-----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, E2KmOUbsCM7MsHvzmusPHM7Qo15JcflaTGio94AwAGMTML9r7KgRhwy0an9DjYIF PW72h4jCD8+WSR4/AbYW+Q== 0000897101-96-001118.txt : 19970102 0000897101-96-001118.hdr.sgml : 19970102 ACCESSION NUMBER: 0000897101-96-001118 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961231 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAMCOR INC CENTRAL INDEX KEY: 0000806549 STANDARD INDUSTRIAL CLASSIFICATION: PAPERBOARD CONTAINERS & BOXES [2650] IRS NUMBER: 411478017 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 033-10280-C FILM NUMBER: 96688453 BUSINESS ADDRESS: STREET 1: HWY 169 N STREET 2: PO BOX 70 CITY: LESUEUR STATE: MN ZIP: 56058 BUSINESS PHONE: 6126656658 MAIL ADDRESS: STREET 1: P.O. BOX 70 STREET 2: HIGHWAY 169 NORTH CITY: LE SUEUR STATE: MN ZIP: 56058 10-K405 1 SECURITIES AND EXCHANGE COMMISSION Washington D. C. 20549 FORM 10-K [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended September 30, 1996 OR Commission file number 333-493 LAMCOR, INCORPORATED (Exact name of registrant as specified in its charter) Minnesota 41-1478017 (State or other jurisdiction I.R.S. Employer of incorporation or organization) Identification number Highway 169 North, P. O. Box 70, Le Sueur, Minnesota 56058 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code): (507) 332-1997 Securities registered under Section 12(b) of the Act None Name or each exchange on which registered None Securities registered pursuant to Section 12(g) of the Act: None (Title of Class) Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No _____ Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this form, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [XX] The aggregate market value of the voting stock held by non-affiliates of the registrant on December 24, 1996, based on the average bid and asked prices of Common Stock in the over-the-counter market on that date was $2,823,803. As of December 23, 1996, 1,382,817 shares of the Common Stock of the registrant were outstanding. Documents incorporated by reference: None. CONTENTS Page Part 1 Item 1 - Business 1 Item 2 - Properties 3 Item 3 - Legal Proceedings 3 Item 4 - Submission of Matters to a Vote of Security Holders 4 Part II Item 5 - Market for Registrant's Common Equity and Related Stockholder Matters 4 Item 6 - Selected Financial Data 6 Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Item 8 - Financial Statements and Supplementary Data 9 Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 9 Part III Item 10 - Directors and Executive Officers of the Registrant 9 Item 11 - Executive Compensation 10 Item 12 - Security Ownership of Certain Beneficial Owners and Management 13 Item 13 - Certain Relationships and Related Transactions 15 Part IV Item 14 - Exhibits, Financial Statements and Reports on Form 8-K 17 PART I Item 1. - BUSINESS General Lamcor, Incorporated ("Lamcor" or "Company"), a corporation organized under the laws of Minnesota in 1983, manufactures flexible packaging products, including laminated roll stock and pouches. The Company sells its products for use principally in the food and medical industries. Products and Markets The Company produces laminated roll stock and pouches. The following table shows the product mix, as a percentage of net sales, for each of the Company's last three fiscal years: Fiscal Year Ended September 30, ------------------------------- Product 1996 1995 1994 ------- ---- ---- ---- Laminated Roll Stock 23% 24% 36% Pouches 77% 76% 64% LAMINATED ROLL STOCK. The Company purchases rolls of barrier and sealant films from approximately eight suppliers. These films have been readily available from such suppliers at prices which vary based on quantity and market conditions for petroleum-based products. The Company laminates one substrate with another, resulting in greater strength and a more effective barrier. The laminated roll stock is either sold to other packaging companies or used for making the Company's other products. The Company sells the laminated roll stock principally to packagers in the meat and cheese industries. POUCHES. The Company produces pouches by sealing the laminated rolls using an automated process. The Company's production equipment seals each pouch on three sides and cuts each pouch to a desired length. The Company produces pouches with either standard or custom thickness and sizes, depending on the customer's specifications. These pouches are used for packaging products sold primarily in the food or medical industries and which require a barrier from the environment to preserve freshness or shelf-life. After a customer purchases the Company's pouches, the customer typically inserts its product, removes air from the pouch and seals the fourth side of the pouch. The removal of air causes the plastic pouch to collapse around the product. In the Company's fiscal year ended September 30, 1996 ("Fiscal 1996") approximately 70% of the pouches produced by the Company were sold for the packaging of food. The Company's business generally is not seasonal. Sales and Marketing The Company currently employs four sales persons who sell the Company's products principally to businesses engaged in the food or medical industries in the upper midwest. Sales outside this area are covered by a network of manufacturer's representatives. Government Regulation The Food and Drug Administration ("FDA") sets standards for the type of plastic film pouch used for cooking food products. The Company purchases plastic film produced by suppliers pursuant to the FDA standards. Management believes that the Company is in compliance with applicable environmental laws concerning the handling and disposal of solvents used in the lamination process of production. Major Customer, Backlog and Exports During fiscal 1996, the Company derived $940,737, or 12% of total net sales, from one customer. No other customer accounted for more than 10% of net sales during fiscal 1996. At November 30, 1996, the Company had a backlog of approximately $2 million which is expected to be filled during fiscal 1997. The Company's backlog at November 30, 1995 was approximately $1.7 million. The Company's net sales included export sales of $257,771 in 1996; $224,587 in 1995 and $212,430 in 1994. Competition The principal competitive factors in the Company's industry are price, product quality and service. Competition continues to be a major factor in the Company's business, including competitors with lower labor costs because of production in Mexico. There are numerous competitors in the plastic packaging industry, many of which have larger production facilities and greater net sales than the Company. Lamcor's principal competitors include American National Can Inc.; Curwood, a division of Bemis Inc.; C&H Packaging Inc., Clearlan Inc.; and Winpak Inc. Intellectual Property The Company uses the trademarks "Lamcor" and "Savorloc" for use with its pouches and does not own any issued issued patents or registered trademarks. Employees As of September 30, 1996, the Company employed 38 persons full time. Pending Merger and Sale of the Company On September 30, 1996, the Company, Packaging Acquisition Corporation ("PAC") and LI Acquisition Corporation, a wholly-owned subsidiary of PAC ("Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which, among other things, (i) Sub will be merged with and into the Company, with the Company being the surviving corporation (the "Merger") and (ii) each outstanding share of the common stock, no par value per share (the "Common Stock"), of the Company (other than shares of Common Stock held by the shareholders, if any, who properly exercise their dissenters' rights under Minnesota law) will be converted into the right to receive $4.12 ("Merger Consideration") less (a) $0.12, representing the pro rata portion of the funds to be placed in escrow to satisfy claims by PAC against the Company for breaching of representations and warranties or failure to perform covenants or agreements of the Company in the Merger Agreement and for certain expenses of the Company (the "Escrow Funds") and (b) applicable taxes required to be withheld. The Merger is subject to several conditions, including approval of the Merger Agreement by the shareholders of the Company. The Board of Directors of the Company has given notice of a special meeting of shareholders to be held December 31, 1996, at which the shareholders of record as of November 25, 1996 will vote on the Merger Agreement. If the Merger Agreement is approved by the shareholders and all other conditions to the Merger are satisfied or waived, the Company expects the Merger to be completed in early January 1997. Item 2. - PROPERTIES The Company owns its 23,668 square foot production and office facility in Le Sueur, Minnesota, (the "Facility"), which is subject to a mortgage with an outstanding balance of $460,000 as of September 30, 1996. The Company has refinanced this mortgage with its other bank debt as described under Item 7 of this report. Management believes that the existing Facility is currently being used at its maximum production capacity. In January 1996, the Company decided to pursue a 24,000 square foot plant expansion project at the Facility. The additional space will be used for warehousing and possibly future production (the "Plant Expansion Project"). The Company intends to finance the Plant Expansion Project through bank debt secured by the Facility and capital equipment. Item 3. - LEGAL PROCEEDINGS In January 1996, the Company decided to pursue the Plant Expansion Project and fund it by raising up to $962,500 of new equity capital and borrowing the balance from a bank. On March 1, 1996, the Company commenced an offering to its then-existing shareholders of rights to acquire up to an aggregate of 350,000 shares of Common Stock at a price of $2.75 per share (the "Rights Offering"). Under the terms of the Rights Offering, shareholders of the Company wishing to subscribe for any of the offered shares were required to deliver their subscription (together with payment of the subscription price for the subscribed shares) to the Company on or before April 15, 1996. By April 15, 1996, the Company had received aggregate subscriptions for approximately 56,441 shares of Common Stock for an aggregate amount of approximately $155,213, which was substantially less than the $962,500 desired for the equity portion of the financing for the Plant Expansion Project. After PAC initiated merger discussions with the Company in late March 1996, PAC informed the Company that if a merger or sale proposal were to be presented by PAC, it would be conditioned on the termination of the Rights Offering and the refund of any subscriptions. Because the Company's directors did not want to jeopardize the success of completing a merger at a favorable price to all Shareholders, on June 14, 1996, the Board of Directors of the Company terminated the Rights Offering and, shortly thereafter, the Company refunded all subscriptions with interest. On July 30, 1996, the Company received a letter from Loper & Seymour, P.A. ("L&S"), counsel to 14 shareholders of the Company, demanding the issuance of the Common Stock which had been subscribed for by those shareholders in the Rights Offering. At the time the Rights Offering was terminated, the Company had received subscriptions for the purchase of 56,441 shares (out of the 350,000 shares initially offered) from shareholders of record (the "Subscriber Group"). PAC expressed to the Company its willingness to proceed with the Merger without a reduction in the Merger Consideration if, upon the closing of the Merger, the Company paid each member of the Subscriber Group a settlement payment of $1.00 for each of the 56,441 shares subscribed for by such members (less certain legal fees), and in exchange for such payment each such member would deliver a release of all claims pertaining to the Rights Offering. On December 2, 1996, the Company, PAC, L&S and another law firm representing 14 members of the Subscriber Group entered into a Stipulation Agreement and Settlement Agreement (the "Settlement Agreement") reflecting the foregoing terms. The Settlement Agreement will only be effective if the Merger is consummated. In addition, as a condition to the closing of the Merger: (i) the Company must have received releases from all of the shareholders in the Subscriber Group who have previously asserted a claim through legal counsel; (ii) the Company must have received releases from at least 95% of the remaining shareholders in the Subscriber Group; and (iii) the Company must have received releases from the holders of at least 800,000 shares of Common Stock who did not timely subscribe for Common Stock in the Rights Offering. Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II Item 5. - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS As of November 25, 1996, there were approximately 300 holders of record of Common Stock. The Company has not paid dividends on its Common Stock during the fiscal years ended September 30, 1996 and 1995. Dividends are generally restricted under the Company's bank credit agreements. The Common Stock is traded on the over-the-counter market. The following table sets forth for the periods indicated the range of the reported high and low bid quotations, based on information received from OTC Bulletin Board, Trading & Market Services, The Nasdaq Stock Market, Inc. ("Nasdaq OTC"). These quotations represent inter-dealer prices and may not necessarily represent actual transactions.
BID PRICE HIGH LOW ---- --- Fiscal year ended September 30, 1996 First Quarter (October 1, 1995 through December 31, 1995)....... $3.00 $2.75 Second Quarter (January 1, 1996 through March 31, 1996)......... $2.75 $2.75 Third Quarter (April 1, 1996 through June 30, 1996)............. $2.75 $2.25 Fourth Quarter (July 1, 1996 through September 30, 1996)........ * * Fiscal year ended September 30, 1995 First Quarter (October 1, 1994 through December 31, 1994)....... $3.50 $3.00 Second Quarter (January 1, 1995 through March 31, 1995)......... $2.50 $1.37 Third Quarter (April 1, 1995 through June 30, 1995)............. $3.37 $2.37 Fourth Quarter (July 1, 1995 through September 30, 1995)........ $3.00 $2.75
* High and low bid prices are unavailable from Nasdaq OTC for the fiscal quarter ended September 30, 1996 as there were no quotes posted on the OTC Bulletin Board from market makers in Common Stock during this period. Item 6. - SELECTED FINANCIAL DATA
Fiscal Years Ended September 30, ------------------------------- 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Statements of Income Data Net sales $8,006,710 $7,158,636 $4,817,411 $3,682,870 $3,190,502 Operating income 706,867 718,961 338,413 226,731 310,363 Interest income 8,981 5,181 8,996 8,054 4,052 Interest expense (143,390) (139,247) (66,141) (50,135) (35,592) Net income $352,458 $358,795 $176,918 $127,450 $192,288 Earnings per share $.20 $.22 $.12 $.09 $.16 (primary) Weighted average number of shares outstanding Primary 1,759,930 1,615,101 1,448,315 1,363,168 1,197,210 Full diluted 1,767,811 1,713,000 1,451,483 1,370,214 1,197,210 As of September 30, ------------------- 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- Balance Sheet Data Working capital $1,469,697 $1,192,202 $693,467 $668,618 $567,467 Total assets 4,509,384 4,164,030 3,527,547 2,374,724 1,936,955 Current liabilities 1,046,321 930,523 1,185,440 518,360 513,310 Long-term debt, less current maturities (1) 745,038 852,093 837,761 589,561 316,042 Stockholders' equity 2,171,280 1,809,858 1,407,346 1,211,803 1,074,603
- -------------------- (1) Excludes capital lease obligations. Item 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Company's audited financial statements and notes to the statements included at the end of this report. The following table sets forth for the fiscal years indicated the percentage of net sales represented by items in the Statements of Income and the percentage by which each item changed from year to year.
Period to Period Fiscal Years Ended September 30, Percentage Changes ------------ ------------------- ------------------ 1996 1995 1994 Fiscal 1996 Fiscal 1995 ---- ---- ---- over 1995 over 1994 --------- --------- Cost of goods sold 71.6% 72.6% 73.5% 10.4% 46.7% Selling, general and 19.5 17.4 19.4 25.6 32.9 administrative expenses Operating income 8.8 10.0 7.0 (1.7) 112.5 Interest income .11 .07 .18 73.3 (42.4) Interest expense 1.8 1.9 1.4 3.0 110.5 Income taxes 2.7 3.2 2.2 (2.7) 116.4 Net income 4.4 5.0 3.7 (1.8) 102.8
Pending Merger and Sale of the Company On September 30, 1996, the Company, PAC and Sub entered into the Merger Agreement pursuant to which, among other things, (i) Sub will be merged with and into the Company, with the Company being the surviving corporation and (ii) each outstanding share of Common Stock (other than shares of Common Stock held by the shareholders, if any, who properly exercise their dissenters' rights under Minnesota law) will be converted into the right to receive $4.12 ("Merger Consideration") less (a) $0.12, representing the pro rata portion of the Escrowed Funds and (b) applicable taxes required to be withheld. The Merger is subject to several conditions, including approval of the Merger Agreement by the shareholders of the Company. The Board of Directors of the Company has given notice of a special meeting of shareholders to be held December 31, 1996, at which the shareholders as of November 25, 1996 will vote on the Merger Agreement. If the Merger Agreement is approved by the shareholders and all other conditions to the Merger are satisfied or waived, the Company expects the Merger to be completed in early January 1997. Results of Operations OVERVIEW Net sales in fiscal 1996 increased 11.8% over net sales in the Company's fiscal year ended September 30, 1995 ("Fiscal 1995"). Gross profit as a percentage of net sales increased to 28.4% in fiscal 1996 compared to 27.4% in fiscal 1995. However, because of additional staffing, write off of bad debt and expenses attributable to the pending Merger, selling, general and administrative expenses as a percentage of net sales increased to 19.5% compared to 17.4% in Fiscal 1995. As a result, operating income and net income for Fiscal 1996 decreased by $12,094 and $6,337, respectively, in these periods. Increases in resin pricing, which began in March 1996 also adversely affected this year's results. Because of contractual commitments with customers and competitive conditions, there is generally a lag between increases in resin prices and increases in prices for the Company's products. FISCAL 1996 VERSUS FISCAL 1995 NET SALES. Net sales increased $848,074 or 11.8% for Fiscal 1996 compared with Fiscal 1995. This increase was due primarily to gains in market share for the Company's products. The Company's sales and marketing departments continue to make proposals to new prospective customers and attend trade shows to generate new leads. Competition continues to be a major factor in the Company's business, including competitors with lower labor costs because of production in Mexico. COST OF GOODS SOLD. Cost of goods sold increased $541,458 or 10.4% for Fiscal 1996 compared with Fiscal 1995. This increase was due primarily to the higher levels of net sales in Fiscal 1996. The decrease in cost of goods sold as a percentage of net sales was attributable to the increase in gross margin on the sale of more value added products in Fiscal 1996. Value added products include pouches with custom sizes or designs, or reclosable or stand-up features. During Fiscal 1996, inventory has been kept at historical levels and in line with projected sales. If raw material prices continue to escalate, it may be necessary to increase these levels as a means of postponing or diluting the effects of higher prices. The Company also monitors inventory levels for cash flow purposes. The Company continues to inventory items for several customers to satisfy their requirements and carry a certain amount of "unattached" raw material to enable the Company to provide product for customers with emergency needs. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expense increased $318,710 or 25.6% for Fiscal 1996 compared with Fiscal 1995. This increase was due primarily to the addition of sales and support personnel, write off of bad debt, and costs connected with the proposed Merger. OTHER INCOME (EXPENSE). Interest expense increased $4,143 for Fiscal 1996 compared with Fiscal 1995 because of debt financing of a pouch machine put into service in May 1995, which was slightly offset with a decrease in the use of the Company's bank line of credit. This increase was also offset in part by an increase of $3,800 of interest income during the comparable periods. INCOME TAXES. Income taxes decreased $6,100 for Fiscal 1996 compared with Fiscal 1995, resulting in part from a $12,437 decrease in income before income taxes for Fiscal 1996. This decrease was offset by the Company's effective tax rate increasing as more income is taxed at the maximum tax rates and as deferred income taxes are being increased accordingly. NET INCOME. Net income decreased $6,337 for Fiscal 1996 compared with Fiscal 1995. Net income per share was $0.02 per share lower for Fiscal 1996 because of this decrease and an increase in the number of outstanding shares of common stock and common share equivalents compared to the Fiscal 1995 period. FISCAL 1995 VERSUS FISCAL 1994 NET SALES. Net sales increased $2,341,225 or 48.6% for Fiscal 1995 compared with the Company's fiscal year ended September 30, 1994 ("Fiscal 1994"). This increase was due to gains in market share for the Company's products and the addition of a network of manufacturer's representatives in the midwest and pacific coast regions. COST OF GOODS SOLD. Cost of goods sold increased $1,652,570 or 46.7% for Fiscal 1995 compared with Fiscal 1994, primarily because of higher levels of net sales in Fiscal 1995. The decrease in cost of goods sold as a percentage of net sales was attributable to the increase in gross margin on the sale of more value added products in Fiscal 1995. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expense increased $308,107 or 32.9% for Fiscal 1995 compared with Fiscal 1994. This increase was due primarily to the 48.6% increase in net sales which resulted in additional sales commissions from both in-house sales staff and manufacturer's representatives who represent the midwest and pacific coast regions. During the second quarter of 1995, ten new offices were completed at the Facility. The Company moved its sales personnel to those new offices, which allowed the Company to terminate the office lease for its sales personnel. OTHER INCOME (EXPENSE). Interest expense increased $77,106 for Fiscal 1995 compared with Fiscal 1994 because of a capital lease obligation and debt financing for a plant expansion and purchase of a pouch machine during Fiscal 1995. Interest income decreased $3,815 for the Fiscal 1995 period because of the expiration of a note receivable which existed in Fiscal 1994. INCOME TAXES. Income taxes increased $121,600 or 116% for Fiscal 1995 compared with Fiscal 1994, resulting primarily from the 48.6% increase in net sales and 108% increase in income before income taxes for the Fiscal 1995 period. NET INCOME. Net income increased $181,877 or 103% for Fiscal 1995 compared with Fiscal 1994. Net income per share was $0.10 per share higher for Fiscal 1995 principally because of this increase. Inflation has not had a significant effect on the Company during the Fiscal 1996, 1995 or 1994 periods. However, volatility of resin prices for the raw material film purchased by the Company for use with its products continued during these periods. Liquidity and Capital Resources At September 30, 1996, the Company had working capital of $1,469,697, representing an increase of $277,495 since September 30, 1995. In Fiscal 1996, the Company had $252,741 net cash provided by operating activities, consisting of $352,458 in net income, $218,421 in depreciation and the remainder from the net change in other working capital items. There were capital expenditures of approximately $171,034 in Fiscal 1996, related to purchase of equipment, and financing activities resulting in payments of debt of $623,352 and net cash used in financing activities of $83,619. Management believes that the financial resources available to the Company, including its bank line of credit, trade credit and internally generated funds, will be sufficient to finance the Company's operations in the foreseeable future. At September 30, 1996, the Company had access to a $600,000 bank line of credit with all funds being available to finance any future operating activity. During the first quarter of fiscal 1997, the Company refinanced its existing mortgage and bank financing with a new $864,000 bank credit arrangement. Approximately $460,000 of the new bank credit facility was used to refinance the existing mortgage on the Facility and the balance will be used to fund $404,000 of the $455,000 cost of the building portion of the Plant Expansion Project. The Company intends to continue with the building portion of the Plant Expansion Project whether or not the Merger is completed. Management believes that its available cash and cash flow from operations will be sufficient to fund its working capital needs for the foreseeable future. LAMCOR, INCORPORATED FINANCIAL REPORT SEPTEMBER 30, 1996, 1995 AND 1994 INDEPENDENT AUDITOR'S REPORT Board of Directors and Shareholders Lamcor, Incorporated We have audited the accompanying balance sheets of Lamcor, Incorporated as of September 30, 1996 and 1995, and the related statements of income, changes in stockholders' equity and cash flows for each of the three years in the period ended September 30, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lamcor, Incorporated as of September 30, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 1996, in conformity with generally accepted accounting principles. /s/ House, Nezerka & Froelich, P.A. Bloomington, Minnesota November 12, 1996, except for Note 5, as to which the date is November 26, 1996 LAMCOR, INCORPORATED
BALANCE SHEETS September 30, 1996 and 1995 ASSETS (Notes 4 and 5) 1996 1995 ----------- ----------- CURRENT ASSETS: Cash and savings account $ 61,562 $ 62,872 Trade accounts receivable, less allowance for doubtful accounts of $10,000 (Note 9) 1,145,402 1,046,302 Inventories (Note 2) 1,263,261 986,438 Prepaid expenses and other 31,793 14,498 Deferred tax assets (Note 10) 14,000 12,615 ----------- ----------- Total current assets 2,516,018 2,122,725 OTHER ASSETS (Note 3) 3,092 4,158 PROPERTY, EQUIPMENT AND IMPROVEMENTS, at cost (Note 6): Land 45,960 20,000 Building and improvements 773,340 753,862 Manufacturing equipment 2,088,102 1,981,743 Office equipment and other 147,402 128,165 ----------- ----------- 3,054,804 2,883,770 Less accumulated depreciation 1,064,530 846,573 ----------- ----------- 1,990,274 2,037,197 ----------- ----------- $ 4,509,384 $ 4,164,080 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt (Note 5) $ 165,000 $ 97,000 Current maturities of capital lease obligations (Note 6) 64,000 57,103 Accounts payable 646,961 503,645 Accrued expenses (Note 11) 168,417 144,569 Income taxes payable (Note 10) 1,943 128,206 ----------- ----------- Total current liabilities 1,046,321 930,523 LONG-TERM DEBT, less current maturities (Note 5) 745,038 852,093 CAPITAL LEASE OBLIGATIONS, less current maturities (Note 6) 361,745 425,706 DEFERRED INCOME TAXES (Note 10) 185,000 145,900 COMMITMENT, CONTINGENCY AND SUBSEQUENT EVENT (Notes 13 and 14) STOCKHOLDERS' EQUITY (Notes 7 and 8): Undesignated shares; authorized 5,000,000 shares; none issued Common stock, no par value; authorized 5,000,000 shares; outstanding shares 1996 1,382,667; 1995 1,341,542 996,559 952,809 Notes receivable arising from the sale of common stock (101,219) (66,433) Retained earnings 1,275,940 923,482 ----------- ----------- 2,171,280 1,809,858 ----------- ----------- $ 4,509,384 $ 4,164,080 =========== ===========
See Notes to Financial Statements.
LAMCOR, INCORPORATED STATEMENTS OF INCOME Years Ended September 30, 1996, 1995 and 1994 1996 1995 1994 ----------- ----------- ----------- Net sales (Note 9) $ 8,006,710 $ 7,158,636 $ 4,817,411 Cost of goods sold 5,736,439 5,194,981 3,542,411 ----------- ----------- ----------- Gross profit 2,270,271 1,963,655 1,275,000 Selling, general and administrative expense 1,563,404 1,244,694 936,587 ----------- ----------- ----------- Operating income 706,867 718,961 338,413 Other income (expense): Interest income 8,981 5,181 8,996 Interest expense (143,390) (139,247) (66,141) Other -- -- 150 ----------- ----------- ----------- (134,409) (134,066) (56,995) ----------- ----------- ----------- Income before income taxes 572,458 584,895 281,418 Income taxes (Note 10) 220,000 226,100 104,500 ----------- ----------- ----------- Net income $ 352,458 $ 358,795 $ 176,918 =========== =========== =========== Earning per common share: Primary $ .20 $ .22 $ .12 =========== =========== =========== Fully diluted $ .20 $ .21 $ .12 =========== =========== =========== Shares used in computing earnings per common equivalent shares: Primary 1,759,930 1,615,101 1,448,315 =========== =========== =========== Fully diluted 1,767,811 1,713,000 1,451,483 =========== =========== ===========
See Notes to Financial Statements.
LAMCOR, INCORPORATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Years Ended September 30, 1996, 1995 and 1994 Common Stock Note Receivable ------------ from Sale of Retained Shares Amount Common Stock Earnings Total ----------- ----------- ----------- ----------- ----------- Balance, September 30, 1993 1,315,542 $ 931,534 $ (107,500) $ 387,769 $ 1,211,803 Stock issued for options 13,000 8,625 -- -- 8,625 Proceeds from notes receivable -- -- 10,000 -- 10,000 Net income -- -- -- 176,918 176,918 ----------- ----------- ----------- ----------- ----------- Balance, September 30, 1994 1,328,542 940,159 (97,500) 564,687 1,407,346 Stock issued for options/compensation 3,000 5,150 -- -- 5,150 Interest on notes receivable -- -- (7,683) -- (7,683) Proceeds from notes receivable -- -- 46,250 -- 46,250 Stock issued for notes receivable/options 10,000 7,500 (7,500) -- -- Net income -- -- -- 358,795 358,795 ----------- ----------- ----------- ----------- ----------- Balance, September 30, 1995 1,341,542 952,809 (66,433) 923,482 1,809,858 Stock issued for options 16,125 12,500 -- -- 12,500 Interest on notes receivable -- -- (3,536) -- (3,536) Stock issued for notes receivable/options 25,000 31,250 (31,250) -- -- Net income -- -- -- 352,458 352,458 ----------- ----------- ----------- ----------- ----------- Balance, September 30, 1996 1,382,667 $ 996,559 $ (101,219) $ 1,275,940 $ 2,171,280 =========== =========== =========== =========== ===========
See Notes to Financial Statements.
LAMCOR, INCORPORATED STATEMENTS OF CASH FLOWS Years Ended September 30, 1996, 1995 and 1994 1996 1995 1994 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 352,458 $ 358,795 $ 176,918 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 218,421 176,179 125,120 Deferred income taxes 37,715 36,285 42,000 Stock exchanged for compensation -- 2,150 -- Interest added to notes receivable (3,536) -- -- Changes in assets and liabilities: Trade accounts receivable (99,100) (252,692) (181,959) Inventories (276,823) 78,249 (628,786) Prepaid expenses and other (17,295) (7,767) (1,317) Refundable income taxes -- -- 37,124 Accounts payable 143,316 (135,338) 269,482 Accrued expenses 23,848 58,459 22,275 Income taxes payable (126,263) 98,770 29,436 ----------- ----------- ----------- Net cash provided by (used in) operating activities 252,741 413,090 (109,707) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (171,034) (214,923) (294,491) Other deposits 602 (1,777) (134,493) ----------- ----------- ----------- Net cash used in investing activities (170,432) (216,700) (428,984) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short-term borrowings 705,000 1,000,000 545,000 Principal payments on short-term borrowings (705,000) (1,090,000) (455,000) Principal payments on long-term debt and capital lease (623,552) (136,583) (85,766) Proceeds from long-term debt 527,433 120,000 350,442 Collections on note receivable from common stock -- 46,250 10,000 Proceeds from exercise of stock options 12,500 3,000 8,625 Checks issued in excess of bank balance -- -- 82,381 Payments on checks issued in excess of bank balance -- (82,381) -- ----------- ----------- ----------- Net cash provided by (used in) financing activities (83,619) (139,714) 455,682 ----------- ----------- ----------- Net increase (decrease) in cash and savings account (1,310) 56,676 (83,009) Cash and savings account: Beginning 62,872 6,196 89,205 ----------- ----------- ----------- Ending $ 61,562 $ 62,872 $ 6,196 =========== =========== =========== SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Capital lease obligation for equipment/deposit $ -- $ 353,040 $ 157,030 =========== =========== =========== Equipment deposit used for purchase of equipment $ -- $ 291,673 $ -- =========== =========== =========== Stock issued for notes receivable $ 31,250 $ 7,500 $ -- =========== =========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for interest $ 146,694 $ 140,019 $ 61,346 =========== =========== =========== Cash paid for income taxes $ 308,548 $ 91,045 $ 15,621 =========== =========== =========== Cash refunded for income taxes $ -- $ -- $ 19,681 =========== =========== ===========
See Notes to Financial Statements. LAMCOR, INCORPORATED NOTES TO FINANCIAL STATEMENTS Years Ended September 30, 1996, 1995 and 1994 Note 1. Nature of Business and Significant Accounting Policies: Nature of business: The Company is engaged in the business of laminating plastic and manufacturing of plastic pouches used in the food and medical industries with sales throughout the United States. A summary of the Company's significant accounting policies follows: Credit risk and allowance for doubtful accounts: The Company reviews customers' credit history before extending credit and establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. Inventories: Inventories are stated at the lower of cost (using standard costs for work in progress and finished goods) or market, computed on a basis which approximates the first-in, first-out (FIFO) method. Property, equipment and improvements: Property, equipment and improvements are stated at cost. For financial reporting purposes, depreciation is computed using the straight-line method over the following estimated useful lives: Years Building and improvements 3-40 Manufacturing equipment 5-15 Office equipment and other 3-5 Depreciation on property, equipment and improvements was $217,957, $175,715 and $124,805 for the years ended September 30, 1996, 1995 and 1994, respectively. For income tax reporting purposes, other lives and methods are used; deferred income taxes are provided for these differences. Revenue recognition: Revenues are recognized at the time of product shipment. Income taxes: Deferred tax assets and liabilities are recognized for the future consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Earnings per share: Earnings per share has been determined by dividing net income by the weighted average common shares outstanding during each period plus the effect of common shares contingently issuable, primarily from stock options as computed using the modified treasury stock method. Estimates and assumptions: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair value of financial instruments: In 1995, the Company adopted Statement of Financial Accounting Standards SFAS No. 107, "Disclosures About Fair Value of Financial Instruments," which requires disclosure of fair value information about financial instruments when the fair value is different than the book value of those financial instruments. Financial instruments included in these financial statements, which ordinarily are not recorded at market value, include long-term debt. The estimated fair value amounts of these instruments have been determined using available market information and appropriate valuation methodologies. When the fair value is equal to the book value, no additional disclosure is made. Stock based compensation: In October 1995, SFAS No. 123, "Accounting for Stock Based Compensation," was issued. This statement establishes financial accounting and reporting standards for stock based employee compensation plans and is effective for fiscal years beginning after December 15, 1995. The Company has not yet adopted or calculated the financial statement impact of this pronouncement. Note 2. Inventories: The components of inventory are as follows: 1996 1995 -------------- -------------- Raw materials $ 183,428 $ 246,576 Work in progress 614,563 416,504 Finished goods 465,270 323,358 -------------- -------------- $ 1,263,261 $ 986,438 ============== ============== Note 3. Other Assets:
1996 1995 -------------- -------------- Equipment deposits $ 1,175 $ 277 Refinancing costs, less accumulated amortization 1996 $1,392; 1995 $928 1,917 2,381 Land deposit - 1,500 -------------- -------------- $ 3,092 $ 4,158 ============== ==============
Note 4. Bank Line of Credit: The Company has a revolving line of credit in the maximum amount of $600,000 which expires on January 22, 1998. Interest is payable at 1.5% over the bank's reference rate which was 8.25% at September 30, 1996. The note is payable on demand and collateralized by substantially all assets except for building and land. There were no outstanding balances due on the credit line at September 30, 1996 and 1995. Note 5. Long-Term Debt:
1996 1995 -------------- -------------- Mortgage payable - bank, due in monthly installments of $3,285 including interest at 1.75% over the bank's reference rate, paid off on September 25, 1996, collateralized by building and land $ - $ 384,772 Notes payable, due in monthly installments including interest from either 9.5% to 9.6% or .5% to 1.5% over the bank's reference rate which was 8.25% at September 30, 1996, balances are due from June 2, 1998 to October 6, 2006, collateralized by substantially all assets 910,038 564,321 -------------- -------------- 910,038 949,093 Less current maturities 165,000 97,000 -------------- -------------- $ 745,038 $ 852,093 ============== ==============
Maturities for the next five years on long-term debt outstanding at September 30, 1996 are as follows: Year Ending September 30 1997 $ 165,000 1998 185,289 1999 194,344 2000 184,297 2001 88,384 After 92,724 ============== $ 910,038 On November 26, 1996, the Company received waivers of certain demand payment features included in certain of the above installment notes. The bank retained such demand payment rights in the case of default, a more than 25% change in ownership and other instances stipulated in the notes. Note 6. Leases: On August 11, 1994, the Company entered into a capital lease agreement with a financing company to acquire $489,920 of equipment. The financing company advanced the manufacturer $157,030 for which the Company was directly obligated as of September 30, 1994. Payments totaling $332,890 were made by the financing company during the 1995 year. The lease began on May 1, 1995 and calls for 84 monthly payments of $8,147 including interest at 10.33%. On January 17, 1995, the Company entered into a capital lease agreement to purchase a truck for $18,884. The lease requires 48 monthly payments of $400 including interest at 9.75%. The Company also entered into a capital lease agreement to purchase a computer for $4,304 which began on April 30, 1995 and requires 36 monthly payments of $130. The following is a schedule by year of the future minimum lease payments due under capital leases together with the present value of the net minimum lease payments: Year Ended September 30: 1997 $ 104,125 1998 103,345 1999 99,360 2000 97,763 2001 97,763 After 2001 57,028 -------------- Total minimum lease payments 559,384 Less amount representing interest 133,639 -------------- Present value of minimum lease payments 425,745 Less current obligation under capital lease 64,000 -------------- Non-current obligation under capital lease $ 361,745 ============== Cost and accumulated amortization of leased assets are as follows: 1996 1995 -------------- -------------- Cost $ 513,108 $ 513,108 Accumulated amortization 76,920 23,290 -------------- -------------- $ 436,188 $ 489,818 ============== ============== Amortization of assets under capital leases is included in depreciation expense and was $53,630 and $23,290 for the years ended September 30, 1996 and 1995, respectively. The Company rented space for a Minneapolis sales office under an operating lease which commenced June 1, 1990 and expired May 31, 1995. Rent expense under all operating leases was $16,488 and $14,810 for the years ended September 30, 1995 and 1994, respectively. Note 7. Stock Options: The Company has reserved shares of common stock for issuance to key employees and stockholders under incentive stock option and purchase plans. Options are exercisable on a graduated scale and/or expire based on the individual terms of the option agreements. The options are exercisable at prices ranging from $ .50 to $2.00 per share. Other pertinent information related to the plan is as follows:
September 30 -------------- 1996 1995 1994 -------------- -------------- -------------- Under option, beginning of year 590,000 598,000 576,000 Granted - 5,000 45,000 Terminated and canceled - - (10,000) Exercised (40,000) (13,000) (13,000) -------------- -------------- -------------- Under option, end of year 550,000 590,000 598,000 ============== ============== ============== Options exercisible, end of year 515,000 505,000 484,000 ============== ============== ==============
The options exercised during the years ended September 30, 1996, 1995 and 1994 were at an average price of $1.09, $.81 and $.66 per share, respectively. Note 8. Notes Receivable Arising From the Sale of Common Stock:
1996 1995 -------------- -------------- Notes receivable from exercise of options for the Company's common stock - Due April 1, 1997, including interest at 6% $ 93,719 $ 58,933 Due August 2, 1996, including interest at 6% 7,500 7,500 -------------- -------------- $ 101,219 $ 66,433 ============== ==============
Issued shares are being held by the Company as collateral for the above notes pending payment of the amounts due. Note 9. Major Customers: The Company derived more than 10% of its net sales from the following unaffiliated customers and had receivable balances from those customers in the amounts of:
Year Ended September 30 --------------------------- 1996 1995 1994 --------------------------- --------------------------- -------------------------- Customer Sales Receivable Sales Receivable Sales Receivable -------- ----------- ----------- ---------- ----------- ---------- ---------- A $ * $ * $ * $ * $ 528,983 $ 68,804 B 940,737 91,935 942,035 87,299 * *
* The net sales to customers A and B were less than 10% of the total net sales for the period indicated. Note 10. Income Taxes: The income tax components are as follows:
Year Ended September 30 ----------------------- 1996 1995 1994 -------------- -------------- -------------- Currently payable: Federal $ 162,285 $ 165,815 $ 51,700 State 20,000 24,000 10,800 -------------- -------------- -------------- 182,285 189,815 62,500 Deferred income taxes 37,715 36,285 42,000 -------------- -------------- -------------- $ 220,000 $ 226,100 $ 104,500 ============== ============== ==============
Net deferred tax liabilities consist of the following:
1996 1995 -------------- -------------- Deferred tax liabilities: Depreciation $ 185,000 $ 145,900 Deferred tax assets: Allowance for doubtful accounts 3,400 3,400 Vacation accrual 4,000 4,018 Inventory capitalization 6,600 5,197 -------------- -------------- 14,000 12,615 -------------- -------------- $ 171,000 $ 133,285 ============== ==============
Differences between income tax expense and the amount computed by applying the statutory federal income tax rates to earnings before income taxes are as follows:
1996 1995 1994 -------------- -------------- -------------- Statutory rate applied to income at 34% $ 194,500 $ 198,900 $ 95,700 Incremental tax brackets - - 13,000 State taxes, net of federal tax benefit 13,200 18,100 10,500 Other 12,300 9,100 (14,700) -------------- -------------- -------------- $ 220,000 $ 226,100 $ 104,500 ============== ============== ==============
Note 11. Other Accrued Expenses: Other accrued expenses consist of the following:
1996 1995 -------------- -------------- Accrued wages and related expenses $ 82,724 $ 42,820 Accrued commissions 32,387 46,189 Accrued profit sharing 26,000 18,000 Payable to chairman - 29,680 Other 27,306 7,880 -------------- -------------- $ 168,417 $ 144,569 ============== ==============
Note 12. Profit Sharing Plan: The Company has a profit sharing plan under Section 401(k) of the Internal Revenue Code for all eligible employees. The Plan provides that Company contributions are at the discretion of the Board of Directors. In addition, participants may elect to enter into salary reduction agreements with the Company for a portion of their compensation. Company contributions for the years ended September 30, 1996, 1995 and 1994 were $26,000, $18,000 and $15,300, respectively. Note 13. Commitments and Contingency: On October 2, 1996, the Company entered into an agreement for the construction of additional warehouse space for approximately $460,000. On March 1, 1996, the Company commenced an offering to its then existing shareholders of rights to acquire up to an aggregate of 350,000 shares of common stock at a price of $2.75 per share. On June 14, 1996, the rights offering was terminated and shortly thereafter, the Company refunded all subscriptions (for 56,441 shares), with interest. On July 30, 1996, the Company received a letter from legal counsel to 13 of such shareholders, demanding the issuance of the common stock which had been subscribed for by those shareholders in the Rights Offering. The Company, its merger candidate (see Note 14) and respective law firms representing the subscribers are currently negotiating a stipulation agreement and settlement agreement under which a settlement payment of $1 (less certain legal fees) would be paid for each of the shares subscribed for by such members and in exchange for such payment, each member would deliver a release of all claims pertaining to the rights offering. There can be no assurance that the Rights Offering terms can be settled under these terms and, accordingly, no liability has been recorded concerning this matter. Note 14. Merger: The Company and its shareholders are considering a proposal to approve and adopt an Agreement and Plan of Merger under which the Company would be merged into another company. The proposal calls for a purchase price of Company stock of $4.12 per share including $.12 allocated to an escrow fund subject to terms as outlined in the agreement. In addition, all outstanding Company stock options would be purchased for $4.12 less the option exercise price and would be subject to the above $.12 escrow. Item 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Reference is made to the Financial Statements and to each of the items referred to therein, which are included at the end of this report. Item 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III Item 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth certain information as of December 4, 1996 concerning the Company's directors and executive officers: Name Age Position with Company ---- --- --------------------- Leo Lund 67 Chairman of the Board, Secretary, Chief Financial Officer and Director Toby Jensen 44 President, Chief Executive Officer and Director Christopher Elliott 39 Director Susan Jones 42 Director David Stewart 54 Director LEO LUND has served as Chairman of the Board, Secretary, Chief Financial Officer and Director of the Company since 1985, and has rendered financial and consulting services to the Company during that time. Mr. Lund was a partner in the accounting firm of Lund & Associates, P.A. from 1955 to 1992. Mr. Lund retired from that firm in 1992 and continues to provide part time financial and consulting services to several different companies, including the Company. TOBY JENSEN has served as President, Chief Executive Officer and Director of the Company since 1988. He has worked in management and sales in the flexible packaging industry for more than 17 years. CHRISTOPHER ELLIOTT has served as a Director of the Company since January 1994. Mr. Elliott has been an attorney with the law firm of Christoffel, Elliott & Albrecht, P.A. since 1989. Christoffel, Elliott & Albrecht, P.A. has served as legal counsel to the Company. SUSAN JONES has served as a Director of the Company since 1990. From 1981 until 1994, Ms. Jones was Vice President and General Manager of Strout Plastics, Inc., a manufacturer of flexible packaging. Since 1994, Ms. Jones has been an independent sales representative in the flexible packaging industry. DAVID STEWART has served as a Director of the Company since 1985. Mr. Stewart has been President of Paragon Enterprises, Inc., a real estate firm, since 1974. Item 11. - EXECUTIVE COMPENSATION The following table provides certain summary information relating to cash and other compensation awarded to, earned by or paid to the Company's President and Chief Executive Officer. The annual compensation paid to the Company's only other executive officer, Leo Lund who serves as Chief Financial Officer and Chairman of the Board, is less than $100,000 and is paid him as an independent consultant and not as an employee of the Company.
SUMMARY COMPENSATION TABLE Long-Term Compensation Annual Compensation ------------------- Awards ---------------------- Securities Name and Fiscal Underlying All Other Principal Position Year(1) Salary($) Bonus($) Options (#) Compensation($) ------------------ ------- --------- -------- ----------- --------------- Toby Jensen, 1996 90,399 9,540 15,000 -- President and 1995 83,649 9,940 10,000 800(2) Chief Executive Officer 1994 78,500 7,900 5,000 900(2)
- ------------------ (1) The Company's fiscal year begins on October 1 and ends on September 30 each year. (2) Contribution under the Company's 401(k) Profit Sharing Plan. The following table sets forth information relating to stock options granted to the executive officer named in the Summary Compensation Table under the Company's stock option plans during the Fiscal 1996.
OPTION GRANTS IN FISCAL 1996 Individual Grants ------------------------------------------------------------------------- Potential Realizable Value at Number of % of Total Assumed Annual Rates of Securities Options Stock Price Appreciation for Underlying Granted to Exercise or Option Term Name Options Employees Base Price Expiration ----------------------------- ---- Granted(#) in Fiscal 1996 ($/share) Date 5% 10% ---------- -------------- --------- ---- ---------- ----------- Toby Jensen 5,000(1) 9% $0.6375 (1) $1,757 $4,328
- ------------------- (1) The options for the purchase of 5,000 shares of common stock were granted to Mr. Jensen on May 4, 1988, expiring April 1, 1989. Effective March 31, 1989, the Company extended the exercise period for these options until April 1, 1996. Effective March 31, 1996, the Company extended the exercise period for these options through the closing of the pending Merger with LI Acquisition Corporation, which is scheduled to be completed on or before January 15, 1997 if all of the conditions to the Merger are satisfied or waived. If the Merger is not completed, the Company intends to extend the exercise period for these options for a reasonable period of time. The following table sets forth information relating to the exercise of options during fiscal 1996 and unexercised options held as of September 30, 1996 by the executive officer named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND OPTION VALUES Value of Unexercised Number of Unexercised In-the Money Shares Securities Underlying Options at Fiscal Name Acquired Options at Fiscal Year End ($) ---- on Value Year End(#) Exercisable / Exercise(#) Realized($) Exercisable / Unexercisable Unexercisable ----------- ----------- --------------------------- ------------- Toby Jensen 25,000 $37,500 183,000/0 $522,375
- ------------------ (1) Based on the average of the bid ($3.25) and ask ($4.00) price per share on September 28, 1996. Mr. Jensen will receive $612,960 for the cancellation of these options effective upon the Merger, and $21,960 of the proceeds from which will be held as part of the Escrowed Funds. Of the 550,000 outstanding options to purchase shares of Common Stock ("Options") outstanding as of December 1, 1996, 49,000 Options were originally scheduled to expire before the closing of the Merger, including 5,000 Options held by Mr. Jensen. The Company has agreed to extend the exercise period of such 49,000 Options through the effective time of the Merger. If the Merger is not completed, the Company intends to extend the exercise period for such Options for a reasonable period of time.
TEN-YEAR OPTION REPRICINGS Number of Securities Market Price of Length of Underlying Options Stock at Time of Exercise Price New Original Option Repriced or Repricing or at Time of Exercise Term Remaining Amended Amendment Repricing or Price at Date of Name Date (#) ($) Amendment ($) Repricing or ($) Amendment - ---------------- -------------- -------------------- ------------------ ----------------- ------------- --------------- Toby Jensen 3/31/90 10,000 $0.50 $0.6375 $0.6375 (1) 3/31/90 15,000 $0.50 $1.00 $1.00 (2) 11/30/94 25,000 $1-11/16 $0.75 $0.75 (3) 11/30/94 25,000 $1-11/16 $1.00 $1.00 (4) 11/30/94 25,000 $1-11/16 $1.25 $1.25 (5) 3/31/96 5,000 $2.75 $0.6375 $0.6375 (6)
- ---------------- (1) Options for the purchase of 10,000 shares of common stock were granted to Mr. Jensen on May 4, 1988, expiring April 1, 1989. Effective March 31, 1990, the Company extended the exercise period for these options until April 1, 1997. (2) Options for the purchase of 15,000 shares of common stock were granted to Mr. Jensen on May 4, 1988, expiring April 1, 1989. Effective March 31, 1990, the Company extended the exercise period for these options until April 1, 1998. (3) Options for the purchase of 25,000 shares of common stock were granted to Mr. Jensen on March 27, 1991, expiring December 1, 1994. Effective November 30, 1994, the Company extended the exercise period for these options until December 1, 1998. (4) Options for the purchase of 25,000 shares of common stock were granted to Mr. Jensen on March 27, 1991, expiring December 1, 1994. Effective November 30, 1994, the Company extended the exercise period for these options until December 1, 1999. (5) Options for the purchase of 25,000 shares of common stock were granted to Mr. Jensen on March 27, 1991, expiring December 1, 1994. Effective November 30, 1994, the Company extended the exercise period for these options until December 1, 2000. (6) Options for the purchase of 5,000 shares of common stock were granted to Mr. Jensen on May 4, 1988, expiring April 1, 1989. Effective March 31, 1989, the market price of the common stock was $0.625 and the Company extended the exercise period for these options until April 1, 1996. Effective March 31, 1996, the Company extended the exercise period for these options through the closing of the pending Merger with LI Acquisition Corporation. As a condition to the consummation of Merger (the "Closing"), each holder of Options must deliver before Closing an Option Cancellation Agreement, under which the Options will be canceled in exchange for the following payment:, At the Closing, PAC will cause the Company to purchase each Option in exchange for a cash payment equal to the product of (a) the difference (if positive) between $4.12 and the price at which the holder of such Option could purchase each share of Common Stock to which such Option relates, multiplied by (b) the number of shares of Common Stock subject to such Option as if such Option was then fully exercisable, less (y) the product of $0.12, representing the pro rata portion of the Escrowed Funds allocable to each share of Common Stock subject to such Option, multiplied by the number of shares referenced in clause (b) above, and further less (z) any taxes required to be withheld. Pursuant to such an agreement, at Closing Mr. Jensen is to receive $612,960 (less an aggregate amount of $21,960 to be held as part of the Escrowed Funds) and Mr. Lund is to receive $862,169 (less an aggregate amount of $30,360 to be held as a part of the Escrowed Funds). DIRECTOR COMPENSATION. Directors who are not employees of the Company are reimbursed by the Company for expenses incurred as directors. Although, the Company does not currently pay directors' fees, the Company has agreed to pay the two members of a Special Committee of the Board of Directors (formed to negotiate and evaluate the Merger Agreement on behalf of the Board) a fee of $15,000 each upon the closing of the Merger in consideration for their assistance in the negotiation of the Merger Agreement and consummation of the Merger. EMPLOYMENT AGREEMENT. When negotiations commenced concerning the Merger with PAC, the Company did not have employment agreements with its executive officers. However, as a condition to proceeding with the Merger, PAC requested that the Company enter into an employment agreement with Mr. Jensen, which will become effective upon the Closing of the Merger. Under that agreement dated September 30, 1996, Mr. Jensen will serve as the Company's President for three years and receive an annual base salary of $120,000 and become eligible for a bonus of up to $75,000, payable by November 15, 1997, based on the Company obtaining performance levels established by the Board of Directors elected by PAC after the Closing of the Merger. Mr. Jensen will also receive an additional one-time bonus of $75,000 upon the Closing of the Merger. Under the employment agreement, Mr. Jensen has agreed that during the term of the agreement and for two years following the termination or expiration of the agreement he will not without the prior written consent of the Company (i) become financially interested in (subject to certain limitations) or be employed as a consultant, officer, director or executive or managerial employee of a business which competes with the Company, (ii) solicit to a business that competes with the Company persons or entities who were customers of the Company during the term of the employment agreement, or (iii) solicit or hire to a business that competes with the Company the Company's employees. If the employment agreement is terminated by the Company after the Merger without cause, the Company would pay Mr. Jensen a severance payment equal to the base salary payable during the remaining term of the agreement. The employment agreement with Mr. Jensen takes effect only if the Merger is successfully completed. CONSULTING ARRANGEMENT. Leo Lund performs consulting services for the Company and serves as its Chief Financial Officer and Chairman of the Board of Directors, as an independent contractor and not as an employee of the Company. The Company currently pays Mr. Lund consulting fees of approximately $2,100 per month for his services. In consideration of Mr. Lund's consulting services to the Company, commencing in 1989 and ending in 1993 the Company also granted Options to Mr. Lund for the purchase of an aggregate of 253,000 shares of Common Stock at a weighted average exercise price of $0.71 per share. All of these Options are currently outstanding and will be canceled upon the closing of the Merger. See "Certain Relationships and Related Transactions Treatment of Options." Mr. Lund has also entered into a noncompetition and confidentiality agreement to take effect upon the Closing of the Merger pursuant to which Lamcor will be required to make a one-time payment of $58,400 to Mr. Lund. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; REPORT ON EXECUTIVE COMPENSATION. There are no interlocks with other companies among any of the officers or directors of the Company. The Company does not have a compensation committee of the Board of Directors. The compensation of the Company's President and Chief Executive Officer is determined by Leo Lund, the Chairman of the Board, based on Mr. Lund's review of Lamcor's performance as it relates to increases in gross sales and profit margins as well as market conditions. The consulting fees paid to Mr. Lund for his services as Chief Financial Officer and as a consultant to the Company are determined by Toby Jensen, the Company's President and Chief Executive Officer. Item 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information regarding the beneficial ownership of Common Stock as of December 4, 1996, by (i) by each person or group that is known by the Company to be the beneficial owner of more than 5% of the outstanding shares of its Common Stock, (ii) each of the executive officers and directors of the Company and (iii) all executive officers and directors of the Company as a group. Information with respect to beneficial ownership is based upon information furnished by such persons to the Company.
Amount and Nature of Percent of Beneficial Ownership Outstanding Shares -------------------- ------------------ Name - ---- Christopher Elliott 156,333 11.3% 4900 First Bank Place 601 Second Avenue South Minneapolis, Minnesota 55402 Toby Jensen 253,050(1)(2) 16.2% P.O. Box 70 Highway 169 North Le Sueur, Minnesota 56058 Susan Jones 10,000(1)(3) * 18546 Vista Del Sol Dallas, Texas 75287 Leo Lund 407,000(1)(4) 24.9% P.O. Box 70 Highway 169 North Le Sueur, Minnesota 56058 David Stewart 14,400(1) 1% 4900 First Bank Place 601 Second Avenue South Minneapolis, Minnesota 55402 Kathy Young 229,520 16.6% 4900 First Bank Place 601 Second Avenue South Minneapolis, Minnesota 55402 All directors and executive officers as a group 840,783(5) 46.1% (5 persons)
- ------------------------- * Less than 1%. (1) These outstanding shares are subject to a Shareholder Voting Agreement dated September 30, 1996, which requires that such shares be voted in favor of the Merger. At the request of PAC and as a condition to PAC's willingness to enter into the Merger Agreement, certain officers and directors who together own 253,450 shares of Common Stock or 18.3% of the outstanding shares as of November 25, 1996, have entered into a Shareholder Voting Agreement pursuant to which each of them has agreed to vote for approval and adoption of the Merger Agreement. Each of the shareholders who have signed a Shareholder Voting Agreement has also agreed not to: (i) transfer their shares of Common Stock other than in the Merger or other than to a family member or charitable institution who agrees to comply with the Shareholder Voting Agreement, (ii) grant a proxy with respect to such shares, other than in connection with the approval of the Merger, (iii) dissent to the Merger or (iv) solicit, initiate or encourage the submission of any other takeover proposal concerning the Company. Each Shareholder Voting Agreement grants a proxy to representatives of PAC to vote in favor of the Merger and against a competing transaction for the sale or merger of the Company. The Shareholder Voting Agreements automatically terminate upon the first to occur of (a) the effective time of the Merger or (b) the date on which the Merger Agreement is terminated in accordance with its terms. (2) Includes 183,000 shares issuable upon the exercise of currently exercisable Options. (3) Includes 5,000 shares issuable upon the exercise of currently exercisable Options. (4) Includes 253,000 shares issuable upon the exercise of currently exercisable Options. (5) Includes 441,000 shares issuable upon the exercise of currently exercisable Options. Item 13. -CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS EMPLOYMENT AGREEMENT WITH TOBY JENSEN. When negotiations commenced concerning the Merger with PAC, the Company did not have employment agreements with its executive officers. However, as a condition to proceeding with the Merger, PAC requested that the Company enter into an employment agreement with Mr. Jensen, which will become effective upon the Closing of the Merger. Under that agreement dated September 30, 1996, Mr. Jensen will serve as the Company's President for three years and receive an annual base salary of $120,000 and become eligible for a bonus of up to $75,000, payable by November 15, 1997, based on the Company obtaining performance levels established by the Board of Directors elected by PAC after the Closing of the Merger. Mr. Jensen will also receive an additional one-time bonus of $75,000 upon the Closing of the Merger. Under the employment agreement, Mr. Jensen has agreed that during the term of the agreement and for two years following the termination or expiration of the agreement he will not without the prior written consent of the Company (i) become financially interested in (subject to certain limitations) or be employed as a consultant, officer, director or executive or managerial employee of a business which competes with the Company, (ii) solicit to a business that competes with the Company persons or entities who were customers of the Company during the term of the employment agreement, or (iii) solicit or hire to a business that competes with the Company the Company's employees. If the employment agreement is terminated by the Company after the Merger without cause, the Company would pay Mr. Jensen a severance payment equal to the base salary payable during the remaining term of the agreement. The employment agreement with Mr. Jensen takes effect only if the Merger is successfully completed. NONCOMPETITION AND CONFIDENTIALITY AGREEMENT WITH LEO LUND. When negotiations commenced concerning the Merger with PAC, the Company did not have written agreements with its directors, officers or employees concerning restrictions on competition with the Company. In connection with the Merger, PAC requested that the Company enter into a noncompetition and confidentiality agreement with Mr. Lund, which will become effective upon the Closing of the Merger. Under that agreement dated September 30, 1996, Mr. Lund has agreed (i) not to disclose any confidential information concerning Lamcor, (ii) not to compete with the Company or solicit its customers for the purpose of competing for two years after the date of the agreement and (iii) not to solicit the Company's employees to leave the Company for two years after the date of the agreement. In consideration of Mr. Lund's entry into that agreement, Lamcor will pay Mr. Lund after the Closing a one-time payment of $58,400. The agreement with Mr. Lund takes effect only if the Merger is successfully completed. TREATMENT OF OPTIONS. Of the 550,000 outstanding options, 49,000 options were originally scheduled to expire before the closing of the Merger, including 5,000 Options held by Mr. Jensen. The Company has agreed to extend the exercise period of such 49,000 Options through the effective time of the Merger. If the Merger is not completed, the Company intends to extend the exercise period for such Options for a reasonable period of time. As a condition to the Merger, each holder of Options must deliver before Closing an Option Cancellation Agreement, under which the Options will be canceled in exchange for the following payment. At the Closing, PAC will cause the Company to purchase each option in exchange for a cash payment equal to the product of (a) the difference (if positive) between $4.12 and the price at which the holder of such Option could purchase each share of Common Stock to which such Option relates, multiplied by (b) the number of shares of Common Stock subject to such option as if such option was then fully exercisable, less (y) the product of $0.12, representing the pro rata portion of the Escrowed Funds allocable to each share of Common Stock subject to such option, multiplied by the number of shares referenced in clause (b) above, and further less (z) any taxes required to be withheld. Pursuant to such an agreement, at Closing Mr. Jensen is to receive $612,956 (less an aggregate amount of $21,960 to be held as part of the Escrowed Funds) and Mr. Lund is to receive $862,169 (less an aggregate amount of $30,360 to be held as a part of the Escrowed Funds). NO CLAIMS REPRESENTATIONS. As a condition to the Merger, PAC has required that each of the directors and officers of the Company deliver a letter to PAC, stating that such person has no claims against the Company and disclosing any indebtedness of such person to the Company, which must be paid in full as of the effective time of the Merger. SHAREHOLDER VOTING AGREEMENTS. At the request of PAC and as a condition to PAC's willingness to enter into the Merger Agreement, certain officers and directors who together own 253,450 shares of Common Stock or 18.3% of the outstanding shares as of November 25, 1996, have entered into a Shareholder Voting Agreement pursuant to which each of them has agreed to vote for approval and adoption of the Merger Agreement. Each of the shareholders who have signed a Shareholder Voting Agreement has also agreed not to: (i) transfer their shares of Common Stock other than in the Merger or other than to a family member or charitable institution who agrees to comply with the Shareholder Voting Agreement, (ii) grant a proxy with respect to such shares, other than in connection with the approval of the Merger, (iii) dissent to the Merger or (iv) solicit, initiate or encourage the submission of any other takeover proposal concerning the Company. Each Shareholder Voting Agreement grants a proxy to representatives of PAC to vote in favor of the Merger and against a competing transaction for the sale or merger of the Company. The Shareholder Voting Agreements automatically terminate upon the first to occur of (a) the effective time of the Merger or (b) the date on which the Merger Agreement is terminated in accordance with its terms. INDEMNIFICATION. The Minnesota Business Corporation Act ("MBCA") requires indemnification by the Company of directors, officers and employees for liabilities incurred in that person's official capacity on behalf of the Company, if the person acted in good faith, received no improper personal benefit and reasonably believed that the conduct was in the best interests of the Company. In the case of a criminal proceeding, the person must have had no reasonable cause to believe the conduct was unlawful. Under the Merger Agreement, PAC has agreed to cause the Company to indemnify the present and former directors and officers of the Company for six years after the effective time of the Merger to the extent provided in the MBCA, provided that such present and former directors and officers are determined to have met the applicable standard of care. If the Company or any of its successors or assigns (i) reorganizes or consolidates with or merges into or enters into another business combination with any other person or entity and is not the resulting, continuing or surviving corporation or entity of such consolidation, merger or transaction or (ii) liquidates, dissolves or transfers all or substantially all of its properties and assets to any person or entity, then proper provision will be made so that the successor and assigns of the Company assume the foregoing indemnification obligations. FEES PAYABLE TO THE SPECIAL COMMITTEE AND FINANCIAL ADVISOR. The Special Committee of the Company's Board of Directors was formed on June 12, 1996 to evaluate and negotiate the Merger Agreement and related transactions on behalf of the Board of Directors. Messrs. Elliott and Stewart, who are not employees or officers of the Company, were unanimously appointed by the Board of Directors to serve as the sole members of the Special Committee because they are located in Minneapolis, Minnesota. The only other outside director, Susan Jones, resides in Texas. Ms. Jones was not appointed to the Special Committee but has been available for consultation. Subject to the Closing of the Merger, Messrs. Elliott and Stewart will each receive from the Company a fee of $15,000 at Closing for their services on the Special Committee. In addition, the Company has reimbursed Messrs. Elliott and Stewart for travel and other out-of-pocket expenses incurred on behalf of the Company. R. J. Steichen & Company will be paid a fee upon the consummation of the Merger equal to 1.0% of the aggregate consideration received by the shareholders of the Company. ACQUISITION OF PAC STOCK. Toby Jensen, Mark Steele and Timothy LaBonte, who are each employees and officers of the Company, have expressed a desire to acquire shares of the capital stock of PAC, and PAC has offered to accept shares of Common Stock currently held by Messrs. Jensen, Steele and LaBonte in exchange for shares of the capital stock of PAC, with the Common Stock valued per share in the exchange no greater than the initial Merger Consideration. If this offer is accepted by any such officer, such officer will transfer to PAC his shares of Common Stock to PAC prior to Closing in exchange for capital stock of PAC. PART IV Item 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Attached are the Financial Statements and Independent Auditor's Report on Examination of Financial Statements for the fiscal years ended September 30, 1996, 1995 and 1994. (b) No report was filed on Form 8-K during the fourth quarter of fiscal 1996. (c) See Exhibit Index following this Report. (d) All schedules are omitted because they are not required or not applicable or the information is shown in the consolidated financial statements or notes thereto. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated December 27, 1996 LAMCOR, INCORPORATED By /s/ Toby Jensen -------------------------------- Toby Jensen, President Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Leo Lund Chairman of the Board, Secretary, December 27, 1996 - --------------------------- Chief Financial Officer and Director Leo Lund (Principal Financial Officer and Principal Accounting Officer) /s/ Toby Jensen President and Director December 27, 1996 - --------------------------- (Principal Executive Officer) Toby Jensen /s/ Christopher Elliott Director December 23, 1996 - --------------------------- Christopher Elliott /s/ Susan Jones Director December 27, 1996 - --------------------------- Susan Jones /s/ David Stewart Director December 27, 1996 - --------------------------- David Stewart
EXHIBIT INDEX Exhibit Number 2.1 Agreement and Plan of Merger dated September 30, 1996 among the Company, PAC and Sub 3.1 Articles of Incorporation of the Company, as amended 3.2 Proposed Amended and Restated Articles of Incorporation of the Company, as submitted to the shareholders for approval at a special meeting of shareholders to be held on December 31, 1996 3.3 Amended and Restated Bylaws of the Company 4.1 Specimen form of the Company's Common Stock certificate 4.2 Form of Shareholder Voting Agreement 4.3 Form of Escrow Agreement 10.1 Stock Option Plans 10.2 Employment Agreement with Toby Jensen 10.3 Noncompetition Agreement and Confidentiality Agreement with Leo Lund 10.4 Form of Option Cancellation Agreement 10.5 Form of Promissory Notes for bank loans 10.6 Form of Agreement with Magnum Industriesp 11.1 Computation of Earnings Per Share. 13.1 [This Report on Form 10-K constitutes the 1996 Annual Report to Shareholders] 21.1 Subsidiaries 27 Financial Data Schedule EX-2.1 2 PLAN OF ACQUISITION, REORGANIZATION, ETC. Exhibit 2.1 Agreement and Plan of Merger dated September 30, 1996 among the Company, PAC and Sub AGREEMENT AND PLAN OF MERGER BY AND AMONG LAMCOR, INCORPORATED, LI ACQUISITION CORPORATION AND PACKAGING ACQUISITION CORPORATION DATED AS OF SEPTEMBER 30, 1996 TABLE OF CONTENTS Page ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER........................5 1.1 Merger..................................................5 1.2 Time and Place of Closing...............................5 1.3 Effective Time..........................................5 ARTICLE 2 TERMS OF MERGER.........................................6 2.1 Charter.................................................6 2.2 Bylaws..................................................6 2.3 Directors and Officers..................................6 2.4 Effect of Merger........................................6 ARTICLE 3 MANNER OF CONVERTING SHARES.............................6 3.1 Conversion of Shares....................................6 3.2 Anti-Dilution Provisions................................7 3.3 Shares Held by Lamcor or Buyer..........................7 3.4 Dissenting Shareholders.................................7 3.5 Conversion of Options and Convertible Securities........8 ARTICLE 4 EXCHANGE OF SHARES......................................8 4.1 Exchange Procedures.....................................8 4.2 Rights of Former Lamcor Shareholders....................9 4.3 Withholding Rights......................................9 4.4 Lost Certificates......................................10 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF LAMCOR...............10 5.1 Organization, Standing and Power.......................10 5.2 Authority; No Breach By Agreement......................10 5.3 Capital Stock..........................................11 5.4 Lamcor Subsidiaries....................................12 5.5 SEC Filings; Financial Statements......................12 5.6 Absence of Undisclosed Liabilities.....................12 5.7 Absence of Certain Changes or Events...................13 5.8 Tax Matters............................................13 5.9 Assets.................................................14 5.10 Intellectual Property..................................15 5.11 Environmental Matters and Permits......................15 5.12 Labor Relations........................................16 5.13 Employee Benefit Plans.................................17 5.14 Material Contracts.....................................18 5.15 Legal Proceedings......................................19 5.16 Reports................................................19 5.17 Statements True and Correct............................19 5.18 Regulatory Matters.....................................20 5.19 State Takeover Laws....................................20 5.20 Charter Provisions.....................................20 5.21 Shareholder Voting Agreement...........................20 5.22 Noncompetition Agreement...............................20 5.23 Knowledge Inquiry......................................20 ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER................21 6.1 Organization, Standing, and Power......................21 6.2 Authority; No Breach By Agreement......................21 6.3 Compliance with Laws...................................22 6.4 Legal Proceedings......................................22 6.5 Statements True and Correct............................23 6.6 Authority of Sub.......................................23 6.7 Regulatory Matters.....................................23 6.8 Arrangements With Lamcor Personnel.....................24 6.9 Financing..............................................24 ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION...............24 7.1 Affirmative Covenants of Lamcor........................24 7.2 Negative Covenants of Lamcor...........................24 7.3 Covenants of Buyer.....................................26 7.4 Adverse Changes in Condition...........................27 7.5 Reports................................................27 ARTICLE 8 ADDITIONAL AGREEMENTS..................................27 8.1 Proxy Statement; Shareholder Approval..................27 8.2 Applications; Antitrust Notification...................28 8.3 Filings with State Offices.............................28 8.4 Agreement as to Efforts to Consummate..................28 8.5 Investigation and Confidentiality......................28 8.6 Press Releases.........................................29 8.7 Certain Actions........................................29 8.8 State Takeover Laws....................................30 8.9 Charter Provisions.....................................30 8.10 Employees..............................................30 8.11 Indemnification........................................30 8.12 Certain Policies of Lamcor.............................32 ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE......32 9.1 Conditions to Obligations of Each Party................32 9.2 Conditions to Obligations of Buyer.....................33 9.3 Conditions to Obligations of Lamcor....................34 ARTICLE 10 TERMINATION............................................35 10.1 Termination............................................35 10.2 Effect of Termination..................................36 10.3 Guaranty by PFC........................................37 ARTICLE 11 MISCELLANEOUS..........................................37 11.1 Definitions............................................37 11.2 Expenses and Fee.......................................44 11.3 Brokers and Finders....................................45 11.4 Entire Agreement.......................................46 11.5 Amendments.............................................46 11.6 Waivers................................................46 11.7 Assignment.............................................47 11.8 Notices................................................47 11.9 Governing Law..........................................47 11.10 Counterparts...........................................48 11.11 Captions; Articles and Sections........................48 11.12 Interpretations........................................48 11.13 Enforcement of Agreement...............................48 11.14 Severability...........................................48 11.15 Escrow.................................................48 11.16 Shareholders' Representative...........................49 11.17 Survival...............................................50 11.18 Arbitration............................................51 LIST OF EXHIBITS EXHIBIT NUMBER DESCRIPTION - ------ ----------- 1. FORM OF SHAREHOLDER VOTING AGREEMENT. (ss. 5.21). 2. MATTERS AS TO WHICH GRAY, PLANT, MOOTY, MOOTY & BENNETT, P.A. WILL OPINE. (ss. 9.2(D)). 3. FORM OF CLAIMS LETTER (ss. 9.2(E)). 4. MATTERS AS TO WHICH ALSTON & BIRD WILL OPINE (ss. 9.3(D)). 5. FORM OF ESCROW AGREEMENT. (ss. 9.1(E)). 6. FORM OF EMPLOYMENT AGREEMENT (JENSEN). (ss. 9.2(F)) 7 FORM OF NONCOMPETITION AGREEMENT (LUND) (ss. 5.22) 8. FORM OF OPTION CANCELLATION AGREEMENT. (ss. 9.2(I)) AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into as of September 30, 1996, by and among LAMCOR, INCORPORATED ("Lamcor"), a Minnesota corporation having its principal office located in Le Sueur, Minnesota; LI ACQUISITION CORPORATION ("Sub"), a Georgia corporation having its principal office located in Atlanta, Georgia; and PACKAGING ACQUISITION CORPORATION ("Buyer"), a Georgia corporation having its principal office located in Atlanta, Georgia. PREAMBLE The Boards of Directors of Lamcor, Sub and Buyer are of the opinion that the transactions described herein are in the best interests of the parties to this Agreement and their respective shareholders. This Agreement provides for the acquisition of Lamcor by Buyer pursuant to the merger of Sub with and into Lamcor. At the effective time of such merger, the outstanding shares of the capital stock of Lamcor shall be convened into the right to receive a cash payment from Buyer (except as provided herein). As a result, Lamcor shall continue to conduct its business and operations as a wholly-owned subsidiary of Buyer. The transactions described in this Agreement are subject to the approval of the shareholders of Lamcor and the satisfaction of certain other conditions described in this Agreement. Certain terms used in this Agreement are defined in Section 11.1 of this Agreement. NOW, THEREFORE, in consideration of the above and the mutual warranties, representations, covenants, and agreements set forth herein, the parties agree as follows; ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER 1.1 MERGER. Subject to the terms and conditions of this Agreement, at the Effective Time, Sub shall be merged with and into Lamcor in accordance with the provisions of Section 302A.65 1 of the MBCA with the effect provided in Section 302A.641 of the MBCA and Section 14-2-1107 of the GBCC with the effect provided in Section 14-2-1106 of the GBCC (the "Merger"). Lamcor shall be the Surviving Corporation resulting from the Merger and shall become a wholly-owned Subsidiary of Buyer and shall continue to be governed by the Laws of the State of Minnesota. The Merger shall be consummated pursuant to the terms of this Agreement, which has been approved and adopted by the respective Boards of Directors of Lamcor, Sub and Buyer, and by Buyer, as the sole shareholder of Sub. 1.2 TIME AND PLACE OF CLOSING. The closing of the transactions contemplated hereby (the "Closing") will take place at 9:00 A.M. on the date that the Effective Time occurs (or the immediately preceding day if the Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties, acting through their authorized officers, may mutually agree. The Closing shall be held at such location as may be mutually agreed upon by the Parties. 1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by this Agreement shall become effective on the date and at the time the Articles of Merger reflecting the Merger shall become effective with the Secretary of State of the State of Minnesota and the Certificate of Merger reflecting the Merger becomes effective with the Secretary of State of the State of Georgia (the "Effective Time"). Subject to the terms and conditions hereof, unless otherwise mutually agreed upon in writing by the authorized officers of each Party, the Parties shall use their reasonable efforts to cause the Effective Time to occur on the first business day following or, if practicable, the same business day as the last to occur of (i) the effective date (including expiration of any applicable waiting period) of the last required Consent of any Regulatory Authority having authority over and approving or exempting the Merger, and (ii) the date on which the shareholders of Lamcor approve this Agreement to the extent such approval is required by applicable Law. ARTICLE 2 TERMS OF MERGER 2.1 CHARTER. The Articles of Incorporation of Lamcor in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation until otherwise amended or repealed. 2.2 BYLAWS. The Bylaws of Lamcor in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation until otherwise amended or repealed. 2.3 DIRECTORS AND OFFICERS. The directors of Sub in office immediately prior to the Effective Time, together with such additional persons as may thereafter be elected, shall serve as the directors of the Surviving Corporation from and after the Effective Time in accordance with the Bylaws of the Surviving Corporation. The officers of Lamcor in office immediately prior to the Effective Time, together with such additional persons as may thereafter be elected, shall serve as the officers of the Surviving Corporation from and after the Effective Time in accordance with the Bylaws of the Surviving Corporation. 2.4 EFFECT OF MERGER. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the MBCA and the GBCC. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of Lamcor and Sub shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of each of Lamcor and Sub shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation. ARTICLE 3 MANNER OF CONVERTING SHARES 3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3, at the Effective Time, by virtue of the Merger and without any action on the part of Buyer, Lamcor, Sub or the shareholders of any of the foregoing, the shares of the constituent corporations shall be converted as follows: (a) Each share of Buyer Capital Stock issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding from and after the Effective Time. (b) Each share of Sub Common Stock issued and outstanding immediately prior to the Effective Time shall cease to be outstanding and shall be converted into one share of Lamcor Common Stock. (c) Each share of Lamcor Common Stock (excluding shares held by Lamcor or any Buyer Company, in each case other than as a result of debts previously contracted, and excluding shares held by shareholders who perfect their statutory dissenters' rights as provided in Section 3.4) issued and outstanding immediately prior to the Effective Time shall cease to be outstanding and shall be convened into and exchanged for the right to receive from Buyer a cash payment in an amount equal to $4.12 (the "Merger Consideration") less (i) $0.12 representing the pro rata portion of the Escrowed Funds described in Section 11.15 and allocable to each such share of Lamcor Common Stock, and (ii) any Taxes required to be withheld pursuant to Section 4.3 (the "Cash Payment"). 3.2 ANTI-DILUTION PROVISIONS. In the event Lamcor changes the number of shares of Lamcor Common Stock issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend, or similar recapitalization with respect to such stock and the record date therefor (in the case of a stock dividend) or the effective date thereof (in the case of a stock split or similar recapitalization for which a record date is not established) shall be prior to the Effective Time, the amount of the Cash Payment shall be proportionately adjusted. 3.3 SHARES HELD BY LAMCOR OR BUYER. Each of the shares of Lamcor Common Stock held by Lamcor or by any Buyer Company shall be canceled and retired at the Effective Time and no consideration shall be issued in exchange therefor. 3.4 DISSENTING SHAREHOLDERS. (a) Notwithstanding any provision of this Agreement to the contrary, shares of Lamcor Common Stock ("Shares") that are outstanding immediately prior to the Effective Time and which are held by Shareholders who shall have not voted in favor of the Merger or consented thereto in writing and who shall have demanded properly in writing the fair value for such Shares in accordance with Section 302A.473 of the MBCA (collectively, the "Dissenting Shares") shall not be converted into or represent the right to receive the Merger Consideration. Such Shareholders shall be entitled to receive payment of the fair value of such Dissenting Shares held by such Shareholders (with interest if required by the MBCA) in accordance with the provisions of such Section 302A.473, except that each Dissenting Share held by Shareholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such Dissenting Shares under such Section 302A.473 shall thereupon be deemed to have been converted into and to have become exchangeable for, as of the Effective Time the right to receive the Cash Payment, without any interest thereon, upon surrender, in the manner provided in Section 4.1, of the certificate or certificates that formerly evidenced such Dissenting Shares. (b) Lamcor shall give Buyer (i) prompt notice of any demands for fair value of Dissenting Shares received by Lamcor and withdrawals of any such demands and (ii) the opportunity to participate in all negotiations and proceedings with respect to each such demand. Lamcor shall not, except with the prior written consent of Buyer, make any payment (except to the extent that any such payment is made pursuant to a final, non-appealable court order) with respect to any demands for the fair value of Dissenting Shares or offer to settle or settle any such demands. (c) Payments to the holders of Dissenting Shares pursuant to Section 302A.473, and any costs or expenses in connection therewith, which exceed the amount of the Merger Consideration payable with respect to such Shares, shall not be paid out of the Escrowed Funds. 3.5 CONVERSION OF OPTIONS AND CONVERTIBLE SECURITIES. At the Effective Time, each option or warrant to purchase shares of Lamcor capital stock outstanding at the Effective Time, whether or not exercisable ("Lamcor Options") , and all other securities convertible into or exchangeable for shares of Lamcor capital stock, whether or not convertible or exchangeable ("Lamcor Convertible Securities"), shall be canceled. At the Closing, Buyer shall cause Lamcor to make a cash payment for each Lamcor Option or Lamcor Convertible Security ("Option Settlement Payment") equal to the product of (a) the difference (if positive) between the Merger Consideration and the price at which the holder of such Lamcor Option or Lamcor Convertible Security could purchase each share of Lamcor Common Stock to which such Lamcor Option or Lamcor Convertible Security relates, multiplied by (b) the number of shares of Lamcor Common Stock subject to such Lamcor Option or Lamcor Convertible Security as if such Lamcor Option was then fully exercisable or such Lamcor Convertible Security was then fully convertible or exchangeable, less (y) the product of $0.12, representing the pro rata portion of the Escrowed Funds described in Section 11.15 allocable to each such share of Lamcor Common Stock, multiplied by the number of shares referenced in clause (b) above, and further less (z) any Taxes required to be withheld pursuant to Section 4.3. At the Effective Time, each such Lamcor Option and each such Lamcor Convertible Security shall no longer represent the right to purchase shares of Lamcor Common Stock, but in lieu thereof shall represent only the nontransferable right to receive the Option Settlement Payment referred to above. The parties hereto agree that the Rights offered pursuant to the Rights offering were terminated and cancelled effective upon the termination of the Rights offering by the Company, are no longer outstanding and are therefore not included in the respective definitions of "Lamcor Options" and "Lamcor Convertible Securities" set forth above. ARTICLE 4 EXCHANGE OF SHARES 4.1 EXCHANGE PROCEDURES (a) At the Effective Time, Buyer shall deposit in trust with a bank or trust company (the "Exchange Agent") selected by mutual agreement of Lamcor and Buyer before the Closing Date cash in an aggregate amount equal to the product of (i) the number of Shares issued and outstanding at the Effective Time (other than Shares owned beneficially or of record by Sub or Buyer and other than the Dissenting Shares) and (ii) the Merger Consideration (such amount is referred to as the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable instructions, make payments provided for in Sections 4.1(b) and 11.15 out of the Exchange Fund The Exchange Fund shall not be used for any other purpose, except as provided in this Agreement or the Escrow Agreement. (b) Promptly after the Effective Time, Buyer and Lamcor shall cause the Exchange Agent to mail to the former Shareholders of Lamcor appropriate transmittal materials which shall specify that delivery shall be effected, and risk of loss and title to the certificates theretofore representing Shares of Lamcor Common Stock (the "Certificates") shall pass, only upon proper delivery of such Certificates to the Exchange Agent. The Exchange Agent may establish reasonable and customary rules and procedures in connection with its duties. After the Effective Time, each holder of Shares of Lamcor Common Stock (other than shares to be canceled pursuant to Section 3.3 or as to which statutory dissenters' rights have been perfected as provided in Section 3.4) issued and outstanding at the Effective Time shall surrender the Certificate or Certificates representing such shares to the Exchange Agent and shall promptly upon surrender thereof receive in exchange therefor the Cash Payment, together with all undelivered dividends or distributions in respect of such shares (without interest thereon) pursuant to Section 4.2. Buyer shall not be obligated to deliver the consideration to which any former holder of Lamcor Common Stock is entitled as a result of the Merger until such holder surrenders such holder's Certificate or Certificates for exchange as provided in this Section 4.1. The Certificate or Certificates so surrendered shall be duly endorsed as the Exchange Agent may require. Any other provision of this Agreement notwithstanding, neither Buyer, the Surviving Corporation nor the Exchange Agent shall be liable to a holder of Lamcor Common Stock for any amounts paid or property delivered in good faith to a public official pursuant to any applicable abandoned property Law. Adoption of this Agreement by the Shareholders of Lamcor shall constitute ratification of the appointment of the Exchange Agent. 4.2 RIGHTS OF FORMER LAMCOR SHAREHOLDERS. At the Effective Time, the stock transfer books of Lamcor shall be closed as to holders of Lamcor Common Stock immediately prior to the Effective Time, and no transfer of Lamcor Common Stock by any such holder shall thereafter be made or recognized. Until surrendered for exchange in accordance with the provisions of Section 4.1, each Certificate (other than Certificates representing shares to be canceled pursuant to Section 3.3 or as to which statutory dissenters' rights have been perfected as provided in Section 3.4) shall from and after the Effective Time represent for all purposes only the right to receive the consideration provided in Section 3.1 in exchange therefor. However, upon surrender of such Certificate, any undelivered cash payments payable hereunder (without interest) shall be delivered and paid with respect to each share represented by such Certificate. 4.3 WITHHOLDING RIGHTS. Each of Surviving Corporation and Buyer shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Lamcor Common Stock, Lamcor Options, or Lamcor Convertible Securities such Taxes as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax law. To the extent that amounts are so withheld by Surviving Corporation or Buyer, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Lamcor Common Stock in respect of which such deduction and withholding was made by Surviving Corporation or Buyer, as the case may be. 4.4 LOST CERTIFICATES. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such person of a bond in such reasonable amount as the Surviving Corporation may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will make payment pursuant to this Article 4 with respect to such Certificate. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF LAMCOR Lamcor hereby represents and warrants to Buyer as follows: 5.1 ORGANIZATION, STANDING AND POWER. Lamcor is a corporation duly organized, validly existing, and in good standing under the Laws of the State of Minnesota, and has the corporate power and authority to carry on its business as now conducted and to own, lease and operate its Assets. Lamcor is duly qualified or licensed to transact business as a foreign corporation in good standing in the States of the United States where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Lamcor. 5.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) Lamcor has the corporate power and authority necessary to execute, deliver, and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement and the consummation of the transactions contemplated herein, including the Merger, have been duly and validly authorized by all necessary corporate action in respect thereof on the part of Lamcor, subject to the adoption of this Agreement by the holders of a majority of the outstanding shares of Lamcor Common Stock (excluding all Shares beneficially owned or owned of record by Buyer or Buyer's Affiliates), which is the only shareholder vote required for approval of this Agreement and consummation of the Merger by Lamcor. Subject to such requisite Shareholder approval, and assuming the due authorization execution and delivery of this Agreement by Buyer and Sub, this Agreement represents a legal, valid, and binding obligation of Lamcor, enforceable against Lamcor in accordance with its terms (except in all cases as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership, conservatorship, moratorium, or similar Laws affecting the enforcement of creditors' rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought). (b) Neither the execution and delivery of this Agreement by Lamcor, nor the consummation by Lamcor of the transactions contemplated hereby, nor compliance by Lamcor with any of the provisions hereof, will (i) conflict with or result in a breach of any provision of Lamcor's Articles of Incorporation or Bylaws, or (ii) except as disclosed in Section 5.2 of the Lamcor Disclosure Memorandum, constitute or result in a Default under, or require any Consent pursuant to, or result in the creation of any Lien on any Asset of Lamcor under, any Contract or Permit of Lamcor or (iii) subject to receipt of the requisite Consents referred to in Section 9.1(b), violate any Law or Order applicable to Lamcor or any of its Material Assets; except with respect to subparagraphs (ii) and (iii) above where any such breaches, defaults, violations or other occurrences would not, individually or in the aggregate, have a Material Adverse Effect on Lamcor's business or Assets. (c) No notice to, filing with, or Consent of, any public body or authority is necessary for the consummation by Lamcor of the Merger and the other transactions contemplated in this Agreement, except (i) in connection or compliance with the provisions of the Securities Laws, applicable state corporate and securities Laws, and rules of the NASD, (ii) for Consents required from Regulatory Authorities and other than notices to or filings with the Internal Revenue Service or the Pension Benefit Guaranty Corporation with respect to any employee benefit plans, or under the HSR Act, and (iii) where failure to obtain such Consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay consummation of the Merger, or otherwise prevent Lamcor from performing its obligations under this Agreement, and would not, individually or in the aggregate, have a Material Adverse Effect on Lamcor's business or Assets. 5.3 CAPITAL STOCK (a) The authorized capital stock of Lamcor consists of 10,000,000 Shares of Lamcor Common Stock, of which 1,382,317 shares are issued and outstanding as of the date of this Agreement and up to 550,000 shares are reserved for issuance and issuable upon exercise of the Lamcor Options or upon the conversion or exchange of Lamcor Convertible Securities. All of the issued and outstanding Shares of Lamcor Common Stock are duly authorized, validly issued and outstanding and are fully paid and nonassessable. No dividends have been made or declared by Lamcor in respect of any shares of Lamcor Common Stock which remain unpaid at the date hereof. No present or former Shareholder of Lamcor has any preemptive rights with respect to shares of Lamcor Common Stock under the MBCA or under the Articles of Incorporation of Lamcor as in effect on the date of this Agreement and none of the outstanding shares of capital stock of Lamcor has been issued in violation of any preemptive rights under the MBCA. (b) Except as set forth in Section 5.3(a), or as disclosed in Section 5.3 of the Lamcor Disclosure Memorandum, no Rights or options exercisable for and no debt or equity securities convertible into or exchangeable for shares of capital stock or other equity securities of Lamcor are outstanding, and Lamcor is under no obligation to issue any shares of its capital stock or other debt or equity securities or any Rights, options or other debt or equity securities exercisable for or convertible or exchangeable for shares of the capital stock of Lamcor. 5.4 LAMCOR SUBSIDIARIES. Lamcor has no, and has never had any, subsidiaries. 5.5 SEC FILINGS; FINANCIAL STATEMENTS. (a) Lamcor has timely filed all SEC Documents required to be filed by Lamcor since December 31, 1992. Section 5.5 of the Lamcor Disclosure Memorandum lists SEC Documents filed by Lamcor since such date (the "Lamcor SEC Reports"). The Lamcor SEC Reports (i) at the time filed, complied in all Material respects with the applicable requirements of the Securities Laws and (ii) did not, at the time they were filed (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such subsequent filing) 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 the light of the circumstances under which they were made, not misleading. (b) Each of the Lamcor Financial Statements (including, in each case, any related notes) contained in the Lamcor SEC Reports, including any Lamcor SEC Reports filed after the date of this Agreement until the Effective Time, complied as to form in all Material respects with the applicable published rules and regulations of the SEC with respect thereto, was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes to such financial statements or, in the case of unaudited interim statements, as permitted by Form 10-Q or 10-QSB of the SEC), and fairly presented in all Material respects the financial position of Lamcor as at the respective dates and the consolidated results of operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which were not or are not expected to be Material in amount or effect. 5.6 ABSENCE OF UNDISCLOSED LIABILITIES. Lamcor has no Knowledge of Liabilities that are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Lamcor, except Liabilities which are accrued or reserved against in the balance sheets of Lamcor as of September 30, 1995 and June 30, 1996, included in the Lamcor Financial Statements delivered prior to the date of this Agreement or reflected in the notes thereto or the Lamcor Disclosure Memorandum. Lamcor has not incurred or paid any Liability since June 30, 1996, except for such Liabilities incurred or paid (i) in the ordinary course of business consistent with past business practice and as to incurred liabilities, are not, individually or in the aggregate, Material, (ii) in connection with the transactions contemplated by this Agreement or (iii) as shown in the Lamcor Disclosure Memorandum. Except as disclosed in Section 5.6 of the Lamcor Disclosure Memorandum, Lamcor is not directly or indirectly liable, by guarantee, indemnity, or otherwise, upon or with respect to, or obligated, by discount or repurchase agreement or in any other way, to provide funds in respect to or obligated to guarantee or assume any Liability of any Person for any amount. Lamcor has terminated the offering of Rights to subscribe for up to 350,000 shares of Lamcor Common Stock initiated by Lamcor on March 1, 1996 (the "Rights offering"), and returned any and all funds tendered pursuant to such Rights offering. Section 5.6 of the Lamcor Disclosure Memorandum lists all Lamcor Shareholders of record who tendered funds pursuant to such Rights offering and had such tendered funds returned by Lamcor. 5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1995, except as disclosed in the Lamcor Financial Statements delivered prior to the date of this Agreement or as disclosed in the Lamcor Disclosure Memorandum and except for such changes as are the result of general economic conditions or general conditions in the industry in which Lamcor operates, (i) there have been no events, changes, or occurrences which have had, or are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Lamcor, and (ii) Lamcor has not taken any action, or failed to take any action, prior to the date of this Agreement, which action or failure, if taken after the date of this Agreement, would represent or result in a Material breach or violation of any of the covenants and agreements of Lamcor provided in Article 7. 5.8 TAX MATTERS. (a) All Tax Returns required to be filed by or on behalf of Lamcor have been timely filed or requests for extensions have been timely filed, granted, and have not expired for periods ended on or before September 30, 1995, and on or before the date of the most recent fiscal year end immediately preceding the Effective Time, and all Tax Returns filed are complete and accurate. All Taxes shown on filed Tax Returns have been paid. There is no audit examination, deficiency, or refund Litigation with respect to any Taxes, except as reserved against in the Lamcor Financial Statements delivered prior to the date of this Agreement or as disclosed in Section 5.8 of the Lamcor Disclosure Memorandum. Lamcor's federal income Tax Returns have not been audited by the IRS. All Taxes and other Liabilities due with respect to completed and settled examinations or concluded Litigation have been paid. There are no Liens with respect to Taxes upon any of the Assets of Lamcor. (b) Lamcor has not executed an extension or waiver of any statute of limitations on the assessment or collection of any Tax due (excluding such statutes that relate to years currently under examination by the Internal Revenue Service or other applicable taxing authorities) that is currently in effect. (c) The provision for any Taxes due or to become due for Lamcor for the period or periods through and including the date of the respective Lamcor Financial Statements that has been made and is reflected on such Lamcor Financial Statements is sufficient to cover all such Taxes. (d) Deferred Taxes of Lamcor have been provided for in accordance with GAAP. (e) Lamcor (i) is not a party to any Tax allocation or sharing agreement, (ii) has not been a member of an affiliated group filing a consolidated federal income Tax Return and (iii) has no Liability for Taxes of any Person under Treasury Regulation Section 1.502-6 (or any similar provision of state, local or foreign Law) as a transferee or successor or by Contract or otherwise. (f) Lamcor is in compliance with, and its records contain all information and documents (including properly completed IRS Forms W-9) necessary to comply with, all applicable information reporting and Tax withholding requirements under federal, state, and local Tax Laws, and such records identify with specificity all accounts subject to backup withholding under Section 3406 of the Internal Revenue Code. (g) Except as disclosed in Section 5.8 of the Lamcor Disclosure Memorandum, Lamcor has not made any payments, is not obligated to make any payments, or is not a party to any Contract that could obligate it to make any payments that would be disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue Code. (h) Through the Effective Time, there has not been nor shall there be an ownership change, as defined in Internal Revenue Code Section 382(g), of Lamcor that occurred during or after any Taxable Period in which Lamcor incurred a net operating loss that carries over to any Taxable Period ending after September 30, 1995, excluding the ownership change contemplated by the Merger. 5.9 ASSETS. Except as disclosed in Section 5.9 of the Lamcor Disclosure Memorandum or as disclosed or reserved against in the Lamcor Financial Statements delivered prior to the date of this Agreement, Lamcor has good and marketable title, free and clear of all Liens, to all of its Assets. To the Knowledge of Lamcor, (i) the machinery and equipment used in Lamcor's business are in good working order and are usable in a manner consistent with past use, reasonable wear and tear excepted, (ii) have been regularly and properly maintained in accordance with reasonable and customary industry standards and applicable regulations, and (iii) there are no defects or malfunctions in such machinery and equipment, which alone or in the aggregate, are reasonably likely to result in any disruption or interruption in Lamcor's business which would have a Material Adverse Effect on Lamcor. All items of inventory of Lamcor reflected on the most recent balance sheet included in the Lamcor Financial Statements delivered prior to the date of this Agreement and prior to the Effective Time consisted and will consist, as applicable, of items of a quality and quantity usable and saleable in the ordinary course of business, are valued at the lower of cost or net realizable market value and conform to generally accepted standards in the industry in which Lamcor is a part. All Assets which are Material to Lamcor's business held under leases or subleases by Lamcor, are held under valid Contracts enforceable in accordance with their respective terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws affecting the enforcement of creditors' rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceedings may be brought), and neither Lamcor nor to Lamcor's Knowledge any other party thereto is in Default in any Material respect under any such Contract. Lamcor has not received notice from any insurance carrier that (i) any policy of insurance will be canceled or that coverage thereunder will be reduced or eliminated, or (ii) premium costs with respect to such policies of insurance will be substantially increased. There are presently no claims pending under such policies of insurance and Lamcor has no Knowledge of any event that would cause Lamcor to be required to give notice thereof in order to assert a claim under such policies. There are no assets used in connection with the business of Lamcor other than (i) the Assets reflected on the Lamcor Financial Statements, (ii) Assets owned by Lamcor but not required by GAAP to be reflected on the Lamcor Financial Statements, and (iii) Assets acquired by Lamcor since the date of the latest Lamcor Financial Statements, less any Assets sold by Lamcor in the ordinary course of business since the latest Lamcor Financial Statements. 5.10 INTELLECTUAL PROPERTY. Lamcor owns or has a license to use (or will by the Effective Time own or have a license to use) all of the Intellectual Property which is Material to and used in the course of its business. Lamcor is the owner of or has a license to any Intellectual Property sold or licensed to a third party in connection with its business operations, and has the right to convey by sale or license any Intellectual Property so conveyed. Lamcor is not in Default under any of its Intellectual Property licenses. No proceedings have been instituted or are pending, or to the Knowledge of Lamcor threatened, which challenge the rights of Lamcor with respect to Intellectual Property used, sold or licensed by Lamcor in the course of its business, nor to the Knowledge of Lamcor has any person claimed or alleged any rights to such Intellectual Property. Lamcor is not obligated to pay any recurring royalties to any Person with respect to any such Intellectual Property. No officer, director, or employee of Lamcor is a party to a Contract which requires such officer, director or employee to assign any interest in any Intellectual Property to Lamcor and to keep confidential any trade secrets, proprietary data, customer information, or other business information of Lamcor, and to the Knowledge of Lamcor no such officer, director or employee is party to any Contract with any Person other than Lamcor which requires such officer, director or employee to assign any interest in any Intellectual Property to any Person other than Lamcor or to keep confidential any trade secrets, proprietary data, customer information, or other business information of any Person other than Lamcor. Except as disclosed in Section 5.10 of the Lamcor Disclosure Memorandum, no officer or director or, to the Knowledge of Lamcor, other employee of Lamcor is party to any Contract which restricts or prohibits such officer, director or employee from engaging in activities competitive with any Person, including Lamcor. 5.11 ENVIRONMENTAL MATTERS AND PERMITS. Except as disclosed in Section 5.11 of the Lamcor Disclosure Memorandum: (a) Lamcor is, and has been, in Material compliance with all Environmental Laws. (b) There is no Litigation pending or, to the Knowledge of Lamcor, threatened before any court, governmental agency, or authority or other forum in which Lamcor has been or, with respect to threatened Litigation, may be named as a defendant (i) for alleged noncompliance (including by any predecessor) with any Environmental Law or (ii) relating to the release, discharge, spillage, or disposal into the environment of any Hazardous Material, whether or not occurring at, on, under, adjacent to, or affecting (or potentially affecting) a site owned, leased, or operated by Lamcor. (c) To the Knowledge of Lamcor, during the period Lamcor's ownership or operation of any of its current properties, there have been no releases, discharges, spillages, or disposals of Hazardous Material in, on, under, adjacent to, or affecting (or potentially affecting) such properties. Prior to the period of Lamcor's ownership or operation of any of its respective current properties, to the Knowledge of Lamcor, there were no releases, discharges, spillages, or disposals of Hazardous Material in, on, under, or affecting any such property. Lamcor has in effect all Permits necessary for it to own, lease, or operate its Material Assets and to carry on its business as now conducted, except for those Permits the absence of which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Lamcor, and there has occurred no Default under any such Permit. Except as disclosed in Section 5.11 of the Lamcor Disclosure Memorandum, Lamcor: (i) is not in Default under any of the provisions of its Articles of Incorporation or Bylaws (or other governing instruments); (ii) is not in Material Default under any Laws, Orders, or Permits applicable to its business or employees conducting its business; or (iii) since January 1, 1993, has not received any notification or communication from any agency or department of federal, state, or local government or any Regulatory Authority or the staff thereof (1) asserting that Lamcor is not in Material compliance with any of the Laws or Orders which such governmental authority or Regulatory Authority enforces, (2) threatening to revoke any Permits, or (3) requiring Lamcor to enter into or consent to the issuance of a cease and desist order, formal agreement, directive, commitment, or memorandum of understanding, or to adopt any Board resolution or similar undertaking. Copies of all Material reports, correspondence, notices and other documents relating to any inspection, audit, monitoring or other form of review or enforcement action by a Regulatory Authority have been made available to Buyer. 5.12 LABOR RELATIONS. Lamcor is not now and has not been in the preceding five (5) years the subject of any Litigation asserting that it has committed an unfair labor practice (within the meaning of the National Labor Relations Act or comparable state law) or seeking to compel it to bargain with any labor organization as to wages or conditions of employment, nor is it party to any collective bargaining agreement, nor is there any strike or other labor dispute, pending or to the Knowledge of Lamcor threatened, or to the Knowledge of Lamcor, is there any current activity involving any of its employees seeking to certify a collective bargaining unit or engaging in any other organization activity. 5.13 EMPLOYEE BENEFIT PLANS. (a) Lamcor has disclosed in Section 5.13 of the Lamcor Disclosure Memorandum, and has delivered or made available to Buyer prior to the execution of this Agreement copies in each case of, all pension, retirement, profit-sharing, deferred compensation, stock option, employee stock ownership, severance pay, vacation, bonus, or other incentive plan, all other written or unwritten employee programs, arrangements, or agreements, all medical, vision, dental, or other health plans, all life insurance plans, and all other employee benefit plans or fringe benefit plans, including "employee benefit plans" as that term is defined in Section 3(3) of ERISA, which grant benefits to any Person in excess of $500.00 on an annualized basis, currently adopted, maintained by, sponsored in whole or in part by, or contributed to by Lamcor or any ERISA Affiliate thereof for the benefit of employees, retirees, dependents, spouses, directors, independent contractors, or other beneficiaries and under which employees, retirees, dependents, spouses, directors, independent contractors, or other beneficiaries are eligible to participate (collectively, the "Lamcor Benefit Plans"). (b) Except for the Lamcor 401(k) Profit Sharing Plan and Trust dated effective October 1, 1993, Lamcor does not have and has never maintained an "employee pension benefit plan," as that term is defined in Section 3(2) of ERISA. Lamcor does not have and has never contributed to a multiemployer plan within the meaning of Section 3(37) of ERISA. (c) All Lamcor Benefit Plans are in compliance with the applicable terms of ERISA, the Internal Revenue Code, and any other applicable Laws the breach or violation of which are reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Lamcor. Each Lamcor ERISA Plan which is intended to be qualified under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service, and Lamcor is not aware of any circumstances likely to result in revocation of any such favorable determination letter. Lamcor has not engaged in a transaction with respect to any Lamcor Benefit Plan that, assuming the taxable period of such transaction expired as of the date hereof, would subject Lamcor to a Tax imposed by either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA. (d) Within the six-year period preceding the Effective Time, no Liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by Lamcor with respect to any ongoing, frozen, or terminated single-employer plan or the single-employer plan of any ERISA Affiliate. Lamcor has not incurred any withdrawal Liability with respect to a multiemployer plan under Subtitle B of Title IV of ERISA (regardless of whether based on contributions of an ERISA Affiliate). (e) Except as disclosed in Section 5.13 of the Lamcor Disclosure Memorandum, Lamcor does not have any Liability for retiree health and life benefits under any of the Lamcor Benefit Plans and there are no restrictions on the rights of Lamcor to amend or terminate any such retiree health or benefit Plan without incurring any Liability thereunder. (f) Except as disclosed in Section 5.13 of the Lamcor Disclosure Memorandum, neither the execution and delivery' of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any payment (including severance, unemployment compensation, golden parachute, or otherwise) becoming due to any director or any employee of Lamcor from Lamcor under any Lamcor Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under any Lamcor Benefit Plan, or (iii) result in any acceleration of the time of payment or vesting of any such benefit. (g) The actuarial present values of all accrued deferred compensation entitlements (including entitlements under any executive compensation, supplemental retirement, or employment agreement) of employees and former employees of Lamcor and its beneficiaries, other than entitlements accrued pursuant to funded retirement plans subject to the provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA, have been fully reflected on the Lamcor Financial Statements to the extent required by and in accordance with GAAP. (h) Each Lamcor Benefit Plan designed to satisfy the requirements of Section 125, Section 401, Section 401(k), Section 409, Section 501(c)(9), Section 4975(e)(7), and/or Section 4980B of the Code, satisfies such section. (i) All amounts required to be paid by Lamcor with respect to each Lamcor Benefit Plan on or before the Effective Time have been paid. (j) Neither the execution and delivery of this Agreement nor the consummation of any of the transactions contemplated hereby will result in a Material increase in the premium costs of any Lamcor Benefit Plan for which benefits are insured or a Material increase in benefit costs of any Lamcor Benefit Plan which provides self-insured benefits. (k) No "leased employee," as that term is defined in Section 414(n) of the Code, performs services for a Company. (l) Lamcor has furnished to Buyer correct and complete copies of all plan documents, trust agreements, summary plan descriptions, employee informational materials, IRS Forms 5500 and participant listings for each Lamcor Benefit Plan. 5.14 MATERIAL CONTRACTS. Except as disclosed in Section 5.14 of the Lamcor Disclosure Memorandum or otherwise reflected in the Lamcor Financial Statements delivered prior to the date of this Agreement, neither Lamcor nor any of its assets, businesses, or operations is a party to, or is bound or affected by, or receives benefits under, (i) any employment, severance, termination, consulting, or retirement Contract providing for aggregate payments to any Person in any calendar year in excess of $50,000, (ii) any Contract relating to the borrowing of money by Lamcor or the guarantee by Lamcor of any such obligation (other than Contracts evidencing trade payables and Contracts relating to borrowings or guarantees made in the ordinary course of business), (iii) any Contract which prohibits or restricts Lamcor from engaging in any business activities in any geographic area, line of business or otherwise in competition with any other Person, (iv) any Contract involving Intellectual Property (other than Contracts entered into in the ordinary course with customers and "shrink-wrap" software licenses), (v) any Contract relating to the provision of data processing, network communication, or other technical services to or by Lamcor, (vi) any Contract relating to the purchase or sale of any goods or services (other than Contracts entered into in the ordinary course of business and involving payments under any individual Contract not in excess of $100,000), and (vii) any other Contract or amendment thereto that would be required to be filed as an exhibit to a Form 10-K filed by Lamcor with the SEC as of the date of this Agreement (together with all Contracts referred to in Sections 5.9 and 5.14(a), the "Lamcor Contracts"). With respect to each Lamcor Contract: (i) the Contract is in frill force and effect; (ii) Lamcor is not in Default thereunder; (iii) Lamcor has not repudiated or waived any Material provision of any such Contract; and (iv) no other party to any such Contract is, to the Knowledge of Lamcor, in Default in any respect or has repudiated or waived any Material provision thereunder. All of the indebtedness of Lamcor for money borrowed is prepayable at any time by Lamcor without penalty or premium. 5.15 LEGAL PROCEEDINGS. Except as described in Section 5.15 of the Lamcor Disclosure Memorandum, there is no Litigation instituted or pending, or to the Knowledge of Lamcor threatened (or unasserted but considered probable of assertion and which if assessed would have at least a reasonable probability of an unfavorable outcome), against Lamcor, or against any officer or director, or employee benefit plan of Lamcor, or against any Asset, interest, or right of any of them, nor are there any Orders of any Regulatory Authorities, other governmental authorities, or arbitrators outstanding against Lamcor. Section 5.15 of the Lamcor Disclosure Memorandum contains a summary of all pending Litigation as of the date of this Agreement to which Lamcor is a party and which names Lamcor as a defendant or cross-defendant. 5.16 REPORTS. Since January 1, 1993 Lamcor has timely filed all Material reports and statements, together with any amendments required to be made with respect thereto, that it was required to file with Regulatory Authorities (except as described in Section 5.16 of the Lamcor Disclosure Memorandum or for failures to file or properly file which are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Lamcor). As of their respective dates, each of such reports and documents, including the financial statements, exhibits and schedules thereto, complied in all Material respects with all applicable Laws, and did not contain any untrue statement of a Material fact or omit to state a Material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. 5.17 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument, or other writing furnished or to be furnished by Lamcor to Buyer pursuant to this Agreement or any other document, agreement, or instrument referred to herein contains or will contain any untrue statement of Material fact or will omit to state a Material fact necessary to make the statements therein, in light of the circumstances under which they were made) not misleading. None of the information supplied or to be supplied by Lamcor for inclusion in the Proxy Statement to be mailed to Lamcor's shareholders in connection with the Shareholders' Meeting, and any other documents to be filed by Lamcor with the SEC or any other Regulatory Authority in connection with the transactions contemplated hereby, will, at the respective time such documents are filed, and with respect to the Proxy Statement, when first mailed to the shareholders of Lamcor, be false or misleading with respect to any Material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or, in the case of the Proxy Statement or any amendment thereof or supplement thereto, at the time of the Shareholders' Meeting, be false or misleading with respect to any Material fact, or omit to state any Material fact necessary to correct any statement in any earlier communication with respect to the solicitation of any proxy for the Shareholders' Meeting. All documents that Lamcor is responsible for filing with any Regulatory Authority in connection with the transactions contemplated hereby will comply as to form in all Material respects with the provisions of applicable Law. 5.18 REGULATORY MATTERS. Lamcor has not taken or agreed to take any action or has -any Knowledge of any fact or circumstance that is reasonably likely to materially impede or delay receipt of any Consents of Regulatory Authorities referred to in Section 9.1(b) or result in the imposition of a condition or restriction of the type referred to in the last sentence of such Section. 5.19 STATE TAKEOVER LAWS. As of the Effective Time, Lamcor will have taken, or cause to be taken, all necessary action required under Minnesota law so that the provisions of the MBCA do not prevent the consummation of the Merger or have a Material Adverse Effect on Sub or Buyer. 5.20 CHARTER PROVISIONS. Lamcor has not taken any action so that the entering into of this Agreement and the consummation of the Merger and the other transactions contemplated by this Agreement do and will result in the grant of any rights to any Person under the Articles of Incorporation, Bylaws or other governing instruments of Lamcor or restrict or impair the ability of Buyer or any of its Subsidiaries to vote, or otherwise to exercise the rights of a shareholder with respect to, Shares of Lamcor that may be directly or indirectly acquired or controlled by them. 5.21 SHAREHOLDER VOTING AGREEMENT. Each of the officers and directors of Lamcor and Affiliates of such officers and directors who are Shareholders, and each of the holders of 5% or more of the outstanding shares of Lamcor Common Stock has executed and delivered to Buyer an agreement in substantially the form of Exhibit 1. 5.22 NONCOMPETITION AGREEMENT. Leo Lund has executed and delivered the Noncompetition Agreement attached as Exhibit 7. 5.23 KNOWLEDGE INQUIRY. As to any representation and warranty contained in this Article 5 that is qualified as being to the "Knowledge" of Lamcor or words of similar import, one or more of the persons named in the definition of "Knowledge" in Section 11.1 as having actual knowledge on behalf of Lamcor of the facts to which such representation and warranty relates either (a) has such actual knowledge of the accuracy of such representation and warranty or (b) has reviewed the text of such representation and warranty and all Schedules to this Agreement relating thereto with the senior most management employee or employees of Lamcor having management or supervisory responsibility for the operations and affairs of Lamcor to which such representation and Warranty relates and has inquired of such employee or employees as to the accuracy of such representation and warranty and has not received any response to such review and inquiry which would indicate that there are facts and circumstances not heretofore disclosed to Buyer that would cause such representation and warranty to be inaccurate in any Material respect. ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to Lamcor as follows: 6.1 ORGANIZATION, STANDING, AND POWER. Buyer is a corporation duly organized, validly existing, and in good standing under the Laws of the State of Georgia, and has the corporate power and authority to carry on its business as now conducted and to own, lease and operate its Material Assets. Buyer is duly qualified or licensed to transact business as a foreign corporation in good standing in the foreign jurisdictions where the character of its Assets or the nature or conduct of its business requires it to be so qualified or licensed, except for such jurisdictions in which the failure to be so qualified or licensed is not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Buyer. 6.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) Buyer has the corporate power and authority necessary to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein, including the Merger, have been duly and validly authorized by all necessary corporate action in respect thereof on the part of Buyer. This Agreement represents a legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms (except in all cases as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, receivership, conservatorship, moratorium, or similar Laws affecting the enforcement of creditors' rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought). (b) Neither the execution and delivery of this Agreement by Buyer, nor the consummation by Buyer of the transactions contemplated hereby, nor compliance by Buyer with any of the provisions hereof, will (i) conflict with or result in a breach of any provision of Buyer's Articles of Incorporation or Bylaws, or (ii) constitute or result in a Default under, or require any Consent pursuant to, or result in the creation of any Lien on any Asset of any Buyer Company under, any Contract or Permit of any Buyer Company or, (iii) subject to receipt of the requisite Consents referred to in Section 9.1(b), violate any Law or Order applicable to any Buyer Company or any of their respective Material Assets. (c) Other than in connection or compliance with the provisions of the Securities Laws, applicable state corporate and securities Laws, and rules of the NASD, and other than Consents required from Regulatory Authorities, and other than notices to or filings with the Internal Revenue Service or the Pension Benefit Guaranty Corporation with respect to any employee benefit plans, or under the HSR Act, and other than Consents, filings, or notifications which, if not obtained or made, are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Buyer, no notice to filing with, or Consent of, any public body or authority is necessary for the consummation by Buyer of the Merger and the other transactions contemplated in this Agreement. 6.3 COMPLIANCE WITH LAWS. Each Buyer Company has in effect all Permits necessary for it to own, lease or operate its Material Assets and to carry on its business as now conducted, and there has occurred no Default under any such Permit. None of the Buyer Companies: (a) is in Default under its Articles of Incorporation or Bylaws (or other governing instruments); or (b) is in Default under any Laws, Orders or Permits applicable to its business or employees conducting its business; or (c) since January 1, 1993, has received any notification or communication from any agency or department of federal, state, or local government or any Regulatory Authority or the staff thereof (i) asserting that any Buyer Company is not in compliance with any of the Laws or Orders which such governmental authority or Regulatory Authority enforces, (ii) threatening to revoke any Permits, or (iii) requiring any Buyer Company to enter into or consent to the issuance of a cease and desist order, formal agreement, directive, commitment or memorandum of understanding, or to adopt any Board resolution or similar undertaking, which restricts materially the conduct of its business. 6.4 LEGAL PROCEEDINGS. There is no Litigation instituted or pending, or, to the Knowledge of Buyer, threatened (or unasserted but considered probable of assertion and which if asserted would have at least a reasonable probability of an unfavorable outcome) against any Buyer Company, or against any officer or director, or employee benefit plan of any Buyer Company, or against an)' Asset, interest, or right of any of them, nor are there any Orders of any Regulatory Authorities, other governmental authorities, or arbitrators outstanding against any Buyer Company. 6.5 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument or other writing furnished or to be furnished by any Buyer Company or any Affiliate thereof to Lamcor pursuant to this Agreement or any other document, agreement or instrument referred to herein contains or will contain any untrue statement of Material fact or will omit to state a Material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the information supplied or to be supplied by any Buyer Company or any Affiliate thereof for inclusion in the Proxy Statement to be mailed to Lamcor's shareholders in connection with the Shareholders' Meeting, and any other documents to be filed by any Buyer Company or any Affiliate thereof with the SEC or any other Regulatory Authority in connection with the transactions contemplated hereby, will, at the respective time such documents are filed, and with respect to the Proxy Statement, when first mailed to the shareholders of Lamcor, be false or misleading with respect to any Material fact, or omit to state any Material fact necessary' to make the statements therein, in light of the circumstances under which they were made, not misleading, or, in the case of the Proxy' Statement or any amendment thereof or supplement thereto, at the time of the Shareholders' Meeting, be false or misleading with respect to any Material fact, or omit to state any Material fact necessary to correct any statement in any earlier communication with respect to the solicitation of any proxy for the Shareholders' Meeting. All documents that any Buyer Company or any Affiliate thereof is responsible for filing with any Regulatory Authority in connection with the transactions contemplated hereby will comply as to form in all Material respects with the provisions of applicable Law. 6.6 AUTHORITY OF SUB. Sub is a corporation duly organized, validly existing and in good standing under the Laws of the State of Georgia as a wholly owned Subsidiary of Buyer. The authorized capital stock of Sub shall consist of 1,000 shares of Sub Common Stock, all of which is validly issued and outstanding, fully paid and nonassessable and is owned by Buyer free and clear of any Lien. Sub has the corporate power and authority necessary to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein, including the Merger, have been duly and validly authorized by all necessary corporate action in respect thereof on the part of Sub. This Agreement represents a legal, valid, and binding obligation of Sub, enforceable against Sub in accordance with its terms (except in all cases as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting the enforcement of creditors' rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought). Buyer, as the sole shareholder of Sub, has voted prior to the Effective Time the shares of Sub Common Stock in favor of approval of this Agreement, as and to the extent required by applicable Law. 6.7 REGULATORY MATTERS. No Buyer Company or any Affiliate thereof has taken or agreed to take any action or has any Knowledge of any fact or circumstance that is reasonably likely to Materially impede or delay receipt of any Consents of Regulatory Authorities referred to in Section 9.1(b) or result in the imposition of a condition or restriction of the type referred to in the last sentence of such Section. 6.8 ARRANGEMENTS WITH LAMCOR PERSONNEL. Prior to the date of this Agreement, Buyer has disclosed to the Special Committee of the Board of Directors of Lamcor all Material arrangements or agreements proposed by any Buyer Companies or any Affiliate thereof to any officer, director or employee of Lamcor and pertaining to (i) the services or compensation of such Person alter the Effective Time or (ii) participation by any such officer, director or employee of Lamcor in the equity ownership of any Buyer Company or any Affiliate thereof at the Effective Time. 6.9 FINANCING. Prior to the date of this Agreement, Buyer has delivered to Lamcor a letter from CGW Southeast Partners III, L.P. ("CGW") addressed to Buyer to the effect that as of the date of this Agreement, CGW is highly confident that Buyer will have sufficient assets and financing to fund the Merger Consideration payable under this Agreement. On or before the last to occur of twenty one (21) days after the date of this Agreement or the mailing of the Proxy Statement to the Shareholders of Lamcor, Buyer will deliver to Lamcor evidence that Buyer has entered into (a) a written agreement with CGW providing for the investment by CGW in the equity securities of Buyer in the amount of not less than Eight Million Dollars ($8,000,000) on the terms and subject to the conditions set forth in that agreement and (b) an agreement and plan of merger with Polyflex Film and Converting, Inc., a Georgia corporation ("PFC") pursuant to which PFC shall, contemporaneously with the consummation of the Merger, merge with and into a wholly owned subsidiary of Buyer on the terms and subject to the conditions set forth in that agreement and plan of merger. Buyer agrees to use commercially reasonable best efforts to cause the transactions to be provided for in such agreement with CGW and such agreement and plan of merger with PFC to be consummated. ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION 7.1 AFFIRMATIVE COVENANTS OF LAMCOR. From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, unless the prior written consent of Buyer shall have been obtained, and except as otherwise expressly contemplated herein, Lamcor shall (a) operate its business only in the usual, regular, and ordinary course, (b) preserve intact its business organization and Assets and maintain its rights and franchises, and (c) take no action which would (i) adversely affect the ability of any Party to obtain any Consents required for the transactions contemplated hereby without imposition of a condition or restriction of the type referred to in the last sentences of Section 9.1(b) or 9.1(c), or (ii) adversely affect the ability of any Party to perform its covenants and agreements under this Agreement. 7.2 NEGATIVE COVENANTS OF LAMCOR. From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, Lamcor covenants and agrees that it will not do or agree or commit to do, any of the following without the prior written consent of the President or Treasurer of Buyer, which consent shall not be unreasonably withheld: (a) amend the Articles of Incorporation, Bylaws or other governing instruments of Lamcor; or (b) except for that certain construction loan and related security interests (the "Construction Loan") in a principal amount not to exceed $480,000.00, which Construction Loan bears interest at a rate not to exceed the highest rate currently charged to Lamcor by Valley National Bank of Le Sueur for Lamcor's other outstanding indebtedness and contains no prepayment penalty or premium, incur any additional debt obligation or other obligation for borrowed money except in the ordinary course of the business, consistent with past practices, or impose, or suffer the imposition, on any Asset of any Lien or permit any such Lien to exist (other than in connection with Liens in effect as of the date hereof that are disclosed in the Lamcor Disclosure Memorandum), or (c) repurchase, redeem, or otherwise acquire or exchange (other than exchanges in the ordinary course under employee benefit plans), directly or indirectly, any shares, or any securities convertible into any shares, of the capital stock of Lamcor, or declare or pay any dividend or make any other distribution in respect of Lamcor's capital stock; or (d) except for this Agreement, or pursuant to the exercise of stock options outstanding as of the date hereof and pursuant to the terms thereof in existence on the date hereof, issue, sell, pledge, encumber, authorize the issuance of, enter into any Contract to issue, sell, pledge, encumber, or authorize the issuance of, or otherwise permit to become outstanding, any additional shares of Lamcor Common Stock or any other capital stock of Lamcor, or any stock appreciation rights, or any option, warrant, or other Right; or (e) adjust, split, combine or reclassify any capital stock of Lamcor or issue or authorize the issuance of any other securities in respect of or in substitution for shares of Lamcor Common Stock, or sell, lease, mortgage or otherwise dispose of or otherwise encumber (x) any shares of capital stock of any Lamcor Subsidiary (unless any such shares of stock are sold or otherwise transferred to another Lamcor Company) or (y) any Material Asset other than in the ordinary course of business for reasonable and adequate consideration and other than in connection with the Construction Loan; or (f) except for purchases of U.S. Treasury securities or U.S. Government agency securities, which in either case have maturities of three years or less, purchase any securities or make any Material investment, either by purchase of stock of securities, contributions to capital, Asset transfers, or purchase of any Assets, in any Person, or otherwise acquire direct or indirect control over any Person, other than in connection with (i) foreclosures in the ordinary course of business, or (iii) the creation of new wholly owned Subsidiaries organized to conduct or continue activities otherwise permitted by this Agreement; or (g) grant any increase in compensation or benefits to the employees or officers of Lamcor, except in accordance with past practice disclosed in Section 7.2(g) of the Lamcor Disclosure Memorandum or as required by Law, pay any severance or termination pay or any bonus other than pursuant to written policies or written Contracts in effect on the date of this Agreement and disclosed in Section 7 2(g) of the Lamcor Disclosure Memorandum; and enter into or amend any severance agreements with officers of Lamcor; grant any Material increase in fees or other increases in compensation or other benefits to directors of Lamcor except in accordance with past practice disclosed in Section 7.2(g) of the Lamcor Disclosure Memorandum; or (h) enter into or amend any employment Contract between Lamcor and any Person; or (i) adopt any new employee benefit plan of Lamcor or terminate or withdraw from, or make any Material change in or to, any existing employee benefit plans of Lamcor other than any such change that is required by Law or that, in the opinion of counsel, is necessary or advisable to maintain the tax qualified status of any such plan, or make any distributions from such employee benefit plans, except as required by Law, the terms of such plans or consistent with past practice; or (j) make any significant change in any Tax or accounting methods or Systems of internal accounting controls, except as may be appropriate to conform to changes in Tax Laws or regulatory accounting requirements or GAAP; or (k) commence any Litigation other than in accordance with past practice, settle any Litigation involving any Liability of Lamcor for Material money damages or restrictions upon the operations of Lamcor; or (l) enter into, modify, amend or terminate any Material Contract or waive, release, compromise or assign any Material rights or claims; or (m) incur fees and expenses in connection with the negotiation and preparation of this Agreement, in settlement of claims relating to, based upon or arising out of the Rights offering or in consideration for the Releases or in attorneys fees and expenses and other costs in obtaining such settlement or Releases, and in connection with the consummation of the transactions provided for herein in excess of $275,000 7.3 COVENANTS OF BUYER. From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, Buyer covenants and agrees that it shall take no action which would (i) materially adversely affect the ability of any Party to obtain any Consents required for the transactions contemplated hereby without imposition of a condition or restriction of the type referred to in the last sentences of Section 9 1(b) or 9 1(c), or (ii) materially adversely affect the ability of any Party to perform its covenants and agreements under this Agreement; provided, that the foregoing shall not prevent any Buyer Company from acquiring any Assets or other businesses or from discontinuing or disposing of any of its Assets or business if such action (i) is, in the judgment of Buyer, desirable in the conduct of the business of Buyer and its Subsidiaries; and (ii) does not adversely affect the Buyer's ability to fund the Merger Consideration and the Option Settlement Payment pursuant to Sections 3 1(c), 3 5 and 9 1(e) 7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written notice promptly to the other Party upon becoming aware of the occurrence or impending occurrence of any event or circumstance relating to it or any of its Subsidiaries which (i) is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a Material breach of any of its representations, warranties, or covenants contained herein, and to use its reasonable efforts to prevent or promptly to remedy the same. 7.5 REPORTS. Each Party and its Subsidiaries shall file all reports required to be filed by it with Regulatory Authorities between the date of this Agreement and the Effective Time and shall deliver to the other Party copies of all such reports promptly after the same are filed. If financial statements are contained in any such reports filed with the SEC, such financial statements will fairly present the consolidated financial position of the entity filing such statements as of the dates indicated and the consolidated results of operations, changes in shareholders' equity, and cash flows for the periods then ended in accordance with GAAP (subject in the case of interim financial statements to normal recurring year-end adjustments that are not Material). As of their respective dates, such reports fled with the SEC will comply in all Material respects with the Securities Laws and will 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 therein, in light of the circumstances under which they were made, not misleading. Any financial statements contained in any other reports to another Regulatory Authority shall be prepared in accordance with Laws applicable to such reports. ARTICLE 8 ADDITIONAL AGREEMENTS 8.1 PROXY STATEMENT; SHAREHOLDER APPROVAL. Lamcor shall call a Shareholders' Meeting, to be held as soon as reasonably practicable after execution of this Agreement, for the purpose of voting upon adoption of this Agreement and such other related matters as it deems appropriate. In connection with the Shareholders' Meeting, (i) Lamcor shall prepare and file with the SEC a Proxy Statement and mail such Proxy Statement to its shareholders, (ii) the Parties shall furnish to each other all information concerning them (including information described in Section 6.8) that they may reasonably request in connection with such Proxy Statement, and (iii) the Board of Directors of Lamcor shall recommend to its shareholders the approval of the matters submitted for approval. Buyer and Lamcor shall make all necessary filings with respect to the Merger under the Securities Laws. 8.2 APPLICATIONS; ANTITRUST NOTIFICATION. Buyer shall prepare and file, and Lamcor shall cooperate in the preparation and, where appropriate, filing of, applications with all Regulatory Authorities having jurisdiction over the transactions contemplated by this Agreement seeking the requisite Consents necessary to consummate the transactions contemplated by this Agreement. To the extent required by the HSR Act, each of the Parties will file with the United States Federal Trade Commission and the United States Department of Justice the notification and report form required for the transactions contemplated hereby and any supplemental or additional information which may reasonably be requested in connection therewith pursuant to the HSR Act and will comply in all Material respects with the requirements of the HSR Act. The Parties shall deliver to each other copies of all filings, correspondence and orders to and from all Regulatory Authorities in connection with the transactions contemplated hereby. 8.3 FILINGS WITH STATE OFFICES. Upon the terms and subject to the conditions of this Agreement, Lamcor shall execute and file the Articles of Merger with the Secretary of State of the State of Minnesota and Sub shall execute and file the Certificate of Merger with the Secretary of State of the State of Georgia in connection with the Closing. 8.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and conditions of this Agreement, each Party agrees to use, and to cause its Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper, or advisable under applicable Laws to consummate and make effective, as soon as reasonably practicable after the date of this Agreement, the transactions contemplated by this Agreement, including using its reasonable efforts to lift or rescind any Order adversely affecting its ability to consummate the transactions contemplated herein and to cause to be satisfied the conditions referred to in Article 9; provided, that nothing herein shall preclude either Party from exercising its rights under this Agreement. Each Party shall use, and shall cause each of its Subsidiaries to use, its reasonable efforts to obtain all Consents necessary or desirable for the consummation of the transactions contemplated by this Agreement. 8.5 INVESTIGATION AND CONFIDENTIALITY. (a) Prior to the Effective Time, each Party shall keep the other Party advised of all Material developments relevant to its business and to consummation of the Merger and shall permit the other Party to make or cause to be made such investigation of the business and properties of it and its Subsidiaries and of their respective financial and legal conditions as the other Party reasonably requests, provided that such investigation shall be reasonably related to the transactions contemplated hereby and shall not interfere unnecessarily with normal operations. No investigation by a Party shall affect the representations and warranties of the other Party. (b) In addition to the Parties' respective obligations under the Confidentiality Agreement, which is hereby reaffirmed and adopted and incorporated by reference herein, each Party shall, and shall cause its advisers and agents to, maintain the confidentiality of all confidential information furnished to it by the other Party concerning its and its Subsidiaries' businesses, operations, and financial positions and shall not use such information for any purpose except in furtherance of the transactions contemplated by this Agreement. If this Agreement is terminated prior to the Effective Time, each Party shall promptly return or certify the destruction of all documents and copies thereof, and all work papers containing confidential information received from the other Party. (c) Each Party agrees to give the other Party notice as soon as practicable after any determination by it of any fact or occurrence relating to the other Party which it has discovered through the course of its investigation and which represents, or is reasonably likely to represent, either a Material breach of any representation, warranty, covenant or agreement of the other Party or which has had or is reasonably likely to have a Material Adverse Effect on the other Party. 8.6 PRESS RELEASES. Prior to the Effective Time, Lamcor and Buyer shall consult with each other as to the form and substance of any press release or other public disclosure materially related to this Agreement or any other transaction contemplated hereby; provided, that nothing in this Section 8.6 shall be deemed to prohibit any Party from making any disclosure which its counsel deems necessary or advisable in order to satisfy such Party's disclosure obligations imposed by Law. 8.7 CERTAIN ACTIONS. Lamcor shall deal exclusively with Buyer with respect to the sale of the Lamcor Common Stock or any assets or properties of Lamcor (not made in the ordinary course of business), and Lamcor shall not (and shall direct the officers, directors, financial advisors, accountants and counsel of Lamcor not to); (i) solicit the submission of any Acquisition Proposal; (ii) participate in any discussions or negotiations regarding, or furnish any information to any person or entity other than the Buyer, or otherwise cooperate in any way or assist, facilitate or encourage, any Acquisition Proposal by any person or entity other than the Buyer; or (iii) enter into any agreement or understanding, whether oral or written, that would prevent the consummation of the transaction proposed herein; provided, however, that the foregoing restrictions shall not apply to any Acquisition Proposal that is received by Lamcor or its Representatives from a third party which the Board of Directors of Lamcor determines is required in the exercise of its fiduciary duties to consider, provided that Lamcor shall promptly notify Buyer thereof If and only if Lamcor shall accept and close within one year after the date of this Agreement any such other Acquisition Proposal first received before the termination of this Agreement, Lamcor shall pay to Buyer, in reimbursement of the expenses incurred by the Buyer in connection with the transaction proposed herein and as liquidated damages to compensate the Buyer for the loss of the benefit to be derived by the Buyer from the acquisition of the Lamcor Common Stock and the consummation of the Merger and the transactions contemplated by this Agreement, the lesser of (i) actual documented out-of-pocket expenses of the Buyer incurred after June 14, 1996 in connection with the transaction proposed herein or (ii) $250,000 (the "Expenses"); provided, however, that no amount shall be paid pursuant to this Section 8 7 if the Agreement was terminated by Lamcor pursuant to Sections 10.1(b), 10.1(c) or 10.1(f) (but only on the basis of the failure of Buyer to satisfy the conditions set forth in Sections 9.3(a), 9.3(b) or 9 3(c)) Upon payment of the Expenses and the Fee to the extent required under Section 11.2, this Agreement shall terminate with no further liability of Lamcor or at law or equity resulting therefrom. 8.8 STATE TAKEOVER LAWS. Before the Effective Time, Lamcor shall take all necessary action so that the provisions of the MBCA do not prevent the consummation of the Merger or have a Material Adverse Effect on Sub or Buyer. 8.9 CHARTER PROVISIONS. Lamcor shall take all necessary action to ensure that the entering into of this Agreement and the consummation of the Merger and the other transactions contemplated hereby do not and will not result in the grant of any rights to any Person under the Articles of Incorporation, Bylaws or other governing instruments of Lamcor or restrict or impair the ability of Buyer or any of its Subsidiaries to vote, or otherwise to exercise the rights of a shareholder with respect to, shares of Lamcor that may be directly or indirectly acquired or controlled by them. 8.10 EMPLOYEES. Following the Effective Time, Buyer intends to cause Lamcor to retain substantially all of its current employees and shall provide generally to officers and employees of Lamcor employee benefits under employee benefit and welfare plans (other than stock option or other plans involving the potential issuance of Buyer Common Stock), on terms and conditions which when taken as a whole are substantially similar to those currently provided by Buyer to its similarly situated officers and employees. For purposes of participation, vesting and (except in the case of Buyer retirement plans) benefit accrual under Buyer's employee benefit plans, the service of the employees of Lamcor prior to the Effective Time shall be treated as service with a Buyer Company participating in such employee benefit plans. Except as otherwise contemplated herein, Buyer also shall cause the Surviving Corporation and its Subsidiaries to honor in accordance with their terms all employment, severance, consulting and other compensation Contracts disclosed in Section 8.10 of the Lamcor Disclosure Memorandum to Buyer between Lamcor and any current or former director, officer, or employee thereof, and all provisions for vested benefits or other vested amounts earned or accrued through the Effective Time under the Lamcor Benefit Plans. 8.11 INDEMNIFICATION. (a) For a period of six years after the Effective Time, Buyer shall, and shall cause the Surviving Corporation to, indemnify', defend and hold harmless the present and former directors and officers of Lamcor (each, an "Indemnified Party") against all Liabilities arising out of actions or omissions arising out of the Indemnified Party's service or services as directors or officers of Lamcor or, at Lamcor's request, of another corporation, partnership, joint venture, trust or other enterprise occurring at or prior to the Effective Time if (i) such Indemnified Party is determined to have met the relevant standard of care and criteria set forth in subdivision 2 of Section 302A 521 of the MBCA (or any successor statutory provisions) and otherwise to the extent and as provided under Section 302A.521 of the MBCA (or any successor statutory provisions) and (ii) such Indemnified Party notifies Buyer of each claim for indemnification in accordance with Section 8.11(b) within the six-year period following the Effective Time. Without limiting the foregoing, in any case in which any determination of eligibility for such indemnification or for the payment or reimbursement of expenses under such Section is required to be made by the Surviving Corporation, the Surviving Corporation shall direct, at the election of the Indemnified Party, that any such determination of eligibility shall be made by independent counsel mutually agreed upon between Buyer and the Indemnified Party. For a period of six (6) years after the Effective Time, Buyer and the Surviving Corporation will not take any action, or permit any action to be taken, which would change or amend the provisions of the Articles of Incorporation or Bylaws of the Surviving Corporation in effect at the Effective Time relating to indemnification provided under Section 302A.521 of the MBCA (or any successor statutory' provisions) or limitation of liability, in any manner that would adversely affect the rights of any Indemnified Party under Section 8.11. In the event the Surviving Corporation or any of its successors or assigns (i) reorganizes or consolidates with or merges into or enters into another business combination with any other Person and is not the resulting, continuing or surviving corporation or entity of such consolidation, merger or transaction or (ii) liquidates, dissolves or transfers all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision will be made so that the successor and assigns of the Surviving Corporation assume the obligations set forth in Section 8.11. Each Indemnified Party shall be a third party beneficiary of Section 8.11 and shall be entitled to enforce the provisions of Section 8.1.1. (b) Any Indemnified Party wishing to claim indemnification under paragraph (a) of this Section 8.11, upon learning of any such Liability or Litigation, shall promptly notify Buyer thereof In the event of any such Litigation (whether arising before or after the Effective Time), (i) Buyer or the Surviving Corporation shall have the obligation and right to assume the defense thereof and neither Buyer nor the Surviving Corporation shall be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if counsel for the Indemnified Parties advises that there are substantive issues which raise conflicts of interest between Buyer or the Surviving Corporation and the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them, and Buyer or the Surviving Corporation shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received; provided, that Buyer and the Surviving Corporation shall be obligated pursuant to this paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of any such Litigation, and (iii) neither Buyer nor the Surviving Corporation shall be liable for any settlement effected without its prior written consent; and provided further that neither Buyer nor the Surviving Corporation shall have any obligation hereunder to any Indemnified Party when and if a court of competent jurisdiction shall determine, and such determination shall have become final, that the indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable Law. The provisions of this Section 8.11 do not and shall not modify the indemnification obligations of Lamcor provided under Section 302A. 521 of the MBCA (or any successor statutory provisions). 8.12 CERTAIN POLICIES OF LAMCOR. Buyer and Lamcor also shall consult with respect to the character, amount and timing of restructuring and Merger-related expense charges to be taken by each of the Parties in connection with the transactions contemplated by this Agreement and shall take such charges in accordance with GAAP), prior to the Effective Time, as may be mutually agreed upon by the Parties. Neither Party's representations, warranties, covenants or agreements contained in this Agreement shall be deemed to be inaccurate or breached in any respect as a consequence of any modifications or charges undertaken solely on account of this Section 8.12. ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE 9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of each Party to perform this Agreement and consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by both Parties pursuant to Section 11.6: (a) SHAREHOLDER APPROVAL. The shareholders of Lamcor, by the requisite approval required by Law and Lamcor's governing corporate documents, shall have adopted this Agreement, and the consummation of the transactions contemplated hereby, including the Merger, as and to the extent required by Law, by the provisions of any governing instruments, or by the rules of the NASD. (b) REGULATORY APPROVALS. All Consents of, filings and registrations with, and notifications to, all Regulatory Authorities required for consummation of the Merger shall have been obtained or made and shall be in frill force and effect and all waiting periods required by Law shall have expired. No Consent obtained from any Regulatory Authority which is necessary to consummate the transactions contemplated hereby shall be conditioned or restricted in a manner (including requirements relating to the raising of additional capital or the disposition of Assets) which in the reasonable judgment of the Board of Directors of Buyer would so materially adversely impact the economic or business assumptions of the transactions contemplated by this Agreement that, had such condition or requirement been known, such Party would not, in its reasonable judgment, have entered into this Agreement. (c) CONSENTS AND APPROVALS. Each Party shall have obtained any and all Consents required for consummation of the Merger (other than those referred to in Section 9.1(b)) or for the preventing of any Default under any Contract or Permit of such Party which, if not obtained or made, is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on such Party. No Consent so obtained which is necessary to consummate the transactions contemplated hereby shall be conditioned or restricted in a manner which in the reasonable judgment of the Board of Directors of Buyer would so materially adversely impact the economic or business assumptions of the transactions contemplated by this Agreement that, had such condition or requirement been known, such Party would not, in its reasonable judgment, have entered into this Agreement. (d) LEGAL PROCEEDINGS. No court or governmental or regulatory authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether temporary, preliminary or permanent) or taken any other action which prohibits, restricts or makes illegal consummation of the transactions contemplated by this Agreement. (e) ESCROW AGREEMENT. Lamcor, Buyer, the Shareholders' Representative and the Escrow Agent shall have entered into an Escrow Agreement in substantially the form of Exhibit 5. 9.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to perform this Agreement and consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by Buyer pursuant to Section 11.6(a): (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of Lamcor set forth in this Agreement shall be true and correct on the date of this Agreement and as of the Effective Time with the same effect as though all such representations and warranties had been made on and as of the Effective Time (provided that representations and warranties which are confined to a specified date shall speak only as of such date). (b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the Material agreements and covenants of Lamcor to be performed and complied with pursuant to this Agreement prior to the Effective Time shall have been duly performed and complied with. (c) CERTIFICATES. Lamcor shall have delivered to Buyer (i) a certificate, dated as of the Effective Time and signed on its behalf by its chief executive officer and its chief financial officer, to the effect that the conditions set forth in Section 9.1 as relates to Lamcor and in Section 9.2(a) and 9.2(b) have been satisfied, and (ii) certified copies of resolutions duly adopted by Lamcor's Board of Directors and shareholders evidencing the taking of all corporate action necessary to authorize the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby. (d) OPINION OF COUNSEL. Buyer shall have received an opinion of Gray, Plant, Mooty, Mooty & Bennett, P.A., counsel to Lamcor, dated as of the Closing, substantially in the form set forth in Exhibit 2. (e) CLAIMS LETTERS. Each of the directors and officers of Lamcor shall have executed and delivered to Buyer letters in substantially the form of Exhibit 3, and all indebtedness of any such director or officer outstanding as of the Effective Time shall have been paid in full to Lamcor. (f) EMPLOYMENT AGREEMENT. Toby Jensen shall have executed, subject to delivery to Buyer at the Closing, an Employment Agreement in substantially the form of Exhibit 6 hereto. (g) DISSENTING SHAREHOLDERS. Not more than five percent (5%) of the Lamcor Common Stock issued and outstanding immediately prior to the Effective Time shall constitute Dissenting Shares. (h) SETTLEMENT OF CLAIMS, RELEASES. Lamcor shall have delivered to Buyer written releases (a "Release") in form and content acceptable to Buyer and its counsel from the shareholders of Lamcor identified below pursuant to which each such shareholder executing any such Release, for good and sufficient consideration (which, to the extent such consideration is the payment of money, shall be paid by Lamcor), agrees to release Lamcor and Buyer and Sub and all officers, directors, agents, attorneys and employees of Lamcor and/or Buyer and Sub of, from and in respect of all claims, demands, actions, causes of action, damages or other liabilities (including both those known or unknown, accrued or yet to accrue and/or those arising out of federal or state statutory or Common law) in any way relating to, based upon or arising out of the commencement, conduct or termination by Lamcor of the Rights offering. A Release shall be obtained from (i) each shareholder of Lamcor that has heretofore asserted against Lamcor, either directly or through an attorney, any claim in any way relating to, based upon or arising out of the commencement, conduct or termination of the Rights offering, (ii) not less than ninety-five percent (95%) of the shareholders of Lamcor who timely subscribed to shares of Lamcor Common Stock in the Rights offering, other than those of such shareholders who are included within clause (i) of this sentence, and (iii) the holders of not less than 800,000 shares of the Lamcor Common Stock issued and outstanding on the date hereof, other than holders of Lamcor Common Stock who are included within clauses (i) and (ii) of this sentence. (i) OPTION CANCELLATION AGREEMENT. Each of the holders of Lamcor Options shall have executed, subject to delivery to Buyer at the Closing, an Option Cancellation Agreement in substantially the form of Exhibit 8 hereto (collectively, the "Option Cancellation Agreements"). 9.3 CONDITIONS TO OBLIGATIONS OF LAMCOR. The obligations of Lamcor to perform this Agreement and consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by Lamcor pursuant to Section 11.6(b): (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of Buyer set forth in this Agreement shall be true and correct on the date of this Agreement and as of the Effective Time with the same effect as though all such representations and warranties had been made on and as of the Effective Time (provided that representations and warranties which are confined to a specified date shall speak only as of such date). (b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the Material agreements and covenants of Buyer to be performed and complied with pursuant to this Agreement prior to the Effective Time shall have been duly performed and complied with. (c) CERTIFICATES. Buyer shall have delivered to Lamcor (i) a certificate, dated as of the Effective Time and signed on its behalf by its chief executive officer and its chief financial officer, to the effect that the conditions set forth in Section 9.1 as relates to Buyer and in Section 9.3(a) and 9.3(b) have been satisfied, and (ii) certified copies of resolutions duly adopted by Buyer's Board of Directors and Sub's Board of Directors and sole shareholder evidencing the taking of all corporate action necessary to authorize the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby. (d) OPINION OF COUNSEL. Lamcor shall have received an opinion of Alston & Bird, counsel to Buyer, dated as of the Effective Time, substantially in the form set forth in Exhibit 4. (e) FAIRNESS OPINION. Lamcor shall have received from R.J. Steichen & Co. Corp. a letter, dated not more than five business days prior to the date of the Proxy Statement, to the effect that, in the opinion of such firm, the consideration to be received by Lamcor shareholders in connection with the Merger is fair, from a financial point of view, to such Shareholders. (f) EXCHANGE AGENT CERTIFICATION. The Exchange Agent shall have delivered to Lamcor a certificate, dated as of the Effective Time, to the effect that the Buyer has deposited with the Exchange Agent the Exchange Fund required pursuant to Section 4.1. ARTICLE 10 TERMINATION 10.1 TERMINATION. Notwithstanding any other provision of this Agreement, and notwithstanding the approval of this Agreement by the shareholders of Lamcor, this Agreement may be terminated and the Merger abandoned at any time prior to the Effective Time only as follows: (a) By mutual written consent of the Board of Directors of Buyer and the Board of Directors of Lamcor; or (b) By the Board of Directors of either Party (provided that the terminating Party is not then in Material breach of any representation, warranty, covenant, or other agreement contained in this Agreement) in the event of a Material breach by the other Party of any representation, warranty, covenant or agreement (other than any breach arising out of or based upon the failure of Buyer timely to deliver to Lamcor the items described in the second sentence of Section 6.9 of this Agreement or the failure of Buyer to obtain the financing at Closing sufficient to fund the Merger Consideration payable under this Agreement) contained in this Agreement which cannot be or has not been cured within 30 days after the giving of written notice to the breaching Party of such breach; or (c) By the Board of Directors of either Party (provided that the terminating Party is not then in Material breach of any representation, warranty, covenant, or other agreement contained in this Agreement) in the event (i) any Consent of any Regulatory Authority required for consummation of the Merger and the other transactions contemplated hereby shall have been denied by final nonappealable action of such authority or if any action taken by such authority is not appealed within the time limit for appeal, or (ii) the shareholders of Lamcor fail to vote their approval of the matters relating to this Agreement and the transactions contemplated hereby at the Shareholders' Meeting where such matters were presented to such shareholders for approval and voted upon; or (d) By the Board of Directors of either Party in the event that the Merger shall not have been consummated by January 15, 1997, if the failure to consummate the transactions contemplated hereby on or before such date is not caused by any breach of this Agreement by the Party electing to terminate pursuant to this Section 10.1(d); or (e) By the Board of Directors of either Party (provided that the terminating Party is not then in Material breach of any representation, warranty, covenant, or other agreement contained in this Agreement) in the event that any of the conditions precedent to the obligations of such Party to consummate the Merger cannot be satisfied or fulfilled by the date specified in Section 10.1(d); or (f) By the Board of Directors of Lamcor if Buyer shall fail timely to deliver to Lamcor the items described in the second sentence of Section 6.9 of this Agreement or if Buyer shall fail to obtain the financing at Closing sufficient to fund the Merger Consideration payable under this Agreement. 10.2 EFFECT OF TERMINATION. In the event of the termination and abandonment of this Agreement pursuant to Section 10.1, this Agreement shall become void and have no effect, except that (i) the provisions of this Section 10.2 and Sections 11.2, 11.16, 11.18 and 8.5(b) shall survive any such termination and abandonment, and (ii) a termination pursuant to Section 10.1(b) shall not relieve the breaching Party from Liability for an uncured willful breach of a representation, warranty, covenant, or agreement giving rise to such termination. In the event this Agreement shall be terminated pursuant to Section 10.1(f), Buyer shall pay and reimburse Lamcor for amounts actually paid by Lamcor to third parties for legal and accounting fees and related costs in connection with the negotiation, preparation and execution of this Agreement and the preparation for the consummation of the transactions contemplated hereby provided, however, that the maximum aggregate liability of Buyer for such payment and reimbursement shall be $100,000. 10.3 GUARANTY BY PFC. Contemporaneously with the execution and delivery by Buyer and Sub of this Agreement, Buyer has delivered to Lamcor the written agreement of PFC guaranteeing the obligations of Buyer under the last sentence of Section 10.2 above. ARTICLE 11 MISCELLANEOUS 11.1 DEFINITIONS. (a) Except as otherwise provided herein, the capitalized terms set forth below shall have the following meanings: "ACQUISITION PROPOSAL" shall mean proposals or offers from any Person or entity other than Buyer or any of Buyer's Affiliates relating to (i) any acquisition, issuance or purchase (whether through a merger, consolidation, share exchange, purchase of assets or similar transaction, and whether effected in a single transaction or series of related transactions) of an amount of the Lamcor capital stock which results in a Change of Control, or (ii) the purchase of all or substantially all of the assets and properties of Lamcor, or (iii) a transaction of the type described in the preceding clauses (i) or (ii) but relating to any corporation or other form of entity formed by Lamcor or any Affiliate of Lamcor to which at least 51% of the outstanding Lamcor Common Stock or substantially all of the assets or properties of Lamcor may be contributed. "AFFILIATE" of a Person shall means (i) any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control such Person; (ii) any officer, director, partner, employer, or direct or indirect beneficial owner of any 10% or greater equity or voting interest of such Person (on a fully diluted basis); or (iii) any other Person for which a Person described in clause (ii) acts in any such capacity. "AGREEMENT" shall mean this Agreement and Plan of Merger, including the Exhibits hereto. "ASSETS" of a Person shall mean all of the assets, properties, businesses and rights of such Person of every kind, nature, character and description, whether real, personal or mixed, tangible or intangible, accrued or contingent, or otherwise relating to or utilized in such Person's business, directly or indirectly, in whole or in part, whether or not carried on the books and records of such Person, and whether or not owned in the name of such Person or any Affiliate of such Person and wherever located. "ARTICLES OF MERGER" shall mean the Articles of Merger to be executed by Lamcor and filed with the Secretary of State of the State of Minnesota relating to the Merger as contemplated by Section 1.1. "BUYER CAPITAL STOCK" shall mean the capital stock of Buyer. "BUYER COMPANIES" shall mean, collectively, Buyer and all Buyer Subsidiaries. "BUYER SUBSIDIARIES" shall mean the Subsidiaries of Buyer, which shall include any corporation or other organization acquired as a Subsidiary of Buyer in the future and held as a Subsidiary by Buyer at the Effective Time. "CERTIFICATE OF MERGER" shall mean the Certificate of Merger to be executed by Lamcor and filed with the Secretary of State of the State of Georgia relating to the Merger as contemplated by Section 1.1. "CHANGE OF CONTROL" shall have occurred if any "person" or "group of persons" (as determined pursuant to Sections 13(d) and 14(d) of the 1934 Act) (i) becomes the beneficial owner, directly or indirectly, of voting securities of Lamcor, or securities convertible into or exchangeable for such voting securities, representing more than 50% of the combined voting power of Lamcor's then outstanding securities or (ii) acquires the right or power to nominate and/or control, directly or indirectly, a majority of the members of Lamcor's Board of Directors (or the Board of Directors of the resulting or surviving entity with which Lamcor is merged or consolidated). "CLOSING DATE" shall mean the date on which the Closing occurs. "CONFIDENTIALITY AGREEMENT" shall mean that certain Nondisclosure, Nonsolicitation and Standstill Agreement, dated June 10, 1996, between Lamcor and Buyer "Consent" shall mean any consent, approval, authorization, clearance, exemption, waiver, or similar affirmation by any Person pursuant to any Contract, Law, Order, or Permit. "CONTRACT" shall mean any written or oral agreement, arrangement, authorization, commitment, contract, indenture, instrument, lease, obligation, plan, practice, restriction, understanding, or undertaking of any kind or character, or other document to which any Person is a party or that is binding on any Person or its capital stock, Assets or business. "DEFAULT" shall mean (i) any breach or violation of or default under any Contract, Law, Order, or Permit, (ii) any occurrence of any event that with the passage of time or the giving of notice or both would constitute a breach or violation of or default under any Contract, Law, Order, or Permit, or (iii) any occurrence of any event that with or without the passage of time or the giving of notice would give rise to a right to terminate or revoke, change the current terms of, or renegotiate, or to accelerate, increase, or impose any Liability under, any Contract, Law, Order, or Permit. "ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface, or subsurface strata) and which are administered, interpreted, or enforced by the United States Environmental Protection Agency and state and local agencies with jurisdiction over, and including common law in respect of, pollution or protection of the environment, including the Comprehensive Environmental Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 ET SEQ. ("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions, discharges, releases, or threatened releases of any Hazardous Material, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of any Hazardous Material. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ESCROW AGREEMENT" shall mean the Escrow Agreement dated as of the Closing Date by and among Buyer, Lamcor and the Shareholders' Representative. "EXHIBITS" 1 through 8, inclusive, shall mean the Exhibits so marked, copies of which are attached to this Agreement. Such Exhibits are hereby incorporated by reference herein and made a part hereof, and may be referred to in this Agreement and any other related instrument or document without being attached hereto. "GAAP" shall mean generally accepted accounting principles, consistently applied during the periods involved. "GBCC" shall mean the Georgia Business Corporation Code. "HAZARDOUS MATERIAL" shall mean (i) any hazardous substance, hazardous material, hazardous waste, regulated substance, or toxic substance (as those terms are defined by any applicable Environmental Laws) and (ii) any chemicals, pollutants, contaminants, petroleum, petroleum products, or oil (and specifically shall include asbestos requiring abatement, removal, or encapsulation pursuant to the requirements of governmental authorities and any polychlorinated biphenyls). "HSR ACT" shall mean Section 7A of the Clayton Act, as added by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder. "INTELLECTUAL PROPERTY" shall mean copyrights, patents, trademarks, service marks, service names, trade names, applications therefor, technology rights and licenses, computer software (including any source or object codes therefor or documentation relating thereto), trade secrets, franchises, know-how, inventions, and other intellectual property rights. "INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. "KNOWLEDGE" as used with respect to (i) Buyer, shall mean the actual knowledge of William C. Beddingfield or Allen D. Barnes and (ii) with respect to Lamcor, shall mean the actual knowledge of Toby Jensen, Leo Lund, Mark Steele, and Dave Shonka. "LAMCOR COMMON STOCK" shall mean the no par value capital stock of Lamcor. "LAMCOR DISCLOSURE MEMORANDUM" shall mean the written information entitled "Lamcor, Incorporated Disclosure Memorandum" delivered prior to the date of this Agreement to Buyer describing in reasonable detail the matters contained therein and, with respect to each disclosure made therein, specifically referencing each Section of this Agreement under which such disclosure is being made. Information disclosed with respect to one Section shall be deemed to be disclosed for purposes of any other Section not specifically referenced with respect thereto. "LAMCOR FINANCIAL STATEMENTS" shall mean (i) the consolidated balance sheets (including related notes and schedules, if any) of Lamcor as of June 30, 1996, and as of September 30, 1995 and 1994, and the related statements of income, changes in shareholders' equity, and cash flows (including related notes and schedules, if any) for the nine months ended June 30, 1996, and for each of the three fiscal years ended September 30, 1995, 1994 and 1993, as filed by Lamcor in SEC Documents, and (ii) the consolidated balance sheets of Lamcor (including related notes and schedules, if any) and related statements of income, changes in shareholders' equity, and cash flows (including related notes and schedules, if any) provided to Buyer or included in SEC Documents filed with respect to periods ended subsequent to June 30, 1996. "LAW" shall mean any code, law (including common law), ordinance, regulation, reporting or licensing requirement, rule, or statute applicable to a Person or its Assets, Liabilities, or business, including those promulgated, interpreted or enforced by any Regulatory Authority. "LIABILITY" shall mean any direct or indirect, primary or secondary, liability, indebtedness, obligation, penalty, cost or expense (including costs of investigation, collection and defense), claim, deficiency, guaranty or endorsement of or by any Person (other than endorsements of notes, bills, checks, and drafts presented for collection or deposit in the ordinary course of business) of any type, whether accrued, absolute or contingent, liquidated or unliquidated, matured or unmatured, or otherwise. "LIEN" shall mean any conditional sale agreement, default of title, easement, encroachment, encumbrance, hypothecation, infringement, lien, mortgage, pledge, reservation, restriction, security interest, title retention or other security arrangement, or any adverse right or interest, charge, or claim of any nature whatsoever of, on, or with respect to any property or property interest, other than (i) Liens for current property Taxes not yet due and payable, and (iii) Liens which do not materially impair the use of or title to the Assets subject to such Lien. "LITIGATION" shall mean any action, arbitration, cause of action, claim, complaint, criminal prosecution, governmental or other examination or investigation, hearing, administrative or other proceeding relating to or affecting a Party, its business, its Assets (including Contracts related to it), or the transactions contemplated by this Agreement. "LOSS" shall mean any and all direct or indirect demands, claims, payments, obligations, recoveries, deficiencies, fines, penalties, interest, assessments, actions, causes of action, suits, losses, diminution in the value of Assets, punitive, exemplary or consequential damages (including, but not limited to, lost income and profits and interruptions of business), liabilities, costs, expenses, and interest on any amount payable to a third party as a result of the foregoing. This definition shall include all Losses, whether accrued, absolute, contingent, known, unknown or otherwise. "MATERIAL" for purposes of this Agreement shall be determined in light of the facts and circumstances of the matter in question; provided that any specific monetary amount stated in this Agreement shall determine materiality in that instance. "MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change or occurrence which, individually or together with any other event, change or occurrence, has a Material adverse impact on (i) the financial position, business, or results of operations of such Party and its Subsidiaries, taken as a whole, or (ii) the ability of such Party to perform its obligations under this Agreement or to consummate the Merger or the other transactions contemplated by this Agreement. "MBCA" shall mean the Minnesota Business Corporation Act. "NASD" shall mean the National Association of Securities Dealers, Inc. "NASDAQ NATIONAL MARKET" shall mean the National Market System of the National Association of Securities Dealers Automated Quotations System. "1933 ACT" shall mean the Securities Act of 1933, as amended. "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended. "ORDER" shall mean any administrative decision or award, decree, injunction, judgment, order, quasi-judicial decision or award, ruling, or writ of any federal, state, local or foreign or other court, arbitrator, mediator, tribunal, administrative agency, or Regulatory Authority. "PARTY" shall mean either Lamcor, Sub or Buyer, and "Parties" shall mean Lamcor, Sub and Buyer. "PERMIT" shall mean any federal, state, local, and foreign governmental approval, authorization, certificate, easement, filing, franchise, license, notice, permit, or right to which any Person is a party or that is or may be binding upon or inure to the benefit of any Person or its securities, Assets, or business. "PERSON" shall mean a natural person or any legal, commercial or governmental entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, trust, business association, group acting in concert, or any person acting in a representative capacity. "PROXY STATEMENT" shall mean the proxy statement used by Lamcor to solicit the approval of its shareholders of the transactions contemplated by this Agreement. "REGULATORY AUTHORITIES" shall mean, collectively, the SEC, the NASD, the United States Department of Justice, and all other federal, state, county, local or other governmental or regulatory agencies, authorities (including self-regulatory authorities), instrumentalities, commissions, boards or bodies having jurisdiction over the Parties and their respective Subsidiaries. "REPRESENTATIVE" shall mean any investment banker, financial advisor, attorney, accountant, consultant, or other representative of a Person. "RIGHTS" shall mean all arrangements, calls, commitments, Contracts, options, rights to subscribe to, scrip, understandings, warrants, or other binding obligations of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of the capital stock of a Person or by which a Person or may be bound to issue additional shares of its capital stock or other Rights. "SEC DOCUMENTS" shall mean all forms, proxy statements, registration statements, reports, schedules, and other documents filed, or required to be filed, by a Party or any of its Subsidiaries with any Regulatory Authority pursuant to the Securities Laws. "SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940, as amended, the Trust Indenture Act of 1939, as amended, applicable state securities Laws, and the rules and regulations of any Regulatory Authority promulgated thereunder. "SHAREHOLDER" and "SHAREHOLDERS" shall mean the holders of Lamcor Common Stock. "SHAREHOLDERS' MEETING" shall mean the meeting of the shareholders of Lamcor to be held pursuant to Section 8.1, including any adjournment or adjournments thereof. "SHAREHOLDERS' REPRESENTATIVE" shall mean David P. Stewart in his capacity as the Shareholders' Representative pursuant to Section 11.16 of this Agreement. "SUB COMMON STOCK" means the no par value common stock of Sub. "SUBSIDIARIES" shall mean all those corporations, associations, or other business entities of which the entity in question either (i) owns or controls 50% or more of the outstanding equity securities either directly or through an unbroken chain of entities as to each of which 50% or more of the outstanding equity securities is owned directly or indirectly by its parent (provided, there shall not be included any such entity the equity securities of which are owned or controlled in a fiduciary capacity), or (ii) in the case of partnerships, serves as a general partner. "SURVIVING CORPORATION" shall mean Lamcor as the surviving corporation resulting from the Merger "TAX" or "TAXES" shall mean any federal, state, county, local, or foreign taxes, charges, fees, levies, imposts, duties, or other assessments, including income, gross receipts, excise, employment, sales, use, transfer, license, payroll, franchise, severance, stamp, occupation, windfall profits, environmental, federal highway use, commercial rent, customs duties, capital stock, paid-up capital, profits, withholding, Social Security, single business and unemployment, disability, real property, personal property, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other tax or governmental fee of any kind whatsoever, imposes or required to be withheld by the United States or any state, county, local or foreign government or subdivision or agency thereof, including any interest, penalties, and additions imposed thereon or with respect thereto. "TAX RETURN" shall mean any report, return, information return, or other information required to be supplied to a taxing authority in Connection with Taxes, including any return of an affiliated or combined or unitary group that includes a Party or its Subsidiaries. (b) The terms set forth below shall have the meanings ascribed thereto in the referenced sections; Business Combination Section 11.2(b) Buyer Preamble Cash Payment Section 3.1(c) Certificates Section 4.1(b) CGW Section 6.9 Closing Section 1.2 Construction Loan Section 7.2(b) Dissenting Shares Section 3 4(a) Effective Time Section 1.3 Escrow Claim Section 11.15 Escrowed Funds Section 11.15 Exchange Agent Section 4.1(a) Exchange Fund Section 4.1(a) Expenses Section 8.7 Fee Section 11.2(b) Indemnified Party Section 8 11(a) Lamcor Preamble Lamcor Benefit Plans Section 5.13(a) Lamcor Contracts Section 5.14 Lamcor Convertible Securities Section 3.5 Lamcor Options Section 3.5 Lamcor Expenses Section 11.15 Lamcor SEC Reports Section 5.5(a) Merger Section 11 Merger Consideration Section 3 1(c) Option Cancellation Agreements Section 9 2(i) Option Settlement Payment Section 3 5 PFC Section 6 9 Release Section 9.2(h) Representative's Expenses Section 11.16(e) Rights offering Section 5.6 Shareholders' Representative Section 11.16(a) Shares Section 3.4(a) Steichen Section 113 Sub Preamble (c) Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed followed by the words "without limitation." 11.2 EXPENSES AND FEE. (a) Except as otherwise provided in this Section 11.2 or in Section 8.7, each of the Parties shall bear and pay all direct costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including filing, registration and application fees, printing fees, and fees and expenses of its own financial or other consultants, investment bankers, accountants, and counsel. (b) In addition to the foregoing, if, after the date of this Agreement and within twelve (12) months following: (i) any termination of this Agreement by Buyer pursuant to Sections 10.1(b) or 10.1(f) (but only on the basis of the failure of Lamcor to satisfy any of the conditions enumerated in Section 9.2, other than Section 9.2(d)); or (ii) failure to consummate the Merger by reason of any failure of Lamcor to satisfy the conditions enumerated in Section 9.2, other than Section 9.2(d); any third-party, in a single transaction or series of related transactions and whether through a merger, consolidation, share exchange, purchase or similar transaction, shall purchase all or substantially all of the Assets of Lamcor or any corporation or business entity owned by Lamcor or its Affiliates and to which such Assets are contributed or acquire or purchase an amount of the capital stock of Lamcor or such other corporation or business entity that results in a Change of Control (collectively, a "Business Combination"), then Lamcor shall pay to Buyer upon consummation and closing of the Business Combination an amount in cash equal to the sum of: (x) the Expenses determined under Section 8.7 above (if not previously paid by Lamcor), plus (y) a fee ("Fee') equal to 2% of the aggregate fair market value of the consideration received by the Shareholders of Lamcor in such Business Combination; which sum represents additional compensation for Buyer's loss as the result of the transactions contemplated by this Agreement not being consummated; provided, however, that no Expenses or Fee shall be paid to Buyer if the Agreement was terminated by Lamcor pursuant to Sections 10.1(b) or 10.1(f) (but only on the basis of the failure of Buyer to satisfy any of the conditions set forth in Sections 9.3(a), 9.3(b) or 9.3(c)). Upon payment of the Expenses and the Fee, this Agreement shall terminate with no further liability of Lamcor or such third party at law or equity resulting therefrom In the event such third-party shall refuse to pay such amounts within ten days of demand therefor by Buyer, the amounts shall be an obligation of Lamcor and shall be paid by Lamcor promptly upon notice to Lamcor by Buyer. 11.3 BROKERS AND FINDERS. Except for R.J. Steichen & Co. Corp. ("Steichen") as to Lamcor, each of the Parties represents and warrants that neither it nor any of its officers, directors, employees, or Affiliates has employed any broker or finder or incurred any Liability for any financial advisory fees, investment bankers' fees, brokerage fees, commissions, or finders' fees in connection with this Agreement or the transactions contemplated hereby. In the event of a claim by any broker or finder based upon his or its representing or being retained by or allegedly representing or being retained by Lamcor or Buyer, each of Lamcor and Buyer, as the case may be, agrees to indemnify and hold the other harmless of and from any Liability in respect of any such claim; provided, however, the Surviving Corporation will pay upon the Effective Time the balance of any fees payable to Steichen so long as Lamcor has not breached the covenant set forth in Section 7.2(m). 11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein, this Agreement (including the documents and instruments referred to herein) constitutes the entire agreement between the Parties with respect to the transactions contemplated hereunder and supersedes all prior arrangements or understandings with respect thereto, written or oral (except, as to Section 8.5(b), for the Confidentiality Agreement). Nothing in this Agreement expressed or implied, is intended to confer upon any Person, other than the Parties or their respective successors, any rights, remedies, obligations, or liabilities under or by reason of this Agreement, other than as provided in Sections 8.11. 11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be amended by a subsequent writing signed by each of the Parties upon the approval of the Boards of Directors of each of the Parties, whether before or after shareholder approval of this Agreement has been obtained; provided, that after any such approval by the holders of Lamcor Common Stock, there shall be made no amendment that pursuant to Section 302A.613 of the MBCA requires further approval by such Shareholders without the further approval of such Shareholders. 11.6 WAIVERS. (a) Prior to or at the Effective Time, Buyer, acting through its Board of Directors, chief executive officer or other authorized officer, shall have the right to waive any Default in the performance of any term of this Agreement by Lamcor, to waive or extend the time for the compliance or fulfillment by Lamcor of any and all of its obligations under this Agreement, and to waive any or all of the conditions precedent to the obligations of Buyer under this Agreement, except any condition which, if not satisfied, would result in the violation of any Law. No such waiver shall be effective unless in writing signed by a duly authorized officer of Buyer. (b) Prior to or at the Effective Time, Lamcor, acting through its Board of Directors, chief executive officer or other authorized officer, shall have the right to waive any Default in the performance of any term of this Agreement by Buyer, to waive or extend the time for the compliance or fulfillment by Buyer of any and all of its obligations under this Agreement, and to waive any or all of the conditions precedent to the obligations of Lamcor under this Agreement, except any condition which, if not satisfied, would result in the violation of any Law. No such waiver shall be effective unless in writing signed by a duly authorized officer of Lamcor. (c) The failure of any Party at any time or times to require performance of any provision hereof shall in no manner affect the right of such Party at a later time to enforce the same or any other provision of this Agreement. No waiver of any condition or of the breach of any term contained in this Agreement in one or more instances shall be deemed to be or construed as a further or continuing waiver of such condition or breach or a waiver of any other condition or of the breach of any other term of this Agreement. 11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Party hereto (whether by operation of Law or otherwise) without the prior written consent of the other Party. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and assigns. 11.8 NOTICES. All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, or by courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered: Lamcor: Lamcor, Incorporated P.O. Box 70 Highway 169 North Le Sueur, Minnesota 56058 Telecopy Number: (612) 665-6390 Attention: Special Committee of the Board of Directors Copy to Counsel: Gray, Plant, Mooty, Mooty & Bennett, P.A. 3400 City Center 33 South Sixth Street Minneapolis, Minnesota 55402-3796 Telecopy Number: (612) 333-0066 Attention: Bruce B. McPheeters, Esq. Buyer: Packaging Acquisition Corporation 1633 Mt. Vernon Road Dunwoody, Georgia 30338 Telecopy Number: (770) 604-9077 Attention: William C. Beddingfield Copy to Counsel: Alston & Bird One Atlantic Center 1201 West Peachtree Street Atlanta, Georgia 30309-3424 Telecopy Number: (404) 881-7777 Attention: Teri L. McMahon, Esq. 11.9 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the Laws of the State of Georgia and as to statutory dissenters' rights, the MBCA, without regard to any applicable conflicts of Laws. 11.10 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 11.11 CAPTIONS; ARTICLES AND SECTIONS. The captions contained in this Agreement are for reference purposes only and are not part of this Agreement. Unless otherwise indicated, all references to particular Articles or Sections shall mean and refer to the referenced Articles and Sections of this Agreement. 11.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any party, whether under any rule of construction or otherwise. No party to this Agreement shall be considered the draftsman. The parties acknowledge and agree that this Agreement has been reviewed, negotiated, and accepted by all parties and their attorneys and shall be construed and interpreted according to the ordinary meaning of the words used so as fairly to accomplish the purposes and intentions of all parties hereto. 11.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement was not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. 11.14 SEVERABILITY. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. 11.15 ESCROW. The Exchange Agent shall deliver to the Escrow Agent on behalf of the Shareholders at the Effective Time an amount equal to Two Hundred Thirty One Thousand Eight Hundred Seventy Eight Dollars and 04/100 ($23 1,878.04) (the "Escrowed Funds") representing the aggregate of (a) the amount allocated to the Escrowed Fund with respect to each share of Lamcor Common Stock issued and outstanding immediately prior to the Effective Time and (b) the amount allocated to each share of Lamcor Common Stock that is subject to any Lamcor Option or Lamcor Convertible Security purchased pursuant to Section 3.5. The term "Escrow Claim" means any and all claims, individually or in the aggregate, made by Buyer within one year after the Effective Time for the purpose of compensating Buyer for Losses resulting from (x) the breach or inaccuracy of any representation or warranty of Lamcor contained herein, (y) the failure of Lamcor to perform any covenant or agreement of Lamcor under this Agreement, and (z) all amounts in excess of $275,000 paid or incurred by Lamcor in connection with the negotiation and preparation of this Agreement, in settlement of claims relating to, based upon or arising out of the Rights offering or in consideration for the Releases, or in attorneys fees and expenses and other costs in obtaining such settlement or Releases, and in connection with the consummation of the transactions provided for herein (collectively, the "Lamcor Expenses"); provided, however, that Buyer shall not be entitled to assert a claim against the Escrowed Funds for breaches of representations and warranties pursuant to the preceding clause (x) if Buyer had actual knowledge of the breach at the Effective Time; provided further, that Buyer shall not be entitled to assert an Escrow Claim against the Escrowed Funds unless each such Escrow Claim is in excess of $1,000.00. An Escrow Claim shall be satisfied or liquidated only from the Escrowed Funds in accordance with the terms and conditions of the Escrow Agreement; provided, however, that Buyer shall not be entitled to receive any of the Escrowed Funds unless (i) the Surviving Corporation is not in breach in any Material respect of any of its covenants or agreements arising after the Effective Time and (ii) the aggregate amount of all Escrow Claims arising out of clauses (x) and (y) of the preceding sentence exceeds $50,000. Once such $50,000 threshold has been reached, Buyer shall be entitled to hall payment for all Escrow Claims arising out of such clauses (x) and (y) out of the Escrowed Funds as if no such limitation on payment had existed, provided that the conditions of clause (i) of this sentence is satisfied at the time of payment. Buyer shall pay all fees and expenses in connection with the escrow and the Escrowed Funds, without reimbursement therefor to Buyer from the Escrowed Funds. Notwithstanding the foregoing, any amount of Lamcor Expenses in excess of $275,000 shall be paid to Buyer out of the Escrowed Funds, to the extent thereof, without regard to such $50,000 threshold. 11.16 SHAREHOLDERS' REPRESENTATIVE. (a) The Shareholders irrevocably make, constitute and appoint David P. Stewart as their agent (the "Shareholders' Representative") and authorize and empower him to fulfill the role of Shareholders' Representative hereunder and under the Escrow Agreement. In the event of the resignation of the Shareholders' Representative, the resigning Shareholders' Representative shall appoint a successor from among the Shareholders and who shall agree in writing to accept such appointment. If the Shareholders' Representative should die or become incapacitated, his successor shall be appointed within 15 days of his death or incapacity by a majority of the Shareholders, and such successor shall be a Shareholder. The choice of a successor Shareholders' Representative appointed in any manner permitted above shall be final and binding upon all of the Shareholders. The decisions and actions of any successor Shareholders' Representative shall be, for all purposes, those of a Shareholders' Representative as if originally named herein. (b) Each Shareholder has made, constituted and appointed and by the approval of this Agreement hereby irrevocably makes, constitutes and appoints the Shareholders Representative as such person's true and lawful attorney in fact and agent, for such person and in such person's name, place and stead for all purposes necessary or desirable in order for the Shareholders' Representative to take the actions contemplated by this Agreement and the Escrow Agreement on behalf of the Shareholders, with the ability to execute and deliver all instruments, certificates and other documents of every kind incident to the foregoing to all intents and purposes and with the same effect as such Shareholder could do personally, and each such Shareholder hereby ratifies and confirms as his, her or its own act, all that the Shareholders' Representative shall do or cause to be done pursuant to the provisions hereof. (c) The death or incapacity of any Shareholder shall not terminate the authority and agency of the Shareholders' Representative. (d) Buyer shall be entitled to rely exclusively upon any communication given or other action taken by the Shareholders' Representative pursuant hereto and shall not be liable for any action taken or not taken in reliance upon the Shareholders' Representative. Buyer shall not be obligated to inquire as to the authority of the Shareholders' Representative to take any action that the Shareholders' Representative takes or purports to take on behalf of the Shareholders. (e) The Shareholders agree to indemnify the Shareholders' Representative and to hold him or her harmless against any and all loss, liability or expense incurred without bad faith on the part of the Shareholders' Representative and arising out of or in connection with his or her duties as Shareholders' Representative, including the reasonable costs and expenses incurred by the Shareholders' Representative in defending against any claim or liability in connection herewith (the "Representative's Expenses"), and authorize the Shareholder's Representative to receive following the first anniversary of the Effective Date a portion of the amount by which the then remaining balance of the Escrowed Funds exceeds the sum of the Tentatively Impounded Funds (as defined in the Escrow Agreement) equal to the Representative's Expenses in accordance with Section 6(f) of the Escrow Agreement, subject to Section 11.16(f) below; provided, however, that Buyer shall pay all reasonable Representative's Expenses incurred by the Shareholders Representative and its counsel in defending against any Escrow Claim in the event that the Shareholders' Representative prevails in such defense, and the Shareholders and Buyer authorize a maximum amount equal to the lesser of (i) Five Thousand Dollars ($5,000.00), or (ii) the actual amount of the reasonable Representative's Expenses incurred by the Shareholders' Representative and its counsel in carrying out the provisions of this Section 11.16 and Section 6 of the Option Cancellation Agreements (as evidenced by a written notice from the Shareholders' Representative to Buyer setting forth the actual amount and a description of such Representative's Expenses), to be remitted prior to the first anniversary of the Effective Date to the Shareholders' Representative out of the Escrowed Funds upon the Escrow Agent's receipt of written notice from Buyer stating the amount to be so remitted (f) Each Shareholder shall have the right to receive upon written request therefor an accounting of the Representative's Expenses for which the Shareholder's Representative is reimbursed from the Escrowed Funds pursuant to Section 11.16(e) hereof. 11.17 SURVIVAL. Article 4, Sections 8.10 and 8.11, and Article 11 (other than Section 11.2) shall survive the Effective Time pursuant to their respective terms. The representations and warranties found in Articles 5 and 6 shall survive until termination of the Escrow Agreement. 11.18 ARBITRATION. Any dispute, controversy or claim arising out of or relating to this Agreement, shall be settled by arbitration in accordance with the then-prevailing Commercial Arbitration Rules of the American Arbitration Association. Such arbitration shall be held in Minneapolis, Minnesota before a panel of three arbitrators, one selected by Buyer and Sub, one selected by Lamcor and the third selected by mutual agreement of the first two arbitrators. Each arbitrator shall be independent and impartial. Judgment upon any award rendered by the arbitrators may be entered into any court of competent jurisdiction. The determinations of which Party (or combination of them) bears the costs and expenses incurred in connection with any such arbitration proceeding shall be made by the arbitrators. (signatures appear on the following page) IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on its behalf and its corporate seal to be hereunto affixed and attested by officers thereunto as of the day and year first above written. ATTEST: LAMCOR, INCORPORATED By: - -------------------------------- ------------------------------------- Secretary President [CORPORATE SEAL] ATTEST: PACKAGING ACQUISITION CORPORATION By: - -------------------------------- ------------------------------------- Secretary President [CORPORATE SEAL] LI ACQUISITION CORPORATION By: - -------------------------------- ------------------------------------- Secretary President [CORPORATE SEAL] LIST OF EXHIBITS TO AGREEMENT AND PLAN OF MERGER Exhibit 1 Form of Shareholder Voting Agreement Exhibit 2 Matters as to which Gray, Plant, Mooty, Mooty & Bennett, P.A. will opine Exhibit 3 Form of Claims Letter Exhibit 4 Matters as to which Alston & Bird will opine Exhibit 5 Form of Escrow Agreement Exhibit 6 Form of Employment Agreement (Jensen) Exhibit 7 Form of Noncompetition Agreement (Lund) Exhibit 8 Form of Option Cancellation Agreement The Company has omitted the above Exhibits to the Agreement and Plan of Merger and hereby agrees to furnish supplementally a copy of any omitted Exhibit to the Commission upon request. EX-3.(I) 3 ARTICLES OF INCORPORATION Exhibit 3.1 Articles of Incorporation of the Company, as amended ARTICLES OF AMENDMENT OF LAMINATIONS INCORPORATED The undersigned corporation hereby adopts the following Articles of Amendment, which replace and supersede prior Articles filed: ARTICLES OF INCORPORATION OF LAMINATIONS, INCORPORATED The undersigned incorporated, being a natural person 18 years of age or older, in order to form a corporate entity under Minnesota Statutes, Chapter 302A, hereby adopts the following Articles of Incorporation: ARTICLE I The name of the corporation is Lamcor, Incorporated. ARTICLE II The registered office of the corporation is located at 8900 Penn Avenue South, Minneapolis, Minnesota 55431, and the registered agent at that address is R. Tuck Aaker. ARTICLE III The name and address of the incorporator is L. Reid Martinson, 8900 Penn Avenue South, Minneapolis, MN 55431. ARTICLE IV The corporation is authorized to issue an aggregate total of 10,000,000 shares. ARTICLE V In addition to the powers granted to the Board of Directors by Minnesota Statutes, Chapter 302A, the Board of Directors of this corporation shall have the power and authority to fix by resolution any designation, class, series, voting power, preference, right, qualification, limitation, restriction, dividend, time and place of redemption, and conversion right with respect to any stock of the corporation. ARTICLE VI Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting by written action signed by a majority of the Board of Directors then in office, except as to those matters which require shareholder approval, in which case the written action shall be signed by all members of the Board of Directors then in office. ARTICLE VII No holder of stock of this corporation shall be entitled to any cumulative voting rights. ARTICLE VIII No holder of stock of this corporation shall have any preferential, pre-emptive, or other rights of subscription to any shares of any class or series of stock of this corporation alloted or sold or to be alloted or sold and now or hereafter authorized, or to any obligations or securities convertible into any class or series of stock of this corporation, nor any right of subscription to any part thereof. IN WITNESS WHEREOF, the incorporator has executed these Articles of Amendment this _____ day of _______________, 1986. ------------------------------------------ R. Tuck Aaker, President STATE OF MINNESOTA ) ) ss: COUNTY OF HENNEPIN ) Subscribed and sworn to before me this _____ day of _______________, 1986. - ---------------------------- Notary Public The amendment was adopted by a unanimous vote of the shareholders, at a duly called meeting on the _____ day of _______________, 1986. ------------------------------------------ R. Tuck Aaker, President Proposed Amended and Restated Articles of Incorporation of the Company, as submitted to the shareholders for approval at a special meeting of shareholders to be held on December 31, 1996 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF LAMCOR, INCORPORATED The undersigned hereby certifies that the shareholders of Lamcor, Incorporated, pursuant to Minnesota Statutes Chapter 302A, have hereby adopted the following Amended and Restated Articles of Incorporation: ARTICLE I The name of the corporation is Lamcor, Incorporated. ARTICLE II The registered office of the corporation is located at Highway 169, Fire #107-C, LeSueur, Minnesota 56058. ARTICLE III The corporation is authorized to issue an aggregate total of 10,000,000 shares. ARTICLE IV In addition to the powers granted to the Board of Directors by Minnesota Statutes, Chapter 302A, the Board of Directors of this corporation shall have the power and authority to fix by resolution any designation, class, series, voting power, preference, right, qualification, limitation, restriction, dividend, time and place of redemption, and conversion right with respect to any stock of the corporation. ARTICLE V Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting by written action signed by a majority of the Board of Directors then in office, except as to those matters which require shareholder approval, in which case the written action shall be signed by all members of the Board of Directors then in office. ARTICLE VI No holder of stock of this corporation shall be entitled to any cumulative voting rights. ARTICLE VII No holder of stock of this corporation shall have any preferential, pre-emptive, or other rights of subscription to any shares of any class or series of stock of this corporation alloted or sold or to be alloted or sold and now or hereafter authorized, or to any obligations or securities convertible into any class or series of stock of this corporation, nor any right of subscription to any part thereof. IN WITNESS WHEREOF, the undersigned has set his hand this 31st day of December, 1996. ------------------------------------------ Toby Jensen, President EX-3.(II) 4 BY-LAWS Exhibit 3.2 Amended and Restated Bylaws of the Company AMENDED AND RESTATED BYLAWS OF LAMCOR, INCORPORATED ARTICLE 1. OFFICES Section 1. Principal Office. The principal office of the corporation shall be located in the City of LeSueur, County of LeSueur, State of Minnesota. Section 2. Registered Office. The registered office of the corporation may be the same as the principal office of the corporation, but in any event must be located in the State of Minnesota, as required by the Minnesota Business Corporation Act. Section 3. Other Business Offices. The corporation may have business offices at such other places, either within or without the State of Minnesota, as the Board of Directors may designate or as the business of the corporation may require from time to time. ARTICLE II. SHAREHOLDERS Section 1. Regular Meeting. Regular meetings of the shareholders of this corporation may be held at the discretion of the Board of Directors on an annual or less frequent periodic basis. The date, time and place of such meetings may be designated by the Board of Directors in the notices of meeting. At regular meetings the shareholders shall elect a Board of Directors and transact such other business as may be appropriate for action by shareholders. If a regular meeting of shareholders has not been held for a period of fifteen (15) months, one or more shareholders holding not less than three percent (3%) of the voting power of all shares of the corporation entitled to vote may call a regular meeting of shareholders by delivering to the President or Vice President written demand for a regular meeting. Within thirty (30) days after the receipt of such a written demand by the chief executive officer or chief financial officer, the Board of Directors shall cause a regular meeting of shareholders to be called. Such a meeting shall be held on notice no later than ninety (90) days after the receipt of such written demand. All of the expenses of this process shall be paid by the corporation. Section 2. Special Meetings of Shareholders. Special meetings of the shareholders, for any purpose or purposes may be called by the President or Vice President or by the Board of Directors, and shall be called by the President or Vice President at the request of the holders of not less than ten percent (10%) of all the outstanding shares of the corporation entitled to vote at the meeting. A special meeting for the purpose of considering any action to directly or indirectly facilitate or effect a business combination, including any action to change or otherwise affect the composition of the Board of Directors for that purpose, when called by shareholders, must be called by shareholders holding twenty-five (25%) or more of the voting power of all shares entitled to vote. Section 3. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Minnesota, as the place of meeting for any regular meeting or for any special meeting. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or without the State of Minnesota, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the corporation in the State of Minnesota. Section 4. Notice of Meetings of Shareholders. A. Regular Meetings and Special Meetings. Notice of the time and place of all regular and special meetings shall be mailed by the Secretary to each shareholder to the last known address of said shareholder as the same appears on the books of the corporation at least ten (10) days before the date of all regular and special meetings. In the event that a plan of merger or exchange is to be considered at a meeting of shareholders, notice of such meeting shall be given to every shareholder, whether or not entitled to vote, not less than fourteen (14) days prior to the date of such meeting. Such notice shall state the purpose of such meeting, and, where a plan of merger or exchange is to be considered, shall include a copy or a short description of the plan. B. Mailing. Every notice shall be deemed duly served when the same has been deposited in the United States mail, with postage fully prepaid, addressed to the shareholder at his, her or its address as it appears on the stock transfer books of the corporation. C. Waiver. Any shareholder may waive notice of any meeting of shareholders. Waiver of notice shall be effective whether given before, at, or after the meeting and whether given orally, in writing, or by attendance. Attendance of a person at a meeting of shareholders, in person or by proxy, shall constitute a waiver of such notice, except when attendance is for the express purpose of objecting to the transaction of any business, at the commencement of the meeting, because the meeting was not lawfully called or convened. Section 5. Quorum. A majority of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. Section 6. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his or her duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the corporation before or at the time of the meeting. Section 7. Voting of Shares. Each Outstanding share of capital stock of the corporation shall be entitled to one vote upon each matter submitted to a vote at a meeting of shareholders except as the Articles of Incorporation otherwise provide. ARTICLE III BOARD OF DIRECTORS Section 1. General Powers. The business, property and affairs of the corporation shall be managed by its Board of Directors. Section 2. Number. The number of Directors of the corporation shall be five (5). Section 3. Tenure. Each Director shall hold office until the next regular meeting of shareholders following his or her nomination in the Articles of Incorporation or his or her election, as the case may be, and until his or her successor shall have been duly elected and qualified, or until his or her prior death, resignation or removal. Section 4. Qualifications. Directors need not be residents of the State of Minnesota or shareholders of the corporation. Section 5. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after, and at the same place as, each regular meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, within or without the State of Minnesota, for the holding of additional regular meetings without other notice than such resolution. Section 6. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President, or in his or her absence, the Vice President, or any Director. The person or persons authorized to call special meetings of the Board of Directors may fix the place within or without the State of Minnesota for holding any special meeting of the Board of Directors called by them, and if no other place is fixed the place of meeting shall be the principal business office of the corporation in the State of Minnesota. All notices of special meetings shall state the purpose thereof. Section 7. Notice of Meetings. If the date, time, and place of a meeting of the Board of Directors has been announced at a previous meeting, no notice is required. In all other cases, however, at least three (3) days' notice of the meetings of the Board of Directors shall be given to each Director. Such notice shall state the date and time of the meeting and any other information required by law or desired by the person or persons calling such meeting. If notice of the meeting is required and such notice does not state the place of the meeting, such meeting shall be held at the principal executive office of the corporation. Notice of meetings of the Board of Directors shall be given to Directors in the same manner provided in these Bylaws for giving notice to shareholders of meetings of the shareholders. Any Director may waive notice of any meeting. A waiver of notice by a Director is effective whether given before, at, or after the meeting, and whether given orally, in writing, or by attendance. The attendance of a Director at any meeting shall constitute a waiver of notice of such meeting, unless such Director objects at the beginning of the meeting to the transaction of business on grounds that the meeting is not lawfully called or convened and does not participate thereafter in the meeting. Section 8. Quorum. A majority of the members of the Board shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such a majority is present at a meeting, a majority of the Directors present may adjourn the meeting from time to time without further notice. Section 9. Manner of Acting. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 10. Vacancies. Any vacancy occurring in the Board of Directors may be filled by appointment made by the remaining Directors. A Director elected to fill a vacancy shall be a Director until his or her successor is elected by the shareholders who may make such election at the next regular meeting of the shareholders, or at any special meeting duly called for that purpose and held prior thereto. Section 11. Removal of Directors. The entire Board of Directors or any Director or Directors may be removed from office, with or without cause, at any special meeting of the shareholders duly called for that purpose as provided in these Bylaws. Such a removal requires an affirmative vote of the shareholders holding a majority of the shares entitled to vote at an election of Directors. At such meeting, without further notice, the shareholders may fill any vacancy or vacancies created by such removal as provided in Section 10. In addition, any Director may be removed at any time, with or without cause, by the other members of the Board of Directors if: (i) the Director was appointed by the board to fill a vacancy; (ii) the shareholders have not elected Directors in the interval between the time of the appointment and the time of removal; and (iii) a majority of the remaining Directors present affirmatively vote to remove the Director, even though said remaining Directors may be less than a quorum. Section 12. Executive Committee. The Directors may by resolution appoint two or more members of the Board as an executive committee to manage the business of the corporation during the interim between meetings of the Board. Section 13. Action in Writing. Any action required or permitted to be taken at a meeting of the Board of Directors or of a lawfully constituted committee thereof, which requires the approval of the shareholders, may be taken by written action signed by all of the Directors then in office or by all of the members of such committee, as the case may be. However, if the Articles of Incorporation authorize written action by less than all the Directors and the action does not require shareholder approval, such action shall be effective if signed by the number of Directors or members of such committee that would be required to take the same action at a meeting at which all Directors or committee members were present. If any written action is taken by less than all Directors or members, all Directors or members shall be notified immediately of its text and effective date. The failure to provide such notice, however, shall not invalidate such written action. A Director who does not sign or consent to the written action has no liability for the action or actions taken thereby. Section 14. Meeting by Means of Electronic Communication. Members of the Board of Directors of the corporation, or any committee designated by such Board, may participate in a meeting of such Board or committee by means of conference telephone or similar means of communication by which all persons participating in the meeting can simultaneously hear each other. Such participation in a meeting pursuant to this Section shall constitute presence in person at such meeting. Meetings held pursuant to this Section, however, are still subject to the notice, quorum, and voting requirements as provided in Sections 7 and 8. ARTICLE IV OFFICERS Section 1. Number. The officers of this corporation shall be a President, a Vice President, a Secretary and a Treasurer. Any two offices, except those of President and Vice President, may be held by the same person. Officers need not be Directors. Section 2. Election and Term of Office. The officers of the corporation to be elected by the Board of Directors shall be elected by the Board of Directors at the regular meeting of the Board of Directors held immediately following each regular meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until his or her successor shall have been duly elected and shall have qualified or until his or her death or until he shall resign or shall have been removed in the manner hereinafter provided. Section 3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the corporation would be served thereby. Section 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. Section 5. President. The President shall be the principal executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the corporation. He shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the corporation as he shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the President. He shall have authority to sign, execute and acknowledge, on behalf of the corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the course of the corporation's regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, he may authorize any Vice President or other officer or agent of the corporation to sign, execute and acknowledge such documents or instruments in his or her place and stead. In general he shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. Section 6. Vice President. In the absence of the President or in the event of his or her death, inability or refusal to act, the Vice President shall perform the duties of President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Vice President shall perform such other duties as from time to time may be assigned to him or her by the President or by the Board of Directors. Section 7. Secretary. The Secretary shall: (a) keep the minutes of the shareholders' and of the Board of Directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) have general charge of the stock transfer books of the corporation; and (f) in general perform all duties incident to the office of Secretary arid such other duties as from time to time may be assigned to him or her by the President or by the Board of Directors. Section 8. Treasurer. If required by the Board of Directors, the Treasurer and any Assistant Treasurer selected by the Board of Directors shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. He shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of these Bylaws; and (b) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the President or by the Board of Directors. Section 9. Assistants and Acting Officers. The Assistant Secretaries and Assistant Treasurers, if any, selected by the Board of Directors, shall perform such duties and have such authority as shall, from time to time be delegated or assigned to them by the Secretary or Treasurer, respectively, or by the President or the Board of Directors. The Board of Directors shall have the power to appoint any person to perform the duties of an officer whenever for any reason it is impracticable for such officer to act personally. Such acting officer so appointed shall have the powers of and be subject to all the restrictions upon the officer to whose office he is so appointed except as the Board of Directors may by resolution otherwise determine. Section 10. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the corporation. Section 11. Filling More Than One Office. Any two offices of the corporation except those of President and Vice President may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity. ARTICLE V CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 1. Certificates for Shares. Certificates representing shares of the corporation shall be in such form, consistent with law, as shall be determined by the Board of Directors. Such certificates shall be signed by the President and the Secretary and sealed with the seal of the corporation. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and the date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled. Section 2. Restrictions on Transfer. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the corporation upon the transfer of such shares. Section 3. Lost, Destroyed or Stolen Certificates. Where the owner claims that his or her certificate for shares has been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof if the owner (a) so requests before the corporation has notice that such shares have been acquired by a bona fide purchaser, and (b) files with the corporation a sufficient indemnity bond, and (c) satisfies such other reasonable requirements as the Board of Directors may prescribe. ARTICLE VI DIVIDENDS Section 1. Declaration of Dividends. The Board of Directors may from time to time declare dividends on its outstanding shares upon the following terms and conditions: (a) Dividends may be declared from earned surplus upon shares of all classes, subject to restrictions, if any, contained in the Articles of Incorporation. (b) Dividends may be declared from any surplus upon preferred shares only; provided that if such a dividend is declared and paid from any surplus other than earned surplus, the shareholders receiving the dividend shall be advised of that fact at the time of payment to them and the next annual statement of accounts to be given to the shareholders shall indicate the surplus from which such dividend was paid; (c) Stock dividends may be declared from appreciation of the value of the assets of the corporation provided capital is not impaired; (d) In determining what is earned surplus, the judgment of the Board of Directors shall be conclusive unless it shall be shown that the Directors acted in bad faith or were grossly negligent. ARTICLE VII SEAL The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation and the words, "Corporate Seal." Use of such seal is not required. ARTICLE VIII AMENDMENTS These Bylaws may be altered, amended or repealed and new Bylaws may be adopted either by the affirmative vote of the shareholders representing a majority of all the shares issued and outstanding, at any regular or special shareholders' meeting or by the affirmative vote of the majority of the Board of Directors at any regular or special meeting, if a notice setting the terms of the proposal has been given in accordance with the notice requirements for special meetings of shareholders or for special meetings of Directors, whichever may be applicable. The Board of Directors may make and alter all Bylaws, except those Bylaws Fixing their number, qualifications, classifications, or term of office; provided, that any Bylaw amended, altered or repealed by the Director as provided herein may thereafter be amended, altered, or repealed by the shareholders. ARTICLE IX. FISCAL YEAR The fiscal year of the corporation shall begin on the first day of October in each year. These Amended and Restated Bylaws were adopted as and for the Bylaws for LAMCOR, INCORPORATED, a Minnesota corporation, by written action signed by all of the directors of the Company effective December 1, 1996. /s/ Leo Lund ------------------------------------------ Secretary EX-4.1 5 Exhibit 4.1 [Front of Certificate] [Border] Common Stock Number: Common Stock Shares: ----------------------- ----------------------- INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA LAMCOR INCORPORATED AUTHORIZED 10,000,000 SHARES COMMON STOCK NO PAR VALUE COMMON CUSIP 5134107 THIS CERTIFIES THAT IS THE OWNER OF FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK WITH NO PAR VALUE, OF ***LAMCOR INCORPORATED*** TRANSFERABLE ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN PERSON OR BY DULY AUTHORIZED ATTORNEY ON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED. THIS CERTIFICATE IS NOT VALID UNLESS COUNTERSIGNED BY THE TRANSFER AGENT AND REGISTRAR. WITNESS THE FACSIMILE SIGNATURES OF ITS DULY AUTHORIZED OFFICERS. Dated: _____________ /s Leo W. Lund s/ Toby Jensen -------------- -------------- Secretary President CORPORATE STOCK TRANSFER, INC. ------------------------ Transfer Agent Authorized Signature [Back of Certificate] FOR VALUE RECEIVED _____ HEREBY SELL, ASSIGN, AND TRANSFER UNTO: ------------------------------------------------------------------------------- (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE) SHARES OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT ____________________________, ATTORNEY, TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE PREMISES. DATED: ______________________ EX-4.2 6 SHAREHOLDER VOTING AGREEMENT Exhibit 4.2 Form of Shareholder Voting Agreement SHAREHOLDER VOTING AGREEMENT THIS SHAREHOLDER VOTING AGREEMENT (this "Agreement") is made and entered into as of September ___, 1996 by and between Packaging Acquisition Corporation, a Georgia corporation ("Buyer"), Lamcor, Incorporated, a Minnesota corporation ("Lamcor"), and the undersigned (the "Shareholder"). WHEREAS, the Shareholder desires that Buyer, LI Acquisition Corporation, a wholly owned subsidiary of Buyer ("Sub"), and Lamcor enter into an Agreement and Plan of Merger dated the date hereof (as the same may be amended or supplemented, the "Merger Agreement") with respect to the merger of Sub with and into Lamcor (the "Merger"); and WHEREAS, the Shareholder and Lamcor are executing this Agreement as an inducement to Buyer to enter into and execute, and to cause Sub to enter into and execute the Merger Agreement; NOW, THEREFORE, in consideration of the execution and delivery by Buyer and Sub of the Merger Agreement and the mutual covenants, conditions and agreements contained herein and therein, the parties agree as follows: 1. REPRESENTATIONS AND WARRANTIES. The Shareholder represents and warrants to Buyer as follows: (a) The Shareholder is the record and beneficial owner of the number of shares (such "Shareholder's Shares") of common stock, no par value, of Lamcor ("Lamcor Stock") set forth below such Shareholder's name on the signature page hereof Except for the Shareholder's Shares, the Shareholder is not the record or beneficial owner of any shares of Lamcor Stock: This Agreement has been duly authorized, executed and delivered by, and constitutes a valid and binding agreement of, the Shareholder, enforceable in accordance with its terms. (b) Neither the execution and delivery of this Agreement nor the consummation by the Shareholder of the transactions contemplated hereby will result in a violation of, or a default under, or conflict with, any contract, trust, commitment, agreement, understanding, arrangement or restriction of any kind to which the Shareholder is a party or bound or to which the Shareholder's Shares are subject. If the Shareholder is married and the Shareholder's Shares constitute community property, this Agreement has been duly executed and delivered by, and constitutes a valid and binding agreement of, the Shareholder's spouse, enforceable against such person in accordance with its terms, and reference herein to "Shareholder" shall, unless the context clearly requires otherwise, also mean and include such spouse. Consummation by the Shareholder of the transactions contemplated hereby will not violate, or require any consent, approval, or notice under, any provision of any judgment, order, decree, statute, law, rule or regulation applicable to the Shareholder or the Shareholder's Shares. (c) The Shareholder's Shares and the certificates representing such Shareholder's Shares are now, and at all times during the term hereof will be, held by the Shareholder, or by a nominee or custodian for the benefit of such Shareholder, free and clear of all liens, claims, security interests, proxies, voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever, except for any such encumbrances or proxies arising hereunder. (d) No broker, investment banker, financial adviser or other person is entitled to any broker's, finder's, financial adviser's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Shareholder. (e) The Shareholder understands and acknowledges that Buyer is entering into, and causing Sub to enter into, the Merger Agreement in reliance upon the Shareholder's execution and delivery of this Agreement. The Shareholder acknowledges that the irrevocable proxy set forth in Section 4 is granted in consideration for the execution and delivery of the Merger Agreement by Buyer and Sub. 2. VOTING AGREEMENTS. The Shareholder agrees with, and covenants to, Buyer as follows: (a) At any meeting of Shareholders of Lamcor called to vote upon the Merger and the Merger Agreement or at any adjournment thereof or in any other circumstances upon which a vote, consent or other approval with respect to the Merger and the Merger Agreement is sought (the "Shareholders' Meeting"), the Shareholder shall vote (or cause to be voted) the Shareholder's Shares in favor of the Merger, the execution and delivery by Lamcor of the Merger Agreement, and the approval of the terms thereof and each of the other transactions contemplated by the Merger Agreement. (b) At any meeting of Shareholders of Lamcor or at any adjournment thereof or in any other circumstances upon which their vote, consent or other approval is sought, the Shareholder shall vote (or cause to be voted) such Shareholder's Shares against (i) any merger agreement or merger (other than the Merger Agreement and the Merger), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by Lamcor or (ii) any amendment of Lamcor 5 Articles of Incorporation or Bylaws or other proposal or transaction involving Lamcor or any of its subsidiaries which amendment or other proposal or transaction would in any manner impede, frustrate, prevent or nullify the Merger, the Merger Agreement or any of the other transactions contemplated by the Merger Agreement (each of the foregoing in clause (i) or (ii) above, a "Competing Transaction"). 3. COVENANTS. The Shareholder agrees with, and covenants to, Buyer as follows: (a) The Shareholder shall not (i) transfer (which term shall include, without limitation, for the purposes of this Agreement, any sale, offer for sale, solicitation of offer to purchase, gift, pledge or other disposition), or consent to any transfer of; any or all of the Shareholder's Shares or any interest therein, except pursuant to the Merger; (ii) enter into or agree to enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of such Shareholder's Shares or any interest therein, (ill) grant any proxy, power of attorney or other authorization in or with respect to such Shareholder's Shares, except for this Agreement, or (iv) deposit such Shareholder's Shares into a voting trust or enter into or agree to enter into a voting agreement or arrangement with respect to such Shareholder's Shares; provided, however, that the Shareholder may transfer (as defined above) any of the Shareholder's Shares to any other person who is on the date hereof; or to any family member of a person or charitable institution which prior to the Shareholders Meeting and prior to such transfer becomes, a party to this Agreement bound by all the obligations of the "Shareholder" hereunder. (b) If a majority of the holders of Lamcor Stock approve the Merger and the Merger Agreement, the Shareholder's Shares shall, pursuant to the terms of the Merger Agreement, be exchanged for the consideration provided in the Merger Agreement. The Shareholder hereby waives any rights of appraisal, or rights to dissent from the Merger, that such Shareholder may have. (c) The Shareholder shall not, nor shall it permit any person who is an adviser or representative of the Shareholder to, directly or indirectly, alone or in concern with others (i) solicit, initiate or encourage the submission of; any Takeover Proposal (as defined below) or (ii) participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Takeover Proposal; provided, however, that such restrictions shall not apply to the extent required by the fiduciary duties of the Shareholder arising out of his or her status as a director of Lamcor Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding sentence by any person who is an adviser or representative of the Shareholder, whether or not such person is purporting to act on behalf of the Shareholder, shall be deemed to be in violation of this Section 3(c) by the Shareholder. For all purposes hereof; "Takeover Proposal" means any proposal for a merger, consolidation, share exchange or other business combination involving Lamcor or any of its subsidiaries or any proposal, tender or other offer to acquire in any manner, directly or indirectly, an equity interest in any voting securities of; or a substantial portion of the assets of Lamcor or any of its subsidiaries, other than the Merger and the other transactions contemplated by the Merger Agreement. 4. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY. (a) The Shareholder hereby irrevocably grants to, and appoints, Buyer and Allen D. Barnes, President of Buyer, and William C. Beddingfield, Executive Vice President, Treasurer and Secretary of Buyer, in their respective capacities as officers of Buyer, and any individual who shall hereafter succeed to any such office of Buyer, and each of them individually, the Shareholder's proxy and attorney-in-fact (with frill power of substitution), for and in the name, place and stead of the Shareholder, to vote the Shareholder's Shares, or grant a consent or approval in respect of such Shareholder's Shares (i) in favor of the Merger, the execution and delivery of the Merger Agreement and approval of the terms thereof and each of the other transactions contemplated by the Merger Agreement and (ii) against any Competing Transaction. (b) The Shareholder represents that any proxies heretofore given in respect of the Shareholder's shares are not irrevocable, and that any such proxies are hereby revoked. (c) The Shareholder hereby affirms that the irrevocable proxy set forth in this Section 4 is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of the Shareholder under this Agreement. The Shareholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked. The Shareholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 302A.449 of the Minnesota Business Corporation Act. 5. CERTAIN EVENTS. The Shareholder agrees that this Agreement and the obligations hereunder shall attach to the Shareholder's Shares and shall be binding upon any person or entity to which legal or beneficial ownership of such Shareholder's Shares shall pass, whether by operation of law or otherwise, including without limitation the Shareholder's successors or assigns. In the event of any stock split, stock dividend, merger, reorganization, recapitalization or other change in the capital structure of Lamcor affecting the Lamcor Stock, or the acquisition of additional shares of Lamcor Stock or other voting securities of Lamcor by any Shareholder, the number of Shareholder's Shares subject to the terms of this Agreement shall be adjusted appropriately and this Agreement and the obligations hereunder shall attach to any additional shares of Lamcor Stock or other voting securities of Lamcor issued to or acquired by the Shareholder. 6. STOP TRACER. Lamcor agrees with, and covenants to, Buyer that Lamcor shall not register the transfer of any certificate representing any of the Shareholder's Shares, unless such transfer is made to Buyer or Sub or otherwise in compliance with this Agreement. The Shareholder agrees that the Shareholder will tender to Lamcor, within five business days after the date thereof; any and all certificates representing such Shareholder's Shares and Lamcor will inscribe upon such certificates the following legend: "The shares of Common Stock, no par value, of Lamcor, Incorporated represented by this certificate are subject to a Shareholder Voting Agreement dated as of __________, 1996, and may not be sold or otherwise transferred, except in accordance therewith. Copies of such Agreement may be obtained at the principal executive offices of Lamcor, Incorporated." In the event that this Agreement is terminated in accordance with Section 9 hereof; Lamcor or its legal counsel may cause the foregoing legend to be removed from such certificates. 7. REGULATORY APPROVALS. Each of the provisions of this Agreement is subject to compliance with applicable regulatory conditions and receipt of any required regulatory approvals. 8. FURTHER ASSURANCES. The Shareholder shall, upon request of Buyer, execute and deliver any additional documents and take such further actions as may reasonably be deemed by Buyer to be necessary or desirable to carry out the provisions hereof and to vest the power to vote such Shareholder's Shares as contemplated by Section 4 in Buyer and the other irrevocable proxies described therein at the expense of Buyer. 9. TERMINATION. This Agreement, and all rights and obligations of the parties hereunder, shall terminate upon the first to occur of (x) the Effective Time of the Merger or (y) the date upon which the Merger Agreement is terminated in accordance with its terms. 10. MISCELLANEOUS. (a) Capitalized terms used and not otherwise defined in this Agreement shall have the respective meanings assigned to them in the Merger Agreement. (b) All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally or sent by overnight courier (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): (i) if to Buyer, to the address set forth in Section 11.8 of the Merger Agreement; and (ii) if to the Shareholder; to its address shown below its signature on the last page hereof. (c) The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. (d) This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement. (e) This Agreement (including the documents and instruments referred to herein) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. (f) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Minnesota, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. (g) Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise, by any of the parties without the prior written consent of the other parties, except as expressly contemplated by Section 3(a). Any assignment in violation of the foregoing shall be void. (h) The Shareholder agrees that irreparable damage would occur and that Buyer would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that Buyer shall be entitled to an injunction or injunctions to prevent breaches by the Shareholder of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of Minnesota or in Minnesota state court, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the parties hereto (i) consents to submit such party to the personal jurisdiction of any Federal court located in the State of Minnesota or any Minnesota state court in the event any dispute arises out of this Agreement or any of the transactions contemplated hereby, (ii) agrees that such Party will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees that such party will not bring any action relating to this Agreement or any of the transactions contemplated hereby in any court other than a Federal court sitting in the State of Minnesota or a Minnesota state court. (i) If any term, provision, covenant or restriction herein, or the application thereof to any circumstance, shall, to any extent, be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions herein and the application thereof to any other circumstances, shall remain in frill force and effect, shall not in any way be affected, impaired or invalidated, and shall be enforced to the fullest extent permitted by law. (j) No amendment, modification or waiver in respect of this Agreement shall be effective against any party unless it shall be in writing and signed by such party. IN WITNESS WHEREOF, the undersigned parties have executed and delivered this Shareholder Voting Agreement as of the day and year first above written. PACKAGING ACQUISITION CORPORATION By ------------------------------------- President LAMCOR, INCORPORATED By ------------------------------------- President SHAREHOLDER: ----------------------------------------- Name: ----------------------------------- Address: -------------------------------- Number of Shares Beneficially Owned: --------------------- EX-4.3 7 ESCROW AGREEMENT Exhibit 4.3 Form of Escrow Agreement ESCROW AGREEMENT THIS ESCROW AGREEMENT (this "Agreement") is made as of January __, 1997 by and among PACKAGING ACQUISITION CORPORATION, a Georgia corporation ("Buyer"), LAMCOR, INCORPORATED ("Lamcor"), DAVID P. STEWART (the "Shareholders' Representative"), on behalf of the shareholders of Lamcor and the holders of Lamcor Options and Lamcor Convertible Securities (as such terms are defined in the Merger Agreement referenced below), and Norwest Bank Minnesota, N.A. (the "Escrow Agent"). BACKGROUND A. Contemporaneously with the execution and delivery hereof, Buyer has acquired Lamcor pursuant to the merger of LI Acquisition Corporation, a wholly owned subsidiary of Buyer ("Sub"), with and into Lamcor pursuant to the terms of that certain Agreement and Plan of Merger dated as of September 30, 1996 (the "Merger Agreement") among Buyer, Lamcor and Sub. Capitalized terms used but not defined herein shall have the meaning set forth in the Merger Agreement. B. The Merger Agreement contemplates the establishment of an escrow fund to satisfy claims by Buyer against Lamcor for (i) the breach or inaccuracy of any representation or warranty of Lamcor contained in the Merger Agreement, (ii) the failure of Lamcor to perform any covenant or agreement of Lamcor under the Merger Agreement and (iii) all Lamcor Expenses in excess of $275,000.00. C. Pursuant to the Merger Agreement, the shareholders of Lamcor (the "Shareholders") have appointed the Shareholders' Representative as their respective agent and attorney-in-fact to execute and deliver this Escrow Agreement on their behalf and to act for them hereunder. Pursuant to Option Cancellation and Purchase Agreements between Lamcor and each holder of Lamcor Options or Lamcor Convertible Securities (together with the Shareholders, the "Holders"), such holders have appointed the Shareholders' Representative as their respective agent and attorney-in-fact to execute and deliver this Escrow Agreement on their behalf and to act for them hereunder. D. Escrow Agent is willing to accept the escrow fund and to hold and distribute the escrow fund in accordance with the terms and conditions set forth herein. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Appointment of Escrow Agent. Lamcor, Buyer and the Shareholders' Representative hereby designate and appoint Escrow Agent to serve as escrow agent hereunder, and Escrow Agent hereby confirms its agreement to act as escrow agent upon the terms, conditions, and provisions of this Agreement. 2. Creation of Escrow Fund. Concurrently with the execution and delivery of this Agreement, the Exchange Agent has deposited with Escrow Agent on behalf of the Holders the sum of Two Hundred Thirty One Thousand Eight Hundred Seventy Eight and 04/100 Dollars ($231,878.04) (the "Escrowed Funds") to satisfy claims by Buyer against Lamcor for (i) the breach or inaccuracy of any representation or warranty of Lamcor contained in the Merger Agreement, (ii) the failure of Lamcor to perform any covenant or agreement of Lamcor under the Merger Agreement and (iii) all Lamcor Expenses in excess of $275,000.00, subject to the limitations of Section 11.15 of the Merger Agreement. The Escrowed Funds shall be invested as set forth in SCHEDULE A. Any investment income earned on the Escrowed Funds shall be added to and shall become a part of the Escrowed Funds. The Escrowed Funds are to be held, administered, and paid by Escrow Agent as provided herein. Escrow Agent acknowledges receipt of the Escrowed Funds and agrees to hold, administer, and pay the same in accordance with the terms of this Agreement and not permit any withdrawal thereof except pursuant to the terms hereof. 3. Claims Against Escrowed Funds. At any time prior to the close of business on the first anniversary hereof (the "First Anniversary"), the Buyer may give to Escrow Agent an Indemnification Claim, with a copy being contemporaneously delivered to the Shareholders' Representative. The Shareholders' Representative shall have thirty (30) days following receipt of such Indemnification Claim by the Escrow Agent to give to Escrow Agent a written objection thereto (the "Objection"), with a copy being contemporaneously delivered to Buyer. If no Objection is timely given to the Escrow Agent by the Shareholders' Representative, such Indemnification Claim is an "Uncontested Claim." If an Objection is timely given to the Escrow Agent by the Shareholders' Representative, such Claim is a "Contested Claim." The Buyer may withdraw, either wholly or partially, and either before or after the filing of an Objection, any Indemnification Claim filed by Buyer hereunder, and the Shareholders' Representative may withdraw, either wholly or partially, any Objection timely filed by it hereunder. Any such Withdrawal Notice shall be in writing and shall be given by the party making such withdrawal to the other parties hereto. 4. Arbitration. (a) Any Contested Claim that cannot be resolved by the Buyer and the Shareholders' Representative within twenty (20) days after Buyer's receipt of an Objection thereto, shall be submitted to arbitration in accordance with this Section 4 and such arbitration shall be the sole remedy for such matter. Such arbitration shall be heard and conducted at a place in the metropolitan Minneapolis, Minnesota area as may be specified by the arbitrator (or any place agreed to by Buyer, the Shareholders' Representative and the arbitration panel), and shall be conducted expeditiously and confidentially in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA"), as such rules shall be in effect on the date of delivery of demand for arbitration, with the exception that the arbitration panel may not award any punitive or exemplary damages or any damages other than compensatory, and except as such rules may be otherwise inconsistent with the express provisions of this Section 4. (b) To initiate arbitration, either Buyer or the Shareholders' Representative shall file a written demand for arbitration by filing a written notice with the AAA and with the other party, complying with the AAA's prescribed procedures for such notices. Within fifteen (15) days of delivery of such demand for arbitration, each party shall appoint one arbitrator, and the arbitrators so selected shall, within fifteen (15) days of their appointment, appoint an additional arbitrator. In the event that the arbitrators selected by the parties are unable to agree upon the selection of the additional arbitrator after reasonable efforts within such fifteen (15) day period, a list of seven (7) qualified and available persons shall be requested from the AAA. The parties shall take turns striking one person each from the list with the last remaining person being the additional selected arbitrator. Once selected, the arbitration panel shall meet as expeditiously as possible, select a chairman, schedule the arbitration hearing, and notify the parties in writing of the date, time and place of the hearing. (c) All conclusions of law reached by the arbitrators shall be made in accordance with the internal laws of the State of Georgia without regard for its conflict of laws doctrine. Any award rendered by the arbitrators shall be accompanied by a written opinion setting forth the findings of fact and conclusions of law relied upon in reaching their decision. The award rendered by the arbitrators shall be final, binding and non-appealable, and judgment upon such award may be entered by any court having jurisdiction thereof. The parties agree that the existence, conduct and content of any such arbitration shall be kept confidential and no party shall disclose to any person any information about such arbitration, except as may be required by this Agreement, by law or for financial reporting purposes. (d) All costs and expenses incurred in connection with any such arbitration proceeding (including reasonable attorneys fees) shall be borne by the party against which the decision is rendered, or , if no decision is rendered, such costs and expenses shall be borne equally by Lamcor as one party and the Holders as the other party. If the arbitrators' decision is a compromise, the determination of which party or parties bears the costs and expenses incurred in connection with any such arbitration proceeding shall be made by the arbitrators on the basis of the arbitrators' assessment of the relative merits of the parties' positions. 5. Tentatively Impounded Funds. With respect to each Indemnification Claim received by Escrow Agent, Escrow Agent shall make a notation on its records setting aside from the Escrowed Funds the amount asserted by the Buyer as a Loss (the "Tentatively Impounded Funds"). Upon notification of determination of the exact amount of the Loss with respect to each Indemnification Claim (whether by Notice of Release or by Award Notice), the Tentatively Impounded Funds shall be decreased or increased by the Escrow Agent as necessary to reflect the difference (if any) between the amount of the Loss asserted in the Indemnification Claim and the amount of the Loss actually payable to the Buyer asserting the Indemnification Claim pursuant to Section 6 hereof. 6. Disbursement of Escrowed Funds. Escrow Agent shall pay and disburse the Escrowed Funds and the Tentatively Impounded Funds as follows: (a) If the Indemnification Claim is an Uncontested Claim, then to Buyer in the amount of the Indemnification Claim; (b) If the Indemnification Claim is a Contested Claim and the Shareholders' Representative delivers a Withdrawal Notice to Escrow Agent with respect to such Contested Claim, then to Buyer in the amount of the Indemnification Claim to which such Objection was withdrawn; (c) If a Notice of Release is received by the Escrow Agent with respect to a Contested Claim, then as specified in such Notice of Release; (d) If an Award Notice is received by the Escrow Agent with respect to an Indemnification Claim, then as specified in such Award Notice; (e) To the Shareholders' Representative prior to the First Anniversary in an amount specified in a written notice from Buyer to the Escrow Agent in accordance with the provisions of Section 11.16(e) of the Merger Agreement and Section 6(e) of the Option Cancellation Agreements; (f) With respect to the excess of the then remaining balance of the Escrowed Funds over the sum of Tentatively Impounded Funds, as of the close of business on the First Anniversary, to the Escrow Agent or Buyer and/or Holders in an amount equal to the amount of the Section 10 Expenses described in a written notice from the Buyer and the Shareholder's Representative to the Escrow Agent; (g) With respect to the excess of the then remaining balance of the Escrowed Funds over the sum of Tentatively Impounded Funds, as of the close of business on the First Anniversary, to the Shareholders' Representative in an amount equal to the amount of Representative's Expenses described in a written notice from the Shareholder's Representative to the Escrow Agent, less any amount disbursed to the Escrow Agent pursuant to Section 6(f) above; (h) To each of the Holders, in Proportionate Shares, following the First Anniversary in an amount equal to the amount by which the then remaining balance of the Escrowed Funds exceeds the sum of Tentatively Impounded Funds, as of the close of business on the First Anniversary, less any amount disbursed to the Escrow Agent pursuant to Section 6(f) above and any amount disbursed to the Shareholders' Representative pursuant to Section 6(g) above; and (i) To each of the Holders, in Proportionate Shares, and/or the Buyer as set forth in any Notice of Release or Award Notice received by Escrow Agent after the First Anniversary. All disbursements hereunder shall be made by Escrow Agent within three (3) business days following the events described above. All payments that are to be made to the Holders hereunder shall be delivered by Escrow Agent to the Shareholders' Representative, who agrees to promptly distribute any such funds received by him to the Holders in their respective Proportionate Shares. 7. Escrow Agent's Duties. Escrow Agent shall be obligated to perform only such duties as are expressly set forth in this Escrow Agreement and the Schedules hereto, and shall not be required, in carrying out its duties under this Escrow Agreement, to refer to the Merger Agreement or determine or verify any party's compliance with the terms of the Merger Agreement. The Escrow Agent may conclusively rely upon and shall be protected in acting upon any statement, certificate, notice, request, consent, order or other document believed by it be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall have no duty or liability to verify any such statement, certificate, notice, request, consent, order or other document, and its sole responsibility shall be to act only as expressly set forth in this Agreement. The Escrow Agent shall be under no obligation to institute or defend any action, suit or proceeding in connection with this Agreement unless first indemnified to its satisfaction. The Escrow Agent may consult counsel in respect of any question arising under this Agreement and the Escrow Agent shall not be liable for any action taken or omitted in good faith upon advice of such counsel. 8. Remedies of Escrow Agent. (a) In the event of any disagreement or controversy hereunder, or if conflicting demands or notices are made upon Escrow Agent, or in the event Escrow Agent in good faith is in doubt as to what action it should take hereunder, the parties expressly agree and consent that Escrow Agent shall have the absolute right, at its option, to do either or both of the following things: (i) stop all further proceedings in, and performance of, this Agreement and of all instructions received hereunder; and (ii) file a suit in interpleader and obtain an order from a court of competent jurisdiction requiring all persons involved to interplead their several claims and rights among themselves and with Escrow Agent. (b) While any interpleader proceeding arising out of or relating to this Agreement is pending, whether the same be initiated by Escrow Agent or by others, Escrow Agent shall have the right, at its option, to stop all further proceedings in, and performance of, this Agreement and instructions received hereunder until all differences shall have been resolved by agreement or until the rights of all parties shall have been fully and finally determined by the interpleader proceedings. The rights of Escrow Agent under this Section 8 are in addition to all other rights which it may have by law or otherwise. 9. Escrow Agent's Fees and Expenses. The reasonable compensation of Escrow Agent as set forth in SCHEDULE B hereto shall be paid by Buyer. 10. Indemnification. Buyer and the Holders, jointly and severally, agree to indemnify, protect and save and hold Escrow Agent and its successors and assigns harmless from all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs and expenses (including reasonable attorneys' fees) of whatsoever kind or nature imposed on, incurred by or asserted against Escrow Agent which in any way relate to or arise out of the execution and delivery of this Agreement or any action taken hereunder; provided, however, that neither Buyer nor any Holder shall have any such obligation to indemnify and save and hold Escrow Agent harmless from any liability incurred by, imposed upon or asserted against Escrow Agent resulting from the gross negligence or bad faith of Escrow Agent. 11. Resignation by or Termination of Escrow Agent. Escrow Agent may resign as such by delivering written notice to such effect at least thirty (30) days prior to the effective date of such resignation to Buyer and the Shareholders' Representative. Buyer and the Shareholders' Representative, acting jointly, may terminate Escrow Agent from its position as such by delivering written notice to Escrow Agent to such effect executed by Buyer and the Shareholders' Representative at least thirty (30) days prior to the effective date of such termination (unless such termination is as a result of Escrow Agent's breach of its obligations hereunder, in which case the effective date of such termination shall be any date specified in such notice by Buyer and the Shareholders' Representative). In the event of such resignation by or termination of Escrow Agent, a successor Escrow Agent shall be appointed by mutual agreement between Buyer and the Shareholders' Representative, and Escrow Agent which has been so terminated or has so resigned shall promptly deliver to the successor Escrow Agent the entire Escrowed Funds (together with copies of all records pertaining thereto) upon presentation of evidence reasonably satisfactory to it of the appointment and authorization of such successor Escrow Agent by Buyer and the Shareholders' Representative. From and after the appointment of a successor Escrow Agent pursuant to this Section 11, all references herein to Escrow Agent shall be deemed to be to such successor Escrow Agent. Should Buyer and the Shareholders' Representative fail to appoint a successor Escrow Agent within thirty (30) days of the effective date of any resignation or termination pursuant to this Section 11, then Escrow Agent may institute suit in a court of competent jurisdiction to have a successor Escrow Agent appointed. 12. Definitions. As used herein: (a) "AWARD NOTICE" means a true copy of the award of the arbitrators entered in any dispute resolved by arbitration pursuant to Section 4. (b) "INDEMNIFICATION CLAIM" means a written declaration by the Buyer stating (i) that the Buyer has a right to assert an Escrow Claim under the Merger Agreement, (ii) the facts, circumstances or events giving rise to such Escrow Claim, and (iii) the amount of the asserted Loss. (c) "NOTICE OF RELEASE" means a written declaration, executed by Buyer and the Shareholders' Representative, specifying the resolution of a Contested Claim and the disposition to be made of the Escrowed Funds or any portion thereof that was the subject of such Contested Claim. (d) "OBJECTION" means a written objection by the Shareholders' Representative to an Indemnification Claim stating in reasonable detail the basis for such objection. (e) "PROPORTIONATE SHARES" means the respective interest of each Holder in any amount disbursed to the Holders hereunder, which interest shall be equal to a fraction, the numerator of which shall be the sum of (i) the number of such Holder's shares of Lamcor Common Stock converted into and exchanged for the right to receive a cash payment from Buyer in accordance with Section 3.1(c) of the Merger Agreement and (ii) the number of shares of Lamcor Common Stock subject to such Holder's Lamcor Options or Lamcor Convertible Securities canceled pursuant to Section 3.5 of the Merger Agreement, and the denominator of which shall be the sum of (i) the aggregate number of shares of Lamcor Common Stock so converted and exchanged and (ii) the aggregate number of shares of Lamcor Common Stock subject to Lamcor Options or Lamcor Convertible Securities so canceled. (f) "SECTION 10 EXPENSES" means all amounts paid or payable by Buyer and/or Holders to the Escrow Agent in accordance with Section 10 hereof. (g) "WITHDRAWAL NOTICE" means an irrevocable written declaration (x) withdrawing an Indemnification Claim executed by the Buyer, or (y) withdrawing an Objection executed by the Shareholders' Representative. 13. General Provisions. (a) Assignment. Neither this Agreement nor any right or benefit of any party hereunder may be assigned or transferred by such party without the prior written consent of all other parties hereto. (b) Amendment. This Agreement may not be amended or modified without the prior written consent of all parties. (c) Waiver. Failure to insist upon strict compliance with any of the terms or conditions of this Agreement at any one time shall not be deemed a waiver of such term or condition at any other time; nor shall any waiver or relinquishment of any right or power granted herein at any time be deemed a waiver or relinquishment of the same or any other right or power at any other time. (d) Governing Law. Notwithstanding the place where this Agreement may be executed by any of the parties, the parties expressly agree that this Agreement shall in all respects be governed by, and construed in accordance with, the laws of the State of Georgia, without regard for its conflict of laws doctrine. (e) Notices. Any notice or other communication to be given hereunder shall be in writing and shall be deemed sufficient when (i) mailed by United States certified mail, return receipt requested, (ii) mailed by overnight express mail, (iii) delivered in person or (iv) transmitted by telecopy, at the address or telecopy number set forth below, or such other address as a party may provide to the other in accordance with the procedure for notices set forth in this Section: If to the Buyer or Lamcor: Lamcor, Incorporated Highway 169 North Le Sueur, Minnesota 56058 Attn: Special Committee of the Board of Directors Telephone: (612) 665-6658 Telecopy: (612) 665-6390 with a copy (which shall not constitute notice) to: Alston & Bird 1201 West Peachtree Street Atlanta, Georgia 30309-3424 Attention: Teri L. McMahon, Esq. Telephone: (404) 881-7266 Telecopy: (404) 881-7777 If to the Shareholders' Representative: David P. Stewart 4900 First Bank Place 601 Second Avenue South Minneapolis, Minnesota 55402 Telephone: (612) 341-9395 Telecopy: (612) 341-2835 with a copy (which shall not constitute notice) to: Gray, Plant, Mooty, Mooty & Bennett, P.A. 3400 City Center 33 South Sixth Street Minneapolis, Minnesota 55402-3796 Attention: Bruce McPheeters, Esq. Telephone: (612) 343-2866 Telecopy: (612) 333-0066 If to Escrow Agent: Norwest Bank Minnesota, N.A. Norwest Bank Investment Management Trust 6th & Marquette Minneapolis, Minnesota 55479 Attn: William Bard Telephone (612) 667-571 Telecopy: (612) 667-5767 (f) Invalid Provision. If any provision of this Agreement shall be determined to be invalid or unenforceable, this Agreement shall be deemed amended to delete such provision and the remainder of this Agreement shall be enforceable by its terms. (g) Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. (h) Further Assurances. Each party agrees to execute and deliver all such further instruments and do all such further acts as may be reasonably necessary or appropriate to effectuate this Agreement. (i) Headings. Headings and captions contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, extend or prescribe the scope of this Agreement or the intent of any provision. (j) Person and Gender. The masculine gender shall include the feminine and neuter genders and the singular shall include the plural. (k) Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to matters set forth in this Agreement, and supersedes any prior understanding or agreement, oral or written, with respect to such matters. (l) Interpretations. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any party hereto, whether under any rule of construction or otherwise. No party shall be considered the draftsman. On the contrary, this Agreement has been reviewed, negotiated and accepted by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto. (m) Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all such counterparts shall constitute one and the same Agreement, binding on all the parties notwithstanding that all the parties are not signatories to the same counterpart. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. PACKAGING ACQUISITION LAMCOR INCORPORATED CORPORATION By:____________________________________ By_________________________________ Name:__________________________________ Name:______________________________ Title:_________________________________ Title:_____________________________ NORWEST BANK MINNESOTA, N.A., as Escrow Agent By:________________________________ Name:______________________________ Title:_____________________________ ----------------------------------- David P. Stewart, as Shareholders' Representative ----------------------------------- David P. Stewart, as attorney-in-fact for the Holders SCHEDULE A The Escrowed Funds shall be invested in the Norwest Ready Cash Investment Fund Institutional Shares (a money market fund). SCHEDULE B The fees and expenses of the Escrow Agent include a one-time fee of $3,000.00, plus reimbursement of reasonable out-of-pocket expenses of the Escrow Agent incurred in connection with this Agreement and approved in advance by Buyer. EX-10.1 8 STOCK OPTION INCENTIVE PLAN Exhibit 10.1 STOCK OPTION INCENTIVE PLAN LAMCOR INCORPORATED 1. Purpose The purpose of this Plan is to further the growth and general prosperity of Lamcor Incorporated, the Company, by enabling the key employees and Directors of the Company, who have been or will be given responsibility for the affairs of the Company, to acquire shares of its common stock under the terms and conditions and in the manner set forth by this Plan, increasing their personal involvement in the Company and to enable the Company to obtain and retain the services of those employees and Directors. 2. Administration This Plan shall be administered by the Chairman of the Board of Directors (CB) of the Company, subject to such orders and resolutions not inconsistent with the provisions of the Plan, the resolutions will from time to time be issued or adopted by the Board of Directors. The CB shall have full power and authority to interpret the Plan, although each participant and the options awarded in the Plan shall be approved by the Board of Directors. Each option granted will be evidenced by a written agreement (Stock Option Agreement) and a document containing the terms and conditions of the Plan. 3. Eligibility and Participation Employees and Directors eligible to receive options under the Plan shall be key personnel including officers and members of the Board of Directors. The CB shall allot to such participants options to purchase shares in such amount as the Board of Directors shall from time to time determine: provided, however, that no employee shall be allotted an option for any greater number of shares than would result in him owning directly or indirectly more than 10% of the total combined voting power or value of the stock of the Company or any of its subsidiaries unless the option price is at least the market value of the stock on the date of the grant, and the option is by its terms not exercisable after six years from the date of grant. 4. Shares Subject to Plan Subject to adjustments provided in section 5, an aggregate of up to 700,000 of the authorized and unissued shares of the common stock of the Company shall be subject to the Plan as of the date the Plan is adopted. The number and kind of shares shall be appropriately adjusted in the event of stock splits, reverse stock splits or stock dividends paid or declared with respect to the stock. If prior to the termination of the Plan, shares issued shall have been repurchased by the Company pursuant to the Plan, such repurchased shares shall again become available for issuance under the Plan. Any shares which, after the effective date of the Plan shall become subject to valid outstanding options under the Plan may, to the extent of the release of any such shares from option by termination or expiration of option without valid exercise be made subject to additional options under the Plan. 5. Adjustments Upon Changes in Capitalization In the event of a merger, consolidation, reorganization, stock dividend, stock split, or any other change in corporate structure or capitalization affecting the Company's common shares, appropriate adjustment shall be made in the maximum number of shares available under the Plan or to any one individual and in the number, kind, option, price, etc. of shares subject to options granted under the Plan. 6. Terms and Conditions of Options The CB as approved by the Board of Directors shall have power subject to the limitations contained in the Plan, to prescribe any terms and conditions in respect to the granting or exercise of any option under the Plan and in particular shall prescribe the following terms and conditions: (a) Each option shall state the number of shares to which it pertains. (b) Each option shall be granted within ten years of the date the Plan is adopted. (c) Each is exercisable only within six years of the date of the grant. (d) The purchase price shall be the fair market value of the shares at such time as the option is granted and shall not be less than the par value of the shares sold. (e) An option shall be exercisable with respect to the shares included on the date after the date of the grant of the option. An option may be exercised at any time thereafter subject to the provision of 6(f) of the Plan within a period determined by the date of the grant of up to 6 years from the date of the grant of the options with respect to all or part of the shares covered by the option. An option may not be exercised for fractional shares of stock. Unless with approval of the Board of Directors. In the event the Company or the stockholders of the Company enter into an agreement to dispose of all or substantially all of the assets or stock of the Company by means of a sale, merger, reorganization, liquidation or otherwise, an option shall become immediately exercisable with respect to the full number of shares. The shares are subject to option during the period commencing the date of such agreement and ending when the disposition of assets or stock contemplated by the agreement is consummated or the agreement terminates. (f) No option shall be exercisable by any employee or Director while there is outstanding any other stock option issued under the Plan by the Company, which was granted at a prior time, to the employee or Director. (g) An option shall be exercised when written notice of such exercise has been given to the Company at its principle business office by the person entitled to exercise the option and full payment for the shares has been received by the Company. Until the stock certificates are issued, no right to vote, receive dividends, or any other rights as a shareholder shall exist with respect to optioned shares notwithstanding the exercise of the option. (h) An option may be exercised by the optionee only while he is, and has continually been, since the date of the grant of the option, an employee or Director of the Company or within three months following termination of employment (for reasons other than death or disability). If the continuous employment of an optionee terminates by reason of his death such option of the deceased employee as he would be entitled to exercise as of the date of death may be exercised within one year following the date of death, but no later than six years after the date of grant of the option by the person to whom his rights under such option shall have passed by will or by the laws of descent and distribution. If the continuous employment of an optionee terminates by reason of disability, such option as the disabled employee would be entitled to exercise as of the date of termination of employment must be exercised within one year following the date of termination, but in no event more than six years after the date of grant of the option. 7. Options not Transferable Options under the Plan may not be sold, pledged, assigned or transferred in any manner other than as provided in paragraph 6 and may be exercised during the lifetime of an optionee only by the optionee. 8. Amendment or Termination of the Plan The Board of Directors may amend the Plan from time to time as they may deem advisable. The Board of Directors may at any time terminate the Plan provided that any termination of the Plan shall not affect options already granted. The options shall remain in full force and effect as if the Plan had not been terminated. 9. Agreement and Representation of Employee As a condition to the exercise of any option or portion, the Company may require the person exercising the option to represent and warrant at the time of any exercise that the shares are being purchased only for investment and without any present intention to sell or distribute the shares if in the opinion of counsel for the Company such representation is required under the Securities Act of 1933, or any other applicable law, regulation or rule of any governmental agency. In the event legal counsel to the Company renders an opinion to the Company that shares for options exercised pursuant to this Plan cannot be issued to the optionee because such act would violate the applicable Federal or State securities law, then and in that event, the optionee agrees that the Company shall not be required to issue the shares to the optionee tendered to the Company upon exercise of the option. 10. Effectiveness and Termination of the Plan The Plan shall become effective upon adoption by the Board of Directors and shall be subject to approval of the stockholders of Lamcor incorporated within 12 months of adoption. The Plan shall terminate on the earliest of: (a) the date when all the common shares available under the Plan shall have been acquired through exercising the options granted under the Plan, (b) ten years after the date of adoption of the Plan by the Board, (c) such other date as the Board may determine. 11. Form of Option Options may be issued by the execution of the Control Products, Inc. form entitled "Stock Option Agreement." Lamcor Incorporated STOCK OPTION AGREEMENT Lamcor Incorporated hereby grants to_______________________________________ an option to purchase_______________ an option to purchase__________________shares of its common stock, at $________ per share in accordance with and subject to all the terms of the Lamcor Incorporated 1991 Stock Option Incentive Plan adopted by the resolution of the Board of Directors on______________, 1991. The Plan, of which the Optionee has received a copy, and the resolutions of adoption are made a part hereof by reference. In accepting this option, the Optionee agrees to be bound by all the terms of the Plan. Dated Lamcor Incorporated by________________________________ Board Chairman Accepted _________________________________________ Optionee STOCK OPTION INCENTIVE PLAN LAMCOR, INC. 1. Purpose The purpose of this Plan is to further the growth and general prosperity of Lamcor, Inc., the Company, by enabling the employees and Directors of the Company, who have been or will be given responsibility of the affairs of the Company, to acquire shares of its common stock tinder the terms and conditions and in the manner set forth by this Plan, increasing their personal involvement in the Company and to enable the Company to obtain and retain the services of those employees and Directors. 2. Administration This Plan shall be administered by the Chief Financial Officer (CEO) of the Company, subject to such orders and resolutions not inconsistent with the provisions of the Plan, the resolutions will from time to time be issued or adopted by the Board of Directors. The CEO shall have full power and authority to interpret the Plan, although each participant and the options awarded in the Plan shall be approved by the Board of Directors. Each option granted will be evidenced by a written agreement (Stock Option Agreement) and a document containing the terms and conditions of the Plan. 3. Eligibility and Participation Employees and Directors eligible to receive options under the Plan shall be those key personnel including officers and members of the Board of Directors. The CEO shall allot to such participants options to purchase shares in such amount as the Board of Directors shall from time to time determine: provided, however, that no employee shall be allotted an option for any greater number of shares than would result in him owning directly or indirectly more than 10% of the total combined voting power or value of the stock of the Company or any of its subsidiaries unless the option price is at least 85% of the market value of the stock on the date of the grant, and the option is by its terms not exercisable after six years from the date of grant. 4. Shares Subject to Plan Subject to adjustment as provided in section 5, an aggregate of up to 35% of the issued and outstanding shares of the common stock of the Company shall be subject to the Plan as of the date the Plan is adopted. Such number and kind of shares shall be appropriately adjusted in the event of stock splits, reverse stock splits or stock dividends paid or declared with respect to such stock. If prior to the termination of the Plan, shares issued shall have been repurchased by the Company pursuant to the Plan, such repurchased shares shall again become available for issuance under the Plan. Any shares which, after the effective date of the Plan, shall become subject to valid outstanding options under the Plan may, to the extent of the release of any such shares from option by termination or expiration of option without valid exercise be made subject to additional options under the Plan. 5. Adjustments Upon Changes in Capitalization In the event of a merger, consolidation, reorganization, stock dividend, stock split, or any other change in corporate structure or capitalization affecting the Company's common shares, appropriate adjustment shall in the maximum number of shares available under the Plan or to any one individual and in the number, kind, option, price, etc. of shares subject to options granted under the Plan. 6. Terms and Conditions of Options The CEO as approved by the Board of Directors shall have power subject to the limitations contained in the Plan, to prescribe any terms and conditions in respect to the granting or exercise of any option under the Plan and in particular shall prescribe the following terms and conditions: (a) Each option shall state the number of shares to which it pertains. (b) Each option shall be granted within ten years of the date the Plan is adopted. (c) Each is exercisable only within six years of the date of the grant. (d) The purchase price shall be 85% of the fair market value of the shares at such time as the option is granted and shall not be less than the par value of the shares sold. (e) An option shall be exercisable with respect to the shares included on the date after the date of the grant of the option. An option may be exercised at any time thereafter subject to the provision of 6(f) of the Plan within a period determined by the date of the grant of up to 6 years from the date of the grant of the options with respect to all or part of the shares covered by the option. An option may not be exercised for fractional shares of stock. In the event the Company or the stockholders of the Company enter into an agreement to dispose of all or substantially all of the assets or stock of the Company by means of a sale, merger, reorganization, liquidation or otherwise, an option shall become immediately exercisable with respect to the full number of shares. The shares are subject to option during the period commencing the date of such agreement and ending when the disposition of assets or stock contemplated by the agreement is consummated or the agreement terminates. f) No option shall be exercisable by any employee or Director while there is outstanding any other stock option issued under the Plan by the Company, which was granted at a prior time, to the employee or Director. g) An option shall be exercised when written notice of such exercise has been given to the Company at its principle business office by the person entitled to exercise the option and full payment for the shares has been received by the Company. Until the stock certificates are issued, no right to vote, receive dividends, or any other rights as a shareholder shall exist with respect to optioned shares notwithstanding the exercise of the option. h) An option may be exercised by the optionee only while he is, and has continually been, since the date of the grant of the option, an employee or Director of the Company or within three months following termination of employment (for reasons other than death or disability). If the continuous employment of an optionee terminates by reason of his death such option of the deceased employee as he would be entitled to exercise as of the date of death may be exercised within one year following the date of death, but no later than six years after the date of grant of the option by the person to whom his rights under such option shall have passed by will or by the laws of descent and distribution. If the continuous employment of an optionee terminates by reason of disability, such option as the disabled employee would be entitled to exercise as of the date of termination of employment must be exercised within one year following the date of termination, but in no event more than six years after the date of grant of the option. 7. Options not Transferable Options under the Plan may not be sold, pledged, assigned or transferred in any manner other than as provided in paragraph 6 and may be exercised during the lifetime of an optionee only by the optionee. 8. Amendment or Termination of the Plan The Board of Directors may amend the Plan from time to time as they may deem advisable. The Board of Directors may at any time terminate the Plan provided that any such termination of the Plan shall not affect options already granted. The options shall remain in full force and effect as if the Plan had not been terminated. 9. Agreement and Representation of Employee As a condition to the exercise of any option or portion, the Company may require the person exercising the option to represent and warrant at the time of any exercise that the shares are being purchased only for investment and without any present intention to sell or distribute the shares if in the opinion of counsel for the Company such representation is required under the Securities Act of 1933, or any other applicable law, regulation or rule of any governmental agency. In the event legal counsel to the Company renders an opinion to the Company that shares for options exercised pursuant to this Plan cannot be issued to the optionee because such act would violate the applicable Federal or State securities law, then and in that event, the optionee agrees that the Company shall not be required to issue the shares to the optionee tendered to the Company upon exercise of the option. 10. Effectiveness and Termination of the Plan The Plan shall become effective upon adoption by the Board of Directors and shall be subject to approval of the stockholders of Lamcor, Inc., within 12 months of adoption. The Plan shall terminate on the earliest of: (a) the date when all the common shares available under the Plan shall have been acquired through exercising the options granted under the Plan, (b) six years after the date of adoption of the Plan by the Board, (c) such other date as the Board may determine. 11. Form of Option Options may be issued by the execution of the Lamcor, Inc. form entitled " Stock Option Agreement." EX-10.2 9 EMPLOYMENT AGREEMENT Exhibit 10.2 Employment Agreement with Toby Jensen EMPLOYMENT AND CONFIDENTIALITY AGREEMENT THIS EMPLOYMENT AND CONFIDENTIALITY AGREEMENT (this "Agreement") is made September 30, 1996, between LAMCOR, INCORPORATED, a Minnesota corporation (the "Company"), and TOBY JENSEN, a resident of the State of Minnesota ("Executive"). BACKGROUND Executive is currently employed by the Company as its President. On the date of this Agreement and pursuant to that certain Agreement and Plan of Merger (the "Merger Agreement" dated September 30, 1996 by and among the Company, Packaging Acquisition Corporation, a Georgia corporation ("Buyer") and LI Acquisition Corporation, a wholly owned subsidiary of Buyer ("Sub"), Buyer has agreed to acquire the Company through the merger of Sub with and into the Company. Upon the effectiveness of the Merger contemplated in the Merger Agreement (the "Effective Time"), the Company desires to continue the employment of Executive in the capacities and on the terms and conditions set forth below. Executive desires to accept employment on the terms and conditions set forth below. AGREEMENT NOW, THEREFORE, for and in consideration of the employment and continued employment of Executive by the Company, the premises, and the mutual agreements hereinafter set forth, the parties agree as follows: 1. Definitions. The following terms used herein shall have the definitions set forth below: (a) "Affiliate" means any person or entity directly or indirectly controlling, controlled by, or under common control with another person. (b) "Area" means the territorial United States and Canada. (c) "Business" or "Business of the Company" means the business of flexible packaging, pouch-making, slitting and lamination. (d) "Cause" means (i) conduct amounting to fraud or dishonesty against the Company; (ii) Executive's willful misconduct, repeated refusal to follow the reasonable directions of the Board of Directors of the Company, or knowing violation of law in the course of performance of the duties of Executive's employment with the Company, (iii) repeated absences from work without a reasonable excuse, (iv) repeated intoxication with alcohol or drugs, (v) a conviction or plea of guilty or NOLO CONTENDERE to a felony or a crime involving dishonesty against the Company; or (vi) a breach or violation by the Executive of the terms of this Agreement or any other agreement to which Executive and the Company are a party. (e) "Competing Enterprise" means any person or any business organization of whatever form, engaged directly or indirectly within the Area in the Business of the Company. (f) "Disability" means (i) the inability of Executive to perform the duties of Executive's employment due to physical or emotional incapacity or illness, where such inability is expected to be of long-continued and indefinite duration, or (ii) Executive shall be entitled to (x) disability retirement benefits under the federal Social Security Act or (y) recover benefits under any long-term disability plan or policy maintained by the Company. In the event of a dispute, the determination of Disability shall be made reasonably by the Board of Directors of the Company and shall be supported by advice of a physician competent in the area to which such Disability relates. (g) "Effective Date of Termination" means the later of the last day on which Executive performs any duties of his employment as a full-time employee of the Company hereunder or the effective date of the termination of Executive's employment hereunder specified in any notice of termination of such employment given by the Company as permitted herein. (h) "Excluded Information" means any data or information that is a Trade Secret hereunder (i) that has been voluntarily disclosed to the public by the Company or any Affiliate thereof or has become generally known to the public (except where such public disclosure has been made by or through Executive or by a third person or entity with the knowledge of Executive without authorization by the Company); (ii) that has been independently developed and disclosed by parties other than Executive or the Company or any Affiliate thereof to Executive or to the public generally without a breach of any obligation of confidentiality by any such person running directly or indirectly to the Company or any Affiliate thereof; or (iii) that otherwise enters the public domain through lawful means. (i) "Subsidiary" means any subsidiary of Buyer. (j) "Trade Secrets" means information which derives economic value, actual or potential, from not being generally known and not being readily ascertainable to other persons who can obtain economic value from its disclosure or use and which is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality. Trade Secrets may include either technical or non-technical data, including without limitation, (i) any useful process, machine, chemical formula, composition of matter, or other device which (A) is new or which Executive has a reasonable basis to believe may be new, (B) is being used or studied by the Company or any Affiliate thereof and is not described in a printed patent or in any literature already published and distributed externally by the Company or any Affiliate thereof, and (C) is not readily ascertainable from inspection of a product of the Company or any Affiliate thereof; (ii) any engineering, technical, or product specifications including those of features used in any current product of the Company or any Affiliate thereof or to be used, or the use of which is contemplated, in a future product of the Company or any Affiliate thereof; (iii) any application, operating system, communication system, or other computer software (whether in source or object code) and all flow charts, algorithms, coding sheets, routines, subroutines, compilers, assemblers, design concepts, test data, documentation, or manuals related thereto, whether or not copyrighted, patented or patentable, related to or used in the Business of the Company or any Affiliate thereof; or (iv) information concerning the customers, suppliers, products, pricing strategies of the Company or any Affiliate thereof, personnel assignments and policies of the Company, or matters concerning the financial affairs and management of the Company or any Affiliate thereof; provided however, that Trade Secrets shall not include any Excluded Information. 2. Terms of Engagement Duties (a) The Company hereby employs Executive as President of the Company. In such capacity Executive shall report to the Board of Directors of the Company, and shall perform such duties and responsibilities relating to the Business of the Company as may be assigned or delegated to him from time to time by the Board of Directors of the Company. Executive shall also be elected to serve as a Senior Vice President of Buyer and shall perform such duties as may be requested from time to time by the Board of Directors of Buyer. The Executive shall not be relocated from the Minneapolis, Minnesota area without the prior consent of Executive. (b) Executive accepts such employment and agrees to: (i) devote substantially all of Executive's effort, time, energy, and skill (reasonable vacations and reasonable absences due to illness excepted) during regular business hours to the duties of his employment hereunder; (ii) faithfully, loyally, and industriously perform such duties, subject to the supervision of the Board of Directors of the Company; and (iii) diligently follow and implement all lawful management policies and decisions of the Company that are communicated to Executive. (c) During the Term of this Agreement, Executive shall not engage (whether or not during normal business hours) in any other business or professional activity, whether or not such activity is pursued for gain, profit or other pecuniary advantage; but this shall not be construed as preventing Executive from (i) investing his personal assets in businesses which do not compete with the Business of the Company or any Affiliate thereof in such form or manner as will not require any services on the part of Executive in the operation or the affairs of the entities in which such investments are made and in which his participation is solely that of an investor, or (ii) purchasing securities in any corporation whose securities are regularly traded on a national securities exchange, provided that such purchase does not result in Executive collectively owning beneficially at any time five (5%) percent or more of the voting securities of any Competing Enterprise or any Affiliate thereof 3. Compensation. (a) In consideration of the services rendered by Executive pursuant to this Agreement, the Company shall pay to Executive a base salary of One Hundred Twenty Thousand Dollars ($120,000) per annum (the "Base Salary"), which Base Salary will be reviewed periodically and may be increased by the Company from time to time. The Base Salary shall be paid in accordance with the Company's standard payroll practices in effect from time to time. Executive shall also be paid in cash on the date hereof a signing bonus in the amount of Seventy Five Thousand Dollars ($75,000). All amounts payable to Executive hereunder shall be subject to such deductions and withholdings as are required by law or by policies of the Company. (b) On September 30, 1997, Executive shall become eligible to receive a cash bonus of up to $75,000 payable by November 15, 1997, based upon performance criteria to be established by the Board of Directors of the Company. After September 30, 1997, Executive shall be eligible to participate in an executive incentive plan to be established by the Company's Board of Directors. (c) Executive shall also have the right to participate in any medical, hospitalization, dental, disability income, life or other similar insurance plans maintained by the Company from time to time to the extent that Executive's position, tenure, salary, age, health and other qualifications make him eligible to participate, and such other fringe benefits as are provided to the other senior management employees of the Company, provided that the Company shall not be required to adopt or continue any insurance plans or fringe benefit plans. (d) The Company shall reimburse Executive for all reasonable business expenses incurred by Executive in connection with the business of the Company subject to compliance with the expense reimbursement policies established by the Company and in sufficient detail to comply with Internal Revenue Service Regulations. Executive shall also be entitled to receive a monthly car allowance of Four Hundred Dollars ($400.00) for the term of this Agreement. (e) Except for stock incentive awards which may be granted from time to time to Executive, the remuneration and benefits set forth in this Section 3 shall be the only compensation payable to Executive with respect to his employment hereunder, and Executive shall not be entitled to receive any compensation in addition to that set forth in this Section 3 or under such stock incentive awards for any services rendered by him in any capacity to the Company or any Affiliate thereof unless agreed to in writing by the Company or such Affiliate thereof 4. Term and Termination of this Agreement. The term of employment of Executive (the "Term") pursuant to this Agreement shall commence on the date hereof and shall continue for a term of three (3) years from the date hereof (the "Term"). (a) Executive's employment hereunder shall be terminated during the Term upon the death or Disability of Executive. (b) Executive's employment hereunder may be terminated during the Term by the Company (i) with Cause at any time without notice to Executive, and (ii) without Cause upon thirty (30) days written notice to Executive, provided that Executive shall immediately cease the performance of his duties hereunder if the Company shall so request following the date of such notice. In the event Executive's employment is terminated without Cause, Executive shall receive, commencing on the Effective Date of Termination without Cause, an aggregate amount equal to his Base Salary as severance pay through the Term, payable in accordance with the Company's standard payroll practices. (c) Upon termination of Executive's employment hereunder pursuant to subsection 4(a) or for Cause pursuant to subsection 4(b), or upon voluntary termination by Executive of Executive's employment hereunder, the Company shall have no further obligation to Executive or his personal representative with respect to remuneration due under this Agreement, except for Base Salary earned but unpaid at the Effective Date of Termination and, in the case of termination of employment under subsection 4(a), a pro rata portion based on the number of days of the fiscal year of the Company in which such termination occurred during which this Agreement was in effect) of the bonus payable under Section 3(b) with respect to such fiscal year. (d) If Executive's employment hereunder is terminated during the Term by the Company without Cause pursuant to subsection 4(b), the Company shall have no obligation to Employee with respect to renumeration due under this Agreement or such termination other than (i) Base Salary earned but unpaid at the Effective Date of Termination, and (ii) a pro rata portion (based on the number of days of the fiscal year of the Company in which the Effective Date of Termination occurred during which this Agreement was in effect) of the bonus payable under Section 3(b) with respect to such fiscal year, and (iii) the severance pay described in subsection 4(b). Payment pursuant to clause (ii) of the preceding sentence shall be made when such bonuses are paid to other executive officers receiving bonus payments with respect to such fiscal year. (e) Notwithstanding anything to the contrary expressed or implied herein, the covenants and agreements of Executive in Sections 5 and 6 of this Agreement shall survive the termination of Executive's employment hereunder. 5. Ownership Non-Disclosure, and Non-Use of Trade Secrets. (a) Executive acknowledges and agrees that all Trade Secrets, and all physical embodiments thereof, are confidential to and shall be and remain the sole and exclusive property of the Company and any Affiliate thereof and that any Trade Secrets produced by Executive during the period of Executive's employment by the Company shall be considered "work for hire" as such term is defined in 17 U.S.C. Section 101, the ownership and copyright of which shall be vested solely in the Company. Executive agrees (i) immediately to disclose to the Company all Trade Secrets developed in whole or part by Executive during the Term of Executive's employment by the Company, and (ii) at the request and expense of the Company, to do all things and sign all documents or instruments reasonably necessary in the opinion of the Company to eliminate any ambiguity as to the rights of the Company in such Trade Secrets including, without limitation, providing to the Company Executive's full cooperation in any litigation or other proceeding to establish, protect, or obtain such rights. Upon request by the Company, and in any event upon termination of Executive's employment by the Company for any reason, Executive shall promptly deliver to the Company all property belonging to the Company or any of its Affiliates, including, without limitation, all Trade Secrets (and all embodiments thereof) then in Executive's custody, control, or possession. (b) Executive agrees that all Trade Secrets of the Company or any Affiliate thereof received or developed by Executive as a result of Executive's employment with the Company will be held in trust and strictest confidence, that Executive will protect such Trade Secrets from disclosure, and that Executive will make no use of such Trade Secrets, except in connection with Executive's employment hereunder, without the Company's prior written consent. The obligations of confidentiality contained in this Agreement will apply during Executive's employment by the Company and (i) with respect to all Trade Secrets consisting of scientific or technical data, at any and all times after expiration or termination (for whatever reason) of such employment; and (ii) with respect to all other Trade Secrets, for a period of five (5) years after such expiration or termination, unless a longer period of protection is provided by law. 6. Non-Compete: Non-Solicitation Covenants. (a) In consideration of the amounts to be paid to Executive hereunder, Executive covenants that Executive shall, during the Term of this Agreement, and for two (2) years following the termination or expiration of the Term of this Agreement or Executive's employment hereunder, observe the following separate and independent covenants: (i) Neither Executive nor any Affiliate will, without the prior written consent of the Company, within the Area, either directly or indirectly, (A) become financially interested in a Competing Enterprise (other than as a holder of less than five percent (5%) of the outstanding voting securities of any entity whose voting securities are listed on a national securities exchange or quoted by the National Association of Securities Dealers, Inc. National Market System), or, (B) engage in or be employed by any Competing Enterprise as a consultant, officer, director, or executive or managerial employee. (ii) Neither Executive nor any Affiliate will, without the prior written consent of the Company, either directly or indirectly, on Executive's own behalf or in the service or on behalf of others, solicit, divert, or appropriate, or attempt to solicit, divert, or appropriate, to any Competing Enterprise within the Area, any person or entity that was a customer of the Company during the Term of this Agreement. (iii) Neither Executive nor any Affiliate will, without the Company's prior written consent, either directly or indirectly, on Executive's own behalf or in the service or on behalf of others, solicit, divert, or hire away, or attempt to solicit, divert, or hire away, to any Competing Enterprise, any person employed by the Company or one of its Affiliates, whether or not such employee is a full-time or a temporary employee of the Company or such Affiliate and whether or not such employment is pursuant to written agreement and whether or not such employment is at will. 7. Remedies. Executive acknowledges and agrees that the Company is engaged in the Business of the Company in and throughout the Area, that by virtue of the training, duties, and responsibilities attendant with Executive's employment by the Company and the special knowledge of the Business and operations of the Company that Executive will have as a consequence of Executive's employment by the Company, great loss and irreparable damage would be suffered by the Company if Executive should breach or violate any of the terms or provisions of the covenants and agreements set forth herein, and that by virtue of Executive' 5 senior management position with the Company Executive has been and will be throughout the Term of this Agreement directly and indirectly involved in servicing the accounts of the Company's customer. Executive further acknowledges and agrees that each such covenant and agreement is reasonably necessary to protect and preserve the interest of the Company. Therefore, in addition to all the remedies provided at law or in equity, Executive agrees and consents that the Company shall be entitled to a temporary restraining order and a permanent injunction to prevent a breach or threatened breach of any of the covenants or agreements of Executive contained herein. The existence of any claim, demand, action or cause of action of Executive against the Company shall not constitute a defense to the enforcement by the Company of any of the covenants or agreements herein whether predicated upon this Agreement or otherwise, and shall not constitute a defense to the enforcement by the Company of any of its rights hereunder. 8. General Provisions. (a) In the event that any one or more of the provisions, or parts of any provisions, contained in the Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect by a court of competent jurisdiction, the same shall not invalidate or otherwise affect any other provision hereof; and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. Specifically, but without limiting the foregoing in any way, each of the covenants of the parties to this Agreement contained herein shall be deemed and shall be construed as a separate and independent covenant and should any part or provision of any of such covenants be held or declared invalid by any court of competent jurisdiction, such invalidity shall in no way render invalid or unenforceable any other part or provision thereof or any other covenant of the parties not held or declared invalid. (b) This Agreement and the rights and obligations of the Company hereunder may be assigned by the Company to any Subsidiary or to any successor to the Company, and shall inure to the benefit of; shall be binding upon, and shall be enforceable by any such assignee, provided that any such assignee shall agree to assume and be bound by this Agreement. This Agreement and the rights and obligations of Executive hereunder may not be assigned by Executive. (c) The waiver by the Company of any breach of this Agreement by Executive shall not be effective unless in writing, and no such waiver shall operate or be construed as a waiver of the same or another breach on a subsequent occasion. (d) This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of Georgia. (e) This Agreement embodies the entire agreement of the parties relating to the employment of Executive by the Company. No amendment or modification of this Agreement shall be valid or binding upon the Company or Executive unless made in writing and signed by the parties. All prior understandings and agreements relating to the employment of Executive by the Company are hereby expressly terminated. In the event the Effective Time does not occur, this Agreement shall be null and void and of no force and effect. (f) Any notice, request, demand, or other communication required to be given hereunder shall be made in writing and shall be deemed to have been fully given if personally delivered or if mailed by overnight delivery (the date on which such notice, request, demand, or other communication is received shall be the date of delivery) to the parties at the following addresses (or at such other addresses as shall be given in writing by any party to the other party hereto): If to Executive: Toby Jensen 10646 First Timberlane Drive Northfield, Minnesota 55057 Telephone: (507) 663-1663 If to Company: Lamcor, Incorporated P.O. Box 70 Highway 169 North Le Sueur, Minnesota 56058 Telephone: (507) 665-6658 Telecopy: (507) 665-2870 with copies (which shall not constitute notice) to: Packaging Acquisition Corporation 1633 Mt. Vernon Road Dunwoody, Georgia 30338 Attn: William C. Beddingfield Telephone: (770) 604-9000 Telecopy: (770) 604-9077 Alston & Bird One Atlantic Center 1201 West Peachtree Street Atlanta, Georgia 30309-3424 Attention: Teri L. McMahon Telephone: (404) 881-7266 Telecopy: (404) 881-7777 (g) This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, and it shall not be necessary for the same counterpart of this agreement to be signed by all of the undersigned in order for the agreements set forth herein to be binding upon all of the undersigned in accordance with the terms hereof. IN WITNESS WHEREOF, the Company and Executive have each executed and delivered this Agreement as of the date first above written. COMPANY: LAMCOR, INCORPORATED By:______________________________________ Name:____________________________________ Title:___________________________________ EXECUTIVE: ____________________________________(SEAL) Toby Jensen EX-10.3 10 NONCOMPETITION AND CONFIDENTIALITY AGREEMENT Exhibit 10.3 Noncompetition Agreement and Confidentiality Agreement with Leo Lund NONCOMPETITION AND CONFIDENTIALITY AGREEMENT THIS NONCOMPETITION AND CONFIDENTIALITY AGREEMENT (this "Agreement") is made and entered into as of September 30, 1996 by and between LAMCOR, INCORPORATED, a Minnesota corporation (the "Company") and LEO LUND (the "Seller"). BACKGROUND A. Pursuant to that certain Agreement and Plan of Merger (the "Merger Agreement") dated September 30, 1996 by and among the Company, Packaging Acquisition Corporation, a Georgia corporation ("Buyer"), and LI Acquisition Corporation, a wholly owned subsidiary of Buyer ("Sub"), Buyer has agreed to acquire the Company through the merger of Sub with and into the Company. B. Prior to the consummation of the transactions contemplated by the Merger Agreement, the Seller was a shareholder of the Company. C. The Seller will receive substantial consideration for the transactions contemplated by the Merger Agreement. D. The Company is engaged in the business of flexible packaging pouch-making, slitting and lamination (the "Business") throughout the territorial United States and Canada (the "Territory"). E. The Seller has acquired intimate knowledge of the Business, which, if exploited by the Seller in contravention of this Agreement, would seriously, adversely and irreparably affect the ability of Buyer to derive benefit from its acquisition of the Company and for the Company to continue to operate the Business. F. The Merger Agreement requires the Seller to enter into this Agreement with the Company as a condition precedent to the consummation of the transactions contemplated by the Merger Agreement, and Buyer would be unwilling to consummate the transactions contemplated by the Merger Agreement without this Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual promises contained herein and in the Merger Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I CASH PAYMENT TO SELLER In consideration of the covenants of the Seller contained herein, the Company agrees to pay to the Seller on the date hereof in cash the sum of Fifty Eight Thousand Four Hundred Dollars ($58,400), payable on January 3, 1997. ARTICLE II CONFIDENTIALITY 2.1 Definitions. As used in this Article 2, the term "Confidential Information" shall mean any and all information regarding the organization, business or finances of the Company, including, without limitation, any and all business plans and strategies, financial information, proposals, reports, marketing plans and information, cost information, customer information, sales volume and other sales statistics, personnel data, pricing information, concepts and ideas, information respecting existing and proposed investments and acquisitions, and information regarding providers and suppliers, but the term "Confidential Information" shall not include information which prior to receipt thereof by the Seller (i) was generally publicly available, or (ii) was in the possession of the Seller free of any restrictions on its use or disclosure and from a source other than the Company or any of its affiliates. 2.2 Non-Disclosure. Seller covenants and agrees that he will not use or disclose any of the Confidential Information for any reason or purpose whatsoever, except that Seller may disclose Confidential Information to authorized representatives of the Company or as directed or authorized by the Company or use such Confidential Information so long as such disclosure and use is in connection with the proper and lawful performance of his services to the Company. 2.3 Records of the Company. The Seller shall not remove any records, documents or any other tangible items (excluding items of personal property owned by the Seller) from the premises of the Company, in either original or duplicate form, except as needed in the ordinary course of performing services to the Company. Upon the request of the Company, the Seller shall promptly deliver to the Company or destroy any such records, documents or other tangible items removed from the premises of the Company by the Seller or his representatives. ARTICLE III COVENANT NOT TO COMPETE The Seller covenants and agrees that, for a period of two (2) years after the date of this Agreement, the Seller shall not, for himself or in conjunction with any person, firm or corporation, engage in, acquire, establish or own any financial, beneficial or other interest in any entity engaged in a Restricted Business (as hereinafter defined) within any part of the Territory, or be employed by or render any managerial, marketing or other advice within any part of the Territory for or in connection with a Restricted Business, other than for the Company; provided, however, that the foregoing shall not prohibit the Seller from owning less than five percent (5%) of any class of securities of a publicly held corporation. As used in this Agreement, the term "Restricted Business" shall mean any person or entity that is engaged, directly or indirectly, in any business or enterprise which is like the Business. ARTICLE IV NONSOLICITATION OF CUSTOMERS The Seller covenants and agrees that, for a period of two (2) years after the date of this Agreement, the Seller shall not, for his own benefit or the benefit of others, other than for the Company, solicit or induce, or attempt to solicit or induce, any Restricted Business Customer (as hereinafter defined) to purchase from a Restricted Business goods or services like or similar to the goods and services manufactured or performed by the Company. As used in this Agreement, the term "Restricted Business Customer" means any person or entity located in the Territory to whom the Company has sold, or attempted to sell, within the three (3) year period preceding the date hereof; products or services manufactured or performed by the Company. ARTICLE V NONSOLICITATION OF EMPLOYEES The Seller covenants and agrees that, for a period of two (2) years after the date of this Agreement, he will not solicit or induce, or attempt to solicit or induce, any employee of the Company to terminate his or her employment with the Company, whether or not such employment is for a specified term or is at will, and whether or not such employment is pursuant to an oral or written agreement. ARTICLE VI REASONABLENESS; INJUNCTIVE RELIEF The restrictions contained in this Agreement arise out of the acquisition by Buyer of the Company, and are made and given to protect and preserve unto Buyer the benefit of its acquisition thereof and the good will of the business associated therewith. The Seller acknowledges and agrees that he has entered into this Agreement in consideration of Buyer's entering into the Merger Agreement. The Seller further acknowledges and agrees that such restrictions are fair and reasonable, that such restrictions are necessary to protect and preserve unto Buyer the benefit of its bargain in the acquisition of the Company, and that such restrictions are necessary for the protection of the legitimate business interests of the Company. Each of the restrictive covenants contained in this Agreement are independent of each other and of any other provision of this Agreement, and the existence of a claim which the Seller may have against the Company, whether based on this Agreement or otherwise, will not prevent the enforcement of any of these restrictive covenants. The Seller agrees that the Company's remedies at law for any breach or threat of breach by the Seller of the provisions of this Agreement, or any part hereof; will be inadequate, and that the Company shall be entitled to an injunction or injunctions to prevent a breach or threatened breach of the provisions of this Agreement and to enforce specifically the terms and provisions hereof. The Company agrees that injunctive relief shall be the sole and exclusive remedy for Seller's breach of any of the restrictive covenants contained herein. The length of time for which these restrictive covenants shall be in force shall be extended by any period of violation or any other period required for litigation during which the Company seeks to enforce these covenants. Should any provision of these covenants be held invalid, illegal or unenforceable, in whole or in part, the validity, legality or enforceability of the remaining part of such provision, and the validity, legality and enforceability of the other provisions hereof; shall not be affected thereby. If any invalidity shall be caused by the length of any period of time, the size of any area, or the scope of activities set forth in any provision hereof; such period of time, such area, such scope or all of such factors, shall be considered to be reduced to a period, area or scope which would cure such invalidity. Any provision of this Agreement which is held invalid, illegal or unenforceable in any jurisdiction shall not be deemed invalid, illegal or unenforceable in any other jurisdiction. ARTICLE VII MISCELLANEOUS 7.1 Assignment. This Agreement and the rights and obligations of the Company hereunder may be assigned by the Company and shall inure to the benefit of; shall be binding upon and shall be enforceable by any such assignee, provided that any such assignee shall agree to assume and be bound by this Agreement. This Agreement and the rights and obligations of the Seller hereunder may not be assigned or delegated by the Seller without the prior written consent of the Company, and any such assignment without consent shall be deemed to be void and of no effect. The Company and the Seller acknowledge and agree that Buyer is intended to be a third party beneficiary under this Agreement. Subject to the foregoing, this Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties hereto, Buyer and their respective successors and assigns, and no other person shall have any right, benefit or obligation hereunder. 7.2 Notices Agents. Unless otherwise provided herein, any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered in person or by courier (effective when delivered), telegraphed, telexed or by facsimile transmission (effective when received) or mailed by certified mail, postage prepaid, return receipt requested (such mailed notice to be effective on the date such receipt is acknowledged), as follows: If to Seller: Leo Lund 8900 Penn Avenue South, Suite 101 Bloomington, Minnesota 55431-2099 Telephone: (612) 881-3000 Telecopier: (612) 8814902 With a copy (which Gray, Plant, Mooty, Mooty & Bennett, P.A. shall not constitute 3400 City Center notice) to: 33 South Sixth Street Minneapolis, Minnesota 55402-3796 Attn: Bruce B. McPheeters, Esq. Telephone: (612) 343-2866 Telecopier: (612) 333-0066 If to the Company: Lamcor, Incorporated P.O. Box 70 Highway 169 North LeSueur, Minnesota 56058 Attn: Toby Jensen Telephone: (507) 665-6658 Telecopier: (507) 665-2870 With copies (which Packaging Acquisition Corporation shall not constitute 1633 Mount Vernon Road notice) to: Dunwoody, Georgia 30338 Attn: William C. Beddingfield Telephone: (770) 604-9000 Telecopier: (770) 604-9077 and Alston & Bird 1201 West Peachtree Street Atlanta, Georgia 30309 Attn: Teri L. McMahon, Esq. Telephone: (404) 881-7266 Telecopier: (404) 881-7777 in any manner other than by facsimile transmission, such party shall also give a notice by facsimile transmission. 7.3 Choice of Law. This Agreement shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of Georgia applicable to contracts made and wholly performed within such state, except with respect to matters of law concerning the internal corporate or trust affairs of any corporate or trust entity which is a party to or subject of this Agreement, as to those matters of law of the jurisdiction under which the respective entity derives its powers shall govern. 7.4 Entire Agreement; Amendments and Waivers. This Agreement constitutes the entire agreement among the parties and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties provided, however, that the Company acknowledges that it continues to owe Seller Thirty Six Thousand Five Hundred Dollars ($36,500.00) for accrued but unpaid salary as of August 31, 1996. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a waiver of waiver unless otherwise expressly provided. The Company, on the one hand, and the Seller, on the other hand, may by written instrument only (a) waive compliance with any of the covenants of the other party contained in this Agreement and (b) waive the other party's performance of any of the obligations set out in this Agreement. In the event the Merger is not consummated, this Agreement shall be null and void and of no force and effect, and no payment as described in Article I shall be due and owing. 7.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 7.6 Headings. The headings of the Articles and Sections herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. 7.7 Construction. The provisions of this Agreement have been carefully negotiated and bargained for between the parties hereto, and the fact that one party may have taken the lead in drafting this Agreement shall not cause any supposed ambiguities or other defects in any provisions hereof to be construed against the drafting party. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. LAMCOR, INCORPORATED By:___________________________________ Name:_________________________________ Title:________________________________ -------------------------------------- Leo Lund EX-10.4 11 OPTION CANCELLATION AGREEMENT Exhibit 10.4 Form of Option Cancellation Agreement OPTION CANCELLATION AGREEMENT This Option Cancellation Agreement (the "Agreement") is entered into as of , 1996, between Lamcor, Incorporated, a Minnesota corporation ("Lamcor"), and , a resident of the State of ("Option Holder"). RECITALS A. As of the date hereof; Option Holder holds options (collectively, the "Lamcor Options") for the purchase of shares of the common stock of Lamcor, no par value per share ("Lamcor Common Stock"), at an exercise price per share stated in Schedule A hereto. B. The Lamcor Options are evidenced by those certain stock option agreements dated _________________________ and ______________________________ , respectively, all of which are attached hereto as Exhibit A (each such agreement, an "Option Agreement"). C. Lamcor, Packaging Acquisition Corporation ("Buyer") and LI Acquisition Corporation, a wholly owned subsidiary of Buyer ("Sub"), have entered into an Agreement and Plan of Merger dated September ___, 1996 (the "Merger Agreement"), pursuant to which at the "Effective Time" (as defined in the Merger Agreement) Sub will merge with and into Lamcor and Lamcor, as the surviving corporation, will become a wholly owned subsidiary of Buyer (the "Merger"). Capitalized terms used herein and undefined shall have the meaning given such terms in the Merger Agreement. D. Pursuant to the terms of the Merger Agreement, promptly after the Effective Time each shareholder of Lamcor ("Shareholder") will receive $4.12 per share of Lamcor Common Stock, less $0.12 per share to be held in escrow for one year following the closing of the Merger (the "Closing"). E. As a condition to the Closing, at the Effective Time each option or warrant to purchase shares of Lamcor capital stock will be canceled in exchange for a cash payment to the holder of each such option, including the Option Holder (collectively, the "Holders"). NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth herein, the parties hereby agree as follows: 1. Determination of the Number of Lamcor Options Canceled. The Option Holder represents and warrants that the number of Lamcor Options stated in Schedule A are the only options or rights for the purchase of Lamcor capital stock held or exercisable by the Option Holder as of the date hereof; and that no such options or rights have been sold, transferred, assigned, hypothecated or otherwise disposed of by the Option Holder prior to the date hereof. The number of Lamcor Options to be surrendered, canceled and terminated pursuant to Section 2 of this Agreement shall be all Lamcor Options outstanding and in effect as of the Effective Time (whether or not exercisable). This Agreement does not expand or extend the rights of the Option Holder. If the Option Holder's employment with Lamcor is terminated or the Option Holder dies or becomes disabled prior to the Closing, the rights of the Option Holder or his estate will be as provided in the applicable Option Agreements, subject to surrender, cancellation and termination thereof pursuant to Section 2 of this Agreement if the Lamcor Options to which such rights relate are outstanding at the Effective Time. 2. Cancellation of Lamcor Options Release. At the Effective Time (and without any further action by the parties hereto), all of the Lamcor Options, the Option Agreements and all rights of the Option Holder thereunder or with respect thereto shall be automatically surrendered, canceled and terminated in consideration for the Cash Payment (as defined in Section 3 below). The Option Holder hereby releases and discharges Lamcor and Buyer and their respective parents, subsidiaries or affiliate corporations and each officer, director, agent, attorney and employee of the foregoing from and in respect of all claims, demands, remedies, actions, causes of action, rights of action, damages or other liabilities, known or unknown and whether or not asserted or accrued, in any way relating to, based upon or arising out of the Lamcor Options, the Option Agreements and all rights of the Option Holder arising thereunder or with respect thereto. Upon receipt of the Cash Payment at the Closing, the Option Holder shall deliver to Buyer all executed original Option Agreements marked "Canceled." In the event that the Option Holder is unable to locate all executed original Option Agreements, Option Holder agrees to execute at Lamcor's request an appropriate affidavit to the effect that such executed originals have been misplaced and that neither such executed originals nor any interest therein have been sold, transferred, assigned, hypothecated or otherwise disposed of prior to the loss thereof. The Option Holder's agreement to cancel the Lamcor Options in exchange for the Cash Payment is irrevocable, subject only to Section 8 below. 3. Cash Payment. In consideration for the cancellation of the Lamcor Options, Lamcor will pay to the Option Holder at the Closing for each Lamcor Option an amount in cash (the "Cash Payment") equal to the product of (a) the difference (if positive) between $4.12 and the price at which the Option Holder could purchase each share of Lamcor Common Stock to which such Lamcor Option relates, multiplied by (b) the number of shares of Lamcor Common Stock subject to such Lamcor Option as if such Lamcor Option was then fully exercisable, less (y) the product of $0.12 multiplied by the number of shares referenced in clause (b) above, and less (z) any taxes required to be withheld pursuant to Section 4 below. 4. Tax Withholding. Lamcor may deduct and withhold from the Cash Payment the amount of any taxes required to be withheld pursuant to applicable federal, state and local laws. To the extent that amounts are so withheld by Lamcor, such withheld amounts shall be treated for the purposes of this Agreement as having been paid to the Option Holder. 5. Escrow Arrangements. Lamcor shall cause to be delivered to the Escrow Agent at the Effective Time on behalf of the Option Holder and all other Holders an amount equal to (a) $0.12 multiplied by (b) the number of shares of Lamcor capital stock subject to such options or warrants (together with funds delivered to the Escrow Agent on behalf of the Shareholders, the "Escrowed Funds"). The term "Escrow Claim" means any and all claims, individually or in the aggregate, made by Buyer within one year after the Effective Time for the purpose of compensating Buyer for Losses resulting from (x) the breach or inaccuracy of any representation or warranty of Lamcor contained in the Merger Agreement, (y) the failure of Lamcor to perform any covenant or agreement of Lamcor under the Merger Agreement, and (z) all Lamcor Expenses in excess of $275,000; provided, however, that Buyer shall not be entitled to assert a claim against the Escrowed Funds for breaches of representations and warranties pursuant to the preceding clause (x) if Buyer had actual knowledge of the breach at the Effective Time; provided further, that Buyer shall not be entitled to assert an Escrow Claim against the Escrowed Funds unless each such Escrow Claim is in excess of $1,000.00. An Escrow Claim shall be satisfied or liquidated only from the Escrowed Funds in accordance with the terms and conditions of the Escrow Agreement; provided, however, that Buyer shall not be entitled to receive any of the Escrowed Funds unless (i) the Surviving Corporation is not in breach in any Material respect of any of its covenants or agreements arising after the Effective Time and (ii) the aggregate amount of all Escrow Claims arising out of clauses (x) and (y) of the preceding sentence exceeds $50,000. Once such $50,000 threshold has been reached, Buyer shall be entitled to full payment for all Escrow Claims arising out of such clauses (x) and (y) out of the Escrowed Funds as if no such limitation on payment had existed, provided that the conditions of clause (i) of the preceding sentence is satisfied at the time of payment. Buyer shall pay all fees and expenses in connection with the escrow and the Escrowed Funds, without reimbursement therefor to Buyer from the Escrowed Funds. Notwithstanding the foregoing, any amount of Lamcor Expenses in excess of $275,000 shall be paid to Buyer out of the Escrowed Funds, to the extent thereof; without regard to such $50,000 threshold. 6. Holders' Representative. (a) The Option Holder irrevocably makes, constitutes and appoints David P. Stewart as its agent (the "Holders' Representative") and authorizes and empowers him to fulfill the role of Holders' Representative hereunder and under the Escrow Agreement. In the event of the resignation of the Holders' Representative, the resigning Holders' Representative shall appoint a successor from among the Holders and who shall agree in writing to accept such appointment. If the Holders' Representative should die or become incapacitated, his successor shall be appointed within 15 days of his death or incapacity by a majority of the Shareholders pursuant to Section 11.16 of the Merger Agreement. The choice of a successor Holders' Representative appointed in any manner permitted above shall be final and binding upon all of the Holders. The decisions and actions of any successor Holders' Representative shall be, for all purposes, those of a Holders' Representative as if originally named herein. (b) Each Holder other than the Option Holder has made, constituted and appointed and by the execution of this Agreement the Option Holder hereby irrevocably makes, constitutes and appoints the Holders' Representative as such person's true and lawful attorney in fact and agent, for such person and in such person's name, place and stead for all purposes necessary or desirable in order for the Holders' Representative to take the actions contemplated by this Agreement and the Escrow Agreement on behalf of the Option Holder, with the ability to execute and deliver all instruments, certificates and other documents of every kind incident to the foregoing to all intents and purposes and with the same effect as the Option Holder could do personally, and the Option Holder hereby ratifies and confirms as his, her or its own act, all that the Holders' Representative shall do or cause to be done pursuant to the provisions hereof. (c) The death or incapacity of the Option Holder shall not terminate the authority and agency of the Holders' Representative. (d) Buyer shall be entitled to rely exclusively upon any communication given or other action taken by the Holders' Representative pursuant hereto and shall not be liable for any action taken or not taken in reliance upon the Holders' Representative. Buyer shall not be obligated to inquire as to the authority of the Holders' Representative to take any action that the Holders' Representative takes or purports to take on behalf of the Option Holder. (e) The Option Holder agrees to indemnify the Holders' Representative and to hold him or her harmless against any and all loss, liability or expense incurred without bad faith on the part of the Holders' Representative and arising out of or in connection with his or her duties as Holders' Representative, including the reasonable costs and expenses incurred by the Holders' Representative in defending against any claim or liability in connection herewith (the "Representative's Expenses"), and authorize the Holder's Representative to receive following the first anniversary of the Effective Date a portion of the amount by which the then remaining balance of the Escrowed Funds exceeds the sum of the Tentatively Impounded Funds (as defined in the Escrow Agreement) equal to the Representative's Expenses in accordance with Section 6(f) of the Escrow Agreement; provided, however, that Buyer shall pay all reasonable Representative's Expenses incurred by the Holders' Representative and its counsel in defending against any Escrow Claim in the event that the Holders' Representative prevails in such defense, and the Holder authorizes a maximum amount equal to the lesser of (i) Five Thousand Dollars ($5,000.00), or (ii) the actual amount of the reasonable Representative's Expenses incurred by the Holders' Representative and its counsel in carrying out the provisions of Section 11.16(e) of the Merger Agreement and this Section 6(e) (as evidenced by a written notice from the Holders' Representative to Buyer setting forth the actual amount and a description of such Representative's Expenses), to be remitted prior to the first anniversary of the Effective Date to the Holders' Representative out of the Escrowed Funds upon the Escrow Agent's receipt of written notice from Buyer stating the amount to be so remitted. 7. Prohibition on Transfer. Except as contemplated herein, the Option Holder agrees not to sell, transfer, assign, hypothecate or otherwise dispose of any of the Lamcor Options, the Option Agreements or any rights of the Option Holder thereunder or with respect thereto. 8. All Obligations Contingent upon Closing. All of the rights and obligations of the parties to this Agreement are subject to the Closing. If the Merger Agreement is terminated for any reason, the Lamcor Options shall remain in effect pursuant to their respective terms, this Agreement shall terminate and no party hereto shall have any liability to any other party under this Agreement. 9. General. This Agreement shall be governed by the laws of the State of Minnesota. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and may be amended only in writing signed by the parties hereto. This Agreement may be signed in multiple counterparts, each of which shall constitute an original and all of which shall constitute one and the same Agreement, and shall be binding upon and inure to the benefit of the parties and their respective heirs, successors, assigns and personal representatives. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the latest date indicated below. LAMCOR, INCORPORATED: OPTION HOLDER: By:_________________________________ Signature:_____________________________ Its:________________________________ Name:__________________________________ Date:_______________________________ Date:__________________________________ SCHEDULE A # of Shares of Issuable upon Exercise of Option Name of Date of Option Lamcor Expiration Exercise Price Option Holder Agreement Options Date ($/Share) - ------------- --------- ------- ---- --------- EX-10.5 12 PROMISSORY NOTE Exhibit 10.5 PROMISSORY NOTE Borrower: Lamcor, Incorporated Lender: First Farmers & P.O. Box 70 Merchants National Bank Le Sueur, MN 56058 112 South Main Street Le Sueur, MN 56058 Principal Amount: $ Initial Rate: Date of Note: PROMISE TO PAY. Lamcor, Incorporated ("Borrower") promises to pay First Farmers & Merchants National Bank ("Lender"), or order, in lawful money of the United States of America, the principal amount of _____________ & 00/100 Dollars ($____________.00) together with Interest on the unpaid principal balance from ___________, until paid in full. PAYMENT. Subject to any payment changes resulting from changes in the Index, Borrower will pay this loan on demand, or if no demand is made, in ___ payments of $_________ each payment. Borrower's first payment is due ___________, and all subsequent payments are due on the same day of each month after that. Borrower's final payment will be due on ___________, and will be for all principal and all accrued Interest not yet paid. Payments include principal and Interest. Interest on this Note is computed on a 365/365 simple interest basis; that is, by applying the ratio of the annual interest rate over the number of days in a year, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing. Unless otherwise agreed or required by applicable law, payments will be applied first to accrued unpaid interest, then to principal, and any remaining amount of any unpaid collection costs and late charges. VARIABLE INTEREST RATE. The interest rate on this Note is subject of change from time to time based on changes in an index which is the First Farmers & Merchants National Bank Inter Rate (the "Index"). The Index is not necessarily the lower rate charged by Lender on its loans and is set by Lender in its sole discretion. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrower's request. Borrower understands that Lender may make loans based on other rates as well. The interest rate change will not occur more often than each MONTH. The Index currently is _____% per annum. The interest rate to be applied to the unpaid principal balance of this Note will be at a rate of _____ percentage points over the Index, resulting in an initial rate of _____% per annum. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law. Whenever increases occur in the interest rate, Lender, at its option, may do one or more of the following: (a) increase Borrower's payments to ensure Borrower's loan will pay off by its original final maturity date, (b) increase Borrower's payments to cover accruing interest, (c) increase the number of Borrower's payments, and (d) continue Borrower's payments of the same amount and increase Borrower's final payment. PREPAYMENT; MINIMUM INTEREST CHARGE. In any event even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum Interest charge of $10.00. Other than Borrower's obligation to pay any minimum interest charge, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments under the payment schedule. Rather, they will reduce the principal balance due and may result in Borrower making fewer payments. DEFAULT. Borrower will be in default if any of the following happens: (a) Borrower fails to make any payment when due. (b) Borrower breaks any promise Borrower has made to Lender, or Borrower fails to comply with or to perform when due any other terms, obligation, covenant, or condition contained in this Note or any agreements related to this Note, or in any other agreement or loan Borrower has with Lender. (c) Borrower defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the Related Documents. (d) Any representation or statement made or furnished to Lender by Borrower on Borrower's behalf is false or misleading in any material respect either now or at the time made or furnished. (e) Borrower becomes insolvent, a receiver is appointed for any part of Borrower's property, Borrower makes an assignment for the benefit of creditors, or any proceeding is commenced either by Borrower or against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries to take any of Borrower's property on or in which Lender has a lien or security interest. This includes a garnishment of any of Borrower's accounts with Lender. (g) Any guarantor dies or any of the other events described in this default section occurs with respect to any guarantor of this Note. (h) A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the indebtedness is impaired. (i) Lender in good faith deems itself insecure. If any default, other than a default in payment, is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured (and not event of default will have occurred) if Borrower, after receiving written notice from Lender demanding cure of such default: (a) cures the default within fifteen (15) days; or (b) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance on this Note and all accrued unpaid interest immediately due, without notice, and then Borrower will pay that amount. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrow also will pay Lender that amount. This includes subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law. This Note has been delivered to Lender and accepted by Lender in the State of Minnesota. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Le Sueur County, the State of Minnesota. This Note shall be governed by and construed in accordance with the laws of the State of Minnesota. RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security interest in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender all Borrower's right, title and interest in and to, Borrower's accounts with Lender (whether checking, savings, or some other account), including without limitation all accounts held jointly with someone else and all accounts Borrower may open in the future, excluding however all IRA and Keogh accounts, and all trust accounts for which the grant of a security interest would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on this Note against any and all such accounts. COLLATERAL. This Note is secured by a Security Agreement from Lamcor, incorporated to First Farms & Merchants National Bank dated ____________, covering ______________________ and existing collateral already on file with First Farmers & Merchants National Bank. GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific default provisions or rights of Lender shall not preclude Lender's right to declare payment of this Note on its demand. Lender may delay of forgo enforcing any of its rights of remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, protest and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan, or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE. BORROWER: Lamcor, Incorporated By: _______________________________ Leo W. Lund, Board Chairman EX-10.6 13 AGREEMENT Exhibit 10.6 AGREEMENT This shall serve as an agreement between Lamcor Incorporated and Magnum Industries (or certain services to be performed by Magnum for Lamcor. These services will include but not necessarily be limited to the following: A. The full inspection and labeling of coffee pouches for Lamcor's Savor-loc system. Magnum in turn agrees to perform such services for a cost of $35.00/m throughout the entire term of this agreement. B. The cutting and inspection of those pouches produced for 3M referred to as the Chevron Program. Cost to Lamcor for these services shall be $50.00/m. Lamcor currently passes on a cost of $60.00/m to 3M in addition to the normal costs of producing the basic pouch. Magnum will guarantee above set price for duration of agreement. The duration of this agreement shall be for a period of three years. Any changes shall require mutual consent of both parties. This agreement may be renewed with both party's consent. Changes to this agreement may be made if unforeseen events change the basic intent of the services required. Events may include but not be limited to loss of business, unacceptable performance, or conflicts of interest arising from Magnum's desire to provide services for a competing operation. Lamcor reserves the first right of refusal if it deems a particular Magnum operation to be detrimental to the well being of Lamcor Incorporated. [SIGNATURES] EX-11.1 14 COMPUTATION OF EARNINGS PER SHARE
Exhibit 11.1 Lamcor, Incorporated Computation of Earnings Per Share Fiscal Years Ended September 30, 1996 1995 1994 ---- ---- ---- Primary Average shares outstanding 1,382,667 1,341,542 1,328,542 Net effect of dilutive stock options, based on the treasury stock using method average market price 377,263 273,559 119,773 Total 1,759,930 1,615,101 1,448,315 ========= ========= ========= Net income $352,458 $358,795 $176,918 Net income per share $.20 $.22 $.12 Fully Diluted Average shares outstanding 1,382,667 1,341,542 1,328,542 Net effect of dilutive stock options, based on the treasury stock method using average market price 385,144 371,458 122,941 Total 1,767,811 1,713,000 1,451,483 ========= ========= ========= Net income $352,458 $358,765 $176,918 Net income per share .20 .21 .12
EX-21.1 15 SUBSIDIARIES OF THE REGISTRANT Exhibit 21.1 Subsidiaries None. EX-27 16 FINANCIAL DATA SCHEDULE
5 12-MOS SEP-30-1996 SEP-30-1996 61,562 0 1,155,402 10,000 1,263,261 2,516,018 3,054,804 1,064,530 4,509,384 1,046,321 1,106,783 0 0 996,559 (101,219) 4,509,384 8,006,710 8,006,710 5,736,439 5,736,439 (8,981) 0 143,390 572,458 220,000 352,458 0 0 0 352,458 0.20 0.20
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