EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
DATED AS OF AUGUST 27, 1996
BY AND AMONG
MISSISSIPPI CHEMICAL CORPORATION
MISS SUB, INC.
AND
FIRST MISSISSIPPI CORPORATION
TABLE OF CONTENTS
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ARTICLE I
The Merger
Section 1.1 The Merger................................................. 1
Section 1.2 Effective Time of the Merger............................... 1
Section 1.3 Closing.................................................... 2
Section 1.4 Effects of the Merger...................................... 2
Section 1.5 Articles of Incorporation and Bylaws....................... 2
Section 1.6 Directors.................................................. 2
Section 1.7 Officers................................................... 2
ARTICLE II
Conversion of Securities
Section 2.1 Conversion of Capital Stock................................ 2
Section 2.2 Exchange of Certificates................................... 3
Section 2.3 Dissenting Shares.......................................... 4
ARTICLE III
Representations and Warranties of the Company
Section 3.1 Organization............................................... 5
Section 3.2 Capitalization............................................. 5
Section 3.3 Authority.................................................. 6
Section 3.4 Consents and Approvals; No Violations...................... 6
Section 3.5 SEC Reports and Financial Statements....................... 7
Information in Disclosure Documents and Registration
Section 3.6 Statements................................................. 7
Section 3.7 Retained Business.......................................... 7
Section 3.8 Litigation................................................. 8
Section 3.9 Employee Benefits.......................................... 8
Section 3.10 Absence of Certain Changes or Events....................... 9
Section 3.11 No Violation of Law........................................ 10
Section 3.12 Taxes...................................................... 10
Section 3.13 Environmental Matters...................................... 11
Section 3.14 Material Contracts......................................... 11
Section 3.15 Rights Agreement........................................... 11
Section 3.16 Brokers or Finders......................................... 11
Section 3.17 State Takeover Statutes.................................... 12
Section 3.18 Opinion of Financial Advisor............................... 12
Section 3.19 Title to Assets............................................ 12
Section 3.20 Employees.................................................. 12
Section 3.21 Insurance.................................................. 12
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ARTICLE IV
Representations and Warranties of Parent and Sub
Section 4.1 Organization............................................... 12
Section 4.2 Capitalization............................................. 13
Section 4.3 Authority.................................................. 13
Section 4.4 Consents and Approvals; No Violations...................... 13
Section 4.5 SEC Reports and Financial Statements....................... 14
Information in Disclosure Documents and Registration
Section 4.6 Statements................................................. 14
Section 4.7 Litigation................................................. 15
Section 4.8 Absence of Certain Changes or Events....................... 15
Section 4.9 No Violation of Law........................................ 15
Section 4.10 Environmental Matters...................................... 15
Section 4.11 Interim Operations of Sub.................................. 15
Section 4.12 Unwanted Businesses........................................ 15
Section 4.13 Purchases of Company Stock................................. 15
Section 4.14 Brokers or Finders......................................... 16
Section 4.15 Opinion of Financial Advisor............................... 16
ARTICLE V
Covenants Pending the Effective Time
Covenants of the Company with Respect to the Retained
Section 5.1 Business................................................... 16
Section 5.2 Covenants of the Company................................... 18
Section 5.3 Covenants of Parent........................................ 18
ARTICLE VI
Additional Agreements
Section 6.1 Reasonable Efforts......................................... 19
Section 6.2 Access to Information...................................... 19
Section 6.3 Stockholders Meetings...................................... 20
Section 6.4 Legal Conditions to Distribution and Merger................ 20
Section 6.5 Stock Exchange Listing..................................... 20
Section 6.6 Company Severance Obligations.............................. 20
Section 6.7 Employee Matters; Company Stock Plans...................... 20
Section 6.8 Fees and Expenses.......................................... 22
Section 6.9 Indemnification............................................ 22
Section 6.10 No Solicitations........................................... 22
Section 6.11 Distribution............................................... 23
Section 6.12 Tax-Free Nature of Transactions............................ 23
Section 6.13 Audited Closing Balance Sheet.............................. 23
Section 6.14 Financing.................................................. 24
Section 6.15 AMPRO Facility............................................. 24
Section 6.16 Comfort Letters............................................ 24
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ARTICLE VII
Conditions
Conditions to Each
Party's Obligation to
Section 7.1 Effect the Merger....... 25
Conditions of
Obligations of Parent
Section 7.2 and Sub................. 25
Conditions of
Obligations of the
Section 7.3 Company................. 26
ARTICLE VIII
Termination and Amendment
Section 8.1 Termination............. 27
Section 8.2 Effect of Termination... 27
Section 8.3 Termination Fee......... 28
Section 8.4 Amendment............... 28
Section 8.5 Extension; Waiver....... 28
ARTICLE IX
Miscellaneous
Nonsurvival of
Representations and
Section 9.1 Warranties.............. 28
Section 9.2 Notices................. 29
Section 9.3 Interpretation.......... 29
Section 9.4 Counterparts............ 29
Entire Agreement; No
Third-Party
Section 9.5 Beneficiaries........... 30
Section 9.6 Governing Law........... 30
Section 9.7 Specific Performance.... 30
Section 9.8 Publicity............... 30
Section 9.9 Assignment.............. 30
Attorney-Client
Section 9.10 Privilege; Work Product. 30
Section 9.11 Other................... 30
Section 9.12 Further Assurances...... 31
ANNEXES AND EXHIBITS
Annex I--Distribution Agreement
Exhibit A--Retained Business
Financial Statements
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of August 27,
1996, by and among Mississippi Chemical Corporation, a Mississippi corporation
("Parent"), Miss Sub, Inc., a Mississippi corporation and a wholly owned
subsidiary of Parent ("Sub"), and First Mississippi Corporation, a Mississippi
corporation (the "Company").
WHEREAS, Parent desires to acquire the Company's fertilizer business but
does not wish to acquire the other businesses conducted or to be conducted by
the Company;
WHEREAS, the Board of Directors of the Company has approved a plan of
distribution embodied in the form of a draft agreement attached hereto as
Annex I, as may be amended pursuant to the provisions of Section 6.11 hereof
(the "Distribution Agreement"), which will be entered into prior to the
Effective Time (as defined in Section 1.2) pursuant to which all of the
Company's assets, other than those used primarily in the Retained Business (as
defined in Section 3.7), will be contributed to a wholly owned subsidiary of
the Company ("Newco") (such contributions, together with all mergers, other
intercompany transfers of assets, and other actions described in Article IV of
the Distribution Agreement, the "Transfer") and shares of capital stock of
Newco will be distributed (the "Distribution") on a pro rata basis to the
stockholders of the Company as provided in the Distribution Agreement in order
to divest the Company of the businesses and operations that Parent is
unwilling to acquire;
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have determined that, following the Distribution, the merger of Sub with and
into the Company (the "Merger") with the Company surviving as a wholly owned
subsidiary of Parent would be advantageous and beneficial to their respective
corporations and stockholders; and
WHEREAS, for federal income tax purposes, it is intended that (i) the
Distribution shall qualify as a tax-free distribution under Section 355 of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) the Merger
shall qualify as a reorganization under Section 368(a) of the Code, and this
Agreement is intended to be and is adopted as a plan of reorganization.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
The Merger
Section 1.1 The Merger. Upon the terms and subject to the conditions hereof
and the Mississippi Business Corporation Act (the "MBCA"), at the Effective
Time, the Company and Sub shall consummate the Merger pursuant to which (i)
Sub shall be merged with and into the Company, (ii) the separate corporate
existence of Sub shall thereupon cease, (iii) the Company shall be the
surviving corporation in the Merger (the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Mississippi and (iv) the
corporate existence of the Company with its properties, rights, privileges,
powers and franchises shall continue unaffected by the Merger.
Section 1.2 Effective Time of the Merger. Upon the terms and subject to the
conditions hereof, articles of merger (the "Articles of Merger") shall be duly
prepared, executed and acknowledged by the Company and thereafter delivered to
the Secretary of State of the State of Mississippi, for filing, as provided in
the MBCA, as soon as practicable on or after the Closing Date (as defined in
Section 1.3). The Merger shall become effective
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immediately following the Distribution, upon the filing of the Articles of
Merger with the Secretary of State of the State of Mississippi or at such time
thereafter as is provided in the Articles of Merger (the "Effective Time").
Section 1.3 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by the parties, which shall be
no later than the second business day after satisfaction or waiver of the
conditions set forth in Article VII hereof, at the offices of the Company, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, unless another date or place is
agreed to in writing by the parties hereto. The date and time at which the
Closing occurs is referred to herein as the "Closing Date."
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in the MBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 1.5 Articles of Incorporation and Bylaws.
(a) The Articles of Incorporation of Sub in effect at the Effective Time
shall be the Articles of Incorporation of the Surviving Corporation until
amended in accordance with the MBCA.
(b) The bylaws of Sub in effect at the Effective Time shall be the bylaws
of the Surviving Corporation until amended in accordance with the MBCA.
Section 1.6 Directors. The directors of Sub at the Effective Time shall be
the initial directors of the Surviving Corporation, each to hold office from
the Effective Time in accordance with the Articles of Incorporation and bylaws
of the Surviving Corporation and until his or her successor is duly elected
and qualified.
Section 1.7 Officers. The officers of Sub at the Effective Time shall be the
initial officers of the Surviving Corporation, each to hold office from the
Effective Time in accordance with the Articles of Incorporation and bylaws of
the Surviving Corporation and until his or her successor is duly appointed and
qualified.
ARTICLE II
Conversion of Securities
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holders of any shares
of Common Stock, par value $1.00 per share, of the Company (the "Company
Common Stock") or Parent, as the holder of the capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $1.00 per share, of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares of
Company Common Stock that are owned by the Company and any shares of
Company Common Stock owned by Parent, Sub or any other wholly-owned
Subsidiary (as hereinafter defined) of Parent shall be cancelled and
retired and shall cease to exist and no stock of Parent or other
consideration shall be delivered in exchange therefor. As used in this
Agreement, the word "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated,
of which (i) such party or any other Subsidiary of such party is a general
partner (excluding partnerships the general partnership interests of which
held by such party and any Subsidiary of such party do not have a majority
of the voting interest in such partnership) or (ii) securities or other
interests having by their terms a majority of the outstanding voting power
with
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respect to such corporation or other organization are directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
(c) Exchange Ratio for Company Common Stock. Subject to Section 2.2(e),
each issued and outstanding share of Company Common Stock (other than
shares to be cancelled in accordance with Section 2.1(b) and Dissenting
Shares, as defined in Section 2.3) shall be converted into the right to
receive the Merger Consideration Per Share in fully paid and nonassessable
shares of Common Stock, par value $0.01 per share, of Parent ("Parent
Common Stock"). The "Merger Consideration Per Share" shall mean 6,904,762
shares of Parent Common Stock divided by the number of shares of Company
Common Stock outstanding at the Effective Time as certified to Parent by
the Company's transfer agent and registrar (the "Effective Time Outstanding
Shares"), rounded to the nearest one ten-thousandth of a share; provided,
however, if the average of the Daily Prices, as derived from The Wall
Street Journal, for the ten (10) trading days immediately preceding the
trading day prior to the Effective Time (such number rounded to the nearest
one one-hundredth of a cent, the "Average Parent Price"), is more than
$25.00, then the Merger Consideration Per Share shall be the greater of (i)
6,393,298 shares of Parent Common Stock divided by the Effective Time
Outstanding Shares and (ii) the number (rounded to the nearest one ten-
thousandth of a share) of Parent Common Shares determined by dividing (A)
the product of (x) 6,904,762 multiplied by (y) a fraction, the numerator of
which is $25.00 and the denominator of which is the Average Parent Price,
by (B) the Effective Time Outstanding Shares. The term "Daily Price" shall
mean for each trading day the average of the opening price, high price, low
price and closing price for the Parent Common Stock. At the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to
have any rights with respect thereto, except the right to receive the
shares of Parent Common Stock and any cash in lieu of fractional shares of
Parent Common Stock to be issued or paid in consideration therefor upon the
surrender of such certificate in accordance with Section 2.2, without
interest.
Section 2.2 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall deposit
with KeyCorp Shareholder Services, Inc. or such other bank or trust company
designated by the Company (and reasonably acceptable to Parent) (the
"Exchange Agent"), for the benefit of the holders of shares of Company
Common Stock, for exchange in accordance with this Article II through the
Exchange Agent, certificates representing the shares of Parent Common Stock
issuable pursuant to Section 2.1 in exchange for outstanding shares of
Company Common Stock, together with cash to be paid in lieu of fractional
shares (such shares of Parent Common Stock, together with any dividends or
distributions with respect thereto contemplated by Section 2.2(c) and cash
in lieu of fractional shares, being hereinafter referred to as the
"Exchange Fund").
(b) Exchange Procedures. As soon as practicable after the Effective Time,
the Surviving Corporation shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately prior
to the Effective Time represented outstanding shares of Company Common
Stock (the "Certificates") whose shares were converted pursuant to Section
2.1 into the right to receive shares of Parent Common Stock (i) a letter of
transmittal (which shall be in such form and have such provisions as Parent
and the Company may reasonably specify) and (ii) instructions for
surrendering the Certificates in exchange for certificates representing
shares of Parent Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by Parent, together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of
Parent Common Stock which such holder has the right to receive pursuant to
the provisions of this Article II and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of Company
Common Stock which is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Parent
Common Stock may be issued to a transferee if the Certificate representing
such Company Common Stock is presented to the Exchange Agent, accompanied
by all documents required to evidence and effect such transfer and by
evidence that any applicable stock transfer taxes have been paid.
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Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender a certificate representing shares of
Parent Common Stock and cash in lieu of any fractional shares of Parent
Common Stock as contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect
to Parent Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock which such holder is entitled to receive upon
the surrender thereof in accordance with this Section 2.2, and no cash
payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2(e) until the holder of record of such Certificate
shall so surrender such Certificate. Subject to the effect of applicable
laws, following surrender of any such Certificate, there shall be paid to
the record holder of the certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest, (i) at the time
of such surrender, the amount of any cash payable in lieu of any fractional
share of Parent Common Stock to which such holder is entitled pursuant to
Section 2.2(e) and the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Parent
Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof (including any
cash paid pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
shares of Company Common Stock which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be
cancelled and exchanged as provided in this Article II.
(e) No Fractional Shares. No certificate or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of
Parent. In lieu of any such fractional shares, each holder of Company
Common Stock who would otherwise have been entitled to a fraction of a
share of Parent Common Stock upon surrender of Certificates for exchange
will be entitled to receive a cash payment in lieu of such fractional share
in an amount equal to such fraction multiplied by the Average Parent Price.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the stockholders of the Company for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
stockholders of the Company who have not theretofore complied with this
Article II shall thereafter look only to Parent for payment of their claim
for Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock and any dividends or distributions with respect to Parent
Common Stock.
(g) No Liability. Neither Parent nor the Company shall be liable to any
holder of shares of Company Common Stock or Parent Common Stock, as the
case may be, for such shares (or dividends or distributions with respect
thereto) or cash for payment in lieu of fractional shares delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 2.3 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of the Company Common Stock which immediately prior to
the Effective Time are held by stockholders who have properly exercised and
perfected appraisal rights under Section 79-4-13.02 of the MBCA (the
"Dissenting Shares") shall not be converted into the right to receive shares
of Parent Common Stock as provided in Section 2.1 hereof, but the holders of
Dissenting Shares shall be entitled to receive such consideration from the
Surviving Corporation as shall be determined pursuant to Section 79-4-13.02 of
the MBCA; provided, however, that, if
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any such holder shall have failed to perfect or shall withdraw or lose his
right to appraisal and payment under the MBCA, such holder's shares of Company
Common Stock shall thereupon be deemed to have been converted as of the
Effective Time into the right to receive shares of Parent Common Stock,
without any interest thereon, as provided in Section 2.1 and such shares shall
no longer be Dissenting Shares.
ARTICLE III
Representations and Warranties of the Company
The Company represents and warrants to Parent and Sub as follows:
Section 3.1 Organization. As used in this Agreement, any reference to the
Company and its Subsidiaries means the Company and each of its Subsidiaries;
any reference to Newco and its Subsidiaries means Newco at the time of the
Distribution and those entities that at or immediately prior to the
Distribution will be direct or indirect Subsidiaries of or merged with or
liquidated into Newco; and references to Subsidiaries of Newco mean those
entities that at or immediately prior to the Distribution will be direct or
indirect Subsidiaries of or merged with or liquidated into Newco. As used in
this Agreement, any reference to any event, change or effect having a material
adverse effect on or with respect to an entity (or group of entities taken as
a whole) means that such event, change or effect is materially adverse to the
business, properties, assets, results of operations or financial condition of
such entity (or, if with respect thereto, of such group of entities taken as a
whole). Each of the Company and its Subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not have a material adverse
effect on the Retained Business taken as a whole. The Company and each of its
Subsidiaries are duly qualified or licensed to do business and in good
standing in each jurisdiction in which the property owned, leased or operated
by them or the nature of the business conducted by them makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed and in good standing would not in the aggregate have a
material adverse effect on the Retained Business taken as a whole or on the
ability of the Company and its Subsidiaries to consummate the transactions
contemplated hereby. True, accurate and complete copies of the Company's
Charter of Incorporation and bylaws, including all amendments thereto, have
heretofore been delivered to Parent.
Section 3.2 Capitalization. The authorized capital stock of the Company
consists of: (i) 100,000,000 shares of Company Common Stock of which, as of
August 26, 1996, 20,621,736 shares were issued and outstanding, and (ii)
20,000,000 shares of preferred stock (the "Company Preferred Stock"), of
which, as of the date hereof, no shares are issued or outstanding. 250,000
shares of Company Preferred Stock are designated Series X Junior Participating
Preferred Stock (the "Company Series X Preferred Stock") and are reserved for
issuance in accordance with the Rights Agreement, dated as of February 27,
1996 (the "Rights Agreement"), by and between the Company and Society National
Bank, as Rights Agent (the "Company Rights Agent"), pursuant to which the
Company has issued rights (the "Company Rights") to purchase shares of Company
Series X Preferred Stock and 249,167 shares of Company Preferred Stock (with
the designations set forth in Section 3.2 of the disclosure schedule delivered
by the Company to Parent on the date hereof (the "Company Disclosure
Schedule")) are reserved for issuance pursuant to the terms of debentures
convertible into Company Preferred Stock (the "Company Convertible
Debentures") and debenture options. As of the date hereof, 926,759 shares of
Company Common Stock were reserved for issuance upon exercise of outstanding
stock options and debenture options (which debenture options are exercisable
for Company Convertible Debentures which are convertible into Company
Preferred Stock which is then convertible into Company Common Stock) and upon
conversion of Company Convertible Debentures pursuant to the Company's 1980
Long-Term Incentive Plan (the "1980 Plan"), 1988 Long-Term Incentive Plan (the
"1988 Plan") and 1995 Long-Term Incentive Plan (the "1995 Plan" and, together
with the 1980 Plan and the 1988 Plan, the "Company Stock Plans"). All the
outstanding shares of the Company's capital stock are, and all shares which
may be issued pursuant to Company
5
Stock Plans will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and non-assessable and free of any
preemptive rights in respect thereof. Except as set forth above or in Section
3.2 of the Company Disclosure Schedule, as of the date hereof, there are no
existing options, warrants, calls, subscriptions or other rights or other
agreements, commitments, understandings or restrictions of any character
binding on the Company or any of its Subsidiaries with respect to the issued
or unissued capital stock of the Company or any of its Subsidiaries. Except as
set forth in Section 3.2 of the Company Disclosure Schedule, there are no
outstanding contractual obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries.
Section 3.3 Authority. The Company has the requisite corporate power and
authority to execute and deliver this Agreement and the Distribution Agreement
and to consummate the transactions contemplated hereby and thereby other than,
with respect to the Merger, the approval and adoption of this Agreement by the
affirmative vote of the holders of at least a majority of the outstanding
shares of Company Common Stock and, with respect to the Distribution, the
declaration of the Distribution by the Company's Board of Directors. The
execution, delivery and performance of this Agreement and the Distribution
Agreement by the Company and the consummation by the Company of the
Distribution and the Merger and of the other transactions contemplated hereby
and thereby have been duly authorized by the Company's Board of Directors, and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the Distribution Agreement or for the Company to
consummate the transactions so contemplated hereby or thereby other than, with
respect to the Merger, the approval and adoption of this Agreement by the
affirmative vote of the holders of at least a majority of the outstanding
shares of Company Common Stock and, with respect to the Distribution,
declaration of the Distribution by the Company's Board of Directors. This
Agreement has been duly executed and delivered by the Company and, assuming
this Agreement constitutes a valid and binding obligation of Parent and Sub,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms. Prior to the Distribution, the
Distribution Agreement will be duly executed and delivered by each of the
Company and Newco and upon such execution and delivery will constitute a valid
and binding obligation of each of the Company and Newco, enforceable against
each of them in accordance with its terms.
Section 3.4 Consents and Approvals; No Violations. Except (a) as set forth
in Section 3.4 of the Company Disclosure Schedule, (b) for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Securities Act of 1933, as amended (the "Securities
Act"), the New York Stock Exchange (the "NYSE"), the National Association of
Securities Dealers, Inc., the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act"), filings under state securities or "blue sky"
laws and the filing with the Secretary of State of the State of Mississippi of
the Articles of Merger and articles of merger with respect to the merger of
FirstMiss Fertilizer, Inc. into the Company and (c) as may be necessary as a
result of any facts or circumstances relating solely to Parent or any of its
Subsidiaries, none of the execution, delivery or performance of this Agreement
or the Distribution Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby or thereby and compliance by
the Company with any of the provisions hereof or thereof will (i) conflict
with or result in any breach of any provisions of the charters or bylaws of
the Company or of any of its Subsidiaries, (ii) require any filing by the
Company or any of its Subsidiaries with, or any permit, authorization, consent
or approval to be obtained by the Company or any of its Subsidiaries of, any
court, arbitral tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency (a "Governmental
Entity"), (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument, obligation or
commitment to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound
("Contracts") or (iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company or any of its Subsidiaries,
except, in the case of clause (ii), (iii) or (iv), for failures to file or
obtain, violations, breaches or defaults which would not have a material
adverse effect on the Retained Business taken as a whole or the ability of the
Company to consummate the transactions contemplated hereby.
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Section 3.5 SEC Reports and Financial Statements. The Company has timely
filed with the Securities and Exchange Commission (the "SEC"), and has
heretofore made available to Parent true and complete copies of, all periodic
reports required to be filed by it since July 1, 1995 under the Exchange Act
(as such documents have been amended since the time of their filing, together
with all such periodic reports to be filed from the date hereof to the
Effective Time, collectively, the "Company SEC Documents"). Except with
respect to information concerning the Triad Chemical Joint Venture ("Triad"),
as to which the Company makes no representation or warranty for the purposes
of this Section 3.5, the Company SEC Documents, including without limitation
any financial statements or schedules included therein, at the time filed, (a)
did not or will not, as the case may be, 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 and (b) complied or
will comply, as the case may be, in all material respects with the applicable
requirements of the Exchange Act. Except with respect to information
concerning Triad, as to which the Company makes no representation or warranty
for purposes of this Section 3.5, the consolidated financial statements of the
Company included in the Company SEC Documents (including the notes and
schedules thereto, the "Company Financial Statements") comply as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis during the periods involved (except as may be indicated
in the notes thereto or, in the case of the unaudited statements, as permitted
by Form 10-Q of the SEC) and fairly present in all material respects (subject,
in the case of the unaudited financial statements, to normal audit
adjustments) the consolidated financial position of the Company and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended.
Section 3.6 Information in Disclosure Documents and Registration
Statements. Except with respect to information concerning Triad, as to which
the Company makes no representation or warranty for purposes of this Section
3.6, none of the information supplied or to be supplied by the Company or its
representatives for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of shares of Parent Common Stock in the Merger
(the "S-4") will, at the time such registration statement becomes effective
under the Securities Act and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (ii) the joint
proxy statement relating to the meetings of each of the Company's and Parent's
stockholders to be held in connection with the Merger (the "Proxy Statement")
will, at the date mailed to the Company's and Parent's stockholders and at the
time of each of the meetings of the Company's and Parent's stockholders to be
held in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by Parent or Sub for inclusion in the Proxy
Statement, with respect to information concerning Parent or any of its
Subsidiaries incorporated by reference in the Proxy Statement or with respect
to information concerning Triad.
Section 3.7 Retained Business.
(a) Attached hereto as Exhibit A is an unaudited pro forma consolidated
balance sheet of the Retained Business of the Company and its Subsidiaries
at June 30, 1996 (including certain explanatory notes thereto, the
"Retained Business Balance Sheet") and an unaudited pro forma consolidated
statement of operations for the Retained Business of the Company and its
Subsidiaries for the year ended June 30, 1996 (including certain
explanatory notes thereto, the "Retained Business Income Statement" and,
together with the Retained Business Balance Sheet, the "Retained Business
Financial Statements"). The "Retained Business" means and includes the
assets, liabilities, capital stock and partnership interests reflected on
the Retained Business Balance Sheet, as such assets and liabilities may
have changed since the date of the Retained Business Balance Sheet, but in
any event shall include all of the Company's direct and indirect
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right, title and interest (including minority interests) in the assets used
primarily in, and all of the Company's liabilities and obligations
(accrued, absolute, contingent, undisclosed or otherwise) which are
primarily related to or have arisen or will arise from, the production,
distribution, sale and storage of ammonia and urea and purchase and resale
of ammonia and urea (except for those assets and liabilities identified in
Section 3.7 of the Company Disclosure Schedule under the headings "Excluded
Assets" and "Excluded Liabilities," which shall not be included in the
Retained Business and which are referred to herein as the "Excluded Assets"
and "Excluded Liabilities"). The Retained Business shall include the
following entities: FirstMiss Fertilizer, Inc.; AMPRO Fertilizer, Inc.; FMF
Barge, Inc.; FMF, Inc. ("FMF"); a 50% interest in Arcadian/FirstMiss
Fertilizer LLC; a 50% interest in Triad; and the partnership interests
currently held by FEC Marketing, Inc. ("FEC") and FMF in FirstMiss
Fertilizer Limited Partnership and FirstMiss Fertilizer Texas LP (the
"Partnerships"). As of the Effective Date, the interests in the
Partnerships currently held by FEC will be held by an entity other than FEC
included in the Retained Business that will be designated by Parent.
(b) Except with respect to information concerning Triad, as to which the
Company makes no representation or warranty for purposes of this Section
3.7, the Retained Business Financial Statements have been prepared in
accordance with generally accepted accounting principles on a basis
consistent with the Company Financial Statements, and, except as set forth
in Section 3.7 of the Company Disclosure Schedule, fairly present in all
material respects (subject to normal audit adjustments) the consolidated
financial position of the Company and its Subsidiaries as at the date
thereof, after giving pro forma effect to the Distribution (assuming the
Distribution occurred on June 30, 1996), and the consolidated results of
their operations for the one-year period then ended, after giving pro forma
effect to the Distribution (assuming the Distribution occurred on July 1,
1995).
(c) At the Effective Time, except for the Excluded Assets and as
contemplated by this Agreement or the Distribution Agreement, neither Newco
nor any of its Subsidiaries will own or have rights to use any of the
assets or property, whether tangible, intangible or mixed, which are
necessary for the conduct of the Retained Business as conducted on the date
hereof. Except as set forth in Section 3.7 of the Company Disclosure
Schedule, at the Effective Time neither Newco nor any of its Subsidiaries
will be a party to any material agreement or arrangement with the Surviving
Corporation or any of its Subsidiaries (other than the Distribution
Agreement and any agreements contemplated by the Distribution Agreement,
including the Tax Disaffiliation Agreement and the Employee Benefits
Agreement).
Section 3.8 Litigation. Except as disclosed in the Company SEC Documents
filed prior to the date hereof or as set forth in Section 3.8 of the Company
Disclosure Schedule and except with respect to information concerning Triad,
as to which the Company makes no representation or warranty for purposes of
this Section 3.8, there is no suit, action, proceeding or investigation
relating to the Retained Business pending or, to the knowledge of the Company,
threatened, against the Company or any of its Subsidiaries before any
Governmental Entity which, individually or in the aggregate, is reasonably
likely to have a material adverse effect on the Retained Business taken as a
whole or the ability of the Company to consummate the transactions
contemplated hereby. Except as disclosed in the Company SEC Documents filed
prior to the date hereof or as set forth in Section 3.8 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is
subject to any outstanding order, writ, injunction or decree relating to the
Retained Business which, individually or in the aggregate, is reasonably
likely to have a material adverse effect on the Retained Business taken as a
whole or a material adverse effect on the ability of the Company to consummate
the transactions contemplated hereby.
Section 3.9 Employee Benefits.
(a) Other than with respect to Triad, as to which the Company makes no
representation or warranty for purposes of this Section 3.9, Section 3.9 of
the Company Disclosure Schedule contains a list of all "employee benefit
plans" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all bonus, stock option,
fringe benefit, vacation, incentive, severance, employment or other benefit
plans, programs, agreements and arrangements (the "Benefit
8
Plans"), which cover employees or former employees of the Company and its
Subsidiaries who are or were employed in the Retained Business (the
"Employees"). True and complete copies of all Benefit Plans, any trust
instruments and/or insurance contracts, if any, forming a part of any such
plans, and all amendments thereto; current summary plan descriptions; where
applicable, the most current determination letter received from the
Internal Revenue Service (the "Service") and most recent determination
letter application; and where applicable, annual reports, financial
statements and actuarial reports for the last three plan years, which
fairly and accurately reflect the financial condition of the plans have
been made available to Parent.
(b) All Benefit Plans are in compliance with ERISA, the Code and all
other applicable laws in all material respects. Each Benefit Plan which is
an "employee pension benefit plan" within the meaning of Section 3(2) of
ERISA (a "Pension Plan") and which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter
from the Service, and the Company is not aware of any circumstances likely
to result in revocation of any such favorable determination letter. Neither
the Company nor any of its Subsidiaries or any ERISA Affiliate (as defined
below) has contributed or been required to contribute to any Multiemployer
Plan (as defined in ERISA) with respect to any Employees.
(c) No liability under Subtitle C or D of Title IV of ERISA has been
incurred by the Company or any Subsidiary with respect to any ongoing,
frozen or terminated Benefit Plan, currently or formerly maintained by any
of them, or the Plan of any entity which is or has been considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the
Code (an "ERISA Affiliate") which would have a material adverse effect on
the Retained Business taken as a whole.
(d) All contributions required to be made or accrued as of June 30, 1996
under the terms of any Benefit Plan for which the Surviving Corporation or
any of its Subsidiaries may have liability have been timely made or have
been reflected on the Retained Business Balance sheet. Neither any Pension
Plan nor any single-employer plan of an ERISA Affiliate has incurred an
"accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA in an amount which would
have a material adverse effect on the Retained Business taken as a whole.
Neither the Company nor any of its Subsidiaries has provided, or is
required to provide, security to any Pension Plan pursuant to Section
401(a)(29) of the Code.
(e) Neither the Company nor any of its Subsidiaries has any obligations
for retiree health and life benefits for Employees or former Employees
under any Benefit Plan, except as set forth in Section 3.9 of the Company
Disclosure Schedule or as required by Part 6 of Title I of ERISA.
(f) The Company and its Subsidiaries have no unfunded liabilities with
respect to any Pension Plan which covers former Employees in an amount
which would have a material adverse effect on the Retained Business taken
as a whole.
(g) Immediately after the Effective Time, the Surviving Corporation or
its Subsidiaries could terminate each Benefit Plan in accordance with its
terms without incurring any material liability.
(h) With respect to the Company and the Retained Business, the
transactions contemplated by this Agreement and the Distribution Agreement
will not cause any additional payments to be due under any Benefit Plan,
nor accelerate the payment or vesting of any amounts due under any Benefit
Plan, nor result in any excess parachute payment within the meaning of Code
Section 280G except for payments which are paid prior to the Effective
Time, accrued on the Audited Closing Balance Sheet (as defined in Section
6.13) or for which funds have been reserved, or amounts due which are
assumed by Newco pursuant to the Distribution Agreement.
Section 3.10 Absence of Certain Changes or Events. Since June 30, 1996, the
Company and its Subsidiaries have conducted the Retained Business only in the
ordinary and usual course consistent with past practice, except as set forth
in Section 3.10 of the Company Disclosure Schedule, and there has not been any
change or development, or combination of changes or developments which
individually or in the aggregate have had or are reasonably likely to have a
material adverse effect on the Retained Business taken as a whole.
9
Section 3.11 No Violation of Law. Except as disclosed in the Company SEC
Documents as filed prior to the date hereof or as set forth in Section 3.11 of
the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is in violation of, or, to the knowledge of the Company, is under
investigation with respect to or has been given notice or been charged by any
Governmental Entity with any violation of, any law, statute, order, rule,
regulation or judgment of any Governmental Entity, except for violations
which, in the aggregate, would not have a material adverse effect on the
Retained Business taken as a whole. The Company and its Subsidiaries have all
permits, licenses, franchises and other governmental authorizations, consents
and approvals necessary to conduct the Retained Business as presently
conducted, except for any such permits, licenses, franchises or other
governmental authorizations, consents and approvals the failure of which to
have would not have a material adverse effect on the Retained Business taken
as a whole.
Section 3.12 Taxes.
(a) Except as disclosed in the Company Financial Statements for the year
ended June 30, 1995 or as set forth in Section 3.12 of the Company
Disclosure Schedule:
(i) the Company and its Subsidiaries have (A) duly filed with the
appropriate governmental authorities all Tax Returns (as hereinafter
defined) required to be filed by them on or prior to the Effective
Time, other than those Tax Returns the failure of which to file would
not have a material adverse effect on the Retained Business taken as a
whole, and such Tax Returns are true, correct and complete in all
material respects, and (B) duly paid in full or made provision in
accordance with generally accepted accounting principles for the
payment of, and withheld, all Taxes (as hereinafter defined) required
to be shown on such Tax Returns or required to be withheld by them,
respectively;
(ii) as of the date hereof, the Tax Returns for the Company and its
Subsidiaries are not currently the subject of any audit, investigation
or proceeding by the Service or, to the Company's knowledge, any state
or local taxing authority, and the Company and its Subsidiaries have
not received any written notice of deficiency or assessment from any
taxing authority with respect to liabilities for material Taxes of the
Company or its Subsidiaries which have not been paid or finally
settled, other than audits, deficiencies or assessments disclosed in
Section 3.12 of the Company Disclosure Schedule which are being
contested in good faith through appropriate proceedings;
(iii) no waiver of any statute of limitations in respect of Taxes or
any extension of time with respect to a Tax assessment or deficiency
granted by the Company or any of its Subsidiaries is currently in
effect;
(iv) none of the Company and its Subsidiaries is a party to any Tax
allocation or sharing agreement, other than the Tax Disaffiliation
Agreement; and
(v) none of the Company and its Subsidiaries has been a member of any
affiliated group within the meaning of Section 1504(a) of the Internal
Revenue Code of 1986, as amended, or any similar affiliated or
consolidated group for tax purposes under state, local or foreign law
(other than a group the common parent of which is the Company), or has
any liability for the Taxes of any person (other than the Company and
its Subsidiaries) under Treasury Regulation Section 1.1502-6 or any
similar provision of state, local or foreign law as a transferee or
successor, by contract or otherwise.
(b) "Taxes" means all taxes, charges, fees, levies, imposts, duties or
other assessments, including, without limitation, income, gross receipts,
excise, personal property, real property, sales, ad valorem, value-added,
leasing, withholding, social security, occupation, use, service, service
use, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local, or foreign
governmental authority whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any
interest, fines, penalties or additional amounts attributable or imposed on
or with respect to any such taxes, charges, fees, levies, imposts, duties
or other assessments. "Tax Return" means any return, report or other
document or information required to be supplied to a taxing authority in
connection with Taxes.
10
Section 3.13 Environmental Matters.
(a) Except as disclosed in the Company SEC Documents as filed prior to
the date hereof or as set forth in Section 3.13 of the Company Disclosure
Schedule, except for such matters that, individually or in the aggregate,
would not have a material adverse effect on the Retained Business taken as
a whole and except with respect to information concerning Triad, as to
which the Company makes no representation or warranty for purposes of this
Section 3.13, (i) the Retained Business of the Company and its Subsidiaries
is in compliance in all material respects with all applicable Environmental
Laws (as hereinafter defined); (ii) the properties included in the Retained
Business and presently owned or operated by the Company or its Subsidiaries
(the "Company Properties") do not contain any Hazardous Substance (as
hereinafter defined) other than as permitted under applicable Environmental
Laws; (iii) neither the Company nor any of its Subsidiaries has since July
1, 1994 received or is aware of any actual claims, notices, demand letters,
lawsuits or requests for information from any Governmental Entity or any
private third party alleging that the Retained Business is in violation of,
or liable under, any Environmental Laws; and (iv) none of the Company, its
Subsidiaries or the Company Properties is subject to any court order,
administrative order or decree relating to the Retained Business arising
under any Environmental Law.
(b) "Environmental Law" means any applicable Federal, state or local law,
regulation, permit, judgment or agreement with any Governmental Entity,
relating to (x) the protection, preservation or restoration of the
environment or to human health or safety, or (y) the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous
Substances. "Hazardous Substance" means any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any Environmental Law.
Section 3.14 Material Contracts. Other than with respect to Triad, Section
3.14 of the Company Disclosure Schedule identifies any Contract included in
the Retained Business to which the Company or any of its Subsidiaries is a
party or by which any of its assets or operations may be bound that is (i) a
loan or similar agreement or indebtedness evidenced by a note or other
instrument, or any direct or indirect guarantee of indebtedness of any other
person, in excess of $1,000,000; (ii) any Contract that expressly limits the
right to terminate the Contract without penalty upon less than one year's
notice and such Contract provides for future payments in excess of $5,000,000
within the next twelve (12) months from the date hereof; (iii) any Contract
for the purchase, sale or transportation of natural gas; (iv) any Contract
related to product purchases or product sales in excess of $500,000; and (v)
any Contract related to capital expenditures, which provides for future
payments in excess of $5,000,000 within the next twelve (12) months from the
date hereof. Except as set forth in Section 3.14 of the Company Disclosure
Schedule and except with respect to Triad, as to which the Company makes no
representation or warranty for purposes of this Section 3.14, (i) each of the
Contracts included in the Retained Business to which the Company or any of its
Subsidiaries is a party or by which any of its assets or operations may be
bound is in full force and effect, except where the failure to be in full
force and effect would not have a material adverse effect on the Retained
Business taken as a whole and (ii) there are no existing defaults by the
Company or such Subsidiary thereunder which default would result in a material
adverse effect on the Retained Business taken as a whole.
Section 3.15 Rights Agreement. As of the Effective Time, the Company will
have taken all necessary action to render the Company Rights inapplicable to
the Merger, the Distribution and the other transactions contemplated hereby.
Section 3.16 Brokers or Finders. Neither the Company nor any of its
Subsidiaries has any liability to any agent, broker, investment banker,
financial advisor or other firm or person for any broker's or finder's fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement except CS First Boston Corporation, whose fees
and expenses, as previously disclosed to Parent, will be paid by the Company
in accordance with the Company's agreement with such firm.
11
Section 3.17 State Takeover Statutes. The provisions of the Mississippi
Control Share Act and the Mississippi Shareholder Protection Act will not
apply to the Merger, the Distribution or any of the other transactions
contemplated hereby, and to the Company's knowledge, no other state takeover
statute or similar statute or regulation applies to the Merger, the
Distribution, or any of the other transactions contemplated hereby.
Section 3.18 Opinion of Financial Advisor. The Company has received the
opinion of CS First Boston Corporation to the effect that, as of the date of
such opinion, the terms of the Distribution and Merger, taken together, are
fair, from a financial point of view, to the holders of common stock of the
Company.
Section 3.19 Title to Assets. The Company has title and/or rights sufficient
to carry-on operations as contemplated by (the AMPRO Retrofit as defined in
Section 6.15) or presently conducted to that portion of the real property (and
the rights, privileges and appurtenances pertaining to such real property)
included in the Retained Business on which the AMPRO ammonia plant and related
operations are located, subject only to the following permitted exceptions:
(i) all highway, roadway, railroad, utility, drainage, pipeline and other like
easements, servitudes and rights of way which an inspection or survey of the
property would show and which do not materially adversely affect use of the
property as a fertilizer manufacturing facility and related operations, (ii)
liens for ad valorem taxes not yet due and payable, (iii) easements,
restrictions and encumbrances which do not materially adversely affect use of
the property as a fertilizer manufacturing facility and related operations and
(iv) all rights, title and interests of (x) Parent and (y) Triad. Except as
otherwise set forth above, except with respect to any other real property
included in the Retained Business, as to which the Company makes no
representation or warranty for purposes of this Section 3.19 and except as set
forth in Section 3.19 of the Company Disclosure Schedule, the Company owns all
of the material assets included in the Retained Business free and clear of any
liens, claims, security interests or encumbrances that, individually or in the
aggregate, are reasonably likely to have a material adverse effect on the
Retained Business taken as a whole.
Section 3.20 Employees. Other than with respect to Triad, the Company has
made available to Parent a list of the employees currently employed in the
Retained Business indicating the positions which they now hold, their current
rates of compensation and which employees, if any, are on short or long term
disability, family and medical, military, workers' compensation, or any other
type of leave of absence; and copies of all employee handbooks, and policy and
procedure manuals. With respect to the Retained Business other than Triad,
neither the Company nor any of its Subsidiaries is a party to, or is bound by,
any collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor is the Company or
any of its Subsidiaries the subject of any proceeding or organizing activity
asserting that it or any such Subsidiary has committed an unfair labor
practice or seeking to compel it or such Subsidiary to bargain with any labor
organization as to wages and conditions of employment, nor is there any
strike, labor dispute, slow down or stoppage involving the Company or any of
its Subsidiaries pending or, to the knowledge of the Company, threatened that,
individually or in the aggregate, are reasonably likely to have a material
adverse effect on the Retained Business taken as a whole.
Section 3.21 Insurance. Set forth in Section 3.21 of the Company Disclosure
Schedule is a schedule of the insurance coverage (including policy limits,
coverage layers, and named insureds) maintained by the Company on the assets,
properties, premises, operations and personnel of the Company, including the
Retained Business.
ARTICLE IV
Representations and Warranties of Parent and Sub
Parent and Sub represent and warrant to the Company as follows:
Section 4.1 Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted except
12
where the failure to be so organized, existing and in good standing or to have
such power and authority would not have a material adverse effect on Parent
and its Subsidiaries taken as a whole. Parent and each of its Subsidiaries are
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by them or the
nature of the business conducted by them makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not in the aggregate have a material adverse effect on
Parent and its Subsidiaries taken as a whole or on the ability of Parent or
Sub to consummate the transactions contemplated hereby. True, accurate and
complete copies of Parent's and Sub's Articles of Incorporation and bylaws,
including all amendments thereto, have heretofore been delivered to the
Company.
Section 4.2 Capitalization. As of the date hereof, the authorized capital
stock of Parent consists of: (i) 100,000,000 shares of Parent Common Stock of
which, as of June 30, 1996, 21,353,450 shares were issued and outstanding and
1,550,000 shares were held in treasury, and (ii) 500,000 shares of preferred
stock, par value $0.01 per share, of which, as of the date hereof, no shares
were issued and outstanding ("Parent Preferred Stock"). 250,000 shares of
Parent Preferred Stock are designated Preferred Stock, Series A and are
reserved for issuance in accordance with the Rights Agreement, dated as of
August 8, 1994, by and between Parent and ▇▇▇▇▇▇ Trust and Savings Bank, as
Rights Agent, pursuant to which Parent has issued rights to purchase shares of
Parent Preferred Stock. All the outstanding shares of Parent's capital stock
are, and all shares of Parent Common Stock which are to be issued pursuant to
the Merger will be when issued in accordance with the terms hereof, duly
authorized, validly issued, fully paid and nonassessable and free of any
preemptive rights in respect thereto. Except for Parent Common Stock issuable
to directors, officers and employees pursuant to Parent stock option and other
benefit plans and except for this Agreement, there are no existing options,
warrants, calls, subscriptions or other rights or other agreements,
commitments, understandings or restrictions of any character relating to the
issued or unissued capital stock of Parent or any of its Subsidiaries. As of
the date hereof, the authorized capital stock of Sub consists of 1,000 shares
of Common Stock, par value $0.01 per share, all of which are validly issued,
fully paid and nonassessable and are owned of record and beneficially by
Parent. After June 30, 1996 and prior to the date hereof, no material number
of shares of Parent Common Stock have been issued except issuances of shares
reserved for issuance as described above.
Section 4.3 Authority. Parent and Sub have the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of the issuance of shares of Parent Common Stock to the Company's
stockholders pursuant to this Agreement by an affirmative vote of the holders
of at least a majority of the shares of Parent Common Stock present, in person
or by proxy, and entitled to vote at the meeting of Parent's stockholders
referred to in Section 6.3(b) for which a quorum exists). The execution,
delivery and performance of this Agreement by each of Parent and Sub and the
consummation by Sub of the Merger and by Parent and Sub of the other
transactions contemplated hereby have been duly authorized by the Boards of
Directors of Parent and Sub and Parent as the sole stockholder of Sub, and no
other corporate proceedings on the part of Parent or Sub are necessary to
authorize this Agreement or for Parent and Sub to consummate the transactions
so contemplated (other than, with respect to the Merger, the approval of the
issuance of shares of Parent Common Stock to the Company's stockholders
pursuant to this Agreement by an affirmative vote of the holders of at least a
majority of the shares of Parent Common Stock present, in person or by proxy,
and entitled to vote at the meeting of Parent's stockholders referred to in
Section 6.3(b) for which a quorum exists). This Agreement has been duly
executed and delivered by each of Parent and Sub, and, assuming this Agreement
constitutes a valid and binding obligation of the Company, constitutes a valid
and binding obligation of each of Parent and Sub, enforceable against each of
them in accordance with its terms.
Section 4.4 Consents and Approvals; No Violations. Except (a) as set forth
in Section 4.4 of the disclosure schedule delivered by Parent to the Company
on or prior to the date hereof (the "Parent Disclosure Schedule"), (b) for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, the HSR Act, the NYSE or the NASDAQ National Market, as the case may be,
filings under state securities or "blue sky" laws, and the filing with the
13
Secretary of State of the State of Mississippi of the Articles of Merger and
(c) as may be necessary as a result of any facts or circumstances relating
solely to the Company and its Subsidiaries, neither the execution, delivery or
performance of this Agreement by Parent and Sub nor the consummation by Parent
and Sub of the transactions contemplated hereby nor compliance by Parent and
Sub with any of the provisions hereof will (i) conflict with or result in any
breach of any provision of the respective charter or bylaws of Parent and Sub,
(ii) require any filing by Parent or its Subsidiaries with, or permit,
authorization, consent or approval to be obtained by Parent or its
Subsidiaries of, any Governmental Entity, (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
Contract to which Parent or any of its Subsidiaries is a party or by which any
of them or any of their properties or assets may be bound or (iv) violate any
order, writ, injunction, decree, statute, ordinance, rule or regulation
applicable to Parent or any of its Subsidiaries, except, in the case of clause
(ii), (iii) or (iv), for failures to file or obtain, violations, breaches or
defaults which would not, individually or in the aggregate, have a material
adverse effect on Parent or Sub or the ability of Parent or Sub to consummate
the transactions contemplated hereby.
Section 4.5 SEC Reports and Financial Statements. Each of Parent and its
Subsidiaries has timely filed with the SEC and has heretofore made available
to the Company true and complete copies of all periodic reports required to be
filed by it since July 1, 1995 under the Exchange Act (as such documents have
been amended since the time of their filing, together with all such periodic
reports to be filed from the date hereof to the Effective Time, collectively,
the "Parent SEC Documents"). Except with respect to information concerning
Triad, as to which Parent makes no representation or warranty for purposes of
this Section 4.5, the Parent SEC Documents, including without limitation any
financial statements or schedules included therein, at the time filed, (a) did
not or will not, as the case may be, 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 and (b) complied or
will comply, as the case may be, in all material respects with the applicable
requirements of the Exchange Act. Except with respect to information
concerning Triad, as to which Parent makes no representation or warranty for
purposes of this Section 4.5, the consolidated financial statements of Parent
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited financial statements, as permitted by Form 10-Q
of the SEC) and fairly present (subject, in the case of the unaudited
statements, to normal audit adjustments) the consolidated financial position
of Parent and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.
Section 4.6 Information in Disclosure Documents and Registration
Statements. Except with respect to information concerning Triad, as to which
Parent makes no representation or warranty for purposes of this Section 4.6,
none of the information supplied by Parent or Sub or their representatives for
inclusion or incorporation by reference in (i) the S-4 will, at the time the
S-4 becomes effective under the Securities Act and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (ii) the Proxy Statement will, at the date mailed to each of
the Company's and Parent's stockholders and at the time of each of the
meetings of the Company's and Parent's stockholders to be held in connection
with the Merger, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The S-4 and the Proxy Statement will comply as to
form in all material respects with the provisions of the Securities Act of
1933, as amended and the rules and regulations thereunder, except that no
representation is made by Parent and Sub with respect to statements made
therein based on information supplied by the Company for inclusion in the S-4
and the Proxy Statement, with respect to information concerning the Company
incorporated by reference in the S-4 and the Proxy Statement or with respect
to information concerning Triad.
14
Section 4.7 Litigation. Except as disclosed in the Parent SEC Documents
filed prior to the date of this Agreement and except with respect to
information concerning Triad, as to which Parent makes no representation or
warranty for purposes of this Section 4.7, there is no suit, action,
proceeding or investigation pending or, to the knowledge of Parent,
threatened, against Parent or any of its Subsidiaries before any Governmental
Entity which, individually or in the aggregate, might reasonably be expected
to have a material adverse effect on Parent and its Subsidiaries taken as a
whole or a material adverse effect on the ability of Parent or Sub to
consummate the transactions contemplated by this Agreement. Except as
disclosed in the Parent SEC Documents filed prior to the date of this
Agreement, neither Parent nor any of its Subsidiaries is subject to any
outstanding order, writ, injunction or decree which, individually or in the
aggregate, might reasonably be expected to have a material adverse effect on
Parent and its Subsidiaries taken as a whole or a material adverse effect on
the ability of Parent or Sub to consummate the transactions contemplated
hereby.
Section 4.8 Absence of Certain Changes or Events. Since June 30, 1996, there
has not been any change or development, or combination of changes or
developments which individually or in the aggregate have had or are reasonably
likely to have a material adverse effect on Parent and its Subsidiaries taken
as a whole.
Section 4.9 No Violation of Law. Except as disclosed in the Parent SEC
Documents as filed prior to the date hereof or as set forth in Section 4.9 of
the Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries is
in violation of, or, to the knowledge of Parent, is under investigation with
respect to or has been given notice or been charged by any Governmental Entity
with any violation of, any law, statute, order, rule, regulation or judgment
of any Governmental Entity, except for violations which, in the aggregate, do
not have a material adverse effect on the Parent and its Subsidiaries taken as
a whole. Parent and its Subsidiaries have all permits, licenses, franchises
and other governmental authorizations, consents and approvals necessary to
conduct their businesses as presently conducted, except for any such permits,
licenses, franchises or other governmental authorizations, consents and
approvals the failure of which to have would not have a material adverse
effect on Parent and its Subsidiaries taken as a whole.
Section 4.10 Environmental Matters. Except as disclosed in the Parent SEC
Documents as filed prior to the date hereof or as set forth in Section 4.10 of
the Parent Disclosure Schedule, except for such matters that, individually or
in the aggregate, would not have a material adverse effect on Parent and its
Subsidiaries taken as a whole and except with respect to information
concerning Triad, as to which Parent makes no representation or warranty for
purposes of this Section 4.10, (i) Parent and its Subsidiaries are in
compliance in all material respects with all applicable Environmental Laws;
(ii) the properties presently owned or operated by Parent or its Subsidiaries
(the "Parent Properties") do not contain any Hazardous Substance other than as
permitted under applicable Environmental Laws; (iii) neither Parent nor any of
its Subsidiaries has, since July 1, 1994, received any actual claims, notices,
demand letters, lawsuits or requests for information from any Governmental
Entity or any private third party alleging that Parent is in violation of, or
liable under, any Environmental Laws; and (iv) none of Parent, its
Subsidiaries or the Parent Properties is subject to any court order,
administrative order or decree arising under any Environmental Law.
Section 4.11 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
Section 4.12 Unwanted Businesses. Parent is unwilling to consummate the
Merger unless the Company has divested itself of all of the Company's assets
and Newco has assumed all of the Company's liabilities, other than those
relating to the Retained Business.
Section 4.13 Purchases of Company Stock. Except as set forth in Section 4.13
of the Parent Disclosure Schedule, neither Parent nor any of its affiliates
has acquired any shares of capital stock of the Company. Section 4.13 of
Parent Disclosure Schedule sets forth the amount of Parent Common Stock
repurchased by Parent in the last six (6) months pursuant to its stock
repurchase program (the "Repurchase Program") or otherwise and the amount of
repurchases authorized by Parent's Board of Directors.
15
Section 4.14 Brokers or Finders. Neither Parent nor any of its Subsidiaries
has any liability to any agent, broker, investment banker, financial advisor
or other firm or person for any broker's or finder's fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement except ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation, whose fees and expenses will be paid by Parent in accordance with
the Parent's agreement with such firm.
Section 4.15 Opinion of Financial Advisor. Parent has received the opinion
of ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation to the effect that the
Merger Consideration Per Share is fair to Parent from a financial point of
view.
ARTICLE V
Covenants Pending the Effective Time
Section 5.1 Covenants of the Company with Respect to the Retained
Business. During the period from the date of this Agreement and continuing
until the Effective Time, the Company agrees as to itself and its Subsidiaries
that except (i) for the Distribution and the other transactions, actions or
events provided for in the Distribution Agreement, including the Employee
Benefits Agreement, (ii) as contemplated or permitted by this Agreement, (iii)
as set forth in Section 5.1 of the Company Disclosure Schedule or (iv) to the
extent that Parent shall otherwise consent in writing (which consent will not
be unreasonably withheld or delayed):
(a) Ordinary Course. The Company and its Subsidiaries shall carry on the
Retained Business in the usual, regular and ordinary course consistent with
past practice and use all reasonable efforts to preserve intact the present
business organization, keep available, consistent with past practice, the
services of the present officers and employees and preserve the
relationships with customers, suppliers and others having business dealings
with the Retained Business, it being understood, however, that (i) certain
employees of the Retained Business will also be engaged in activities for
Newco and its Subsidiaries and certain officers of the Company will resign
at the time of the Distribution and will serve as officers of Newco, and
(ii) the failure of any employees of the Retained Business to remain
employees of the Retained Business or become employees of Parent or any
Subsidiary of Parent shall not constitute a breach of this covenant.
Without limiting the foregoing, except as set forth in Section 5.1 of the
Company Disclosure Schedule and except for "like kind" replacements and
repairs of equipment, the Company will not make or enter into any
contracts, commitments or agreements obligating the Company to make any
capital expenditures primarily relating to, or arising from, the Retained
Business in excess of $1,000,000, in the aggregate.
(b) Dividends; Changes in Stock. The Company shall not (i) declare or pay
any dividends (including dividends in Company Common Stock) on or make
other distributions in respect of any of its capital stock (including such
a distribution or dividend made in connection with a recapitalization,
reclassification, merger, consolidation, reorganization or similar
transaction), except for regular quarterly cash dividends consistent with
amounts currently paid and the Distribution, (ii) split (including a
reverse stock split), combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
or (iii) repurchase, redeem or otherwise acquire, or permit any Subsidiary
to repurchase, redeem or otherwise acquire, any shares of capital stock of
the Company or any of its Subsidiaries.
(c) Issuance of Securities. The Company shall not, nor shall the Company
permit any of its Subsidiaries included in the Retained Business to, issue,
transfer or sell, or authorize or propose or agree to the issuance,
transfer or sale of, any shares of its capital stock of any class, any
other equity interests or any securities convertible into, or any rights,
warrants, calls, subscriptions, options or other rights or agreements,
commitments or understandings to acquire, any such shares, equity interests
or convertible securities, other than (i) the issuance of shares of Company
Common Stock, Company Preferred Stock and Company Convertible Debentures
upon the exercise or conversion of stock options, debenture options,
debentures or stock grants outstanding on the date of this Agreement
pursuant to Company Stock Plans and in accordance with their present terms
(or conversions of Company Preferred Stock issued upon the exercise of
debenture options-outstanding on the date of this Agreement into Company
Common Stock pursuant to the terms
16
thereof), (ii) issuances by a wholly owned Subsidiary of its capital stock
to its parent, (iii) the authorization and issuance of Company Series X
Preferred Stock or Company Common Stock in connection with the Company
Rights and reservation for issuance of shares of Company Series X Preferred
Stock or Company Common Stock in connection with the Company Rights in
addition to those presently reserved for issuance, and (iv) the granting of
stock options, debenture options or stock grants to employees of the
Company other than the Retained Employees (as defined in Section 6.7) and
issuance of securities upon exercise of the foregoing.
(d) Governing Documents. The Company shall not amend its Charter of
Incorporation or bylaws in a manner adverse to Parent and Sub or otherwise
inconsistent with the transactions contemplated hereby.
(e) Indebtedness. The Company shall not, nor shall it permit any of its
Subsidiaries to, incur (which shall not be deemed to include (i) entering
into credit agreements, lines of credit or similar arrangements until
borrowings are made under such arrangements or (ii) refinancings of
existing indebtedness) any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of the Company or any of its
Subsidiaries or guarantee any obligations of others other than (v) in the
ordinary course of business consistent with past practice, (w) pursuant to
existing credit or guaranty agreements, (x) Company Convertible Debentures
issuable upon exercise of debenture options, (y) indebtedness incurred
solely by, or that will be assumed and become the obligation solely of
Newco or any of its Subsidiaries at the Time of Distribution (as defined in
the Distribution Agreement) or (z) the Financing (as defined in Section
6.14).
(f) Changes to Benefit Plans. Except as would not increase the costs of
the Retained Business and except for changes in response to any changes in
applicable law, the Company shall not, nor shall it permit any of its
Subsidiaries (other than Newco and its Subsidiaries) to, (i) enter into,
adopt, amend (except as may be required by law and except for immaterial
amendments) or terminate any Benefit Plan or any agreement, arrangement,
plan or policy between the Company or any such Subsidiary and one or more
of its directors, officers or Employees or (ii) except for normal increases
in the ordinary course of business consistent with past practice and the
payment of bonuses to employees in the aggregate not to exceed the amount
set forth in Section 5.1 of the Company Disclosure Schedule, increase in
any manner the compensation or fringe benefits of any director, officer or
Employee or pay any benefit to any director, officer or Employee not
required by any plan or arrangement as in effect as of the date hereof or
enter into any contract, agreement, commitment or arrangement to do any of
the foregoing; provided that the foregoing shall not prohibit the Company
from hiring and paying new employees in the ordinary course of business
consistent with past practice.
(g) Filings. The Company shall promptly provide Parent (or its counsel)
copies of all filings (other than those portions of filings under the HSR
Act which Parent has no reasonable interest in obtaining in connection with
the Merger) made by the Company with any Federal, state or foreign
Governmental Entity in connection with this Agreement, the Distribution
Agreement and the transactions contemplated hereby and thereby.
(h) Accounting Policies and Procedures. The Company will not and will not
permit any of its Subsidiaries to change any of its accounting principles,
policies or procedures, except as may be required by generally accepted
accounting principles.
(i) Newco. The Company shall (i) abide and cause Newco to abide by their
respective obligations under the Distribution Agreement, Tax Disaffiliation
Agreement and Employee Benefits Agreement and (ii) not terminate or amend,
or waive compliance with any obligations under, the Distribution Agreement,
Tax Disaffiliation Agreement or Employee Benefits Agreement in any manner
adverse to Parent and Sub.
(j) Sale of Assets. The Company shall not sell, lease, exchange,
mortgage, pledge, transfer or otherwise dispose of, or agree to sell,
lease, exchange, mortgage, pledge, transfer or otherwise dispose of, any of
the assets included in the Retained Business, except for dispositions of
inventories and equipment in the ordinary course of the Retained Business
and consistent with past practice.
(k) Retained Cash. After December 31, 1996, all net cash generated by the
Retained Business after December 31, 1996 shall be retained by the Company.
17
Section 5.2 Covenants of the Company. During the period from the date of
this Agreement and continuing to the Effective Time, the Company agrees as to
itself and its Subsidiaries that the Company shall not, and shall not permit
any of its Subsidiaries to, take any action, including, without limitation,
with respect to the terms of the Articles of Incorporation or bylaws of Newco,
that would or is reasonably likely to result in any of the conditions to the
Merger set forth in Article VII not being satisfied or that would materially
impair the ability of the Company to consummate the Distribution in accordance
with the terms of the Distribution Agreement or the Merger in accordance with
the terms hereof or would materially delay such consummation.
Section 5.3 Covenants of Parent. During the period from the date of this
Agreement and continuing until the Effective Time, Parent agrees as to itself
and its Subsidiaries that except (i) as contemplated or permitted by this
Agreement, (ii) as set forth in Section 5.3 of the Parent Disclosure Schedule
or (iii) to the extent that the Company shall otherwise consent in writing
(which consent will not be unreasonably withheld or delayed):
(a) Ordinary Course. Parent and its Subsidiaries shall carry on their
businesses in the usual, regular and ordinary course consistent with past
practice and use all reasonable efforts to preserve intact the present
business organization, keep available, consistent with past practice, the
services of the present officers and employees and preserve the
relationships with customers, suppliers and others having business dealings
with them.
(b) Dividends; Changes in Stock. Parent shall not (i) declare or pay any
dividends (including dividends in Parent Common Stock) on or make other
distributions in respect of any of its capital stock (including such a
distribution or dividend made in connection with a recapitalization,
reclassification, merger, consolidation, reorganization or similar
transaction), except for regular quarterly cash dividends, (ii) split
(including a reverse split), combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
or (iii) repurchase, redeem or otherwise acquire, or permit any Subsidiary
to repurchase, redeem or otherwise acquire, any shares of capital stock of
Parent or any of its Subsidiaries other than repurchases of Parent Common
Stock pursuant to the Repurchase Program and made prior to the ten (10)
trading days prior to the date of the first trading day used in calculating
the Average Parent Price.
(c) Issuance of Securities. Parent shall not, nor shall Parent permit any
of its Subsidiaries to, issue, transfer or sell, or authorize or propose or
agree to the issuance, transfer or sale of, any shares of its capital stock
of any class, any other equity interests or any securities convertible
into, or any rights, warrants, calls, subscriptions, options or other
rights or agreements, commitments or understandings to acquire, any such
shares, equity interests or convertible securities, other than (i) the
issuance of shares of Parent Common Stock upon the exercise of stock
options or stock grants pursuant to existing employee benefit plans,
(ii) issuances by a wholly owned Subsidiary of its capital stock to its
parent, and (iii) the authorization and issuance of capital stock upon
exercise of Parent's existing rights plan and reservation for issuance of
shares of capital stock in addition to those presently reserved for
issuance pursuant to Parent's existing rights plan.
(d) Governing Documents. Parent shall not amend its Articles of
Incorporation or bylaws in a manner adverse to the Company or otherwise
inconsistent with the transactions contemplated hereby.
(e) Indebtedness. Parent shall not, nor shall it permit any of its
Subsidiaries to, incur (which shall not be deemed to include (i) entering
into credit agreements, lines of credit or similar arrangements until
borrowings are made under such arrangements or (ii) refinancings of
existing indebtedness) any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of Parent or any of its Subsidiaries
or guarantee any obligations of others other than (w) in the ordinary
course of business consistent with past practice, (x) pursuant to existing
credit or guaranty agreements, (y) the Financing (as defined in Section
6.14) or (z) additional indebtedness not to exceed $50,000,000 in the
aggregate.
(f) Filings. Parent shall promptly provide the Company (or its counsel)
copies of all filings (other than those portions of filings under the HSR
Act which the Company has no reasonable interest in obtaining in connection
with the Merger) made by Parent with any Federal, state or foreign
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby and thereby.
18
(g) Accounting Policies and Procedures. Parent will not and will not
permit any of its Subsidiaries to change any of its accounting principles,
policies or procedures, except as may be required by generally accepted
accounting principles.
(h) Cooperation. Parent shall not take, nor permit Sub or any of its
other Subsidiaries to take, any action that would or is reasonably likely
to result in any of the conditions to the Merger set forth in Article VII
not being satisfied or that would materially impair the ability of Parent
or Sub to consummate the Merger in accordance with the terms hereof or
materially delay such consummation, and Parent shall promptly advise the
Company orally and in writing of any change in, or event with respect to,
the business or operations of Parent having, or which, insofar as can
reasonably be foreseen, could have, a material adverse effect on Parent and
its Subsidiaries taken as a whole.
ARTICLE VI
Additional Agreements
Section 6.1 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all 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 and regulations to
consummate and make effective the transactions contemplated by this Agreement
including, without limitation, (i) the prompt preparation and filing with the
SEC of the S-4 and the Proxy Statement, (ii) such actions as may be required
to have the S-4 declared effective under the Securities Act and to have the
Proxy Statement cleared by the SEC, in each case as promptly as practicable,
including by consulting with each other as to, and responding promptly to, any
SEC comments with respect thereto, (iii) the prompt preparation and filing of
all necessary documents under the HSR Act, (iv) such actions as may be
required to have the applicable waiting period under the HSR Act expire or
terminate as promptly as practicable, including by consulting with each other
as to, and responding promptly to any comments or requests for information
with respect thereto, (v) such actions as may be required to be taken under
applicable state securities or "blue sky" laws in connection with the issuance
of shares of Parent Common Stock contemplated hereby, and (vi) the
distribution of the prospectus constituting a part of the S-4 and the Proxy
Statement to stockholders of the Company. Each party shall promptly consult
with the other and provide any necessary information with respect to all
filings made by such party with any Governmental Entity in connection with
this Agreement and the transactions contemplated hereby.
Section 6.2 Access to Information. Upon reasonable notice, each of the
Company and Parent shall (and shall cause its Subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives of the
other party, access, during normal business hours during the period prior to
the Effective Time, to all its properties, books, contracts, commitments and
records (with respect to the Company, to the extent relating to the Retained
Business), and, during such period, each of the Company and Parent shall (and
shall cause each of their respective Subsidiaries to) furnish promptly to the
other (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of
federal securities laws and (b) all other information concerning its business,
properties and personnel (with respect to the Company, to the extent related
to the Retained Business) as such other party may reasonably request. After
the Effective Time, upon reasonable notice, Parent shall cause the Surviving
Corporation and its Subsidiaries to afford to the officers, employees,
accountants, counsel and other representatives of Newco access, during normal
business hours, to the Surviving Corporation's and its Subsidiaries' books and
records which Newco may reasonably request in order to complete tax filings or
for other legitimate business purposes. Unless otherwise required by law, the
parties will hold any information made available pursuant to this Section 6.2
which is nonpublic in confidence in accordance with the confidentiality
agreement, dated August 9, 1996 (the "Confidentiality Agreement"), between
Parent and the Company.
19
Section 6.3 Stockholders Meetings.
(a) The Company shall call a meeting of its stockholders to be held as
promptly as practicable for the purpose of voting upon the approval and
adoption of this Agreement. The Company will, through its Board of
Directors, recommend to its stockholders approval and adoption of this
Agreement and, if the Company determines such approval to be necessary or
appropriate, the Distribution and shall use all reasonable efforts to hold
such meeting as soon as practicable after the date hereof; provided,
however, that the Board of Directors of the Company may fail to make such a
recommendation, or withdraw, modify or change any such recommendation if it
determines after receiving the advice of outside counsel that making such
recommendation, or that the failure to withdraw, modify or change its
recommendation, would be inconsistent with its fiduciary duties under
applicable law.
(b) Parent shall call a meeting of its stockholders to be held as
promptly as practicable for the purpose of voting upon the approval of the
issuance of the shares of Parent Common Stock to the Company's stockholders
pursuant to this Agreement. Parent will, through its Board of Directors,
recommend to its stockholders such approval and shall use all reasonable
efforts to hold such meeting as soon as practicable after the date hereof;
provided, however, that the Board of Directors of Parent may fail to make
such a recommendation, or withdraw, modify or change any such
recommendation if it determines after receiving the advice of outside
counsel that making such recommendation, or that the failure to withdraw,
modify or change its recommendation, would be inconsistent with its
fiduciary duties under applicable law.
Section 6.4 Legal Conditions to Distribution and Merger. Each of the
Company, Parent and Sub will use all reasonable efforts to comply promptly
with all legal requirements which may be imposed on it or its respective
Subsidiaries with respect to the Distribution and the Merger (which actions
shall include, without limitation, furnishing all information required under
the HSR Act and will promptly cooperate with and furnish information to each
other in connection with any such requirements imposed upon any of them or any
of their respective Subsidiaries in connection with the Distribution or the
Merger). Subject to the terms and conditions hereof, each of the Company,
Parent and Sub will, and will cause its Subsidiaries to, promptly use all
reasonable efforts to obtain (and will consult and cooperate with each other
in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or private third party,
required to be obtained or made by such party in connection with the
Distribution or the Merger or the taking of any action contemplated thereby or
by this Agreement or the Distribution Agreement.
Section 6.5 Stock Exchange Listing. Parent shall use all reasonable efforts
to cause the shares of Parent Common Stock to be issued in the Merger to be
approved for listing on either the NYSE or the NASDAQ National Market System,
depending on where the Parent Common Stock is listed as of the Effective Time,
and any other securities exchange on which shares of Parent Common Stock may
at such time be listed, subject to official notice of issuance, prior to the
Closing Date.
Section 6.6 Company Severance Obligations. Subject to the proviso in the
following sentence, the Company will pay with the proceeds of the Financing
(as defined in Section 6.14) or Newco will assume the transaction bonus and
severance payments arising out of the transactions contemplated by this
Agreement pursuant to any contract, agreement or arrangement of which the
Company or any of its Subsidiaries is a party, including, without limitation,
payments pursuant to the agreements listed in Section 6.6 of the Company
Disclosure Schedule. In no event shall Parent, any of its Subsidiaries or the
Surviving Corporation be responsible for any such payments, or be under any
obligation to honor or assume any such obligations; provided, however, Parent
and the Surviving Corporation shall assume and retain, with respect to the
Retained Employees (as defined in Section 6.7), any and all severance
obligations that arise due to events or actions occurring after the Effective
Time.
Section 6.7 Employee Matters; Company Stock Plans.
(a) The Company and Parent agree that Parent will, to the extent
practicable, immediately after the Effective Time and for at least six (6)
months thereafter, permit the operating personnel of the Retained
20
Business and the other Company employees listed in Section 6.7 to the
Parent Disclosure Schedule who will remain in the employ of the Surviving
Corporation after the Effective Time (collectively, the "Retained
Employees") (i) to participate in a group health plan of Parent, or one of
its Subsidiaries that similarly situated employees of Parent participate,
in accordance with the terms of the plan and, subject to the approval of
its stop-loss carrier on reasonable terms and subject to applicable legal
requirements, to waive any pre-existing condition clause or waiting period
requirement in such group health plan and to give credit for deductible
amounts paid by a Retained Employee during the current deductible year of
such group health plan while employed by the Company; (ii) to participate
in and receive credit under tax qualified retirement plans of Parent or any
of its Subsidiaries that similarly situated employees of Parent
participate, for which they are otherwise eligible, solely for eligibility
and vesting purposes, for their service with the Company, to the extent
permitted by applicable tax-qualification requirements; and (iii) to
participate in other benefit plans of Parent which are offered to similarly
situated employees.
(b) Effective as of the Effective Time, each outstanding option to
purchase shares of Company Common Stock or to purchase Company Convertible
Debentures (a "Company Option") held by a Retained Employee under the
Company Stock Plans whether vested or unvested, exercisable or
unexercisable, shall be exchanged for an option (a "Parent Option") to
purchase the number of shares of Parent Common Stock equal to the product
of (1) the quotient of (x) the Average Company Stock Price, and (y) the
Average Parent Stock Price (the "Conversion Ratio") and (2) the number of
shares of Company Common Stock that the holder of such option would have
been entitled to receive had such holder exercised such option in full and
in the case of a Company Option exercisable for Company Convertible
Debentures, converted such convertible debentures into Company Preferred
Stock and then into Company Common Stock, (not taking into account whether
or not such option or convertible debenture was in fact exercisable)
(rounded to the nearest whole share) at an exercise price equal to the per
share exercise price of such Company Options divided by the Conversion
Ratio (rounded to the nearest cent), which Parent Option shall be subject
to the same terms and conditions (including the vesting schedule) as the
Company Option; provided, however, that the Parent Option shall be
exercisable only for Parent Common Stock. The obligations of the Company
with respect to such Parent Options shall be transferred to and assumed by
Parent. For purposes of this Section 6.7(b), (i) "Average Parent Stock
Price" shall mean the average of the closing prices of the Parent Common
Stock on the New York Stock Exchange Composite Transactions Reporting
System or the NASDAQ National Market System, as the case may be, as
reported by The Wall Street Journal, for the 10 trading days immediately
proceeding the trading day prior to the date that the Company Common Stock
commences trading on an x-dividend basis with respect to the Distribution
(the "Measuring Period") and (ii) "Average Company Stock Price" shall mean
the average of the closing prices of the Company Common Stock on the New
York Stock Exchange Composite Transactions Reporting System, as reported by
The Wall Street Journal, for the Measuring Period.
(c) As soon as practicable after the Effective Time, Parent shall deliver
to the Retained Employees having options exchanged pursuant to Section
6.7(b) above appropriate notices setting forth their rights pursuant
thereto.
(d) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery
under the options converted in accordance with this Section 6.7. As soon as
practicable after the Effective Time, Parent shall file a registration
statement on Form S-3 or Form S-8, as appropriate (or any successor or
other appropriate forms), or another appropriate form with respect to the
shares of Parent Common Stock subject to such options or, to the extent
required by law or in accordance with past practice, awards and shall use
its best efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of
the prospectus or prospectuses contained therein) for so long as such
options or awards remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements
under Section 16(a) of the Exchange Act, where applicable, Parent shall
administer the options exchanged pursuant to this Section 6.7 in a manner
that complies with Rule 16b-3 promulgated under the Exchange Act to the
extent the applicable options complied with such rule prior to the Merger.
21
(e) Nothing in this Agreement shall be construed to require Parent or the
Company to continue the employment of any Retained Employee for any period
of time, or, except as required by Section 6.7(a) above, to offer any
particular type or level of benefits to any employee. Nothing in this
Agreement shall prevent Parent or the Company from disciplining or
terminating any Retained Employee or from amending or terminating any
benefit plans at any time.
Section 6.8 Fees and Expenses. Subject to the Distribution Agreement,
whether or not the Merger is consummated and except as otherwise provided
herein, all fees, costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses; provided, however, that Parent and the Company shall
each pay one-half of the printing costs incurred with respect to the S-4 and
the Proxy Statement.
Section 6.9 Indemnification.
(a) The Company shall, and from and after the Effective Time the
Surviving Corporation shall, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date of this
Agreement or who becomes prior to the Effective Time, an officer, director
or employee of the Company or any of its Subsidiaries (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses, liabilities
or judgments, or amounts that are paid in settlement with the approval of
the indemnifying party (which approval shall not be unreasonably withheld)
of, or in connection with, any claim, action, suit, proceeding or
investigation to the extent related to, or to the extent arising from, the
Retained Business and based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer or
employee of the Company or any of its Subsidiaries, whether pertaining to
any matter existing or occurring at or prior to the Effective Time and
whether asserted or claimed prior to, or at or after, the Effective Time
("Indemnified Liabilities"), in each case to the full extent a corporation
is permitted under the MBCA (notwithstanding the bylaws of the Company or
the Surviving Corporation) to indemnify its own directors, officers and
employees, as the case may be (and the Surviving Corporation will pay
expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by law
upon receipt of any affirmation and undertaking contemplated by Section
8.53 of the MBCA). Without limiting the foregoing, in the event any such
claim, action, suit, proceeding or investigation is brought against any
Indemnified Party (whether arising before or after the Effective Time), (i)
the Indemnified Parties may retain counsel satisfactory to them with the
consent of the Company (or the consent of the Surviving Corporation after
the Effective Time) which consent of the Company (or, after the Effective
Time, the Surviving Corporation) with respect to such counsel retained by
the Indemnified Parties may not be unreasonably withheld, (ii) the Company
(or after the Effective Time, the Surviving Corporation) shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received, and (iii) the Company (or
after the Effective Time, the Surviving Corporation) will use all
reasonable efforts to assist in the vigorous defense of any such matter,
provided that neither the Company nor the Surviving Corporation shall be
liable for any settlement of any claim effected without its written
consent, which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 6.9,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify the Company or the Surviving Corporation (but the failure so
to notify shall not relieve the Company or the Surviving Corporation from
any liability which it may have under this Section 6.9 except to the extent
such failure materially prejudices such party), and shall deliver to the
Company (or after the Effective Time, the Surviving Corporation) the
affirmation and undertaking contemplated by Section 8.53 of the MBCA. The
Indemnified Parties as a group may retain only one law firm to represent
them with respect to each such matter unless there is, under applicable
standards of professional conduct, a conflict on any significant issue
between the positions of any two or more Indemnified Parties.
(b) The provisions of this Section 6.9 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs
and representatives.
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Section 6.10 No Solicitations. The Company will immediately cease any
existing discussions or negotiations conducted prior to the date hereof with
respect to any merger, consolidation, business combination, sale of a
significant amount of assets outside of the ordinary course of business, sale
of shares of capital stock outside of the ordinary course of business, tender
or exchange offer, spin-off, recapitalization or similar transaction involving
the sale of the Company or any of its Subsidiaries or divisions but excluding
those potential transactions set forth in Section 6.10 of the Company
Disclosure Schedule (an "Acquisition Transaction"). The Company, its
Subsidiaries and their respective directors and officers shall not, and its or
its Subsidiaries' affiliates, representatives and agents shall not, directly
or indirectly, solicit any person, entity or group concerning any Acquisition
Transaction (other than the transactions contemplated by this Agreement);
provided that the Company may (i) furnish information or enter into
negotiations to the extent the Company's Board of Directors determines after
receiving the advice of outside counsel that the failure to do so would be
inconsistent with its fiduciary duties under applicable law and prior to
furnishing such information to, or entering into discussions or negotiations
with such person, entity or group the Company (x) provides immediate written
notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person, entity or group,
and (y) either enters into with such person, entity or group a confidentiality
agreement in reasonable, customary form on terms not more favorable to such
person, entity or group than the terms contained in the Confidentiality
Agreement or releases Parent from the standstill provisions of the
Confidentiality Agreement not applicable to such person; and (ii) recommend to
its stockholders a bona fide transaction or combination of transactions that
the Board of Directors determines after consulting with its legal and other
advisors is more favorable, from a financial point of view, to the
stockholders of the Company than the Distribution and the Merger (a "Higher
Proposal"). The Company agrees not to release any third party from its
obligations, or grant any consent, under any existing standstill provision
relating to any Acquisition Transaction or otherwise under any confidentiality
or other agreement without similarly releasing or granting a consent to Parent
under the Confidentiality Agreement.
Section 6.11 Distribution. Prior to the Closing, the Company will enter into
the Distribution Agreement in the form attached hereto with such changes which
are not adverse to Parent and Sub and cause Newco to enter into the
Distribution Agreement and the Company will take all action necessary to
effect the Distribution pursuant to the terms of the Distribution Agreement.
Section 6.12 Tax-Free Nature of Transactions. Each party agrees to report
the Transfer as a tax-free transaction under Section 332, 351 or 368(a) of the
Code, the Distribution as a tax-free distribution under Section 355 of the
Code and the Merger as a tax-free reorganization within the meaning of Section
368(a)(1)(B) of the Code on all Tax Returns and other filings, and take no
position inconsistent therewith. The parties shall not, and shall not permit
any of their respective Subsidiaries to, take or cause or permit to be taken,
any action that would disqualify the Distribution as a tax-free distribution
under Section 355 of the Code, disqualify the Transfer as a tax-free
transaction under Section 332, 351 or 368(a) or disqualify the Merger as a
reorganization within the meaning of Section 368(a)(1)(B) of the Code,
excluding any action to be taken pursuant to this Agreement to effect the
Merger.
Section 6.13 Audited Closing Balance Sheet. No later than 45 days after the
Effective Date, Newco shall deliver to Parent an audited consolidated balance
sheet for the Retained Business at the earlier of the Effective Date or
December 31, 1996 after giving effect to the Distribution (but not to the
Financing (as defined in Section 6.14) or the Merger), which shall be audited
by Newco's independent public accountants as in accordance with generally
accepted auditing standards (the "Audited Closing Balance Sheet"). The Audited
Closing Balance Sheet shall be prepared in accordance with generally accepted
accounting principles on a basis consistent with the Company Financial
Statements. To the extent that the net working capital (current assets less
current liabilities) of the Retained Business as shown on the Audited Closing
Balance Sheet is more or less than the estimated net working capital as of the
Effective Date certified pursuant to Section 6.14, the Company shall pay to
Newco, or Newco shall pay to the Company, the amount of such excess or
shortfall, respectively, in cash within five days of the delivery of the
Audited Closing Balance Sheet. The Company agrees that representatives of
Parent and Newco shall be given access to all work papers, books, records and
other information related to
23
the preparation of the Audited Closing Balance Sheet. In addition, the Company
will authorize, and will use all reasonable efforts to provide Parent and
Newco with access to all work papers of the Company's independent public
accountants in connection with or relating to their audit of the Audited
Closing Balance Sheet.
Section 6.14 Financing. Parent will use its best efforts to assist the
Company in arranging a customary bank facility for the Company that will be
funded immediately prior to the Time of Distribution (as defined in the
Distribution Agreement) (the "Financing"). The Financing will be in an
aggregate amount equal to $150,000,000 plus (i) the product of (x) the lesser
of (A) $2.00 and (B) the amount, if any, by which the Average Parent Price is
less than $19.00 times (y) 6,904,762, plus (ii) the costs of obtaining the
Financing (including, without limitation, any commitment or agent fees,
reasonable attorney fees or other costs and expenses associated with the
Financing), plus (iii) the product of (x) $56,575 times (y) the number of
calendar days by which the Effective Date is after December 31, 1996, plus
(iv) the net cash used by the Retained Business after December 31, 1996
through the Effective Date, minus (v) the unpaid balance as of the Effective
Date of the AMPRO Retrofit due under the ▇▇▇▇▇▇▇ Agreement (as defined in
Section 6.15) (which unpaid balance as of July 31, 1996 is set forth in
Section 6.15 of the Company Disclosure Schedule), plus or minus (vi) the
amount by which the estimated net working capital of the Retained Business as
of the earlier of the Effective Date or December 31, 1996 as certified by the
chief financial officer of the Company is more or less, respectively, than
$8,000,000. Without qualifying Parent's obligations pursuant to the last
sentence of this Section 6.14, the Financing will be on terms that are
acceptable to Parent. The parties agree that the proceeds of the Financing
will be used to refinance in full all outstanding debt of the Retained
Business (other than accounts payable incurred in the ordinary course of the
Retained Business), as well as any and all transaction, severance and other
costs payable by the Company in connection with the transactions contemplated
by this Agreement. To the extent that the proceeds of the Financing are not
fully applied as set forth above, any remaining proceeds may be contributed to
Newco at the discretion of the Company. The Company shall be responsible for
the costs of obtaining the Financing (including, without limitation, any
commitment or agent fees, reasonable attorney fees or other costs and expenses
associated with the Financing), although the parties recognize that Parent
will incur costs related to the Financing in connection with satisfying itself
as to the terms and conditions of the Financing. In the event that the
Company's stockholders do not approve the Merger, the Distribution and the
other transactions contemplated by this Agreement, the Company and Parent will
reimburse each other for one-half of any costs incurred by them in connection
with the Financing. In the event this Agreement is terminated for any other
reason, Parent shall be responsible for and reimburse the Company for any
costs reasonably incurred in connection with the Financing. In the event that
the Company is unable to arrange a bank facility for the Financing, Parent
will be responsible for arranging alternative funds from an independent,
unrelated third party for the Financing.
Section 6.15 AMPRO Facility. The Company shall use all reasonable efforts to
cause the capital improvements to the Company's AMPRO Facility currently in
progress (the "AMPRO Retrofit") as set forth in that certain contract dated
September 7, 1995 between the Company and ▇.▇. ▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇
Agreement") to be completed (including plant shutdowns, tie-ins and resumption
of operations) by December 31, 1996 (with performance testing to be completed
after December 31, 1996) on the terms and conditions set forth in the ▇▇▇▇▇▇▇
Agreement. Section 6.15 of the Company Disclosure Schedule sets forth the
unpaid balance of the cost of completion of the AMPRO Retrofit as of July 31,
1996 under the ▇▇▇▇▇▇▇ Agreement. If despite the Company's reasonable efforts,
the AMPRO Retrofit is not mechanically complete and ready for tie-ins to be
made during the time of turnaround scheduled for December 1, 1996 through
December 15, 1996 then the turnaround shall be delayed until such time as the
AMPRO Retrofit can be mechanically completed and made ready for tie-ins during
the turnaround period.
Section 6.16 Comfort Letters.
(a) The Company shall use all reasonable efforts to cause KPMG Peat
Marwick LLP, the Company's independent public accountants, to deliver a
letter dated as of the date of the Proxy Statement, and addressed to itself
and Parent and their respective Boards of Directors, in form and substance
reasonably satisfactory to Parent, and customary in scope and substance for
agreed-upon procedures letters delivered by
24
independent public accountants in connection with registration statements
and proxy statements similar to the S-4 and the Proxy Statement.
(b) Parent shall use all reasonable efforts to cause ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
Co., the Parent's independent public accountants, to deliver a letter dated
as of the date of the Proxy Statement, and addressed to itself and the
Company and their respective Boards of Directors, in form and substance
reasonably satisfactory to the Company, and customary in scope and
substance for agreed-upon procedures letters delivered by independent
public accountants in connection with registration statements and proxy
statements similar to the S-4 and the Proxy Statement.
ARTICLE VII
Conditions
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of the parties to effect the Merger are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
(a) Stockholder Approvals. This Agreement shall have been approved and
adopted by (i) the affirmative vote of the holders of at least a majority
of the outstanding shares of Company Common Stock and (ii) the affirmative
vote of the holders of at least a majority of the shares of Parent Common
Stock present, in person or by proxy, and entitled to vote at the meeting
of stockholders of Parent referred to in Section 6.3(b) for which a quorum
exists.
(b) Stock Exchange Listing. The shares of Parent Common Stock issuable to
the Company's stockholders pursuant to this Agreement shall have been
authorized for listing on the NYSE or the NASDAQ National Market System, if
Parent Common Stock has not been listed on the NYSE, upon official notice
of issuance.
(c) Other Approvals. Other than the filing of the Articles of Merger
provided for by Section 1.2, all authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting
periods imposed by, any Governmental Entity or other public or private
third party, the failure of which to obtain would have a material adverse
effect on Parent and its Subsidiaries or the Surviving Corporation and its
Subsidiaries, in each case taken as a whole, shall have been filed,
occurred or been obtained. Parent shall have received all state securities
or "blue sky" permits and other authorizations necessary to issue the
Parent Common Stock pursuant to this Agreement.
(d) Registration Statement. The S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceeding
by the SEC seeking a stop order.
(e) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or the Distribution shall be in effect (each
party agreeing to use all reasonable efforts to have any such order
reversed or injunction lifted).
(f) HSR Approval. Any applicable waiting period under the HSR Act shall
have expired or been terminated.
(g) Consummation of the Distribution. The Distribution shall have become
effective in accordance with the Distribution Agreement.
Section 7.2 Conditions of Obligations of Parent and Sub. The obligations of
Parent and Sub to effect the Merger are subject to the satisfaction, on or
prior to the Closing Date, of the following conditions unless waived by Parent
and Sub:
(a) Representations and Warranties. The representations and warranties of
the Company contained herein shall be true and correct in all material
respects as of the Closing Date as though made on and as of the Closing
Date, except to the extent such representations and warranties speak as of
an earlier date (in which case, such representations and warranties shall
be true and correct in all material respects as of such
25
earlier date) and except as otherwise contemplated by this Agreement, and
Parent shall have received a certificate signed on behalf of the Company by
the chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement and the Distribution Agreement at or prior to
the Closing Date, and Parent shall have received a certificate signed on
behalf of the Company by the chief financial officer of the Company to such
effect.
(c) Opinion of Counsel. Parent shall have received the opinion of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ or Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇
substantially to the effect set forth in Section 7.2(c) of the Company
Disclosure Schedule.
(d) Opinion of Tax Counsel. Parent shall have received the opinion of
▇▇▇▇▇▇ & ▇▇▇▇, L.L.P. to the effect the Merger qualifies as a tax-free
reorganization within the meaning of Section 368(a) of the Code.
(e) Opinion of Counsel Regarding the Distribution. Parent shall have
received the opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ to the effect
that the Transfer qualifies as one or more tax-free transactions under one
or more of Sections 332, 351, and 368(a)(1)(D) of the Code and that the
Distribution qualifies as a tax-free distribution under Section 355 of the
Code.
(f) Indebtedness of the Retained Business. As of the Effective Time, the
Retained Business shall have no outstanding Indebtedness, other than the
Financing. The term "Indebtedness" shall mean any indebtedness for borrowed
money, indebtedness evidenced by a note or other instrument, capitalized
lease obligations, obligations for the deferred purchase price of assets or
direct or indirect guarantees of any of the foregoing.
(g) Company Options. At the Effective Time, all Company Options, other
than Company Options held by Retained Employees, shall have been terminated
or exchanged for Newco Options or shall have been fully assumed by Newco.
Section 7.3 Conditions of Obligations of the Company. The obligation of the
Company to effect the Merger is subject to the satisfaction of the following
conditions, on or prior to the Closing Date, unless waived by the Company:
(a) Representations and Warranties. The representations and warranties of
Parent and Sub contained in this Agreement shall be true and correct in all
material respects as of the Closing Date as though made on and as of the
Closing Date, except to the extent such representations and warranties
speak as of an earlier date (in which case, such representations and
warranties shall be true and correct in all material respects as of such
earlier date) and except as otherwise contemplated by this Agreement, and
the Company shall have received a certificate signed on behalf of Parent
and Sub by the chief financial officer of Parent and Sub, respectively, to
such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall
have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and
the Company shall have received a certificate signed on behalf of Parent by
the chief financial officer of Parent to such effect.
(c) Opinion of Counsel. The Company shall have received the opinion of
▇▇▇▇▇▇ & ▇▇▇▇, L.L.P. substantially to the effect set forth in Section 7.3
of the Parent Disclosure Schedule. In giving such opinion, ▇▇▇▇▇▇ & ▇▇▇▇,
L.L.P. may rely as to matters of Mississippi law on opinions of local
counsel reasonably satisfactory to the Company.
(d) Opinion of Tax Counsel. The Company shall have received an opinion of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ to the effect that the Merger
qualifies as a tax-free reorganization within the meaning of Section 368(a)
of the Code, that the Transfer qualifies as one or more tax-free
transactions under one or more of Sections 332, 351, and 368(a)(1)(D) of
the Code and that the Distribution qualifies as a tax-free distribution
under Section 355 of the Code.
26
(e) Financing. The Financing shall have been obtained by the Company; the
Financing shall have been funded; and the proceeds of the Financing shall
have been applied pursuant to Section 6.14 and the Distribution Agreement.
ARTICLE VIII
Termination and Amendment
Section 8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of the Merger and this
Agreement by the stockholders of the Company:
(a) by mutual consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated before March 31, 1997 (unless the failure to so consummate the
Merger by such date shall be due to the action or failure to act of the
party seeking to terminate this Agreement);
(c) by either Parent or the Company if the Average Parent Price is less
than $17.00;
(d) by Parent, upon a material breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have
become untrue in any material respect, in either case such that the
conditions set forth in Section 7.2(a) or Section 7.2(b) of this Agreement,
as the case may be, would be incapable of being satisfied by March 31,
1997; provided, that in any case, a willful breach shall be deemed to cause
such conditions to be incapable of being satisfied for purposes of this
Section 8.1(c) if such willful breach shall not have been remedied within
ten (10) days after receipt by the Company of written notice from Parent
specifying the nature of such willful breach and requesting that it be
remedied;
(e) by the Company, upon a material breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have become
untrue in any material respect, in either case such that the conditions set
forth in Section 7.3(a) or Section 7.3(b) of this Agreement, as the case
may be, would be incapable of being satisfied by March 31, 1997; or
provided, that in any case, a willful breach shall be deemed to cause such
conditions to be incapable of being satisfied for purposes of this Section
8.1(d) if such willful breach shall not have been remedied within ten (10)
days after receipt by Parent of written notice from the Company, specifying
the nature of such willful breach and requesting that it be remedied;
(f) by Parent if (i) the Company's stockholders do not approve the Merger
and this Agreement at the meeting required under Section 6.3(a) hereof,
(ii) Parent's stockholders do not approve the issuance of the shares of
Parent Common Stock to the Company's stockholders pursuant to this
Agreement at the meeting required under Section 6.3(b) or (iii) the Company
withdraws, amends or modifies in a manner adverse to Parent its favorable
recommendation of the Merger; or
(g) by the Company if (i) the Company's stockholders do not approve the
Merger and this Agreement at the meeting required under Section 6.3(a)
hereof, (ii) Parent's stockholders do not approve the issuance of the
shares of Parent Common Stock to the Company's stockholders pursuant to
this Agreement at the meeting required under Section 6.3(b), (iii) the
Company has received a proposal for an Acquisition Transaction that it
advises Parent in writing the Company wishes to accept or (iv) the
Financing has not been arranged by December 31, 1996.
Section 8.2 Effect of Termination. In the event of a termination of this
Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their affiliates or
respective officers or directors, other than the provisions of Section 8.3;
provided, however, that any such termination shall not relieve any party from
liability for willful breach of this Agreement (including, without limitation,
a willful breach of Section 6.14 by Parent) or from its obligations under the
Confidentiality Agreement.
27
Section 8.3 Termination Fee. If (a)(i) Parent terminates this Agreement
pursuant to Section 8.1(f)(iii) or (ii) the Company terminates this Agreement
pursuant to 8.1(g)(iii) and (b) within one year after such termination, the
Company enters into an agreement, letter of intent or binding arrangement with
respect to an Acquisition Transaction or an Acquisition Transaction occurs
(provided, however, that in the case of an Acquisition Transaction involving
only Newco or any of its Subsidiaries (a "Newco Acquisition Transaction"),
payment hereunder will be due only if the Company began discussions or
negotiations, received a proposal or indication of interest or entered into an
agreement, letter of intent or binding arrangement with respect to such Newco
Acquisition Transaction prior to the termination of this Agreement), the
Company will pay to Parent within one business day following the execution and
delivery of such agreement or letter of intent or the entering into of such an
arrangement or the occurrence of such Acquisition Transaction, as the case may
be, a fee, in cash, of $8,000,000; provided, however, that the Company in no
event will be obligated to pay more than one such $8,000,000 fee with respect
to all such agreements and occurrences and such termination and such fee shall
be the exclusive remedy of Parent for the transactions contemplated hereby
upon termination of this Agreement pursuant to Section 8.1(f)(iii) or Section
8.1(g)(iii) and shall be deemed inclusive of expenses incurred by Parent. Upon
the payment of the $8,000,000 to Parent in accordance with this Section 8.3,
the Company shall have no further liability with respect to the transactions
contemplated hereby.
Section 8.4 Amendment. This Agreement may be amended by the parties hereto,
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of the Company or of Parent; provided that (i)
after any such approval, no amendment shall be made which by law requires
further approval by such stockholders without such further approval and (ii)
after the Effective Time, this Agreement may be amended only with the written
consent of Newco. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 8.5 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by the respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions contained here. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party.
ARTICLE IX
Miscellaneous
Section 9.1 Nonsurvival of Representations and Warranties. None of the
representations or warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties set forth in this
Agreement or in any instrument delivered pursuant to the terms hereof.
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Section 9.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given on the date delivered if delivered
personally (including by reputable overnight courier), on the date transmitted
if sent by facsimile (which is confirmed) or mailed by registered or certified
mail (return receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Mississippi Chemical Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to the Company, to
First Mississippi Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to
be followed by the words "without limitation." The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be
deemed to refer to August 27, 1996.
Section 9.4 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when a counterpart has been signed by each of the parties and
delivered to each of the other parties, it being understood that all parties
need not sign the same counterpart.
29
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and the instruments referred to herein, including the
Distribution Agreement) and the Confidentiality Agreement (a) constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and thereof, and (b) except as provided in Section 6.9, are not intended to
confer upon any person other than the parties hereto and thereto any rights or
remedies hereunder or thereunder; provided that after the Effective Time,
Newco may enforce the obligations of Parent, Sub or the Company under this
Agreement.
Section 9.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Mississippi without regard to any
applicable conflicts-of-law principles.
Section 9.7 Specific Performance. The parties hereto agree that if any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to
determine, and that the parties shall be entitled to specific performance of
the terms hereof, in addition to any other remedy at law or equity.
Section 9.8 Publicity. Except as otherwise required by law or the rules of
the NYSE or the NASDAQ National Market System, for so long as this Agreement
is in effect and then with as much advance notice to the other party as is
practicable under the circumstances, neither the Company nor Parent shall, or
shall permit any of its Subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.
Section 9.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights hereunder to any direct or indirect
wholly owned Subsidiary of Parent, and after the Effective Time, Newco shall
be entitled to enforce the obligations of Parent, Sub and the Company pursuant
to this Agreement (including the documents and instruments referred to herein)
and the Confidentiality Agreement. 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.
Section 9.10 Attorney-Client Privilege; Work Product. Anything herein or in
the Distribution Agreement notwithstanding, except with respect to matters
addressed in the opinion referred to in Section 7.3(d) hereof, the
transactions contemplated hereby and by the Distribution Agreement shall not
be deemed to transfer to Parent, Sub or the Surviving Corporation any right to
waive, nor shall they be deemed to waive, any attorney-client privilege
between the Company, the present officers and directors of the Company or
Newco and their legal counsel with respect to legal advice concerning the
transactions contemplated hereby and by the Distribution Agreement, in either
case concerning privileged communications (or work product related thereto) at
any time prior to the Closing Date. Parent, Sub and the Surviving Corporation
and their successors and assigns shall not be entitled to waive or have
access, nor shall they attempt to waive or seek access, to any privileged
communication (or work product related thereto) between the Company, the
present officers and directors of the Company or Newco and their legal counsel
relating to the Merger or the Distribution or matters relating to Newco, its
subsidiaries and their respective businesses.
Section 9.11 Other. Except as otherwise provided for herein and the other
agreements to be entered into in connection herewith as to which Parent and
the Company agree that neither of them has a cause of action against the other
for violation of the parties rights with respect to Triad, it is expressly
understood and agreed that this Agreement and any other agreement to be
entered into in connection herewith shall not affect in any way and shall be
without prejudice to and with full reservation of Parent's and the Company's
rights with respect to Triad. Nothing in this Agreement or any other agreement
to be entered into in connection herewith shall constitute an acknowledgment
by either Parent or the Company of the existence and enforceability of any
such rights.
30
Section 9.12 Further Assurances. Subject to the terms and conditions hereof
and, as applicable, of the Distribution Agreement, the Company and Parent
will, and will cause their respective Subsidiaries to, do such additional
things as are necessary or proper to carry out and effectuate the intent of
this Agreement or any part hereof or the transactions contemplated hereby,
including, without limitation, the providing of reasonable transition
assistance services by Newco at cost to the Surviving Corporation for a period
not to exceed one year after the Effective Time.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
and Plan of Merger and Reorganization to be signed by their respective
officers thereunto duly authorized as of the date first written above.
Mississippi Chemical Corporation
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: _________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President and
General Counsel
Miss Sub, Inc.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: _________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
First Mississippi Corporation
/s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
By: _________________________________
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President and Chief
Financial Officer
31