<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 16, 1996
TRANS-RESOURCES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 33-11634 36-2729497
State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation
9 West 57th Street, New York, New York 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 888-3044
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Item 2. Acquisition or Disposition of Assets
Pursuant to an Asset Purchase Agreement, dated as of May 21, 1996, by
and among Mississippi Chemical Corporation, a Mississippi corporation ("MCC"),
Mississippi Acquisition I, Inc., a Mississippi corporation which is an indirect
wholly-owned subsidiary of MCC ("MI"), Mississippi Acquisition II, Inc., a
Mississippi corporation which is an indirect wholly-owned subsidiary of MCC
("MII"; MI and MII being collectively called the "Designated Buyers"), New
Mexico Potash Corporation, a New Mexico corporation which is an indirect
wholly-owned subsidiary of the Registrant ("NMPC"), and Eddy Potash, Inc., a
Delaware corporation which is a direct wholly-owned subsidiary of the Registrant
("Eddy"; NMPC and Eddy being collectively called the "Sellers"), on August 16,
1996 (the "Closing Date") NMPC and Eddy completed the sale of substantially all
of their assets to MI and MII, respectively, for $45,000,000 plus a working
capital adjustment (described below) and the assumption of specified liabilities
(but excluding, among other things, liabilities, if any, which may arise in
connection with the antitrust litigations in which Sellers are defendants).
NMPC and Eddy had conducted Registrant's potash mining and production
operations. During the year ended December 31, 1995 and the six month periods
ended June 30, 1995 and June 30, 1996, the potash operations contributed
approximately $54,000,000 (14%), $29,000,000 (15%) and $29,000,000 (12%),
respectively, to the Registrant's revenues, excluding intercompany sales.
On the Closing Date, the Designated Buyers paid $10,638,000 pursuant to
the above-mentioned working capital adjustment. The final amount of the
adjustment will be determined after completion (within 75 days after the Closing
Date) of a combined Closing
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Date balance sheet for Sellers, with the amount of any working capital in excess
of $10,638,000 being payable by Designated Buyers and any shortfall from
$10,638,000 being payable by Sellers.
Approximately 50% of the aggregate proceeds received on the Closing
Date were applied to prepay debt secured by the assets of NMPC or Eddy. In
connection with the sale, Registrant's indirect wholly-owned subsidiary,
Vicksburg Chemical Company, entered into a five year potash supply agreement, at
prevailing market rates during the period (subject to certain adjustments), with
MI.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
Not Applicable
(b) Pro Forma Financial Information.
The following unaudited Pro Forma Condensed Consolidated
Financial Statements give effect to the sale of substantially all of
the assets of NMPC and Eddy as described in Item 2 herein, as if such
transactions had occurred at (i) the beginning of each period presented
for the Pro Forma Condensed Consolidated Statements of Operations and
(ii) June 30, 1996 for the Pro Forma Condensed Consolidated Balance
Sheet. The Pro Forma Condensed Consolidated Statements of Operations do
not reflect a net gain of approximately $24.4 million on the sale of
NMPC's and Eddy's assets. In addition, the Pro Forma Condensed
Consolidated Statements of Operations reflect no interest earned on the
sale proceeds.
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The unaudited Pro Forma Condensed Consolidated Financial
Statements are based on historical financial information of Registrant
for the periods referred to above. Pro Forma adjustments are described
in the accompanying notes. The unaudited Pro Forma Condensed
Consolidated Financial Statements should be read in conjunction with
the historical financial statements and the notes thereto included in
the Registrant's Annual Report on Form 10-K for the year ended December
31, 1995 and the Registrant's Quarterly Report on Form 10-Q for the six
month period ended June 30, 1996, previously filed with the Securities
and Exchange Commission.
The unaudited Pro Forma Condensed Consolidated Financial
Statements are presented for informational purposes only and are not
necessarily indicative of what the actual financial position or results
of operations would have been had the transaction occurred on the dates
indicated, nor do they purport to indicate the future financial
position or results of future operations of Registrant. In the opinion
of management, all adjustments necessary to present fairly such
unaudited Pro Forma Condensed Consolidated Financial Statements have
been made.
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Trans-Resources, Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of June 30, 1996
($000's)
<TABLE>
<CAPTION>
Pro Forma
ASSETS: Historical Adjustments Pro Forma
<S> <C> <C> <C>
Current Assets:
Cash $17,269 $55,638 (a) $46,632
(26,275) (b)
Accounts Receivable 106,051 (7,104) (a) 98,947
Inventory 62,791 (7,771) (a) 55,020
Prepaid Expenses and Other 46,857 (3,884) (a) 42,973
---------- ---------- ----------
Total Current Assets 232,968 10,604 243,572
Property, Plant and Equipment - net 215,784 (14,286) (a) 201,498
Other Assets 31,370 (139) (a) 31,231
---------- ---------- ----------
TOTAL ASSETS $480,122 ($3,821) $476,301
======== ======== ========
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
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Trans-Resources, Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of June 30, 1996
($000's)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY:
Current Liabilities:
Current Maturities of Long-Term Debt $23,837 $23,837
Short-Term Debt 14,727 14,727
Accounts Payable, Accrued Expenses, etc. 88,442 ($1,921)(a) 86,521
----------- ---------- ---------
Total Current Liabilities 127,006 (1,921) 125,085
--------- ---------- ---------
Long-Term Debt - net:
Senior Indebtedness, Notes Payable & Other 188,992 (26,275)(b) 162,717
Senior Subordinated Indebtedness - net 114,123 114,123
--------- ---------- ---------
Long-Term Debt - net 303,115 (26,275) 276,840
--------- --------- ---------
Other Liabilities 28,769 (64)(a) 28,705
---------- ---------- ---------
Stockholder's Equity:
Preferred Stock 7,960 7,960
Common Stock 0 0
Additional Paid-In Capital 8,682 8,682
Retained Earnings 4,737 24,439 (a) 29,176
Cumulative Translation Adjustment (430) (430)
Unrealized Gains on Marketable Securities 283 283
------------ ---------- ---------
Total Stockholder's Equity 21,232 24,439 45,671
---------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $480,122 ($3,821) $476,301
======== ========= ========
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
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Trans-Resources, Inc.
Pro Forma Condensed Consolidated Statement of Operations
For the Six Month Period Ended June 30, 1996
($000's)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
<S> <C> <C> <C>
REVENUES $240,664 ($29,431)(c) $211,233
COSTS AND EXPENSES:
Cost of goods sold 196,292 (28,351)(c) 167,941
General and administrative 23,085 (1,721)(c) 21,364
--------- --------- ---------
OPERATING INCOME 21,287 641 (c) 21,928
Interest expense (17,048) 1,039 (c) (16,009)
Interest and other income - net 928 (119)(c) 809
--------- ---------- ---------
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 5,167 1,561 (c) 6,728
INCOME TAX PROVISION 2,560 2,560
--------- ---------- ---------
INCOME BEFORE EXTRAORDINARY ITEM $2,607 $1,561 (c) $4,168
========= ========= =========
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
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Trans-Resources, Inc.
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1995
($000's)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
<S> <C> <C> <C>
REVENUES $385,564 ($53,628)(c) $331,936
COSTS AND EXPENSES:
Cost of goods sold 323,126 (49,098)(c) 274,028
General and administrative 43,193 (3,308)(c) 39,885
-------- ---------- ---------
OPERATING INCOME 19,245 (1,222)(c) 18,023
Interest expense (34,498) 1,140 (c) (33,358)
Interest and other income - net 9,128 (179)(c) 8,949
-------- ---------- ---------
LOSS BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (6,125) (261)(c) (6,386)
INCOME TAX PROVISION 733 733
-------- ---------- --------
LOSS BEFORE EXTRAORDINARY ITEM ($6,858) ($261)(c) ($7,119)
======== ========== =========
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
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Trans-Resources, Inc.
Notes To Pro Forma Condensed Consolidated Financial Statements
The Pro Forma adjustments reflect the sales of substantially all of the assets
used in the operations of NMPC and Eddy as described in Item 2 herein. The
unaudited Pro Forma Condensed Consolidated Financial Statements reflect the
above transactions as if they had occurred at the end of the period for the
purposes of the Pro Forma Condensed Consolidated Balance Sheet and at the
beginning of each period presented for the Pro Forma Condensed Consolidated
Statements of Operations.
The Pro Forma adjustments for the above transactions are codified as indicated
and are as follows:
(a) To reflect the proceeds of approximately $55.6 million from the
sales and the reduction of the applicable assets and liabilities
and the estimated net gain relating thereto, after giving effect
to estimated transaction fees and other costs.
(b) To reflect the prepayment of approximately $26.3 million of
indebtedness secured by the assets of NMPC or Eddy.
(c) To reflect the elimination of NMPC's and Eddy's operations.
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Item 7- (Continued).
(c) Exhibits.
2.1. Asset Purchase Agreement, dated as of May 21, 1996, by and among
MCC, MI, MII, NMPC and Eddy. Registrant hereby agrees to furnish
supplementally to the Securities and Exchange Commission upon
request a copy of any omitted schedule or exhibit, all of which
are listed at the end of the Table of Contents to the Asset
Purchase Agreement.
2.2. Amendment to Asset Purchase Agreement, dated August 16, 1996.
Registrant hereby agrees to furnish supplementally to the
Securities and Exchange Commission upon request a copy of any
omitted exhibit, all of which are referenced on the first page of
the Amendment.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
August 30, 1996 TRANS-RESOURCES, INC.
By: /s/ Lester W. Youner
-----------------------------
Lester W. Youner
Vice President, Treasurer and
Chief Financial Officer
11
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description Page No.
- ------- ----------- --------
<S> <C> <C>
2.1 Asset Purchase Agreement, dated as of May 21, 1996, by and
among MCC, MI, MII, NMPC and Eddy. Registrant hereby agrees
to furnish supplementally to the Securities and Exchange
Commission upon request a copy of any omitted schedule or
exhibit, all of which are listed at the end of the Table of
Contents to the Asset Purchase Agreement.
2.2 Amendment to Asset Purchase Agreement, dated August 16,
1996. Registrant hereby agrees to furnish supplementally to
the Securities and Exchange Commission upon request a copy
of any omitted exhibit, all of which are referenced on the
first page of the Amendment.
</TABLE>
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<PAGE> 1
Exhibit 2.1
ASSET PURCHASE AGREEMENT
by and among
MISSISSIPPI CHEMICAL CORPORATION,
MISSISSIPPI ACQUISITION I, INC.,
MISSISSIPPI ACQUISITION II, INC.,
EDDY POTASH, INC.
and
NEW MEXICO POTASH CORPORATION
Dated as of May 21, 1996
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Article 1 Defined Terms........................................................................ 3
1.1 Definitions.......................................................................... 3
1.2 Additional Definitions............................................................... 10
1.3 Accounting........................................................................... 10
Article 2 Assets Purchased and Sold............................................................ 10
2.1 Assets............................................................................... 10
2.2 Excluded Assets...................................................................... 13
2.3 Contracts, Rights and Obligations.................................................... 13
2.4 Power of Attorney, Etc............................................................... 14
Article 3. The Closing; Purchase Price; Purchase Price
Adjustment........................................................................... 16
3.1 The Closing.......................................................................... 16
3.2 Purchase Price....................................................................... 16
3.3 Assumption of Liabilities............................................................ 20
(a) Assumed Liabilities......................................................... 20
(b) Excluded Liabilities........................................................ 21
3.4 Allocation........................................................................... 22
3.5 Payment of Taxes, Etc................................................................ 22
3.6 Closing Documents.................................................................... 23
(a) Sellers' Deliveries......................................................... 23
(b) Designated Buyers' Deliveries............................................... 25
3.7 Further Assurances................................................................... 26
Article 4 Representations and Warranties....................................................... 27
4.1 Sellers.............................................................................. 27
(a) Organization, Qualification and Corporate
Power................................................................................ 27
(b) Due Authorization; Noncontravention......................................... 27
(c) Legal Compliance............................................................ 28
(d) Title to Assets............................................................. 28
(e) Tax Matters................................................................. 29
(f) Consents.................................................................... 30
(g) Validity.................................................................... 30
(h) Employees................................................................... 30
(i) Assets Necessary for Business............................................... 31
(j) Financial Statements........................................................ 31
(k) Intellectual Property....................................................... 32
(l) Employee Benefit Plans...................................................... 33
(m) Environmental Matters....................................................... 35
(n) Insurance................................................................... 37
(o) Brokers..................................................................... 37
(p) No Material Adverse Effect.................................................. 37
(q) No Material Undisclosed Liabilities......................................... 37
(r) Inventory................................................................... 38
(s) Receivables................................................................. 38
(t) Employee Relations.......................................................... 38
</TABLE>
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<TABLE>
<CAPTION>
Page
-----
<S> <C> <C>
(u) Employee Matters............................................................ 39
(v) Material Contracts.......................................................... 39
(w) Reserve for Workers' Compensation........................................... 41
4.2 Parent and Designated Buyers......................................................... 41
(a) Organization................................................................ 41
(b) Due Authorization; Noncontravention......................................... 41
(c) Validity.................................................................... 42
(d) Brokers..................................................................... 42
(e) Legal Compliance............................................................ 43
(f) Financing................................................................... 43
Article 5 Pre-Closing Covenants....................................................................... 45
5.1 Pre-Closing Covenants................................................................ 45
(a) General..................................................................... 45
(b) Notices and Consents; Hart-Scott Rodino and
Other Antitrust Matters..................................................... 46
(c) Full Access................................................................. 48
(d) Operation of Business....................................................... 48
(e) Exclusivity................................................................. 50
(f) Letters of Credit; Security Deposits, Surety
Bonds....................................................................... 51
(g) Confidentiality Agreements.................................................. 51
Article 6 Post-Closing Covenants...................................................................... 51
6.1 Certain Employee Matters............................................................. 51
(a) Current Employees........................................................... 51
(b) Medical, Insurance and Other Benefits....................................... 53
(c) Designated Buyers' Plans.................................................... 58
(d) Supersession................................................................ 59
6.2 Record Retention and Winding Up...................................................... 59
6.3 Cooperation.......................................................................... 60
6.4 Name Change.......................................................................... 60
Article 7 Conditions to Obligation to Close........................................................... 61
7.1 Conditions to Obligation of Designated Buyers........................................ 61
(a) Representations and Warranties.............................................. 61
(b) Performance by Seller....................................................... 61
(c) No Action or Proceedings.................................................... 61
(d) Hart-Scott-Rodino........................................................... 61
(e) Satisfaction of Designated Buyers........................................... 62
(f) Intercompany Agreements..................................................... 62
(g) Third Party Consents........................................................ 62
(h) Vicksburg Agreement......................................................... 63
7.2 Conditions to Obligation of Sellers.................................................. 63
(a) Representations and Warranties.............................................. 63
(b) Performance by Designated Buyers............................................ 63
(c) No Action or Proceedings.................................................... 64
(d) Hart-Scott-Rodino........................................................... 64
(e) Satisfaction of Sellers..................................................... 64
(f) Letters of Credit, Security Deposits, etc................................... 64
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(g) Cedar Release Under GECC Agreement.......................................... 64
(h) Release of Sellers from Mine Closure
Liability................................................................... 65
(i) Vicksburg Agreement......................................................... 65
Article 8 Termination................................................................................. 65
8.1 Termination.......................................................................... 65
8.2 Effect of Termination................................................................ 66
Article 9 Indemnification............................................................................. 67
9.1 Survival of Warranties; Etc.......................................................... 67
9.2 Seller's Indemnification............................................................. 69
9.3 Designated Buyer's Indemnification................................................... 70
9.4 Defense of Claims.................................................................... 71
9.5 Guarantee............................................................................ 72
Article 10 Miscellaneous............................................................................... 72
10.1 Press Releases and Public Announcements.............................................. 72
10.2 Expenses............................................................................. 73
10.3 Assignment........................................................................... 73
10.4 Notice............................................................................... 73
10.5 Entire Agreement..................................................................... 74
10.6 Third Parties........................................................................ 74
10.7 Construction......................................................................... 74
10.8 Captions............................................................................. 75
10.9 Counterparts......................................................................... 75
10.10 Applicable Law....................................................................... 75
10.11 Guarantee............................................................................ 75
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Schedules
2.1(1) -- Property Plant and Equipment
2.1(2) -- Inventories
2.1(3) -- Real Property; Certain Permitted Liens
2.1(4) -- Intellectual Property
2.1(5) -- Leases, Etc.
2.1(8) -- Excluded Records
2.2 -- Excluded Assets
3.3(a)(2) -- Assumed Agreements
3.3(a)(3) -- Contingent Obligations
3.3(b) -- Excluded Liabilities
3.4 -- Purchase Price Allocation
4.1(b) -- Defaults
4.1(c) -- Litigation
4.1(e) -- Tax Matters
4.1(f) -- Required Consents
4.1(l) -- ERISA
4.1(m) -- Environmental Matters
4.1(n) -- Insurance Policies
4.1(t) -- Employee Relations
4.1(u) -- Employee Matters
4.1(v) -- Material Contracts
4.2(e) -- Buyer Consents
5.1(d) -- Severance
5.1(f) -- Letters of Credit, Security Deposits,
Surety Bonds
6.1(a) -- Business Employees
7.1(g) -- BLM Letters Relating to Mineral Leases
9.2 -- Letter to BLM regarding indebtedness to
BLM
</TABLE>
<TABLE>
<S> <C> <C>
Exhibits
A -- Form of Agreement between NMPC and
Vicksburg Chemical Company
</TABLE>
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PURCHASE AGREEMENT
AGREEMENT, dated as of May 21, 1996, by and among Mississippi Chemical
Corporation, a Mississippi corporation ("Parent"), Mississippi Acquisition I,
Inc., a Mississippi corporation which is an indirect wholly-owned subsidiary of
Parent ("MI"), Mississippi Acquisition II, Inc., a Mississippi corporation which
is an indirect wholly-owned subsidiary of Parent ("MII;" MI and MII being herein
sometimes referred to individually as a "Designated Buyer" and collectively as
the "Designated Buyers"), New Mexico Potash Corporation, a New Mexico
corporation ("NMPC") and Eddy Potash, Inc., a Delaware corporation ("EDDY;" NMPC
and EDDY being herein sometimes referred to individually as a "Seller" and
collectively as the "Sellers").
WHEREAS, MI wishes to purchase the Business Assets (as defined below)
of NMPC and MII wishes to purchase the Business assets of EDDY upon the terms
and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements herein set forth, Sellers hereby agree with
Designated Buyers as follows:
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Article 1 Defined Terms.
1.1 Definitions. As used herein, the following terms shall have the
following meanings (terms defined in the singular have the same meanings when
used in the plural and vice versa):
"Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise).
"Applicable Designated Buyer" shall mean (a) MI when referring to the
purchaser of the Business Assets of NMPC; and (b) MII when referring to the
purchaser of the Business Assets of EDDY.
"Business" shall mean the business of a Seller, of mining,
concentrating, converting and distributing potash.
"Business Assets" shall mean the assets, rights and properties of a
Seller conveyed to Applicable Designated Buyer pursuant to Section 2.1 hereof.
"Business Day" shall mean any day on which commercial banks are not
authorized or required to close in New York City.
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"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidential Information" shall mean any information concerning the
businesses and affairs of a Seller that is not already generally available to
the public.
"Controlled Group" means any entity with which Seller is considered to
be a "single employer" within the meaning of Section 414 of the Code.
"Eddy Financial Statements" shall mean collectively the audited balance
sheets of Eddy as of December 31, 1995 and 1994, and the related statements of
income, stockholder's equity and cash flows for the years then ended and the
unaudited balance sheet as of March 31, 1996 and the related cash flow data for
the three month period then ended.
"Employee" shall mean any current or former employee, officer,
independent contractor, agent or consultant working in the Business.
"Employee Benefit Plan" shall mean any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension
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Benefit Plan, (c) qualified defined benefit retirement plan or arrangement which
is an Employee Pension Benefit Plan (excluding any Multiemployer Plan), or (d)
Employee Welfare Benefit Plan or material fringe benefit plan or program.
"Employee Pension Benefit Plan" shall have the meaning set
forth in ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" shall have the meaning set
forth in ERISA Sec. 3(1).
"Environmental Laws" shall mean all foreign, federal, state and local
environmental, health and safety laws and regulations, including without
limitation, RCRA, CERCLA, the Superfund Amendments and Reauthorization Act, the
Toxic Substances Control Act, the Hazardous Materials Transportation Act, the
Clean Air Act, the Clean Water Act, the Solid Waste Disposal Act, all as amended
to date, together with all regulations issued or promulgated thereunder,
relating to particulate emissions, pollution, hazardous waste and effluent
discharges, the protection of the environment or the health and safety of
workers or the general public.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time, and the regulations promulgated
thereunder.
"Excluded Assets" shall mean the assets, rights and properties of a
Seller excluded from the Business Assets pursuant to Section 2.2 hereof.
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"Excluded Liabilities" shall mean the liabilities and obligations of a
Seller which are not assumed by Applicable Designated Buyer pursuant to this
Agreement as described in Section 3.3(b) hereof.
"Financial Statements" shall mean collectively the Pro Forma
Combined Financial Statements, the Eddy Financial Statements and
the NMPC Financial Statements.
"Intellectual Property" shall mean patents (including all reissues,
divisions, continuations in part and extensions thereof), registrations of
trademarks and other marks, registrations of trade names, labels or other trade
rights, registered user entries, copyrights, copyright registrations and pending
applications for patents, registrations or entries, and trademarks and other
marks, trade names, labels, slogans, promotional material and other trade
rights, whether or not registered.
"Know-how" shall mean trade secrets, know-how (including, without
limitation, product know-how and use and application know-how), processes,
product designs, specifications, quality control procedures, manufacturing,
engineering and other drawings, computer databases and software, telephone
numbers, facsimile numbers, technology and all other information and
intangibles, including, without limitation, technical information, safety
information, engineering data and design and engineering specifications,
research records, market surveys and all promotional literature, customer and
supplier lists and similar data.
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"Knowledge" shall (i) mean the knowledge of senior management of the
party making the representation, and (ii) be construed to represent that the
party making the representation has caused reasonable inquiry and investigation
to be made into the matter represented to be true.
"Leases" shall mean leases and subleases, whether capitalized or
operating, licenses, easements, grants and other attachment rights and similar
instruments under which a party has the right to use real or personal property
or rights of way or under which a party has the right to explore for, produce
and sell minerals, including without limitation, potash.
"Material Adverse Effect" shall mean any change or effect that,
individually or when taken together with all other related changes or effects,
would be materially adverse to the business, assets, financial condition,
prospects or results of operations of a Seller, including without limitation,
such Seller's ability to perform under this Agreement.
"Multiemployer Plan" shall mean a plan as defined in Section
3(37) of ERISA.
"NMPC Financial Statements" shall mean collectively the audited balance
sheet of NMPC as of December 31, 1994 and the related statement of income,
stockholder's equity and cash flow for the year then ended, the NMPC column in
the Cedar Chemical Corporation consolidating balance sheet and statement of
income
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<PAGE> 12
as of and for the year ended December 31, 1995, and the unaudited balance sheet
of NMPC as of March 31, 1996 and the related cash flow data for the three month
period then ended.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean: (i) liens, claims or encumbrances imposed
by law, such as carriers', warehousemen's, materialmen's and mechanics' liens,
or liens arising out of judgments or awards against a Seller with respect to
which (a) a Seller is currently prosecuting an appeal or proceedings for review,
and (b) such Seller has posted the necessary bond in connection with such appeal
or proceedings; (ii) liens for property taxes not yet subject to penalties for
nonpayment and liens for property taxes the payment of which is being contested
or the time for doing so has not yet expired and for which appropriate reserves
are established and recorded in the Financial Statements; (iii) as to real
property, encumbrances, easements and other liens or restrictions disclosed on
Schedule 2.1(3) hereto or which do not in the aggregate materially impair the
use or value of said properties in the operation of the Business; and (iv)
unrecorded easements, covenants, rights of way, reservations or other
encumbrances which do not in the aggregate materially impair the use of said
properties in the operation of the Business.
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<PAGE> 13
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization, an association, limited liability
company, a joint venture, a trust or other similar organization, a government or
any political subdivision thereof, or any other legal entity.
"Pro Forma Combined Financial Statements" shall mean collectively the
unaudited combined balance sheet data of Sellers as of December 31, 1995 and the
related combined income statement and cash flow data for the three years then
ended and the unaudited combined balance sheet data of Sellers as of March 31,
1996 and the related cash flow data for the three months then ended.
"RCRA" shall mean the Resource Conservation and Recovery
Act, as amended.
"Taxes" shall mean all federal, state, county, local, foreign and other
taxes, charges, fees, levies, customs, duties or other assessments (including,
without limitation, income, property, withholding, excise, sales, use, gross
receipts, franchise, employment and payroll related taxes), whether or not
measured in whole or in part by net income, and including related interest,
penalties and additions to tax.
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1.2 Additional Definitions. The following terms defined
elsewhere in this Agreement shall have the respective meanings
therein defined:
<TABLE>
<CAPTION>
Term Definition
---- -----------
<S> <C> <C>
Assumed Liabilities Section 3.3(a)
BLM Section 7.1(g)
Buyer Plan Section 6.1(c)
Business Employees Section 6.1(a)(1)
Cedar Section 5.1(d)
Closing Section 3.1
Closing Date Section 3.1
Continued Employee Section 6.1(a)(2)
Eddy Retiree Medical Trust Section 3.3(b)
Environmental Losses Section 7.5(a)
"losses," "damages" or "deficiency" Section 9.1(c)
Purchase Price Section 3.1
Seller's Vacation Policy Section 6.1(b)(5)
"TRI" Section 9.5
</TABLE>
1.3 Accounting. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be
delivered hereunder shall be prepared, in conformity with United States
generally accepted accounting principles, consistently applied.
Article 2 Assets Purchased and Sold.
2.1 Assets.
Upon the terms and subject to the conditions hereinafter set
forth, each Seller hereby agrees to sell, assign, transfer and convey to
Applicable Designated Buyer, and each of the Applicable Designated Buyers hereby
agrees that it shall pur-
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<PAGE> 15
chase and accept from the respective Seller, on the Closing Date, all right,
title and interest in and to such Seller's assets, rights and properties of
every kind and description, tangible or intangible used or useful in the
operation of the Business of such Seller as the same shall exist on the Closing
Date (but excluding the Excluded Assets), free and clear of all liens, claims
and encumbrances, other than Permitted Liens, including, without limitation:
(1) All tangible personal property, plant, equip-
ment, leasehold improvements and other operating and related facilities of such
Seller, substantially all of which are listed on Schedule 2.1(1) hereto as of
the date thereof.
(2) All inventories of raw materials, finished goods
and work in progress used or maintained by such Seller, substantially all of
which items are listed on Schedule 2.1(2) hereto as of the date thereof, as well
as all office supplies, spare parts and other supplies used or maintained by
such Seller in connection with such Seller's Business and on hand at the
Closing.
(3) All of the real property of such Seller, the
legal descriptions of which are set forth on Schedule 2.1(3) hereto, together
with all water rights appurtenant thereto.
(4) All of the Intellectual Property of such Seller,
substantially all of which is listed on Schedule 2.1(4)
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<PAGE> 16
hereto, and all of such Seller's Know-how used, useful or held
for use in the conduct of the Business.
(5) All of the Leases and consents, permits,
licenses, instruments and agreements which relate to the operation by such
Seller of its Business, including, without limitation, such Seller's mining and
mineral rights (all of the foregoing which are material to the operation of such
Seller's Business are listed on Schedule 2.1(5) hereto).
(6) All warranties in favor of such Seller with
respect to any and all tangible personal property or pursuant to any permit,
license, instrument or agreement, including, without limitation, warranties of
any supplier of equipment sold to such Seller.
(7) All contracts, agreements, options, sales or
purchase orders, guarantees, commitments and other instruments of any kind,
whether written or oral, to which such Seller is a party, attributable to the
Business.
(8) Except as set forth in Schedule 2.1(8) hereto,
such Seller's files of correspondence, lists, records (in whatever medium the
records are stored), manuals and books of account concerning past, present and
prospective customers and compliance with the rules and regulations of all
federal, state or local regulatory agencies, relating to such Seller's Business.
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<PAGE> 17
(9) Such Seller's claims or causes of action relating
to its Business Assets, including, without limitation, claims and causes of
action for infringement of its Intellectual Property.
(10) Such Seller's accounts receivable.
2.2 Excluded Assets. Anything in Section 2.1 hereof to the
contrary notwithstanding, there shall be excluded from the Business Assets any
assets listed on Schedule 2.2 hereto.
2.3 Contracts, Rights and Obligations. Anything in this Agreement to
the contrary notwithstanding, this Agreement shall not constitute an assignment
of any contract, license, lease, permit, commitment, sales order, purchase order
or any claim or other rights of a Seller if an attempted assignment thereof,
without the consent of a third party thereto, would constitute a breach thereof
or in any way materially and adversely affect the rights of Applicable
Designated Buyer thereunder or the right of Applicable Designated Buyer to
continue to conduct all or any part of the Business of a Seller in the manner
and on the terms currently enjoyed by such Seller. Each Seller shall use its
best efforts to obtain in writing, prior to the Closing Date, any and all such
consents and shall deliver copies thereof to Applicable Designated Buyer
promptly after such Seller's receipt thereof but no later than immediately prior
to the Closing. If such consent has not been obtained, or if an attempted
assignment thereof would be ineffective or would affect the rights of a Seller
or
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<PAGE> 18
Applicable Designated Buyer thereunder so that Applicable Designated Buyer would
not in fact receive all such rights or would materially and adversely affect the
obligations of a Seller or Applicable Designated Buyer thereunder, subject to
7.1(g) hereof, the respective Seller and Applicable Designated Buyer will
cooperate with each other in any reasonable arrangement requested by Applicable
Designated Buyer designed to provide for Applicable Designated Buyer, at the
expense of such Seller and Applicable Designated Buyer to be shared equally, the
benefits under any such claim, contract, license, lease, permit, commitment,
sales order or purchase order, including enforcement for the benefit of
Applicable Designated Buyer of any and all rights of Seller against a third
party thereto arising out of the breach or cancellation by such third party or
otherwise.
2.4 Power of Attorney, Etc.
(a) Effective upon the Closing, each Seller hereby constitutes
and appoints Applicable Designated Buyer and its successors, legal
representatives and assigns the true and lawful attorneys of such Seller, with
full power of substitution, in the name of such Seller or Applicable Designated
Buyer, but on behalf of and for the benefit of Applicable Designated Buyer and
its successors, legal representatives and assigns and at the expense of
Applicable Designated Buyer: (i) to demand and receive from time to time any and
all of the Business Assets of such Seller and to make endorsements and give
receipts and releases for and in respect of the same and any part thereof; (ii)
to institute,
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<PAGE> 19
prosecute, compromise and settle any and all proceedings at law, in equity or
otherwise that Applicable Designated Buyer and its successors, legal
representatives or assigns may deem proper in order to collect, assert or
enforce any claim, right or title of any kind in or to such Seller's Business
Assets; (iii) to defend or compromise any or all actions, suits or proceedings
in respect of any of such Seller's Business Assets; and (iv) to do all such acts
and things in relation to the matters set forth in the preceding clauses (i)
through (iii) as Applicable Designated Buyer and its successors, legal
representatives or assigns shall deem desirable. Each Seller hereby agrees that
the appointment hereby made and the powers hereby granted are coupled with an
interest and are and shall be irrevocable by it in any manner or for any reason.
Each Seller agrees to deliver to Applicable Designated Buyer at the Closing an
acknowledged power of attorney to the foregoing effect.
(b) From and after the Closing Date, Applicable Designated
Buyer shall have the right to receive and open all mail, packages and other
communications addressed to a Seller and relating to such Seller's Business, and
each Seller agrees to deliver to Applicable Designated Buyer any such mail,
packages or other communications received directly or indirectly by such Seller
other than those relating to Excluded Assets or Excluded Liabilities. From and
after the Closing Date, Applicable Designated Buyer shall have the right and
authority to collect, for its own account, all of the receivables included in
the Business
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<PAGE> 20
Assets, and each Seller shall transfer or deliver to Applicable Designated Buyer
any cash or other property received directly or indirectly by such Seller in
respect of such receivables, including any amounts payable as interest, and such
funds will be deemed held in trust for the benefit of Applicable Designated
Buyer until so transferred or delivered by the respective Seller.
Article 3. The Closing; Purchase Price; Purchase Price
Adjustment.
3.1 The Closing.
The purchase and sale of the Business Assets of each Seller
(the "Closing") shall take place concurrently at the offices of Rubin Baum Levin
Constant & Friedman, 30 Rockefeller Plaza, 29th Floor, New York, New York 10112,
at 10:00 A.M. on the third Business Day following the satisfaction or waiver of
all conditions to the obligations of the Designated Buyers and Sellers to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective party will take at the Closing itself) or at
such other place and/or other date as the parties may mutually agree (the
"Closing Date"). In no event shall the Closing Date be later than September 1,
1996. The parties hereto agree that the purchase of the Business Assets of one
Seller cannot be consummated unless the purchase of the Business Assets of the
other Seller is concurrently consummated hereunder.
3.2 Purchase Price.
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<PAGE> 21
(a) Subject to any adjustment pursuant to Section 3.2(b) hereof, the
purchase price for the sale of NMPC's Business Assets (the "NMPC Purchase
Price") and the purchase price for the sale of EDDY'S Business Assets (the "EDDY
Purchase Price;" and collectively with the NMPC Purchase Price, the "Purchase
Price") shall be an aggregate of $55,638,000, to be allocated by the parties
hereto between the NMPC Purchase Price and the EDDY Purchase Price (the
"Allocated Purchase Prices") within twenty days after the date hereof (the
"Deadline"), plus in each case the assumption of liabilities provided for in
Section 3.3 hereof, payable at the Closing by the Applicable Designated Buyer by
wire transfer of immediately available funds in the amounts and to the
respective accounts of the Sellers to be furnished by the respective Sellers to
the Applicable Designated Buyer prior to the Closing Date.
If the parties fail to agree on the Allocated Purchase Prices
by the Deadline, on the first Business Day thereafter Sellers and Designated
Buyers shall either agree upon a firm of certified public accountants to
determine the Allocated Purchase Prices or shall each select a firm of certified
public accountants of nationally recognized standing in order for such two firms
to select on the second Business Day after the Deadline a third firm of
certified public accountants to determine the Allocated Purchase Prices. If by
the end of the fifth Business Day after the Deadline, a firm has not yet been
selected pursuant to the foregoing procedures to determine the Allocated
Purchase
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<PAGE> 22
Prices, then the firm shall be a firm of certified public accountants designated
by the American Arbitration Association at the request of any party. The firm
engaged shall be requested to determine the Allocated Purchase Prices no later
than the fifteenth Business Day after the Deadline, and its decision shall be
final and binding upon the parties. The parties shall be responsible for their
respective expenses in connection with this determination, except that the fees
of the firm agreed upon by the parties (or otherwise designated to determine the
Allocated Purchase Prices in accordance herewith) shall be divided equally
between Designated Buyers, on the one hand, and Sellers, on the other.
(b) Promptly following the Closing Date (but in any event no later than
seventy five days after the Closing Date) Sellers shall, at the expense of
Designated Buyers and Sellers to be shared equally, prepare a combined balance
sheet for Sellers' Businesses (after eliminating the Excluded Assets and the
Excluded Liabilities), as at the Closing Date (the "Closing Balance Sheet") in a
manner consistent with the preparation of the Pro Forma Financial Statements
which shall be reported on without qualification by the independent auditing
firm of one of the Sellers. If Designated Buyers do not give written notice to
Sellers setting forth detailed objections to the Closing Balance Sheet (the
"Objection Notice") within 20 days of said delivery, it shall be final and
binding on the parties. If there is a dispute between Sellers and Designated
Buyers with respect to the
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<PAGE> 23
Closing Balance Sheet and Sellers and Designated Buyers are unable to resolve
such dispute within 15 days of receipt of the Objection Notice, such dispute
shall be resolved as expeditiously as possible by a firm of certified public
accountants mutually acceptable to the parties. If the parties are unable to
agree upon a firm of certified public accountants within 5 days, then Sellers
and Designated Buyers shall within 5 days thereafter, by notice to the other,
set forth the name of a firm of certified public accountants. The two firms
designated by the parties shall as promptly as possible select a third firm of
certified public accountants to resolve the dispute; provided, however, that if
the firms are unable to agree upon a third firm within seven Business Days after
the second of such firms is selected or if Sellers or Designated Buyers fail to
select a firm, then the third firm of certified public accountants shall be a
firm of certified public accountants designated by the American Arbitration
Association at the request of any party. The decision of the firm of certified
public accountants mutually acceptable to the parties (or such other firm of
certified public accountants designated in accordance herewith to resolve the
dispute) shall be final and binding upon Sellers and Designated Buyers and the
Closing Balance Sheet as approved by such firm of certified public accountants
shall be the Closing Balance Sheet hereunder. The parties shall be responsible
for their respective expenses in connection with such resolution, except for the
fees of the firm of certified public accountants mutually acceptable to the par-
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<PAGE> 24
ties (or the third accounting firm designated in accordance herewith) which
shall be divided equally between Designated Buyers, on the one hand, and
Sellers, on the other. In the event that the combined working capital of
Sellers' Businesses (computed by subtracting the current liabilities from the
current assets (excluding deferred taxes and eliminating Excluded Assets,
including, without limitation, prepaid insurance, and Excluded Liabilities), all
as set forth in the Closing Balance Sheet)), is greater or less than
$10,638,000, Designated Buyers shall pay to Sellers, in the aggregate, the
amount of such excess, allocated as specified by Sellers, or Sellers shall pay
to Designated Buyers, in the aggregate, the amount of such shortfall, allocated
as specified by Designated Buyers, in cash within five days after the delivery
of the Closing Balance Sheet.
3.3 Assumption of Liabilities.
(a) Assumed Liabilities. In addition to payment of the
Purchase Price, each Applicable Designated Buyer hereby agrees to assume at the
Closing and thereafter to pay, perform and discharge when due, to the extent not
previously paid, performed and discharged, all obligations and liabilities of
the Seller whose Business Assets it is acquiring (other than the Excluded
Liabilities) attributable to such Seller's Business (the "Assumed Liabilities"),
including, without limitation, the following:
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<PAGE> 25
(1) all obligations and liabilities of each such
Seller provided or reserved for in the Financial Statements of such Seller or
arising after the date of the most recent Eddy Financial Statements or NMPC
Financial Statements, as the case may be, in the ordinary course of business;
(2) all obligations and liabilities arising under
the Leases and other agreements, consents, permits and other
instruments listed on Schedule 3.3(a)(2) hereto;
(3) any contingent obligations and liabilities
listed on Schedule 3.3(a)(3) hereto, including, among other things,
environmental costs and, with respect to Eddy, the contingent continuing
liabilities to the Eddy retiree medical trust fund (the "Eddy Retiree Medical
Trust") as described in Section 4.1(l)(7) below;
(4) the National Labor Relations Board complaint
against EDDY referred to in Schedule 4.1(c) hereto;
(5) the employee matters described in Article 6
as being assumed by Buyer; and
(6) the overriding royalties existing with
respect to the mineral leases.
(b) Excluded Liabilities. Designated Buyers shall
not assume, or agree to pay, perform or discharge, or otherwise
have any responsibility for any of the liabilities or obligations
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<PAGE> 26
of Sellers, fixed or contingent, asserted or unasserted, and whether arising
prior to, on or after the Closing Date, which are set forth on Schedule 3.3(b).
3.4 Allocation. The Eddy Purchase Price and the NMPC Purchase Price
shall be allocated among, and considered paid for, the Business Assets of each
Seller in accordance with the procedure set forth on Schedule 3.4 hereto.
Designated Buyers and Sellers shall report the purchase and sale of the Business
Assets for all Tax purposes in a manner consistent with such allocation.
Designated Buyers and Sellers shall file forms as required under Section 1060 of
the Code.
3.5 Payment of Taxes, Etc. Each Seller shall pay, promptly when due,
all gross receipts, income or gains taxes payable in connection with the
transfer of its Business Assets. The Applicable Designated Buyer shall, with
respect to the Business Assets which it is acquiring, pay (i) all transfer
taxes, sales and use taxes, stamp taxes and other Taxes payable in connection
with the transfer of the Business Assets, (ii) survey, search and title
insurance and other title fees, (iii) all filing fees for trademark or patent
assignments, and (iv) the cost of recordation of deeds and other instruments of
transfer referred to in Section 3.6(a)(1). Each party shall pay its filing fees
payable in connection with the filing of any Notification and Report Forms and
related material required to be filed with the Federal Trade
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<PAGE> 27
Commission and the Antitrust Division of the United States Department of Justice
under the Hart-Scott-Rodino Act.
3.6 Closing Documents.
(a) Sellers' Deliveries. At the Closing, each Seller
shall deliver to the Applicable Designated Buyer the following documents:
(1) Such deeds, bills of sale, endorsements,
assignments, change of ownership forms with respect to water rights and other
good and sufficient instruments of conveyance, transfer and consent, as shall
(subject to Section 7.1(g) hereof) be effective to vest in Applicable Designated
Buyer good and marketable title to the Business Assets of such Seller, free and
clear of all liens, claims and encumbrances other than Permitted Liens or as
resulting from Designated Buyers' or Parent's (or their Affiliates) acts and in
form and substance reasonably satisfactory to Buyer's counsel.
(2) An opinion, dated the Closing Date and
addressed to Designated Buyers, from each of Rubin Baum Levin Constant &
Friedman and the Law Offices of W. T. Martin, Jr., P.A., in scope, form and
substance reasonably satisfactory to Designated Buyers.
(3) Copies of the instruments, authorizations,
approvals, consents and orders of third parties including, without limitation,
all necessary approvals from federal, state and
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<PAGE> 28
local authorities as may be required for the valid assignment and transfer to
Applicable Designated Buyer, as of the Closing, of all right, title and interest
in, to and under the Leases and the other agreements, consents, permits,
licenses and instruments of such Seller listed on Schedule 2.1(5).
(4) A good standing certificate of such Seller,
dated no earlier than seven Business Days prior to the Closing Date, issued by
the Secretary of State of such Seller's state of incorporation and, in the case
of EDDY, also a certificate issued by the Secretary of State of New Mexico as to
EDDY's qualification to do business in such state.
(5) A certificate from the Secretary or an
Assistant Secretary of such Seller certifying as to (A) the corporate charter
and by-laws of Seller, (B) the directors' resolutions and any other required
corporate action, including any shareholders resolutions, authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby; and (C) the names and authorized signatures of
each of the officers of such Seller authorized to sign this Agreement and the
other instruments executed and delivered by such Seller in connection herewith.
(6) A certificate to the effect that each of the
conditions specified in Section 7.1(a), (b) and (c) is satisfied in all respects
with respect to such Seller.
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<PAGE> 29
(7) The Power of Attorney referred to in
Section 2.4(a).
(b) Designated Buyers' Deliveries. On the Closing Date,
each Applicable Designated Buyer shall deliver to the Seller whose Business
Assets it is purchasing the following documents:
(1) An opinion, dated the Closing Date, and
addressed to each Seller, from Hughes & Luce, L.L.P., counsel to Parent and
Designated Buyers, in scope, form and substance reasonably satisfactory to
Sellers. In giving such opinion, such counsel may rely as to all matters of
local law on local counsel provided such counsel states that they and Sellers
may reasonably rely on the opinion of such local counsel.
(2) Good Standing Certificates with respect to
Parent and such Applicable Designated Buyer, dated no earlier than seven
Business Days prior to the Closing Date, issued by the Secretary of State of
Mississippi.
(3) Certificates from the Secretary or any
Assistant Secretary of each of Parent and each Applicable Designated Buyer
certifying as to (A) the charter and by-laws of Parent and Applicable Designated
Buyer, (B) the directors' resolutions and any other required corporate action,
including any shareholders resolution, authorizing the execution and delivery of
this Agreement and the consummation of the transactions con-
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<PAGE> 30
templated hereby; and (C) the names and authorized signatures of each of the
officers of Parent and Applicable Designated Buyer authorized to sign this
Agreement and the other instruments executed and delivered by Parent or
Applicable Designated Buyer in connection herewith.
(4) An instrument of assumption of liabilities in
form and substance reasonably satisfactory to Seller's counsel.
(5) A certificate to the effect that each of the
conditions specified in Section 7.2(a), (b) and (c) is satisfied.
3.7 Further Assurances. Subject to the terms and condi-
tions of this Agreement, each of the Sellers and Designated Buyers shall 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 sale of the Business
Assets and the other transactions contemplated by this Agreement. From time to
time after the date hereof, without further consideration, each Seller shall, at
Applicable Designated Buyer's expense, execute and deliver or cause to be
executed and delivered such documents to Applicable Designated Buyer as such
Applicable Designated Buyer may reasonably request in order more effectively to
vest in such Applicable Designated Buyer good and marketable title to the
Business Assets pursuant to this Agreement.
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<PAGE> 31
Article 4 Representations and Warranties.
4.1 Sellers. NMPC and EDDY, respectively, severally (but
not jointly) represent and warrants to MI and MII, respectively, that the
statements contained in this Section 4.1 with respect to itself and its Business
Assets are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4.1).
(a) Organization, Qualification and Corporate Power. NMPC and
Eddy are each corporations duly organized, validly existing and in good
standing, under the laws of the States of New Mexico and Delaware, respectively.
Seller (1) has all requisite corporate power and governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being conducted and (2) is qualified to do business and is
in good standing in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where failure to do
so would not have a Material Adverse Effect.
(b) Due Authorization; Noncontravention. The making
and performance by Seller of this Agreement has been duly authorized by all
necessary corporate action and does not in any material respect violate any law,
rules, regulations, or orders to which Seller or any of its Business Assets is
subject; or result
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<PAGE> 32
in a breach of, or constitute a default under, the Certificate of Incorporation
or By-laws of Seller, or, except as provided in Schedule 4.1(b), any material
indenture or other agreement or instrument by which Seller or any of its
Business Assets may be bound or affected; or result in or require the creation
or imposition of any lien, charge or encumbrance upon or with respect to any of
its Business Assets; except in the case of any of the foregoing in this Section
4.1(b) where such violation, breach, default, lien, charge or incumbrance would
not have a Material Adverse Effect.
(c) Legal Compliance. Except as set forth in Schedule 4.1(c)
hereto, there are no lawsuits or other proceedings pending or to the Knowledge
of Seller, threatened against Seller or any of its properties or assets, before
any court or arbitrator or by or before any governmental commission, bureau or
other regulatory authority, which could have a Material Adverse Effect. Except
as set forth in Schedule 4.1(c) hereto, Seller is not in default under or in
violation of any law, rule, regulation, order, writ, injunction or decree of any
court, arbitrator, governmental commission, bureau or other regulatory
authority, which could have a Material Adverse Effect. To the Knowledge of
Seller, there are no judgments outstanding against Seller.
(d) Title to Assets. Seller has good and marketable
title to its Business Assets (in fee simple in the case of the real property
described on Schedule 2.1(3) hereto), free and
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clear of all liens, claims and encumbrances other than Permitted Liens and
except for the need to obtain certain consents set forth in Schedule 4.1(f) in
connection with any assignment of certain of the Business Assets. There are no
pending or, to Seller's Knowledge, threatened condemnation or eminent domain
proceedings that could materially and adversely affect Buyer's right to use any
premises or use and enjoy the benefit of lease-hold interests included in
Seller's Business Assets from and after the Closing. Upon obtaining the above
referenced consents and consummation of the transactions contemplated hereby,
Applicable Designated Buyer will have acquired good and marketable title in and
to, or a valid leasehold interest in, each of the Business Assets of Sellers,
free and clear of any liens or encumbrances, except for Permitted Liens, or as
may result from Parent's or Applicable Designated Buyers' (or their Affiliates)
acts.
(e) Tax Matters. Seller has filed all tax and information
returns required to be filed by it on or prior to the date hereof and has paid
all Taxes required to be paid except such Taxes, if any, as are not yet due and
payable or which are being contested in good faith and by proper proceedings
(and for which appropriate reserves are established and recorded in the
Financial Statements), and except where any such failure to file or pay would
not have a Material Adverse Effect. Except as set forth on Schedule 4.1(e)
hereto, Seller is not a party to any Tax allocation or sharing agreement.
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(f) Consents. True, correct and complete copies of each
material Lease, consent, permit, license, instrument and agreement of Seller
listed on Schedule 2.1(5) have been delivered or made available to Buyer and all
of the foregoing are in full force and effect, except where the failure to be in
full force and effect would not have a Material Adverse Effect. Schedule 4.1(f)
hereto contains a complete list of all consents and approvals of third parties
(including, without limitation, governmental authorities) required for the
consummation by Seller of the transactions contemplated by this Agreement.
(g) Validity. This Agreement and the other agreements and
instruments executed and delivered by Seller pursuant hereto constitute the
legal, valid and binding obligation of Seller each enforceable in accordance
with its terms, except insofar as the enforceability hereof or thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance or other
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity.
(h) Employees. Concurrently with the execution and delivery of
this Agreement, Seller has delivered to Applicable Designated Buyer a list of
the individuals currently employed by Seller 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;
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copies of all employee handbooks, and policy and procedure manuals; and copies
of (or access to) documentation demonstrating compliance with all applicable
notice and recordkeeping requirements including without limitation those
required by the Fair Labor Standards Act, the Occupational Safety and Health
Act, the Mine Safety and Health Act, Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act, the Americans with Disabilities Act,
the Employee Polygraph Protection Act, the Family and Medical Leave Act, the
Immigration Reform and Control Act, and any other applicable federal, state or
local law, regulation, rule or order relating to employment except where failure
to so comply would not have a Material Adverse Effect.
(i) Assets Necessary for Business. Seller's Business Assets
(together with Seller's Excluded Assets) constitute, and on the Closing Date
will constitute, all of the assets, rights and property used or held for use in
the Business by such Seller.
(j) Financial Statements. True, correct and complete copies of
the NMPC Financial Statements and the Eddy Financial Statements have heretofore
been delivered to Parent. Each of the NMPC Financial Statements and the Eddy
Financial Statements has been prepared in conformity with generally accepted
accounting principles on a consistent basis and fairly presents in all material
respects the financial position of the respective Seller as of the date thereof
and the results of the respective Seller's operations (in the case of annual
statements) and cash flow data
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for the period(s) which are included in said Financial Statements. The Pro Forma
Combined Financial Statements have been prepared in conformity with generally
accepted accounting principles on a basis consistent with the NMPC Financial
Statements and the Eddy Financial Statements and fairly present in all material
respects the combined financial position of Sellers as of December 31, 1995 and
March 31, 1996 and the combined operating and/or cash flow data for the periods
for which such information is included in said Financial Statements.
(k) Intellectual Property. Seller has not used any
Intellectual Property material in the conduct of the Business other than that
listed on Schedule 2.1(4) hereto. Seller validly owns, beneficially and of
record, the trade secrets and confidential business information included in its
Know-how, free and clear of any lien, claim or encumbrance; and has the right to
use all of the other Know-how material in the conduct of its Business. Seller is
not subject to any judgment, order, writ, injunction or decree of any court or
any federal, state, local or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any arbitrator, nor
has Seller entered into nor is it a party to any agreement or other instrument,
which restricts or impairs Seller's use of any of its Intellectual Property or
Know-how.
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(l) Employee Benefit Plans. (1) Schedule 4.1(l)
lists each Employee Benefit Plan that Seller maintains or to
which Seller contributes.
(2) To the Knowledge of Seller, except as set
forth on Schedule 4.1(l), each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in operation in all
respects with the applicable requirements of ERISA and the Code and other
applicable law, except where the failure to comply would not have a Material
Adverse Effect.
(3) All contributions (including all employer
contributions and employee salary reduction contributions or other employee
contributions) which are due have been paid to each such Employee Benefit Plan
or are otherwise accrued as current liabilities in the Financial Statements.
(4) Except as set forth on Schedule 4.1(l), each
such Employee Benefit Plan which is an Employee Pension Benefit Plan and is
intended to be qualified under Code Sec. 401(a) has received a current,
uncaveated determination letter from the Internal Revenue Service to the effect
that it meets the requirements of Code Sec. 401(a).
(5) Seller does not and has not maintained or
made contributions to, or been required to maintain or make contributions to,
any Employee Pension Benefit Plan which is subject to Title IV of ERISA.
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(6) With respect to each such Employee Benefit
Plan, as applicable, Seller has delivered to Buyer correct and complete copies
of the plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the Form 5500
Annual Reports for the three most recent plan years for which such reports have
been required to be filed (except as set forth on Schedule 4.1(l) or where the
failure to file such reports would not have a Material Adverse Effect); copies
of the most recent determination letter application; medical claims data for the
most recent annual period; and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan.
(7) With respect to the Eddy Retiree Medical
Trust Fund: (i) EDDY has made all contributions required to be made to such
trust prior to and as of the Closing Date; (ii) neither Eddy nor MII have or
shall have any fiduciary or administrative duty or responsibility with respect
to such trust or with respect to the payment of benefits related to such trust
and (iii) EDDY's obligations with respect to such trust are fully and accurately
described in Section 4.05 of the Fourth Amended Plan of Reorganization of
Trans-Resources, Inc. and EDDY, as filed in the United States Bankruptcy Court
for the Northern District of Texas, Dallas Division, on April 25, 1988.
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(8) Seller does not contribute to and has never
contributed to a Multiemployer Plan.
(9) With respect to each Employee Benefit Plan
that Seller maintains or ever has maintained or to which it contributes, ever
has contributed, or ever has been required to contribute:
(A) No liability exists as a result of the complete
or partial termination of any such Employee Benefit Plan which
is an Employee Pension Benefit Plan.
(B) No action, suit, proceeding, hearing, or
investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending, except
where the action, suit, proceeding, hearing, or investigation
would not have a Material Adverse Effect.
(10) Seller has not incurred any liability with
respect to an Employee Benefit Plan as a result of being a member of a
"Controlled Group," except to the extent the liability would not have a Material
Adverse Effect.
(m) Environmental Matters. Other than as set forth on
or referred to on Schedule 4.1(m) hereto and to the Knowledge of
Seller:
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(1) Seller is not in material violation of any
Environmental Law which could have a Material Adverse Effect.
(2) There is no action or proceeding by any gov-
ernmental or regulatory body of which Seller has actual notice pending against
Seller or threatened against Seller by any governmental or regulatory body that
alleges or would allege any violation of any Environmental Law.
(3) There are no facts, events, conditions, cir-
cumstances, activities, practices, incidents, actions or omissions that could
reasonably be expected to result in a material liability to Seller under any
Environmental Law.
(4) Seller has not received any notice that it
may be a potentially responsible party at any waste disposal site.
(5) The Business Assets are free of environmental
liens, the presence of hazardous substances, hazardous waste, PCBs, petroleum
products, radon, underground or above ground storage tanks, and other on-site
conditions of environmental concern, any of which would have a Material Adverse
Effect.
(6) Seller has all environmental permits necessary
for operations on any owned or leased property and is in material compliance
with all such permits except where the failure with respect to any of the
foregoing would not have a Material Adverse Effect.
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(7) There has been no off-site disposal of hazardous
substances or waste by Seller in violation of any Environmental Law which would
have a Material Adverse Effect.
(n) Insurance. Schedule 4.1(n) hereto contains a true and
complete list of all policies of insurance and fidelity or surety bonds
currently in force covering Seller's Business. Also included on Schedule 4.1(n)
is a list of all claims, if any, relating to Seller currently pending or which
have been settled during the last 12 months under any of the policies set forth
on Schedule 4.1(n).
(o) Brokers. Except for Goldman, Sachs & Co., the fees of
which shall be paid by Sellers, neither Sellers nor anyone acting on behalf of
Sellers has retained any broker, finder or agent or agreed to pay any brokerage
fee, finder's fee or commission with respect to the transactions contemplated by
this Agreement.
(p) No Material Adverse Effect. Since March 31, 1996,
Seller has conducted its business in the ordinary course consistent with past
practices, and there has not been any Material Adverse Effect.
(q) No Material Undisclosed Liabilities. Except as
expressly set forth on the Schedules hereto, there are no liabilities of the
Business of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise,
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other than (i) liabilities disclosed or provided for in the Financial
Statements, (ii) current liabilities incurred in the ordinary course of business
since December 31, 1995, which in aggregate are not material to the Business,
taken as a whole, and (iii) Excluded Liabilities.
(r) Inventory. All inventory set forth on the March 31,
1996 balance sheet of Seller and not sold in the ordinary course of business
will on the Closing Date be owned free and clear of any lien or encumbrance,
other than Permitted Liens. All of the inventory recorded on the March 31, 1996
balance sheet of Seller consisted of, and all inventory related to the Business
of Seller on the Closing Date will consist of, items of a quality usable or
saleable in the normal course of such Seller's Business consistent with past
practice.
(s) Receivables. All accounts receivable and other
receivables reflected on the March 31, 1996 balance sheet of Seller are (other
than receivables collected since the date of this Agreement), and all accounts
receivable and other receivables arising from or otherwise relating to the
Business at the Closing Date will be, valid, genuine and to Seller's knowledge
fully collectible in the aggregate amount thereof, subject to normal and
customary trade discounts, less any reserves for doubtful accounts recorded on
the Financial Statements.
(t) Employee Relations. Except as set forth on Sched-
ule 4.1(t): (i) there is no strike, dispute, slow down, or stop-
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page actually pending or threatened against or involving Seller; (ii) no
representation questions exist respecting the employees of Seller; (iii) no
material grievance exists which might have a Material Adverse Effect, (iv) no
arbitration proceeding arising out of or under any collective bargaining
agreement is pending, and no claim therefor has been asserted; (v) no collective
bargaining agreement has existed or is currently being negotiated by Seller;
(vi) and Seller has not experienced any material labor difficulty or organizing
activity during the last three years.
(u) Employee Matters. Except as set forth on Schedule
4.1(u), Seller is in substantial compliance with all applicable federal, state
and local laws, regulations and orders respecting wages and hours, leaves of
absence, safety, and other terms and conditions of employment with respect to
its employees except where the failure to be in such compliance would not
result in a Material Adverse Effect. Except as set forth on Schedule 4.1(u)
hereto, no employment discrimination, wage and hour, safety, unfair labor
practice or other complaints, charges, citations or other notices of violations
have been filed or issued against Seller or, to Seller's knowledge, threatened
to be filed with or issued by any federal, state or local governmental
authorities over Seller's labor or employment matters except where such filing
or issuance would not have a Material Adverse Effect.
(v) Material Contracts. Schedule 4.1(v) hereto contains
a true and complete listing of the following oral and writ-
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ten contracts and agreements (and all amendments, supplements and modifications
thereto) to which Seller is a party: (i) any contract or agreement relating to
capital expenditures of more than $50,000; (ii) all current or pending contracts
or agreements between Seller and any other party which involve, in the
aggregate, the payment or receipt by Seller of more than $100,000, which cannot
be cancelled without penalty upon thirty (30) days' notice; (iii) any loan or
advance to, or investment in, any Person or any contract or agreement relating
to the making of any such loan, advance, or investment, except that employee
loans or travel advances need not be listed unless the aggregate of such loans
or advances shall exceed $50,000; (iv) any guarantee or other contingent
liability in respect of any indebtedness or obligation of any Person; (v) any
management, consulting, employee, severance, union, termination agreement or
similar contract or agreement; (vi) any contract or agreement limiting the
freedom of Seller or its successors from engaging in any line of business,
soliciting employees or customers, or competing with any Person and any contract
or agreement where any Person has agreed not to compete with Seller or its
Affiliates; (vii) any contract or agreement which, to the best knowledge of
Seller, may be reasonably expected to have a Material Adverse Effect; and (viii)
any contract, commitment, or agreement between (1) Seller and (2) any
shareholder, officer, employee, or director (or any of their Affiliates) of
Seller. Each contract or agreement disclosed on Schedule 4.1(v) hereto is a
valid and binding agreement
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of Seller and is in full force and effect, and neither Seller nor, to the
knowledge of Seller, any other party thereto is in default in any material
respect under the terms of any such contract or agreement.
(w) Reserve for Workers' Compensation. All liabilities
arising out of or otherwise relating to Seller's Workers' Compensation program
will be included as current liabilities in the Closing Balance Sheet, except to
the extent such liabilities would not have a Material Adverse Effect.
4.2 Parent and Designated Buyers. Parent and MI (with respect to itself
and Parent), jointly and severally represent and warrant to NMPC, and Parent and
MII (with respect to itself and Parent) jointly and severally represent and
warrant to EDDY that the statements contained in this Section 4.2 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4.2).
(a) Organization. Parent and Designated Buyer are
each a corporation duly organized, validly existing and in good
standing under the laws of the State of Mississippi.
(b) Due Authorization; Noncontravention. The making
and performance by Parent and Designated Buyer of this Agreement and the other
agreements and instruments executed and delivered
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by Parent and Designated Buyer pursuant hereto have been duly authorized by all
necessary corporate action and do not and will not in any material respect
violate any material provision of law, rules, regulations or orders; or result
in a material breach of, or constitute a material default under, Parent or
Designated Buyer's respective Certificates of Incorporation or By-laws or any
indenture or other agreement or instrument by which Parent or Designated Buyer
or any of their respective properties may be bound or affected; or result in, or
require, the creation or imposition of any lien upon or with respect to any of
Parent's or Designated Buyer's properties.
(c) Validity. This Agreement and the other agreements and
instruments executed and delivered by Parent or Designated Buyer pursuant hereto
constitute the legal, valid and binding obligation of Parent or Designated
Buyer, as the case may be, enforceable in accordance with its terms, except
insofar as the enforceability hereof and thereof may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting
the enforcement of creditors' rights generally and by general principles of
equity.
(d) Brokers. Neither Parent nor Designated Buyer nor anyone
acting on behalf of either of them has retained any broker, finder or agent or
agreed to pay any brokerage fee, finder's fee or commission with respect to the
transactions contemplated by this Agreement.
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(e) Legal Compliance. There are no lawsuits or other
proceedings pending or to the Knowledge of Parent or Designated Buyer threatened
against Parent or Designated Buyer or any of their respective properties or
assets, before any court or arbitrator or by or before any governmental
commission, bureau or other regulatory authority which affect Parent's or
Designated Buyer's ability to consummate the transactions contemplated by this
Agreement. Neither Parent nor Designated Buyer is in default under or in
violation of any law, rule, regulation, order, writ, injunction or decree of any
court, arbitrator, governmental commission, bureau or other regulatory
authority, and there are no judgments outstanding against Parent or Designated
Buyer, in each case which affect Parent's or Designated Buyer's ability to
consummate the transaction contemplated by this Agreement. Other than the
consents set forth on Schedule 4.2(e), to Parent's or Designated Buyer's
Knowledge, no consents or approvals of third parties are necessary for the
consummation by Parent and Designated Buyer of the transactions contemplated by
this Agreement.
(f) Financing. Designated Buyer either (i) has available on
hand, from its working capital or currently available unrestricted credit
facilities, or (ii) has obtained (and delivered to each Seller) commitments for
all financing that will be required to provide, all of the cash that Designated
Buyer will need to consummate the purchase of the Business Assets.
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(g) Inspections; Limitation of Seller's Warranties. Parent and
Designated Buyer are each an informed and sophisticated participant in the
transactions contemplated by this Agreement and have been advised by Persons
experienced in the evaluation and purchase of enterprises such as the Business
of each Seller, and along with such Persons have undertaken such investigation,
and have been provided with and have evaluated such documents and information,
as Parent and Designated Buyer and their advisors have deemed necessary to
enable them to make an informed and intelligent decision with respect to the
execution, delivery and performance of this Agreement. Anything herein to the
contrary notwithstanding, Parent and Designated Buyer acknowledge that
Applicable Designated Buyer is acquiring the Business of a Seller without any
representation or warranty, express or implied, by either Seller or any of its
Affiliates except as expressly set forth herein. In furtherance of the
foregoing, and not in limitation thereof, Parent and Designated Buyer
acknowledge that neither Seller nor any of their advisors, including, without
limitation, Goldman, Sachs & Co., or any of their respective Affiliates or
representatives had made any representation or warranty, express or implied,
with respect to and Parent and Designated Buyer are not relying upon (i) the
information set forth in the Confidential Memorandum dated January 1996 which
was provided to Parent, (ii) any other information provided to Parent or
Designated Buyer pursuant to the confidentiality agreement which Parent executed
prior to the Confidential Memorandum having
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been furnished to it, or (iii) any financial projection or forecast delivered to
Parent or Designated Buyer with respect to the revenues or profitability or
financial position which may arise from the operation of the Business either
before or after the Closing Date. With respect to any projection or forecast
delivered by or on behalf of Seller to Parent or Designated Buyer, Parent and
Designated Buyer acknowledge that (i) there are uncertainties inherent in
attempting to make such projections and forecasts; (ii) they are each familiar
with such uncertainties, generally; (iii) they are each taking full
responsibility for making their own evaluation of the adequacy and accuracy of
all such projections and forecasts furnished to them; and (iv) neither Parent
nor either Designated Buyer shall have a claim against either Seller or any of
its advisors including, without limitation, Goldman, Sachs & Co., or any of
their respective Affiliates with respect to such projections or forecasts or the
assumptions relating to such projections or forecasts.
Article 5 Pre-Closing Covenants.
5.1 Pre-Closing Covenants. Sellers, Parent and Designated
Buyers agree as follows with respect to the period between the
execution of this Agreement and the Closing.
(a) General. Each of the parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including
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satisfaction, but not waiver, of the closing conditions set forth
in Article 7 below).
(b) Notices and Consents; Hart-Scott Rodino and Other
Antitrust Matters. (i) Each Seller will give any notices to third parties, and
(subject to Section 7.1(g)) use its reasonable best efforts to obtain any third
party consents (set forth on Schedule 4.1(f)), necessary to consummate the
transactions contemplated hereby, and Parent and Designated Buyers will use
their reasonable best efforts to obtain the consents and approvals set forth on
Schedule 4.2(e). Subject to Section 7.1(g), each of the parties will give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies necessary for consummation of the transactions contemplated hereby.
(ii) Without limiting the generality of
the foregoing, each of the parties will file any Notification and Report Forms
and related material that it may be required to file with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the Hart-Scott-Rodino Act, will use its reasonable best efforts to obtain
a waiver from the applicable waiting period, will make any further filings
pursuant thereto or pursuant to any other applicable antitrust law that may be
necessary, proper, or advisable in connection therewith, and will cooperate with
each other in connection with their respective filings under any such antitrust
law
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and in connection with resolving any investigation or other inquiry concerning
the transactions contemplated by this Agreement commenced by any governmental
authority, including, without limitation, the Federal Trade Commission or the
Antitrust Division of the Department of Justice or any state attorney general.
(iii) Each party hereto shall promptly
inform the other parties of any material communication received by such party
from any governmental authority pursuant to any antitrust law (including from
the Federal Trade Commission, the Antitrust Division of the Department of
Justice or any state attorney general) regarding any of the transactions
contemplated by this Agreement. Without limitation to the foregoing, Parent and
Designated Buyers will advise Sellers promptly in respect of any understandings,
undertakings or agreements (oral or written) which Parent or any Designated
Buyer proposes to make or enter into with the Federal Trade Commission, the
Antitrust Division of the Department of Justice, any state attorney general or
any other domestic or foreign governmental authority in connection with the
transactions contemplated hereby.
(iv) In furtherance and not in limita-
tion of the covenants contained in this Section 5.1(b), each party hereto shall
use its best efforts to resolve such objections, if any, as may be asserted with
respect to the transactions contemplated by this Agreement under any antitrust
law.
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(v) Notwithstanding the foregoing, each
party hereto agrees and acknowledges that no party hereto shall be required to
divest or hold separate or otherwise take or commit to take any material action
that, prior to the Closing, materially limits its freedom of action with respect
to, or its ability to retain, the business of such party.
(c) Full Access. Each Seller will permit representatives of
Parent and Applicable Designated Buyer to have full access at all reasonable
times, and in a manner so as not to unreasonably interfere with its normal
business operations, to all of its premises, properties, personnel, books,
records (including tax records), contracts, and documents. Parent and Designated
Buyers will, and will cause their representatives to, treat and hold as such any
Confidential Information they receive from a Seller in the course of the reviews
contemplated by this Section 5.1(c), will, and will cause their representatives
to, not use any of the Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason whatsoever, will,
and will cause their representatives to, return to the respective Seller all
tangible embodiments (and all copies) of the Confidential Information which are
in their possession and will not take business advantage of any such
information.
(d) Operation of Business. Prior to the Closing Date, each
Seller shall conduct its business only in the ordinary
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course consistent with past practices and shall use all commercially reasonable
efforts to (i) preserve its present business organization, (ii) keep available
the services of substantially all of its present officers and employees, (iii)
preserve present material business relationships, (iv) maintain and keep the
Business Assets, (v) not purchase, sell, lease, encumber or otherwise dispose of
any assets, except in the ordinary course of business and consistent with past
practice, (vi) maintain in full force and effect insurance comparable in amount
and in scope of coverage to that now maintained, (vii) pay and perform, when
due, all material obligations under contracts, leases and documents relating to
or affecting the Business Assets and the Business of such Seller, except where
such Seller is disputing the foregoing in good faith, and (viii) comply with and
perform all material obligations and duties imposed by federal, state and local
laws, and all rules, regulations and orders imposed by federal, state or local
governmental authorities, except in the case of clauses (vii) or (viii) as set
forth on Schedule 5.1(d) or where the failure to so pay, perform or comply would
not have a Material Adverse Effect. In addition, prior to the Closing Date, a
Seller shall not, without the prior written consent of Applicable Designated
Buyer, borrow or agree to borrow any funds or guarantee or agree to guarantee
the obligations of others, except pursuant to the $3,000,000 Credit Agreement,
dated as of October 13, 1995, between EDDY and General Electric Capital
Corporation, or that certain Credit Agreement, dated as of November 3, 1995,
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between NMPC's parent corporation, Cedar Chemical Corporation ("Cedar"), The
Chase Manhattan Bank, N.A., as Administrative Agent and the other parties
thereto, or except where any such borrowing or guarantee will not result in any
liability or obligation to be assumed by Designated Buyer. Each Seller shall
notify Applicable Designated Buyer of any unexpected emergency or other change
in the normal course of Seller's Business or in the operation of Seller's
properties and of any governmental complaints, investigations, or hearings (or
communications indicating that the same may be contemplated), adjudicatory
proceedings, and keep Applicable Designated Buyer informed of such events.
(e) Exclusivity. Sellers shall negotiate exclusively with
Parent and Designated Buyers with respect to the acquisition of the Business
Assets and shall not directly or indirectly: (i) solicit any other buyers for
all or any part of the capital stock or assets of Sellers; (ii) encourage any
third parties to bid for any of the assets of Sellers or to purchase shares of
the capital stock of Sellers or participate in any negotiations or discussions
with any such third parties with respect thereto; (iii) provide business or
financial information (not otherwise publicly available) concerning Sellers to
any third parties except in the ordinary course of business; or (iv) assist or
cooperate with any third party to make any proposal to purchase all or any part
of the capital stock or assets of Sellers. In addition, Sellers shall direct
their financial and other advisors and representatives to comply with each of
the foregoing covenants.
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(f) Letters of Credit; Security Deposits, Surety Bonds. On or
prior to the Closing Date, Parent and Applicable Designated Buyer will use their
best efforts to cooperate with Seller to secure releases from all such Seller's
obligations under all letters of credit, security deposits, surety and
performance bonds, guarantees and other performance assurance obligations which
are set forth on Schedule 5.1(f) and will furnish all instruments to the
reasonable satisfaction of the party secured thereby.
(g) Confidentiality Agreements. During the period from the
date of this Agreement through the Closing Date, each Seller shall not
terminate, amend, modify or waive any provision of any confidentiality agreement
to which it is a party. During such period, each Seller shall enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreement, including, but not limited to, by obtaining injunctions to prevent
any breaches of such agreements and to enforce specifically the terms and
provisions thereof in any court of the United States of America or of any state
having jurisdiction.
Article 6 Post-Closing Covenants.
6.1 Certain Employee Matters.
(a) Current Employees. (1) The Applicable Designated Buyer
agrees to offer employment, as of the Closing Date, to substantially all
individuals then currently employed by the
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respective Seller or any Affiliate thereof, who are then currently engaged in
the Business and are listed on Schedule 6.1(a) ("Business Employees"). On or
before the Closing Date, each Applicable Designated Buyer shall deliver to
Seller a list of Business Employees of such Seller to whom it will not be
offering employment as of the Closing Date. Sellers make no representations or
warranties regarding which, if any, Business Employees will accept Designated
Buyers' offers of employment.
(2) Applicable Designated Buyer shall continue
the terms of employment of any Business Employee who accepts employment with
such Designated Buyer ("Continued Employee") with respect to current rates of
compensation, levels of job seniority and benefits that are, in the aggregate,
substantially equivalent, until at least 90 days after the Closing Date.
Thereafter, except as expressly provided elsewhere in this Agreement, including
this Section 6.1, Applicable Designated Buyer, in its sole discretion, may
modify the terms and conditions of employment of any Continued Employee. Nothing
herein shall prevent Applicable Designated Buyer from disciplining any employee,
or terminating any employee for cause, or, except as expressly provided in this
Agreement, including this Section 6.1, from amending or terminating any Employee
Benefit Plan, regardless of whether such action occurs within 90 days after the
Closing Date.
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(3) Nothing expressed or implied in this Agree-
ment, including this Section 6.1, is intended to confer upon any Employee or his
legal representatives any rights or remedies, including, without limitation, any
rights of employment for any specified period, of any nature or kind whatsoever
under or by reason of this Agreement.
(b) Medical, Insurance and Other Benefits. (1) (A) All
expenses or claims covered under medical, travel accident, accidental death and
dismemberment and life insurance plans (if any) of a Seller and which have been
incurred by Employees and their dependents before the Closing Date, irrespective
of the time at which claims are presented, are the responsibility of such Seller
and shall be paid directly by such Seller or its insurance carrier to such
Employees and their dependents. No amount for the above-mentioned expenses or
claims shall be included as current liabilities on the Closing Balance Sheet.
All expenses or claims covered under medical, travel accident, accidental death
and dismemberment and life insurance plans (if any) of a Designated Buyer and
which are incurred by Continued Employees and their dependents on or after the
Closing Date, including any expenses attributable to facts or conditions exist-
ing on or before the Closing Date, are the responsibility of such Designated
Buyer and shall be paid directly by such Designated Buyer or its insurance
carrier to such Continued Employees and dependents. To the extent permitted by
law, each Designated Buyer agrees to provide credit toward the payment of any
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deductible and to recognize past service of Continued Employees with a Seller or
any Affiliate thereof for the purpose of any such plans it adopts for the
benefit of Continued Employees. Except as expressly provided elsewhere in this
Agreement, including this Section 6.1, nothing in this subsection (b)(1)(A)
shall require a Designated Buyer to provide any such plans or benefits to any
employee.
(B) Except as expressly provided elsewhere
in this Agreement, including this Section 6.1, each Designated Buyer in its sole
discretion may determine the terms of any group health insurance plan that it
may elect to provide Continued Employees and their dependents and may modify or
terminate such plan at any time; provided, however, that effective as of the
Closing Date, each Designated Buyer agrees to provide to Continued Employees and
their dependents a group health plan without any exclusion for pre-existing
conditions. As soon as practicable, each Applicable Designated Buyer agrees to
furnish the respective Seller with information as to which Continued Employees
have enrolled in such plan.
(C) Notwithstanding anything in subsection
(b)(1)(B) to the contrary, a Designated Buyer shall not be required to provide
coverage for pre-existing conditions, or for persons who are not actively at
work or who are confined in a hospital, other institution or at home under a
physician's care as of the Closing Date, in a group health plan with respect to
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Continued Employees if such Designated Buyer uses its best efforts to obtain
coverage for pre-existing conditions and such persons either (i) from its
stop-loss carrier on reasonable terms or (ii) by assuming or continuing Seller's
existing stop-loss insurance coverage on reasonable terms and is unable to
obtain such coverage from either such insurance carrier or to assume or continue
such coverage on reasonable terms. Each respective Seller agrees to provide
Applicable Designated Buyer such information as it may request for purposes of
seeking such coverage. Prior to the Closing Date, each Designated Buyer agrees
to furnish the respective Seller with information as to whether an exclusion for
pre-existing conditions or for persons specified in this subsection (b)(1)(C)
applies to Continued Employees.
(2) All short-term, long-term and extended dis-
ability benefits under the terms of a Seller's plans (if any) payable to a
Seller's Employees and their dependents who became disabled before the Closing
Date are the responsibility of such Seller and shall be paid directly by such
Seller or its insurance carrier to such Employees and their dependents. No
amount for the above-mentioned benefits shall be included in current liabilities
on the Closing Balance Sheet. All short-term, long-term and extended disability
benefits under the terms of a Designated Buyer's plans (if any) payable to
Continued Employees and their dependents who become disabled on or after the
Closing Date shall be the responsibility of such Designated Buyer and
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shall be paid directly by such Designated Buyer or its insurance carrier to such
Continued Employees and their dependents. Except as expressly provided elsewhere
in this Agreement, including this Section 6.1, nothing in this subsection (b)(2)
shall require a Designated Buyer to provide any such plans or benefits to any
Continued Employee.
(3) Each Seller agrees to fulfill its obligations
under continuation coverage rules of COBRA with respect to a "qualifying event,"
within the meaning of Section 4980B(f) of the Code or Section 603 of ERISA,
occurring on or before the Closing Date with respect to any Employees and their
dependents. Each Designated Buyer shall fulfill all such obligations with
respect to any "qualifying event" that occurs after the Closing Date with
respect to any Continued Employees and their dependents.
(4) If any Employees are terminated from employ- ment
by a Seller as a result of the transactions contemplated by this Agreement or
otherwise, any obligations arising out of such termination of employment,
including but not limited to severance (including any severance payments due
under the terms of the Eddy Potash, Inc. Severance Pay Benefit Plan, an Employee
Welfare Benefit Plan and Trust), accrued vacation pay, COBRA obligations,
notices or compensation required under the Worker Adjustment and Retraining
Notification ("WARN") Act, employment discrimination complaints, unfair labor
practice charges, grievance under any collective bargaining agreement, breach of
contract claims, and
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wrongful termination and related tort claims shall be the sole responsibility of
such Seller. If any Continued Employees are terminated by Applicable Designated
Buyer, any obligations arising out of such termination of employment, including
but not limited to severance, accrued vacation pay, COBRA obligations, notices
or compensation required under the Worker Adjustment and Retraining Notification
("WARN") Act, employment discrimination complaints, unfair labor practice
charges, grievance under any collective bargaining agreement, breach of contract
claims, and wrongful termination and related tort claims, shall be the sole
responsibility of Applicable Designated Buyer. Nothing in this subsection (b)(4)
shall require Applicable Designated Buyer to provide any severance pay benefits,
medical coverage, vacation, or other benefits to any employee or former employee
except as expressly provided elsewhere in this Agreement, including this
Section 6.1. Except as expressly provided elsewhere in this Agreement,
including this Section 6.1, each Applicable Designated Buyer reserves the sole
right to design, structure, amend or terminate any severance plan, medical
plan, vacation policy, or other plan or policy as it sees fit.
(5) With respect to Continued Employees, Applicable
Designated Buyer shall continue to apply the vacation policy of the respective
Seller or any Affiliate thereof that is currently in effect (the "Seller's
Vacation Policy") at least until December 31, 1996 so that each Continued
Employee shall be entitled to use any vacation time and receive any vacation pay
to
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which he or she would otherwise be entitled until at least December 31, 1996
under such Seller's Vacation Policy. Thereafter, Applicable Designated Buyer may
in its sole discretion amend, modify, or terminate such Seller's Vacation
Policy. From and after the Closing Date, Applicable Designated Buyer will
recognize past service of Continued Employees with the respective Seller or any
Affiliate thereof for purposes of all vacation policies of Applicable Buyer
applicable to Continued Employees.
(6) After the Closing Date, each Designated Buyer and
each Seller shall each provide the other on a continuing basis at no cost to the
other such information regarding Continued Employees as the other shall
reasonably request.
(7) NMPC agrees that as of the Closing Date it shall
terminate its severance policy for the benefit of its Employees.
(c) Designated Buyers' Plans. Each Designated Buyer shall
cause each Continued Employee to be eligible to participate in a defined
contribution plan qualified under Code Section 401(a) and 401(k) ("Buyer Plan").
To the extent permitted by law, the Applicable Designated Buyer shall cause each
Continued Employee to be granted credit for service with Seller or any affiliate
thereof for purposes of eligibility and vesting in such Designated Buyer's Plan.
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(d) Supersession. This Section 6.1 shall govern employee
benefits and labor and employment matters and shall supersede any provision in
this Agreement to the contrary.
6.2 Record Retention and Winding Up. All of a Seller's files of
correspondence, lists, records (in whatever medium the records are stored),
manuals and books of account concerning past, present and prospective customers
and compliance with the rules and regulations of all federal, state or local
regulatory agencies including, without limitation, with respect to matters
relating to the litigations which are set forth on Schedule 4.1(c)
("Litigations"), required by such Seller, including, without limitation, for use
in connection with the Litigations or for the preparation of tax returns and the
like (collectively, "Filings"), shall be made available to such Seller and its
Affiliates, during normal business hours and without unreasonable interference
with the business operations of the Applicable Designated Buyer or Parent, for
examination and duplication (at such Seller's expense) after the Closing Date
for a period of five years. Thereafter, at least 60 days prior to destroying any
of said files, lists, records, manuals and books of account, the Applicable
Designated Buyer shall give notice of its intention to do so to the respective
Seller. If such Seller shall notify the Applicable Designated Buyer that it
wishes to retain any of such files, lists, records, manuals or books of account
which such Designated Buyer intends to destroy, the Applicable Designated Buyer
shall (at such Seller's expense) deliver such files, lists,
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records, manuals or books of account to a location designated by such Seller in
said notification.
6.3 Cooperation. Each Designated Buyer agrees that it shall cooperate
with each Seller in connection with the Litigations by providing upon reasonable
notice the services of employees of such Designated Buyer having knowledge of
facts in connection therewith in order to assist such Seller in the preparation
of such Seller's defenses and to testify at depositions or trials thereof. Each
Designated Buyer also agrees that it shall cooperate with Sellers in connection
with any Filings by providing upon reasonable notice the services of Employees
of such Designated Buyer having knowledge of facts in connection therewith in
order to assist each Seller in connection therewith. In consideration of the
foregoing, each Seller agrees that it shall pay to Designated Buyer the
reasonable cost of the time expended by such Designated Buyer's personnel and
shall reimburse the reasonable out-of-pocket costs incurred by such employees in
providing such testimony or assistance and the costs of all photocopying and
delivery of any documents provided to a Seller by such Designated Buyer.
6.4 Name Change. Within 30 days after the Closing, each Seller agrees
to amend its charter documents to change its corporate name to a name bearing no
resemblance to its current name so as to make each Seller's corporate name
available to the Applicable Designated Buyer.
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Article 7 Conditions to Obligation to Close.
7.1 Conditions to Obligation of Designated Buyers. The
obligation of each Designated Buyer to consummate the transactions to be
performed by it in connection with the Closing is subject to the concurrent
consummation of the other Designated Buyer's transaction with the other Seller
pursuant hereto and to satisfaction of the following conditions:
(a) Representations and Warranties. The representa-
tions and warranties set forth in Section 4.1 above shall be true
and correct in all material respects at and as of the Closing
Date;
(b) Performance by Seller. Each Seller shall have
performed and complied with all of its covenants hereunder in all
material respects through the Closing, including without limita-
tion, the deliveries set forth in Article 3.6(a) hereof;
(c) No Action or Proceedings. There shall not be any
injunction, judgment, order, decree, ruling, or charge in effect
preventing consummation of any of the transactions contemplated
by this Agreement;
(d) Hart-Scott-Rodino. All applicable waiting periods
(and any extensions thereof) under the Hart-Scott-Rodino Act
shall have expired or otherwise been terminated;
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(e) Satisfaction of Designated Buyers. All actions to be taken
by a Seller in connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be reasonably satisfactory
in form and substance to Designated Buyers;
(f) Intercompany Agreements. All agreements and arrangements
between either Seller and any of its Affiliates shall have expired or been
terminated effective prior to the Closing Date;
(g) Third Party Consents. All consents and approvals from
governmental and regulatory bodies and from parties to contracts or other
agreements listed on Schedule 4.1(f) shall have been obtained; provided,
however, that with respect to consents of the U.S. Bureau of Land Management
("BLM"), this Section 7.1(g) shall be deemed already satisfied by the three
letters, each dated May 15, 1996, and attached hereto as Schedule 7.1(g)(A)
hereto, from the District Manager of the Roswell District of the BLM as to: (i)
waiver of the lessee acreage restrictions, (ii) acceptance of Designated
Purchasers' assumption of responsibility for compliance with closure
requirements relating to the mines, and (iii) approval of the Assignments and
Applications for Approval of the Transfers upon the filing thereof, unless any
of said letters shall be withdrawn
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or materially adversely modified by the unilateral action of the BLM.
A Designated Buyer may waive any condition specified in this Section 7.1 if it
executes a writing so stating at or prior to the Closing.
(h) Vicksburg Agreement. MI shall have entered into a
Product Sales Agreement, substantially in the form of Exhibit A hereto, with
Vicksburg Chemical Company ("Vicksburg"), an affiliate of Sellers.
7.2 Conditions to Obligation of Sellers. The obligation of each Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to the concurrent consummation of the Applicable Designated
Buyer's transaction with the other Seller and to satisfaction of the following
conditions:
(a) Representations and Warranties. The representations
and warranties set forth in Section 4.2 above shall be true and correct in all
material respects at and as of the Closing Date;
(b) Performance by Designated Buyers. Each Designated
Buyer shall have performed and complied with all of its covenants hereunder in
all material respects through the Closing, includ- ing, without limitation, the
deliveries set forth in Section 3.6(b) hereof;
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(c) No Action or Proceedings. There shall not be any
injunction, judgment, order, decree, ruling, or charge in effect preventing
consummation of any of the transactions contemplated by this Agreement;
(d) Hart-Scott-Rodino. All applicable waiting periods
(and any extensions thereof) under the Hart-Scott-Rodino Act shall have expired
or otherwise been terminated;
(e) Satisfaction of Sellers. All actions to be taken by Parent
or Designated Buyers in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to each Seller;
(f) Letters of Credit, Security Deposits, etc. Each Seller
shall have been released, in a manner reasonably satisfactory to such Seller,
from all obligations under all letters of credit, security deposits, surety and
performance bonds, guarantees and other performance assurance obligations which
are set forth on Schedule 5.1(f) and shall have received back all such security
deposits;
(g) Cedar Release Under GECC Agreement. Cedar shall have been
released as a guarantor under the Master Lease Agreements between NMPC and
General Electric Capital Corporation;
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(h) Release of Sellers from Mine Closure Liability. The May
15, 1996 letter from the BLM releasing Sellers from any responsibility or
liability for compliance with closure requirements relating to the mines,
included in Schedule 3.3(a)(3), shall continue in full force and effect; and
(i) Vicksburg Agreement. MI and Vicksburg shall have entered
into the agreement described in Section 7.1(h) hereof.
A Seller may waive any condition specified in this Section 7.2 if it
executes a writing so stating at or prior to the Closing.
Article 8 Termination.
8.1 Termination. The parties may terminate this Agreement
as provided below:
(i) Designated Buyers and Sellers may terminate this Agreement
by mutual written consent at any time prior to the Closing;
(ii) Designated Buyers may terminate this Agreement by giving
written notice to Sellers at any time prior to the Closing (A) in the
event a Seller has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect,
Designated Buyers have notified Sellers of such breach, and such breach
has continued without cure for a period of 30 days after the notice of
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breach or (B) if the Closing shall not have occurred on or before
September 1, 1996, by reason of the failure of any condition precedent
under Section 7.1 hereof (unless the failure results from a Designated
Buyer or Parent itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(iii) Sellers may terminate this Agreement by giving written
notice to Designated Buyers at any time prior to the Closing (A) in the
event Parent or a Designated Buyer has breached any material
representation, warranty, or covenant contained in this Agreement in
any material respect, Sellers have notified Designated Buyers of the
breach, and the breach has continued without cure for a period of 30
days after the notice of breach or (B) if the Closing shall not have
occurred on or before September 1, 1996, by reason of the failure of
any condition precedent under Section 7.2 hereof (unless the failure
results from a Seller itself breaching any representation, warranty, or
covenant contained in this Agreement).
8.2 Effect of Termination. If any party terminates this Agreement
pursuant to Section 8.1 above, all rights and obligations of the parties
hereunder shall terminate without any liability of any party to any other party;
provided, however, that (i) the confidentiality provisions contained in Section
5.1(c) above and the publicity provisions contained in Section 10.1
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below shall survive termination, and (ii) if such termination shall result from
the willful failure of any party to fulfill a condition to the performance of
the obligations of another party or to perform a covenant of this Agreement or
from a willful breach of any party to this Agreement, such party shall be fully
liable for any and all losses and damages incurred or suffered by the other
parties as a result of such failure or breach.
Article 9 Indemnification.
9.1 Survival of Warranties; Etc.
(a) The representations and warranties made in this Agreement,
the Schedules hereto and any documents delivered by any of the parties pursuant
hereto shall survive and remain in full force and effect from and after the date
hereof, for the periods set out below:
(1) Except for the representation and set forth
in Sections 4.1(d), 4.1(e) and 4.1(g) hereof, all of the representations and
warranties in this Agreement shall expire and be of no further force and effect
after the six month anniversary of the Closing Date.
(2) The representations and warranties made by
Sellers in Section 4.1(d) hereof shall survive and remain in full force and
effect from and after the date hereof without expiration.
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(3) The representations and warranties made by
Sellers in Sections 4.1(e) and 4.1(g) shall survive and remain in full force and
effect until the expiration of the applicable statutes of limitation by which
any governmental authority, or party, as the case may be, may assert a claim
with respect to the subject matter of such Section.
(b) Each of the parties acknowledges that there are no
representations or warranties by or on behalf of any party hereto or any of its
respective Affiliates or representatives other than those expressly set forth in
this Agreement or on a Schedule hereto.
(c) All references in this Article 9 to "losses," "damages" or
any "deficiency" suffered or incurred by a party or its Affiliates shall be: (i)
deemed to include all reasonable costs and expenses (including reasonable
attorneys' fees, amounts paid as judgments or settlements and costs of
investigation) incurred by the Person entitled to indemnification in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters for which such person is indemnified against under this
Agreement; and (ii) reduced by the amount of proceeds recovered from any
indemnification, contribution or right over, or from and against, any Person who
is not an Affiliate of such party. Parent, each Designated Buyer and each
Seller, as the case may be, shall each take all reasonable steps to recover
under any applicable right of indemnification or
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contribution from Persons other than a party hereto, but its failure to make any
such recovery shall not serve to limit or impair its rights under this Article
9.
9.2 Seller's Indemnification. Subject to the limitations and
restrictions contained elsewhere in this Article 9, each Seller hereby agrees
(severally and not jointly) to indemnify, defend and hold the Applicable
Designated Buyer and Parent, their Affiliates, successors and assigns and their
respective representatives (collectively, "Buyer's Indemnitees") harmless from
and against any and all losses that such Buyer's Indemnitees may at any time
suffer or incur, or become subject to, as a result of or in connection with (i)
any breach or inaccuracy of any of the representations and warranties made by
such Seller in or pursuant to this Agreement if asserted by Buyer's Indemnitees
during the period that such representations and warranties survive; (ii) any
failure by such Seller to carry out perform, satisfy and discharge any of its
covenants, agreements, undertakings, liabilities or obligations under this
Agreement or under any of the documents and instruments delivered by such Seller
pursuant to this Agreement; (iii) claims by third parties against the Applicable
Designated Buyer relating to the operation and ownership by such Seller of the
Business Assets, the performance by such Seller under the Assumed Liabilities,
the conduct of the business of such Seller prior to the Closing Date and the
performance by Seller under the Excluded Liabilities and (iv) indebtedness, if
any, of the Sellers which Applicable Designated
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Buyer pays to BLM pursuant to the letter from Designated Buyers to BLM attached
hereto as Schedule 9.2. Notwithstanding the foregoing, Sellers shall not be
required to indemnify Buyer's Indemnitees under this Section 9.2 (other than
under clause (iv) above) unless and until the aggregate amount of such losses
shall exceed $250,000 at which time Sellers will be obligated to indemnify
Buyer's Indemnitees for all additional losses in excess of $250,000; provided,
however, in no event shall Sellers be liable to Buyer's Indemnitees hereunder
(including pursuant to (iv) above) for an amount in excess of $5,000,000 (in the
aggregate for both Sellers and for Buyer's Indemnitees of both Designated
Buyers).
9.3 Designated Buyer's Indemnification. The Designated Buyers hereby
jointly and severally agree to indemnify, defend and hold each Seller, its
Affiliates, successors and assigns and their respective representatives
(collectively, "Seller's Indemnitees") harmless from and against any and all
losses that Seller's Indemnitees may at any time suffer or incur, or become
subject to, as a result of or in connection with (i) any breach or inaccuracy of
any of the representations and warranties made by Parent or a Designated Buyer
in or pursuant to this Agreement; (ii) any failure of a Designated Buyer to
carry out, perform, satisfy and discharge any of its covenants, agreements,
undertakings, liabilities or obligations under this Agreement or under any of
the documents and instruments delivered by a Designated Buyer pursuant to this
Agreement; and (iii) claims by third par-
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ties against a Seller or its Affiliates relating to the operation and ownership
by a Designated Buyer of the Business Assets, the performance by a Designated
Buyer under the Assumed Liabilities and the conduct of the business of a
Designated Buyer (so long as such claims or losses arise from events that
occurred after the Closing Date).
9.4 Defense of Claims. A Seller and a Designated Buyer shall each give
prompt notice to the other of any claim against the party giving notice which
might give rise to a claim based upon any indemnity contained herein. The notice
shall set forth in reasonable detail the nature and basis of the claim and the
actual or estimated amount thereof. The failure to provide such notice promptly
will not relieve the indemnifying party of its obligations under Article 9
unless and only to the extent that the failure to give such notice promptly
materially prejudiced the ability of the indemnifying party to defend against
such claim. In the event any action, suit or proceeding is brought against a
party with respect to which the other party hereto may have liability under any
indemnity contained herein, the indemnifying party shall have the right, at its
sole cost and expense, to defend such action in the name and on behalf of the
indemnified party with counsel reasonably satisfactory to the indemnified party.
The parties hereto agree to render to each other such assistance as may
reasonably be required in order to ensure the proper and adequate defense of any
such action, suit or proceeding. The indemnified party shall have the right to
partici-
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pate, at its own expense and with counsel of its choosing, in the defense of any
claim against which it is indemnified hereunder and it shall be kept fully
informed with respect thereto. The party seeking indemnification hereunder shall
not make any settlement of any claim which might give rise to liability of
another party under any indemnity contained herein without the prior written
consent of such other party, which consent shall not be unreasonably withheld.
9.5 Guarantee. NMPC covenants that on or prior to Closing, it will
deliver to MI a guarantee of Cedar, in a form reasonably satisfactory to MI, of
NMPC's obligations under Section 9.2. EDDY covenants that on or prior to
Closing, it will deliver to MII a guarantee of Trans-Resources, Inc. ("TRI"), in
a form reasonably satisfactory to MII, of EDDY's obligations under Section 9.2.
Article 10 Miscellaneous.
10.1 Press Releases and Public Announcements. No party hereto or
Affiliate thereof shall issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior written
approval of Parent and TRI; provided, however, that any party hereto or
Affiliate thereof may make any public disclosure it believes in good faith is
required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing
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entity will use its reasonable best efforts to advise the other (unaffiliated)
party hereto prior to making the disclosure).
10.2 Expenses. Except as otherwise specified herein, each Seller and
Designated Buyer shall each pay their own expenses in connection with the
preparation of this Agreement and the consummation of the transactions
contemplated hereby.
10.3 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. No party hereto may assign or transfer its rights or obligations
arising under this Agreement, without the written consent of the other parties
hereto.
10.4 Notice. All notices and other communications provided for herein
shall be in writing and telecopied, mailed or delivered by overnight courier or
by hand to the intended recipient at the telephone number or "Address for
Notices" specified below its name on the signature pages hereof; or, as to any
party, at such other telephone number or address as shall be designated by such
party in a notice to each other party. Except as otherwise provided in this
Agreement, all notices and other communications hereunder shall be deemed to
have been duly given when transmitted by telecopier or delivered to an overnight
courier service, in each case addressed as aforesaid or personally delivered or,
in the case of a mailed notice, when actually received by the intended
recipient.
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10.5 Entire Agreement. This Agreement, together with the Schedules
hereto, contains the entire understanding between the parties hereto concerning
the subject matter hereof and supersedes any and all prior representations,
warranties, undertakings, covenants and agreements between the parties. This
Agreement may not be changed, modified, altered or terminated except by an
agreement in writing executed by the parties hereto. Any waiver by any party of
any of its rights under this Agreement shall not constitute a waiver of any
other rights or of any other future breach.
10.6 Third Parties. Except as expressly set forth herein, nothing
herein expressed or implied is intended or shall be construed to confer upon or
give to any person or entity other than the parties hereto and their successors
or permitted assigns, any rights or remedies under or by reason of this
Agreement.
10.7 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless
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the context requires otherwise. The word "including" shall mean including
without limitation.
10.8 Captions. Captions and descriptive headings are for convenience
of reference only and shall not control or affect the meaning or construction
of any provisions of this Agreement.
10.9 Counterparts. This Agreement may be executed in any number of
counterpart copies and by telecopier, each of which shall be deemed an original,
but which together shall constitute a single instrument.
10.10 Applicable Law. This Agreement shall be governed and controlled
as to validity, enforcement, interpretation, construction effect and in all
other respects by the internal laws of the State of New York applicable to
contracts made and to be wholly performed in that state.
10.11 Guarantee. Parent hereby unconditionally guarantees each
Designated Buyer's obligations to close the transactions contemplated herein in
accordance with the terms and provisions hereof and to pay the cash purchase
price set forth in Section 3.2(a) and (b) hereof in accordance with the terms
and provisions hereof. Sellers agree and acknowledge that Parent is not assuming
or guaranteeing the Assumed Liabilities and, except as set forth in the
preceding sentence or in Section 4.2 hereof, Parent shall have no liability or
responsibility for any of Designated Buyers' duties or obligations under this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
NEW MEXICO POTASH CORPORATION
By: John Lewandowski
---------------------------------
Title: President
- Address for Notices -
c/o Trans-Resources, Inc.
9 West 57th Street
New York, New York 10019
Telecopier No.: 212-888-3708
Attention: Chief Financial Officer
with copies to:
Rubin Baum Levin Constant & Fried-
man
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-7825
Attention: Edward Klimerman, Esq.
EDDY POTASH, INC.
By: John Lewandowski
---------------------------------
Title: President
- Address for Notices -
c/o Trans-Resources, Inc.
9 West 57th Street
New York, New York 10019
Telecopier No.: 212-888-3708
Attention: Chief Financial Officer
with copies to:
Rubin Baum Levin Constant &
Friedman
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-7825
Attention: Edward Klimerman, Esq.
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MISSISSIPPI CHEMICAL CORPORATION
By: C.E. McCraw
------------------------------
Title: Senior Vice President -
Operations
- Address for Notices -
Post Office Box 388
Yazoo City, Mississippi 39194-0388
Telecopier No.: (601) 751-2912
Attention: Secretary
with copies to:
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Telecopier No.: (214) 939-6100
Attention: Alan J. Bogdanow
MISSISSIPPI ACQUISITION I, INC.
By: C.E. McCraw
------------------------------
Title: Vice President
- Address for Notices -
Post Office Box 388
Yazoo City, Mississippi 39194-0388
Telecopier No.: (601) 751-2912
Attention: Corporate Secretary
with copies to:
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Telecopier No.: (214) 939-6100
Attention: Alan J. Bogdanow
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MISSISSIPPI ACQUISITION II, INC.
By: C.E. McCraw
--------------------------------
Title: Vice President
- Address for Notices -
Post Office Box 388
Yazoo City, Mississippi 39194-0388
Telecopier No.: (601) 751-2912
Attention: Corporate Secretary
with copies to:
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Telecopier No.: (214) 939-6100
Attention: Alan J. Bogdanow
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Exhibit 2.2
NEW MEXICO POTASH CORPORATION
EDDY POTASH, INC.
August 16, 1996
Mississippi Chemical Corporation
Mississippi Acquisition I, Inc.
Mississippi Acquisition II, Inc.
Post Office Box 388
Yazoo City, Mississippi 39134-0388
Re: Amendment to Asset Purchase Agreement, dated as of May 21,
1996 (the "Purchase Agreement"), among Mississippi Chemical
Corporation, Mississippi Acquisition I, Inc., Mississippi
Acquisition II, Inc., Eddy Potash, Inc. and New Mexico Potash
Corporation
Gentlemen:
Reference is made to Sections 4.1(f) and 7.1(g) of the Purchase
Agreement. Terms defined in the Purchase Agreement are used herein as defined
therein.
By signing below, please confirm our agreement as follows:
1. With respect to consents and/or approvals of the New Mexico State
Land Office, Sections 4.1(f) and 7.1(g) will be deemed satisfied by the letter,
dated August 15, 1996, from the New Mexico State Land Office attached hereto as
Exhibit A.
2. Notwithstanding that the items listed on Exhibit B hereto (the
"Existing Arrangements") were identified on Schedule 4.1(f) to the Purchase
Agreement as "Required Consents," such consents are not necessary and obtaining
these consents will not be a condition to Closing because the Designated Buyers
are entering into newly negotiated alternate arrangements with the third parties
to the Existing Arrangements (the "Alternate Arrangements"). Your signature
below will also confirm that (i) Designated Buyers' entry into these Alternate
Arrangements will not create any liabilities to Sellers as a result of the
concomitant termination of the Existing Arrangements, and (ii) that no
liabilities will accrue to Sellers under the Existing Arrangements for periods
after the Closing Date.
3. If the Closing occurs on August 16, 1996, it will be deemed to have
occurred as of 7:00 A.M. Carlsbad, New Mexico time on that date.
4. Effective as of the date hereof, Section 9.2 of the Purchase
Agreement is hereby
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amended to read in its entirety as follows:
"9.2 Seller's Indemnification. Subject to the limitations and
restrictions contained elsewhere in this Article 9, each Seller hereby agrees
(severally and not jointly) to indemnify, defend and hold the Applicable
Designated Buyer and Parent, their Affiliates, successors and assigns and their
respective representatives (collectively, "Buyer's Indemnitees") harmless from
and against any and all losses that such Buyer's Indemnitees may at any time
suffer or incur, or become subject to, as a result of or in connection with (i)
any breach or inaccuracy of any of the representations and warranties made by
such Seller in or pursuant to this Agreement if asserted by Buyer's Indemnitees
during the period that such representations and warranties survive; (ii) any
failure by such Seller to carry out perform, satisfy and discharge any of its
covenants, agreements, undertakings, liabilities or obligations under this
Agreement or under any of the documents and instruments delivered by such Seller
pursuant to this Agreement; (iii) claims by third parties against the Applicable
Designated Buyer relating to the operation and ownership by such Seller of the
Business Assets, the performance by such Seller under the Assumed Liabilities,
or the conduct of the business of such Seller, in each case prior to the Closing
Date, and the performance by Seller under the Excluded Liabilities and (iv)
indebtedness, if any, of the Sellers which Applicable Designated Buyer pays to
BLM pursuant to the letter from Designated Buyers to BLM attached hereto as
Schedule 9.2, and (v) indebtedness, if any, of the Sellers which Applicable
Designated Buyer pays to the New Mexico State Land Office (the "State Land
Office") for the royalties, if any, owed to the State Land Office on or prior to
the Closing Date in connection with the Leases between a Seller and the State
Land Office listed on Schedule 2.1(5) hereto. Notwithstanding the foregoing,
Sellers shall not be required to indemnify Buyer's Indemnitees under this
Section 9.2 (other than under clauses (iv) and (v) above) unless and until the
aggregate amount of such losses shall exceed $250,000 at which time Sellers will
be obligated to indemnify Buyer's Indemnitees for all additional losses in
excess of $250,000; provided, however, in no event shall Sellers be liable to
Buyer's Indemnitees hereunder (including pursuant to (iv) above, but other than
under clause (v) above) for an amount in excess of $5,000,000 (in the aggregate
for both Sellers and for Buyer's Indemnitees of both Designated Buyers)."
This Amendment may be signed in counterparts and by telecopied
signature.
Very truly yours,
NEW MEXICO POTASH CORPORATION
By: John Lewandowski
-----------------------------
Title: President
EDDY POTASH, INC.
By: John Lewandowski
-----------------------------
Title: President
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Confirmed and Agreed to as of the above date:
MISSISSIPPI CHEMICAL CORPORATION
By: C. E. McCraw
----------------------------------
Title: Senior Vice President-Operations
MISSISSIPPI ACQUISITION I, INC.
By: C. E. McCraw
----------------------------------
Title: Vice President
MISSISSIPPI ACQUISITION II, INC.
By: C. E. McCraw
----------------------------------
Title: Vice President
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