman of the Supervisory Boards of ABN- AMRO Holding NV, Van Leer Group Foundation and Stienstra Holding BV. He is a citizen of the Netherlands. Joan D. Manley Group Vice President and director of Time Incorporated (communications) from 1978 to 1984 (retired). Mrs. Manley became a director of Sara Lee in 1982. She also is a director of Dreyfus Founders Funds. Cary D. McMillan Executive Vice President and Chief Financial and Administrative Officer of Sara Lee Corporation since January 2000; he joined Sara Lee in 1999 as Chief Financial and Administrative officer. Mr. McMillan became a director of Sara Lee in January 2000. Mr. McMillan also is a member of the supervisory board of Sara Lee/DE N.V., a Dutch subsidiary of Sara Lee. From 1980 to 1999, Mr. McMillan was employed by Arthur Andersen LLP, most recently serving as the managing partner of Arthur Andersen's Chicago office.
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Present Principal Occupation or Employment; Name and Address Material Positions Held During the past Five Years - ---------------- -------------------------------------------------- C. Steven McMillan President and Chief Executive Officer of Sara Lee Corporation since July 2000; President and Chief Operating Officer of Sara Lee from 1997 to July 2000; Executive Vice President of Sara Lee from 1993 to 1997. Mr. McMillan became a director of Sara Lee in 1993. He also is a director of Monsanto Corporation, Pharmacia Upjohn Corporation and Dynegy Corporation. Frank L. Meysman Executive Vice President of Sara Lee Corporation since 1997; Senior Vice President of Sara Lee from 1994 to 1997. He became a director of Sara Lee in 1997. Mr. Meysman also has been Chairman of the Board of Management of Sara Lee/DE N.V., a Dutch subsidiary of Sara Lee, since 1994. He is a member of the Supervisory Board of VNU, a Netherlands-based publishing company, and GIMV, a Belgium-based investment company. He is a citizen of Belgium. Rozanne L. Ridgway Former Assistant Secretary of State for European and Canadian Affairs (1985-1989) and, since July 1994, Chair (non-executive) of the Baltic American Enterprise Fund. Ambassador Ridgway became a director of Sara Lee in 1992. She also serves as a director of The Boeing Company, Emerson Electric Company, 3M Company and the New Perspective Fund. Richard L. Thomas Chairman of First Chicago NBD Corporation and The First National Bank of Chicago from January 1992 to May 1996 (retired). Mr. Thomas became a director of Sara Lee in 1976. He is also a director of The PMI Group, Inc., Sabre Holdings Corporation, Unicom Corporation and IMC Global, Inc. John D. Zeglis Chairman and Chief Executive Officer of AT&T Wireless Group (wireless communications) since December 1999. Mr. Zeglis served as President of AT&T Corporation (communications) from 1997 to December 1999 and, from 1984 to 1997, served in a number of senior executive positions at AT&T. Mr. Zeglis has served as a director of AT&T Corporation since 1997. Mr. Zeglis became a director of Sara Lee in 1998. He also serves as a director of Helmerich & Payne, Inc. and Georgia Pacific Corp. and serves as a trustee of the Culver Educational Foundation. Janet E. Bergman Senior Vice President of Investor Relations and Corporate Affairs for Sara Lee Corporation since March 2001. Since joining Sara Lee in 1988, Ms. Bergman has held various positions with Sara Lee, including Vice President of Investor Relations and Corporate Affairs, and Vice President and Executive Director of Investor Relations. William A. Geoppinger Executive Vice President of Sara Lee Corporation since June 2001 and Chief Executive Officer of Sara Lee Foods since 1999. Since joining Sara Lee in 1966, Mr. Geoppinger has held various positions with Sara Lee and its subsidiaries, including Senior Vice President of Sara Lee, and President and Chief Executive Officer of Hillshire Farm & Kahn's, a subsidiary of Sara Lee.
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Present Principal Occupation or Employment; Name and Address Material Positions Held During the past Five Years - ---------------- -------------------------------------------------- Gary C. Grom Senior Vice President-Human Resources of Sara Lee Corporation since 1992. Since joining Sara Lee in 1985, Mr. Grom has held various human resources positions with Sara Lee, including Executive Director--Compensation, Benefits and Manpower Planning; Vice President--Human Resources for Sara Lee Packaged Meats; and Vice President--Human Resources for Sara Lee Corporation. Paul J. Lustig Executive Vice President of Sara Lee Corporation and Chief Executive Officer of Sara Lee Branded Apparel since 2000. Since joining Sara Lee in 1991, Mr. Lustig has held various positions with Sara Lee, including Chief Executive Officer of Sara Lee Branded Apparel--North and South America and Australia; Chief Executive Officer-- Personal Products Group; Chief Executive Officer of Personal Products--Pacific Rim; and Chief Executive Officer of Sara Lee Bakery--Worldwide. Mark J. McCarville Senior Vice President--Corporate Finance of Sara Lee Corporation since 2000. Since joining Sara Lee in 1976, Mr. McCarville has held various treasury and corporate development positions with Sara Lee, including Senior Vice President of Corporate Development, and Vice President of Treasury. Mr. McCarville also serves on the Board of Directors of Delta Galil Industries, Ltd. Roderick A. Palmore Senior Vice President, General Counsel and Secretary of Sara Lee Corporation since 1999; Deputy General Counsel and Vice President of Sara Lee from 1996 to 1999. Prior to joining Sara Lee, Mr. Palmore was a partner of Sonnenschein, Nath & Rosenthal (law firm) in Chicago from 1993 to 1996 and a partner of Wildman, Harrold, Allen & Dixon (law firm) in Chicago from 1986 to 1993. Mr. Palmore has served as a director and as President of SLC Acquisition Corp. since its formation in June 2001. Wayne R. Szypulski Senior Vice President of Sara Lee Corporation since June 2001 and Controller of Sara Lee since 1993. Since joining Sara Lee in 1983, Mr. Szypulski has held various financial accounting positions with Sara Lee, including Vice President--Controller, Assistant Corporate Controller, Director--Accounting Projects, and Manager-- Accounting. Ann E. Ziegler Senior Vice President--Corporate Development of Sara Lee Corporation since 2000. Since joining Sara Lee in 1993, Ms. Ziegler has held various positions with Sara Lee, including Vice President--Corporate Development, and Executive Director of Corporate Development. Ms. Ziegler also serves on the Board of Directors of Delta Galil Industries, Ltd
2. Directors and Executive Officers of the Purchaser. The following table sets forth the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and executive officer of the Purchaser. Unless otherwise indicated, the current business address of each person is 3 First National Plaza, Chicago, Illinois 60602, and the current phone number is (312) 726-2600. Unless otherwise indicated, each such person is a citizen of the United States of America. I-4
Present Principal Occupation or Employment; Name and Address Material Positions Held During the past Five Years - ---------------- -------------------------------------------------- Roderick A. Palmore Senior Vice President, General Counsel and Secretary of Sara Lee Corporation since 1999; Deputy General Counsel and Vice President of Sara Lee from 1996 to 1999. Prior to joining Sara Lee, Mr. Palmore was a partner of Sonnenschein, Nath & Rosenthal (law firm) in Chicago from 1993 to 1996 and a partner of Wildman, Harrold, Allen & Dixon (law firm) in Chicago from 1986 to 1993. Mr. Palmore has served as a director and as President of SLC Acquisition Corp. since its formation in June 2001. R. Henry Kleeman Vice President, Deputy General Counsel and Assistant Secretary of Sara Lee Corporation since 1999; Chief Counsel--Corporate & Securities of Sara Lee from 1995 to 1999. Prior to joining Sara Lee, Mr. Kleeman was a partner of Wildman, Harrold, Allen & Dixon (law firm) in Chicago. Mr. Kleeman has served as a director and as Vice President and Treasurer of SLC Acquisition Corp. since its formation in June 2001. Helen N. Kaminski Chief Counsel--Corporate & Securities of Sara Lee Corporation since 2000. Prior to joining Sara Lee, Ms. Kaminski was a partner of Neal, Gerber & Eisenberg (law firm) in Chicago (1997 to 2000). Ms. Kaminski has served as Vice President and Secretary of SLC Acquisition Corp. since its formation in June 2001.
I-5 Manually signed facsimiles of the Letter of Transmittal, properly completed, will be accepted. The Letter of Transmittal and certificates evidencing Shares and any other required documents should be sent or delivered by each stockholder or his broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below: The Depositary for the Offer is: Mellon Investor Services LLC By Facsimile Transmission (for Eligible Institutions only): (201) 296-4293 Confirm by Telephone: (201) 296-4860 By Overnight Courier: By Mail: By Hand: Reorganization Department Reorganization Department Reorganization Department 85 Challenger Road P.O. Box 3301 120 Broadway Mail Stop--Reorg. South Hackensack, NJ 07606 13th Floor Ridgefield Park, NJ 07660 New York, NY 10271
Other Information: Questions or requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers listed below. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained from the Information Agent. A stockholder may also contact brokers, dealers, commercial banks or trust companies for assistance concerning the Offer. The Information Agent for the Offer is: [MORROW LOGO] 445 Park Avenue, 5th Floor New York, New York 10022 Call Collect (212) 754-8000 Bankers and Brokers Call: (800) 654-2468 All Others Call Toll Free: (800) 607-0088 E-Mail: earthgrains.info@morrowco.com The Dealer Manager for the Offer is: [JPMorgan LOGO] J.P. Morgan Securities Inc. 60 Wall Street New York, New York 10260-0060 Call: (212) 648-1995 Call Toll Free: (866) 262-0777 EX-99.A2 3 dex99a2.txt LETTER OF TRANSMITTAL Letter of Transmittal to Tender Shares of Common Stock (Including the Associated Rights to Purchase Preferred Stock) of The Earthgrains Company Pursuant to the Offer to Purchase dated July 3, 2001 by SLC Acquisition Corp. a wholly owned subsidiary of Sara Lee Corporation THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JULY 31, 2001, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: Mellon Investor Services LLC By Mail: By Overnight Courier: By Hand: Reorganization Department Reorganization Department Reorganization Department PO Box 3301 85 Challenger Road 120 Broadway South Hackensack, NJ 07606 Mail Stop--Reorg 13th Floor Ridgefield Park, NJ 07660 New York, NY 10271
By Facsimile Transmission: (for eligible institutions only) (201) 296-4293 Confirm Facsimile By Telephone: (201) 296-4860 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR BELOW, WITH SIGNATURE GUARANTEE IF REQUIRED, AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW. THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. DESCRIPTION OF SHARES TENDERED - -------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) Shares Certificate(s) and Share(s) Tendered (Please fill in, if blank, exactly as name(s) (Please attach additional signed list, if appear(s) on Share Certificate(s)) necessary) - ------------------------------------------------------------------------------------------------------------------------------ Shares Total Number of Number Certificate Shares Represented of Shares Number(s)(1) by Certificate(s)(1) Tendered(2) --------------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- ------------------------------------- - -------------------------------------------------- -------------------------------------
Total Shares Tendered - ------------------------------------------------------------------------------- (1) Need not be completed by stockholders who deliver Shares by book-entry transfer ("Book-Entry Stockholders"). (2) Unless otherwise indicated, all Shares represented by certificates delivered to the Depositary will be deemed to have been tendered. See Instruction 4. This Letter of Transmittal is to be used by stockholders of The Earthgrains Company (the "Company") if certificates for Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in Section 3 of the Offer to Purchase) is utilized, if delivery of Shares is to be made by book-entry transfer to an account maintained by the Depositary at the Book- Entry Transfer Facility (as defined in Section 2 of the Offer to Purchase and pursuant to the procedures set forth in Section 3 thereof). Holders of Shares whose certificates for such Shares (the "Share Certificates") are not immediately available, or who cannot complete the procedure for book-entry transfer on a timely basis, or who cannot deliver all other required documents to the Depositary prior to the Expiration Date (as defined in the Offer to Purchase), must tender their Shares according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. TENDER OF SHARES [_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK- ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution: ___________________________________________ Account Number: __________________________________________________________ Transaction Code Number: _________________________________________________ - ------------------------------------------------------------------------------- [_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s): _________________________________________ Window Ticket Number (if any): ___________________________________________ Date of Execution of Notice of Guaranteed Delivery: ______________________ Name of Eligible Institution that Guaranteed Delivery: ___________________ If delivery is by book-entry transfer, provide the following: Account Number: __________________________________________________________ Transaction Code Number: _________________________________________________ NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY 2 Ladies and Gentlemen: The undersigned hereby tenders to SLC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Sara Lee Corporation, a Maryland corporation ("Sara Lee"), the above-described shares of common stock, par value $0.01 per share, of The Earthgrains Company, a Delaware corporation (the "Company"), including the associated rights to purchase preferred stock (collectively, the "Shares"), pursuant to the Purchaser's offer to purchase all outstanding Shares, at a purchase price of $40.25 per Share, net to the seller in cash (the "Offer Price"), without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 3, 2001, and in this Letter of Transmittal (which together with any amendments or supplements thereto or hereto, collectively constitute the "Offer"). Upon the terms and subject to the conditions of the Offer (and if the Offer is extended or amended, the terms of any such extension or amendment), and effective upon acceptance for payment of the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to or upon the order of the Purchaser all right, title and interest in and to all of the Shares that are being tendered hereby (and any and all dividends, distributions, rights, other Shares or other securities issued or issuable in respect thereof on or after the date hereof (collectively, "Distributions") and irrevocably constitutes and appoints Mellon Investor Services LLC (the "Depositary") the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and all Distributions), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver certificates for such Shares (and any and all Distributions) or transfer ownership of such Shares (and any and all Distributions) on the account books maintained by the Book-Entry Transfer Facility, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser, (ii) present such Shares (and any and all Distributions) for transfer on the books of the Company, and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any and all Distributions), all in accordance with the terms of the Offer. By executing this Letter of Transmittal, the undersigned hereby irrevocably appoints Roderick A. Palmore, R. Henry Kleeman and Helen N. Kaminski, and each of them, and any other designees of the Purchaser, the attorneys-in- fact and proxies of the undersigned, each with full power of substitution, to vote at any annual or special meeting of the Company's stockholders or any adjournment or postponement thereof or otherwise in such manner as each such attorney-in- fact and proxy or his or her substitute shall in his or her sole discretion deem proper with respect to, to execute any written consent concerning any matter as each such attorney-in-fact and proxy or his or her substitute shall in his or her sole discretion deem proper with respect to, and to otherwise act as each such attorney-in-fact and proxy or his or her substitute shall in his or her sole discretion deem proper with respect to, all of the Shares (and any and all Distributions) tendered hereby and accepted for payment by the Purchaser. This appointment will be effective if and when, and only to the extent that, the Purchaser accepts such Shares for payment pursuant to the Offer. This power of attorney and proxy are irrevocable and are granted in consideration of the acceptance for payment of such Shares in accordance with the terms of the Offer. Such acceptance for payment shall, without further action, revoke any prior powers of attorney and proxies granted by the undersigned at any time with respect to such Shares (and any and all Distributions), and no subsequent powers of attorney, proxies, consents or revocations may be given by the undersigned with respect thereto (and, if given, will not be deemed effective). The Purchaser reserves the right to require that, in order for the Shares or other securities to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares (and any and all Distributions), including voting at any meeting of the Company's stockholders. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and all Distributions and that, when the same are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title thereto and to all Distributions, free and clear of all liens, restrictions, charges and encumbrances and the same will not be subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby and all Distributions. In addition, the undersigned shall remit and transfer promptly to the Depositary for the account of the Purchaser all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer, and, pending such remittance and transfer or appropriate assurance thereof, the Purchaser shall be entitled to all rights and privileges as owner of each such 3 Distribution and may withhold the entire purchase price of the Shares tendered hereby or deduct from such purchase price, the amount or value of such Distribution as determined by the Purchaser in its sole discretion. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that the valid tender of the Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the Instructions hereto will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer (and if the Offer is extended or amended, the terms or conditions of any such extension or amendment). Without limiting the foregoing, if the price to be paid in the Offer is amended in accordance with the Merger Agreement, the price to be paid to the undersigned will be the amended price notwithstanding the fact that a different price is stated in this Letter of Transmittal. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, the Purchaser may not be required to accept for payment any of the Shares tendered hereby. Unless otherwise indicated under "Special Payment Instructions," please issue the check for the purchase price of all of the Shares purchased and/or return any certificates for the Shares not tendered or accepted for payment in the name(s) of the registered holder(s) appearing above under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price of all of the Shares purchased and/or return any certificates for the Shares not tendered or not accepted for payment (and any accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under "Description of Shares Tendered." In the event that the boxes entitled "Special Payment Instructions" and "Special Delivery Instructions" are both completed, please issue the check for the purchase price of all Shares purchased and/or return any certificates evidencing Shares not tendered or not accepted for payment (and any accompanying documents, as appropriate) in the name(s) of, and deliver such check and/or return any such certificates (and any accompanying documents, as appropriate) to, the person(s) so indicated. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please credit any Shares tendered herewith by book-entry transfer that are not accepted for payment by crediting the account at the Book-Entry Transfer Facility designated above. The undersigned recognizes that the Purchaser has no obligation, pursuant to the "Special Payment Instructions," to transfer any Shares from the name of the registered holder thereof if the Purchaser does not accept for payment any of the Shares so tendered. 4 SPECIAL PAYMENT INSTRUCTIONS (See SPECIAL DELIVERY INSTRUCTIONS Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7) To be completed ONLY if the check To be completed ONLY if the check for the purchase price of Shares for the purchase price of Shares accepted for payment and/or Share accepted for payment and/or Share Certificates not tendered or ac- Certificates not tendered or ac- cepted for payment are to be is- cepted for payment are to be sent sued in the name of someone other to someone other than the under- than the undersigned. signed or to the undersigned at an address other than that shown Issue[_] Check under "Description of Shares Ten- [_] Certificate(s) to: dered." Name _____________________________ Mail[_] Check (Please Print) [_] Certificate(s) to: Address __________________________ Name______________________________ (Please Print) __________________________________ (Include Zip Code) Address __________________________ __________________________________ __________________________________ (Tax Identification or Social (Include Zip Code) Security Number) __________________________________ (Also complete Substitute Form W- (Tax Identification or Social 9 below) Security Number) Account Number: __________________ (Also complete Substitute Form W- 9 below) 5 IMPORTANT SHAREHOLDER: SIGN HERE (Please Complete Substitute Form W-9 Included Herein) _______________________________________________________ _______________________________________________________ (Signature(s) of Owner(s)) Name(s)________________________________________________ ________________________________________________ Capacity (Full Title) _________________________________ (See Instructions) Address________________________________________________ ________________________________________________ ________________________________________________ ________________________________________________ (Include Zip Code) Area Code and Telephone Number ________________________ Tax Identification or Social Security Number ________________________________ (See Substitute Form W-9) Dated: __________ , 2001 (Must be signed by the registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by the person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.) GUARANTEE OF SIGNATURE(S) (If required--See Instructions 1 and 5) Authorized Signature(s) _______________________________ Name __________________________________________________ Name of Firm __________________________________________ Address________________________________________________ (Include Zip Code) Area Code and Telephone Number ________________________ Dated: __________ , 2001 6 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Guarantee of Signatures. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section, includes any participant in the Book-Entry Transfer Facility's systems whose name appears on a security position listing as the owner of the Shares) of Shares tendered herewith, unless such registered holder(s) has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program or by any other "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. Requirements of Tender. This Letter of Transmittal is to be completed by stockholders if certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if tenders are to be made pursuant to the procedure for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Share Certificates evidencing tendered Shares, or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of Shares into the Depositary's account at the Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a manually signed facsimile hereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). Stockholders whose Share Certificates are not immediately available, or who cannot complete the procedure for delivery by book-entry transfer on a timely basis or who cannot deliver all other required documents to the Depositary prior to the Expiration Date, may tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, must be received by the Depositary prior to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry Confirmation) evidencing all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three New York Stock Exchange trading days after the date of execution of such Notice of the Guaranteed Delivery. If Share Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND THE RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering stockholders, by execution of this Letter of Transmittal (or a manually signed facsimile hereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. Inadequate Space. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares and any other required information should be listed on a separate signed schedule attached hereto. 4. Partial Tenders (not applicable to stockholders who tender by book-entry transfer). If fewer than all of the Shares evidenced by any Share Certificate are to be tendered, fill in the number of Shares that are to be 7 tendered in the box entitled "Number of Shares Tendered." In this case, new Share Certificates for the Shares that were evidenced by your old Share Certificates, but were not tendered by you, will be sent to you, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered unless indicated. 5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are held of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations. If this Letter of Transmittal or any certificates or stock powers are signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Purchaser of the authority of such person so to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment is to be made or certificates for Shares not tendered or not accepted for payment are to be issued in the name of a person other than the registered holder(s). Signatures on any such Share Certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the certificate(s) listed and transmitted hereby, the certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on the certificate(s). Signature(s) on any such Share Certificates or stock powers must be guaranteed by an Eligible Institution. 6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6, the Purchaser will pay all stock transfer taxes with respect to the transfer and sale of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificate(s) for Shares not tendered or not accepted for payment are to be registered in the name of, any person other than the registered holder(s), or if tendered certificate(s) are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such other person(s)) payable on account of the transfer to such other person will be deducted from the purchase price of such Shares purchased unless evidence satisfactory to the Purchaser of the payment of such taxes, or exemption therefrom, is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the certificate(s) evidencing the Shares tendered hereby. 7. Special Payment and Delivery Instructions. If a check is to be issued in the name of, and/or certificates for Shares not tendered or not accepted for payment are to be issued or returned to, a person other than the signer of this Letter of Transmittal or if a check and/or such certificates are to be returned to a person other than the person(s) signing this Letter of Transmittal or to an address other than that shown in this Letter of Transmittal, the appropriate boxes on this Letter of Transmittal must be completed. 8. Substitute Form W-9. A tendering stockholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax Information" below, and to certify, under penalties of perjury, that such number is correct and that such stockholder is not subject to backup withholding of Federal income tax. If a tendering stockholder has been notified by the Internal Revenue Service that such stockholder is subject to backup withholding, such stockholder must cross out item (2) of the Certification box of the Substitute Form W-9, unless such stockholder has since 8 been notified by the Internal Revenue Service that such stockholder is no longer subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering stockholder to federal income tax withholding on the payment of the purchase price of all Shares purchased from such stockholder. If the tendering stockholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such stockholder should write "Applied For" in the space provided for the TIN in Part I of the Substitute Form W-9, and sign and date the Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold a portion of all payments of the purchase price to such stockholder until a TIN is provided to the Depositary. Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Noncorporate foreign stockholders should submit an appropriate and properly completed IRS Form W-8BEN, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. 9. Requests for Assistance or Additional Copies. Questions and requests for assistance or additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery, IRS Form W8-BEN and the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 may be directed to the Information Agent at the address and phone number set forth below, or from brokers, dealers, commercial banks or trust companies. 10. Lost, Destroyed or Stolen Certificates. If any certificate representing Shares has been lost, destroyed or stolen, the stockholder should promptly notify Mellon Investor Services LLC, in its capacity as transfer agent for the shares (toll-free telephone number: (888) 213-0971). The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE HEREOF) TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION DATE. 9 IMPORTANT TAX INFORMATION IMPORTANT: This Letter of Transmittal (or a manually executed copy of the Letter of Transmittal), together with any required signature guarantees, and Share certificates and all other required documents must be received by the Depositary on or prior to the Expiration Date. IMPORTANT TAX INFORMATION Under federal income tax law, a stockholder surrendering Shares must, unless an exemption applies, provide the Depositary (as payor) with his correct TIN on IRS Form W-9 or on the Substitute Form W-9 included in this Letter of Transmittal. If the stockholder is an individual, his TIN is such stockholder's social security number. If the correct TIN is not provided, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service and payments of cash to the tendering stockholder (or other payee) pursuant to the Offer may be subject to backup withholding of a portion of all payments of the purchase price. Certain stockholders (including, among others, corporations and certain foreign individuals and entities) may not be subject to backup withholding and reporting requirements. In order for an exempt foreign stockholder to avoid backup withholding, such person should complete, sign and submit an appropriate Form W-8 signed under penalties of perjury, attesting to his or her exempt status. A Form W-8 can be obtained from the Depositary. Exempt stockholders, other than foreign stockholders, should furnish their TIN, write "Exempt" in Part II of the Substitute Form W-9 and sign, date and return the Substitute Form W-9 to the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions. If backup withholding applies, the Depositary is required to withhold and pay over to the Internal Revenue Service a portion of any payment made to payee. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. Purpose of Substitute Form W-9 To prevent backup withholding on payments that are made to a stockholder with respect to Shares purchased pursuant to the Offer, the stockholder is required to notify the Depositary of his correct TIN by completing the Substitute Form W-9 included in this Letter of Transmittal certifying (1) that the TIN provided on the Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN), and (2) that the stockholder is not subject to backup withholding because (i) the stockholder has not been notified by the Internal Revenue Service that the stockholder is subject to backup withholding as a result of a failure to report all interest and dividends or (ii) the Internal Revenue Service has notified the stockholder that the stockholder is no longer subject to backup withholding. What Number to Give the Depositary The stockholder is required to give the Depositary the TIN, generally the social security number or employer identification number, of the record holder of the Shares tendered hereby. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, he or she should write "Applied For" in the space provided for the TIN in Part I, sign and date the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer Identification Number, which appears in a separate box below the Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold a portion of all payments of the purchase price until a TIN is provided to the Depositary. 10 PAYER'S NAME: MELLON INVESTOR SERVICES LLC Part I: Taxpayer Identification Number--For all accounts, enter taxpayer identification number in the box at right. (For most individuals, this is your social security number. If you do not have a number, see Obtaining a Number in the enclosed Guidelines for Certification of Taxpayer Identification Number (TIN) on Substitute Form W-9 (the "Guidelines").) Certify by signing and dating below. SUBSTITUTE --------------- FORM W-9 Social Department of Security the Treasury Number OR Internal Revenue Service --------------- Employer Identification Number Note: If the account is in more than one name, check in the enclosed Guidelines to determine which number to give the payer. -------------------------------------------------------- Part II: For payees exempt from backup withholding, see the enclosed Guidelines and complete as instructed therein. - -------------------------------------------------------------------------------- Certification--Under penalties of perjury, I certify that: (1)The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me); and (2)I am not subject to backup withholding either because (a) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (b) the IRS has notified me that I am no longer subject to backup withholding. Certification Instructions--You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if, after being notified by the IRS that you were subject to backup withholding, you received another notification from the IRS that you were no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.) - -------------------------------------------------------------------------------- The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required to avoid backup withholding. Signature _________________________________________ Date ___________________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF A PORTION OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me, and either (a) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center or Social Security Administrative Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer Identification Number by the time of payment, a portion of all reportable payments made to me thereafter will be withheld until I provide a number. Signature _________________________________________ Date ___________________ 11 MANUALLY SIGNED FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH STOCKHOLDER OF THE COMPANY OR SUCH STOCKHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE FIRST PAGE. Questions and requests for assistance or for additional copies of the Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may be directed to the Information Agent at its telephone number and location listed below, and will be furnished promptly at the Purchaser's expense. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: [MORROW LOGO] 445 Park Avenue, 5th Floor New York, New York 10022 Call Collect (212) 754-8000 Banks and Brokerage Firms Call: (800) 654-2468 Stockholders Please Call: (800) 607-0088 E-Mail: earthgrains.info@morrowco.com The Dealer Manager for the Offer is: [JPMorgan logo] J.P. Morgan Securities Inc. 60 Wall Street New York, New York 10260-0060 Call: (212) 648-1995 Call Toll Free: (866) 262-0777 12 EX-99.A3 4 dex99a3.txt NOTICE OF GUARANTEED DELIVERY Notice of Guaranteed Delivery for Tender of Shares of Common Stock (Including the Associated Rights to Purchase Preferred Stock) of The Earthgrains Company to SLC Acquisition Corp. a wholly owned subsidiary of Sara Lee Corporation (Not to be used for signature guarantees) THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JULY 31, 2001, UNLESS THE OFFER IS EXTENDED. This Notice of Guaranteed Delivery, or a form substantially equivalent hereto, must be used to accept the Offer (as defined below) if certificates for Shares (as defined below) are not immediately available, if the procedure for book-entry transfer cannot be completed on a timely basis, or if time will not permit all required documents to reach Mellon Investor Services LLC (the "Depositary") on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). This form may be delivered by hand, transmitted by facsimile transmission or mailed (to the Depositary). See Section 3 of the Offer to Purchase. The Depositary for the Offer is: Mellon Investor Services LLC BY MAIL: BY OVERNIGHT COURIER: BY HAND: Mellon Investor Services Mellon Investor Services Mellon Investor Services LLC LLC LLC Reorganization Reorganization Reorganization Department Department Department PO Box 3301 85 Challenger Road 120 Broadway South Hackensack, NJ Mail Stop--Reorg 13th Floor 07606 Ridgefield Park, NJ New York, NY 10271 07660 BY FACSIMILE TRANSMISSION: (for eligible institutions only) (201) 296-4293 CONFIRM FACSIMILE BY TELEPHONE: (201) 296-4860 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN ONE SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN THE FACSIMILE NUMBER SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. THIS NOTICE OF GUARANTEED DELIVERY TO THE DEPOSITARY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" (AS DEFINED IN THE OFFER TO PURCHASE) UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEES MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal or an Agent's Message (as defined in the Offer to Purchase) and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED. Ladies and Gentlemen: The undersigned hereby tenders to SLC Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Sara Lee Corporation, a Maryland corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 3, 2001 (the "Offer to Purchase") and the related Letter of Transmittal (which, together with any amendments or supplements thereto, constitute the "Offer"), receipt of which is hereby acknowledged, the number of shares of common stock, par value $0.01 per share, of The Earthgrains Company, a Delaware corporation (the "Company"), including the associated rights to purchase preferred stock (collectively, the "Shares"), set forth below, pursuant to the guaranteed delivery procedures set forth in the Offer to Purchase. Name(s) of Record Holder(s) Number of Shares Tendered: _________ ____________________________________ Certificate No(s) (if available): ____________________________________ (please print) ____________________________________ Address(es): ____________________________________ ____________________________________ [_]Check if securities will be tendered by book-entry transfer ____________________________________ (Zip Code) Name of Tendering Institution: Area Code and Telephone No.(s): ____________________________________ ____________________________________ Signature(s) Account No.: _______________________ ____________________________________ Dated: _______________________, 2001 ____________________________________ GUARANTEE (Not to be used for signature guarantee) The undersigned, a firm that is a participant in the Securities Transfer Agents Medallion Program, or an "eligible guarantor institution" (as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended), hereby guarantees to deliver to the Depositary either the certificates evidencing all tendered Shares, in proper form for transfer, or to deliver Shares pursuant to the procedure for book-entry transfer into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility"), in either case together with the Letter of Transmittal (or a facsimile thereof) properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry delivery, and any other required documents, all within three New York Stock Exchange trading days after the date hereof. Name of Firm: _______________________________________________________________ ___________________________________________________________________ (Authorized Signature) Address: ____________________________________________________________________ ______________________________________________________________________ Zip Code Title: ______________________________________________________________________ Name: _______________________________________________________________________ (Please type or print) Area Code and Tel. No. ______________________________________________________ Date: _________________________, 2001 NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.A4 5 dex99a4.txt LETTER TO BROKERS, DEALERS Offer to Purchase for Cash All Outstanding Shares of Common Stock (Including the Associated Rights to Purchase Preferred Stock) of The Earthgrains Company by SLC Acquisition Corp. a wholly owned subsidiary of Sara Lee Corporation THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JULY 31, 2001, UNLESS THE OFFER IS EXTENDED. July 3, 2001 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been engaged by SLC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Sara Lee Corporation, a Maryland corporation ("Sara Lee"), to act as Dealer Manager in connection with the Purchaser's offer to purchase all outstanding shares of common stock, par value $0.01 per share, including the associated rights to purchase preferred stock (collectively, the "Shares"), of The Earthgrains Company, a Delaware corporation (the "Company"), at a purchase price of $40.25 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 3, 2001 (the "Offer to Purchase") and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") enclosed herewith. The Offer is conditioned upon, among other things, (1) there being validly tendered and not withdrawn prior to the expiration date of the Offer a number of Shares that represents at least a majority of the issued and outstanding Shares on a fully diluted basis, and (2) the waiting periods under the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended, the European Community Merger Regulation, as amended, and any other comparable provisions under any pre-merger notification laws or regulations of foreign jurisdictions shall have expired or been terminated. See Section 15 of the Offer to Purchase. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. 1. Offer to Purchase dated July 3, 2001; 2. Letter of Transmittal for your use in accepting the Offer and tendering Shares and for the information of your clients (manually signed facsimile copies of the Letter of Transmittal may be used to tender Shares); 3. Notice of Guaranteed Delivery to be used to accept the Offer if share certificates are not immediately available or if such certificates and all other required documents cannot be delivered to Mellon Investor Services LLC (the "Depositary"), or if the procedures for book-entry transfer cannot be completed on a timely basis; 4. A printed form of letter that may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 5. The letter to stockholders of the Company from Barry H. Beracha, Chairman of the Board of Directors and Chief Executive Officer of the Company, accompanied by the Company's Solicitation/ Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by the Company; and 6. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. The Board of Directors of the Company unanimously (i) determined that the terms of the Offer and the Merger are fair to and in the best interests of the stockholders of the Company, (ii) approved the Merger Agreement (as defined below) and the transactions contemplated thereby, including the Offer and the Merger (as defined below), and (iii) recommends that the Company's stockholders accept the Offer and tender their Shares pursuant to the Offer and approve and adopt the Merger Agreement. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of June 29, 2001 (the "Merger Agreement"), by and among Sara Lee, the Purchaser and the Company. The Merger Agreement provides for, among other things, the making of the Offer by the Purchaser, and further provides that the Purchaser will be merged with and into the Company (the "Merger") following the satisfaction or waiver of the conditions to the Merger set forth in the Merger Agreement. Following the Merger, the Company will continue as the surviving corporation, wholly owned by Sara Lee, and the separate corporate existence of the Purchaser will cease. In order to take advantage of the Offer, (i) a duly executed and properly completed Letter of Transmittal and any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry delivery of Shares, and other required documents should be sent to the Depositary and (ii) certificates representing the tendered Shares should be delivered to the Depositary, or such Shares should be tendered by book- entry transfer into the Depositary's account maintained at the Book-Entry Transfer Facility (as described in the Offer to Purchase), all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. Holders of Shares whose certificates for such Shares (the "Share Certificates") are not immediately available, who cannot complete the procedures for book-entry transfer on a timely basis, or who cannot deliver all other required documents to the Depositary prior to the Expiration Date (as defined in the Offer to Purchase) must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. The Purchaser will not pay any fees or commissions to any broker or dealer or other person (other than the Depositary, the Information Agent, and the Dealer Manager as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse you for customary mailing and handling costs incurred by you in forwarding the enclosed materials to your clients. The Purchaser will pay or cause to be paid all stock transfer taxes applicable to its purchase of Shares pursuant to the Offer, except as otherwise provided in Instruction 6 of the Letter of Transmittal. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JULY 31, 2001, UNLESS THE OFFER IS EXTENDED. Any inquiries you may have with respect to the Offer should be addressed to, and additional copies of the enclosed materials may be obtained from, the Information Agent or the undersigned at the addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Very truly yours, J.P. Morgan Securities Inc. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF PARENT, THE PURCHASER, THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT, THE DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. EX-99.A5 6 dex99a5.txt CLIENT LETTER Offer to Purchase for Cash All Outstanding Shares of Common Stock (Including the Associated Rights to Purchase Preferred Stock) of The Earthgrains Company by SLC Acquisition Corp. a wholly owned subsidiary of Sara Lee Corporation THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JULY 31, 2001, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration is the Offer to Purchase dated July 3, 2001 (the "Offer to Purchase") and a related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") in connection with the offer by SLC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Sara Lee Corporation, a Maryland corporation ("Sara Lee"), to purchase all outstanding shares of common stock, par value $0.01 per share, of The Earthgrains Company, a Delaware corporation (the "Company"), including the associated rights to purchase preferred stock (collectively, the "Shares"), at a purchase price of $40.25 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the Letter of Transmittal enclosed herewith. We or our nominees are the holder of record of Shares for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The enclosed Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account. We request instructions as to whether you wish us to tender any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the Offer to Purchase. Your attention is invited to the following: 1. The offer price is $40.25 per Share, net to you in cash, without interest. 2. The Offer is being made for all outstanding Shares. 3. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of June 29, 2001 (the "Merger Agreement"), by and among Sara Lee, the Purchaser and the Company. The Merger Agreement provides, among other things, that the Purchaser will be merged with and into the Company (the "Merger") following the satisfaction or waiver of each of the conditions to the Merger set forth in the Merger Agreement. At the effective time of the Merger each Share (other than Shares owned by the Company or Sara Lee or any of their respective subsidiaries, and other Shares that are held by stockholders, if any, who properly exercise dissenters rights under Delaware Law) will be converted into the same price per share, in cash, without interest, as paid pursuant to the Offer. 4. The Board of Directors of the Company unanimously (i) determined that the terms of the Offer and the Merger are fair to and in the best interests of the stockholders of the Company, (ii) approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, and (iii) recommends that the Company's stockholders accept the Offer and tender their Shares pursuant to the Offer and approve and adopt the Merger Agreement. 5. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Tuesday, July 31, 2001 (the "Expiration Date"), unless the Offer is extended. 6. Any stock transfer taxes applicable to the sale of Shares to the Purchaser pursuant to the Offer will be paid by the Purchaser, except as otherwise provided in the Letter of Transmittal. The Offer is conditioned upon, among other things, (1) there being validly tendered and not withdrawn prior to the Expiration Date a number of Shares that represents at least a majority of the issued and outstanding Shares on a fully diluted basis, and (2) the waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the European Community Merger Regulation, as amended, and any other comparable provisions under any pre- merger notification laws or regulations of foreign jurisdictions shall have expired or been terminated. See Section 15 of the Offer to Purchase. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. The Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Purchaser shall make a good faith effort to comply with such state statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, the Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Shares in such state. In those jurisdictions where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Purchaser by J.P. Morgan Securities Inc. in its capacity as Dealer Manager for the Offer or one or more registered brokers or dealers licensed under the laws of such jurisdiction. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing and returning to us the instruction form contained in this letter. An envelope to return your instructions to us is also enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified in this letter. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the Expiration Date. Offer to Purchase for Cash All Outstanding Shares of Common Stock (Including the Associated Rights to Purchase Preferred Stock) of The Earthgrains Company by SLC Acquisition Corp. a wholly owned subsidiary of Sara Lee Corporation The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase dated July 3, 2001 and the related Letter of Transmittal in connection with the offer by SLC Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Sara Lee Corporation, a Maryland corporation, to purchase all outstanding shares of common stock, par value $0.01 per share, including the associated rights to purchase preferred stock (collectively, the "Shares"), of The Earthgrains Company, a Delaware corporation, at a purchase price of $40.25 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal. This will instruct you to tender to the Purchaser the number of Shares indicated below (or, if no number is indicated below, all Shares) that are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal. Account No.: _______________________ SIGN HERE Dated: _______________________, 2001 ____________________________________ ____________________________________ Number of Shares to be Signature(s) Tendered: ____________________________________ _________ shares of Common Stock* ____________________________________ ____________________________________ ____________________________________ Print Name(s) and Address(es) ____________________________________ ____________________________________ ____________________________________ Area Code and Telephone Number(s) ____________________________________ Taxpayer Identification or Social Security Number(s) - -------- *Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. EX-99.A6 7 dex99a6.txt GUIDELINES ON FORM W-9 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER (TIN) ON SUBSTITUTE FORM W-9 (Section references are to the Internal Revenue Code) Guidelines for Determining the Proper Identification Number to Give the Payer--A Social Security number ("SSN") has nine digits separated by two hyphens: i.e., 000-00-0000. An employer identification number ("EIN") has nine digits separated by one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payor. - -----------------------------------------
For this type of Give the SOCIAL account: SECURITY number of-- - ----------------------------------------- 1. Individual The individual 2. Two or more in- The actual owner of dividuals the account or, if (joint account) combined funds, the first individual on the account(1) 3. Custodian ac- The minor(2) count of a mi- nor (Uniform Gift to Minors Act) 4.a. The usual The grantor-trust- revocable ee(1) savings trust (grantor is also trustee) b. So-called trust The actual owner(1) account that is not a legal or valid trust under state law 5. Sole proprie- The owner(3) torship
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For this type of Give the EMPLOYER account: IDEN- TIFICATION number of-- - ------------------------------------------------------------------------------- 6. Sole proprie- The owner(3) torship 7. A valid trust, The legal entity(4) estate, or pen- sion trust 8. Corporate The corporation 9. Association, The organization club, religious, charitable, edu- cational or other tax-exempt organ- ization 10. Partnership The partnership 11. A broker or The broker or nominee registered nomi- nee 12. Account with The public entity the Department of Agriculture in the name of a public entity (such as a state or local govern- ment, school dis- trict, or prison) that receives ag- ricultural program payments - -----------------------------------------------------------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person's SSN must be furnished. (2) Circle the minor's name and furnish the minor's SSN. (3) Show your individual name. You may also enter your business name. You may use your SSN or EIN (if you have one). Using your EIN may, however, result in unnecessary notices to the requestor of the Form W-9 or substitute Form W-9. (4) List first and circle the name of the valid trust, estate, or pension trust. (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 1 Resident Aliens. If you are a resident alien and you do not have and are not eligible to get an SSN, your TIN is your IRS individual taxpayer identification number ("ITIN"). Enter it on the portion of the Form W-9 or substitute Form W-9 where the SSN would be entered. If you do not have an ITIN, see "Obtaining a Number" below. Name If you are an individual, you must generally provide the name shown on your social security card. However, if you have changed your last name, for in- stance, due to marriage, without informing the Social Security Administration of the name change, please enter your first name, the last name shown on your social security card, and your new last name. Obtaining a Number If you don't have a taxpayer identification number ("TIN"), apply for one im- mediately. To apply, obtain Form SS-5, Application for a Social Security Card, from your local office of the Social Security Administration, or Form SS-4, Application for Employer Identification Number, from the Internal Revenue Service (the "IRS") by calling 1-800-829-3676 or visiting the IRS's Internet web site at www.irs.gov. Resident aliens who are not eligible to get a Social Security number and need an ITIN should obtain Form W-7, Application for Indi- vidual Taxpayer Identification Number, from the IRS by calling 1-800-829-3676 or visiting the IRS's Internet web site at www.irs.gov. Payees and Payments Exempt from Backup Withholding Exempt payees described below should file Form W-9 or substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TIN, WRITE "EXEMPT" ON THE FACE OF THE FORM AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. The following is a list of payees exempt from backup withholding and for which no information reporting is required: (1) An organization exempt from tax under section 501(a), or an individual re- tirement plan ("IRA"), or a custodial account under section 403(b)(7). (2) The United States or any of its agencies or instrumentalities. (3) A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities. (4) A foreign government or any of its political subdivisions, agencies or in- strumentalities. (5) An international organization or any of its agencies or instrumentalities. Other payees that may be exempt from backup withholding include: (6) A corporation. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the U.S. or a possession of the U.S. (9) A futures commission merchant registered with the Commodity Futures Trad- ing Commission. (10) A real estate investment trust. (11) An entity registered at all times during the tax year under the Invest- ment Company Act of 1940. (12) A common trust fund operated by a bank under section 584(a). (13) A financial institution. (14) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secre- taries, Inc., Nominee List. (15) A trust exempt from tax under section 664 or described in section 4947. For interest and dividends, all listed payees are exempt except item (9). For broker transactions, payees listed in (1) through (13) and a person registered under the Investment Advisers Act of 1940 who regularly acts as a broker are exempt. Payments subject to reporting under sections 6041 and 6041A are gener- ally exempt from backup withholding only if made to payees described in items (1) through (7), except the following payments made to a corporation and re- portable on Form 1099-MISC are not exempt from withholding: . Medical and health care payments. . Attorneys' fees. . Payments for services paid by a federal executive agency. Payments of dividends generally not subject to backup withholding include the following: . Payments to nonresident aliens subject to withholding under section 1441. . Payments to partnerships not engaged in a trade or business in the U.S. and that have at least one nonresident partner. . Payments made by certain foreign organizations. Payments of interest generally not subject to backup withholding include the following: . Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payor's trade or business and you have not provided your correct TIN to the payor. . Payments of tax-exempt interest (including exempt-interest dividends under section 852). . Payments described in section 6049(b)(5) to nonresident aliens. . Payments on tax-free covenant bonds under section 1451. . Payments made by certain foreign organizations. . Mortgage interest paid by you. Payments that are not subject to information reporting are also not subject to backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A, and 6050N, and the regulations under those sections. Privacy Act Notice.--Section 6109 requires you to furnish your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, or contributions you made to an IRA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. You must provide your TIN whether or not you are qualified to file a tax return. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a TIN to a payor. Certain penalties may also apply. Penalties (1) Failure to Furnish TIN.--If you fail to furnish your correct TIN to a re- quester (the person asking you to furnish your TIN), you are subject to a pen- alty of $50 for each such failure unless your failure is due to reasonable cause and not to wilful neglect. (2) Civil Penalty for False Information With Respect to Withholding.--If you made a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. (3) Criminal Penalty for Falsifying Information.--Willfully falsifying certi- fications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS. 2 EX-99.A8 8 dex99a8.txt SUMMARY ADVERTISEMENT This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made only by the Offer to Purchase, dated July 3, 2001, and the related Letter of Transmittal and any amendments or supplements thereto, and is being made to all holders of Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In those jurisdictions where securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser (as defined below) by J.P. Morgan Securities Inc. (the "Dealer Manager"), or one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by the Purchaser. Notice of Offer to Purchase for Cash All of the Outstanding Shares of Common Stock (Including the Associated Rights to Purchase Preferred Stock) of The Earthgrains Company at $40.25 Net Per Share by SLC Acquisition Corp. a wholly owned subsidiary of Sara Lee Corporation SLC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Sara Lee Corporation, a Maryland corporation ("Parent"), is offering to purchase all of the outstanding shares of common stock, par value $0.01 per share, of The Earthgrains Company, a Delaware corporation (the "Company"), including the associated rights to purchase preferred stock (collectively, the "Shares"), at a price of $40.25 per Share, net to the seller in cash, on the terms and subject to the conditions set forth in the Offer to Purchase, dated July 3, 2001 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). Tendering stockholders who have Shares registered in their names and who tender directly to Mellon Investor Services LLC (the "Depositary") will not be charged brokerage fees or commissions or, except as set forth in the Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. Stockholders who hold their Shares through a broker or bank should consult such institution as to whether it charges any service fees. The Purchaser will pay all charges and expenses of the Depositary and Morrow & Co., which is acting as the information agent (the "Information Agent"), incurred in connection with the Offer. Following the consummation of the Offer, the Purchaser intends to effect the Merger described below. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JULY 31, 2001, UNLESS THE OFFER IS EXTENDED. The Offer is conditioned upon, among other things, (i) there being validly tendered and not withdrawn prior to the Expiration Date (as defined below) of the Offer a number of Shares that represents at least a majority of the issued and outstanding Shares at such time on a fully diluted basis and (ii) the waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the European Community Merger Regulation, as amended, and any other comparable provisions under any pre-merger notification laws or regulations of foreign jurisdictions having expired or been terminated. The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of June 29, 2001 (the "Merger Agreement"), by and among Parent, the Purchaser and the Company. The purpose of the Offer is for Parent, through the Purchaser, to acquire a majority voting interest in the Company as the first step in acquiring the entire equity interest in the Company. The Merger Agreement provides that, among other things, the Purchaser will make the Offer and, after the purchase of Shares pursuant to the Offer and the satisfaction or waiver of the other conditions set forth in the Merger Agreement and in accordance with relevant provisions of the Delaware General Corporation Law (the "DGCL"), the Purchaser will be merged with and into the Company, with the Company continuing as the surviving corporation (the "Merger"). At the effective time of the Merger (the "Effective Time"), each Share issued and outstanding immediately prior to the Effective Time (other than Shares owned by Parent or the Company or any of their respective subsidiaries, all of which will be cancelled, and other than Shares that are held by stockholders, if any, who properly exercise their dissenters' rights under the DGCL, if available) will be converted into the right to receive $40.25 in cash, or any higher price that is paid in the Offer, without interest thereon (the "Offer Price"). THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY (I) DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, (II) APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND (III) RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER AND APPROVE AND ADOPT THE MERGER AGREEMENT. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance of such Shares for payment pursuant to the Offer. In all cases, on the terms and subject to the conditions of the Offer, payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting such payment to tendering stockholders. Under no circumstances will interest on the purchase price of Shares be paid by the Purchaser because of any delay in making any payment. Payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after the timely receipt by the Depositary of (i) certificates for such Shares or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant to the procedures set forth in the Offer to Purchase, (ii) a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) with all required signature guarantees or, in the case of book-entry transfer, an Agent's Message (as defined in the Offer the Purchase), and (iii) any other documents required by the Letter of Transmittal. The Purchaser may, without the consent of the Company, (i) extend the Offer beyond the scheduled Expiration Date if any of the conditions to its obligation to accept for payment and to pay for the Shares shall not be satisfied or, to the extent permitted by the Merger Agreement, waived by 12:00 Midnight, New York City time, on Tuesday, July 31, 2001, or (ii) extend the Offer for any period required by any rule, regulation or interpretation of the Securities and Exchange Commission applicable to the Offer. If, at the Expiration Date, (1) any applicable waiting period under each of the Hart-Scott-Rodino Antitrust Improvements Act, the European Community Merger Regulation, and any other comparable provisions under any pre-merger notification laws or regulations of foreign jurisdictions has not expired or been terminated or (2) (A) there is any banking moratorium, limitation on the extension of credit or any change which materially and adversely affects the ability of financial institutions in the United States to extend credit or (B) subject to Parent's obligations under the Merger Agreement, there is any pending proceeding by a governmental entity against Parent, the Purchaser or the Company or any statute, law or regulation is enacted or promulgated, which has certain specified adverse effects on Parent, the Purchaser, the Company or their ability to consummate the transactions contemplated by the Merger Agreement, then, in each case, the Purchaser shall extend the Offer from time to time until March 31, 2002 (or June 30, 2002 if additional time is required in connection with obtaining the required antitrust approvals). The Purchaser may, but is not required to, subject to the terms of the Merger Agreement, provide a subsequent offering period in accordance with Rule 14d-11 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), following the Expiration Date. A subsequent offering period is an additional period of time from three to 20 business days in length, beginning after the Purchaser purchases Shares tendered in the Offer, during which time stockholders may tender, but not withdraw, their Shares and receive the Offer Price. Under the Exchange Act, no withdrawal rights apply to Shares tendered during a subsequent offering period, and no withdrawal rights apply during the subsequent offering period with respect to Shares tendered in the Offer and accepted for payment. The term "Expiration Date" means 12:00 Midnight, New York City time, on Tuesday, July 31, 2001, unless the Purchaser shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Any extension of the period during which the Offer is open will be followed, as promptly as practicable, by public announcement thereof, such announcement to be issued not later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of a tendering stockholder to withdraw such stockholder's Shares except during the subsequent offering period. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment pursuant to the Offer, also may be withdrawn at any time after August 31, 2001. Except as otherwise provided in Section 4 of the Offer to Purchase, tenders of Shares made pursuant to the Offer are irrevocable. For a withdrawal of Shares tendered pursuant to the Offer to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any notice of withdrawal must specify the name and taxpayer identification number of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such shares, if different from that of the person who tendered the Shares. If certificates for Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered for the account of an Eligible Institution (as defined in the Offer to Purchase), the signature on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer as set forth in the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, and its determination will be final and binding on all parties. The information required to be disclosed by Paragraph (d)(1) of Rule 14d-6 of the General Rules and Regulations under the Exchange Act is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided to the Purchaser its list of stockholders and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase, the related Letter of Transmittal and other related materials are being mailed to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance and copies of the Offer to Purchase, the Letter of Transmittal and all other tender offer materials may be directed to the Information Agent or the Dealer Manager at its address and telephone number set forth below and will be furnished promptly at the Purchaser's expense. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager and the Information Agent) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: MORROW & CO., INC. 445 Park Avenue, 5th Floor New York, New York 10022 Banks and Brokerage Firms Call: (212) 754-8000 E-Mail: earthgrains.info@morrowco.com Shareholders Please Call: (800) 607-0088 The Dealer Manager for the Offer is: JP Morgan LOGO J.P. Morgan Securities Inc. 60 Wall Street New York, New York 10260-0060 Call: (866) 262-0777 July 3, 2001 EX-99.B1 9 dex99b1.txt COMMITMENT LETTER J.P. MORGAN SECURITIES INC. THE CHASE MANHATTAN BANK 270 Park Avenue New York, New York 10017 June 29, 2001 Sara Lee Corporation Three First National Plaza Chicago, Illinois 60602-4260 Attention: Ms. Diana Ferguson Vice President and Treasurer Sara Lee Corporation -------------------- $3,000,000,000 of Senior Unsecured Revolving Credit Facilities --------------------------------------------------------------- Commitment Letter ----------------- Ladies and Gentlemen: Sara Lee Corporation (the "Borrower") has advised The Chase Manhattan Bank ("Chase") and J.P. Morgan Securities Inc. ("JPMorgan") that it intends to acquire all the outstanding common stock of The Earthgrains Company ("Earthgrains") by means of a cash tender offer (the "Offer") and a subsequent merger, for an aggregate purchase price of approximately $3,000,000,000 (including the assumption of certain indebtedness of Earthgrains), pursuant to an acquisition agreement to be entered into between the Borrower or a subsidiary thereof and Earthgrains prior to the commencement of the Offer (the "Acquisition Agreement"). Such acquisition and all related transactions are referred to herein as the "Acquisition". In connection with the foregoing, you have advised Chase and JPMorgan that you wish to establish senior unsecured revolving credit facilities in an aggregate principal amount of $3,000,000,000 (the "Facilities"), consisting of the "364-Day Facility" and the "Bridge Facility" referred to in the Term Sheet, to finance the Acquisition (or provide liquidity in connection with an issuance and sale of commercial paper to finance the Acquisition), to refinance certain indebtedness of the Borrower and Earthgrains, to pay related fees and expenses and for general corporate purposes. It is contemplated that the terms of the Facilities will be substantially as set forth in the Summaries of Terms and Conditions (the "Term Sheets") attached as Exhibits A and B hereto. Chase is pleased to advise you of its commitment to provide the entire amount of the Facilities, subject to the conditions set forth or referred to herein and in the Term Sheets. You hereby engage JPMorgan, and JPMorgan hereby confirms its willingness, (a) to act as joint lead arranger and joint bookrunner for the 364-Day Facility and (b) to act as sole lead arranger and sole bookrunner for the Bridge Facility, in each case upon the terms and subject to the conditions set forth or referred to in this Commitment Letter and in the Term Sheets. You hereby engage Chase, and Chase hereby confirms its willingness, to act as sole administrative agent for the Facilities upon the terms and subject to the conditions set forth or referred to in this Commitment Letter and in the Term Sheets. It is contemplated that one other financial institution mutually acceptable to the Borrower and JPMorgan will be awarded the titles of joint lead arranger and joint bookrunner for the 364-Day Facility, and that one or more other financial institutions mutually acceptable to the Borrower and JPMorgan will be awarded other agency titles for the Facilities, but that none of the financial institutions referred to in this sentence will have any role or responsibilities in connection with the arrangement, syndication or documentation of the Facilities. It is agreed that Chase and JPMorgan, in consultation with you, will perform all functions and exercise all authority customarily performed and exercised by them in such roles. Chase reserves the right, prior to or after the execution of definitive documentation for the Facilities, to syndicate all or a portion of each of its commitment hereunder to one or more financial institutions selected as provided below that will become parties to such definitive documentation pursuant to a syndication to be managed by JPMorgan (the financial institutions that will become parties to such definitive documentation being collectively called the "Lenders"); provided, that Chase and JPMorgan shall in no event commence syndication efforts or disclose the Acquisition to any prospective Lender prior to the public announcement of the Acquisition by you. Upon the acceptance of commitments from other Lenders, Chase will be released from corresponding amounts of its commitment hereunder. You understand that JPMorgan intends to commence syndication efforts promptly upon the execution of this Commitment Letter, and you agree actively to assist JPMorgan in completing a syndication satisfactory to it. Such assistance shall include (a) your using commercially reasonable efforts to ensure that the syndication efforts benefit materially from your existing lending relationships, (b) direct contact between senior management and advisors of the Borrower, Earthgrains and the proposed Lenders, (c) assistance in the preparation of a Confidential Information Memorandum and other marketing materials to be used in connection with the syndication and (d) the hosting, with JPMorgan, of one or more meetings of prospective Lenders, if appropriate. JPMorgan, in consultation with the Borrower, and subject to the next sentence, will manage all aspects of the syndication, including decisions as to the selection of institutions to be approached and when they will be approached, when their commitments will be accepted, which institutions will participate, the allocations of the commitments among the Lenders and the amount and distribution of fees among the Lenders. JPMorgan will syndicate the Facilities initially only to financial institutions that are parties to the Borrower's existing credit agreements. To the extent JPMorgan believes it necessary to syndicate to other financial institutions in order to ensure a successful syndication, JPMorgan will approach only such financial institutions as shall have been approved by the Borrower (such approval not to be unreasonably withheld). To assist JPMorgan in its syndication efforts, you agree promptly to provide such financial and other information with respect to the Borrower and its subsidiaries, Earthgrains and its subsidiaries, the Acquisition and the other transactions contemplated hereby, as JPMorgan shall reasonably request, it being understood that JPMorgan will endeavor, in determining the information to be disclosed to prospective Lenders, to take into account any concerns you may express as to the disclosure of confidential information to the extent consistent, in its judgment, with its legal responsibilities and the achievement of a successful syndication. You hereby represent and covenant that (a) all information and data concerning the Borrower, Earthgrains, their respective subsidiaries, the Acquisition and the other transactions contemplated hereby (the "Information"), other than any financial projections or other forward looking information ("Projections"), that have been made or will be made available to Chase or JPMorgan by you or any of your representatives in connection with the transactions contemplated hereby will, when furnished, and taken as a whole, be true and correct in all material respects and will not, when furnished, and taken as a whole, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made and (b) any Projections that have been or will be made available to Chase or JPMorgan by you or any of your representatives in connection with the transactions contemplated hereby have been or will be prepared in good faith based upon assumptions believed by you to be reasonable in all material respects. In the event any event or circumstance shall come to your attention that shall result in the Information or the projections being incorrect or misleading in any material respect, you agree promptly to disclose such event or circumstance to Chase and JPMorgan. In arranging the Facilities, including the syndication of the Facilities, Chase and JPMorgan will be using and relying primarily on the Information and any Projections without independent verification thereof. As consideration for Chase's commitment hereunder and JPMorgan's agreement to structure, arrange and syndicate the Facilities and to provide advisory services in connection therewith, you agree to pay to Chase the nonrefundable fees set forth in the Term Sheets and in the Fee Letter dated the date hereof and delivered herewith (the "Fee Letter"). Chase's commitment hereunder is subject to the agreements set forth in this paragraph. Chase's commitment hereunder is subject to (a) its reasonable satisfaction with the terms of and the documentation providing for the Acquisition, (b) there not having occurred or come to the attention of Chase since March 31, 2001, in the case of the Borrower, or January 2, 2001, in the case of Earthgrains, any material adverse change in the business, assets or condition of the Borrower and its subsidiaries taken as a whole or Earthgrains and its subsidiaries taken as a whole; (c) the negotiation, execution and delivery of definitive credit documentation for the Facilities mutually satisfactory to the Borrower and Chase and substantively the same as the Existing Credit Agreement (as defined therein) as contemplated by the Term Sheet; (d) there not having occurred and being continuing a material adverse change in financial, banking or capital market conditions generally since the date hereof that, in JPMorgan's good faith judgment, would be likely to have a material adverse effect on the syndication of the Facilities; (e) JPMorgan's satisfaction that, prior to the earlier of (i) the closing of the Facilities and (ii) the 60th day after the Acquisition shall have been publicly announced by you, there shall be no competing offering, placement or arrangement of any commercial bank or other credit facilities of the Borrower or its subsidiaries or Earthgrains or its subsidiaries and (f) the other conditions specifically referred to in the Term Sheets. You agree (a) to indemnify and hold harmless each of Chase, JPMorgan, their affiliates and the respective officers, directors, employees, advisors and agents of the foregoing persons (each, an "indemnified person") from and against any and all losses, claims, damages and liabilities to which any such indemnified person may become subject arising out of or in connection with this Commitment Letter, the Facilities, the use of the proceeds thereof, the Acquisition or any related transaction or any claim, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any indemnified person is a party thereto, and to reimburse each indemnified person upon demand for any reasonable legal or other expenses incurred in connection with investigating or defending any of the foregoing, provided that the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities or related expenses to the extent they have resulted from the willful misconduct or gross negligence of such indemnified person, from the breach by such indemnified person of its contractual obligations to you or from negotiated settlements of pending or threatened legal actions entered into by such indemnified person without your consent (unless such consent shall have been unreasonably withheld), and (b) to reimburse Chase, JPMorgan and each of their affiliates on demand for all reasonable out-of-pocket expenses (including due diligence expenses, syndication expenses, travel expenses and reasonable fees, charges and disbursements of counsel) incurred in connection with the syndication and preparation and negotiation of the documentation for the Facilities (including, without limitation, this Commitment Letter, the Term Sheets, the Fee Letter and the definitive financing documentation) or the administration thereof. No indemnified person shall be liable for any damages arising from the use of Information or other materials obtained through electronic, telecommunications or other information transmission systems by persons not authorized to receive such Information or other materials (except to the extent resulting from the willful misconduct or gross negligence of such indemnified person or its officers, directors, employees, advisors and agents or from the breach by such indemnified person of its contractual obligations to you) or for any special, indirect, consequential or punitive damages in connection with the Facilities. This Commitment Letter is delivered to you on the understanding that none of this Commitment Letter, the Term Sheets, the Fee Letter or any of their terms or substance shall be disclosed, directly or indirectly, to any other person, except that (a) you may disclose the foregoing (i) to your directors, officers, employees and agents who are directly involved in the consideration of this matter and who have been advised of the disclosure limitations set forth above and (ii) as may be compelled in a judicial or administrative proceeding or otherwise required by law (in which case you agree to inform us as promptly as practicable thereof in advance), and (b) after your execution and delivery of this Commitment Letter and the Fee Letter, you may disclose the this Commitment Letter and the Term Sheets and their terms and substance (but not the Fee Letter or the contents thereof) to Earthgrains, to rating agencies and in filings with the Securities and Exchange Commission and other regulatory authorities. Neither this Commitment Letter nor Chase's commitment hereunder shall be assignable by any party hereto without the prior written consent of the other parties (except that Chase may assign portions of its commitment pursuant to the syndication contemplated hereby or as provided in the Term Sheets), and any attempted assignment contrary to this sentence shall be void. Any and all obligations of, and services to be provided by, Chase or JPMorgan hereunder may be performed, and any and all rights of Chase or JPMorgan hereunder may be exercised, by or through their respective affiliates; provided that Chase or JPMorgan, as the case may be, shall remain liable for the performance of their respective affiliates. This Commitment Letter may not be amended or any provision hereof waived or modified except by an instrument in writing signed by Chase, JPMorgan and you. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this Commitment Letter by facsimile transmission shall be effective as delivery of a manually executed counterpart of this Commitment Letter. This Commitment Letter is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto and indemnified persons. This Commitment Letter shall be governed by, and construed in accordance with, the laws of the State of New York. You acknowledge that Chase, JPMorgan and their affiliates may be providing financing or other services to other companies that have or may in the future have interests conflicting with your own interests in the transactions contemplated hereby. Chase and JPMorgan agree on behalf of themselves and each of their affiliates that they will not use information obtained from you or from persons acting on your behalf in connection with the transactions contemplated hereby in connection with the performance by Chase or JPMorgan of services for such other companies and will not disclose or furnish any such information to such other companies or to persons or entities acting on their behalf. You acknowledge that Chase and JPMorgan have no obligation to use in connection with the transactions contemplated hereby or to furnish to you confidential information obtained by them from other companies. If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms hereof and of the Fee Letter by signing in the appropriate space below and in the Fee Letter and returning to Chase the enclosed duplicate originals of this Commitment Letter and the Fee Letter not later than 5:00 p.m., New York City time, on June 29, 2001, failing which Chase's commitment and Chase's and JPMorgan's agreements hereunder will expire at such time. In the event that the execution and delivery of definitive documentation for the Facilities shall not occur on or before December 31, 2001, then this Commitment Letter, Chase's commitment hereunder and Chase's and JPMorgan's undertakings and rights contained herein shall (except as provided in the next sentence) automatically terminate unless Chase and JPMorgan shall agree to an extension. The compensation, reimbursement, indemnification and confidentiality provisions set forth above shall remain in full force and effect regardless of any termination of this Commitment Letter or the commitment and agreements of Chase and JPMorgan hereunder, but, except in the case of the compensation provisions set forth in the Fee Letter, shall upon the execution and delivery of the definitive documentation for the Facilities, be be superceded and replaced by the corresponding provisions in such definitive documentation. Chase and JPMorgan are pleased to have the opportunity to assist you in connection with this important financing. Very truly yours, THE CHASE MANHATTAN BANK by /s/ Thomas H. Kozlark ----------------------------------- Name: Thomas H. Kozlark Title: Vice President J.P. MORGAN SECURITIES INC. by /s/ Thomas H. Kozlark ----------------------------------- Name: Thomas H. Kozlark Title: Vice President Accepted and agreed to as of the date first written above: SARA LEE CORPORATION by /s/ Diana S. Ferguson -------------------------------- Name: Diana S. Ferguson Title: Vice President, Treasurer CONFIDENTIAL EXHIBIT A June 29, 2001 Sara Lee Corporation -------------------- $1,500,000,000 Senior Unsecured 364-Day Revolving Credit Facility ----------------------------------------------------------------- Summary of Principal Terms and Conditions ----------------------------------------- Borrower: Sara Lee Corporation (the "Borrower"). - --------- Lead Arrangers J.P. Morgan Securities Inc. - -------------- ("JPMorgan") and another financial and Bookrunners: institution to be determined by the - ---------------- Borrower and JPMorgan will serve as joint lead arrangers and joint bookrunners for the Facility referred to below. Administrative Agent: The Chase Manhattan Bank (in such - --------------------- capacity, the "Agent"). Other Agent Titles: To be determined. - ------------------- Lenders: A syndicate of financial institutions - -------- arranged by JPMorgan in consultation with the Borrower (the "Lenders"). Acquisition: The Borrower intends to acquire all - ------------ the outstanding common stock of The Earthgrains Company ("Earthgrains") by means of a cash tender offer (the "Offer") and a subsequent merger, for an aggregate purchase price of approximately $3,000,000,000 (including the assumption of certain indebtedness of Earthgrains), pursuant to an acquisition agreement to be entered into between the Borrower and Earthgrains prior to the commencement of the Offer (the "Acquisition Agreement"). Such acquisition and all related transactions are referred to herein as the "Acquisition". In connection with the foregoing, the Borrower intends to establish the Facility and the Bridge Facility referred to in Exhibit B to the Commitment Letter to which this Term Sheet is attached (the "Bridge Facility") to finance the Acquisition (or provide liquidity in connection with an issuance and sale of commercial paper to finance the Acquisition) and to pay related fees and expenses. Facility: A 364-Day Competitive Advance and - --------- Revolving Credit Facility in an aggregate principal amount of $1,500,000,000 (the "Facility"). Purpose: The Facility will be used to finance - -------- the Acquisition (or provide liquidity in connection with an issuance and sale of commercial paper to finance the Acquisition), to refinance certain indebtedness of the Borrower and Earthgrains, to pay related fees and expenses and for general corporate purposes. Borrowing Options: Two borrowing options will be - ------------------ available under the Facility: (i) a competitive advance option (the "CAF") and (ii) a revolving credit option under which borrowings may be made at interest rates based on LIBOR or Chase's alternate base rate (the "Revolving Credit"). The CAF will be provided on an uncommitted competitive advance basis through an auction mechanism. The Revolving Credit will be provided on a committed basis. Under each option amounts borrowed and repaid may be reborrowed subject to availability under the Facility. Availability: Under the CAF, up to the full aggregate - ------------- amount of the remaining commitments (less any amounts outstanding under the Revolving Credit) may be borrowed, repaid and reborrowed during the life of the Facility at the discretion of the Lenders, who may elect to bid in accordance with Chase's standard CAF auction procedures. Under the Revolving Credit, up to the full aggregate amount of the remaining commitments (less any amount outstanding under the CAF) may be borrowed, repaid and reborrowed during the life of the Facility. Final Maturity: The Lenders' commitments under the - --------------- Facility will expire on the date that is 364 days after the date of execution of definitive credit documentation for the Facility (the "Closing Date"). At the Borrowers' request, if no default shall have occurred and be continuing, borrowings outstanding under the Facility at the commitment termination date will mature on the first anniversary of such date. Interest Rates and Fees: As set forth on Annex I hereto. - ------------------------ Interest Periods: CAF--as per market availability: - ----------------- --- LIBOR Auction Advances: 1, 2, 3, or 6 months or other periods as agreed by the advancing Lenders Fixed Rate Auction Advances: 7-360 days or other periods as agreed by the advancing Lenders Revolving Credit--at the Borrower's option: LIBOR Loans: 1, 2, 3, or 6 months Interest on LIBOR loans and advances and Fixed Rate advances will be payable on the last day of each Interest Period (and at the end of each three months, in the case of Interest Periods of longer than three months), and upon prepayment or, with respect to interest on CAF loans and advances only, as otherwise agreed by the advancing CAF Lenders. In respect of LIBOR loans and advances and Fixed Rate advances, interest will be payable in arrears on the basis of a 360-day year (calculated on the basis of actual number of days elapsed). Interest on ABR loans will be payable quar terly in arrears on the basis of a 365-day year for ABR loans when based on Chase's Prime Rate and otherwise on a 360-day year (in each case calculated on the basis of the actual number of days elapsed). Optional Commitment Reductions Upon at least one business day's - ------------------------------ prior irrevocable written notice to and Prepayments: the Agent, the Borrower may at any - ---------------- time in whole permanently terminate, or from time to time permanently reduce, the commitments under the Facility; provided that (i) any outstanding loans that would exceed the reduced commitments must be prepaid together with any related breakage costs and (ii) no such termination or reduction shall be made that would reduce the aggregate available commitments of all Lenders to an amount less than the aggregate CAF advances then outstanding . Voluntary prepayments of Revolving Credit loans will be permitted in whole or in part at any time subject to a minimum aggregate amount to be determined. CAF advances will not be prepayable without the consent of the advancing Lenders. Prepayments during LIBOR Interest Periods will be subject to the payment of breakage costs. ABR Loans may be prepaid at any time without penalty. Documentation: A credit agreement containing the - -------------- provisions described herein and other customary provisions and satisfactory to the Borrower and the Lenders. The representations and warranties, covenants and events of default set forth in the credit agreement will, except to the extent provided in this Term Sheet or required to correct outdated references or to reflect the use of the proceeds of the Facilities, be substantively the same as those in the Third Amended and Restated Sara Lee Corporation Five Year Credit Agreement dated as of October 13, 2000 (the "Existing Credit Agreement"). Representations and Warranties: Substantively the same as in the - ------------------------------- Existing Credit Agreement, including organization, corporate power and authority, absence of conflicts, enforceability, financial statements, absence of material adverse change since date of last audited financial statements, litigation and contingent liabilities, liens, subsidiaries, ERISA matters, inapplicability of Investment Company Act of 1940 and Public Utility Holding Company Act of 1935, Federal Reserve margin regulations, copyrights, patents and trademarks, and pari passu character of obligations; and accuracy of disclosure in all material respects. Conditions Precedent to The availability of the Facility will - ----------------------- be subject to closing conditions Effectiveness of Facility: substantively the same as those set - -------------------------- forth in the Existing Credit Agreement, including execution and delivery of satisfactory definitive financing documentation with respect to the Facility, accuracy of representations and warranties in all material respects, absence of defaults, delivery of evidence of authority, officers' certificates and legal opinions, and payment of fees due to Lenders and reasonable expenses; as well as to the conditions set forth below: The Borrower shall have delivered the latest available audited financial statements for each of the Borrower and Earthgrains (in each case as filed with its most recent Form 10-K Report or equivalent report to Canadian securities regulatory authorities) and such pro forma financial information as shall have been reasonably requested by the Agent. The Offer shall have been completed in accordance with applicable law and the terms of the Acquisition Agreement (in the form heretofore delivered to the Agent), without any modification or waiver of the terms thereof that could materially and adversely affect the rights or interests of the Lenders, and the Borrower shall have acquired a sufficient percentage of the outstanding common shares of Earthgrains to permit the Borrower to acquire the remaining shares through a subsequent merger. After giving effect to the completion of the Offer and the other transactions contemplated in connection with the Acquisition, the assets and liabilities of the Borrower and Earthgrains shall be consistent in all material respects with the pro forma financial information heretofore delivered to the Agent. The Borrower's existing 364-day credit facility will have been terminated and all amounts outstanding thereunder repaid. All requisite governmental authorities and third parties shall have approved or consented to the Acquisition to the extent such approvals or consents are required under applicable laws or agreements or otherwise, all applicable appeal periods shall have expired and there shall be no governmental or judicial action, actual or threatened, that could reasonably be expected to restrain, prevent or impose materially burdensome conditions on the Acquisition or the other transactions contemplated hereby. Any amendment, waiver or other modification required in connection with the Acquisition, the Facility or the transactions contemplated hereby of any agreement governing indebtedness of the Borrower or Earthgrains that will remain outstanding after the Acquisition shall have become effective and shall be reasonably satisfactory in all material respects to the Agent. The definitive credit documentation for the Bridge Facility shall have been executed and delivered and shall have become effective. Conditions to Each Borrowing: Accuracy in all material respects of - ----------------------------- all representations and warranties and the absence of any default or event of default at the time of, or after giving effect to, such borrowing (with exceptions comparable to those in the Existing Credit Agreement). Covenants: Substantively the same as those in - ---------- the Existing Credit Agreement, including delivery of financial statements and other information, maintenance of books and records and inspections, insurance, payment of taxes and other obligations, limitation on liens, guarantees, mergers, consolidations and sales of assets, employee benefit plans, use of proceeds, and other agreements. Financial Covenant: An interest coverage requirement - ------------------- substantively the same as that in the Existing Credit Agreement. Events of Default: Substantively the same as those in - ------------------ the Existing Credit Agreement: 1. nonpayment of principal, interest, fees or other amounts 2. material inaccuracy of representations and warranties 3. violation of covenants 4. cross default 5. bankruptcy events 6. certain ERISA events 7. judgments 8. change of control Voting Rights: Amendments and waivers of the credit - -------------- agreements will require the approval of Lenders holding not less than a majority of the aggregate amount of the loans and unused commitments; provided that the consent of all affected Lenders will be required with respect to (i) reductions in the unpaid principal amount or extensions of the scheduled date for the payment of principal of any Loan, (ii) reductions in interest rates or fees or extensions of the dates for payment thereof, and (iii) increases in the amounts or extensions of the expiry date of the Lenders' commitments, and the consent of 100% of the Lenders will be required with respect to (i) modifications of the pro rata provisions of the credit agreements and (ii) modifications to any of the voting percentages. Cost and Yield Protection: Substantively the same as the - -------------------------- provisions in the Existing Credit Agreement, including but not limited to (a) protection against increased costs or loss of yield resulting from changes in reserve, tax, capital adequacy and other requirements of law and from the imposition of or changes in withholding or other taxes, subject to customary lender mitigation provisions and limitations on the period within which claims must be made, and (b) indemnification for "breakage costs" incurred in connection with the prepayment of any Eurodollar Loan on a day other than the last day of an interest period with respect thereto. Assignments and Participations: Lenders will be permitted to assign - ------------------------------- and sell participations in loans and commitments. Assignments will be by novation and, except in the case of assignments to another Lender or an affiliate of a Lender, will be subject to the prior consent of the Borrower (other than in the case of a bankruptcy default affecting the Borrower) and the Agent (in each case not to be unreasonably withheld). In the case of partial assignments (other than to another Lender or to an affiliate of a Lender), the minimum assignment amount will be $10,000,000 unless otherwise agreed by the Borrower and the Agent. Each assignment will be subject to the payment of a service fee of $4,000 to the Agent by the parties to such assignment. Participations will be without restriction and participants will have the same benefits as syndicate Lenders with regard to yield protection and increased costs (but will not be permitted to receive amounts greater than the transferring Lender). Voting rights of participants will be limited to matters referred to in the proviso under "Voting Rights" above. Confidentiality provisions will be substantively the same as those in the Existing Credit Agreement. Expenses and Indemnification: The Borrower will pay (a) all - ----------------------------- reasonable out-of-pocket expenses of JPMorgan, Chase and the Co-Arranger (and the Lenders for documentary taxes) associated with the arrangement, syndication and administration of the Facility and the preparation, execution, and delivery of the credit documentation and any amendment or waiver with respect thereto (including the reasonable fees, charges and disbursements of counsel), and (b) all reasonable out-of-pocket expenses of the Agent and the Lenders (including the reasonable fees, charges and disbursements of counsel) in connection with the enforcement of the credit documentation. JPMorgan, Chase, the Co-Arranger, the Lenders and their affiliates (and their respective officers, directors, employees, advisors and agents) will have no liability for, and will be indemnified by the Borrower and held harmless against, any loss, liability, cost or expense incurred in respect of the financing contemplated hereby or the use or the proposed use of proceeds thereof (except to the extent resulting from the gross negligence or wilful misconduct of the indemnified party or from the indemnified party's breach of its obligations under the definitive credit documentation). Governing Law and Forum: New York. - ------------------------ Counsel for Chase and JPMorgan: Cravath, Swaine & Moore. - ------------------------------- ANNEX I Facility Fees: Facility Fees will accrue and be payable - -------------- to the Lenders on the aggregate amount of the Facility (whether drawn or undrawn), commencing on the Closing Date and payable in arrears at the end of each calendar quarter and upon the termination in full of the commitments and the repayment of the loans outstanding under the Facility. The Facility Fees will accrue through the maturity and repayment of the Facility at a rate to be determined prior to the Closing Date on the basis of the ratings of Moody's Investors Service, Inc. and Standard and Poor's Ratings Services initially applicable to the Borrower's senior, unsecured, non-credit enhanced long-term debt (the "Index Debt") after giving effect to the Acquisition (the "Ratings"), all as set forth in the table appearing at the end of this Annex I. Utilization Fee: A Utilization Fee will accrue and - ---------------- be payable to the Lenders under the Facility on the amount of the outstanding loans thereunder for each day on which such loans exceed 50% of the aggregate commitments under the Facility (including each day following the termination of the commitments). Utilization Fees will be payable in arrears at the end of each calendar quarter and upon termination of the commitments under the Facility. The rates at which the Utilization Fee accrues will depend upon the Ratings as set forth in the table appearing at the end of this Annex I. Interest Rates: Interest will be payable on the loans at - --------------- the following rates per annum: CAF --- The rates obtained from bids selected by the Borrower in accordance with Chase's standard competitive auction procedures. Revolving Credit ---------------- (a) In the case of Eurodollar loans, LIBOR plus a spread to be determined prior to the Closing Date on the basis of the Ratings, as set forth in the table appearing at the end of this Annex I. (b) In the case of ABR loans, the Alternate Base Rate. As used herein: "Alternate Base Rate" means the higher of (i) Chase's Prime Rate, and (ii) the Federal Funds Effective Rate plus 1/2 of 1% per annum. "LIBOR" means the London Interbank Offered Rate (adjusted for statutory reserve requirements) for eurodollar deposits of one, two, three or six months (as selected by the Borrower). FEE AND SPREAD TABLE --------------------
- --------------------------------------------------------------------------------------- First Total Drawn Drawn Cost if Cost (less than if (greater LIBOR or equal) than) Facility Spread 50% 50% Fee (bps Drawn Drawn Ratings (bps per per (bps per Utilization (bps per (S&P/Moody's)/1/ annum) annum) annum) Fee annum)/2/ - --------------------------------------------------------------------------------------- Category 1 A/A2 or higher 6.0 19.0 25.0 10.0 35.0 - --------------------------------------------------------------------------------------- Category 2 A-/A3 7.0 28.0 35.0 10.0 45.0 - --------------------------------------------------------------------------------------- Category 3 BBB+/Baa1 10.0 35.0 45.0 10.0 55.0 - --------------------------------------------------------------------------------------- Category 4 lower than 12.5 50.0 62.5 10.0 72.5 BBB+/Baa1 or unrated - ---------------------------------------------------------------------------------------
- -------------------- /1/In the event of split Ratings, the Facility Fees and Spreads will be based upon the higher rating unless the Ratings differ by more than one Category, in which event the Facility Fees and Spreads will be based upon the Category next above that corresponding to the lower Rating. /2/If the Borrower's term-out option is exercised, the drawn pricing will be increased by 10.0 basis points per annum. CONFIDENTIAL EXHIBIT B June 29, 2001 Sara Lee Corporation -------------------- $1,500,000,000 Senior Unsecured Bridge Revolving Credit Facility ---------------------------------------------------------------- Summary of Principal Terms and Conditions ----------------------------------------- Borrower: Sara Lee Corporation. - --------- Lead Arranger J.P. Morgan Securities Inc. - ------------- ("JPMorgan") will serve as sole lead and Bookrunner: arranger and sole bookrunner for the - --------------- Facility referred to below. Administrative Agent: The Chase Manhattan Bank (in such - --------------------- capacity, the "Agent"). Other Agent Titles: To be determined. - ------------------- Lenders: A syndicate of financial institutions - -------- arranged by JPMorgan in consultation with the Borrower (the "Lenders"). Acquisition: The Borrower intends to acquire all - ------------ the outstanding common stock of The Earthgrains Company ("Earthgrains") by means of a cash tender offer (the "Offer") and a subsequent merger, for an aggregate purchase price of approximately $3,000,000,000 (including the assumption of certain indebtedness of Earthgrains), pursuant to an acquisition agreement to be entered into between the Borrower and Earthgrains prior to the commencement of the Offer (the "Acquisition Agreement"). Such acquisition and all related transactions are referred to herein as the "Acquisition". In connection with the foregoing, the Borrower intends to establish the Facility and the 364-Day Facility referred to in Exhibit A to the Commitment Letter to which this Term Sheet is attached (the "364-Day Facility") to finance the Acquisition (or provide liquidity in connection with an issuance and sale of commercial paper to finance the Acquisition) and to pay related fees and expenses. Facility: A 364-Day Bridge Credit Facility in an - --------- aggregate principal amount of $1,500,000,000 (the "Bridge Facility"). Purpose: The Facility will be used to finance the - -------- Acquisition (or provide liquidity in connection with an issuance and sale of commercial paper to finance the Acquisition), to refinance certain indebtedness of the Borrower and Earthgrains, to pay related fees and expenses and for general corporate purposes. Borrowing Options: Two borrowing options will be available - ------------------ under the Facility: (i) a competitive advance option (the "CAF") and (ii) a revolving credit option under which borrowings may be made at interest rates based on LIBOR or Chase's alternate base rate (the "Revolving Availability: Credit"). The CAF will be provided on an - ------------- uncommitted competitive advance basis through an auction mechanism. The Revolving Credit will be provided on a committed basis. Under each option amounts borrowed and repaid may be reborrowed subject to availability under the Facility. Under the CAF, up to the full aggregate amount of the remaining commitments (less any amounts outstanding under the Revolving Credit) may be borrowed, repaid and reborrowed during the life of the Facility at the discretion of the Lenders, who may elect to bid in accordance with Chase's standard CAF auction procedures. Under the Revolving Credit, up to the full aggregate amount of the remaining commitments (less any amount outstanding under the CAF) may be borrowed, repaid and reborrowed during the life of the Facility. Final Maturity: The Lenders' commitments under the - --------------- Facility will expire and the borrowings thereunder will mature on the date that is 364 days after the date of execution of definitive credit documentation for the Facility (the "Closing Date"). Interest Rates and Fees: As set forth on Annex I hereto. - ------------------------ Interest Periods: CAF--as per market availability: - ----------------- --- LIBOR Auction Advances: 1, 2, 3, or 6 months or other periods as agreed by the advancing Lenders Fixed Rate Auction Advances: 7-360 days or other periods as agreed by the advancing Lenders Revolving Credit--at the Borrower's ---------------- option: LIBOR Loans: 1, 2, 3, or 6 months Interest on LIBOR loans and advances and Fixed Rate advances will be payable on the last day of each Interest Period (and at the end of each three months, in the case of Interest Periods of longer than three months), and upon prepayment or, with respect to interest on CAF loans and advances only, as otherwise agreed by the advancing CAF Lenders. In respect of LIBOR loans and advances and Fixed Rate advances, interest will be payable in arrears on the basis of a 360-day year (calculated on the basis of actual number of days elapsed). Interest on ABR loans will be payable quar terly in arrears on the basis of a 365-day year for ABR loans when based on Chase's Prime Rate and otherwise on a 360-day year (in each case calculated on the basis of the actual number of days elapsed). Optional Commitment Reductions Upon at least one business day's - ------------------------------ Documentation: prior irrevocable written and Prepayments: notice to the Agent, the Borrower may at - ---------------- any time in whole permanently terminate, or from time to time permanently reduce, the commitments under the Facility; provided that (i) any outstanding loans that would exceed the reduced commitments must be prepaid together with any related breakage costs and (ii) no such termination or reduction shall be made that would reduce the aggregate available commitments of all Lenders to an amount less than the aggregate CAF advances then outstanding. Voluntary prepayments of Revolving Credit loans will be permitted in whole or in part at any time subject to a minimum aggregate amount to be determined. CAF advances will not be prepayable without the consent of the advancing Lenders. Prepayments during LIBOR Interest Periods will be subject to the payment of breakage costs. ABR Loans may be prepaid at any time without penalty. Manditory Prepayments: The Borrower will be required to prepay - ---------------------- Revolving Credit loans and reduce the commitments under the Facility with 100% of the net proceeds of issuances and sales of indebtedness or equity securities, subject to exceptions to be agreed upon. Documentation: A credit agreement containing the - -------------- provisions described herein and other customary provisions and satisfactory to the Borrower and the Lenders. The representations and warranties, covenants and events of default set forth in the credit agreement will, except to the extent provided in this Term Sheet or required to correct outdated references or to reflect the use of the proceeds of the Facilities, be substantively the same as those in the Third Amended and Restated Sara Lee Corporation Five Year Credit Agreement dated as of October 13, 2000 (the "Existing Credit Agreement"). Representations and Warranties: Substantively the same as in the - ------------------------------- Existing Credit Agreement, including organization and corporate power, authorization and absence of conflicts, validity and binding nature, financial statements and absence of material adverse change since date of last audited financial statements, litigation and contingent liabilities, liens, subsidiaries, ERISA, inapplicability of Investment Company Act of 1940 and Public Utility Holding Company Act of 1935, Federal Reserve margin regulations, copyrights, patents and trademarks, and pari passu character of obligations; and accuracy of disclosure in all material respects. Conditions Precedent to The availability of the Facility will - ----------------------- be subject to closing conditions Effectiveness of Facility: substantively the same as those set - -------------------------- forth in the Existing Credit Agreement, including execution and delivery of satisfactory definitive financing documentation with respect to the Facility, accuracy of representations and warranties in all material respects, absence of defaults, delivery of evidence of authority, officers' certificates and legal opinions, and payment of fees due to Lenders and reasonable expenses; as well as to the conditions set forth below: The Borrower shall have delivered the latest available audited financial statements for each of the Borrower and Earthgrains (in each case as filed with its most recent Form 10-K Report or equivalent report to Canadian securities regulatory authorities) and such pro forma financial information as shall have been reasonably requested by the Agent. The Offer shall have been completed in accordance with applicable law and the terms of the Acquisition Agreement (in the form heretofore delivered to the Agent), without any modification or waiver of the terms thereof that could materially and adversely affect the rights or interests of the Lenders, and the Borrower shall have acquired a sufficient percentage of the outstanding common shares of Earthgrains to permit the Borrower to acquire the remaining shares through a subsequent merger. After giving effect to the completion of the Offer and the other transactions contemplated in connection with the Acquisition, the assets and liabilities of the Borrower and Earthgrains shall be consistent in all material respects with the pro forma financial information heretofore delivered to the Agent. The Borrower's existing 364-day credit facility will have been terminated and all amounts outstanding thereunder repaid. All requisite governmental authorities and third parties shall have approved or consented to the Acquisition to the extent such approvals or consents are required under applicable laws or agreements or otherwise, all applicable appeal periods shall have expired and there shall be no governmental or judicial action, actual or threatened, that could reasonably be expected to restrain, prevent or impose materially burdensome conditions on the Acquisition or the other transactions contemplated hereby. Any amendment, waiver or other modification required in connection with the Acquisition, the Facility or the transactions contemplated hereby of any agreement governing indebtedness of the Borrower or Earthgrains that will remain outstanding after the Acquisition shall have become effective and shall be reasonably satisfactory in all material respects to the Agent. The definitive credit documentation for the Bridge Facility shall have been executed and delivered and shall have become effective. Conditions to Each Borrowing: Accuracy in all material respects of all - ----------------------------- representations and warranties and the absence of any default or event of default at the time of, or after giving effect to, such borrowing (with exceptions comparable to those in the Existing Credit Agreement). Covenants: Substantively the same as those in - ---------- the Existing Credit Agreement, including delivery of financial statements, certificates and other information, maintenance of books and records and inspections, insurance, taxes and liabilities, limitation on liens, guarantees, mergers, consolidations and sales of assets, employee benefit plans, use of proceeds, and other agreements. Financial Covenant: An interest coverage requirement - ------------------- substantively the same as that in the Existing Credit Agreement. Events of Default: Substantively the same as those in - ------------------- the Existing Credit Agreement: 1. nonpayment of principal, interest, fees or other amounts 2. material inaccuracy of representations and warranties 3. violation of covenants 4. cross default 5. bankruptcy events 6. certain ERISA events 7. judgments 8. change of control Voting Rights: Amendments and waivers of the credit - -------------- agreements will require the approval of Lenders holding not less than a majority of the aggregate amount of the loans and unused commitments; provided that the consent of all affected Lenders will be required with respect to (i) reductions in the unpaid principal amount or extensions of the scheduled date for the payment of principal of any Loan, (ii) reductions in interest rates or fees or extensions of the dates for payment thereof, and (iii) increases in the amounts or extensions of the expiry date of the Lenders' commitments, and the consent of 100% of the Lenders will be required with respect to (i) modifications of the pro rata provisions of the credit agreements and (ii) modifications to any of the voting percentages. Cost and Yield Protection: Substantively the same as the provisions - -------------------------- in the Existing Credit Agreement, including but not limited to (a) protection against increased costs or loss of yield resulting from changes in reserve, tax, capital adequacy and other requirements of law and from the imposition of or changes in withholding or other taxes, and (b) indemnification for "breakage costs" incurred in connection with the prepayment of any Eurodollar Loan on a day other than the last day of an interest period with respect thereto. Assignments and Participations: Lenders will be permitted to assign and - ------------------------------- sell participations in loans and commitments. Assignments will be by novation and, except in the case of assignments to another Lender or an affiliate of a Lender, will be subject to the prior consent of the Borrower (other than in the case of a bankruptcy default affecting the Borrower) and the Agent (in each case not to be unreasonably withheld). In the case of partial assignments (other than to another Lender or to an affiliate of a Lender), the minimum assignment amount will be $10,000,000 unless otherwise agreed by the Borrower and the Agent. Each assignment will be subject to the payment of a service fee of $4,000 to the Agent by the parties to such assignment. Participations will be without restriction and participants will have the same benefits as syndicate Lenders with regard to yield protection and increased costs (but will not be permitted to receive amounts greater than the transferring Lender). Voting rights of participants will be limited to matters referred to in the proviso under "Voting Rights" above. Confidentiality provisions will be substantively the same as those in the Existing Credit Agreement. Expenses and Indemnification: The Borrower will pay (a) all reasonable - ----------------------------- out-of-pocket expenses of JPMorgan, Chase and the Co-Arranger (and the Lenders for documentary taxes) associated with the arrangement, syndication and administration of the Facility and the preparation, execution, and delivery of the credit documentation and any amendment or waiver with respect thereto (including the reasonable fees, charges and disbursements of counsel), and (b) all reasonable out-of-pocket expenses of the Agent and the Lenders (including the reasonable fees, charges and disbursements of counsel) in connection with the enforcement of the credit documentation. JPMorgan, Chase, the Co-Arranger, the Lenders and their affiliates (and their respective officers, directors, employees, advisors and agents) will have no liability for, and will be indemnified by the Borrower and held harmless against, any loss, liability, cost or expense incurred in respect of the financing contemplated hereby or the use or the proposed use of proceeds thereof (except to the extent resulting from the gross negligence or wilful misconduct of the indemnified party or from the indemnified party's breach of its obligations under the definitive credit documentation). Governing Law and Forum: New York. - ------------------------ Counsel for Chase and JPMorgan: Cravath, Swain & Moore - ------------------------------- ANNEX I Facility Fees: Facility Fees will accrue and be payable - -------------- to the Lenders on the aggregate amount of the Facility (whether drawn or undrawn), commencing on the Closing Date and payable in arrears at the end of each calendar quarter and upon the termination in full of the commitments and the repayment of the loans outstanding under the Facility. The Facility Fees will accrue through the maturity and repayment of the Facility at a rate to be determined prior to the Closing Date on the basis of the ratings of Moody's Investors Service, Inc. and Standard and Poor's Ratings Services initially applicable to the Borrower's senior, unsecured, non-credit enhanced long-term debt (the "Index Debt") after giving effect to the Acquisition (the "Ratings"), all as set forth in the table appearing at the end of this Annex I. Utilization Fee: A Utilization Fee will accrue and - ---------------- be payable to the Lenders under the Facility on the amount of the outstanding loans thereunder for each day on which such loans exceed 50% of the aggregate commitments under the Facility (including each day following the termination of the commitments). Utilization Fees will be payable in arrears at the end of each calendar quarter and upon termination of the commitments under the Facility. The rates at which the Utilization Fee accrues will depend upon the Ratings as set forth in the table appearing at the end of this Annex I. Interest Rates: Interest will be payable on the loans at - --------------- the following rates per annum: CAF --- The rates obtained from bids selected by the Borrower in accordance with Chase's standard competitive auction procedures. Revolving Credit ---------------- (a) In the case of Eurodollar loans, LIBOR plus a spread to be determined prior to the Closing Date on the basis of the Ratings, as set forth in the table appearing at the end of this Annex I. (b) In the case of ABR loans, the Alternate Base Rate. As used herein: "Alternate Base Rate" means the higher of (i) Chase's Prime Rate, and (ii) the Federal Funds Effective Rate plus 1/2 of 1% per annum. "LIBOR" means the London Interbank Offered Rate (adjusted for statutory reserve requirements) for Eurodollar deposits of one, two, three or six months (as selected by the Borrower). FEE AND SPREAD TABLE --------------------
- ----------------------------------------------------------------------------------------- First Total Drawn Cost Drawn Cost LIBOR if (less if (greater Facility Spread than or equal) than 50% Fee (bps 50% Drawn Drawn Ratings (bps per per (bps per Utilization (bps per (S&P/Moody's)/3/ annum) annum) annum) Fee annum) - ----------------------------------------------------------------------------------------- Category 1 A/A2 or higher 6.0 19.0 25.0 10.0 35.0 - ----------------------------------------------------------------------------------------- Category 2 A-/A3 7.0 28.0 35.0 10.0 45.0 - ----------------------------------------------------------------------------------------- Category 3 BBB+/Baa1 10.0 35.0 45.0 10.0 55.0 - ----------------------------------------------------------------------------------------- Category 4 lower than 12.5 50.0 62.5 10.0 72.5 BBB+/Baa1 or unrated - -----------------------------------------------------------------------------------------
- ---------------------- /3/In the event of split Ratings, the Facility Fees and Spreads will be based upon the higher rating unless the Ratings differ by more than one Category, in which event the Facility Fees and Spreads will be based upon the Category next above that corresponding to the lower Rating. EX-99.D1 10 dex99d1.txt AGREEMENT AND PLAN OF MERGER Execution Copy AGREEMENT AND PLAN OF MERGER by and among SARA LEE CORPORATION SLC ACQUISITION CORP. and THE EARTHGRAINS COMPANY dated June 29, 2001 TABLE OF CONTENTS ----------------- Page Index of Defined Terms...............................................Index - i ARTICLE I THE OFFER AND MERGER.............................................2 Section 1.1 The Offer..........................................2 Section 1.2 Company Actions....................................3 Section 1.3 Directors..........................................4 Section 1.4 The Merger.........................................6 Section 1.5 Effective Time.....................................6 Section 1.6 Closing............................................7 Section 1.7 Directors and Officers of the Surviving Corporation........................................7 Section 1.8 Subsequent Actions.................................7 Section 1.9 Stockholders' Meeting..............................8 Section 1.10 Merger Without Meeting of Stockholders.............8 ARTICLE II CONVERSION OF SECURITIES.........................................9 Section 2.1 Conversion of Capital Stock........................9 Section 2.2 Exchange of Certificates...........................9 Section 2.3 Dissenting Shares.................................11 Section 2.4 Company Option Plan...............................12 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................13 Section 3.1 Organization......................................13 Section 3.2 Subsidiaries and Affiliates.......................14 Section 3.3 Capitalization....................................15 Section 3.4 Authorization; Validity of Agreement; Company Action............................................16 Section 3.5 Board Approvals...................................17 Section 3.6 Required Vote.....................................17 Section 3.7 Consents and Approvals; No Violations.............17 Section 3.8 Company SEC Documents and Financial Statements........................................18 Section 3.9 Absence of Certain Changes........................19 Section 3.10 No Undisclosed Liabilities........................21 i Section 3.11 Litigation.........................................21 Section 3.12 Employee Benefit Plans; ERISA......................21 Section 3.13 Taxes..............................................24 Section 3.14 Contracts..........................................26 Section 3.15 Real and Personal Property.........................26 Section 3.16 Intellectual Property..............................26 Section 3.17 Labor Matters......................................28 Section 3.18 Compliance with Laws...............................29 Section 3.19 Condition of Assets................................29 Section 3.20 Customers and Suppliers............................30 Section 3.21 Environmental Matters..............................30 Section 3.22 Information in the Offer Documents, the Schedule 14D-9 and the Proxy Statement...........................33 Section 3.23 Opinion of Financial Advisor.......................34 Section 3.24 Brokers............................................34 Section 3.25 Rights Agreement...................................34 Section 3.26 Capital Expenditures...............................34 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER....................................................35 Section 4.1 Organization.......................................35 Section 4.2 Authorization; Validity of Agreement; Necessary Action.............................................35 Section 4.3 Consents and Approvals; No Violations..............36 Section 4.4 Information in the Proxy Statement.................36 Section 4.5 Information in the Offer Documents.................36 Section 4.6 Brokers............................................37 Section 4.7 Financing..........................................37 ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER...........................37 Section 5.1 Acquisition Proposals..............................37 Section 5.2 Interim Operations of the Company..................38 Section 5.3 No Solicitation....................................42 ARTICLE VI ADDITIONAL AGREEMENTS............................................44 Section 6.1 Additional Agreements..............................44 Section 6.2 Notification of Certain Matters....................45 Section 6.3 Access; Confidentiality............................45 ii Section 6.4 Consents and Approvals.............................46 Section 6.5 Publicity..........................................47 Section 6.6 Insurance and Indemnification......................47 Section 6.7 Purchaser Compliance...............................48 Section 6.8 Third Party Standstill Agreements..................48 Section 6.9 Reasonable Best Efforts............................49 Section 6.10 State Takeover Laws................................49 Section 6.11 Employee Benefits..................................50 Section 6.12 Headquarters.......................................52 ARTICLE VII CONDITIONS.......................................................52 Section 7.1 Conditions to Each Party's Obligations to Effect the Merger.............................................52 ARTICLE VIII TERMINATION.....................................................53 Section 8.1 Termination........................................53 Section 8.2 Effect of Termination..............................54 ARTICLE IX MISCELLANEOUS..............................................55 Section 9.1 Amendment and Modification.........................55 Section 9.2 Non-survival of Representations and Warranties.....55 Section 9.3 Expenses...........................................55 Section 9.4 Notices............................................55 Section 9.5 Interpretation.....................................57 Section 9.6 Jurisdiction.......................................57 Section 9.7 Service of Process.................................57 Section 9.8 Specific Performance...............................57 Section 9.9 Counterparts.......................................58 Section 9.10 Entire Agreement; No Third-Party Beneficiaries.....58 Section 9.11 Severability.......................................58 Section 9.12 Governing Law......................................58 Section 9.13 Assignment.........................................59 iii Index of Defined Terms ---------------------- Defined Term Section No. - ------------ ----------- Acquisition Agreement....................................................5.3(c) Acquisition Proposal........................................................5.1 Acquisition Proposal Interest...............................................5.1 Agreement..............................................................Recitals Appointment Date............................................................5.2 Assignee...................................................................9.13 Audit...................................................................3.13(b) Average Premium..........................................................6.6(b) Balance Sheet Date..........................................................3.9 Certificates.............................................................2.2(b) Closing.....................................................................1.6 Closing Date................................................................1.6 Code....................................................................3.12(b) Common Stock.............................................................3.3(a) Company................................................................Recitals Company Agreements..........................................................3.7 Company Board of Directors.............................................Recitals Company Disclosure Schedule.........................................Article III Company Employee........................................................6.11(c) Company Financial Advisor..................................................3.23 Company Intellectual Property...........................................3.16(a) Company Material Adverse Change..........................................3.1(a) Company Material Adverse Effect..........................................3.1(a) Company SEC Documents.......................................................3.8 Company Subsidiary.......................................................3.2(a) Confidentiality Agreement................................................5.3(b) Continuing Directors.....................................................1.3(a) D&O Insurance............................................................6.6(b) Delaware Courts.............................................................9.6 DGCL...................................................................Recitals Dissenting Shares........................................................2.3(a) ECMR........................................................................3.7 Effective Time..............................................................1.5 Index - i Encumbrances..............................................................3.2(a) Environmental Claims.................................................3.21(a)(ii) Environmental Laws....................................................3.21(a)(i) ERISA....................................................................3.12(a) ERISA Affiliate..........................................................3.12(c) Exchange Act..............................................................1.1(a) Financial Statements.........................................................3.8 GAAP.........................................................................3.8 Governmental Entity..........................................................3.7 HSR Act......................................................................3.7 Hazardous Substances................................................3.21(a)(iii) Indemnified Party.........................................................6.6(a) Initial Expiration Date...................................................1.1(a) Listed Company Intellectual Property.....................................3.16(b) Merger....................................................................1.4(a) Merger Consideration......................................................2.1(c) Minimum Condition.........................................................1.1(a) Multiemployer Plan.......................................................3.12(d) New Parent Option.........................................................2.4(a) NPL......................................................................3.21(h) Offer...................................................................Recitals Offer Documents...........................................................1.1(b) Offer Price.............................................................Recitals Option Exchange Ratio.....................................................2.4(a) Option Plan...............................................................2.4(a) Options...................................................................2.4(a) Parent..................................................................Recitals Parent Common Shares......................................................2.4(a) Parent Plan..............................................................6.11(c) Paying Agent..............................................................2.2(a) Person....................................................................3.2(a) Plans....................................................................3.12(a) Preferred Stock...........................................................3.3(a) Proxy Statement.......................................................1.9(a)(ii) Purchaser...............................................................Recitals Purchaser Common Stock.......................................................2.1 Regulation M-A............................................................1.1(b) Representatives...........................................................5.3(a) Index - ii Rights Agreement...........................................................3.25 Schedule 14D-9...........................................................1.2(a) SEC......................................................................1.1(b) Securities Act...........................................................2.4(c) Shares.................................................................Recitals Special Meeting.......................................................1.9(a)(i) Subsidiary...............................................................3.2(a) Superior Proposal........................................................5.3(b) Surviving Corporation....................................................1.4(a) Tax Authority...........................................................3.13(b) Tax Returns.............................................................3.13(b) Taxes...................................................................3.13(b) Termination Fee..........................................................8.2(b) Title IV Plan...........................................................3.12(d) Transactions................................................................3.4 Voting Debt..............................................................3.3(a) Index - iii AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this "Agreement"), --------- dated June 29, 2001, by and among Sara Lee Corporation, a company organized under the laws of Maryland ("Parent"), SLC Acquisition Corp., a Delaware ------ corporation and a wholly-owned subsidiary of Parent (the "Purchaser"), and The --------- Earthgrains Company, a Delaware corporation (the "Company"). ------- WHEREAS, the Board of Directors of each of Parent, the Purchaser and the Company has approved, and deems it advisable and in the best interests of its respective stockholders to consummate, the acquisition of the Company by Parent upon the terms and subject to the conditions set forth herein; WHEREAS, in furtherance thereof, it is proposed that the Purchaser make a cash tender offer (the "Offer") to acquire all shares of the issued and ----- outstanding common stock, par value $0.01 per share, of the Company (the "Shares"), together with the associated rights to purchase shares of Series A ------ Junior Participating Preferred Stock, par value $0.01 per share, issued pursuant to the Rights Agreement (as defined herein) for $40.25 per share, net to the seller in cash (such price, or any such higher price per Share as may be paid in the Offer, is referred to herein as the "Offer Price"); ----------- WHEREAS, also in furtherance of such acquisition, the Board of Directors of each of Parent, the Purchaser and the Company has approved and declared advisable this Agreement and the Merger (as defined in Section 1.4) following the Offer in accordance with the General Corporation Law of the State of Delaware (the "DGCL") and upon the terms and subject to the conditions set forth ---- herein; WHEREAS, the Board of Directors of the Company (the "Company Board of ---------------- Directors") has determined that the consideration to be paid for each Share in - --------- the Offer and the Merger is fair to the holders of such Shares and has resolved to recommend that the holders of such Shares accept the Offer and approve this Agreement and each of the Transactions (as defined in Section 3.4) upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows: ARTICLE I THE OFFER AND MERGER Section 1.1 The Offer. (a) Provided that this Agreement shall --------- not have been terminated in accordance with Section 8.1 and none of the events set forth in Annex I hereto shall have occurred and be continuing, as promptly as practicable, and, in any event, within seven business days of the date hereof, the Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Offer to ------------ purchase for cash all Shares at the Offer Price. The obligations of the Purchaser to accept for payment and to pay for any Shares validly tendered on or prior to the expiration of the Offer and not withdrawn shall be subject to (i) there being validly tendered and not withdrawn prior to the expiration of the Offer that number of Shares which, together with the Shares then beneficially owned by Parent or the Purchaser, represents at least a majority of the Shares outstanding on a fully-diluted basis (the "Minimum Condition") and (ii) the ----------------- other conditions set forth in Annex I hereto. Subject to the prior satisfaction or waiver by Parent or the Purchaser of the Minimum Condition and the other conditions of the Offer set forth in Annex I hereto, the Purchaser shall, in accordance with the terms of the Offer, consummate the Offer and accept for payment and pay for, and Parent shall cause the Purchaser to accept for payment and pay for, all Shares validly tendered and not withdrawn pursuant to the Offer promptly after expiration of the Offer (subject to the provisions of Rule 14d-11 under the Exchange Act, to the extent applicable). The Purchaser shall not, at any time, amend or waive the Minimum Condition and shall not decrease the Offer Price, change the form of consideration payable in the Offer, decrease the number of Shares sought in the Offer, impose additional conditions to the Offer, or amend any other condition of the Offer in any manner adverse to the holders of the Shares without the prior written consent of the Company, provided, -------- however, that (x) if on the 20th business day following the commencement of the - ------- Offer (within the meaning of Rule 14d-2 under the Exchange Act) (the "Initial ------- Expiration Date"), all conditions to the Offer shall not have been satisfied or - --------------- waived, the Purchaser may, from time to time, in its sole discretion, extend the Offer for such period as the Purchaser may determine, and (y) the Purchaser may, in its sole discretion, extend the Offer for any period required by any rule, regulation, interpretation or position of the SEC or the staff thereof applicable to the Offer. In addition, subject to the provisions of Section 8.1(b)(iii), if, on the Initial Expiration Date or any subsequent expiration date (related to an extension of the Offer), (x) the applicable waiting periods under the HSR Act (as defined herein), the ECMR (as defined herein) or any other comparable provisions under any applicable 2 pre-merger notification laws or regulations of foreign jurisdictions have not expired or terminated or (y) any of the events set forth in clause (c) of Annex I shall have occurred and be continuing (and the condition in Annex I with respect thereto shall not have been waived by the Purchaser) or (z) any of the events set forth in clause (a) or (b) of Annex I shall have occurred and be continuing and the Purchaser and Parent shall be contesting such event to the extent required by Section 6.4(b) hereof (and the condition in Annex I with respect to the applicable clause shall not have been waived by the Purchaser), then in each such case, the Purchaser shall extend the Offer. In the event the Minimum Condition is satisfied and the Purchaser purchases Shares pursuant to the Offer, the Purchaser may, in the Purchaser's sole discretion, provide a "subsequent offering period" in accordance with Rule 14d-11 under the Exchange Act. In addition, the Purchaser may increase the Offer Price (but not change any other condition of the Offer) and extend the Offer to the extent required by law in connection with such increase, in each case in its sole discretion and without the Company's consent. (b) As soon as practicable on the date the Offer is commenced, Parent and the Purchaser shall file with the United States Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule TO with --- respect to the Offer, which shall include the offer to purchase and forms of the related letter of transmittal and all other ancillary Offer documents (collectively, together with any amendments and supplements thereto, the "Offer ----- Documents"). Parent and the Purchaser shall cause the Offer Documents to be - --------- filed with the SEC and disseminated to holders of Shares as required by applicable federal securities laws. Parent and the Purchaser, on the one hand, and the Company, on the other hand, agree to promptly correct any information provided by it for use in the Offer Documents if it shall have become false or misleading in any material respect or as otherwise required by law. The Purchaser further agrees to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and disseminated to holders of Shares as required by applicable federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review and comment on the Offer Documents before they are filed with the SEC. In addition, Parent and the Purchaser agree to provide the Company and its counsel with any comments or communications that Parent, the Purchaser or their counsel may receive from time to time from the SEC or its staff with respect to the Offer Documents promptly after Parent's or the Purchaser's, as the case may be, receipt of such comments. Section 1.2 Company Actions. (a) On the date the Offer Documents are --------------- filed with the SEC, the Company shall, in a manner that complies with Rule 14d-9 3 under the Exchange Act, file with the SEC a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments, supplements and exhibits thereto, the "Schedule 14D-9") which shall, -------------- subject to the provisions of Section 5.3(c), contain the recommendation that the stockholders of the Company accept the Offer, tender their Shares to the Purchaser pursuant to the Offer, and approve and adopt this Agreement and the Merger. The Company agrees to cause the Schedule 14D-9 to be filed with the SEC and disseminated to holders of Shares as required by applicable federal securities laws. The Company, on the one hand, and Parent and the Purchaser, on the other hand, agree to promptly correct any information provided by it for use in the Schedule 14D-9 if it shall have become false or misleading in any material respect or as otherwise required by law. The Company agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to holders of the Shares as required by applicable federal securities laws. Parent, the Purchaser and their counsel shall be given the reasonable opportunity to review and comment on the Schedule 14D-9 before it is filed with the SEC. In addition, the Company agrees to provide Parent, the Purchaser and their counsel in writing with any comments or communications that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9 promptly after the Company's receipt of such comments. (b) In connection with the Offer, the Company shall promptly furnish to the Purchaser mailing labels, security position listings and any available listing or computer file containing the names and addresses of the record holders of the Shares as of a recent date, and shall promptly furnish the Purchaser with such information and assistance (including, but not limited to, lists of holders of the Shares, updated periodically, and their addresses, mailing labels and lists of security positions) as the Purchaser may reasonably request. Section 1.3 Directors. (a) Promptly upon the purchase of and payment --------- for Shares by Parent or the Purchaser which represent at least a majority of the outstanding Shares (on a fully-diluted basis), Parent shall be entitled to elect or designate such number of directors, rounded up to the next whole number, on the Company Board of Directors as is equal to the product of the total number of directors on the Company Board of Directors (giving effect to the directors elected or designated by Parent pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by the Purchaser, Parent and any of their affiliates bears to the total number of Shares then outstanding (on a fully-diluted basis). The Company shall, upon Parent's request, either take all actions necessary to promptly 4 increase the size of the Company Board of Directors, or promptly secure the resignations of such number of its incumbent directors, or both, as is necessary to enable Parent's designees to be so elected or designated to the Company's Board of Directors, and shall take all actions necessary to cause Parent's designees to be so elected or designated at such time. At such time, the Company shall, upon Parent's request, also cause persons elected or designated by Parent to constitute the same percentage (rounded up to the next whole number) as is on the Company Board of Directors of (i) each committee of the Company Board of Directors, (ii) each board of directors (or similar body) of each Company Subsidiary (as defined in Section 3.2), and (iii) each committee (or similar body) of each such board, in each case only to the extent permitted by applicable law or the rules of any stock exchange on which the Common Stock is listed. The Company's obligations under this Section 1.3(a) shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. The Company shall promptly take all actions required pursuant to such Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.3(a), including, but not limited to, mailing to stockholders (together with the Schedule 14D-9) the information required by Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be elected or designated to the Company Board of Directors. Parent or the Purchaser shall supply the Company with information with respect to either of them and their nominees, officers, directors and affiliates to the extent required by Section 14(f) and Rule 14f-1. Notwithstanding the provisions of this Section 1.3, the parties shall use reasonable best efforts to ensure that at least three of the members of the Company Board of Directors are, at all times before the Effective Time, directors of the Company who are members of the Board of Directors on the date hereof (the "Continuing Directors"). If, however, there are in office fewer than -------------------- three Continuing Directors for any reason, the Company Board of Directors will take all action necessary to cause a person designated by the remaining Continuing Directors to fill such vacancy, which person shall be deemed to be a Continuing Director for all purposes of this Agreement, or if no Continuing Directors then remain, the other directors of the Company then in office will designate two persons to fill such vacancies who are not officers or employees or affiliates of the Company, Parent or the Purchaser or any of their respective Subsidiaries or affiliates and such persons will be deemed to be Continuing Directors for all purposes of this Agreement. (b) Following the election or appointment of Parent's designees pursuant to Section 1.3 and until the Effective Time, the approval of a majority of the Continuing Directors will be required to authorize any: (i) termination of this Agreement by the Company; (ii) amendment of this Agreement by the Company 5 Board of Directors; (iii) extension by the Company of time for performance of any obligation or action hereunder by Parent or the Purchaser; (iv) waiver by the Company of compliance with any of the agreements or conditions contained herein for the benefit of the Company or its stockholders; (v) consent by the Company Board of Directors hereunder, or (vi) other action of the Company hereunder or in connection with the transactions contemplated hereby that adversely affects the holders of Shares (other than Parent and the Purchaser). Section 1.4 The Merger. (a) Subject to the terms and conditions of ---------- this Agreement, at the Effective Time, the Company and the Purchaser shall consummate a merger (the "Merger") pursuant to which (i) the Purchaser shall be ------ merged with and into the Company and the separate corporate existence of the Purchaser shall thereupon cease, (ii) the Company shall be the successor or surviving corporation in the Merger and shall continue to be governed by the laws of the State of Delaware, and (iii) the separate corporate existence of the Company with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger. The corporation surviving the Merger is sometimes hereinafter referred to as the "Surviving Corporation." The Merger --------------------- shall have the effects set forth in the DGCL. (b) The Certificate of Incorporation of the Purchaser, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation, except as to the name of the Surviving Corporation, which shall be Sara Lee Bakery, Inc. (c) The Bylaws of the Purchaser, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation, except as to the name of the Surviving Corporation, which shall be Sara Lee Bakery, Inc. Section 1.5 Effective Time. Parent, the Purchaser and the Company -------------- shall cause an appropriate Certificate of Merger to be executed and filed on the Closing Date with the Secretary of State of the State of Delaware as provided in the DGCL. Notwithstanding the foregoing, if the Merger is to be consummated pursuant to Section 1.10 of this Agreement, Parent shall execute and file a Certificate of Ownership and Merger with the Secretary of State of the State of Delaware in accordance with the DGCL. The Merger shall become effective on the date and time on which the Certificate of Merger or the Certificate of Ownership and Merger, as the case may be, has been duly filed with the Secretary of State of the State of Delaware, or such later 6 time as agreed upon by the parties, such time hereinafter referred to as the "Effective Time." -------------- Section 1.6 Closing. The closing of the Merger (the "Closing") will ------- ------- take place at 10:00 a.m., Chicago time, the later of (x) as soon as practicable (taking into consideration the exercise of Company Options (as defined herein)) (but in no event later than five business days) after the expiration of the Offer (or the expiration of any "subsequent offering period" if the Purchaser elects to provide such a "subsequent offering period") and (y) the second business day after satisfaction or waiver of all of the conditions set forth in Article VII (the "Closing Date"), at the offices of Skadden, Arps, Slate, ------------ Meagher & Flom (Illinois), 333 West Wacker Drive, Chicago, Illinois 60606. Section 1.7 Directors and Officers of the Surviving Corporation. The --------------------------------------------------- directors of the Purchaser immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation, in each case until their respective successors shall have been duly elected, designated or qualified, or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Certificate of Incorporation and Bylaws. For the avoidance of doubt and without limiting the foregoing, Parent and the Purchaser agree that, so long as Barry H. Beracha is willing and able to serve, after the Effective Time, Barry H. Beracha shall be the Chief Executive Officer of the Surviving Corporation and shall serve in such capacity until his successor shall have been duly elected, designated, or qualified, or until his earlier death, resignation or removal in accordance with the Surviving Corporation's Certificate of Incorporation, Bylaws, or any applicable employment agreements. Section 1.8 Subsequent Actions. If at any time after the Effective ------------------ Time the Surviving Corporation shall determine that any actions are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either of the Company or the Purchaser acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, then the officers and directors of the Surviving Corporation shall be authorized take all such actions as may be necessary or desirable to vest all right, title or interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement. 7 Section 1.9 Stockholders' Meeting. (a) If required by law to --------------------- consummate the Merger, the Company shall: (i) duly call, give notice of, convene and hold a special meeting of its stockholders (the "Special Meeting") as soon as reasonably --------------- practicable following the acceptance for payment and purchase of Shares by the Purchaser pursuant to the Offer for the purpose of considering and taking action upon this Agreement; (ii) prepare and file with the SEC a preliminary proxy or information statement relating to the Merger and this Agreement and use all reasonable efforts to obtain and furnish the information required to be included by the SEC in the Proxy Statement (as hereinafter defined) and, after consultation with Parent, respond promptly to any comments made by the SEC with respect to the preliminary proxy or information statement and cause a definitive proxy or information statement (the "Proxy Statement") --------------- to be mailed to its stockholders; (iii) include in the Proxy Statement the recommendation of the Company Board of Directors that stockholders of the Company vote in favor of the approval of the Merger and the adoption of this Agreement; and (iv) use all reasonable efforts to solicit from holders of Shares proxies in favor of the Merger and take all actions reasonably necessary or, in the reasonable opinion of the Purchaser, advisable to secure the approval of stockholders required by the DGCL, the Company's Certificate of Incorporation and any other applicable law to effect the Merger. (b) Parent agrees to vote, or cause to be voted, all of the Shares then owned by it, the Purchaser or any of its other subsidiaries and affiliates in favor of the approval of the Merger and the adoption of this Agreement. Section 1.10 Merger Without Meeting of Stockholders. Notwithstanding -------------------------------------- Section 1.9, in the event that Parent, the Purchaser or any other subsidiary of Parent shall acquire at least 90% of the outstanding Shares, the parties hereto agree, subject to Article VII, to take all necessary and appropriate actions to 8 cause the Merger to become effective as soon as practicable after such acquisition, without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL. ARTICLE II CONVERSION OF SECURITIES Section 2.1 Conversion of Capital Stock. As of the Effective Time, by --------------------------- virtue of the Merger and without any action on the part of the holders of any Shares or the holders of the common stock, par value $0.01 per share, of the Purchaser (the "Purchaser Common Stock"): ---------------------- (a) Purchaser Common Stock. Each outstanding share of the ---------------------- Purchaser Common Stock shall be converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation. (b) Cancellation of Treasury Stock and Parent-Owned Stock. All ----------------------------------------------------- Shares that are owned by the Company as treasury stock and any Shares owned by Parent, the Purchaser or any other wholly-owned Subsidiary of Parent shall be cancelled and retired, and no consideration shall be delivered in exchange therefor. (c) Conversion of Shares. Each outstanding Share (other than -------------------- Shares to be cancelled in accordance with Section 2.1(b) and other than Dissenting Shares (as defined in Section 2.3)) shall be converted into the right to receive the Offer Price, payable to the holder thereof in cash, without interest (the "Merger Consideration"). From and after the Effective Time, all -------------------- such Shares shall no longer be outstanding and shall automatically be cancelled and retired, and each holder of a certificate representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the surrender of such certificate in accordance with Section 2.2, without interest thereon. Section 2.2 Exchange of Certificates. (a) Paying Agent. Prior to the ------------------------ ------------ Effective Time, Parent shall designate a bank or trust company (which shall be reasonably acceptable to the Company) to act as agent for the holders of Shares in connection with the Merger (the "Paying Agent") and to receive the funds to ------------ which holders of Shares shall become entitled pursuant to Section 2.1(c). Prior to the Effective Time, Parent or the Purchaser shall make available to the Paying Agent the aggregate 9 Merger Consideration. Such funds shall be invested by the Paying Agent as directed by Parent or the Surviving Corporation, in its sole discretion, pending payment thereof by the Paying Agent to the holders of the Shares. Earnings from such investments shall be the sole and exclusive property of Parent and the Surviving Corporation, and no part of such earnings shall accrue to the benefit of holders of Shares. (b) Exchange Procedures. Promptly after the Effective Time, the ------------------- Paying Agent shall mail to each holder of record of Shares (the "Certificates"), ------------ whose shares were converted pursuant to Section 2.1 into the right to receive the Merger Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent) and (ii) instructions for effecting the surrender of the Certificates in exchange for payment of the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly represented by such Certificate and the Certificate so surrendered shall forthwith be cancelled. If payment of the Merger Consideration is to be made to a Person (as hereinafter defined) other than the Person in whose name the surrendered Certificate is registered, it shall be a condition precedent of payment that (x) the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer, and (y) the Person requesting such payment shall have paid any transfer and other taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not required to be paid. Until surrendered as contemplated by this Section 2.2, each Certificate shall be deemed after the Effective Time to represent only the right to receive the Merger Consideration, without interest thereon. (c) Transfer Books; No Further Ownership Rights in Shares. At ----------------------------------------------------- the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares on the records of the Company. From and after the Effective Time, the holders of Certificates evidencing ownership of Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares, except as otherwise provided for herein or by applicable law. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article II. 10 (d) Termination of Fund; No Liability. At any time following --------------------------------- six months after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) made available to the Paying Agent and not disbursed to holders of Certificates, and thereafter such holders shall be entitled to look only to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Certificates, without any interest thereon. Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Certificate for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. Section 2.3 Dissenting Shares. (a) Notwithstanding anything in this ----------------- Agreement to the contrary, Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has complied with Section 262 of the DGCL ("Dissenting Shares") shall not be converted into a right to receive the Merger ----------------- Consideration, unless such holder fails to perfect or withdraws or otherwise loses his or her right to appraisal. A holder of Dissenting Shares shall be entitled to receive payment of the appraised value of such Shares held by him or her in accordance with Section 262 of the DGCL, unless, after the Effective Time, such holder fails to perfect or withdraws or loses his or her right to appraisal, in which case such Shares shall be converted into and represent only the right to receive the Merger Consideration, without interest thereon, upon surrender of the Certificate or Certificates representing such Shares pursuant to Section 2.2. (b) The Company shall give Parent (i) prompt notice of any written demands for appraisal of any Shares, attempted withdrawals of such demands and any other instruments served pursuant to the DGCL and received by the Company relating to rights of appraisal and (ii) the opportunity to participate in the conduct of all negotiations and proceedings with respect to demands for appraisal under the DGCL. Except with the prior written consent of Parent, the Company shall not voluntarily make any payment with respect to any demands for appraisal or settle or offer to settle any such demands for appraisal. 11 Section 2.4 Company Option Plan. ------------------- (a) Prior to the Effective Time, the Company shall have taken all necessary actions so that at the Effective Time, each unexpired and unexercised stock option under the Company's 1996 Stock Incentive Plan (the "Option Plan"), or otherwise granted by the Company outside of the Option Plan ----------- (the "Options"), will be assumed by Parent as of the Effective Time as ------- hereinafter provided. At the Effective Time, without further action on the part of the Company or the optionholder, each Option will be automatically converted into an option (the "New Parent Option") to purchase common stock, par value ----------------- $0.01 per share, of Parent (the "Parent Common Shares"). With respect to each -------------------- such New Parent Option (i) the number of Parent Common Shares subject to such New Parent Option will be determined by multiplying the number of Shares subject to such Option immediately prior to the Effective Time by the Option Exchange Ratio (as hereinafter defined), and rounding any fractional share up to the nearest whole share, and (ii) the per share exercise price of such New Parent Option will be determined by dividing the exercise price per share specified in the Option by the Option Exchange Ratio, and rounding the exercise price thus determined up to the nearest whole cent, provided, however, that in the case of any Option to which Section 422 of the Code applies, the adjustments provided for in this Section shall be effected in a manner consistent with the requirements of Section 424(a) of the Code. Such New Parent Option shall otherwise be subject to the same terms and conditions as such Option. At the Effective Time, (i) all references in the Option Plan, the applicable stock option or other award agreements issued thereunder and in any other Options to the Company shall be deemed to refer to Parent; and (ii) Parent shall assume the Option Plan and all of the Company's obligations with respect to the Options. The "Option Exchange Ratio" shall mean the Offer Price divided by the average of --------------------- the closing prices per Parent Common Share as reported on the New York Stock Exchange composite transactions reporting system (as reported in the New York City edition of The Wall Street Journal) for each of the ten consecutive trading days in the period ending five days prior to the Effective Time. (b) Parent shall take all corporate action necessary to reserve for issuance a sufficient number of Parent Common Shares for delivery pursuant to the terms set forth in this Section 2.4. (c) No later than one business day prior to the Effective Time, Parent shall file with the Securities and Exchange Commission a registration statement on an appropriate form or a post-effective amendment to a previously filed registration 12 statement under the Securities Act of 1933, as amended (the "Securities Act"), -------------- with respect to Parent Common Shares subject to New Parent Options issued pursuant to this Section 2.4, and shall use its reasonable best efforts to maintain the current status of the prospectus contained therein, as well as comply with any applicable state securities or "blue sky" laws, for so long as such options or other equity-based awards remain outstanding. (d) Parent and the Company shall take all such steps as may be required to cause the transactions contemplated by this Section 2.4 and any other dispositions of equity securities of the Company (including derivative securities) or acquisitions of Parent equity securities (including derivative securities) in connection with any of the transactions contemplated by this Agreement by each individual who is a director or officer of the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in accordance with the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth in a schedule delivered to Parent prior to the execution of this Agreement (the "Company Disclosure Schedule"), the Company --------------------------- represents and warrants to Parent and the Purchaser as set forth below. Each exception set forth in the Company Disclosure Schedule shall be deemed to be a disclosure with respect to any other section or sections of this Article III if the relevance of such item to such other section or sections is readily apparent from the face of the Company Disclosure Schedule. Section 3.1 Organization. (a) The Company is a corporation duly ------------ organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has full corporate power and authority and all necessary governmental licenses, authorizations, permits, consents and approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to be so organized, existing and in good standing or to have such power, authority, or governmental licenses, authorizations, permits, consents or approvals would not, individually or in the aggregate, have a Company Material Adverse Effect. As used in this Agreement, "Company Material Adverse Change" or "Company ------------------------------- ------- 13 Material Adverse Effect" means any change, event or effect, as the case may be, - ----------------------- that is materially adverse to (y) the business, operations, properties (including intangible properties), financial condition, results of operations, assets or liabilities of the Company and the Company Subsidiaries, taken as a whole, or (z) the Company's ability to consummate each of the Transactions; provided, that in no event shall any of the following (alone or in combination - -------- with another event identified in this proviso) be deemed to constitute, nor shall any of the following be taken into account in determining whether there has been or will be, a Company Material Adverse Change or Company Material Adverse Effect: any change, event, violation, inaccuracy, circumstance or effect that results from or arises out of the public announcement or pendency of the Offer, the Merger or the other transactions contemplated hereby. (b) The Company is duly qualified or licensed to do business and in good standing in each jurisdiction where such qualification or licensing is necessary, except where the failure to be so qualified or licensed or in good standing would not, individually or in the aggregate, have a Company Material Adverse Effect. Section 3.2 Subsidiaries and Affiliates. (a) Section 3.2(a) of the --------------------------- Company Disclosure Schedule sets forth the name, jurisdiction of incorporation or organization and authorized and outstanding capital of each Company Subsidiary. Other than with respect to the Company Subsidiaries, the Company does not own, directly or indirectly, any capital stock or other equity securities of any Person or have any direct or indirect equity or ownership interest in any business other than publicly-traded securities constituting less than five percent of the outstanding equity of the issuing entity. All of the outstanding capital stock of each Company Subsidiary is owned directly or indirectly by the Company free and clear of all liens, charges, security interests, options, claims, mortgages, pledges, or other encumbrances and restrictions of any nature whatsoever ("Encumbrances"), and is validly issued, ------------ fully paid and nonassessable, and there are no outstanding options, rights or agreements of any kind relating to the issuance, sale or transfer of any capital stock of any such Company Subsidiary to any person except the Company or another wholly-owned Subsidiary. As used in this Agreement: the term "Company ------- Subsidiary" means each Person which is a Subsidiary of the Company; the term - ---------- "Subsidiary" means with respect to any party, any corporation, partnership, ---------- limited liability company or other organization or entity, whether incorporated or unincorporated, of which (i) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such organization is directly or indirectly owned or controlled by such party or by any one 14 or more of its Subsidiaries, or by such party and one or more of its Subsidiaries or (ii) such party or any other Subsidiary of such party is a general partner (excluding any such partnership where such party or any Subsidiary of such party does not have a majority of the voting interest in such partnership); and the term "Person" means a natural person, partnership, ------ corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Entity or other entity or organization. (b) Each Company Subsidiary (i) is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, (ii) has full power and authority and all necessary governmental licenses, authorizations, permits, consents and approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, and (iii) is duly qualified or licensed to do business as a foreign Person in good standing in each jurisdiction where such qualification or license is necessary, except where the failure to have such licenses, authorizations, permits, consents or approvals, and the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have a Company Material Adverse Effect. Each such jurisdiction is listed in Section 3.2(b) of the Company Disclosure Schedule, which are the only jurisdictions in which such qualification or license is necessary. The Company has heretofore delivered to Parent complete and correct copies of the Certificate of Incorporation and Bylaws of the Company as presently in effect, and will deliver copies of such documents or their equivalents as presently in effect for each Company Subsidiary promptly after the execution of this Agreement. Section 3.3 Capitalization. (a) The authorized capital stock of the -------------- Company consists of (i) 150,000,000 shares of common stock, $0.01 par value per share (the "Common Stock") and (ii) 10,000,000 shares of preferred stock, par ------------ value $0.01 per share (the "Preferred Stock") of which 408,000 shares have been --------------- designated as Series A Junior Participating Preferred Stock. As of the date hereof, (i) 42,648,084 Shares are issued and outstanding, (ii) no shares of Preferred Stock are issued and outstanding, (iii) 1,922,220 Shares are issued and held in the treasury of the Company, and (iv) a total of 7,834,850 Shares are reserved for issuance pursuant to the Option Plan. All of the outstanding shares of the Company's capital stock are, and all Shares which may be issued pursuant to the exercise of outstanding Options will be, duly authorized, validly issued, fully paid and non-assessable. There is no indebtedness having general voting rights (or convertible into securities having such rights) ("Voting Debt") of the Company or any Company Subsidiary issued and outstanding. ----------- Except as disclosed in 15 this Section 3.3 or as set forth in Section 3.3(a) of the Company Disclosure Schedule, (i) there are no existing options, warrants, calls, pre-emptive rights, subscriptions or other rights, agreements, arrangements or commitments of any kind relating to the issued or unissued capital stock of the Company or any Company Subsidiary obligating the Company or any Company Subsidiary to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, the Company or any Company Subsidiary or securities convertible into or exchangeable for such shares or equity interests, or obligating the Company or any Company Subsidiary to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment, and (ii) there are no outstanding contractual obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any Shares or the capital stock of the Company or any Company Subsidiary or any affiliate of the Company or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Company Subsidiary or any other entity. Section 3.3(a) of the Company Disclosure Schedule sets forth, with respect to each existing option to purchase capital stock of the Company, the number of shares issuable, and the purchase price payable therefor upon the exercise of each such option. (b) All of such options have been granted to employees of the Company in the ordinary course of business consistent with past practice. All options granted under the Option Plan have been granted pursuant to option award agreements in the substantially the form attached as an exhibit to Section 3.3(b) of the Company Disclosure Schedule. (c) There are no voting trusts or other agreements or understandings to which the Company or any Company Subsidiary is a party with respect to the voting of the capital stock of the Company or any of the Company Subsidiaries. Section 3.4 Authorization; Validity of Agreement; Company Action. The ---------------------------------------------------- Company has the requisite corporate power and authority to execute and deliver this Agreement, and has the requisite corporate power and authority to perform the transactions provided for or contemplated by this Agreement, including, but not limited to, the Offer and the Merger (collectively, the "Transactions"). The ------------ execution, delivery and performance by the Company of this Agreement, and the consummation by it of the Transactions, have been duly and validly authorized by the Company Board of Directors, and no other corporate action on the part of the Company is necessary to 16 authorize the execution and delivery by the Company of this Agreement and the consummation by it of the Transactions other than, with respect to the Merger, the approval of the Merger and adoption of this Agreement by holders of a majority of the Shares. This Agreement has been duly executed and delivered by the Company and, assuming due and valid authorization, execution and delivery hereof by Parent and the Purchaser, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Section 3.5 Board Approvals. As of the date hereof, the Company Board --------------- of Directors, at a meeting duly called and held, has unanimously (i) determined that each of the Agreement, the Offer and the Merger are advisable and fair to and in the best interests of the stockholders of the Company, (ii) duly and validly approved and taken all corporate action required to be taken by the Company Board of Directors to authorize the consummation of the Transactions, and (iii) resolved to recommend that the stockholders of the Company accept the Offer, tender their Shares to the Purchaser pursuant to the Offer, and approve and adopt this Agreement and the Merger, and none of the aforesaid actions by the Company Board of Directors has been amended, rescinded or modified. The action taken by the Company Board of Directors constitutes approval of the Transactions (including each of the Offer and the Merger) by the Company Board of Directors under (A) Article Nine of the Certificate of Incorporation of the Company, and (B) Section 203 of the DGCL, and no other state takeover statute is applicable to the Transactions. Section 3.6 Required Vote. The affirmative vote of the holders of a ------------- majority of the outstanding Shares is the only vote of the holders of any class or series of the Company's capital stock necessary to approve the Merger and adopt this Agreement. Section 3.7 Consents and Approvals; No Violations. None of the ------------------------------------- execution, delivery or performance of this Agreement by the Company, the consummation by the Company of the Transactions or compliance by the Company with any of the provisions of this Agreement will (i) conflict with or result in any breach of any provision of the Certificate of Incorporation, the Bylaws or similar organizational documents of the Company or any Company Subsidiary, state securities or blue sky 17 laws or the DGCL, (ii) require any filing by the Company with, or permit, authorization, consent or approval of, any court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency, foreign or domestic (a "Governmental Entity") (except for ------------------- (A) compliance with any applicable requirements of the Exchange Act, (B) any filings as may be required under the DGCL in connection with the Merger, (C) filings, permits, authorizations, consents and approvals as may be required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), under the European Community Merger Regulation, as amended (the ------- "ECMR") and any comparable provisions under any applicable pre-merger ---- notification laws or regulations of foreign jurisdictions, (D) the filing with the SEC and the New York Stock Exchange, Inc. of (1) the Schedule 14D-9 and (2) a Proxy Statement if stockholder approval is required by law and other such reports under the Exchange Act as may be required in connection with this Agreement and the Transactions, and (E) such filings and approvals as may be required by any applicable state securities, blue sky or takeover laws), (iii) 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, amendment, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, lien, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company or any Company Subsidiary is a party or by which any of them or any of their respective properties or assets may be bound (the "Company Agreements") or (iv) ------------------ violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company, any Company Subsidiary or any of their respective properties or assets, except in the case of clauses (ii), (iii) or (iv) where (x) any failure to obtain such permits, authorizations, consents or approvals, (y) any failure to make such filings, or (z) any such violations, breaches or defaults would not, individually or in the aggregate, (I) have a Company Material Adverse Effect or (II) prevent or materially delay the consummation of the Transactions. Section 3.8 Company SEC Documents and Financial Statements. The ---------------------------------------------- Company has filed with the SEC all forms, reports, schedules, statements and other documents required by it to be filed since March 28, 1998 under the Exchange Act or the Securities Act (collectively, the "Company SEC Documents"). --------------------- As of their respective dates, or if amended, as of the date of the last such amendment, the Company SEC Documents (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the applicable requirements 18 of the Exchange Act and the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder. None of the Company Subsidiaries is required to file any forms, reports or other documents with the SEC. All of the audited financial statements and unaudited consolidated interim financial statements of the Company included in the Company SEC Documents (collectively, the "Financial Statements") (i) have been prepared from the books -------------------- and records of the Company and its consolidated Subsidiaries, (ii) comply in all material respects with the applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (iii) have been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved ---- (except as may be indicated in the notes thereto and except, in the case of the unaudited interim statements, as may be permitted under Form 10-Q of the Exchange Act) and (iv) fairly present in all material respects the consolidated financial position and the consolidated results of operations and cash flows (subject, in the case of unaudited interim financial statements, to normal year-end adjustments) of the Company and its consolidated Subsidiaries as of the times and for the periods referred to therein. Section 3.9 Absence of Certain Changes. Except as contemplated by -------------------------- this Agreement, since March 27, 2001 (the "Balance Sheet Date"), each of the ------------------ Company and each Company Subsidiary has conducted its respective business only in the ordinary course of business consistent with past practice. From the Balance Sheet Date through the date of this Agreement, neither the Company nor any Company Subsidiary has: (a) suffered any Company Material Adverse Change; (b) paid, discharged or satisfied any material claim, liability or obligation (whether absolute, accrued, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business consistent with past practice, of liabilities and obligations reflected or reserved against in the Balance Sheet or incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date; (c) permitted or allowed any of its material property or assets (real, personal or mixed, tangible or intangible) to be subjected to any material Encumbrance, except for liens for current taxes not yet due; (d) written down the value of any inventory (including write- downs by reason of shrinkage or mark-down) or written off as uncollectible any 19 notes or accounts receivable, except for write-downs and write-offs in the ordinary course of business consistent with past practice; (e) cancelled any material debts or waived any claims or rights of material value; (f) sold, transferred, or otherwise disposed of any of its material properties or assets (real, personal or mixed, tangible or intangible), except in the ordinary course of business consistent with past practice; (g) granted any increase in the compensation or benefits of officers or employees (including any such increase pursuant to any bonus, pension, severance, profitsharing or other plan, agreement or commitment) or any increase in the compensation or benefits payable or to become payable to any officer or employee, except in the ordinary course of business consistent with past practice; (h) declared, paid or set aside for payment any dividend or other distribution in respect of its capital stock (except, (i) with respect to the Company, for regular quarterly dividends in an amount not to exceed $0.07 per Share), and (ii) with respect to Company Subsidiaries, cash dividends or other cash distributions to the Company or any other Company Subsidiary in the ordinary course of business consistent with the Company's cash management procedures) or redeemed, purchased or otherwise acquired, directly or indirectly, any shares of capital stock or other securities of the Company or any Company Subsidiary; (i) except as set forth in the Company SEC Documents filed prior to the date hereof, (i) made any change in any of the accounting methods used by it materially affecting its assets, liabilities or business, except for such changes required by GAAP or (ii) made any Tax election or changed any Tax election already made, adopted any Tax accounting method, changed any Tax accounting method, entered into any closing agreement or settled any material claim or material assessment relating to Taxes or consented to any claim or assessment relating to Taxes or any waiver of the statute of limitations for any such claim or assessment; (j) paid, loaned or advanced any amount to, or sold, transferred or leased any material properties or assets (real, personal or mixed, tangible or intangible) to, or entered into any agreement or arrangement with, any of its officers or directors or any affiliate or associate of any of its officers or directors except for 20 directors' fees, and compensation to officers at rates not exceeding the rates of compensation paid during the year 2001; or (k) agreed, whether in writing or otherwise, to take any action described in this Section 3.09. Section 3.10 No Undisclosed Liabilities. Except (a) as disclosed in -------------------------- the Financial Statements and (b) for liabilities and obligations (i) incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date, (ii) arising under this Agreement, (iii) as disclosed in Section 3.10 of the Company Disclosure Schedule, or (iv) as would not, individually or in the aggregate, have a Company Material Adverse Effect, neither the Company nor any Company Subsidiary has incurred any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise required by GAAP to be recognized or disclosed on a consolidated balance sheet of the Company or any Company Subsidiary or in the notes thereto. Section 3.11 Litigation. Except to the extent specifically disclosed ---------- with respect to a particular matter in the Company SEC Documents or set forth in Section 3.11 of the Company Disclosure Schedule, there is no suit, claim, action, proceeding, including, without limitation, arbitration proceeding or alternative dispute resolution proceeding, or investigation pending or, to the knowledge of the Company, threatened against, affecting or naming as a party thereto the Company or any Company Subsidiary that could reasonably be expected, individually or in the aggregate, to (i) have a Company Material Adverse Effect or (ii) materially delay the consummation of the Transactions. Section 3.12 Employee Benefit Plans; ERISA. Except to the extent ----------------------------- specifically disclosed with respect to a particular matter in the Company SEC Documents: (a) Section 3.12(a) of the Company Disclosure Schedule contains a true and complete list of each material deferred compensation and each material incentive compensation, equity compensation plan, "welfare" plan, fund or program (within the meaning of section 3(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")); "pension" plan, fund or program ----- (within the meaning of section 3(2) of ERISA); each material employment, termination or severance agreement; and each other material employee benefit plan, fund, program, agreement or arrangement, in each case, that is sponsored, maintained or contributed to 21 or required to be contributed to by the Company or by any Company Subsidiary, for the benefit of any employee or former employee of the Company or any Company Subsidiary (the "Plans"). ----- (b) With respect to each Plan, the Company has heretofore delivered or made available to Parent true and complete copies of the Plan and any amendments thereto (or if the Plan is not a written Plan, a description thereof), any related trust or other funding vehicle, any reports or summaries required under ERISA or the Code and the most recent determination letter received from the Internal Revenue Service with respect to each Plan intended to qualify under section 401 of the Internal Revenue Code of 1986, as amended (the "Code"). ---- (c) No material liability under Title IV or section 302 of ERISA has been incurred by the Company or any trade or business, whether or not incorporated, that together with the Company would be deemed a "single employer" within the meaning of section 4001(b) of ERISA (an "ERISA Affiliate") that has --------------- not been satisfied in full, and, to the Company's knowledge, no condition exists that presents a material risk to the Company or any ERISA Affiliate of incurring any such liability, other than liability for premiums due the Pension Benefit Guaranty Corporation (which premiums have been paid when due). (d) With respect to each Plan which is subject to Title IV of ERISA (and that is not a multiemployer plan within the meaning of Section 3(37) of ERISA (a "Multiemployer Plan")) (a "Title IV Plan"), the present value of ------------------ ------------- accrued benefits under such plan, based upon the actuarial assumptions used for financial reporting purposes in the most recent actuarial report prepared by such plan's actuary with respect to such plan did not exceed, as of its latest valuation date, the then current value of the assets of such plan allocable to such accrued benefits. (e) With respect to any Title IV Plan that is a Multiemployer Plan, covering employees of the Company or any ERISA Affiliate, (i) none of the transactions contemplated by this Agreement will result in a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in sections 4203 and 4205 of ERISA and, (ii) since June 1, 1995, no event has occurred that presents a material risk of a complete or partial withdrawal, and neither Company nor any ERISA Affiliate has been assessed any withdrawal liability, (iii) neither the Company nor any ERISA Affiliate has any contingent liability under section 4204 of ERISA, and (iv) to the 22 Company's knowledge, no circumstances exist that present a material risk that any such plan will go into reorganization. (f) No Title IV Plan or any trust established thereunder has incurred any "accumulated funding deficiency" (as defined in section 302 of ERISA and section 412 of the Code), whether or not waived, as of the last day of the most recent fiscal year of each Title IV Plan ended prior to the Effective Time. All contributions required to be made with respect to any Plan on or prior to the Effective Time have been timely made, or have been reflected on the Financial Statements. (g) Each Plan has been operated and administered in all material respects in accordance with its terms and applicable law, including but not limited to ERISA and the Code. (h) Each Plan intended to be "qualified" within the meaning of section 401(a) of the Code, with the exception of any Multiemployer Plan, has received a favorable determination letter from the Internal Revenue Service, and to the Company's knowledge, there are no circumstances likely to result in revocation of any such favorable determination letter or the loss of the qualification of any such Plan under Section 401(a) of the Code. (i) No Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of the Company or any Subsidiary for periods extending beyond their retirement or other termination of service, other than (i) coverage mandated by applicable law, (ii) death benefits under any "pension plan," or (iii) benefits the full cost of which is borne by the current or former employee (or his beneficiary). (j) The consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event, (i) entitle any current or former employee or officer of the Company or any ERISA Affiliate to severance pay, unemployment compensation or any other payment, except as expressly provided in this Agreement, or (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee or officer. (k) There are no pending, or, to the knowledge of the Company, threatened or anticipated claims by or on behalf of any Plan, by any employee or beneficiary covered under any such Plan, or otherwise involving any such 23 Plan (other than routine claims for benefits), which would have, individually or in the aggregate, a Company Material Adverse Effect. (l) Except as would not be expected to result in a Material Adverse Effect, with respect to all of the Plans which are subject to Laws other than those of the United States, (a) such Plans are in material compliance with any applicable Laws, including relevant tax laws, and the requirements of any trust deed under which they are established, (b) all employer and employee contributions to each such Plan required by law or by the terms of such plan have been made, or, if applicable, accrued, in accordance with normal accounting practices; and (c) the fair market value of the assets of each funded plan, the liability of each insurer for any plan funded through insurance or the book reserve established for any plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations, as of the Effective Time, with respect to all current and former participants in such plan. Section 3.13 Taxes. (a) Except to the extent specifically disclosed ----- with respect to a particular matter in the Company SEC Documents or as set forth in Section 3.13 of the Company Disclosure Schedule: (i) the Company and all Company Subsidiaries (x) have duly filed (or there have been filed on their behalf) with the appropriate Tax Authorities (as hereinafter defined) all material Tax Returns (as hereinafter defined) required to be filed by them, and all such Tax Returns are true, correct and complete in all material respects, and (y) have duly and timely paid in full (or there has been paid on their behalf), or (in the case of any Taxes that are being contested in good faith by appropriate proceedings) have established reserves (in accordance with GAAP) as reflected on the Financial Statements, all material Taxes (as hereinafter defined) that are due and payable and for which they are liable; (ii) there are no material liens for Taxes upon any property or assets of the Company or any Company Subsidiary, except for liens for Taxes not yet due or for Taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established on the Financial Statements in accordance with GAAP; (iii) no material Federal, state, local or foreign Audits (as hereinafter defined) are pending with regard to any material Taxes or 24 material Tax Returns of the Company or any Company Subsidiary and to the best knowledge of the Company and the Company Subsidiaries no such Audit is threatened; (iv) the Federal income Tax Returns of the Company and the Company Subsidiaries have been examined by the applicable Tax Authorities (or the applicable statutes of limitation for the assessment of Taxes for such periods have expired) for all periods through and including March 31, 1998, and as of the date hereof no material adjustments have been asserted as a result of such examinations which have not been (x) resolved and fully paid, or (y) reserved on the Financial Statements in accordance with GAAP. None of the Company or any Company Subsidiary has granted any request, agreement, consent or waiver to extend the statutory period of limitations applicable to the assessment of any Tax with respect to the Tax Return of the Company or any Company Subsidiary; (v) neither the Company nor any Company Subsidiary is a party to any written or oral contract, agreement or arrangement providing for the allocation, indemnification, or sharing of Taxes; and (vi) neither the Company nor any Company Subsidiary has been a member of any "affiliated group" (as defined in section 1504(a) of the Code) other than the affiliated group of which Company is the "parent" and is not subject to Treasury Regulation Section 1.1502-6 (or any similar provision under foreign, state, or local law) for any period other than in connection with the affiliated group of which the company is the "parent," or has any liability for Taxes of any Person (other than the Company and the Company Subsidiaries) under Treasury Regulation Section 1.1502-6 or any similar provision of state, local or foreign law, as a transferee or successor, by contract or otherwise. (b) "Audit" means any audit, assessment, or other examination ----- relating to Taxes by any Tax Authority or any judicial or administrative proceedings relating to Taxes. "Tax" or "Taxes" means all Federal, state, local, --- ----- and foreign taxes, and other duties or assessments of a similar nature (whether imposed directly or through withholding and including all required estimated payments of such taxes, duties or assessments), including any interest, additions to tax, or penalties applicable thereto, imposed by any Tax Authority. "Tax Authority" means the Internal Revenue Service and any other domestic or ------------- foreign governmental authority responsible 25 for the administration of any Taxes. "Tax Returns" mean all Federal, state, ----------- local, and foreign tax returns, declarations, statements, reports, schedules, forms, documents and information returns (and any amendments thereto) that are filed or required to be filed with any Tax Authority. Section 3.14 Contracts. Each Company Agreement is valid, binding and --------- enforceable and is in full force and effect, except where any failure to be valid, binding and enforceable and in full force and effect would not have a Company Material Adverse Effect, and there are no defaults thereunder, except those defaults that individually or in the aggregate would not have a Company Material Adverse Effect. Section 3.15 Real and Personal Property. (a) Each of the Company and -------------------------- the Company Subsidiaries has good and marketable title to, or valid leasehold interests in, all its properties and assets, free and clear of all Encumbrances, except for Encumbrances that, individually or in the aggregate, would not have a Company Material Adverse Effect. (b) Each of the Company and the Company Subsidiaries has complied in all material respects with the terms of all leases to which it is a party, except for such non-compliance that would not, individually or in the aggregate, have a Company Material Adverse Effect. Each of the Company and the Company Subsidiaries enjoys peaceful and undisturbed possession under all such leases, except as would not, individually or in the aggregate, have a Company Material Adverse Effect. Section 3.16 Intellectual Property. (a) As used in this Agreement, --------------------- "Company Intellectual Property" means all of the following which are used to ----------------------------- conduct the business of the Company or any Company Subsidiary as presently conducted: (i) trademarks, service marks, logos, trade dress, corporate names, trade names, Internet domain names, all registrations and applications for the foregoing, and all goodwill associated with the foregoing; (ii) patents and pending patent applications; (iii) trade secrets, and confidential, proprietary, know-how, processes, formulas, and recipes that are not the subject of a patent or patent application, (iv) copyrights, copyright applications and registrations, computer software programs, databases and compilations, but excluding commercially-available software and documentation and other related elements having a replacement value of less than $5,000; and (v) all material licenses and other agreements to which the Company or any Company Subsidiary is a party and relate to any of the foregoing. 26 (b) Section 3.16(b) of the Company Disclosure Schedule sets forth all material Company Intellectual Property, which is owned by the Company or any Company Subsidiary, except for Company Intellectual Property falling under 3.16(a)(iii), and all material agreements concerning Company Intellectual Property to which the Company or any Company Subsidiary is a party (the "Listed ------ Company Intellectual Property"). - ----------------------------- (c) The Company and each Company Subsidiary own or have the right to use all Company Intellectual Property used in the Company's business as presently conducted, except as would not, individually or in the aggregate, have a Company Material Adverse Effect. (d) To the knowledge of the Company and each Company Subsidiary and except as would not, individually or in the aggregate, have a Company Material Adverse Effect, the conduct of the Company's and each Company Subsidiary's business and the use of the Listed Company Intellectual Property in connection therewith does not infringe, misappropriate, or otherwise violate any intellectual property rights or any other proprietary right of any third party, and neither the Company nor any Company Subsidiary has received written notice alleging any infringement, misappropriation, or other violation by the Company or any Company Subsidiary of any such rights of any third party. (e) Neither the Company nor any Company Subsidiary has received notice or has knowledge that any third party is infringing upon, misappropriating, or otherwise violating any Listed Company Intellectual Property rights owned by the Company or any Company Subsidiary. (f) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect and to the knowledge of the Company and each Company Subsidiary, (i) the Listed Company Intellectual Property owned by the Company or any Company Subsidiary is valid, subsisting, and in full force and effect, (ii) record ownership of the Listed Company Intellectual Property owned by the Company or any Company Subsidiary is up-to-date, and (iii) there are no pending or, to the knowledge of the Company, threatened challenges to the validity of any Listed Company Intellectual Property owned by the Company or any Company Subsidiary. 27 (g) The consummation of the transactions contemplated herein will not materially alter or impair the Company's or any Company Subsidiary's rights to own or use any Listed Company Intellectual Property. (h) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, the Company and each Company Subsidiary has taken reasonable steps to preserve the confidentiality of its trade secrets, its confidential, proprietary manufacturing processes, formulas, recipes, and other confidential, proprietary information. Section 3.17 Labor Matters. Except as set forth in Section 3.17 of ------------- the Company Disclosure Schedule or in the Company SEC Reports filed prior to the date hereof: (a) The Company and each Company Subsidiary has good labor relations and there are no controversies, grievances, or arbitrations pending, or to the knowledge of the Company, threatened between the Company or any Company Subsidiary, on the one hand, and any of their respective employees, on the other hand, which would have, individually or in the aggregate, a Company Material Adverse Effect. Since March 28, 2000, the Company does not know of any material labor union organizing activities with respect to any employees of the Company or any Company Subsidiary into one or more collective bargaining units. (b) The Company and all Company Subsidiaries are in compliance in all material respects with all applicable laws respecting employment and employment practices, terms and conditions of employment, health and safety, and wages and hours, and are not engaged in any unfair labor practice except for any noncompliance or practices that would not have, individually or in the aggregate, a Company Material Adverse Effect. (c) Neither the Company nor any of its subsidiaries nor any of their respective employees, agents or representatives has committed a material unfair labor practice as defined in the National Labor Relations Act and there is no material unfair labor practice complaint or other allegation of labor law violation against the Company or any Company Subsidiary pending before the National Labor Relations Board or any other Governmental Entity. 28 (d) Since March 28, 2000, there has been no and there is no actual or threatened material labor dispute, strike, slowdown or work stoppage or, to the knowledge of the Company, threatened against or affecting the Company or any Company Subsidiary. (e) Except for such matters as would no reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, neither Company nor any Company Subsidiary has received notice of any actual or threatened investigation, charge or complaint against Company or any Company Subsidiary with respect to employees pending before the Equal Employment Opportunity Commission or any other Governmental Entity regarding an unlawful employment practice. (f) The Company and each of its Subsidiaries is and has been in substantial compliance with all notice and other requirements under the Workers' Adjustment and Retraining Notification Act and any similar state, local or foreign law. Section 3.18 Compliance with Laws. The Company and the Company -------------------- Subsidiaries have complied in a timely manner and in all material respects with all laws, rules and regulations, ordinances, judgments, decrees, orders, writs and injunctions of all United States federal, state, local, foreign governments and agencies thereof which affect the business, properties or assets of the Company and the Company Subsidiaries, except for instances of possible noncompliance that would not, individually or in the aggregate, have Company Material Adverse Effect, and no notice, charge, claim, action or assertion has been received by the Company or any Company Subsidiary or has been filed, commenced or, to the Company's knowledge, threatened against the Company or any Company Subsidiary alleging any violation of any of the foregoing, except for instances of possible noncompliance that individually or in the aggregate would not have Company Material Adverse Effect. All licenses, permits and approvals required under such laws, rules and regulations are in full force and effect except where the failure to be in full force and effect would not, individually or in the aggregate, have a Company Material Adverse Effect. Section 3.19 Condition of Assets. All of the material property, plant ------------------- and equipment of the Company and each Company Subsidiary has in all material respects been maintained in reasonable operating condition and repair, ordinary wear and tear excepted, and is in all material respects sufficient to permit the Company and 29 each Company Subsidiary to conduct their operations in the ordinary course of business in a manner consistent with their past practices. Section 3.20 Customers and Suppliers. Since March 28, 2000, there has ----------------------- been no termination, cancellation or material curtailment of the business relationship of the Company or any Company Subsidiary with any customer or supplier or group of affiliated customers or suppliers which individually or in the aggregate would result in a Company Material Adverse Effect nor any written notice of intent to so terminate, cancel or materially curtail (and would have such an effect). Section 3.21 Environmental Matters. (a) The following terms shall --------------------- have the following meanings for the purposes of this Agreement: (i) "Environmental Laws" shall mean all foreign, ------------------ Federal, state and local laws, regulations, rules and ordinances relating to pollution or protection of the environment or human health and safety, or as it relates to Hazardous Substance exposure, including, without limitation, laws relating to releases or threatened releases of Hazardous Substances into the environment (including, without limitation, ambient air, surface water, groundwater, land, surface and subsurface strata) 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 environmental harm to 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, without limitation, 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 an Hazardous Substance at any location, whether or not owned or operated by the Company or any Company Subsidiary or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. 30 (iii) "Hazardous Substances" shall mean (a) any -------------------- petrochemical or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "restricted hazardous materials," "extremely hazardous substances," "toxic substances," "contaminants" or "pollutants" or words of similar meaning and regulatory effect; or (c) any other chemical, material or substance, exposure to which is prohibited, limited, or regulated by any applicable Environmental Law. (b) Except to the extent specifically disclosed with respect to a particular matter in the Company SEC Documents: (i) The Company and each Company Subsidiary has been and is in material compliance with all applicable Environmental Laws, including, but not limited to, possessing all permits, authorizations, licenses, exemptions and other governmental authorizations required for its operations as currently conducted under applicable Environmental Laws, except for such non-compliance that would not, individually or in the aggregate, have a Company Material Adverse Effect. (ii) There is no pending or, to the knowledge of the Company, threatened claim, lawsuit, or administrative proceeding against the Company or any Company Subsidiary, under or pursuant to any Environmental Law, that would have a Company Material Adverse Effect. Neither the Company nor any Company Subsidiary has received notice from any Person, including, but not limited to, any Governmental Entity, alleging that the Company or any Company Subsidiary has been or is in violation or potentially in violation of any applicable Environmental Law or otherwise may be liable under any applicable Environmental Law, which violation or liability is unresolved and would have a Material Adverse Effect on the Company. Neither the Company nor any Company Subsidiary has 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, except for such matters as would not, if they matured into 31 a claim against the Company or any Company Subsidiary, individually or in the aggregate, have a Company Material Adverse Effect. (iii) There is no Environmental Claim pending or, to the knowledge of the Company, threatened against the Company or any Company Subsidiary or, to the knowledge of the Company or any Company Subsidiary, against any Person whose liability for any Environmental Claim the Company or any Company Subsidiary has or may have retained and there are no past or present actions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal of any Hazardous Substance that would be expected to form the basis of any Environmental Claim against the Company or any Company Subsidiary or, to the knowledge of the Company or any Company Subsidiary, against any Person whose liability for any Environmental Claim the Company or any Company Subsidiary has retained that, in each case, would individually or in the aggregate have a Company Material Adverse Effect. (iv) With respect to the real property that is currently owned, leased or operated by the Company or any Company Subsidiary, 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.) of Hazardous Substances or any other contaminant or pollutant on or underneath any of such real property that would, individually or in the aggregate, have a Company Material Adverse Effect. (v) With respect to real property that was formerly owned, leased or operated by the Company or any Company Subsidiary or any of their predecessors in interest, there were 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.) of Hazardous Substances or any other contaminant or pollutant on or underneath any of such real property during or prior to the Company's or any Company Subsidiary's ownership or operation of such real property that would, individually or in the aggregate, result in a Company Material Adverse Effect. (vi) Neither the Company nor any Company Subsidiary has entered into any written agreement or incurred any material legal or monetary obligation to pay to, reimburse, guarantee, pledge, defend, 32 indemnify or hold harmless any Person from or against any liabilities or costs arising out of or related to the generation, manufacture, use, transportation or disposal of Hazardous Substances, or otherwise arising in connection with or under Environmental Laws, other than in each case exceptions which would not, individually or in the aggregate, have a Company Material Adverse Effect. (vii) Neither the Company nor any Company Subsidiary has 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") established pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42, U.S.C. 9601, et seq.; (ii) listed on any state or foreign list of hazardous waste sites that is analogous to the NPL; or (iii) has been subject to environmental investigation or remediation, other than, in each case, exceptions which would not, individually or in the aggregate, have a Company Material Adverse Effect. (c) Notwithstanding any other representation and warranty in this Article III, the representations and warranties contained in this Section 3.21 constitute the sole representation and warranties of the Company with respect to any Environmental Law, Environmental Claim or Hazardous Substance. Section 3.22 Information in the Offer Documents, the Schedule 14D-9 ------------------------------------------------------ and the Proxy Statement. The information supplied by the Company for inclusion - ----------------------- in the Offer Documents, the Schedule 14D-9 and the Proxy Statement, if any, will not, at the respective times the Offer Documents, the Schedule 14D-9 and the Proxy Statement or any amendments or supplements thereto are filed with the SEC or are first published, sent or given to stockholders of the Company, as the case may be, 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 made therein, in the light of the circumstances under which they were made, not misleading. The Schedule 14D-9, and the Proxy Statement, if any, will comply in all material respects with the provisions of applicable federal securities laws and, on the date filed with the SEC and on the date first published or sent or given to the Company's stockholders, will not 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 made therein, in the light of the circumstances under which they were made, not misleading, except that the Company makes no representation or warranty with respect to statements made in the Offer 33 Documents, Schedule 14D-9 and the Proxy Statement, if any, based on information furnished by Parent or the Purchaser for inclusion therein. Section 3.23 Opinion of Financial Advisor. The Company has received ---------------------------- the written opinion of UBS Warburg, LLC (the "Company Financial Advisor"), dated ------------------------- June 29, 2001, to the effect that, as of such date, the consideration to be received in the Offer and the Merger by the Company's stockholders is fair to the Company's stockholders from a financial point of view, and a copy of such opinion has been delivered to Parent and the Purchaser. The Company has been authorized by the Company Financial Advisor to permit the inclusion of such opinion in its entirety in the Offer Documents, the Schedule 14D-9 and the Proxy Statement. Section 3.24 Brokers. No broker, investment banker, financial advisor ------- or other person, other than the Company Financial Advisor, the fees and expenses of which will be paid by the Company, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Company or the Purchaser. True and correct copies of all agreements between the Company and the Company Financial Advisor, including, without limitation, any fee arrangements, are included in Section 3.24 of the Disclosure Schedule. Section 3.25 Rights Agreement. The Company has taken all action which ---------------- may be necessary under the Rights Agreement, dated as of February 22, 1996, by and between the Company and Boatmen's Trust Company as rights agent (the "Rights ------ Agreement") so that the execution of this Agreement and any amendments thereto - --------- by the parties hereto and the consummation of the transactions contemplated hereby and thereby shall not cause (i) Parent and/or the Purchaser or their respective "Affiliates" or "Associates" to become an "Acquiring Person" (as such terms are defined in the Rights Agreement) or (ii) a "Distribution Date," a "Stock Acquisition Date" (as such terms are defined in the Rights Agreement) to occur and no such date or event has occurred prior to the date hereof, irrespective of the number of shares of Common Stock acquired pursuant to the Offer or other transactions contemplated by this Agreement. Section 3.26 Capital Expenditures. The budgeted capital expenditures -------------------- of the Company for the fiscal year 2002 is $111.3 million; as of June 19, 2001, the Company's expenditures in respect of capital expenditures was $20.1 million, which amount has been spent in all material respects in accordance with the budget. 34 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER Parent and the Purchaser represent and warrant to the Company as follows: Section 4.1 Organization. Each of Parent and the Purchaser is a ------------ corporation duly organized and validly existing and in good standing under the laws of the jurisdiction of its respective incorporation and has all requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as is now being conducted, except where the failure to be so organized and existing or to have such power, authority, and governmental approvals would not, individually or in the aggregate, impair in any material respect the ability of each of Parent and the Purchaser, as the case may be, to perform its obligations under this Agreement, or prevent or materially delay the consummation of any of the Transactions. Section 4.2 Authorization; Validity of Agreement; Necessary Action. ------------------------------------------------------ Each of Parent and the Purchaser has full corporate power and authority to execute and deliver this Agreement and to consummate the Transactions. The execution, delivery and performance by Parent and the Purchaser of this Agreement and the consummation of the Transactions have been duly authorized by the boards of directors of each of Parent and the Purchaser, and by Parent as the sole stockholder of the Purchaser, and no other corporate authority or approval on the part of Parent or the Purchaser is necessary to authorize the execution and delivery by Parent and the Purchaser of this Agreement and the consummation of the Transactions. This Agreement has been duly executed and delivered by Parent and the Purchaser and, assuming due and valid authorization, execution and delivery hereof by the Company, is the valid and binding obligation of each of Parent and the Purchaser enforceable against each of them in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. 35 Section 4.3 Consents and Approvals; No Violations. None of the ------------------------------------- execution, delivery or performance of this Agreement by Parent or the Purchaser, the consummation by Parent or the Purchaser of the Transactions, or compliance by Parent or the Purchaser with any of the provisions hereof will (a) conflict with or result in any breach of any provision of the organizational documents of Parent or the Certificate of Incorporation or Bylaws of the Purchaser, (b) violate, conflict with or result in a breach of any provisions under any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, deed of trust, license, franchise, permit, concession, contract, lease or other instrument or agreement to which Parent is a party (c) require any filing by Parent or the Purchaser with, or permit, authorization, consent or approval of, any Governmental Entity (except for (i) compliance with any applicable requirements of the Exchange Act and Securities Act, (ii) any filing pursuant to the DGCL, (iii) filings, permits, authorizations, consents and approvals as may be required under the HSR Act, the ECMR and comparable merger and notifications, laws or regulations of foreign jurisdictions, (iv) the filing or deemed filing with the SEC and The New York Stock Exchange, Inc. of (A) the Schedule TO, (B) the Proxy Statement, if stockholder approval is required by law and (C) such reports under Section 13(a) of the Exchange Act as may be required in connection with this Agreement and the Transactions, or (iv) such filings and approvals as may be required by any applicable state securities, blue sky or takeover laws), or (d) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Parent, any of its Subsidiaries, or any of their properties or assets, except in the case of clause (b), (c) or (d) such violations, breaches or defaults which would not, individually or in the aggregate, impair in any material respect the ability of each of Parent and the Purchaser to perform its obligations under this Agreement, as the case may be, or prevent or materially delay the consummation of any the Transactions. Section 4.4 Information in the Proxy Statement. None of the ---------------------------------- information supplied by Parent or the Purchaser in writing expressly for inclusion or incorporation by reference in the Proxy Statement (or any amendment thereof or supplement thereto) will, at the date mailed to stockholders and at the time of the meeting of stockholders to be held in connection with the Merger, 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 made therein, in light of the circumstances under which they are made, not misleading. Section 4.5 Information in the Offer Documents. The Offer Documents ---------------------------------- will comply in all material respects with the provisions of applicable federal 36 securities laws and, on the date filed with the SEC and on the date first published or sent or given to the Company's stockholders, will not 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 made therein, in the light of the circumstances under which they were made, not misleading, except that no representation is made by Parent or the Purchaser with respect to information furnished by the Company expressly for inclusion in the Offer Documents. Section 4.6 Brokers. No broker, investment banker, financial advisor ------- or other Person, other than J.P. Morgan Chase & Co., the fees and expenses of which will be paid by Parent, is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent or the Purchaser. Section 4.7 Financing. The Purchaser currently has and will have at --------- each of (i) the time of acceptance for purchase by the Purchaser of the Shares pursuant to the Offer and (ii) the Effective Time sufficient funds to consummate the Transactions, including payment in full for all Shares validly tendered into the Offer or outstanding at the Effective Time. ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER Section 5.1 Acquisition Proposals. The Company shall promptly notify --------------------- Parent if any proposals are received by, any information is requested from, or any negotiations or discussions are sought to be initiated or continued with the Company or its officers, directors, employees, investment bankers, attorneys, accountants or other agents, in each case, in connection with an Acquisition Proposal (an "Acquisition Proposal Interest"), which notice shall identify the ----------------------------- name of the Person indicating such Acquisition Proposal Interest and the material terms and conditions of any Acquisition Proposal. As used in this Agreement, "Acquisition Proposal" means any tender or exchange offer involving -------------------- the Company, any proposal for a merger, consolidation or other business combination involving the Company, or any proposal or offer to acquire in any manner a substantial equity interest in, or a substantial portion of the business or assets of, the Company, any proposal or offer with respect to any recapitalization or restructuring with respect to the Company or any proposal or offer with respect to any other transaction similar to any of the foregoing with respect to the Company. 37 Section 5.2 Interim Operations of the Company. The Company covenants --------------------------------- and agrees that, except (i) as expressly contemplated by this Agreement, (ii) as required by applicable law, or (iii) as Parent may consent (which consent shall not be unreasonably withheld or delayed) in writing, after the date hereof, and prior to the earlier of (x) the termination of this Agreement in accordance with Article VIII and (y) the time the designees of Parent constitute a majority of the Company Board of Directors (the "Appointment Date"): ---------------- (a) the business of the Company and the Company Subsidiaries shall be conducted only in the ordinary course of business consistent with past practice, and each of the Company and the Company Subsidiaries shall use its reasonable efforts to preserve its present business organization intact and maintain good relations with customers, suppliers, employees, contractors, distributors and others having business dealings with it; (b) the Company shall not, directly or indirectly, (i) except upon exercise of the Options or other rights to purchase Shares pursuant to the Option Plan outstanding on the date hereof or for the issuance of Shares pursuant to the terms of Options outstanding under the Plans in effect on the date hereof, issue, sell, transfer or pledge or agree to sell, transfer or pledge any treasury stock of the Company or any capital stock of any Company Subsidiary beneficially owned by it, (ii) amend its Certificate of Incorporation or Bylaws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of the Company; (c) neither the Company nor any Company Subsidiary shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock, except, with respect to the Company, for regular quarterly dividends in an amount not to exceed $0.07 per Share; (ii) issue, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants or rights of any kind to acquire, any shares of capital stock of the Company or any Company Subsidiaries, other than Shares reserved for issuance on the date hereof pursuant to the exercise of the Options outstanding on the date hereof; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any of its material assets, or incur or modify any material indebtedness or other liability, other than in the ordinary course of business consistent with past practice; or (iv) redeem, purchase or otherwise acquire any shares of its capital stock, 38 or any instrument which includes a right to acquire such shares except in connection with the exercise of repurchase rights or rights of first refusal in favor of the Company with respect to shares of Common Stock issued upon exercise of Options granted under the Option Plan; (d) except as set forth in Section 5.2(d) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary shall change the compensation or benefits payable or to become payable to any of its officers, directors or employees (other than increases in wages to employees who are not directors or affiliates, in the ordinary course of business consistent with past practice, as required by any collective bargaining agreement), enter into or amend any employment, severance, consulting, termination or other agreement or employee benefit plan or make any loans to any of its officers, directors, employees or affiliates or change its existing borrowing or lending arrangements for or on behalf of any of such persons pursuant to an employee benefit plan or otherwise, other than such actions taken in the ordinary course of business consistent with past practice; (e) neither the Company nor any Company Subsidiary shall pay or arrange for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or affiliate or pay or make any arrangement for payment to any officers, directors, employees or affiliates of the Company of any amount relating to unused vacation days, except payments and accruals made in the ordinary course of business consistent with past practice; adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any Company director, officer or employee, whether past or present, or amend in any material respect any such existing plan, agreement or arrangement in a manner inconsistent with the foregoing; (f) the Company will not, in any material respect, modify, amend or terminate any of the material Company Agreements, and neither the Company nor any Company Subsidiary shall waive, release or assign any material rights or claims under any of the material Company Agreements; 39 (g) neither the Company nor any Company Subsidiary will permit any material insurance policy naming it as a beneficiary or a loss payee to be cancelled or terminated without notice to Parent; (h) neither the Company nor any Company Subsidiary will (i) incur or assume any long-term indebtedness or any short-term indebtedness (which shall not include trade payables) (except for short-term indebtedness for working capital in the ordinary course of business not to exceed $50,000,000 in the aggregate); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, other than in an immaterial amount; (iii) make any loans, advances or capital contributions to, or investments in, any other Person other than in an immaterial amount; (iv) acquire (by merger, consolidation or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof or any equity interest therein; or (v) enter into any material commitment or transaction (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets or real estate); (i) neither the Company nor any Company Subsidiary shall enter into or modify any collective bargaining agreement or any successor collective bargaining agreement to any collective bargaining agreement other than in the ordinary course of business; (j) the Company and each Company Subsidiary shall timely and properly file, or timely and properly file requests for extensions to file, all federal, state, local and foreign tax returns which are required to be filed, and pay or make provision for the payment of all taxes owed by them; (k) the Company shall not waive, amend or otherwise alter the Rights Agreement or redeem the Rights; (l) neither the Company nor any Company Subsidiary will (i) change any of the accounting methods used by it except for such changes required by GAAP or (ii) make any Tax election or change any Tax election already made, adopt any Tax accounting method, change any Tax accounting method, enter into any closing agreement or settle any material claim or material assessment relating to Taxes or consent to any claim or assessment relating to Taxes or any waiver of the statute of limitations for any such claim or assessment; 40 (m) neither the Company nor any Company Subsidiary will pay, discharge or satisfy any claims, liabilities or obligations (whether absolute, accrued, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligations, in the ordinary course of business consistent with past practice, or of claims, liabilities or obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company; (n) neither the Company nor any Company Subsidiary will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any Company Subsidiary (other than the Merger); (o) neither the Company nor any Company Subsidiary will take, or agree in writing or otherwise to take, any action that would or is reasonably likely to result in any of the conditions to the Merger set forth in Article VII or any of the conditions to the Offer set forth in Annex I not being satisfied, or would make any representation or warranty of the Company contained herein inaccurate in any material respect at or prior to the Effective Time, or that would materially impair the ability of the Company to consummate the Merger in accordance with the terms hereof or materially delay such consummation; (p) neither the Company nor any Company Subsidiary shall make any capital expenditure which is not in all material respects in accordance with the annual budget for the fiscal year 2002, a true and correct copy of which has been delivered to Parent; and (q) neither the Company nor any Company Subsidiary will enter into any agreement, contract, commitment or arrangement to do any of the foregoing, or authorize, recommend, propose, in writing or announce an intention to do any of the foregoing. Notwithstanding the foregoing, nothing in this Section 5.2 or any other provision of this Agreement shall prohibit (i) any wholly-owned direct or indirect subsidiary of the Company from paying cash dividends or making other cash distributions to the Company or any wholly-owned direct or indirect subsidiary of the Company in the ordinary course of business consistent with the Company's cash management procedures, or (ii) the Company (or any subsidiary of the Company) from 41 fulfilling its obligations under any agreement or contract specifically disclosed in Section 5.2 of the Company Disclosure Schedule and previously provided to Parent. Section 5.3 No Solicitation. (a) The Company agrees that it shall --------------- immediately cease and cause to be terminated all existing discussions, negotiations and communications with any Persons with respect to any Acquisition Proposal. Except as provided in Section 5.3(b), from the date of this Agreement until the earlier of termination of this Agreement or the Effective Time, the Company shall not and shall not authorize or permit its officers, directors, employees, investment bankers, attorneys, accountants or other agents (collectively, "Representatives") to directly or indirectly (i) initiate, --------------- solicit or knowingly encourage, or knowingly take any action to facilitate the making of, any offer or proposal which constitutes or which may be reasonably likely to lead to any third-party Acquisition Proposal or (ii) enter into any agreement with respect to any Acquisition Proposal, or (iii) in the event of an unsolicited Acquisition Proposal for the Company, engage in negotiations or discussions with, or provide any information or data to, any Person (other than Parent or any of its affiliates or representatives) relating to any Acquisition Proposal. Notwithstanding the foregoing, nothing contained in this Section 5.3 shall prohibit the Company or the Company Board of Directors from (x) in the event of an unsolicited Acquisition Proposal, requesting from the third party such information as may be reasonably necessary for the Company Board of Directors to inform themselves as to the material terms of such Acquisition Proposal for the sole purpose of determining whether such Acquisition Proposal constitutes a Superior Proposal, provided, that (i) the Company Board of Directors shall have determined, in good faith after being advised by outside legal counsel, that taking such action with respect to an Acquisition Proposal from such third party is necessary in order for the Company Board of Directors to discharge its fiduciary duties under applicable law and (ii) upon receipt of such information requested from the third party, neither the Company nor any of its Representatives shall be permitted to engage in any further discussion or negotiations with any such third party that would otherwise violate paragraph (a) of this Section 5.3, (y) taking (and disclosing to the Company's stockholders) its position with respect to a tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 under the Exchange Act or (z) making such disclosure to the Company's stockholders as in the good-faith judgment of the Company Board of Directors, after receipt of advice from outside legal counsel to the Company, that such disclosure is necessary for the Company Board of Directors to comply with its fiduciary duties under applicable law. 42 (b) Notwithstanding the foregoing, prior to the acceptance of Shares pursuant to the Offer, the Company may furnish information concerning its business, properties or assets to any Person pursuant to a confidentiality agreement with terms no less favorable to the Company than those contained in the Confidentiality Agreement (other than with respect to any standstill provision contained therein), dated May 29, 2001 entered into between Parent and the Company (the "Confidentiality Agreement") and may negotiate and participate ------------------------- in discussions and negotiations with such Person concerning an Acquisition Proposal if, but only if, (x) such Acquisition Proposal is reasonably likely to be consummated (taking into account the legal aspects of the proposal, the Person making the Acquisition Proposal and approvals required in connection therewith); (y) such entity or group has on an unsolicited basis, and in the absence of any violation of this Section 5.3 by the Company, submitted a bona fide, fully financed, written proposal to the Company relating to any such transaction which the Board of Directors determines in good faith, after receiving advice from the Company's financial advisors, is more favorable than the Offer to the Company's stockholders from a financial point of view, and (z) in the good faith opinion of the Company Board of Directors, after consultation with outside legal counsel to the Company, providing such information or access or engaging in such discussions or negotiations is in the best interests of the Company and its stockholders and necessary in order for the Company Board of Directors to discharge its fiduciary duties to the Company's stockholders under applicable law (an Acquisition Proposal which satisfies clauses (x), (y) and (z) being referred to herein as a "Superior Proposal"). The Company shall promptly, ----------------- and in any event within two business days following receipt of a Superior Proposal and prior to providing any such party with any material non-public information, notify Parent of the receipt of the same. The Company shall promptly provide to Parent any material non-public information regarding the Company provided to any other party which was not previously provided to Parent, such additional information to be provided no later than the date of provision of such information to such other party. (c) Except as set forth herein, neither the Company Board of Directors nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to the Transactions, to Parent or to the Purchaser, the approval or recommendation by the Company Board of Directors of the Offer, this Agreement or the Merger, (ii) approve or recommend or propose to approve or recommend, any Acquisition Proposal or (iii) enter into any agreement with respect to any Acquisition Proposal. Notwithstanding the foregoing, prior to the time of acceptance for payment of Shares in the Offer, the Company Board of Directors may 43 (subject to the terms of this and the following sentence) withdraw or modify its approval or recommendation of the Offer, this Agreement or the Merger, approve or recommend a Superior Proposal, or enter into an agreement with respect to a Superior Proposal (an "Acquisition Agreement"), in each case at any time after --------------------- the third business day following the Company's delivery to Parent of written notice advising Parent that the Company Board of Directors has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal and identifying the Person making such Superior Proposal; provided, -------- however, that the Company shall not enter into an agreement with respect to a - ------- Superior Proposal unless the Company complies with Section 5.3(d). (d) The Company may terminate this Agreement and enter into an Acquisition Agreement with respect to such Superior Proposal, provided that, -------- prior to any such termination, (i) the Company has provided Parent written notice that it intends to terminate this Agreement pursuant to this Section 5.3(d), identifying the Superior Proposal then determined to be more favorable and the parties thereto and delivering a copy of the Acquisition Agreement for such Superior Proposal in the form to be entered into, (ii) within a period of three business days following the delivery of the notice referred to in clause (i) above, Parent does not propose adjustments in the terms and conditions of this Agreement and the Company shall have caused its financial and legal advisors to negotiate with Parent in good faith such proposed adjustments in the terms and conditions of this Agreement which the Company Board of Directors determines in its good faith judgment (after receiving the advice of its financial advisor) to be as favorable to the Company's stockholders as such Superior Proposal, and (iii) at least three full business days after the Company has provided the notice referred to in clause (i) above, the Company delivers to Parent (A) a written notice of termination of this Agreement pursuant to this Section 5.3(d), and (B) a wire transfer of immediately available funds in the amount of the Termination Fee (as defined in Section 8.2(b)). ARTICLE VI ADDITIONAL AGREEMENTS Section 6.1 Additional Agreements. Subject to the terms and --------------------- conditions as herein provided, the Company, Parent and the Purchaser shall each comply in all material respects with all applicable laws and with all applicable rules and regulations of any Governmental Entity to achieve the satisfaction of the Minimum Condition and all conditions set forth in Annex I attached hereto and in Article VII, and 44 to consummate and make effective the Merger and the other Transactions. Each of the parties hereto agrees to use all reasonable best efforts to obtain in a timely manner all necessary waivers, consents and approvals and to effect all necessary registrations and filings, and to use all reasonable best efforts to take, or cause to be taken, all other actions and to do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective as promptly as practicable the Transactions; provided; that nothing contained in -------- this Section 6.1 shall require any party to waive or exercise any right hereunder which is waivable or exercisable in the sole discretion of such party. Section 6.2 Notification of Certain Matters. The Company shall give ------------------------------- prompt notice to Parent and Parent shall give prompt notice to the Company (in the case of the Company, to the extent known by members of the Policy Committee of the Company and, in the case of Parent, to the extent known by the executive officers of Parent), of (a) the occurrence or non-occurrence of any event whose occurrence or non-occurrence, as the case may be, would cause any condition set forth in Annex I to not be satisfied in any material respect at any time from the date hereof to the date the Purchaser purchases Shares pursuant to the Offer and (b) any material failure of the Company, the Purchaser or Parent, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 6.2 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice or the representations or warranties of the parties or the conditions to the obligations of the parties hereto. Section 6.3 Access; Confidentiality. From the date hereof until the ----------------------- Effective Time, upon reasonable notice and subject to the terms of the Confidentiality Agreement, the Company shall (and shall cause each of the Company Subsidiaries to) afford to the officers, employees, accountants, counsel, financing sources and other representatives of Parent and the Purchaser, reasonable access, during normal business hours to all of its properties, books, contracts, commitments and records and, during such period, the Company shall (and shall cause each of the Company Subsidiaries to) furnish promptly to Parent and the Purchaser (a) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws and (b) all other information concerning its business, properties and personnel as Parent or the Purchaser may reasonably request. Unless otherwise required by law or regulation (including stock exchange rules) and until the Effective Time, Parent and the Purchaser will hold any 45 such information which is non-public in confidence in accordance with the terms of the Confidentiality Agreement (except as may be required by law or by any listing agreement with or by the listing rules of The New York Stock Exchange) and, in the event this Agreement is terminated for any reason, Parent or the Purchaser shall promptly return or destroy such information in accordance with the Confidentiality Agreement. No investigation pursuant to this Section 6.3 shall affect any representation or warranty made by the parties hereunder. Section 6.4 Consents and Approvals. ---------------------- (a) Each of Parent, the Purchaser and the Company shall take all reasonable actions necessary to comply promptly with all legal requirements which may be imposed on it with respect to this Agreement and the Transactions (which actions shall include, without limitation, furnishing all information required under the HSR Act, under the ECMR and in connection with approvals of or filings with any other Governmental Entity) and shall promptly cooperate with and, subject to such confidentiality agreements as may be reasonably necessary or requested, furnish information to each other or their counsel in connection with any such requirements imposed upon any of them or any of their Subsidiaries in connection with this Agreement and the Transactions. Each of the Company, Parent and the Purchaser shall, and shall cause respective Subsidiaries to, take all reasonable actions necessary to obtain (and shall cooperate with each other in obtaining) any consent, authorization, order or approval of, or any exemption by, any Governmental Entity or other public or private third party required to be obtained or made by Parent, the Purchaser, the Company or any of their respective Subsidiaries in connection with the Transactions or the taking of any action contemplated thereby or by this Agreement. (b) Each of the Company, the Purchaser and Parent shall take all reasonable actions necessary to file as soon as practicable following the date hereof notifications under the HSR Act, under the ECMR or under comparable merger notification laws under foreign jurisdictions, and to respond as promptly as practicable to any inquiries received from the Federal Trade Commission or the Antitrust Division of the Department of Justice or any authorities of such other foreign jurisdictions for additional information or documentation and to respond as promptly as practicable to all inquiries and requests received from any State Attorney General or other Governmental Entity in connection with antitrust or competition matters. Parent, the Purchaser and the Company agree to cooperate and to take promptly any and all commercially reasonable steps to resolve any issues arising under the HSR Act, the 46 ECMR or any other comparable laws of foreign jurisdictions so as to enable the parties to expeditiously close the Transactions contemplated by this Agreement. In furtherance of the foregoing, if any administrative or judicial action or proceeding, including any proceeding by a private party, is instituted (or threatened to be instituted) challenging any of the Transactions as violative of any such laws, each of Parent, the Purchaser and the Company shall cooperate in all respects with each other and use its respective reasonable best efforts to contest and resist any such action or proceeding so as to permit consummation of the Transactions contemplated by this Agreement (including defending against any litigation brought by a Governmental Entity seeking to prevent the consummation of the Transactions). Notwithstanding the foregoing, or any other covenant herein contained (including, without limitation, Sections 6.1 and 6.9), in connection with the receipt of any necessary approvals under the HSR Act, the ECMR or any other comparable laws of foreign jurisdictions, neither Parent nor the Company shall be required to divest or hold separate or otherwise take or commit to take any action that limits Parent's or the Company's freedom of action with respect to, or their ability to retain, the Company or any material portions thereof or any of the businesses, product lines, material properties or material assets of the Company or Parent. Section 6.5 Publicity. Each of Parent and the Company shall consult --------- with the other regarding their initial press releases with respect to the execution of this Agreement. Thereafter, so long as this Agreement is in effect, neither the Company nor Parent, nor any of their respective affiliates, shall issue of any press release or other announcement with respect to the Offer, the Merger or this Agreement without the prior consultation of the other party, except as such party believes, after receiving the advice of outside counsel, may be required by law or by any listing agreement with or listing rules of a national securities exchange or trading market or by the listing rules of The New York Stock Exchange, provided, however, that each party shall provide, if -------- ------- practicable, notice to and consult with the other party prior to issuing any such press release or other announcement. Section 6.6 Insurance and Indemnification. (a) For a period of six ----------------------------- years after the Effective Time, Parent shall, or shall cause the Surviving Corporation (or any successor to the Surviving Corporation) to indemnify, defend and hold harmless the present and former directors and officers of the Company and the Company Subsidiaries, and persons who become any of the foregoing prior to the Effective Time (each an "Indemnified Party") against all losses, claims, ----------------- damages, liabilities, costs, fees and expenses (including reasonable fees and disbursements of counsel) and judgments, 47 fines, losses, claims, liabilities and amounts paid in settlement arising out of or in connection with any claim, action, suit, proceeding, or investigation, whether criminal, civil, administrative or investigative, arising out of any acts or omissions occurring at or prior to the Effective Time (including the Transactions); provided, however, that Parent shall not be required to indemnify -------- ------- any Indemnified Party pursuant hereto if it shall be determined that the Indemnified Party acted in bad faith and not in a manner such party believed to be in or not opposed to the best interests of the Company. Parent shall also advance expenses as incurred to the fullest extent permitted under applicable law provided the person to whom such advances are made provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification. Parent and the Company agree that in the event any claim or claims are asserted or made within the six-year period contemplated by this Section, all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims. (b) Parent or the Surviving Corporation shall maintain the Company's existing officers' and directors' liability insurance ("D&O --- Insurance") for a period of not less than three years after the Effective Time; - --------- provided, however, that Parent may substitute therefor policies of substantially - -------- ------- equivalent coverage and amounts containing terms no less favorable to such former directors or officers; provided, further, that if the existing D&O -------- Insurance expires or is terminated or cancelled during such period, then Parent or the Surviving Corporation shall use reasonable best efforts to obtain substantially similar D&O Insurance; provided further, however, that in no event -------- shall Parent be required to pay aggregate premiums for insurance under this Section 6.6(b) in excess of 150% of the average of the aggregate premiums paid by the Company in 1998, 1999 and 2000 on an annualized basis for such purpose (the "Average Premium"); and provided, further, that if Parent or the Surviving --------------- -------- Corporation is unable to obtain the amount of insurance required by this Section 6.6(b) for such aggregate premium, Parent or the Surviving Corporation shall obtain as much insurance as can be obtained for an annual premium not in excess of 150% of the Average Premium. The budgeted amount for D&O Insurance for fiscal year 2002 is set forth on Section 6.6(b) of the Company Disclosure Schedule. Section 6.7 Purchaser Compliance. Parent shall cause the Purchaser to -------------------- comply with all of its obligations under this Agreement. Section 6.8 Third Party Standstill Agreements. During the period from --------------------------------- the date of this Agreement through the Effective Time, the Company shall enforce 48 and shall not terminate, amend, modify or waive any standstill provision of any confidentiality or standstill agreement between the Company and other parties entered into prior to the date hereof. Section 6.9 Reasonable Best Efforts. ----------------------- (a) Prior to the Closing, upon the terms and subject to the conditions of this Agreement, the Purchaser and the Company agree to use their respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary and appropriate, under applicable laws to consummate and make effective the Transactions as promptly as practicable including, but not limited to (i) the preparation and filing of all forms, registrations and notices required to be filed to consummate the Transactions and the taking of such actions as are necessary, subject to Section 6.4(b), to obtain any requisite approvals, consents, orders, exemptions or waivers by any third party or Governmental Entity, and (ii) the satisfaction of the other parties' conditions to Closing. In addition, no party hereto shall take any action after the date hereof that would reasonably be expected to materially delay the obtaining of, or result in not obtaining, any permission, approval or consent from any Governmental Entity necessary to be obtained prior to Closing. (b) Prior to the Closing, each party shall promptly consult with the other parties hereto with respect to, provide any necessary information with respect to, and provide the other (or its counsel) copies of, all filings made by such party with any Governmental Entity or any other information supplied by such party to a Governmental Entity in connection with this Agreement and the Transactions. Each party hereto shall promptly inform the other of any communication from any Governmental Entity regarding any of the Transactions unless otherwise prohibited by law. If any party hereto or affiliate thereof receives a request for additional information or documentary material from any such Government Entity with respect to the Transactions, then such party shall endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with such request. To the extent that transfers, amendments or modifications of permits (including environmental permits) are required as a result of the execution of this Agreement or consummation of the Transactions, the Company shall use its commercially reasonable efforts to effect such transfers. Section 6.10 State Takeover Laws. If any state takeover statute ------------------- becomes or is deemed to become applicable to the Company, the Offer, the acquisition 49 of Shares pursuant to the Offer, or the Merger, then the Company Board of Directors shall, subject to its fiduciary duties as advised of the same by its counsel, take all action necessary to render such statute inapplicable to the foregoing. Section 6.11 Employee Benefits. ----------------- (a) Parent agrees that, during the period commencing at the Effective Time and ending on December 31, 2002, the employees of the Company will continue to be provided with salary and benefits under employee benefit plans (other than plans providing for retiree medical benefits, incentive pay plans, plans involving the issuance of equity and plans that provide for payments or benefits upon a change in control) that are no less favorable in the aggregate than the benefits currently provided by the Company and any Company Subsidiary to such employees under the Plans listed in Section 3.12(a) of the Company Disclosure Schedule (excluding plans providing for retiree medical benefits, incentive pay plans, plans that provide equity-based compensation and plans that provide for payments or benefits upon a change in control); provided, however, that during the period commencing at the Effective Time and ending on December 31, 2002, the employees of the Company will be provided with salary and benefits that are no less favorable in the aggregate than the benefits, including, but not limited to, retiree medical benefits, provided by Parent to similarly-situated employees of Parent; and provided further, that employees covered by a collective bargaining agreement shall not be subject to the foregoing sentence, but shall be subject to the applicable collective bargaining (b) Parent agrees to cause the Company to honor all contracts, agreements, arrangements, policies, plans and commitments of the Company or any of the Company Subsidiaries, in accordance with their terms, which are applicable with respect to any employee, officer, director or executive or former employee, officer, director, or executive of the Company or of any Company Subsidiary, provided that such contract, agreement, arrangement, policy, plan or commitment is disclosed in Section 3.12 of the Company Disclosure Schedule. Neither this Section 6.11 nor any other provision of this Agreement shall limit the ability or right of the Company and its Subsidiaries to terminate the employment of any of their respective employees after the Closing Date (subject to any rights of any such employees pursuant to any contract, agreement, arrangement, policy, plan or commitment). (c) For purposes of all employee benefit plans, programs and agreements maintained by or contributed to by Parent and its Subsidiaries (including, 50 after Closing, the Surviving Corporation), Parent shall, or shall cause its Subsidiaries to cause each such plan, program or arrangement to treat the prior service with the Company or its Subsidiaries immediately prior to the Closing of any employee of the Company or the Company Subsidiaries (a "Company Employee") ---------------- (to the same extent such service is recognized under analogous plans, programs or arrangements of the Company or its affiliates prior to the closing) as service rendered to Parent or its Subsidiaries, as the case may be, for all purposes; provided, however, that (i) such crediting of service shall not operate to duplicate any benefit or the funding of such benefit under any plan, or (ii) require the crediting of past service for benefit accrual purpose under any defined benefit pension plan. Company Employees shall also be given credit for any deductible or co-payment amounts paid in respect of the plan year in which the Closing occurs, to the extent that, following the Closing, they participate in any other plan for which deductibles or co-payments are required. Parent shall also cause each Parent Plan (as hereinafter defined below) to waive any preexisting condition which was waived under the terms of any Plan immediately prior to the Closing or waiting period limitation which would otherwise be applicable to a Company Employee on or after the Closing. Parent shall recognize any accrued but unused vacation of the Company Employees as of the Closing Date, and Parent shall cause the Company and its Subsidiaries to provide such paid vacation. For purposes of this Agreement, a "Parent Plan" ----------- shall mean such employee benefit plan, as defined in Section 3(3) of ERISA, or a nonqualified employee benefit or deferred compensation plan, stock option, bonus or incentive plan or other employee benefit or fringe benefit program, that may be in effect generally for employees of Company and the Company Subsidiaries from time to time. The requirement of this Section 6.11(c) shall not apply to any employee covered by a collective bargaining agreement, it being understood that the terms of the applicable collective bargaining covering each such employee apply. (d) Parent shall cause the Company to satisfy any liability for severance pay and similar obligations payable to any Company Employee who is terminated by Parent or the Company, or any of their respective Subsidiaries, on or before December 31, 2002 on terms no less favorable than those provided under the applicable severance plans listed in Section 6.11 of the Company Disclosure Schedule; provided, however, that employees covered by a collective bargaining agreement shall not be subject to the foregoing sentence, but shall be subject to the applicable collective bargaining agreement. (e) The Company shall use its best efforts to cause to be amended, prior to the Effective Time, any plans or agreements with Company 51 Employees that provide for funding of a rabbi trust in connection with a change in control of the Company to eliminate any such funding requirements. (f) Except as provided in this Section 6.11, nothing in this Agreement shall limit or restrict the rights of Parent or the Company to modify, amend, terminate or establish employee benefit plans or arrangements, in whole or in part, at any time after the Closing Date. (g) The Company shall not, during the period prior to the Effective Time, make any written or other communication to its employees relating to employee, compensation or benefits without the prior approval of Parent, which approval shall not be unreasonably withheld. Section 6.12 Headquarters. Parent has no present intention to change ------------ the location of the Company's executive headquarters and agrees for a period of at least two years after the Effective Date, that the Company's executive headquarters shall remain in St. Louis, Missouri. ARTICLE VII CONDITIONS Section 7.1 Conditions to Each Party's Obligations to Effect the ---------------------------------------------------- Merger. The respective obligations of each party to effect the Merger shall be - ------ subject to the satisfaction on or prior to the Closing Date of each of the following conditions, any and all of which may be waived in whole or in part by Parent, the Purchaser and the Company, as the case may be, to the extent permitted by applicable law: (a) Stockholder Approval. The Merger and this Agreement -------------------- shall have been approved and adopted by the requisite vote of the holders of the Shares, to the extent required pursuant to the requirements of the Certificate of Incorporation, the Bylaws of the Company, and the DGCL; (b) Statutes; Court Orders. No statute, rule or regulation ---------------------- shall have been enacted or promulgated by any Governmental Entity which prohibits the consummation of the Merger, and there shall be no order or injunction of a court of competent jurisdiction in effect prohibiting consummation of the Merger; and 52 (c) Purchase of Shares in Offer. The Purchaser shall have --------------------------- purchased, or caused to be purchased, the Shares pursuant to the Offer; provided, however, that neither Parent nor the Purchaser may invoke this - -------- ------- condition if the Purchaser (or its assignee) shall have failed in violation of the terms of this Agreement or the Offer to purchase Shares so tendered and not withdrawn. ARTICLE VIII TERMINATION Section 8.1 Termination. This Agreement may be terminated and the ----------- Transactions may be abandoned at: (a) any time before the Effective Time, whether before or after stockholder approval thereof, by mutual written consent of Parent and the Company; (b) By either Parent or the Company (i) if, prior to the purchase of the Shares in the Offer, a court of competent jurisdiction or other Governmental Entity shall have issued an order, decree or ruling or taken any other action, in each case permanently restraining, enjoining or otherwise prohibiting any of the Transactions, (ii) if the Offer shall have expired without any Shares being purchased therein, or (iii) if the Offer has not been consummated by March 31, 2002; provided, however, that in the event that there -------- is issued a "second request" under the HSR Act or commenced a "second phase investigation" under ECMR or similar request or investigation is made in connection with the review by any Governmental Entity of the Transactions under any comparable law of foreign jurisdictions, such date shall be extended to June 30, 2002; provided further, however, that the right to terminate this Agreement -------- pursuant to clause (ii) or (iii) of this Section 8.1(c) 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 the Offer to be consummated by such date; (c) By Parent, at any time prior to the purchase of the Shares pursuant to the Offer, if (i) the Company Board of Directors shall have withdrawn, modified, or changed its recommendation in respect of this Agreement, the Offer or the Merger in a manner adverse to the Transactions, to Parent or to the Purchaser, (ii) the 53 Company Board of Directors shall have recommended any proposal other than by Parent or the Purchaser in respect of an Acquisition Proposal, (iii) the Company shall have failed to affirm its recommendation in respect of the Transactions within five days of a request to do so by Parent, (iv) the Company shall have violated or breached any of its obligations under Section 5.3, or (v) the Company shall have breached any representation, warranty, covenant or other agreement contained in this Agreement which (A) would give rise to the failure of a condition set forth in paragraph (f) or (g) of Annex I hereto and (B) cannot be or has not been cured, in all material respects, within 30 days after the giving of written notice to the Company; or (d) By the Company (i) pursuant to and in compliance with Section 5.3(d) or (ii) if the Purchaser shall have failed to commence the Offer within 7 business days following the date of this Agreement, unless such failure to commence the Offer is due to any action or failure to act on the part of the Company or (iii) if, at any time prior to the purchase of the Shares in the Offer, Parent or the Purchaser shall have breached in any material respect any of the representations, warranties, covenants or agreements contained in this Agreement and such breach cannot be or has not been cured, in all material respects, within 30 days after the giving of written notice to Parent. Section 8.2 Effect of Termination. (a) In the event of the --------------------- termination of this Agreement as provided in Section 8.1, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become null and void (except for Sections 9.3, 9.5, 9.6, 9.8 and 9.12 which shall survive such termination) and there shall be no liability on the part of Parent, the Purchaser or the Company, except (i) as set forth in Sections 6.3 and 8.2, and (ii) nothing herein shall relieve any party from liability for any willful breach of this Agreement. (b) If (i) Parent shall have terminated this Agreement pursuant to Section 8.1(c)(i) - (iv); (ii) the Company shall have terminated this Agreement pursuant to Section 8.1(d)(i); or (iii) both (x) Parent shall have terminated this Agreement pursuant to Section 8.1(b)(ii) or 8.1(b)(iii) and, at the time of such termination there shall be outstanding an Acquisition Proposal and (y) within 9 months following such termination, a definitive agreement with respect to an Acquisition Proposal shall have been executed by the Company or another Person shall have become the beneficial owner of more than 15% of the Shares, then the Company shall pay to Parent promptly after such payment is due (which, for the avoidance of doubt, in the case of clause (b)(iii), shall be on the date the definitive agreement is executed 54 and delivered or the date such Person becomes the beneficial owner of such Shares, as applicable) (or in accordance with Section 5.3(d) in the case of a termination pursuant to Section 8.1(d)(i)) a termination fee (the "Termination ----------- Fee") of $67 million which amount shall be payable by wire transfer to such - --- account as Parent may designate in writing to the Company. If this Agreement is terminated pursuant to Sections 8.1(c)(i)- (iv), the Termination Fee shall be paid not later than two business days after the date of such termination. ARTICLE IX MISCELLANEOUS Section 9.1 Amendment and Modification. Subject to applicable law and -------------------------- as otherwise provided in the Agreement, this Agreement may be amended, modified and supplemented in any and all respects, whether before or after any vote of the stockholders of the Company contemplated hereby, by written agreement of the parties hereto, by action taken by their respective Boards of Directors or equivalent governing bodies, but, after the purchase of Shares pursuant to the Offer, any amendment shall be in compliance with the terms of Section 1.3(b) and, after the approval of this Agreement by the stockholders, no amendment shall be made which by law requires further approval by such stockholders without obtaining such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. Section 9.2 Non-survival of Representations and Warranties. None of ---------------------------------------------- the representations and warranties in this Agreement or in any schedule, instrument or other document delivered pursuant to this Agreement shall survive the acceptance for payment, and payment for, the Shares by the Purchaser pursuant to the Offer. Section 9.3 Expenses. Except as expressly set forth in Section -------- 8.2(b), all fees, costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such fees, costs and expenses except that any transfer, stamp or similar taxes shall be borne by Parent. Section 9.4 Notices. All notices and other communications hereunder ------- shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or sent by a nationally recognized overnight courier service, such as 55 Federal Express (providing proof of delivery), to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Parent or the Purchaser, to: Sara Lee Corporation Three First National Plaza Chicago, Illinois 60602-4260 Telephone: (312) 726-2600 Facsimile: (312) 558-8687 Attention: General Counsel with a copy to: Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 West Wacker Drive Chicago, Illinois 60606 Telephone: (312) 407-0700 Facsimile: (312) 407-0411 Attention: Charles W. Mulaney, Jr., Esq. and (b) if to the Company, to: The Earthgrains Company 8400 Maryland Avenue St. Louis, Missouri 63105-3668 Telephone: (314) 259-7000 Facsimile: (314) 259-7029 Attention: General Counsel with a copy to: Sullivan & Cromwell 125 Broad Street New York, New York 10004 Telephone: (212) 555-4048 56 Facsimile: (212) 558-3588 Attention: Francis J. Aquila, Esq. Section 9.5 Interpretation. When a reference is made in this -------------- Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words "include", "includes" or "including" are used in this Agreement they shall be deemed to be followed by the words "without limitation." As used in this Agreement, the term "affiliates" shall have the meaning set forth in Rule 12b-2 of the Exchange Act. Section 9.6 Jurisdiction. Each of Parent, the Purchaser and the ------------ Company hereby expressly and irrevocably submits to the non-exclusive personal jurisdiction of the United States District Court for the District of Delaware and to the jurisdiction of any other competent court of the State of Delaware (collectively, the "Delaware Courts"), preserving, however, all rights of --------------- removal to such federal court under 28 U.S.C. Section 1441, in connection with all disputes arising out of or in connection with this Agreement or the transactions contemplated hereby and agrees not to commence any litigation relating thereto except in such courts. Each such party hereby waives the right to any other jurisdiction or venue for any litigation arising out of or in connection with this Agreement or the transactions contemplated hereby to which any of them may be entitled by reason of its present or future domicile. Notwithstanding the foregoing, each such party agrees that each of the other parties shall have the right to bring any action or proceeding for enforcement of a judgment entered by the Delaware Courts in any other court or jurisdiction. Section 9.7 Service of Process. Each of Parent, the Purchaser and the ------------------ Company irrevocably consents to the service of process outside the territorial jurisdiction of the courts referred to in Section 9.6 hereof in any such action or proceeding by mailing copies thereof by registered United States mail, postage prepaid, return receipt requested, to its address as specified in or pursuant to Section 9.4 hereof. However, the foregoing shall not limit the right of a party to effect service of process on the other party by any other legally available method. Section 9.8 Specific Performance. Each of Parent, the Purchaser and -------------------- the Company acknowledges and agrees that in the event of any breach of this Agreement, each non-breaching party would be irreparably and immediately harmed and could not be made whole by monetary damages. It is accordingly agreed that the parties hereto (a) will waive, in any action for specific performance, the defense of 57 adequacy of a remedy at law and (b) shall be entitled, in addition to any other remedy to which they may be entitled at law or in equity, to compel specific performance of this Agreement in any action instituted in accordance with Section 9.6 hereof. Section 9.9 Counterparts. This Agreement may be executed manually or ------------ by facsimile by the parties hereto, in any number of counterparts, each of which shall be considered one and the same agreement and shall become effective when a counterpart hereof shall have been signed by each of the parties and delivered to the other parties. Section 9.10 Entire Agreement; No Third-Party Beneficiaries. This ---------------------------------------------- Agreement and the Confidentiality Agreement: (a) constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersedes all other prior agreements and understandings, both written and oral, among the parties or any of them with respect to the subject matter hereof and thereof (provided that the provisions of this Agreement shall supersede any conflicting provisions of the Confidentiality Agreement), and (b) except as provided in Section 6.6, are not intended to confer upon any Person other than the parties hereto any rights or remedies hereunder. Section 9.11 Severability. If any term or other provision of this ------------ Agreement is invalid, illegal or incapable of being enforced by rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the Transactions are fulfilled to the extent possible. Section 9.12 Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof, provided, however, that -------- ------- the laws of the respective jurisdictions of incorporation of each of the parties shall govern the 58 relative rights, obligations, powers, duties and other internal affairs of such party and its board of directors. Section 9.13 Assignment. This Agreement shall not be assigned by any ---------- of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties, except that the Purchaser may assign any or all of its rights, interests and obligations hereunder to Parent, one or more direct or indirect wholly-owned Subsidiaries of Parent, or a combination thereof (each, an "Assignee"). This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and permitted assigns. 59 IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above. SARA LEE CORPORATION By /s/ C. Steven McMillan ------------------------------------------------------- Name: C. Steven McMillan Title: President and Chief Executive Officer SLC ACQUISITION CORP. By /s/ Roderick A. Palmore ------------------------------------------------------- Name: Roderick A. Palmore Title: President THE EARTHGRAINS COMPANY By /s/ Barry H. Beracha ------------------------------------------------------- Name: Barry H. Beracha Title: Chairman and Chief Executive Officer ANNEX I Notwithstanding any other provisions of the Offer, and in addition to (and not in limitation of) the Purchaser's right to extend and amend the Offer at any time in its sole discretion (subject to the provisions of the Merger Agreement), the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e- 1(c) under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered Shares after termination or withdrawal of the Offer), pay for, and may delay the acceptance for payment of or, subject to the restriction referred to above, the payment for, any validly tendered Shares if by the expiration of the Offer (as it may be extended in accordance with the requirements of Section 1.1), (i) the Minimum Condition shall not be satisfied, (ii) the applicable waiting periods under the HSR Act, the ECMR or any other comparable provisions under any applicable pre-merger notification laws or regulations of foreign jurisdictions have not expired or terminated, or (iii) at any time on or after the date of the Agreement and prior to the acceptance for payment of Shares pursuant to the Offer, any of the following events shall occur, and be continuing: (a) there shall be pending any suit, action or proceeding by any Governmental Entity against the Purchaser, Parent, the Company or any Company Subsidiary (i) seeking to restrain or prohibit Parent's or the Purchaser's ownership or operation (or that of any of their respective Subsidiaries or affiliates) of all or a material portion of their or the Company's and the Company Subsidiaries' businesses or assets, or to compel Parent or the Purchaser or their respective Subsidiaries and affiliates to dispose of or hold separate any material portion of the business or assets of the Company or Parent and their respective Subsidiaries, (ii) challenging the acquisition by Parent or the Purchaser of any Shares under the Offer, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or the performance of any of the other Transactions, or seeking to obtain from the Company, Parent or the Purchaser any damages that are material in relation to the Company and the Company Subsidiaries, taken as a whole, (iii) seeking to impose material limitations on the ability of the Purchaser, or render the Purchaser unable, to accept for payment, pay for or purchase some or all of the Shares pursuant to the Offer and the Merger, or (iv) seeking to impose limitations on the ability of the Purchaser or Parent to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by it on all matters properly presented to the Company's stockholders; A-1 (b) there shall be any statute, rule, regulation, judgment, order or injunction enacted, entered, enforced, promulgated or deemed applicable, to the Offer or the Merger, that is reasonably likely to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (iv) of paragraph (a) above; (c) there shall have occurred (i) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (ii) any limitation (whether or not mandatory) by any United States Governmental Entity on the extension of credit generally by banks or other financial institutions, or (iii) a change in general financial or bank conditions which materially and adversely affects the ability of financial institutions in the United States to extend credit or syndicate loans; (d) since March 27, 2001, there shall have occurred any events or changes which have had, or would have or constitute, individually or in the aggregate, a Company Material Adverse Change or a Company Material Adverse Effect; (e) the Company Board of Directors shall have (i) withdrawn, or modified or changed in a manner adverse to the Transactions, to Parent or to the Purchaser (including by amendment of the Schedule 14D-9), its recommendation of the Offer, the Merger Agreement, or the Merger, (ii) recommended any Acquisition Proposal, (iii) resolved to do any of the foregoing or (iv) taken a neutral position or made no recommendation with respect to an Acquisition Proposal Interest (other than by Parent or the Purchaser) after a reasonable amount of time (and in no event more than 5 business days following receipt thereof) has elapsed; (f) any of the representations and warranties of the Company contained in the Merger Agreement, disregarding all qualifications and exceptions contained therein relating to materiality or Company Material Adverse Effect or any similar standard or qualification, shall not be true and correct in all respects as of the date of determination, as if made at and as of such time, except to the extent expressly made as of an earlier date, in which case as of such earlier date, and except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, have a Company Material Adverse Effect; (g) the Company shall have breached or failed, in any material respect, to perform or to comply with its agreements and covenants to be performed or complied with by it under the Merger Agreement; A-2 (h) all consents, permits and approvals of Governmental Entities and other Persons shall not have been obtained other than those the failure of which to obtain, individually or in the aggregate, would not have a Company Material Adverse Effect; or (i) the Merger Agreement shall have been terminated in accordance with its terms. The foregoing conditions are for the benefit of Parent and the Purchaser, may be asserted by Parent or the Purchaser regardless of the circumstances giving rise to such condition, and may be waived by Parent or the Purchaser in whole or in part at any time and from time to time, subject in each case to the terms of the Merger Agreement. The failure by Parent or the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and, each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. The capitalized terms used in this Annex I shall have the meanings set forth in the agreement to which it is annexed, except that the term "Merger Agreement" shall be deemed to refer to the agreement to which this Annex I is annexed. A-3 EX-99.D2 11 dex99d2.txt CONFIDENTIALITY AGREEMENT Exhibit 9 [LETTERHEAD OF SARA LEE CORPORATION] Personal and Confidential ------------------------- May 29, 2001 The Earthgrains Company 8400 Maryland Drive St. Louis, Missouri 63105 Attn: Joseph M. Noelker Vice President, General Counsel and Corporate Secretary Confidentiality Agreement ------------------------- Dear Mr. Noelker: This agreement is in regard to discussions concerning possible negotiated business arrangements in our mutual interest. In connection therewith we may receive certain written or oral information concerning The Earthgrains Company (the "Company") and its subsidiaries from officers, directors, employees, agents or advisors of the Company. All such information furnished to us, our officers, directors, employees, agents or representatives (collectively, "Representatives") and all analyses, compilations, computer disks, forecasts, studies or other documents prepared by us or our Representatives based on any such information are hereinafter referred to as "Information." We recognize and acknowledge the competitive value of the Information and the damage that could result to the Company if any Information were used or disclosed other than as authorized in this agreement. In addition, we recognize and acknowledge that the Information will remain the property of the Company and that disclosure will not confer on us or our Representatives any rights with respect to the Information. In consideration of your entering into such discussions, we agree that: The Information will be used solely for the purpose of exploring possible negotiated business arrangements between us and not for any other business or competitive purpose. The Information will be kept confidential by us and, without your prior written consent, neither we nor our Representatives will disclose to any person the fact that the Information has been made available to us or that discussions [LOGO OF SARA LEE] between the parties concerning possible business arrangements are taking place (in each case, except as required by law and then only after compliance with the next paragraph hereof). If we or any of our Representatives are required by law to disclose any of the Information, or if we or any of our Representatives are required to disclose the fact that the Information has been made available or that discussions between the parties are taking place, we will notify you promptly so that you may seek a protective order or other appropriate remedy. If no such protective order or other remedy is obtained, or if you waive compliance with the applicable terms of this agreement, we will furnish only that portion of the Information which we are advised by counsel is legally required to be disclosed and will exercise all reasonable efforts to obtain reliable assurances that confidential treatment will be accorded the Information. If we do not proceed with any business arrangement, or upon your request, (i) all Information furnished by you will be promptly returned to you and (ii) all other Information and all other documents or data containing or reflecting such Information will be destroyed with such destruction certified by an officer in writing, in either case, without retaining a copy thereof (whatever the form or storage medium); provided, that all Information will remain subject to the terms of this agreement. We acknowledge that our obligation to keep confidential the Information disclosed to us by the Company under the terms of this agreement shall survive the expiration of the agreement. This obligation does not apply to such portions of the Information which (i) are or become generally available to the public (other than as a result of a disclosure by us or our Representatives), (ii) are or become available to us on a nonconfidential basis from a source other than you or one of your Representatives (provided that such source is not, to our knowledge, bound by a confidentiality agreement with, or other obligation of confidentiality to, the Company in respect to such Information) or (iii) have been independently acquired or developed without violating any of the obligations under this letter agreement. We agree that, for a period of two years after the date hereof, without your prior written consent, we will not, and will cause each of our affiliates (as such term is defined under the Securities Exchange Act of 1934) not to, singly or as part of a group, directly or indirectly; (i) acquire any equity securities of the Company or any rights to acquire any such equity securities; (ii) participate in any solicitation of 2 [LOGO OF SARA LEE] proxies or become a participant in any election contest with respect to the Company; (iii) form, join or in any way participate in a "group" (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) with respect to any voting securities of the Company; (iv) otherwise act, alone or in concert with others, to seek or offer to control or influence, in any manner, the management, Board of Directors or policies of the Company, or (v) make any public disclosure, or take any action which would require the Company to make any disclosure, with respect to any of the matters set forth in this agreement. We also agree that, for a period of two years after the date hereof, unless specifically invited by you, we will not and will cause each of our affiliates not to make any public announcement with respect to (i) any form of business combination transaction involving the Company, (ii) any form of restructuring, recapitalization or similar transaction with respect to the Company, (iii) any request to amend, waive or terminate the provisions of this letter agreement or (iv) any proposal or other statement inconsistent with the terms of this letter agreement. For a period of two years from the date hereof, we will not, without your prior written consent, hire for employment, or seek to hire for employment, any of your officers or any other person now employed by you or any of your subsidiaries with whom we have direct contact as a result of these discussions. We acknowledge that, in the event of any breach of this agreement by us, you may be irreparably and immediately harmed and may not be made whole by monetary damages. It is accordingly agreed that, in addition to any other remedy to which you may be entitled, you shall be entitled to an injunction to prevent breaches of, and to compel specific performance of, this agreement. Any proceeding relating to this agreement shall be brought only in a federal or state court of Delaware. Each of the parties hereto hereby consents to personal jurisdiction in any such action and to service of process by mail, and waives any objection to venue in any such court. This agreement shall be governed by the internal laws of the State of Delaware. This agreement contains the entire agreement between us concerning the subject matter hereof and shall be binding on our respective successors and assigns. 3 [LOGO OF SARA LEE] No modification of this agreement or waiver of any provision hereof will be binding unless approved in writing by each of us. This agreement will terminate two years after the date hereof. Please sign and return one copy of this letter which thereupon will constitute a legally binding agreement with respect to the subject matter hereof. Sincerely, SARA LEE CORPORATION By: /s/ Roderick A. Palmore -------------------------------- Name: Roderick A. Palmore Title: Senior Vice President, General Counsel and Secretary ACCEPTED AND AGREED TO: THE EARTHGRAINS COMPANY By: /s/ Joseph M. Noelker ------------------------- Name: Joseph M. Noelker Title: Vice President, General Counsel & Corporate Secretary 4 -----END PRIVACY-ENHANCED MESSAGE-----