<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 25, 1996
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------
IMC GLOBAL INC.
(Exact name of registrant as specified in its charter)
--------------
DELAWARE 2874 36-3492467
(State or Other (Primary Standard Industrial (I.R.S.
Jurisdiction of Classification Code Number) Employer
Incorporation or Identification
Organization) No.)
2100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
(708) 272-9200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
MARSCHALL I. SMITH
SENIOR VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
IMC GLOBAL INC.
2100 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
(708) 272-9200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------
Copies to:
THOMAS A. COLE, ESQ. NORMAN M. GOLD, ESQ.
LARRY A. BARDEN, ESQ. PETER M. HOWARD, ESQ.
SIDLEY & AUSTIN ALTHEIMER & GRAY
ONE FIRST NATIONAL PLAZA 10 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60603 CHICAGO, ILLINOIS 60606
(312) 853-7000 (312) 715-4000
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the effective date of this
Registration Statement and the effective time of the Merger described in this
Registration Statement.
--------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box [_] .
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 par
value................. 36,495,589 shares(1) N.A. $1,180,739,615(2) $407,152(3)
- ----------------------------------------------------------------------------------------------
Preferred Stock Purchase
Rights................ 36,495,589 rights (4) (4) (4)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Consists of up to 34,298,463 shares of IMC Common Stock issuable pursuant
to the Merger Agreement upon the exchange of currently outstanding shares
of common stock of The Vigoro Corporation and up to 2,197,126 shares of IMC
Common Stock issuable in respect of currently outstanding options of The
Vigoro Corporation, each based upon the maximum exchange ratio provided for
in the Merger Agreement.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1) and Rule 457(c), based on the average of the
high and low prices of the Vigoro Common Stock on the New York Stock
Exchange on January 18, 1996 ($55.00).
(3) Pursuant to Rule 457(b), $234,273 of the registration fee is offset by the
filing fee previously paid by IMC in connection with the filing of
preliminary proxy materials on December 13, 1995. Accordingly, a
registration fee of $172,879 is being paid herewith.
(4) The Preferred Stock Purchase Rights are evidenced by certificates for
shares of IMC Common Stock and automatically trade with IMC Common Stock.
Value attributable to such Preferred Stock Purchase Rights, if any, is
reflected in the market price of the IMC Common Stock.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
IMC GLOBAL INC.
CROSS-REFERENCE TABLE
CROSS-REFERENCE SHEET BETWEEN ITEMS IN FORM S-4
AND JOINT PROXY STATEMENT/PROSPECTUS PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER CAPTION OR LOCATION IN PROSPECTUS
- -------------------- ---------------------------------
A. INFORMATION ABOUT THE TRANSACTION
<S> <C>
1.Forepart of Registration
Statement and Outside Front Facing Page, Cross Reference Table and
Cover Page of Prospectus...... Outside Front Cover Page of Joint Proxy
Statement/Prospectus
2.Inside Front and Outside Back
Cover Pages of Prospectus..... Table of Contents, "Available Information"
and "Incorporation of Documents by
Reference"
3.Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information................... "Summary," "Risk Factors" and "The Merger"
4.Terms of the Transaction....... "Summary," "The Merger," Other Terms of the
Merger Agreement," "Comparison of the
Rights of Holders of IMC Common Stock and
Vigoro Common Stock"
5.Pro Forma Financial "Unaudited Pro Forma Condensed Consolidated
Information................... Financial Statements"
6.Material Contacts with the
Company Being Acquired........ "The Merger"
7.Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwriters.................. Not Applicable
8.Interests of Named Experts and
Counsel....................... "Experts" and "Legal Opinions"
9.Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities................... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10.Information with Respect to S-3 "Incorporation of Documents by Reference"
Registrants................... and "Business of IMC"
11.Incorporation of Certain
Information by Reference...... "Incorporation of Documents by Reference"
12.Information with Respect to S-2
or S-3 Registrants............ Not Applicable
13.Incorporation of Certain
Information by Reference...... Not Applicable
14.Information with Respect to
Registrants Other than S-3 or
S-2 Registrants............... Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15.Information with Respect to S-3 "Incorporation of Documents by Reference"
Companies..................... and "Business of Vigoro"
16.Information with Respect to S-2
or S-3 Companies.............. Not Applicable
17.Information with Respect to
Companies Other than S-2 or S-
3 Companies................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18.Information if Proxies,
Consents or Authorizations are "Incorporation of Documents by Reference,"
to be Solicited............... "Summary," "IMC Special Meeting," "Vigoro
Special Meeting" and "The Merger"
19.Information if Proxies,
Consents or Authorizations are
not be Solicited or in an
Exchange Offer................ Not Applicable
</TABLE>
<PAGE>
January [30], 1996
LOGO OF IMC GLOBAL
Dear Stockholder:
On behalf of the Board of Directors and management of IMC Global Inc.
("IMC"), I cordially invite you to attend a Special Meeting of Stockholders
(the "Special Meeting") to be held at the offices of Sidley & Austin, 2 South
Dearborn, Suite 5500, Chicago, Illinois, on February 28, 1996 at 10:00 a.m.,
local time.
At the Special Meeting, you will be asked to approve the issuance of shares
(the "Share Issuance") of Common Stock, par value $1.00 per share, of IMC
("IMC Common Stock") pursuant to the Agreement and Plan of Merger dated as of
November 13, 1995 (the "Merger Agreement") among IMC, Bull Merger Company, a
wholly-owned subsidiary of IMC ("Merger Sub"), and The Vigoro Corporation
("Vigoro"). The Merger Agreement provides for the merger (the "Merger") of
Merger Sub into Vigoro, with Vigoro surviving as a subsidiary of IMC, all of
the outstanding common stock of which will be owned by IMC. Subject to the
terms and conditions of the Merger Agreement, each share of Common Stock of
Vigoro outstanding immediately prior to the effective time of the Merger
(other than shares owned directly or indirectly by IMC or Vigoro, which will
be cancelled) will be converted into the right to receive between 1.50 and
1.70 shares of IMC Common Stock (adjusted to reflect IMC's 2-for-1 stock split
effected on November 30, 1995), depending on the average of the per share
daily closing prices of IMC Common Stock on the New York Stock Exchange during
the 20 consecutive trading days ending on the fifth trading day prior to the
date of the Special Meeting of Stockholders of Vigoro, all as more fully set
forth in the accompanying Joint Proxy Statement and Prospectus (the "Proxy
Statement/Prospectus") and the Merger Agreement, a copy of which is included
as Annex I to the Proxy Statement/Prospectus. Pursuant to the Rights Agreement
between IMC and The First National Bank of Chicago, each share of IMC Common
Stock constituting the Share Issuance will include a right to purchase one
two-hundredth of a share of Junior Participating Preferred Stock, Series C, of
IMC. Cash will be paid in lieu of any fractional share of IMC Common Stock.
At the Special Meeting, you will also be asked to approve amendments to the
Restated Certificate of Incorporation of IMC (i) to increase the number of
authorized shares of IMC Common Stock from 100,000,000 to 250,000,000 and (ii)
to increase the range of the number of directors who may from time to time
comprise the Board of Directors of IMC (the "IMC Board") to not less than 5
nor more than 15 (collectively, the "Charter Amendments").
Upon consummation of the Merger and the filing of the IMC Charter
Amendments, the IMC Board will be comprised of the nine current members of the
IMC Board and four individuals to be mutually selected by IMC and Vigoro from
among the current members of the Board of Directors of Vigoro (the "Vigoro
Designees"). IMC and Vigoro presently anticipate that the Vigoro Designees
will be Joseph P. Sullivan, the Chairman of the Board of Vigoro, Robert E.
Fowler, Jr., a Director and the President and Chief Executive Officer of
Vigoro, Rod F. Dammeyer, a Director of Vigoro, and an individual currently
serving as an outside Director of Vigoro to be mutually designated by IMC and
Vigoro at or prior to the Effective Time.
<PAGE>
THE BOARD OF DIRECTORS OF IMC HAS UNANIMOUSLY DETERMINED THAT THE MERGER AND
THE SHARE ISSUANCE ARE ADVISABLE AND FAIR TO AND IN THE BEST INTERESTS OF THE
STOCKHOLDERS OF IMC. ACCORDINGLY, THE BOARD OF DIRECTORS OF IMC HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE SHARE ISSUANCE AND EACH OF THE
CHARTER AMENDMENTS AND RECOMMENDS THAT YOU VOTE IN FAVOR OF THE SHARE ISSUANCE
AND EACH OF THE CHARTER AMENDMENTS AT THE SPECIAL MEETING. APPROVAL OF THE
SHARE ISSUANCE AND EACH OF THE CHARTER AMENDMENTS IS A CONDITION TO THE
CONSUMMATION OF THE MERGER.
The Merger, the Merger Agreement, the Share Issuance and the Charter
Amendments are more fully described in the accompanying Proxy
Statement/Prospectus. We urge you to read this material carefully. If you have
any questions regarding any of the foregoing, please call Morrow & Co., Inc.,
our proxy solicitation agent, toll free at (800) 662-5200 or collect at (212)
754-8000.
It is important that your shares of IMC Common Stock be represented at the
Special Meeting regardless of the number of shares you hold.
You are urged to specify your voting preferences by marking, dating and
signing the enclosed proxy card and returning it in the enclosed business
reply envelope. If you wish to vote in accordance with the recommendation of
the IMC Board, all you need to do is date and sign the proxy card and return
it in such envelope.
PLEASE COMPLETE AND RETURN THE PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND
THE SPECIAL MEETING. If you do attend and wish to vote in person, you may
revoke your proxy at that time.
If you plan to attend the Special Meeting, please check the proxy card in
the space provided. This will assist us in making preparations for the
meeting, and will enable us to expedite your admittance. If your shares are
not registered in your name and you would like to attend the Special Meeting,
please ask the broker, trust company, bank or other nominee which holds such
shares to provide you with evidence of your share ownership, which will enable
you to gain admittance to the Special Meeting.
Sincerely,
[SIGNATURE OF W.F. BUECHE]
Chairman and
Chief Executive Officer
2100 Sanders Road
Northbrook, Illinois 60062
Telephone 708-272-9200
<PAGE>
Headquarters Office:
2100 Sanders Road
Northbrook, Illinois 60062
LOGO OF IMC GLOBAL
---------------------
Notice of Special Meeting of Stockholders
- --------------------------------------------------------------------------------
To our Stockholders:
A Special Meeting of Stockholders (the "Special Meeting") of IMC Global Inc.,
a Delaware corporation ("IMC"), will be held at the offices of Sidley & Austin,
2 South Dearborn, Suite 5500, Chicago, Illinois, on Wednesday, February 28,
1996, at 10:00 a.m., local time, for the following purposes:
1. To consider and vote upon a proposal to approve the issuance of shares
(the "Share Issuance") of Common Stock, par value $1.00 per share, of
IMC ("IMC Common Stock") pursuant to the merger contemplated by, and in
accordance with the terms of, the Agreement and Plan of Merger dated as
of November 13, 1995 (the "Merger Agreement") among IMC, Bull Merger
Company, a Delaware corporation and a wholly-owned subsidiary of IMC,
and The Vigoro Corporation, a Delaware corporation ("Vigoro");
2. To consider and vote upon a proposal to approve an amendment to the
Restated Certificate of Incorporation of IMC to increase the number of
authorized shares of IMC Common Stock from 100,000,000 to 250,000,000
(the "Stock Amendment");
3. To consider and vote upon a proposal to approve an amendment to the
Restated Certificate of Incorporation of IMC to increase the range of
the number of directors that may from time to time comprise the Board of
Directors of IMC to not less than 5 nor more than 15 (together with the
Stock Amendment, the "Charter Amendments"); and
4. To transact such other business as may properly come before the Special
Meeting.
A conformed copy of the Merger Agreement is attached to the accompanying
Joint Proxy Statement and Prospectus (the "Proxy Statement/Prospectus") as
Annex I.
Stockholders of record at the close of business on January 15, 1996 are
entitled to receive notice of and to vote at the Special Meeting and any
adjournment or postponement thereof. Approval of the Share Issuance will
require the affirmative vote of a majority of the votes cast on the Share
Issuance, provided that the total number of votes cast on such proposal
represents more than 50% of the outstanding shares of IMC Common Stock.
Approval of each of the Charter Amendments will require the affirmative vote of
a majority of the outstanding shares of IMC Common Stock. APPROVAL OF THE SHARE
ISSUANCE AND EACH OF THE CHARTER AMENDMENTS IS A CONDITION TO THE CONSUMMATION
OF THE MERGER.
IMC may abandon the Merger under certain circumstances prior to its
consummation as provided in the Merger Agreement, which includes a right to
abandon the Merger if the average of the per share daily closing prices of IMC
Common Stock on the New York Stock Exchange ("NYSE") (as reported in the NYSE
Composite Transactions in The Wall Street Journal, Midwest Edition) during the
20 consecutive trading days ending on the fifth trading day prior to the date
of the Special Meeting of Stockholders of Vigoro is greater than $42.665.
<PAGE>
It is important that your shares of IMC Common Stock be represented at the
Special Meeting regardless of the number of shares you hold. You are urged to
specify your voting preferences by marking, dating and signing the enclosed
proxy card and returning it in the enclosed business reply envelope. If you
wish to vote in accordance with the recommendations of the Board of Directors
of IMC, all you need to do is date and sign the proxy card and return it in
such envelope.
PLEASE COMPLETE AND RETURN THE PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND
THE SPECIAL MEETING. If you do attend the Special Meeting and wish to vote in
person, you may revoke your proxy at that time.
The accompanying Proxy Statement/Prospectus is also being used to solicit
voting instructions for the shares of IMC Common Stock which are held by the
trustee of IMC's Investment Plan for Salaried Employees for the benefit of the
participants in such Plan. It is important that each participant mark, date
and sign the voting instruction card which is enclosed with the Proxy
Statement/Prospectus and return it in the enclosed business reply envelope. No
postage is required if the reply is mailed in the United States.
In accordance with the General Corporation Law of the State of Delaware, a
complete list of the holders of IMC Common Stock entitled to vote at the
Special Meeting will be open to examination, during ordinary business hours at
the offices of Sidley & Austin, 2 South Dearborn, Suite 5500, Chicago,
Illinois for 10 days preceding the Special Meeting, by any IMC stockholder for
any purpose germane to the Special Meeting.
Dated: January , 1996
By Order of the Board of Directors,
Marschall I. Smith
Senior Vice President, Secretary
and General Counsel
<PAGE>
LOGO OF THE VIGORO CORPORATION
January , 1996
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders (the
"Special Meeting") of The Vigoro Corporation ("Vigoro") to be held on February
28, 1996, at 10:00 a.m., local time, at the Fairmont Hotel, 200 North Columbus
Drive, State Room, 2nd Floor, Chicago, Illinois.
At the Special Meeting, you will be asked to consider and vote on a proposal
to approve and adopt an Agreement and Plan of Merger (the "Merger Agreement"),
pursuant to which a wholly-owned subsidiary of IMC Global Inc. ("IMC") will be
merged with and into Vigoro (the "Merger"), with Vigoro surviving as a
subsidiary of IMC, all of the outstanding common stock of which will be owned
by IMC. The terms of the Merger Agreement provide, among other things, that
each outstanding share of common stock, par value $.01 per share, of Vigoro
("Vigoro Common Stock") as of the effective time of the Merger will be
converted into the right to receive between 1.50 and 1.70 shares of common
stock, par value $1.00 per share, of IMC (which upon issuance shall include a
proportionate right to purchase, under certain circumstances, shares of Junior
Participating Preferred Stock, Series C, of IMC, the "IMC Common Stock")
(adjusted to reflect IMC's 2-for-1 stock split effected on November 30, 1995),
depending on the average of the per share daily closing prices of IMC Common
Stock on the New York Stock Exchange during the 20 consecutive trading days
ending on the fifth trading day prior to the date of the Special Meeting, all
as more fully set forth in the accompanying Joint Proxy Statement and
Prospectus (the "Proxy Statement/Prospectus") and the Merger Agreement, a copy
of which is included as Annex I to the Proxy Statement/Prospectus. Each
outstanding share of Series E preferred stock, par value $100 per share, of
Vigoro ("Series E Preferred Stock") and Series F preferred stock, par value
$100 per share, of Vigoro ("Series F Preferred Stock") will remain issued and
outstanding following the Merger. Details of the proposed transaction are set
forth in the accompanying Proxy Statement/Prospectus, which you should read
carefully.
After careful consideration, the Board of Directors of Vigoro has determined
that the Merger is advisable and fair to and in the best interests of Vigoro
and its stockholders. Accordingly, the Board of Directors unanimously
recommends that all stockholders vote for its approval.
The Merger and the Merger Agreement are more fully described in the
accompanying Proxy Statement/ Prospectus. You are encouraged to read this
material carefully. If you have any questions regarding any of the foregoing,
please call Morrow & Co., Inc., our proxy solicitation agent, toll free at
(800) 662-5200 or collect at (212) 754-8000.
The affirmative vote of the holders of not less than a majority of the
outstanding shares of Vigoro Common Stock, Series E Preferred Stock and Series
F Preferred Stock, voting together as a single class, will be necessary for
approval and adoption of the Merger Agreement.
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE SPECIAL MEETING, YOU ARE
URGED TO PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN
THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
IF YOU ATTEND THE SPECIAL MEETING IN PERSON YOU MAY, IF YOU WISH, VOTE
PERSONALLY ON ALL MATTERS BROUGHT BEFORE THE SPECIAL MEETING EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY.
Sincerely,
Joseph P. Sullivan
Chairman of the Board
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY
<PAGE>
THE VIGORO CORPORATION
225 NORTH MICHIGAN AVENUE
SUITE 2500
CHICAGO, ILLINOIS 60601
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 28, 1996
----------------
To the Stockholders of The Vigoro Corporation:
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of The Vigoro Corporation, a Delaware corporation ("Vigoro"), will
be held on February 28, 1996, at 10:00 a.m., local time, at the Fairmont
Hotel, 200 North Columbus Drive, Regent Room, 3rd Floor, Chicago, Illinois,
for the following purposes:
(a) to consider and vote on a proposal to approve and adopt an Agreement
and Plan of Merger dated as of November 13, 1995 (the "Merger Agreement")
among IMC Global Inc., a Delaware corporation ("IMC"), Bull Merger Company,
a Delaware corporation and a wholly-owned subsidiary of IMC ("Merger Sub"),
and Vigoro, pursuant to which, among other things, (i) Merger Sub would be
merged with and into Vigoro (the "Merger"), with Vigoro surviving as a
subsidiary of IMC, all of the outstanding common stock of which would be
owned by IMC, (ii) each outstanding share of common stock, par value $.01
per share, of Vigoro ("Vigoro Common Stock") as of the effective time of
the Merger would be converted into the right to receive between 1.50 and
1.70 shares of common stock, par value $1.00 per share, of IMC (which upon
issuance shall include a proportionate right to purchase, under certain
circumstances, shares of Junior Participating Preferred Stock, Series C, of
IMC, the "IMC Common Stock"), depending on the average of the per share
daily closing prices of IMC Common Stock on the New York Stock Exchange
("NYSE") (as reported in the NYSE Composite Transactions in The Wall Street
Journal, Midwest Edition) during the 20 consecutive trading days ending on
the fifth trading day prior to the date of the Special Meeting (the
"Average Price") and (iii) each outstanding share of Series E preferred
stock, par value $100 per share, of Vigoro ("Series E Preferred Stock") and
Series F preferred stock, par value $100 per share, of Vigoro ("Series F
Preferred Stock") would remain issued and outstanding following the Merger,
all as more fully set forth in the accompanying Joint Proxy Statement and
Prospectus (the "Proxy Statement/Prospectus"), and in the Merger Agreement,
a copy of which is included as Annex I to the Proxy Statement/Prospectus;
and
(b) to transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
Vigoro may abandon the Merger under certain circumstances prior to the
consummation of the Merger as provided in the Merger Agreement, which includes
a right to abandon the Merger if the Average Price is less than $29.115.
The Board of Directors of Vigoro has fixed the close of business on January
15, 1996, as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the Special Meeting or any
adjournment or postponement thereof, and only stockholders of record at such
time will be entitled to notice of and to vote at the Special Meeting. A list
of Vigoro stockholders entitled to vote at the Special Meeting will be
available for examination, during ordinary business hours, at the principal
offices of Vigoro, 225 North Michigan Avenue, Suite 2500, Chicago, Illinois
60601, for ten days prior to the Special Meeting.
Holders of Vigoro Common Stock, Series E Preferred Stock and Series F
Preferred Stock (collectively, the "Voting Stock") outstanding as of the
Record Date are entitled to one vote for each such share of Voting Stock held
by them. The affirmative vote of a majority of the outstanding shares of
Voting Stock is required for approval and adoption of the Merger Agreement.
Holders of shares of Vigoro Common Stock will not have appraisal rights in
connection with the approval and adoption of the Merger Agreement. Holders of
shares of Series E Preferred Stock and Series F Preferred Stock will have
appraisal rights in connection with the approval
<PAGE>
and adoption of the Merger Agreement. Holders of Series E Preferred Stock and
Series F Preferred Stock should read the Proxy Statement/Prospectus and Annex
VII thereto for a description of and statutory provisions related to appraisal
rights.
A form of Proxy and the Proxy Statement/Prospectus containing more detailed
information with respect to the matters to be considered at the Special Meeting
accompany this notice.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY, WHICH IS BEING
SOLICITED BY THE BOARD OF DIRECTORS, WHETHER OR NOT YOU PLAN TO ATTEND THE
SPECIAL MEETING. AN ADDRESSED RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE.
By Order of the Board of Directors,
Rose Marie Williams
Secretary
January , 1996
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JANUARY 25, 1996
IMC GLOBAL INC.
AND
THE VIGORO CORPORATION
JOINT PROXY STATEMENT
-----------
IMC GLOBAL INC.
PROSPECTUS
-----------
This Joint Proxy Statement and Prospectus ("Proxy Statement/Prospectus") is
being furnished to the holders of Common Stock, par value $1.00 per share ("IMC
Common Stock"), of IMC Global Inc., a Delaware corporation ("IMC"), in
connection with the solicitation of proxies by the Board of Directors of IMC
(the "IMC Board") for use at a Special Meeting of Stockholders of IMC to be
held at the offices of Sidley & Austin, 2 South Dearborn, Suite 5500, Chicago,
Illinois, on Wednesday, February 28, 1996, at 10:00 a.m., local time, and at
any and all adjournments or postponements thereof (the "IMC Special Meeting").
This Proxy Statement/Prospectus is also being furnished to the holders of
Common Stock, par value $.01 per share ("Vigoro Common Stock"), Series E
Preferred Stock, par value $100 per share ("Series E Preferred Stock"), and
Series F Preferred Stock, par value $100 per share ("Series F Preferred Stock"
and, together with the Series E Preferred Stock, the "Vigoro Preferred Stock"),
of The Vigoro Corporation, a Delaware corporation ("Vigoro"), in connection
with the solicitation of proxies by the Board of Directors of Vigoro (the
"Vigoro Board") for use at a Special Meeting of Stockholders of Vigoro to be
held at the Fairmont Hotel, 200 North Columbus Drive, State Room, 2nd Floor,
Chicago, Illinois, on February 28, 1996, at 10:00 a.m., local time, and at any
and all adjournments or postponements thereof (the "Vigoro Special Meeting"
and, together with the IMC Special Meeting, the "Special Meetings"). The Vigoro
Common Stock and the Vigoro Preferred Stock are collectively referred to herein
as the "Vigoro Voting Stock."
This Proxy Statement/Prospectus relates to the Agreement and Plan of Merger
dated as of November 13, 1995 (the "Merger Agreement") among IMC, Bull Merger
Company, a Delaware corporation and a wholly-owned subsidiary of IMC ("Merger
Sub"), and Vigoro, which provides for the merger (the "Merger") of Merger Sub
with and into Vigoro, with Vigoro surviving as a subsidiary of IMC, all of the
outstanding common stock of which will be owned by IMC. Subject to the terms
and conditions of the Merger Agreement, each share of Vigoro Common Stock
outstanding immediately prior to the effective time of the Merger (the
"Effective Time") (other than shares owned directly or indirectly by IMC or
Vigoro, which will be cancelled) will be converted into the right to receive
1.60 shares (the "Conversion Number") of IMC Common Stock, subject to
adjustment as described below. Pursuant to the Rights Agreement dated as of
June 21, 1989, as amended (the "IMC Rights Agreement"), between IMC and The
First National Bank of Chicago, as Rights Agent, each share of IMC Common Stock
issued pursuant to the Merger Agreement will include a right (collectively, the
"IMC Rights") to purchase one two-hundredth of a share of Junior Participating
Preferred Stock, Series C, par value $1.00 per share ("IMC Series C Preferred
Stock"), of IMC. The Conversion Number is subject to adjustment depending on
the average of the per share daily closing prices of IMC Common Stock on the
New York Stock Exchange ("NYSE") (as reported in the NYSE Composite
Transactions in The Wall Street Journal, Midwest Edition) during the 20
consecutive trading days ending on the fifth trading day prior to the date of
the Vigoro Special Meeting (the "Average Price"), all as more fully set forth
herein and in the Merger Agreement, a copy of which is included as Annex I
hereto. Cash will be paid in lieu of any fractional share of IMC Common Stock.
Each outstanding share of Vigoro Preferred Stock will remain issued and
outstanding following the Merger, subject to the appraisal rights in favor of
holders of Vigoro Preferred Stock discussed herein.
At the IMC Special Meeting, holders of IMC Common Stock will be asked to
approve the issuance of shares (the "Share Issuance") of IMC Common Stock
pursuant to the Merger Agreement. At the IMC Special Meeting, holders of IMC
Common Stock will also be asked to approve amendments to the Restated
Certificate of Incorporation of IMC (the "IMC Charter") (i) to increase the
number of authorized shares of IMC Common Stock from 100,000,000 to 250,000,000
(the "Stock Amendment") and (ii) to increase the range of the number of
directors that may from time to time comprise the IMC Board to not less than 5
nor more than 15 (the "Director Amendment" and, together with the Stock
Amendment, the "Charter Amendments").
At the Vigoro Special Meeting, holders of Vigoro Voting Stock will be asked
to consider and vote on a proposal to approve and adopt the Merger Agreement.
SEE "RISK FACTORS" COMMENCING ON PAGE 18 FOR A DESCRIPTION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY STOCKHOLDERS BEFORE VOTING.
This Proxy Statement/Prospectus also constitutes the Prospectus of IMC filed
as part of a Registration Statement on Form S-4 (the "Registration Statement")
with the Securities and Exchange Commission (the "SEC") under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the shares of IMC
Common Stock constituting the Share Issuance and the IMC Rights being
registered in connection therewith.
IMC Common Stock is listed for trading under the symbol "IGL" on the NYSE and
the Chicago Stock Exchange (the "CSE"). Vigoro Common Stock is listed for
trading under the symbol "VGR" on the NYSE. On November 10, 1995, the last
trading day prior to the public announcement of the execution of the Merger
Agreement, the last reported per share sale price of IMC Common Stock and
Vigoro Common Stock, as reported on the NYSE, was $37.313 (adjusted to reflect
IMC's 2-for-1 stock split effected on November 30, 1995) and $45.25,
respectively. On January , 1996, the last trading day prior to the date of
this Proxy Statement/Prospectus, the last reported per share sale price of IMC
Common Stock and Vigoro Common Stock, as reported on the NYSE, was $
and $ , respectively.
This Proxy Statement/Prospectus and the accompanying forms of proxy are first
being mailed to stockholders of IMC and stockholders of Vigoro on or about
January , 1996.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------
The date of this Proxy Statement/Prospectus is January , 1996.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
AVAILABLE INFORMATION................................................... 1
INCORPORATION OF DOCUMENTS BY REFERENCE................................. 1
SUMMARY................................................................. 3
The Companies.......................................................... 3
IMC Special Meeting.................................................... 4
Vigoro Special Meeting................................................. 4
The Merger and the Merger Agreement.................................... 5
Recent Developments.................................................... 11
Selected Historical Consolidated Financial Information................. 12
IMC Global Inc. Selected Unaudited Pro Forma Consolidated Financial
Information........................................................... 15
IMC Global Inc. and The Vigoro Corporation Comparative Per Share Data.. 16
IMC Global Inc. and The Vigoro Corporation Market Prices; Dividends
Paid and Dividend Policy.............................................. 17
RISK FACTORS............................................................ 18
IMC SPECIAL MEETING..................................................... 20
Purpose................................................................ 20
Record Date; Voting Rights............................................. 20
Share Ownership of Management.......................................... 21
Quorum................................................................. 21
Proxies................................................................ 21
Solicitation of Proxies................................................ 21
Required Vote.......................................................... 22
VIGORO SPECIAL MEETING.................................................. 22
Purpose................................................................ 22
Record Date; Voting Rights............................................. 22
Share Ownership of Management and GAMI................................. 22
Quorum................................................................. 22
Proxies................................................................ 23
Solicitation of Proxies................................................ 23
Required Vote.......................................................... 23
Appraisal Rights....................................................... 23
THE MERGER.............................................................. 24
General................................................................ 24
Conversion of Shares................................................... 25
Agreement with Respect to Dividends.................................... 25
Background of the Merger............................................... 25
IMC's Reasons for the Merger; Recommendation of the IMC Board.......... 27
Opinion of IMC's Financial Advisor..................................... 29
Vigoro's Reasons for the Merger; Recommendation of the Vigoro Board.... 33
Opinion of Vigoro's Financial Advisor.................................. 34
Certain Transactions between IMC and Vigoro and GAMI................... 38
Interests of Certain Persons in the Merger............................. 39
Stock Option Plans..................................................... 42
Certain United States Federal Income Tax Consequences.................. 42
Certain Canadian Federal Income Tax Consequences....................... 43
Anticipated Accounting Treatment....................................... 44
Governmental and Regulatory Approvals.................................. 44
Percentage Ownership Interest of Vigoro Stockholders After the Merger.. 46
Appraisal Rights....................................................... 46
Stock Exchange Listing................................................. 47
Delisting and Deregistration of Vigoro Common Stock.................... 48
Resales of IMC Common Stock............................................ 48
</TABLE>
<TABLE>
<CAPTION>
PAGE
NUMBER
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<S> <C>
OTHER TERMS OF THE MERGER AGREEMENT..................................... 49
Conversion of Shares in the Merger..................................... 49
No Fractional Shares................................................... 50
November Stock Dividend; Adjustment of Conversion Number............... 50
Exchange Agent; Procedures for Exchange of Certificates................ 50
Representations and Warranties......................................... 52
Conduct of Business Pending the Merger................................. 52
No Solicitation........................................................ 55
Third Party Standstill Agreements...................................... 56
Conditions Precedent to the Merger..................................... 56
Vigoro Stock Options and Restricted Stock.............................. 57
Employee Benefits...................................................... 58
Indemnification; Directors and Officers Insurance...................... 58
Termination............................................................ 59
Fees and Expenses...................................................... 60
Amendment.............................................................. 62
Waiver................................................................. 62
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION........ 63
COMPARISON OF THE RIGHTS OF HOLDERS OF IMC COMMON STOCK AND VIGORO
COMMON STOCK........................................................... 72
Directors.............................................................. 72
Stockholder Rights Plan................................................ 72
No Stockholder Action by Written Consent; Special Meetings............. 74
Anti-Greenmail and Fair Price Provisions............................... 75
Advance Notice Provisions for Nominations and Proposals................ 75
Preferred Stock........................................................ 76
Amendment of the Certificate of Incorporation and By-Laws.............. 76
Section 203 of the DGCL................................................ 76
Limitation on Liability of Directors................................... 77
Indemnification of Directors and Officers.............................. 77
BUSINESS OF IMC......................................................... 78
General................................................................ 78
Phosphate Rock......................................................... 78
Concentrated Phosphates................................................ 78
Potash................................................................. 78
Other Products......................................................... 79
BUSINESS OF VIGORO...................................................... 79
General................................................................ 79
Potash................................................................. 79
Distribution Network................................................... 80
PROPOSED IMC CHARTER AMENDMENTS......................................... 80
EXPERTS................................................................. 81
LEGAL OPINIONS.......................................................... 81
STOCKHOLDER PROPOSALS................................................... 81
ANNEXES TO THE PROXY STATEMENT/PROSPECTUS
ANNEX IMERGER AGREEMENT
ANNEX IIVOTING AGREEMENT
ANNEX IIISTOCK OPTION AGREEMENT
ANNEX IVREGISTRATION RIGHTS AGREEMENT
ANNEX VOPINION OF LEHMAN BROTHERS INC.
ANNEX VIOPINION OF J.P. MORGAN SECURITIES INC.
ANNEX VIIDELAWARE GENERAL CORPORATION LAW SECTION 262
ANNEX VIII PROPOSED IMC CHARTER AMENDMENTS
</TABLE>
i
<PAGE>
AVAILABLE INFORMATION
IMC and Vigoro are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the SEC. Such reports, proxy statements and other information may be inspected
and copied at the public reference facilities maintained by the SEC at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the following Regional Offices of the SEC: Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies of such materials can also be obtained
at prescribed rates from the Public Reference Section of the SEC, 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of such materials relating to IMC
can be inspected at the NYSE, 20 Broad Street, New York, New York 10005; and
the CSE, One Financial Place, 440 South LaSalle Street, Chicago, Illinois
60605. Copies of such materials relating to Vigoro can be inspected at the
NYSE, 20 Broad Street, New York, New York 10005.
This Proxy Statement/Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. Reference is made to the
Registration Statement and the Exhibits thereto for further information.
Statements contained or incorporated by reference herein concerning the
provisions of any agreement or other document filed as an Exhibit to the
Registration Statement or otherwise filed with the SEC are not necessarily
complete and reference is hereby made to the copy thereof so filed for more
detailed information, each such statement being qualified in its entirety by
such reference.
INCORPORATION OF DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS THAT ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF SUCH DOCUMENTS (OTHER
THAN EXHIBITS THERETO WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
HEREIN) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL
OWNER OF SHARES OF IMC COMMON STOCK OR VIGORO VOTING STOCK TO WHOM THIS PROXY
STATEMENT/PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST TO, IN THE
CASE OF DOCUMENTS RELATING TO IMC, MARSCHALL I. SMITH, IMC GLOBAL INC., 2100
SANDERS ROAD, NORTHBROOK, ILLINOIS 60062, TELEPHONE NUMBER (708) 272-9200; AND
IN THE CASE OF DOCUMENTS RELATING TO VIGORO, ROSE MARIE WILLIAMS, THE VIGORO
CORPORATION, 225 NORTH MICHIGAN AVENUE, SUITE 2500, CHICAGO, ILLINOIS 60601,
TELEPHONE NUMBER (312) 819-2020. IN ORDER TO ENSURE DELIVERY OF DOCUMENTS
PRIOR TO THE APPLICABLE SPECIAL MEETING, ANY REQUEST THEREFOR SHOULD BE MADE
NOT LATER THAN FEBRUARY 21, 1996.
The following documents heretofore filed with the SEC pursuant to the
Exchange Act are incorporated herein by reference:
1. IMC's Annual Report on Form 10-K for the year ended June 30, 1995;
2. IMC's Quarterly Report on Form 10-Q for the quarter ended September
30, 1995;
3. IMC's Current Reports on Form 8-K filed August 17, 1995 and October
17, 1995;
4. The description of the IMC Common Stock contained in IMC's
Registration Statement on Form 8-A/A-1 filed January 12, 1995, including
any amendments or reports filed for the purpose of updating such
description;
5. The description of the IMC Rights contained in IMC's Registration
Statement on Form 8-A filed June 23, 1989, as amended by Form 8-A/A filed
September 18, 1995 and January 23, 1996;
6. Vigoro's Annual Report on Form 10-K for the transition period from
July 1, 1994 through December 31, 1994;
7. Vigoro's Quarterly Reports on Form 10-Q for the quarters ended March
31, June 30, and September 30, 1995;
8. Vigoro's Current Reports on Form 8-K filed January 5, 1995, September
27, 1995, October 3, 1995 and October 4, 1995; and
9. The description of Vigoro Common Stock contained in its Registration
Statement on Form 8-A filed May 13, 1991.
1
<PAGE>
All reports and other documents filed by either IMC or Vigoro pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Proxy Statement/Prospectus and prior to the date of its Special
Meeting shall be deemed to be incorporated by reference herein and to be a
part hereof from the dates of filing of such reports and documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement/Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document which also is incorporated
or deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
----------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS WITH RESPECT TO THE MATTERS DESCRIBED IN THIS PROXY
STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE
HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY EITHER IMC OR VIGORO. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES, NOR DOES IT CONSTITUTE THE SOLICITATION OF
A PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY
OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF IMC OR VIGORO SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
----------------
All information contained or incorporated by reference in this Proxy
Statement/Prospectus with respect to IMC and Merger Sub has been provided by
IMC. All information contained or incorporated by reference in this Proxy
Statement/Prospectus with respect to Vigoro has been provided by Vigoro.
2
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Proxy Statement/Prospectus. Reference is made
to, and this summary is qualified in its entirety by, the more detailed
information contained or incorporated by reference in this Proxy
Statement/Prospectus and the Annexes hereto.
As used herein, unless the context otherwise clearly requires, "IMC" refers
to IMC Global Inc. and "Vigoro" refers to The Vigoro Corporation, and, unless
the context otherwise requires, such entities and their respective subsidiaries
and affiliated partnerships or joint ventures, including, with respect to IMC,
IMC-Agrico Company ("IMC-Agrico"), a Delaware general partnership formed
pursuant to an Amended and Restated Partnership Agreement among a subsidiary of
IMC and Freeport-McMoRan Resources Partners, Limited Partnership and certain
affiliates of each. Capitalized terms not defined in this Proxy
Statement/Prospectus have the respective meanings specified in the Merger
Agreement.
All information in this Proxy Statement/Prospectus has been adjusted to
reflect a 2-for-1 stock split (the "IMC Stock Split") of IMC Common Stock
effected in the form of a stock dividend distributed on November 30, 1995 to
IMC stockholders of record as of the close of business on November 15, 1995.
----------------
STOCKHOLDERS OF IMC AND VIGORO ARE URGED TO READ THIS PROXY
STATEMENT/PROSPECTUS AND THE ANNEXES HERETO IN THEIR ENTIRETY AND SHOULD
CONSIDER CAREFULLY THE INFORMATION SET FORTH BELOW UNDER THE HEADING "RISK
FACTORS" ON PAGE 18.
----------------
THE COMPANIES
IMC. IMC is one of the world's leading producers of crop nutrients for the
international community. IMC mines and processes potash in the United States
and Canada, and is a joint venture partner in IMC-Agrico, the nation's largest
producer, marketer and distributor of phosphate crop nutrients and a leading
producer and marketer of animal feed ingredients. IMC believes that it is one
of the lower-cost North American producers of phosphate rock, potash and
concentrated phosphates. IMC also manufactures high-value crop nutrients which
are marketed principally in the Southeastern United States under the Rainbow(R)
brand name.
IMC's principal executive offices are located at 2100 Sanders Road,
Northbrook, Illinois 60062 and its telephone number is (708) 272-9200. For
further information concerning IMC, see "AVAILABLE INFORMATION," "INCORPORATION
OF DOCUMENTS BY REFERENCE," "--Selected Historical Consolidated Financial
Information" and "BUSINESS OF IMC."
Vigoro. Vigoro is one of the world's leading producers and distributors of
potash and one of the largest distributors in the United States of crop
nutrients and related products through its retail distribution network. Vigoro
believes it is the lowest cost producer of potash in the world. Vigoro's retail
distribution network extends principally to corn and soybean farmers in the
Midwestern and Southeastern United States. Vigoro also sells potash and certain
other products to industrial users in the United States and Canada.
Vigoro's principal executive offices are located at 225 North Michigan
Avenue, Suite 2500, Chicago, Illinois 60601 and its telephone number is (312)
819-2020. For further information concerning Vigoro, see "AVAILABLE
INFORMATION," "INCORPORATION OF DOCUMENTS BY REFERENCE," "--Selected Historical
Consolidated Financial Information" and "BUSINESS OF VIGORO."
3
<PAGE>
Merger Sub. Merger Sub was incorporated in the State of Delaware on November
8, 1995 solely for the purpose of consummating the Merger and the other
transactions contemplated by the Merger Agreement. Merger Sub has minimal
assets and no business and has carried on no activities which are not directly
related to its formation and its execution of the Merger Agreement. Its
principal executive offices are located at 2100 Sanders Road, Northbrook,
Illinois 60062, and its telephone number is (708) 272-9200.
IMC SPECIAL MEETING
Purpose. The IMC Special Meeting will be held at the offices of Sidley &
Austin, 2 South Dearborn, Suite 5500, Chicago, Illinois, on Wednesday, February
28, 1996, at 10:00 a.m., local time, to consider and vote upon a proposal to
approve the Share Issuance and separate proposals to approve each of the
Charter Amendments. The stockholders of IMC will also consider and take action
upon any other business which may properly be brought before the IMC Special
Meeting. See "IMC SPECIAL MEETING--Purpose."
Record Date. Only holders of record of shares of IMC Common Stock at the
close of business on January 15, 1996 (the "IMC Record Date") are entitled to
receive notice of and to vote at the IMC Special Meeting. At the close of
business on the IMC Record Date, there were 59,548,268 shares of IMC Common
Stock outstanding, each of which entitles the registered holder thereof to one
vote. See "IMC SPECIAL MEETING--Record Date; Voting Rights."
Share Ownership of Management. At the close of business on the IMC Record
Date, Directors and executive officers of IMC and their affiliates were the
beneficial owners of an aggregate of 223,512 (approximately 0.4%) of the shares
of IMC Common Stock then outstanding.
Required Vote. Approval of the Share Issuance will require the affirmative
vote of a majority of the votes cast on the Share Issuance, provided that the
total number of votes cast on such proposal represents more than 50% of the
outstanding shares of IMC Common Stock. Approval of the Share Issuance by the
holders of IMC Common Stock is required by the rules of the NYSE. Approval of
each of the Charter Amendments will require the affirmative vote of a majority
of the outstanding shares of IMC Common Stock. See "IMC SPECIAL MEETING--
Required Vote" and "--Quorum." Approval of the Share Issuance and the Charter
Amendments by the requisite vote of IMC stockholders is a condition to, and is
required for, consummation of the Merger.
VIGORO SPECIAL MEETING
Purpose. The Vigoro Special Meeting will be held at the Fairmont Hotel, 200
North Columbus Drive, State Room, 2nd Floor, Chicago, Illinois, on Wednesday,
February 28, 1996, at 10:00 a.m., local time, to consider and vote upon a
proposal to approve and adopt the Merger Agreement. The stockholders of Vigoro
will also consider and take action upon any other business which may properly
be brought before the Vigoro Special Meeting. See "VIGORO SPECIAL MEETING--
Purpose."
Record Date. Only holders of record of shares of Vigoro Voting Stock at the
close of business on January 15, 1996 (the "Vigoro Record Date") are entitled
to receive notice of and to vote at the Vigoro Special Meeting. At the close of
business on the Vigoro Record Date, there were 20,175,566 shares of Vigoro
Common Stock outstanding, 2,826.2018 shares of Series E Preferred Stock
outstanding and 200 shares of Series F Preferred Stock outstanding, each of
which entitles the registered holder thereof to one vote. See "VIGORO SPECIAL
MEETING--Record Date; Voting Rights."
Share Ownership of Management and GAMI. At the close of business on the
Vigoro Record Date, Great American Management and Investment, Inc. ("GAMI") was
the beneficial owner of 4,068,929 shares (approximately 20.17%) of Vigoro
Common Stock then outstanding; the Directors and executive officers of Vigoro
and their affiliates (other than GAMI) were the beneficial owners of an
aggregate of 1,622,320 shares (approximately 8.0%) of the Vigoro Common Stock
then outstanding. Neither GAMI nor any of the Directors or executive officers
of Vigoro or their affiliates beneficially own any shares of Vigoro Preferred
Stock.
4
<PAGE>
Required Vote. Approval and adoption of the Merger Agreement will require the
affirmative vote of a majority of the outstanding shares of Vigoro Voting
Stock. Pursuant to a Voting Agreement dated as of November 13, 1995 (the
"Voting Agreement") between IMC and GAMI, GAMI has agreed, except under certain
circumstances, to attend the Vigoro Special Meeting in person or by proxy and
vote its shares of Vigoro Common Stock in favor of approval and adoption of the
Merger Agreement. In connection with the Voting Agreement, GAMI has granted IMC
an irrevocable proxy (the "Irrevocable Proxy") to vote its shares in accordance
with the Voting Agreement. See "VIGORO SPECIAL MEETING--Required Vote" and "--
Quorum" and "THE MERGER--Certain Transactions between IMC and Vigoro and GAMI."
THE MERGER AND THE MERGER AGREEMENT
General. At the Effective Time, Merger Sub will be merged with and into
Vigoro, with Vigoro continuing as the surviving corporation (the "Surviving
Corporation") and a subsidiary of IMC, all of the outstanding common stock of
which will be owned by IMC. As a result of the Merger, the separate corporate
existence of Merger Sub will cease and Vigoro will succeed to all the rights
and be responsible for all the obligations of Merger Sub in accordance with the
Delaware General Corporation Law (the "DGCL"). Subject to the terms and
conditions of the Merger Agreement, each share of Vigoro Common Stock
outstanding immediately prior to the Effective Time (other than shares owned
directly or indirectly by IMC or Vigoro, which will be cancelled) will be
converted into the right to receive 1.60 shares of IMC Common Stock if the
Average Price is equal to or greater than $30.938 per share and less than or
equal to $40.00 per share. The Conversion Number is subject to proportional
adjustment down to 1.50 if the Average Price is greater than $40.00 per share.
The Conversion Number is subject to proportional adjustment up to 1.70 if the
Average Price is less than $30.938 per share. If the Average Price is greater
than $42.665 per share, the Conversion Number will be 1.50, and IMC will have
the right to terminate the Merger Agreement. If the Average Price is less than
$29.115 per share, the Conversion Number will be 1.70, and Vigoro will have the
right to terminate the Merger Agreement. Each share of IMC Common Stock
constituting the Share Issuance will include one IMC Right. Cash will be paid
in lieu of any fractional share of IMC Common Stock. Each share of Vigoro
Preferred Stock outstanding immediately prior to the Effective Time will remain
issued and outstanding immediately after the Merger, subject to the appraisal
rights in favor of holders of Vigoro Preferred Stock discussed herein. See "THE
MERGER--Appraisal Rights" and "OTHER TERMS OF THE MERGER AGREEMENT--Conversion
of Shares in the Merger."
The Merger will become effective upon the filing of a Certificate of Merger
(the "Certificate of Merger") with the Secretary of State of the State of
Delaware unless the Certificate of Merger provides for a later date of
effectiveness (not to exceed 30 days after the date that the Certificate of
Merger is so filed). The filing of the Certificate of Merger will occur as soon
as practicable following the satisfaction or waiver of the conditions set forth
in the Merger Agreement. See "OTHER TERMS OF THE MERGER AGREEMENT--Conditions
Precedent to the Merger."
Recommendation of the IMC Board. The IMC Board has unanimously determined
that the Merger and the Share Issuance are advisable and fair to and in the
best interests of the stockholders of IMC and has approved the Merger
Agreement. The IMC Board has also unanimously determined that the Charter
Amendments are advisable and in the best interests of the stockholders of IMC.
THE IMC BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF IMC VOTE IN FAVOR
OF THE SHARE ISSUANCE AND EACH OF THE CHARTER AMENDMENTS AT THE IMC SPECIAL
MEETING. See "THE MERGER--IMC's Reasons for the Merger; Recommendation of the
IMC Board" and "PROPOSED IMC CHARTER AMENDMENTS."
Opinion of IMC's Financial Advisor. Lehman Brothers Inc. ("Lehman Brothers")
acted as financial advisor to IMC in connection with the Merger and delivered
its written opinion dated November 12, 1995 to the IMC Board to the effect
that, based upon and subject to certain conditions stated therein, as of the
date of such opinion, the Conversion Number is fair to IMC from a financial
point of view. The full text of the Lehman Brothers
5
<PAGE>
written opinion, which sets forth a description of the assumptions made,
matters considered and limitations on the review undertaken, is attached hereto
as Annex V and should be read carefully in its entirety. See "THE MERGER--
Opinion of IMC's Financial Advisor."
Recommendation of the Vigoro Board. The Vigoro Board has unanimously
determined that the Merger is advisable and fair to and in the best interests
of Vigoro and its stockholders and has approved the Merger Agreement. THE
VIGORO BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF VIGORO VOTE IN
FAVOR OF APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AT THE VIGORO SPECIAL
MEETING. See "THE MERGER--Vigoro's Reasons for the Merger; Recommendation of
the Vigoro Board."
Opinion of Vigoro's Financial Advisor. J.P. Morgan Securities Inc. ("J.P.
Morgan") acted as financial advisor to Vigoro in connection with the Merger and
delivered its written opinion dated November 13, 1995 to the Vigoro Board that,
based upon and subject to the various considerations set forth therein, as of
the date of such opinion, the consideration to be received by the holders of
Vigoro Common Stock in connection with the Merger is fair to such holders from
a financial point of view. The full text of the written opinion dated November
13, 1995 of J.P. Morgan, which sets forth the assumptions made, matters
considered and limitations on the review undertaken, is attached hereto as
Annex VI and should be read carefully in its entirety. See "THE MERGER--Opinion
of Vigoro's Financial Advisor."
Interests of Certain Persons in the Merger. In considering the
recommendations of the Vigoro Board with respect to the Merger Agreement and
the IMC Board with respect to the Share Issuance and the Charter Amendments,
stockholders should be aware that certain members of the management of Vigoro
and IMC, the Vigoro Board and the IMC Board have certain interests in the
Merger that are in addition to the interests of stockholders of Vigoro and IMC
generally (including, without limitation, under The Vigoro Corporation
Severance Plan (the "Severance Plan") adopted on November 13, 1995, a severance
plan for IMC adopted on December 21, 1995 and pursuant to certain transition
bonus and non-competition agreements of both Vigoro and IMC. Vigoro's Severance
Plan is applicable to 28 employees and, if all covered employees receive the
maximum potential payments thereunder, would require payments in an aggregate
amount of approximately $6.0 million. Pursuant to the Merger Agreement, upon
consummation of the Merger, (i) 14 Vigoro employees will enter into non-
competition agreements with IMC which, if the maximum amount of potential
payments thereunder were made, would require payments in an aggregate amount of
approximately $9.2 million and (ii) five Vigoro officers and key employees will
enter into transition bonus agreements with IMC which, if all such transition
bonuses were paid out in the maximum potential amount, would require payments
in an aggregate amount of approximately $1.1 million. IMC's Severance Plan is
applicable to 28 employees of IMC and, if all covered employees receive the
maximum potential payments thereunder, would require payments in an aggregate
amount of approximately $6.1 million. In addition, (i) nine IMC employees will
enter into non-competition agreements with IMC which, if the maximum amount of
potential payments thereunder were made, would require payments in an aggregate
amount of approximately $4.4 million and (ii) seven IMC key employees will
enter into transition bonus agreements with IMC which, if all such transition
bonuses were paid out in the maximum potential amount, would require payments
in an aggregate amount of approximately $2.3 million. See "THE MERGER--
Interests of Certain Persons in the Merger" and "OTHER TERMS OF THE MERGER
AGREEMENT--Indemnification; Directors and Officers Insurance."
Governance. Upon consummation of the Merger and the filing of the Charter
Amendments, the IMC Board will be comprised of the nine current members of the
IMC Board and four individuals to be mutually selected by IMC and Vigoro from
among the current members of the Vigoro Board (the "Vigoro Designees"). IMC and
Vigoro presently anticipate that the Vigoro Designees will be Joseph P.
Sullivan, the Chairman of the Board of Vigoro, Robert E. Fowler, Jr., a
Director and the President and Chief Executive Officer of Vigoro, Rod F.
Dammeyer, Chief Executive Officer of GAMI and a Director of Vigoro, and an
individual currently serving as an outside Director of Vigoro to be mutually
designated by IMC and Vigoro at or prior to the Effective Time. The Vigoro
Designees will be elected Directors of IMC by the IMC Board for terms expiring
(i) at IMC's 1996 annual meeting of stockholders, in the case of two such
Vigoro Designees, (ii) at IMC's 1997 annual meeting of
6
<PAGE>
stockholders, in the case of one such Vigoro Designee and (iii) at IMC's 1998
annual meeting of stockholders, in the case of one such Vigoro Designee. The
terms of the current IMC Directors will not be affected. GAMI has separately
agreed with IMC that if the direct or indirect ownership of IMC Common Stock by
GAMI is reduced to below 3.5% of the outstanding shares of IMC Common Stock,
GAMI will cause any affiliate or associate of GAMI (within the meaning of Rule
405 under the Securities Act) who is then serving as a Director of IMC to
resign as such a Director.
Following the Effective Time, Robert E. Fowler, Jr. will be president of a
group comprised of the combined company's potash assets, the Vigoro
FARMARKET(R) network (including the related nitrogen production assets) and the
Vigoro Consumer and Professional Products Group. James D. Speir, President and
Chief Operating Officer of IMC, will remain a director of IMC following the
Effective Time and will be president of a group comprised of IMC-Agrico
(including the recently acquired Feed Ingredient Division) and the Rainbow
Division of IMC. See "THE MERGER--General."
Conditions Precedent to the Merger. The obligations of IMC and Vigoro to
consummate the Merger are subject to various conditions, including, but not
limited to: (i) obtaining requisite approval of the Share Issuance and the
Charter Amendments by the stockholders of IMC; (ii) obtaining requisite
approval of the Merger
Agreement by the stockholders of Vigoro; (iii) obtaining certain requisite
governmental approvals; (iv) the absence of any preliminary or permanent
injunction or other order by any court or governmental entity which prevents
the Merger or any of the transactions contemplated thereby; (v) obtaining
authorization for listing on the NYSE of the IMC Common Stock constituting the
Share Issuance and the IMC Common Stock issuable upon exercise of Vigoro stock
options outstanding immediately prior to the Effective Time which such
authorization has been obtained, subject to approval of the Share Issuance by
the stockholders of IMC; and (vi) the absence of any Material Adverse Change
(as defined in the Merger Agreement) with respect to the other party. See
"OTHER TERMS OF THE MERGER AGREEMENT--Conditions Precedent to the Merger."
Certain U.S. Federal Income Tax Consequences. The obligation of Vigoro to
consummate the Merger is conditioned on the receipt by Vigoro of an opinion of
Arnold & Porter, special counsel to Vigoro, to the effect that, for United
States income tax purposes (i) the Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and Vigoro, Merger Sub and IMC will each be a party to
such reorganization within the meaning of Section 368(b) of the Code; (ii) no
gain or loss will be recognized by IMC or Vigoro as a result of the Merger;
(iii) no gain or loss will be recognized by stockholders of Vigoro who are
United States persons (within the meaning of the Code) upon the exchange of
their Vigoro Common Stock solely for shares of IMC Common Stock pursuant to the
Merger, except with respect to cash, if any, received in lieu of fractional
shares of IMC Common Stock; (iv) the aggregate tax basis of the shares of IMC
Common Stock received by a holder of Vigoro Common Stock solely in exchange for
Vigoro Common Stock pursuant to the Merger (including fractional shares of IMC
Common Stock for which cash is received) will be the same as the aggregate tax
basis of the Vigoro Common Stock exchange therefor; (v) the holding period for
shares of IMC Common Stock received by a holder of Vigoro Common Stock solely
in exchange for Vigoro Common Stock pursuant to the Merger will include the
holding period of the Vigoro Common Stock exchanged therefor, provided such
Vigoro Common Stock was held as a capital asset by such stockholder at the
Effective Time; and (vi) a stockholder of Vigoro who receives cash in lieu of a
fractional share of IMC Common Stock will recognize gain or loss equal to the
difference, if any, between such stockholder's tax basis in such fractional
share and the amount of cash received. See "THE MERGER--Certain United States
Federal Income Tax Consequences" and "OTHER TERMS OF THE MERGER AGREEMENT--
Conditions Precedent to the Merger."
Certain Canadian Federal Income Tax Consequences. Holders of Vigoro Common
Stock who are residents of Canada for the purposes of the Income Tax Act
(Canada) (the "Canada Tax Act") will realize a capital gain (or capital loss)
to the extent that the aggregate of the fair market value (in Canadian dollars)
of the IMC Common Stock (including any IMC Rights) received in the Merger and
the amount of any cash (in Canadian dollars) received in lieu of a fractional
share of IMC Common Stock, net of any reasonable costs of disposition, exceeds
(or is less than) the adjusted cost base (in Canadian dollars) to the holder of
Vigoro Common Stock
7
<PAGE>
exchanged in the Merger. The stockholder will be considered to have acquired
IMC Common Stock in the Merger at a cost for Canadian tax purposes equal to
such fair market value, to be averaged with the adjusted cost base to the
stockholder of any other IMC Common Stock held by the stockholder as capital
property at the time of the Merger. See "THE MERGER--Certain Canadian Federal
Income Tax Consequences."
Anticipated Accounting Treatment. The Merger is expected to be accounted for
as a pooling of interests in accordance with generally accepted accounting
principles. It is a condition to the consummation of the Merger that each of
IMC and Vigoro receive a copy, dated as of the Effective Time, of (i) an
opinion of Arthur Andersen LLP, addressed to Vigoro, that Vigoro qualifies as
an entity that may be a party to a business combination for which the pooling-
of-interest method of accounting would be available and (ii) an opinion of
Ernst & Young LLP, addressed to IMC, that the Merger will qualify as a pooling
of interests under generally accepted accounting principles if the Merger is
consummated in accordance with the terms of the Merger Agreement. See "THE
MERGER--Anticipated Accounting Treatment" and "OTHER TERMS OF THE MERGER
AGREEMENT--Conditions Precedent to the Merger."
Termination of the Merger Agreement; Fees and Expenses. The Merger Agreement
may be terminated at any time prior to the Effective Time, whether before or
after approval by the stockholders of IMC of the Share Issuance and Charter
Amendments or approval and adoption by the stockholders of Vigoro of the Merger
Agreement: (i) by mutual written consent of IMC and Vigoro; (ii) by either IMC
or Vigoro (A) if the other fails to comply in any material respect with any of
its covenants or agreements contained in the Merger Agreement required to be
complied with prior to the date of such termination or materially breaches any
representation or warranty that is not qualified as to materiality or breaches
any representation or warranty that is so qualified (in each case after a five
business-day cure period following notice of such breach) or (B) if the
requisite stockholder approvals are not obtained; (iii) by either IMC or Vigoro
at any time during the 30-day period commencing on March 12, 1996 and ending on
April 11, 1996; (iv) by either IMC or Vigoro if (A) the Merger has not been
effected prior to the close of business on August 14, 1996, subject to certain
limitations, or (B) any court or other governmental entity having jurisdiction
has permanently enjoined or prohibited the transactions contemplated by the
Merger Agreement; (v) by either IMC or Vigoro under specified circumstances
involving a competing transaction; (vi) by either IMC or Vigoro if the Board of
Directors of the other withdraws or modifies its recommendation of the Share
Issuance, the Charter Amendments or the Merger Agreement, as the case may be,
or its approval of the Merger Agreement; and (vii) by IMC if Vigoro breaches
its no-solicitation undertaking. In addition, the Merger Agreement may be
terminated by Vigoro, prior to the Vigoro Special Meeting, if the Average Price
is less than $29.115 or by IMC, prior to the IMC Special Meeting, if the
Average Price is greater than $42.665. See "OTHER TERMS OF THE MERGER
AGREEMENT--Termination." The Merger Agreement provides for the payment of fees
of up to $30 million following a termination of the Merger Agreement under
certain circumstances. See "OTHER TERMS OF THE MERGER AGREEMENT--Fees and
Expenses."
Regulatory Approvals--United States. Consummation of the Merger is subject to
the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). IMC and Vigoro each filed
a notification and report form under the HSR Act with the Federal Trade
Commission ("FTC") and the Antitrust Division of the Department of Justice (the
"Antitrust Division") on November 17, 1995 and requested early termination of
the waiting period. However, at any time before or after consummation of the
Merger, notwithstanding the expiration of the waiting period under the HSR Act,
the FTC, the Antitrust Division, a state or a private person or entity could
seek under federal or state antitrust laws, among other things, to enjoin or
rescind the Merger. The waiting period expired on December 17, 1995. See "THE
MERGER--Governmental and Regulatory Approvals."
Regulatory Approvals--Canadian Competition Act. Under the Canadian
Competition Act, certain transactions involving an amalgamation or the
acquisition of voting shares of a corporation that carries on, or that controls
a corporation that carries on, an operating business in Canada require
notification to the Director of Investigation and Research of the Bureau of
Competition Policy (the "Canadian Director"). If a merger is
8
<PAGE>
subject to the notification requirement, notification must be made either on
the basis of a short-form filing (with a seven-day waiting period) or a long-
form filing (with a 21-day waiting period). The transaction may not be
completed until the applicable waiting period has expired. However, the
Canadian Director's review of a merger may take longer than the statutory
waiting period. The Canadian Director may at any time before, or within three
years after, completion of a merger seek an order of the Competition Tribunal
enjoining or unwinding a merger on the basis that it is likely to substantially
lessen or prevent competition, unless the parties obtain from the Canadian
Director an advance ruling certificate ("ARC"). IMC and Vigoro filed a short-
form notification with the Canadian Director on December 14, 1995 and have also
requested that an ARC be issued. There can be no assurance that the Canadian
Director will issue an ARC. The seven-day waiting period during which the
Canadian Director could require the parties to make a long-form filing expired
on December 21, 1995. By letters dated January 15, 1996, the Canadian Director
requested that IMC and Vigoro provide additional information to assist the
Canadian Director in the evaluation of the Merger. IMC and Vigoro are in the
process of complying with these information requests. See "THE MERGER--
Governmental and Regulatory Approvals."
Investment Canada Act. IMC is required to file an Application for Review (an
"Application") in respect of the Merger under the Investment Canada Act
(Canada) (the "Investment Canada Act") with the Director of Investments, either
prior to consummation of the Merger or within 30 days thereafter. The Minister
of Industry (the "Minister") is required to determine whether a reviewable
acquisition is likely to be of "net benefit to Canada" taking into account
certain factors specified in the Investment Canada Act. The Investment Canada
Act contemplates an initial review period of 45 days after filing; however, if
the Minister has not completed the review by that date, he may extend the
review period by a further 30 days (or such longer period as may be agreed to
by IMC) to permit completion of the review. If the Minister determines that he
is not satisfied that the Merger is likely to be of net benefit to Canada, IMC
may not consummate the Merger or, if the Merger has been consummated, must
divest itself of control of the Canadian business that is the subject of the
acquisition. IMC filed an Application on December 15, 1995. See "THE MERGER--
Governmental and Regulatory Approvals."
Percentage Ownership Interest of Vigoro Stockholders after the Merger. Based
on the number of shares of IMC Common Stock outstanding on the IMC Record Date
and assuming the issuance of approximately 32.3 million shares of IMC Common
Stock constituting the Share Issuance, upon consummation of the Merger there
will be approximately 91.8 million shares of IMC Common Stock of which the
former stockholders of Vigoro will own approximately 35% (approximately 36%
assuming the exercise of all currently outstanding options to purchase shares
of IMC Common Stock and all currently outstanding options to purchase Vigoro
Common Stock, other than the IMC Option defined and discussed below).
Certain Related Agreements. Pursuant to a Stock Option Agreement, dated as of
November 13, 1995 (the "Stock Option Agreement"), between IMC and Vigoro, a
copy of which is attached as Annex III to this Proxy Statement/Prospectus,
Vigoro has granted to IMC an option to purchase 3,959,330 authorized and
unissued shares of Vigoro Common Stock, which, if exercised, would represent
approximately 16.4% of the outstanding Vigoro Common Stock as of the Vigoro
Record Date at a price of $57.21 per share (the "IMC Option"). The IMC Option
becomes exercisable by IMC only upon the occurrence of certain business
combinations involving Vigoro, including the acquisition by a third party of
30% or more of the outstanding shares of Vigoro Common Stock. See "THE MERGER--
Certain Transactions Between IMC and Vigoro and GAMI." In addition, IMC and
GAMI entered into the Voting Agreement pursuant to which GAMI agreed to vote
its shares of Vigoro Common Stock, except under certain circumstances, in favor
of approval and adoption of the Merger Agreement and granted IMC the
Irrevocable Proxy. See "--Vigoro Special Meeting."
United States Securities Law Considerations. The shares of IMC Common Stock
to be issued in connection with the Merger will be freely transferable under
the Securities Act, except that shares issued to any person who is deemed to be
an "affiliate" (as used in paragraphs (c) and (d) of Rule 145 under the
Securities Act, including, without limitation, directors and certain executive
officers) of Vigoro for purposes of such Rule 145 may not be
9
<PAGE>
resold except in transactions permitted by such Rule 145 or as otherwise
permitted under the Securities Act. In addition, SEC guidelines provide that
the pooling-of-interest method of accounting generally will not be challenged
on the basis of sales of shares by "affiliates" of the acquiring or acquired
company if such "affiliates" do not dispose of any of the shares of the
acquiring or acquired company that they own or receive in connection with a
merger during the period beginning 30 days before consummation of the merger
and ending when financial results covering at least 30 days of post-merger
operations of the combined enterprise have been published. Affiliates of each
of Vigoro and IMC have agreed not to sell, pledge, transfer or otherwise
dispose of, or in any other way reduce such person's risk relative to, any
shares of IMC Common Stock or Vigoro Common Stock except as permitted by such
guidelines. See "THE MERGER--Resales of IMC Common Stock."
Canadian Securities Law Considerations. The issuance of IMC Common Stock
pursuant to the Merger to residents of Canada will be exempt from the
registration and prospectus filing requirements of Canadian securities
legislation. Canadian residents receiving shares of IMC Common Stock in the
Merger may make gifts of such shares and, except residents of Nova Scotia, may
resell such shares over the NYSE or CSE. Resales may also be made by residents
of the Provinces of Manitoba, New Brunswick, Prince Edward Island, Quebec and,
if certain conditions are satisfied, British Columbia and Saskatchewan. The
foregoing discussion assumes that no such Canadian resident is a person or
company or a member of a combination of persons or companies holding a
sufficient number of IMC securities to affect materially the control of IMC.
Canadian residents should consult their legal advisers with respect to
transactions not covered by the above discussion. See "THE MERGER--Resales of
IMC Common Stock."
Appraisal Rights. Under the DGCL, stockholders of IMC are not entitled to
appraisal rights with respect to the Share Issuance or either of the Charter
Amendments, and holders of Vigoro Common Stock are not entitled to appraisal
rights with respect to the approval and adoption of the Merger Agreement.
Holders of Vigoro Preferred Stock are entitled to appraisal rights under
Section 262 of the DGCL. See "THE MERGER--Appraisal Rights."
10
<PAGE>
RECENT DEVELOPMENTS
Recent IMC Financial Results. On January 16, 1996, IMC released its financial
results for the three months and six months ended December 31, 1995 as follows:
<TABLE>
<CAPTION>
SIX MONTHS
THREE MONTHS ENDED ENDED DECEMBER
DECEMBER 31, 31,
--------------------- ----------------
1995(3) 1994 1995(3) 1994
---------- --------- -------- ------
(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
Net sales.............................. $ 549.6 $ 451.8 $1,034.5 $872.6
Cost of goods sold..................... 400.5 337.9 771.6 682.0
--------- --------- -------- ------
Gross margins.......................... 149.1 113.9 262.9 190.6
Selling, general and administrative
expenses(1)........................... 21.6 21.6 39.1 35.9
Other operating (income) and expense,
net................................... (4.0) .2 (5.6) (5.9)
--------- --------- -------- ------
Operating earnings..................... 131.5 92.1 229.4 160.6
Interest earned, and other non-
operating (income) and expense, net... (.6) (.7) (2.0) (3.4)
Interest charges....................... 11.1 13.3 22.5 28.3
--------- --------- -------- ------
Earnings before minority interest and
items noted below..................... 121.0 79.5 208.9 135.7
Minority interest...................... 50.3 34.0 88.6 55.5
--------- --------- -------- ------
Earnings before items noted below(2)... 70.7 45.5 120.3 80.2
Provision for income taxes............. 27.1 17.6 46.5 30.5
--------- --------- -------- ------
Earnings before cumulative effect of
accounting change and extraordinary
item.................................. 43.6 27.9 73.8 49.7
Cumulative effect of accounting
change(4)............................. (5.9)
Extraordinary loss-debt retirement(5).. (1.8) (3.0)
--------- --------- -------- ------
Net earnings........................... $ 43.6 $ 26.1 $ 73.8 $ 40.8
========= ========= ======== ======
Earnings per share(6):
Primary--
Earnings before cumulative effect of
accounting change and extraordinary
item.................................. $ .73 $ .47 $ 1.23 $ .84
Cumulative effect of accounting
change(4)............................. (.10)
Extraordinary loss-debt retirement(5).. (.03) (.05)
--------- --------- -------- ------
Net earnings........................... $ .73 $ .44 $ 1.23 $ .69
========= ========= ======== ======
Fully diluted--
Earnings before cumulative effect of
accounting change and extraordinary
item.................................. $ .70 $ .46 $ 1.20 $ .83
Cumulative effect of accounting
change(4)............................. (.09)
Extraordinary loss-debt retirement(5).. (.03) (.05)
--------- --------- -------- ------
Net earnings........................... $ .70 $ .43 $ 1.20 $ .69
========= ========= ======== ======
</TABLE>
- --------
(1) Included reorganization charges totaling $5.0 million ($4.1 million net of
minority interest) for the three and six months ended December 31, 1994
resulting from shifting the marketing and administrative functions of
Phosphate Chemicals Export Association, Inc. to its member companies.
(2) Included provisions totaling $1.4 million and $9.0 million ($.8 million and
$5.1 million net of minority interest) for the three and six months ended
December 31, 1994 to provide for remediation costs associated with a
sinkhole beneath a phosphogypsum storage stack at IMC-Agrico's New Wales
concentrated phosphate production facility in Florida and repair and
cleanup costs related to earthen dam breaches at
11
<PAGE>
IMC-Agrico's Payne Creek and Hopewell phosphate mining facilities in
Florida. These charges were partially offset by a gain of $5.0 million from
the sale of land in Florida in September 1994.
(3) On October 16, 1995, IMC acquired the animal feed ingredients business of
Mallinckrodt Group Inc. and subsequently contributed the business to IMC-
Agrico. The acquisition was accounted for under the purchase method of
accounting and, accordingly, operating results of the feed ingredients
business have been included in IMC's Consolidated Statement of Earnings
since the date of acquisition.
(4) Reflected the cumulative effect of an accounting change for periods prior
to July 1, 1994, resulting from the adoption of Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits."
(5) Consisted primarily of redemption premium incurred by IMC and write-off of
previously deferred finance charges in connection with the purchase of
portions of IMC's senior long-term debt.
(6) All share and per share data have been restated to give retroactive effect
to the IMC Stock Split.
Primary earnings per share were based on the weighted average number of
shares and equivalent shares outstanding. Fully diluted earnings per share
additionally assumed the conversion of IMC's 6.25 percent convertible
subordinated debentures at $31.75 per share and the issuance of IMC Common
Stock to satisfy the conversion requirements.
Primary shares and equivalent shares outstanding totaled 60.1 million and
59.9 million shares for the three and six months ended December 31, 1995,
respectively. For the three and six months ended December 31, 1994, primary
shares and equivalent shares outstanding totaled 59.1 million shares. Fully
diluted shares and equivalent shares outstanding totaled 63.8 million and
63.6 million shares for the three and six months ended December 31, 1995 and
62.8 million shares for the three and six months ended December 31, 1994.
Net earnings used in the computation of fully diluted earnings per share
assumed the addback of after-tax interest expense to recognize the
conversion of IMC's 6.25 percent convertible subordinated debentures at the
beginning of each fiscal year.
IMC's results for the three months and six months ended December 31, 1995
reflect continued strong demand for its crop nutrients, particularly
concentrated phosphates. The results also include the operating results of IMC-
Agrico's Feed Ingredient Division which was acquired on October 16, 1995.
Recent Vigoro Financial Results. Based on preliminary results, management of
Vigoro anticipates that net income per share for Vigoro's fiscal year ended
December 31, 1995 and for its fiscal quarter ended December 31, 1995 will be in
the range of $3.38 to $3.42 and $0.49 to $0.53, respectively. Results for the
quarter ending December 31, 1995 have been impacted by continued soft consumer
sales and soft pricing of potash.
Recent Acquisition by Vigoro. On January 3, 1996, Vigoro, through its wholly-
owned subsidiary, Vigoro Industries, Inc., acquired the assets of Putnam
Leasing Corporation, Leipsic Agri Supply Co., Inc., Agri Supply Company, Inc.,
Ag Supply N.W. Company, Ag Supply SE, Inc., Agri Supply South, Inc. and Agri
Supply Company West in exchange for $3.5 million in cash and 266,828 shares of
Vigoro Common Stock valued at approximately $14.9 million. These related
companies operated seven Ohio-based retail farm service centers and a dry and
liquid storage facility.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
Set forth below is selected historical consolidated financial information of
IMC and Vigoro which is based upon the historical consolidated financial
statements of IMC and Vigoro. The following information should be read in
conjunction with the respective consolidated financial statements of IMC and
Vigoro which are included in documents incorporated by reference in this Proxy
Statement/Prospectus.
IMC's fiscal year end is June 30 and Vigoro's fiscal year end is currently
December 31. It is anticipated that the historical financial statements of the
combined company subsequent to the Merger will reflect information on a June 30
fiscal year basis. See "THE MERGER--Anticipated Accounting Treatment" and
"UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION."
12
<PAGE>
IMC GLOBAL INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following selected historical consolidated financial information of IMC
with respect to each year in the five-year period ended June 30, 1995 is
derived from and should be read in conjunction with the consolidated financial
statements of IMC. The consolidated financial statements of IMC for each of the
years in the three-year period ended June 30, 1995 are included in documents
incorporated by reference in this Proxy Statement/Prospectus. Such consolidated
financial statements have been audited by Ernst & Young LLP, independent
auditors. The following selected consolidated financial information as of and
for each of the three-month periods ended September 30, 1995 and 1994 is
derived from and should be read in conjunction with the unaudited interim
consolidated financial statements of IMC which are included in documents
incorporated by reference in this Proxy Statement/Prospectus. Such unaudited
interim consolidated financial statements reflect all adjustments (consisting
only of normally recurring accruals) which the management of IMC considers
necessary to present fairly the financial information for such periods. The
results of operations for any interim period are not necessarily indicative of
results for a full year. All of the information set forth below reflects the
IMC Stock Split. See "AVAILABLE INFORMATION" and "INCORPORATION OF DOCUMENTS BY
REFERENCE."
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED JUNE 30,
------------------ ------------------------------------------------
1995 1994 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:(1)
Net sales............... $ 484.9 $ 420.8 $1,924.0 $1,441.5 $ 897.1 $1,058.5 $1,131.2
Gross margins........... 113.8 76.7 448.5 207.6 124.9 229.5 240.9
Sterlington litigation
settlement, net(2)..... (169.1)
Operating earnings
(loss)................. 97.9 68.5 381.8 167.3 (129.7) 191.4 196.0
Interest earned and
other non-operating
(income) and expense,
net.................... (1.4) (2.7) (6.2) 23.4 2.8 5.5 2.1
Interest charges........ 11.4 15.0 52.2 81.0 44.8 44.5 41.1
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
minority interest and
items noted below...... 87.9 56.2 335.8 62.9 (177.3) 141.4 152.8
Minority interest....... 38.3 21.5 128.4 55.1
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
items noted below...... 49.6 34.7 207.4 7.8 (177.3) 141.4 152.8
Provision (credit) for
income taxes........... 19.4 12.9 80.3 11.4 (57.3) 50.5 57.0
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
extraordinary item and
cumulative effect of
accounting changes..... 30.2 21.8 127.1 (3.6) (120.0) 90.9 95.8
Extraordinary loss-debt
retirement............. (1.2) (6.5) (25.2)
Cumulative effect on
prior years of changes
in accounting for
postemployment benefits
(net of taxes) in 1995,
postretirement benefits
other than pensions
(net of taxes) in 1993
and income taxes in
1992................... (5.9) (5.9) (47.1) (165.5)
-------- -------- -------- -------- -------- -------- --------
Net earnings (loss)..... $ 30.2 $ 14.7 $ 114.7 $ (28.8) $ (167.1) $ (74.6) $ 95.8
======== ======== ======== ======== ======== ======== ========
Earnings (loss) per
share:
Earnings (loss) before
extraordinary item and
cumulative effect of
accounting changes..... $ 0.51 $ 0.37 $ 2.15 $ (0.07) $ (2.72) $ 2.06 $ 1.93
Extraordinary loss-debt
retirement............. (0.02) (0.11) (0.50)
Cumulative effect on
prior years of changes
in accounting.......... (0.10) (0.10) (1.07) (3.75)
-------- -------- -------- -------- -------- -------- --------
Net earnings (loss)..... $ 0.51 $ 0.25 $ 1.94 $ (0.57) $ (3.79) $ (1.69) $ 1.93
======== ======== ======== ======== ======== ======== ========
Weighted average number
of shares and
equivalent shares
outstanding............ 59.7 59.1 59.2 50.5 44.2 44.1 49.8
BALANCE SHEET DATA (AT
END OF PERIOD):(1)
Working capital......... $ 299.9 $ 304.0 $ 252.4 $ 324.6 $ 195.1 $ 80.2 $ 48.1
Total assets............ 2,762.8 2,732.9 2,693.2 2,778.3 2,055.6 1,838.4 1,739.3
Long-term debt, less
current maturities..... 515.5 637.7 515.5 688.1 893.4 630.6 607.7
Total stockholders'
equity................. 796.8 670.0 762.9 655.0 430.4 615.4 698.6
OTHER FINANCIAL DATA:(1)
Capital expenditures.... $ 18.6 $ 11.6 $ 64.2 $ 40.7 $ 106.1 $ 177.7 $ 168.5
Depreciation, depletion
and amortization....... 30.7 32.8 134.4 122.4 61.5 83.3 90.2
</TABLE>
- -------
(1) See the footnotes to the appropriate IMC annual or interim financial
statements for a description of non-recurring items and accounting changes.
Beginning in 1994, financial information reflects the consolidation of IMC-
Agrico which was formed on July 1, 1993.
(2) Represents a charge related to the settlement of litigation resulting from
the May 1991 explosion at a facility managed by IMC in Sterlington,
Louisiana.
13
<PAGE>
THE VIGORO CORPORATION
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following selected historical consolidated financial information of
Vigoro with respect to (i) the six months ended December 31, 1994, (ii) each
fiscal year in the three-year period ended June 30, 1994, (iii) the eleven
months ended June 30, 1991, and (iv) the fiscal year ended July 31, 1990, is
derived from and should be read in conjunction with the consolidated financial
statements of Vigoro. The consolidated financial statements of Vigoro for the
six months ended December 31, 1994 and each year in the three-year period ended
June 30, 1994 are included in documents incorporated by reference in this Proxy
Statement/Prospectus. Such consolidated financial statements have been audited
by Arthur Andersen LLP, independent public accountants. The following selected
consolidated financial information as of and for each of the nine-month periods
ended September 30, 1995 and 1994 has been derived from and should be read in
conjunction with the unaudited interim consolidated financial statements of
Vigoro which are included in documents incorporated by reference in this Proxy
Statement/Prospectus. Such unaudited interim consolidated financial statements
reflect all adjustments (consisting only of normally recurring accruals) which
the management of Vigoro considers necessary to present fairly the financial
information for such periods. The results of operations for any interim period
are not necessarily indicative of results for a full year. See "AVAILABLE IN-
FORMATION" and "INCORPORATION OF DOCUMENTS BY REFERENCE."
<TABLE>
<CAPTION>
NINE MONTHS ELEVEN
ENDED SIX MONTHS ENDED YEARS ENDED MONTHS YEAR
SEPTEMBER 30, DECEMBER 31, JUNE 30, ENDED ENDED
-------------- ---------------- ---------------------- JUNE 30, JULY 31,
1995 1994 1994 (1) 1993(1) 1994 1993 1992 1991 (2) 1990 (3)
------ ------ -------- ------- ------ ------ ------ -------- --------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales............... $752.8 $650.7 $262.5 $185.8 $727.4 $578.2 $594.1 $557.6 $561.6
Operating earnings...... 111.0 75.0 24.6 13.7 82.2 72.1 74.5 69.7 66.5
Interest earned and
other (income) expense,
net.................... (1.2) (3.4) (0.6) (1.9) (4.9) (3.5) (5.0) 0.1 (1.6)
Interest charges........ 17.4 8.2 6.1 4.6 10.2 10.8 15.0 24.0 29.5
Earnings before minority
interests,
extraordinary items and
cumulative effect of
accounting change...... 58.9 44.3 11.8 6.8 48.5 42.1 40.5 23.4 27.7
Earnings before
extraordinary items and
cumulative effect of
accounting change...... 58.9 44.3 11.8 6.8 48.5 42.1 40.5 20.6 25.4
Extraordinary items..... (2.0) 0.2 1.6
Cumulative effect of
change in accounting
(3).................... (24.9)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net earnings (loss)..... 58.9 44.3 11.8 6.8 48.5 40.1 40.5 (4.1) 27.0
Preferred stock
dividends.............. 1.6 1.0 1.0 0.5 4.4 6.6
------ ------ ------ ------ ------ ------ ------ ------ ------
Earnings (loss)
available for common
stock.................. $ 57.3 $ 43.3 $ 10.8 $ 6.8 $ 48.0 $ 40.1 $ 40.5 $ (8.5) $ 20.4
====== ====== ====== ====== ====== ====== ====== ====== ======
Earnings (loss) per
common share:
Earnings before
extraordinary items and
cumulative effect of
accounting change...... $ 2.89 $ 2.20 $ 0.55 $ 0.35 $ 2.43 $ 2.10 $ 2.03 $ 1.29 $ 1.60
Extraordinary gain
(loss)................. (0.10) 0.02 0.13
Cumulative effect on
prior years of change
in accounting.......... (1.99)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net earnings (loss) per
common share........... $ 2.89 $ 2.20 $ 0.55 $ 0.35 $ 2.43 $ 2.00 $ 2.03 $(0.68) $ 1.73
====== ====== ====== ====== ====== ====== ====== ====== ======
Weighted average common
shares outstanding..... 19.9 19.7 19.7 19.7 19.7 20.0 20.0 12.5 11.8
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets............ $777.1 $549.7 $607.6 $456.2 $573.9 $457.1 $410.7 $425.3 $350.6
Long-term debt, less
current maturities..... 226.0 122.8 122.7 102.8 113.5 101.2 110.3 132.3 180.5
Preferred stock......... 30.3 28.2 28.2 28.2 51.1
Total common
stockholders' equity... 247.3 189.4 190.0 159.4 201.3 171.9 145.2 116.7 17.3
OTHER FINANCIAL DATA:
Capital expenditures.... $ 46.2 $ 28.5 $ 23.7 $ 16.7 $ 35.3 $ 30.9 $ 27.1 $ 19.1 $ 17.6
Depreciation, depletion
and amortization....... 26.7 20.6 14.6 11.2 24.6 24.0 20.7 21.2 18.3
</TABLE>
- -------
(1) In March 1995, Vigoro changed its fiscal year-end from June 30 to December
31 effective December 31, 1994. Information for the six months ended
December 31, 1994 covers the period from Vigoro's previous fiscal year-end
to Vigoro's new year-end. Information for the six months ended December 31,
1993 is presented for comparative purposes.
(2) In June 1991, Vigoro changed its fiscal year-end from July 31 to June 30.
(3) Effective July 1, 1993, Vigoro adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). Vigoro
restated prior years financial statements by retroactively applying the
provisions of SFAS No. 109 to August 1, 1990. As a result, Vigoro's year
ended July 31, 1990 was not restated.
14
<PAGE>
IMC GLOBAL INC.
SELECTED UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following selected unaudited pro forma consolidated statements of
operations data and other financial data for the three months ended September
30, 1995 and 1994 and the years ended June 30, 1995, 1994 and 1993 and selected
unaudited pro forma consolidated balance sheet data as of September 30, 1995
have been prepared from the historical financial statements of IMC and Vigoro.
The selected unaudited pro forma consolidated financial information is
presented for illustrative purposes only, and therefore is not necessarily
indicative of the operating results and financial position that might have been
achieved had the Merger occurred as of an earlier date, nor is it necessarily
indicative of operating results and financial position which may occur in the
future.
The selected unaudited pro forma consolidated financial information gives
effect to accounting for the Merger as a pooling of interests, in accordance
with Accounting Principles Board Opinion No. 16 ("APB No. 16"), and assumes the
conversion of each share of outstanding Vigoro Common Stock into 1.60 shares of
IMC Common Stock. See "THE MERGER--Conversion of Shares." The selected
unaudited pro forma consolidated statement of operations data and other
financial data presented herein have been prepared as if the Merger had been
consummated on July 1, 1992. The selected unaudited pro forma consolidated
balance sheet data as of September 30, 1995 reflect the Merger as if it had
occurred on September 30, 1995.
The selected unaudited pro forma consolidated financial information for the
respective periods presented should be read in conjunction with the historical
consolidated financial statements and notes thereto of IMC and Vigoro which are
included in documents incorporated by reference in this Proxy
Statement/Prospectus and the Unaudited Pro Forma Condensed Consolidated
Financial Information appearing elsewhere in this Proxy Statement/Prospectus.
See "AVAILABLE INFORMATION," "INCORPORATION OF DOCUMENTS BY REFERENCE" and
"UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION."
<TABLE>
<CAPTION>
THREE
MONTHS ENDED
SEPTEMBER 30, YEARS ENDED JUNE 30,
---------------- ---------------------------
1995 1994 1995 1994 1993
-------- ------ -------- -------- --------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
(1)
Net sales....................... $ 598.6 $516.1 $2,767.8 $2,125.3 $1,438.1
Gross margins................... 146.9 105.7 692.6 377.8 276.8
Sterlington litigation
settlement, net................ (169.1)
Operating earnings (loss)....... 104.3 73.4 510.6 244.5 (62.1)
Interest earned and other non-
operating (income) and expense,
net............................ (3.0) (3.1) (6.3) 18.5 (0.7)
Interest charges................ 16.8 17.6 73.6 91.2 55.6
-------- ------ -------- -------- --------
Earnings (loss) before minority
interest, income taxes,
extraordinary item and the
cumulative effect of accounting
changes........................ 90.5 58.9 443.3 134.8 (117.0)
Minority interest............... 38.8 22.0 130.4 55.6
-------- ------ -------- -------- --------
Earnings (loss) before income
taxes, extraordinary item and
the cumulative effect of
accounting changes............. 51.7 36.9 312.9 79.2 (117.0)
Provision (credit) for income
taxes.......................... 19.6 12.9 117.1 34.8 (39.1)
-------- ------ -------- -------- --------
Earnings (loss) before
extraordinary item and the
cumulative effect of accounting
changes applicable to common
stock.......................... $ 32.1 $ 24.0 $ 195.8 $ 44.4 $ (77.9)
======== ====== ======== ======== ========
Earnings (loss) per common
share.......................... $ 0.35 $ 0.26 $ 2.15 $ 0.54 $ (1.02)
Weighted average number of
shares and equivalent shares
outstanding.................... 91.5 90.6 90.9 82.1 76.2
BALANCE SHEET DATA (AT END OF
PERIOD): (1)
Working capital................. $ 482.2
Total assets.................... 3,382.0
Long-term debt, less current
maturities..................... 741.5
Total stockholders' equity...... 1,033.9
OTHER FINANCIAL DATA:
Capital expenditures............ $ 37.8 $ 21.5 $ 114.9 $ 76.0 $ 137.0
Depreciation, depletion and
amortization................... 39.8 40.0 165.9 146.8 82.2
</TABLE>
- --------
(1) Certain amounts in the historical financial statements of IMC and Vigoro
have been reclassified for the pro forma combined presentation.
15
<PAGE>
IMC GLOBAL INC. AND THE VIGORO CORPORATION
COMPARATIVE PER SHARE DATA
The following table sets forth certain book value, earnings and dividend per
share data for IMC and Vigoro on a historical and pro forma combined basis. The
pro forma earnings per share data is derived from the Unaudited Pro Forma
Condensed Consolidated Financial Information appearing elsewhere in this Proxy
Statement/Prospectus, which gives effect to the Merger as a pooling of
interests as if the Merger had been consummated at the beginning of the
earliest period presented. The information set forth below should be read in
conjunction with the Selected Historical Consolidated Financial Information of
IMC and Vigoro and the Unaudited Pro Forma Condensed Consolidated Financial
Information, including the notes thereto, appearing elsewhere in this Proxy
Statement/Prospectus and the consolidated financial statements of IMC and
Vigoro included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "AVAILABLE INFORMATION," "INCORPORATION OF DOCUMENTS
BY REFERENCE," "--Market Prices; Dividends Paid and Dividend Policy" and
"UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION."
<TABLE>
<CAPTION>
IMC COMMON STOCK(1) VIGORO COMMON STOCK
-------------------- ------------------------
PRO FORMA PRO FORMA
HISTORICAL COMBINED HISTORICAL EQUIVALENT(2)
---------- --------- ---------- -------------
<S> <C> <C> <C> <C>
BOOK VALUE PER SHARE AS OF:
September 30, 1995............ $13.43 $11.34 $12.44 $18.14
June 30, 1995................. 12.92 10.98 12.32 17.57
EARNINGS (LOSS) PER SHARE BEFORE
EXTRAORDINARY ITEM AND THE
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES:(3)
For the quarter ended:
September 30, 1995.......... $ 0.51 $ 0.35 $ 0.10 $ 0.56
September 30, 1994.......... 0.37 0.26 0.11 0.42
For the year ended:
June 30, 1995............... 2.15 2.15 3.35 3.44
June 30, 1994............... (0.07) 0.54 2.43 0.86
June 30, 1993............... (2.72) (1.02) 2.10 (1.63)
CASH DIVIDENDS DECLARED PER
SHARE:(3)(4)
For the quarter ended:
September 30, 1995.......... $ 0.05 $ 0.05 $ 0.21 $ 0.08
September 30, 1994.......... 0.19
For the year ended:
June 30, 1995............... 0.15 0.15 0.82 0.24
June 30, 1994............... 0.74
June 30, 1993............... 0.41 0.41 0.66 0.66
</TABLE>
- --------
(1) All per share data reflected herein give effect to the IMC Stock Split.
(2) The equivalent pro forma per share data for Vigoro are computed by
multiplying IMC's pro forma per share information by 1.60, the assumed
Conversion Number.
(3) IMC's fiscal year end of June 30, 1995 differs by more than 93 days from
Vigoro's fiscal year end of December 31, 1994. The above information for
the year ended June 30, 1995 reflects Vigoro's results for the twelve-month
period July 1, 1994 through June 30, 1995. The above information for the
years ended June 30, 1994 and 1993 reflects the results of Vigoro for its
fiscal years ended June 30, 1994 and 1993, respectively.
(4) The pro forma combined dividends per share for IMC Common Stock assume no
changes in cash dividends per share.
16
<PAGE>
IMC GLOBAL INC. AND THE VIGORO CORPORATION
MARKET PRICES; DIVIDENDS PAID AND DIVIDEND POLICY
IMC Common Stock is traded on the NYSE and the CSE under the symbol "IGL."
Vigoro Common Stock is traded on the NYSE under the symbol "VGR." The following
table sets forth, for the periods indicated, the range of the high and low
sales prices of IMC Common Stock and Vigoro Common Stock on the NYSE Composite
Transactions Tape and the dividends paid per share of IMC Common Stock and
Vigoro Common Stock. All of the information set forth below gives effect to the
IMC Stock Split.
<TABLE>
<CAPTION>
IMC COMMON STOCK VIGORO COMMON STOCK
------------------------- -------------------------
DIVIDENDS DIVIDENDS
HIGH LOW PAID HIGH LOW PAID
------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Calendar Year 1993:
Quarter ended March 31,.. $28.813 $15.500 $0.135 $24.500 $21.625 $0.17
Quarter ended June 30,... 18.313 12.188 23.875 20.375 0.17
Quarter ended September
30,..................... 17.125 13.000 25.500 20.750 0.17
Quarter ended December
31,..................... 23.625 16.500 30.750 24.625 0.17
Calendar Year 1994:
Quarter ended March 31,.. 24.625 19.250 34.000 28.750 0.19
Quarter ended June 30,... 22.125 15.375 33.250 25.500 0.19
Quarter ended September
30,..................... 22.313 17.063 36.500 27.500 0.19
Quarter ended December
31,..................... 22.375 18.125 0.05 35.875 27.875 0.19
Calendar Year 1995:
Quarter ended March 31,.. 26.250 20.625 0.05 37.875 29.750 0.21
Quarter ended June 30,... 27.313 22.250 0.05 42.125 35.875 0.21
Quarter ended September
30,..................... 33.313 27.000 0.05 46.250 41.000 0.21
Quarter ended December
31,..................... 40.875 30.313 0.08 62.000 40.000 0.21
Calendar Year 1996:
Quarter ended March 31,
(through January ,
1996)...................
</TABLE>
Set forth below are the last reported sale prices of IMC Common Stock and
Vigoro Common Stock on November 10, 1995, the last trading day prior to the
public announcement of the execution of the Merger Agreement, and the
equivalent pro forma sale price of Vigoro Common Stock on such date, as
determined by multiplying such last reported sale price of IMC Common Stock by
1.60, the assumed Conversion Number:
<TABLE>
<S> <C>
IMC Common Stock.................................................. $37.313
Vigoro Common Stock............................................... 45.250
Vigoro Equivalent................................................. 59.700
</TABLE>
The market prices of shares of IMC Common Stock and Vigoro Common Stock are
subject to fluctuation. As a result, IMC and Vigoro stockholders are urged to
obtain current market quotations.
In April 1993, the IMC Board voted to suspend cash dividend payments in light
of financial demands of litigation arising out of an explosion at a
nitroparaffins plant operated by IMC in Sterlington, Louisiana and weakness in
concentrated phosphate prices. Although IMC commenced quarterly dividends in
the quarter ended December 31, 1994, any future cash dividends will be at the
discretion of the IMC Board and will be dependent on IMC's results of
operations, financial condition and other factors deemed relevant by the IMC
Board.
Pursuant to the Merger Agreement, Vigoro has agreed that it will not declare
a dividend or fix a record date therefor in the calendar quarter in which the
consummation of the Merger will occur if such action would result in the
holders of Vigoro Common Stock being entitled to dividends for such quarter
both on Vigoro Common Stock held prior to the Effective Time and on IMC Common
Stock at or after the Effective Time. See "THE MERGER--Agreement with Respect
to Dividends."
17
<PAGE>
RISK FACTORS
In considering whether to approve the Share Issuance and Charter Amendments
or to approve and adopt the Merger Agreement, as the case may be, stockholders
of IMC and Vigoro should consider the following matters. In addition,
stockholders of IMC and Vigoro should carefully review the annual and
quarterly reports filed by each of IMC and Vigoro and incorporated by
reference in this Proxy Statement/Prospectus, which reports contain further
discussions of certain matters described below.
STERLINGTON LITIGATION
Angus Chemical Company ("Angus") and IMC are involved in various litigation
arising out of a May 1991 explosion at a nitroparaffins plant located in
Sterlington, Louisiana. Angus wants IMC to assume responsibility for a class
action lawsuit currently pending in Louisiana against IMC, Angus and other
defendants for injuries arising out of the explosion, and to reimburse Angus
for amounts that Angus has paid for settled claims in connection with the
Sterlington explosion. With respect to the settled demands, Angus, in
pleadings filed in Louisiana and Texas, states that it is seeking
approximately $9.5 million, plus interest, fees, and costs. In addition, Angus
is seeking direct payment from IMC's insurers, X.L. Insurance Company, Ltd.
("XL") and A.C.E. Insurance Company, Ltd. ("ACE") for certain damages in an
action pending in Louisiana state court. Angus has not specified how much it
is seeking from IMC's insurers. Angus may be asserting claims against XL for
the difference between the limits of the XL policy of $75.0 million and the
$45.7 million that XL has paid to IMC under the policy. In addition, Angus may
be asserting claims against ACE for the difference between the limit of the
ACE policy of $100.0 million and the $15.0 million that ACE has previously
paid to IMC. IMC may have obligations to indemnify certain of the insurers if
Angus is successful in this case. IMC is unable to estimate the magnitude of
its exposure at this time.
IMC continues to vigorously litigate each of the matters arising out of the
Sterlington explosion. A jury trial is scheduled to commence in the summer or
fall of 1996 in Texas state court with respect to Angus's and IMC's claims for
contribution and indemnity for the settled demands. Discovery is still not
complete with respect to the lawsuits scheduled for trial in July 1996, and
all of the other lawsuits are in early stages. In addition, Angus has filed an
action in federal court in Louisiana seeking reimbursement for amounts
allegedly expended to remediate certain environmental sites at the Sterlington
plant. In its pleadings filed with the Louisiana federal court, Angus states
that it is seeking approximately $1.8 million for amounts expended, plus
interest, fees, costs, and reimbursement for any future expenses. IMC is
unable to estimate the magnitude of its exposure at this time.
ANTITRUST LITIGATION
A number of class action suits have been filed in United States federal
courts, two California state courts and an Illinois state court against most
of the North American potash producers. IMC and two of Vigoro's subsidiaries,
Kalium Chemicals, Ltd. ("Kalium Chemicals") and Kalium Canada, Ltd. ("Kalium
Canada"), are named as defendants in a number of these suits. The complaints
essentially allege that the North American potash producers acted together to
fix the price of potash sold in the United States and that, by unspecified
means and in unspecified circumstances, IMC, Kalium Chemicals and Kalium
Canada became a part of the acts of North American potash producers. None of
the complaints specify the amount of damages sought by the plaintiffs. All of
the complaints seek treble damages and attorneys' fees and ask that the court
find the defendants jointly and severally liable.
The first suits were filed in April 1993 in the United States District Court
for the District of Minnesota. One suit was subsequently withdrawn and the
remaining 12 suits were consolidated. In May 1993 and June 1993, respectively,
substantially similar class action suits were filed in the United States
District Courts for the Northern District of Illinois and the Western District
of Virginia. The Judicial Panel on Multidistrict Litigation transferred these
federal actions to the United States District Court for the District of
Minnesota for consolidated pretrial proceedings. All of these claims are
asserted on behalf of a purported group of direct purchasers of potash. In
January 1995, the District Court granted the plaintiffs' motion to certify a
class consisting of direct purchasers of potash in the United States.
Discovery is now concluded in the case and defendants' motions for summary
judgment have been filed.
18
<PAGE>
In addition to the direct purchaser actions filed in the United States
District Courts, two complaints have been filed in California state courts on
behalf of indirect purchasers residing in California. IMC, Kalium Chemicals
and Kalium Canada have answered both of the California complaints and have
denied all material allegations. These cases are still in a preliminary stage
and no discovery has been conducted.
The case filed in Illinois state court has been dismissed for failure to
state a claim. Plaintiffs have appealed the dismissal.
IMC, Kalium Chemicals and Kalium Canada are not able to estimate the amount
of damages that could ultimately be sought in the civil suits. Based upon
available information, management of IMC believes that IMC did not act in
concert with others, and management of Vigoro believes that neither Kalium
Chemicals nor Kalium Canada acted in concert with others, to fix prices in
violation of the United States antitrust laws or any other laws. There can be
no assurance, however, that these cases will ultimately be decided in a manner
favorable to IMC, Kalium Chemicals and Kalium Canada. In connection with
Vigoro's Colonsay mine, affiliates of Noranda Inc. ("Noranda"), from whom
Vigoro purchased the mine on January 5, 1995, are also named as defendants in
the civil suits. Vigoro did not assume any liabilities of Noranda or such
affiliates, with respect to operations at Colonsay prior to the January 5,
1995 closing of the purchase, which may arise out of such antitrust
litigation, and Vigoro is entitled to be indemnified by Noranda against such
liabilities should they arise.
The Antitrust Division has been conducting a grand jury investigation into
allegations similar to those made in the civil actions. IMC and Vigoro have
been cooperating with the investigation.
FTC PHOSPHATE OPERATIONS INQUIRY
IMC was notified on October 2, 1995 by the FTC that the FTC is conducting an
investigation to determine whether manufacturers of concentrated phosphates
may have violated Section 5 of the Federal Trade Commission Act, as amended,
by agreeing to restrict output or raise prices. The FTC has requested that IMC
provide certain information and documents regarding IMC's phosphate
operations. IMC has submitted responsive information and documents to the FTC.
The FTC has stated that neither its request for information and documents nor
the fact that it has commenced an investigation should be construed as
indicating that a violation has occurred or is occurring.
MINING RISKS
Since December 1985, IMC has experienced an inflow of water into one of its
two interconnected potash mines in Saskatchewan, Canada. As a result, IMC has
suffered losses and has been forced to undertake substantial efforts to
control the flooding. IMC has significantly reduced the water inflow since the
initial discovery and has been able to meet all sales obligations and
requirements from production at the mines. Despite the relative success of
such measures, there can be no assurance that the amounts required for
remedial efforts in future years will not increase or that inflows or
remediation costs will not increase to a level which would cause IMC to
abandon the mines. The long-term outlook of the water inflow has caused IMC to
consider alternatives to its current mining operations in Saskatchewan. Any
solution to the water inflow situation at the mines is likely to result in
substantial capital expenditures and/or charges to operations.
Like other potash producers' shaft mines, Vigoro's Colonsay mine is subject
to the risks of inflow of water as a result of its shaft mining operations.
The Saskatchewan potash mining industry generally has been unable to secure
insurance to cover other risks associated with underground operations.
Therefore, IMC's and Vigoro's underground mine operations are not presently
insured against, and are not insurable against, business interruption or risk
from catastrophic perils, including collapse, floods and other water inflow.
ENVIRONMENTAL MATTERS
Both IMC and Vigoro are subject to numerous environmental laws and
regulations in the United States and Canada which regulate certain activities
and operations of each company and impose liability for the cleanup of
environmental contamination. IMC and Vigoro have each incurred, and the
combined company will continue to incur, substantial capital expenditures and
operating costs on account of these laws and regulations. Neither IMC nor
Vigoro can predict the operational or financial impact of new or amended laws
or regulations or the future enforcement or interpretation of existing laws
and regulations.
19
<PAGE>
INTERNATIONAL OPERATIONS
Foreign operations and investments are subject to numerous risks, including
fluctuations in foreign currency exchange rates and controls, expropriation
and other economic, political and regulatory policies of local governments and
laws and policies of the United States affecting foreign trade and investment.
Internationally, IMC's products are sold primarily through one Canadian and
three United States export associations. Due to economic and political
factors, customer needs can change dramatically from year to year. In 1995,
sales to the People's Republic of China represented approximately 18% of
consolidated net sales. Other principal customer countries include India,
Thailand, Japan, Korea, Australia, New Zealand and several Latin American and
European countries.
CONVERSION NUMBER
The Conversion Number is subject to adjustment in certain circumstances
based upon the Average Price of IMC Common Stock. If the Average Price is (i)
equal to or greater than $30.938 per share and less than or equal to $40.00
per share, the Conversion Number will be 1.60, (ii) greater than $42.665 per
share, the Conversion Number will be 1.50, or (iii) less than $29.115 per
share, the Conversion Number will be 1.70. If the Average Price is (a) greater
than $40.00 per share and less than or equal to $42.665 per share, the
Conversion Number will be adjusted to equal $64.00 divided by the Average
Price, or (b) greater than or equal to $29.115 and less than $30.938, the
Conversion Number will be adjusted to equal $49.50 divided by the Average
Price. Except for the adjustments described above, the Conversion Number will
not be adjusted in the event of any increase or decrease in the price of IMC
Common Stock, and the aggregate market value of IMC Common Stock delivered to
holders of Vigoro Common Stock will fluctuate depending upon the price of IMC
Common Stock. Because the Average Price is based on the price of IMC Common
Stock during a 20 trading day period ending on the fifth trading day prior to
the date of the Vigoro Special Meeting, the price of IMC Common Stock at the
Effective Time may vary from (x) the Average Price, (y) the price of IMC
Common Stock at the date of this Proxy Statement/Prospectus and (z) the price
of IMC Common Stock at the date of the Special Meetings, due to changes in the
business, operations or prospects of IMC or Vigoro, market assessments of the
likelihood that the Merger will be consummated, general market and economic
considerations, or other factors. In addition, if the Average Price is greater
than $42.665 per share, IMC will have the right to terminate the Merger
Agreement, and if the Average Price is less than $29.115 per share, Vigoro
will have the right to terminate the Merger Agreement.
IMC SPECIAL MEETING
PURPOSE
At the IMC Special Meeting, the stockholders of IMC will consider and vote
upon separate proposals to approve the Share Issuance, the Stock Amendment and
the Director Amendment. The holders of IMC Common Stock will also consider and
take action upon any other business which may properly be brought before the
IMC Special Meeting and on which holders of IMC Common Stock are entitled to
vote.
The IMC Board has unanimously determined that the Merger and the Share
Issuance are advisable and fair to and in the best interests of the
stockholders of IMC and has approved the Merger Agreement. The IMC Board has
also unanimously determined that each of the Charter Amendments is advisable
and in the best interests of stockholders of IMC. THE IMC BOARD UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS OF IMC VOTE IN FAVOR OF THE SHARE ISSUANCE
AND EACH OF THE CHARTER AMENDMENTS AT THE IMC SPECIAL MEETING. See "THE
MERGER--IMC's Reasons for the Merger; Recommendation of the IMC Board" and
"PROPOSED IMC CHARTER AMENDMENTS."
RECORD DATE; VOTING RIGHTS
Only holders of record of IMC Common Stock at the close of business on the
IMC Record Date, January 15, 1996, are entitled to receive notice of and to
vote at the IMC Special Meeting. At the close of business on
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the IMC Record Date, there were 59,548,268 shares of IMC Common Stock
outstanding, each of which entitles the registered holder thereof to one vote.
SHARE OWNERSHIP OF MANAGEMENT
At the close of business on the IMC Record Date, Directors and executive
officers of IMC and their affiliates were the beneficial owners of an aggregate
of 223,512 (approximately 0.4%) of the shares of IMC Common Stock then
outstanding.
QUORUM
The holders of a majority of the shares of IMC Common Stock outstanding must
be present in person or represented by proxy at the IMC Special Meeting in
order for a quorum to be present.
If an executed proxy is returned and the stockholder has abstained from
voting on approval of the Share Issuance or either of the Charter Amendments,
or if any executed proxy is returned by a broker holding shares of IMC Common
Stock in street name which indicates that the broker does not have or declines
to exercise discretionary authority to vote such shares (a so-called "broker
non-vote"), the shares represented by such proxy will be considered present at
the IMC Special Meeting for purposes of determining a quorum and for purposes
of calculating the vote, but will not be considered to have been voted in favor
of approval of such matter. Brokers holding shares of IMC Common Stock in
street name will not have discretionary authority to vote such shares on the
Share Issuance but will have discretionary authority to vote such shares on the
Charter Amendments.
In the event that a quorum is not present at the IMC Special Meeting, it is
expected that such meeting will be adjourned or postponed to solicit additional
proxies.
PROXIES
All shares of IMC Common Stock represented by properly executed proxies in
the enclosed form which are received in time for the IMC Special Meeting and
have not been revoked will be voted in accordance with the instructions
indicated in such proxies. IF NO INSTRUCTIONS ARE INDICATED, SUCH SHARES WILL
BE VOTED FOR THE APPROVAL OF THE SHARE ISSUANCE AND EACH OF THE CHARTER
AMENDMENTS. IMC does not know of any matter not described in the Notice of
Special Meeting that is expected to come before the IMC Special Meeting. If,
however, any other matters are properly presented for action at the IMC Special
Meeting, the persons named in the enclosed form of proxy and acting thereunder
will have the discretion to vote on such matters in accordance with their best
judgment, unless such authority is withheld. In addition, the persons
designated in such proxy will have discretion to vote upon any procedural
matter relating to the IMC Special Meeting, including the right to vote for any
adjournment thereof proposed by the IMC Board to solicit additional proxies
except that such persons designated in a proxy which votes against either the
Share Issuance or the Charter Amendments will not have the right to vote upon
any adjournment to solicit additional proxies. Any proxy in the enclosed form
may be revoked by the stockholder executing it at any time prior to its
exercise by giving written notice thereof to the Secretary of IMC, by signing
and returning a later dated proxy or by voting in person at the IMC Special
Meeting. Attendance at the IMC Special Meeting will not in and of itself
constitute the revocation of a proxy.
Proxies will be received by IMC's independent proxy processing agent, and the
vote will be certified by independent inspectors. Proxies and ballots that
identify the vote of a particular stockholder will be kept confidential other
than as necessary to meet legal requirements, in cases where such stockholder
has requested disclosure or written a comment to such effect on the returned
proxy card. During the proxy solicitation period, IMC will receive vote tallies
from time to time from its independent proxy processing agent, but such tallies
will provide aggregate data rather than the names of stockholders. Such agent
will notify IMC if a stockholder has failed to vote so that such stockholder
may be requested to do so.
SOLICITATION OF PROXIES
Proxies are being solicited hereby on behalf of the IMC Board. Pursuant to
the Merger Agreement, the entire cost of proxy solicitation for the IMC Special
Meeting, including the reasonable expenses of brokers, fiduciaries and other
nominees in forwarding solicitation material to beneficial owners, will be
borne by IMC, except that IMC and Vigoro will share equally all printing
expenses and filing fees. In addition to the use of the mail,
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solicitation may be made by telephone or otherwise by Directors, officers and
regular employees of IMC. Such Directors, officers and regular employees will
not be additionally compensated for such solicitation, but may be reimbursed
for out-of-pocket expenses incurred in connection therewith. If undertaken,
the expense of such solicitation would be nominal. IMC has retained Morrow &
Co., Inc. to aid in the solicitation of proxies from its stockholders. The
fees of Morrow & Co., Inc. to be paid by IMC are estimated to be less than
$25,000, plus reimbursement of out-of-pocket expenses.
REQUIRED VOTE
Approval of the Share Issuance will require the affirmative vote of a
majority of the votes cast on the Share Issuance, provided that the total
number of votes cast on such proposal represents more than 50% of the shares
of IMC Common Stock. Approval of each of the Charter Amendments will require
the affirmative vote of a majority of the outstanding shares of IMC Common
Stock. Because each of the Charter Amendments requires the affirmative vote of
a majority of the outstanding shares of IMC Common Stock, abstentions and
broker non-votes will have the same effect as a vote against approval of such
proposals. An abstention with respect to the Share Issuance will have the same
effect as a vote against approval of such proposal; broker non-votes will not
be counted as cast on such proposal.
VIGORO SPECIAL MEETING
PURPOSE
At the Vigoro Special Meeting, the holders of Vigoro Voting Stock will
consider and vote upon a proposal to approve and adopt the Merger Agreement.
The holders of Vigoro Voting Stock will also consider and take action upon any
other business which may properly be brought before the Vigoro Special Meeting
and on which holders of Vigoro Voting Stock are entitled to vote.
The Vigoro Board has unanimously determined that the Merger is advisable and
fair to and in the best interests of Vigoro and its stockholders and has
approved the Merger Agreement. THE VIGORO BOARD UNANIMOUSLY RECOMMENDS THAT
THE STOCKHOLDERS OF VIGORO VOTE IN FAVOR OF APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AT THE VIGORO SPECIAL MEETING. See "THE MERGER--Vigoro's
Reasons for the Merger; Recommendation of the Vigoro Board."
RECORD DATE; VOTING RIGHTS
Only holders of record of Vigoro Voting Stock at the close of business on
the Vigoro Record Date, January 15, 1996, are entitled to receive notice of
and to vote at the Vigoro Special Meeting. At the close of business on the
Vigoro Record Date, there were 20,175,566 shares of Vigoro Common Stock
outstanding, 2,826.2018 shares of Series E Preferred Stock outstanding and 200
shares of Series F Preferred Stock outstanding. Each share of Vigoro Voting
Stock entitles the registered holder thereof to one vote.
SHARE OWNERSHIP OF MANAGEMENT AND GAMI
At the close of business on the Vigoro Record Date, Directors and executive
officers of Vigoro and their affiliates (other than GAMI) were the beneficial
owners of an aggregate of 1,622,320 (approximately 8.0%) of the Vigoro Common
Stock then outstanding. In addition, GAMI owned approximately 20.17% of the
outstanding shares of Vigoro Common Stock as of the Vigoro Record Date. See
"--Required Vote."
QUORUM
A majority of the outstanding shares of Vigoro Voting Stock entitled to vote
must be represented in person or by proxy at the Vigoro Special Meeting in
order for a quorum to be present.
If an executed proxy is returned and the stockholder has abstained from
voting on approval and adoption of the Merger Agreement, the shares
represented by such proxy will be considered present at the Vigoro Special
Meeting for purposes of determining a quorum and for purposes of calculating
the vote, but will not be considered to have been voted in favor of approval
and adoption of the Merger Agreement. Brokers holding shares of Vigoro Common
Stock in street name will not have discretionary authority to vote such shares
on the approval and adoption of the Merger Agreement. Broker non-votes will be
considered present at the Vigoro Special Meeting for purposes of determining
the presence of a quorum and of calculating the vote, but will not be
considered to have been voted in favor of approval and adoption of the Merger
Agreement.
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In the event that a quorum is not present at the Vigoro Special Meeting, it
is expected that such meeting will be adjourned or postponed to solicit
additional proxies.
PROXIES
All Vigoro Voting Stock represented by properly executed proxies in the
enclosed form which are received in time for the Vigoro Special Meeting and
have not been revoked will be voted in accordance with the instructions
indicated in such proxies. IF NO INSTRUCTIONS ARE INDICATED, SUCH SHARES WILL
BE VOTED FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. Vigoro does
not know of any matter not described in the Notice of Special Meeting that is
expected to come before the Vigoro Special Meeting. If, however, any other
matters are properly presented for action at the Vigoro Special Meeting, the
persons named in the enclosed form of proxy and acting thereunder will have
the discretion to vote on such matters in accordance with their best judgment,
unless such authority is withheld. In addition, the persons designated in such
proxy will have discretion to vote upon any procedural matter relating to the
Vigoro Special Meeting, including the right to vote for any adjournment
thereof proposed by the Vigoro Board to solicit additional proxies except that
such persons designated in a proxy which votes against approval and adoption
of the Merger Agreement will not have the right to vote upon any adjournment
to solicit additional proxies. Any proxy in the enclosed form may be revoked
by the stockholder executing it at any time prior to its exercise by giving
written notice thereof to the Secretary of Vigoro, by signing and returning a
later dated proxy or by voting in person at the Vigoro Special Meeting.
Attendance at the Vigoro Special Meeting will not in and of itself constitute
the revocation of a proxy.
SOLICITATION OF PROXIES
Proxies are being solicited hereby on behalf of the Vigoro Board. Pursuant
to the Merger Agreement, the entire cost of proxy solicitation for the Vigoro
Special Meeting, including the reasonable expenses of brokers, fiduciaries and
other nominees in forwarding solicitation material to beneficial owners, will
be borne by Vigoro, except that IMC and Vigoro will share equally all printing
expenses and filing fees. In addition to the use of the mail, solicitation may
be made by telephone or otherwise by Directors, officers and regular employees
of Vigoro. Such Directors, officers and regular employees will not be
additionally compensated for such solicitation, but may be reimbursed for out-
of-pocket expenses incurred in connection therewith. If undertaken, the
expense of such solicitation would be nominal. Vigoro has retained Morrow &
Co., Inc. to aid in the solicitation of proxies from its stockholders. The
fees of Morrow & Co., Inc. to be paid by Vigoro are estimated to be less than
$25,000, plus reimbursement of out-of-pocket expenses.
REQUIRED VOTE
Approval and adoption of the Merger Agreement and the Merger will require
the affirmative vote of a majority of the outstanding shares of Vigoro Voting
Stock. Because approval and adoption of the Merger Agreement requires the
affirmative vote of a majority of the outstanding shares of Vigoro Common
Stock, abstentions and broker non-votes will have the same effect as a vote
against approval and adoption of the Merger Agreement.
Pursuant to the Voting Agreement, GAMI has agreed, except under certain
circumstances, to attend the Vigoro Special Meeting and vote its shares in
favor of approval and adoption of the Merger Agreement. As of the Record Date,
GAMI beneficially owned approximately 20.17% of the outstanding shares of
Vigoro Voting Stock. GAMI has granted IMC the Irrevocable Proxy.
APPRAISAL RIGHTS
Holders of Vigoro Common Stock are not entitled to appraisal rights in
connection with the Merger. Holders of shares of Vigoro Preferred Stock are
entitled to appraisal rights under Section 262 of the DGCL. Pursuant to
Section 262, any holder of shares of Vigoro Preferred Stock who files a
written demand for appraisal prior to the taking of the vote to approve and
adopt the Merger Agreement at the Vigoro Special Meeting, who continuously
holds such shares through the effective date of the Merger and who does not
vote in favor of such approval and adoption, is entitled to an appraisal by
the Delaware Court of Chancery of the fair value of such shares (exclusive of
any element of value arising from the expectation or accomplishment of the
Merger). See "THE MERGER--Appraisal Rights."
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THE MERGER
The description of the Merger and the Merger Agreement contained in this
Proxy Statement/Prospectus does not purport to be complete and is qualified in
its entirety by reference to the Merger Agreement, a conformed copy of which
is attached hereto as Annex I and incorporated herein by reference.
GENERAL
At the Effective Time, Merger Sub will be merged with and into Vigoro, with
Vigoro continuing as the Surviving Corporation and a subsidiary of IMC, all of
the outstanding common stock of which will be owned by IMC. As a result of the
Merger, the separate corporate existence of Merger Sub will cease and Vigoro
will succeed to all the rights and be responsible for all the obligations of
Merger Sub in accordance with the DGCL. Subject to the terms and conditions of
the Merger Agreement, each share of Vigoro Common Stock outstanding
immediately prior to the Effective Time (other than shares owned directly or
indirectly by IMC or Vigoro, which will be cancelled) will be converted into
the right to receive 1.60 shares of IMC Common Stock if the Average Price is
equal to or greater than $30.938 per share and less than or equal to $40.00
per share. The Conversion Number is subject to proportional adjustment down to
1.50 if the Average Price is greater than $40.00 per share and less than or
equal to $42.665 per share and proportional adjustment up to 1.70 if the
Average Price is equal to or greater than $29.115 per share and less than
$30.938 per share. If the Average Price is below $29.115 per share, the
Conversion Number will be 1.70, and Vigoro will have the right to terminate
the Merger Agreement. If the Average Price is above $42.665 per share, the
Conversion Number will be 1.50, and IMC will have the right to terminate the
Merger Agreement. Each share of IMC Common Stock constituting the Share
Issuance will include an IMC Right. Cash will be paid in lieu of any
fractional share of IMC Common Stock. Each share of Vigoro Preferred Stock
outstanding immediately prior to the Effective Time will remain issued and
outstanding immediately after the Merger, subject to the appraisal rights in
favor of holders of Vigoro Preferred Stock discussed herein. See "--Appraisal
Rights" and "OTHER TERMS OF THE MERGER AGREEMENT--Conversion of Shares in the
Merger."
The Merger will become effective upon the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware unless the Certificate of
Merger provides for a later date of effectiveness (not to exceed 30 days after
the date that the Certificate of Merger is so filed). The filing of the
Certificate of Merger will occur as soon as practicable following the
satisfaction or waiver of the conditions to the Merger set forth in the Merger
Agreement. See "OTHER TERMS OF THE MERGER AGREEMENT--Conditions Precedent to
the Merger."
After consummation of the Merger and the filing of the Charter Amendments,
the IMC Board will be comprised of the nine current members of the IMC Board
and the Vigoro Designees. IMC and Vigoro presently anticipate that the Vigoro
Designees will be Joseph P. Sullivan, the Chairman of the Board of Vigoro,
Robert E. Fowler, Jr., a Director and the President and Chief Executive
Officer of Vigoro, Rod F. Dammeyer, Chief Executive Officer of GAMI and a
Director of Vigoro, and an individual currently serving as an outside Director
of Vigoro to be mutually designated by IMC and Vigoro at or prior to the
Effective Time. The Vigoro Designees will be elected Directors of IMC by the
current members of the IMC Board for terms expiring (i) at IMC's 1996 annual
meeting of stockholders, in the case of two of such Vigoro Designees, (ii) at
IMC's 1997 annual meeting of stockholders, in the case of one such Vigoro
Designee, and (iii) at IMC's 1998 annual meeting of stockholders, in the case
of one such Vigoro Designee. The terms of the current IMC Directors will not
be adjusted. Although stockholder approval of the Director Amendment is
necessary to increase the size of the IMC Board to not less than 5 nor more
than 15 members, stockholder approval of the election of the Vigoro Designees
to the IMC Board is not required by the IMC Charter, IMC By-laws or the DGCL.
Following the Effective Time, Robert E. Fowler, Jr. will be president of a
group comprised of the combined company's potash assets, the Vigoro FARMARKET
network (including the related nitrogen production assets) and the Vigoro
Consumer and Professional Products Group. James D. Speir, President and Chief
Operating Officer of IMC, will remain a director of IMC following the
Effective Time and will be president of a group comprised of IMC-Agrico
(including the recently acquired Feed Ingredient Division) and the Rainbow
Division of IMC.
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The Amended and Restated Partnership Agreement of IMC-Agrico, and a related
agreement among IMC Global Operations Inc., Freeport-McMoRan Resource
Partners, Limited Partnership ("FRP"), Freeport-McMoRan Inc. and IMC-Agrico
(collectively, the "Partnership Agreement"), contain provisions which require
an affiliate of a partner which desires to accept any opportunity to own,
manage, operate, control or invest in any business that is engaged, in whole
or in part, in the "Phosphate Chemicals Business" (as defined in such
Partnership Agreement) to offer such opportunity to IMC-Agrico; provided,
however, that if such opportunity involves the acquisition of an entity whose
revenues derived from the "Phosphate Chemicals Business" represent less than
10% of the total revenues of such entity, the party desiring to accept such
opportunity is only required to either offer the portion of the opportunity
consisting of the Phosphate Chemicals Business to IMC-Agrico or sell such
portion to an independent third party. FRP and IMC-Agrico have agreed to waive
any right, which may exist, of IMC-Agrico to be offered the opportunity to
acquire any part of Vigoro's business as a result of the Merger. In addition,
IMC and FRP have entered into certain amendments to the Partnership Agreement
in part to reflect changes in the nature of the business of IMC resulting from
the Merger. These amendments, which will become effective only if the Merger
is consummated, provide for (i) a shift of 0.85% of distributable cash
interest of IMC-Agrico from IMC to FRP following the Merger, (ii) changes to
certain IMC-Agrico governance procedures, including the establishment of a new
office of President for IMC-Agrico, who would be appointed by IMC subject to
the approval of IMC-Agrico's Policy Committee and a related clarification of
management and reporting responsibilities, (iii) the modification of certain
product pricing and sourcing provisions with respect to transactions between
IMC-Agrico and affiliates of IMC, including the FARMARKET network of Vigoro
and (iv) the establishment of criteria under which certain acquisitions by
IMC's Rainbow Division or Vigoro's FARMARKET network would not be required to
be offered to IMC-Agrico. If the shift of distributable cash from IMC to FRP
contemplated by the amendments to the Partnership Agreement had been effective
as of July 1, 1994, cash distributions to FRP for the fiscal year ended June
30, 1995 (which aggregated $254.9 million) would have been increased by $4.0
million.
CONVERSION OF SHARES
The Conversion Number is subject to adjustment based on the Average Price.
If the Average Price is:
. less than $29.115, the Conversion Number will be 1.70; provided, however,
that Vigoro will have the right to terminate the Merger Agreement
. greater than or equal to $29.115, but less than $30.938, the Conversion
Number will be equal to $49.50 divided by the Average Price
. greater than or equal to $30.938, but less than or equal to $40.00, the
Conversion Number will be 1.60
. greater than $40.00, but less than or equal to $42.665, the Conversion
Number will be equal to $64.00 divided by the Average Price
. greater than $42.665, the Conversion Number will be 1.50; provided,
however, that IMC will have the right to terminate the Merger Agreement
AGREEMENT WITH RESPECT TO DIVIDENDS
The Merger Agreement provides that holders of Vigoro Common Stock will be
entitled to either a dividend on Vigoro Common Stock or on shares of IMC
Common Stock, but not both, for the calendar quarter in which the Effective
Time occurs. However, if (i) Vigoro has not declared any regular quarterly
dividend in respect of any quarter after the date of the Merger Agreement and
(ii) the Merger is not effected on a date which would enable such stockholders
to receive a dividend on IMC Common Stock for such quarter, then Vigoro may
declare a special dividend of not more than $0.23 per share of Vigoro Common
Stock with respect to such quarter to compensate such stockholders for such
regular quarterly dividend they would otherwise have received in respect of
their Vigoro Common Stock.
BACKGROUND OF THE MERGER
In late 1993, IMC began to consider opportunities for expansion of its
business through strategic business combinations or alliances which would,
among other things, (i) reduce the relative contribution of phosphate based
crop nutrients, which are subject to wide price fluctuations, to consolidated
sales and earnings; (ii) develop
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production capacity in regions outside North America; (iii) establish more
direct exposure to farmers, the principal end users of IMC's products; and
(iv) develop alternate sourcing and/or technology for potash production at
IMC's underground potash mines in Saskatchewan, Canada, which have been
subject to water inflows since 1985. In connection with this effort, IMC
commenced a preliminary analysis of several agricultural-related products,
services and strategic opportunities. Between late 1993 and mid 1995, IMC
consulted informally with several investment banking firms, including Lehman
Brothers, regarding possible strategic opportunities.
In late 1993, Wendell F. Bueche, Chairman and Chief Executive Officer of
IMC, met with Joseph P. Sullivan, Chairman of the Board of Vigoro, and Robert
E. Fowler, Jr., President and then Chief Operating Officer of Vigoro, to
discuss, on a preliminary basis, the strategic benefits of a business
combination or alliance involving IMC and Vigoro. The parties acknowledged at
the meeting that a further study should be undertaken of the benefits of a
possible business combination involving the two companies.
In February 1994, at Mr. Sullivan's suggestion, Mr. Bueche met with Sam Zell
and Rod F. Dammeyer, both members of the Vigoro Board, to assess the
feasibility of a business combination or alliance involving the two companies.
Following that meeting, Messrs. Bueche and Sullivan met to resume their
discussions, which included the possibility of a merger between IMC and
Vigoro.
In early 1994, IMC asked Lehman Brothers to assess the financial feasibility
of pursuing a business combination with Vigoro. In June 1994, Mr. Bueche met
with Messrs. Sullivan and Dammeyer to exchange preliminary views as to the
relative values of IMC and Vigoro that could serve as a basis for a variety of
possible business combinations between the companies. All parties agreed that
while there could be significant benefits from a transaction, including cost
savings and technology sharing, the substantial disagreement between the
parties as to the relative values of the companies did not support further
discussions and discussions between the parties were terminated. Throughout
this time, the IMC Board and the Vigoro Board were briefed by their respective
managements on the discussions among the parties.
In September 1994, Vigoro commenced the development of a strategic plan in
light of recent consolidation trends within the crop nutrients industry and
the potential effect of these trends on Vigoro's competitive position and the
market price of Vigoro Common Stock. This strategic plan concentrated on
examining the relative feasibility of growing Vigoro's business internally or
through strategic acquisitions or business combinations. In January 1995,
Vigoro engaged J.P. Morgan to provide financial advisory expertise, including
examining the profitability of Vigoro's various business segments in
connection with Vigoro's overall strategic planning process.
At its March 1995 meeting, the Vigoro Board considered management's
presentation of Vigoro's strategic plan and authorized management to explore
various strategic alternatives including business combinations which would or
would not result in Vigoro's surviving as the continuing entity. Thereafter,
J.P. Morgan began to assist Vigoro in exploring specific strategic
alternatives.
There was no significant contact between IMC and Vigoro between August 1994
and June 1995. In June 1995, Mr. Dammeyer, at the suggestion of Mr. Sullivan,
contacted IMC, through Lehman Brothers, to suggest renewed discussions. The
IMC Board was informed of an impending meeting with Vigoro and discussed the
benefits of a possible transaction with Vigoro. On June 21, 1995,
representatives of IMC, Vigoro and Lehman Brothers met to discuss a possible
transaction. There was a second meeting, on July 6, 1995, at which IMC,
represented by Mr. Bueche, and Vigoro, represented by Messrs. Sullivan and
Fowler, agreed that the strategic benefits and cost savings of a combination
were significant and that it was appropriate to conduct reciprocal high level
due diligence between the senior corporate and operating personnel of both
companies to better assess such benefits and savings. The parties also
discussed on a preliminary basis their mutual expectations with respect to the
possible terms for a transaction.
On July 11, 13 and 20, 1995, representatives of IMC, Vigoro and IMC's
outside counsel met to conduct due diligence of each other's business focusing
primarily on environmental matters and potash technology sharing and sourcing
alternatives. On July 24, Mr. Bueche met with Messrs. Sullivan and Fowler and
discussed
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certain of the preliminary terms on which IMC management would be prepared to
propose a business combination to the IMC Board. On July 21 and 28, special
meetings of the IMC Board were held, at which Mr. Bueche briefed the IMC Board
on a possible strategic transaction with Vigoro. A special meeting of the
Vigoro Board was held on July 26, at which Mr. Sullivan briefed the Vigoro
Board on the possible transaction with IMC. Over the next two weeks there were
several additional meetings between representatives of IMC and Vigoro to
discuss possible transaction terms. At an August 8 meeting between Messrs.
Bueche, Speir, Sullivan and Fowler, the parties concluded they could not come
to agreement on the terms of a possible transaction at such time and ceased
discussions.
On October 21, 1995, Messrs. Bueche and Zell discussed whether the benefits
of a combination warranted further review. On October 25, Mr. Bueche, with
representatives from Lehman Brothers, met with Messrs. Fowler and Dammeyer.
Mr. Bueche presented preliminary terms to Messrs. Fowler and Dammeyer which
the parties discussed. There were additional meetings on October 31 and
November 6 involving Messrs. Bueche, Sullivan, Fowler and financial advisors
and counsel for IMC and Vigoro at which certain additional transaction terms
were discussed. Between November 7 and 9, IMC and Vigoro conducted additional
due diligence on each other and exchanged limited internal financial
information, including projections from IMC for its fiscal year ending June
30, 1996 and Vigoro for the calendar years ending December 31, 1995 and 1996,
respectively. The Executive Committee of the Vigoro Board was consulted on a
regular basis with respect to the course of these discussions.
The IMC Board met on November 9, 1995, at which time IMC management updated
the IMC Board on the results of due diligence, including cost savings and the
benefits of potash mining technology transfers. The IMC Board was updated on
the possible terms of a merger involving IMC and Vigoro and a draft merger
agreement was reviewed by the IMC Board. Lehman Brothers made a presentation
outlining the results of the financial analyses it had conducted to assess the
fairness of the proposed Conversion Number. At this time, Lehman Brothers
indicated that it would be prepared to opine favorably as to the fairness of
the proposed Conversion Number, from a financial point of view, assuming no
significant change in the proposed terms. The Vigoro Board met on November 9,
1995, at which time Messrs. Sullivan and Fowler presented the proposed terms
of the Merger and the results of management's preliminary due diligence. At
such meeting, counsel to Vigoro reviewed the terms of a draft merger agreement
with the Vigoro Board. J.P. Morgan made its presentation outlining the results
of its financial analyses and indicated that it would be prepared to opine
that the consideration to be received by the holders of Vigoro Common Stock
would be fair, from a financial point of view, to such holders.
Negotiations on the terms of a possible merger and a possible merger
agreement continued from November 9 through November 12. The IMC Board met
again on November 12. At that meeting, the IMC Board received an update on
business due diligence and reviewed the proposed terms of the transaction.
Lehman Brothers presented additional information and delivered its written
opinion that the Conversion Number was fair to IMC from a financial point of
view. The IMC Board approved the transaction subject to satisfactory
negotiation of certain unresolved issues within parameters discussed and
agreed upon by the IMC Board. IMC and Vigoro completed negotiations the
evening of November 12 within the parameters approved by the IMC Board.
The Vigoro Board met again on the morning of November 13, 1995. At the
meeting, the Vigoro Board received an update on due diligence issues and
reviewed the status of the transaction. J.P. Morgan presented additional
information and delivered its written opinion that the consideration to be
received by the holders of Vigoro Common Stock in the Merger would be fair,
from a financial point of view, to such holders. Following such meeting of the
Vigoro Board, during which the Vigoro Board approved the transaction, IMC,
Merger Sub and Vigoro executed the definitive Merger Agreement.
IMC'S REASONS FOR THE MERGER; RECOMMENDATION OF THE IMC BOARD
The IMC Board has unanimously determined that the Merger and the Share
Issuance are advisable and fair to and in the best interests of the
stockholders of IMC and has approved the Merger Agreement. Accordingly, the
IMC Board unanimously recommends that the stockholders of IMC vote in favor of
the Share Issuance. In
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reaching its determination, the IMC Board consulted with IMC's management, as
well as its financial advisors and legal counsel, and considered a number of
reasons and factors, including the following:
(i) The merger with Vigoro will substantially broaden IMC's business mix
and may reduce the volatility of IMC's earnings. Vigoro's potash sales and
earnings will reduce the relative importance of more price-volatile
phosphate-based crop nutrients to IMC to consolidated results, with an
expected reduction in volatility of operating earnings. In addition, a more
significant portion of Vigoro's potash sales is to industrial customers
compared to IMC, whose shipments are almost exclusively to agricultural
markets. Vigoro also has a significant retail business, which gives it
direct contact with farmers, the principal consumers of crop nutrient
products of both IMC and Vigoro; IMC currently sells a very limited amount
of products directly to farmers;
(ii) The acquisition of Vigoro will enable the combined company to
benefit from the potash mining expertise of IMC and Vigoro and should
provide a cost-effective means to attempt to address IMC's water inflow
problem which has existed since 1985 at IMC's potash mines at Esterhazy,
Saskatchewan. In fiscal 1995, IMC spent approximately $16 million, or
approximately $5/ton of production, to control such inflows. One
alternative which IMC has investigated is to convert its Esterhazy
operations to a solution mine. Vigoro has been successful in developing the
solution mining process at its Kalium mine at Belle Plaine, Saskatchewan,
which is believed to be the lowest-cost potash mine in the world and the
only mine to use a solution mining process on a large scale. Similarly, IMC
possesses significant know-how in shaft mining which it believes could be
applied to lower costs and facilitate expansion at Vigoro's recently-
acquired mine at Colonsay, Saskatchewan;
(iii) The combined company should be able to achieve significant cost
savings through consolidation of administrative and marketing staffs,
improved logistics and various other areas of overlap. These savings will
enable the combined company to compete more effectively with North American
and foreign potash producers in the global potash market;
(iv) The combined company will have a stronger balance sheet and
substantially larger cash flows than IMC currently has, which will give the
combined company greater financial flexibility to make investments in new
capacity and/or new regions which IMC expects will be required to satisfy
growing worldwide demand for agricultural crop nutrients;
(v) The expected pro forma earnings impact of the transaction (assuming
IMC and Vigoro were able to consummate the Merger as a pooling of interests
under generally accepted accounting principles) and the tax effects of the
Merger on IMC;
(vi) The presentation of Lehman Brothers delivered to the IMC Board,
including the opinion of Lehman Brothers rendered on November 12, 1995,
that the Conversion Number is fair, from a financial point of view, to IMC;
(vii) The Conversion Number and the historical market prices and trading
information with respect to IMC Common Stock and Vigoro Common Stock; and
(viii) The terms and conditions of the Merger Agreement, which were
viewed as providing an equitable basis for the Merger from the standpoint
of IMC.
The foregoing discussion of the information and factors considered and given
weight by the IMC Board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the Merger,
the IMC Board did not find it practicable to and did not quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the IMC Board may have given
different weights to different factors.
THE IMC BOARD UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF IMC COMMON STOCK
VOTE "FOR" APPROVAL OF THE SHARE ISSUANCE AND EACH OF THE CHARTER AMENDMENTS.
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OPINION OF IMC'S FINANCIAL ADVISOR
IMC, pursuant to an engagement letter dated July 14, 1995 (the "Lehman
Engagement Letter"), retained Lehman Brothers as its financial advisor in
connection with IMC's proposed Merger with Vigoro.
At the November 12, 1995 meeting of the IMC Board, Lehman Brothers delivered
its written opinion that, as of such date and based upon and subject to the
various conditions described to the IMC Board, the Conversion Number is fair,
from a financial point of view, to IMC. The full text of the written opinion
of Lehman Brothers is attached as Annex V hereto. Holders of IMC Common Stock
are urged to read this opinion in its entirety for a summary of assumptions
made, matters considered and limits of the review undertaken by Lehman
Brothers in arriving at its opinion. The description of the opinion of Lehman
Brothers set forth in this Proxy Statement/Prospectus is qualified in its
entirety by reference to the full text of such opinion. The Conversion Number
and share price information for IMC have been adjusted to give effect to the
IMC Stock Split.
No limitations were imposed by IMC on the scope of Lehman Brothers'
investigation or the procedures to be followed by Lehman Brothers in rendering
its opinion. The Conversion Number was determined by arm's-length negotiation
between IMC and Vigoro after consultation by each of such parties with their
respective financial advisors as to various matters, including preliminary
ranges of value, and was not based on a recommendation by Lehman Brothers,
although Lehman Brothers evaluated the financial terms of the Merger and
participated in discussions concerning the Conversion Number. In arriving at
its opinion, Lehman Brothers did not ascribe a specific range of values to IMC
or Vigoro, but made its determination as to the fairness, from a financial
point of view, of the Conversion Number on the basis of the financial and
comparative analyses summarized below. The opinion is for the use and benefit
of the IMC Board and is not intended to be and does not constitute a
recommendation to any stockholder of IMC as to how such stockholder should
vote with respect to the Share Issuance. Lehman Brothers was not requested to
opine as to, and the opinion does not in any manner address, IMC's underlying
business decision to proceed with or effect the Merger.
In arriving at its opinion, Lehman Brothers reviewed and analyzed: (i) the
Merger Agreement and related documents and the specific terms of the Merger;
(ii) IMC's Annual Reports to Stockholders and Annual Reports on Form 10-K for
the fiscal years ended June 1993 through June 1995 and a draft of its
Quarterly Report on Form 10-Q for the quarter ended September 1995; (iii)
Vigoro's Annual Reports to Stockholders and Annual Reports on Form 10-K for
the fiscal years ended June 1992 through June 1994, its Transition Report on
Form 10-K for the six month period ended December 1994 and its Quarterly
Reports on Form 10-Q for the quarters ended March and June 1995 and a draft of
the Quarterly Report on Form 10-Q for the quarter ended September 1995; (iv)
certain operating and financial information provided to Lehman Brothers by the
management of IMC relating to its business, including projections of future
financial results; (v) certain operating and financial information relating to
the business of Vigoro provided to Lehman Brothers by the managements of IMC
and Vigoro, including projections of future financial results provided to
Lehman Brothers by IMC and projections of near-term future financial results
provided to Lehman Brothers by Vigoro; (vi) the anticipated pro forma
financial impact of the Merger on IMC; (vii) trading histories of the common
stock of IMC and Vigoro and a comparison of such trading histories with each
other and with those of certain other companies that Lehman Brothers deemed
relevant; (viii) historical price trends for certain of the crop nutrients
produced by Vigoro and IMC; (ix) a comparison of the historical financial
results and present financial condition of IMC and Vigoro with those of
certain other companies that Lehman Brothers deemed relevant and (x) a
comparison of the financial terms of the Merger with the financial terms of
certain other transactions that Lehman Brothers deemed relevant. Lehman
Brothers also performed additional analyses, including discounted cash flow
analyses and relative contribution analyses.
In addition, Lehman Brothers had discussions with certain of IMC's senior
management regarding IMC's business, operations, financial condition and
prospects, as well as their views with respect to the business, operations,
financial condition and prospects of Vigoro and the potential cost savings,
production efficiencies and other business, operational and strategic impacts
expected to result from a combination of the businesses of
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IMC and Vigoro. Furthermore, Lehman Brothers had discussions with certain of
Vigoro's senior management regarding Vigoro's business, operations, financial
condition and prospects, as well as their views with respect to the business,
operations, financial condition and prospects of IMC and the potential cost
savings, production efficiencies and other business, operational and strategic
impacts expected to result from a combination of the businesses of IMC and
Vigoro. Lehman Brothers also undertook such other studies, analyses and
investigation as Lehman Brothers deemed appropriate for the purposes of its
opinion.
In arriving at its opinion, Lehman Brothers assumed and relied upon the
accuracy and completeness of the financial and other information used by it
without assuming any responsibility for independent verification of such
information. With respect to the financial projections of IMC and Vigoro and
the potential cost savings and other benefits that could be achieved upon
consummation of the Merger, upon advice of the management of IMC, Lehman
Brothers assumed that such projections were reasonably prepared on a basis
reflecting the best currently available estimates and judgments of the
respective managements of IMC and Vigoro as to the future financial
performance of IMC or Vigoro, as the case may be. For purposes of its
analysis, however, Lehman Brothers also considered financial projections for
IMC and Vigoro based on certain more conservative assumptions and estimates.
Lehman Brothers discussed these adjusted projections with the management of
IMC and the management of IMC has agreed with the appropriateness of the use
of such adjusted projections by Lehman Brothers in performing its analysis. In
arriving at its opinion, Lehman Brothers did not conduct a physical inspection
of the properties and facilities of IMC or Vigoro, did not make or obtain any
evaluations or appraisals of the assets or liabilities of IMC or Vigoro and
was able to conduct only limited due diligence with the management of Vigoro
prior to rendering its opinion. Lehman Brothers' opinion necessarily is based
upon market, economic and other conditions as they existed on, and could be
evaluated as of, the date of its opinion. Notwithstanding the foregoing,
Lehman Brothers has determined that the amendments to the Partnership
Agreement described above under the heading "THE MERGER--General" do not
affect its opinion.
IMC management prepared long-term financial projections for IMC, based on
internal information for each of its principal business units, principally for
the purpose of assessing the impact of changes in raw material prices,
finished product prices and production levels on sales, earnings and cash
flow. Such projections were not prepared with a view towards public disclosure
or compliance with published guidelines of the Securities and Exchange
Commission or the guidelines established by the American Institute of
Certified Public Accountants ("AICPA") regarding projections. IMC management
also prepared long-term financial projections for Vigoro based on its review
and analysis of publicly available historical financial and product
information for Vigoro and estimates of future financial performance published
by various Wall Street equity research analysts. Such projections were
prepared principally for the purpose of assessing the impact of changes in raw
material prices, finished product prices and production levels on sales,
earnings and cash flow and were not prepared with a view towards public
disclosure or compliance with published guidelines of the SEC or the
guidelines established by the AICPA regarding projections. Such projections
were prepared on a June fiscal year basis in order to be consistent with IMC's
fiscal year; Vigoro's fiscal year ends in December.
In performing its analyses, with the concurrence of management of IMC,
Lehman Brothers performed a variety of sensitivity analyses to incorporate
potential fluctuations in commodity prices and production levels for the two
companies. The commodity price levels were generated based upon historical
commodity price levels after consultation with, and the concurrence of, IMC's
senior management. Using these sensitivity analyses, Lehman Brothers then
developed the following scenarios in conjunction with management of IMC, both
of which assume no real dollar inflation and which are referenced throughout
the remainder of this Proxy Statement/ Prospectus: (i) "Base Case" projections
assume: IMC's realized prices for key phosphate products for fiscal 1996 are
at IMC's forecasted levels for fiscal 1996 and that prices increase
approximately 3% in fiscal 1997 and remain at 1997 levels thereafter; potash
prices for both IMC and Vigoro for fiscal year 1996 are based upon IMC's
forecasted levels for fiscal 1996 and increase 2% per annum thereafter;
phosphate and potash production levels for IMC remain relatively static in all
years and potash production for Vigoro increases modestly in fiscal 1997 and
remains constant thereafter and (ii) "Lower Price Case" projections assume:
key phosphate product prices are at approximately 80% of assumed fiscal 1996
Base Case levels in all periods; potash prices for both IMC and Vigoro for
fiscal 1996 at approximately 85% of Base Case levels, increasing 2% per annum
thereafter; phosphate and potash production levels for IMC remain relatively
static in all years while potash production at Vigoro remains constant at
current levels.
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Because the assumptions underlying the projections for IMC and Vigoro
prepared by the managements of the two companies are inherently subject to
significant economic and competitive uncertainties and contingencies beyond
the control of IMC and Vigoro, there can be no assurances that the assumptions
will prove valid or that the estimates set forth in the projections are
capable of being, or will be, realized. Actual results may be higher or lower
than those contemplated by the projections, and possibly by significant
amounts.
In connection with its presentation to the IMC Board on November 12, 1995,
and in advising the IMC Board of its opinion, Lehman Brothers performed
certain financial and comparative analyses, as summarized below. The
preparation of a fairness opinion involves various determinations as to the
most appropriate and relevant methods of financial and comparative analysis
and the application of those methods to the particular circumstances, and
therefore such an opinion is not readily susceptible to summary description.
Furthermore, in arriving at its opinion, Lehman Brothers did not attribute any
particular weight to any analysis or factor considered by it, but rather made
qualitative judgments as to the significance and relevance of each analysis
and factor. Accordingly, Lehman Brothers believes that its analyses must be
considered as a whole and that considering any portions of such analyses and
of the factors considered, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying its opinion.
In its analyses, Lehman Brothers made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of IMC. Any estimates contained
in these analyses are not necessarily indicative of actual values or
predictive of future results or values, which may be significantly more or
less favorable than as set forth therein. In addition, analyses relating to
the value of businesses do not purport to be appraisals or to reflect the
prices at which businesses actually may be sold. No opinion is being expressed
as to the prices at which shares of IMC Common Stock may trade at any future
time.
Stock Price Trading Range and Conversion Number Analyses. Lehman Brothers
analyzed the stock price trading ranges of both IMC and Vigoro from May 21,
1991 (the date of Vigoro's initial public offering) to November 10, 1995 and
compared the relative stock price performance of each company from May 21,
1991 to November 10, 1995 and January 2, 1995 to November 10, 1995. As of
November 10, 1995, the ratio between Vigoro's and IMC's closing stock price
for the 20 days prior to the announcement date was 1.233. Lehman Brothers
noted that the implied value per share of Vigoro's stock of $59.700, based
upon the Conversion Number of 1.60 and IMC's November 10, 1995 closing stock
price of $37.313, represented a 31.9% premium to the Vigoro closing stock
price as of such date. As of July 24, 1995, the date at which preliminary
terms were initially discussed, the ratio between Vigoro's and IMC's closing
stock price for the 20 days prior was 1.552. Lehman Brothers also noted that
the implied value per share of Vigoro's stock price of $47.800, based upon an
exchange ratio of 1.60 and IMC's July 21, 1995 closing stock price of $29.875,
represented a 7.1% premium to the Vigoro closing stock price as of such date.
Analysis of Selected Publicly Traded Comparable Companies. Using publicly
available information, Lehman Brothers compared selected financial data of
Vigoro with similar data for six companies engaged in businesses considered by
Lehman Brothers to be comparable to Vigoro. Specifically, Lehman Brothers
included in its review Arcadian Corporation (formerly known as Arcadian
Partners, L.P.), Agrium, Inc., IMC, Mississippi Chemical Corporation, Potash
Corporation of Saskatchewan, Inc. ("PCS") and Terra Industries, Inc., (the
"Comparable Universe"). In Lehman Brothers' judgment, only IMC and PCS are
similar enough to Vigoro in size, corporate structure and product mix to serve
as direct comparables to Vigoro and, as a result, information on the other
companies was included for illustrative purposes only. Lehman Brothers
calculated several standard industry market valuation multiples for Vigoro and
compared them to the market valuation multiples for IMC and PCS. In addition,
Lehman Brothers applied the market valuation multiples of both IMC and PCS to
the financial results of Vigoro for the latest twelve months ended September
30, 1995 to determine implicit price per share values. Lehman Brothers
determined that an approximate value of Vigoro based upon this analysis ranged
from $40 to $55 per share. However, because of the inherent differences
between the business, operations and prospects of Vigoro and the businesses,
operations and prospects of the companies in the Comparable Universe, Lehman
Brothers believed that it was inappropriate to, and therefore did not, rely
solely on the quantitative
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results of the analysis, and accordingly also made qualitative judgments
concerning differences between the financial and operating characteristics and
prospects of Vigoro and the companies in the Comparable Universe which would
affect the public trading values of Vigoro and such comparable companies.
Analysis of Selected Comparable Transactions. Using publicly available
information, Lehman Brothers compared selected financial data, including total
market value of the equity plus debt minus cash ("Firm Value") as a multiple
of sales, earnings before interest and taxes ("EBIT") and earnings before
interest, taxes, depreciation and amortization ("EBITDA") for Vigoro with
similar data for selected transactions in the crop nutrients industry to
derive implied price per share values. Although there have been over ten major
announced acquisitions in the crop nutrients industry since 1990, there were
only four transactions for which there was sufficient information and which
Lehman Brothers believed provided an adequate comparison to Vigoro.
Specifically, the transactions Lehman Brothers considered relevant were
PCS/Occidental Petroleum--Agricultural Products Division, PCS/TexasGulf,
Vigoro/Central Canada Potash--Noranda Minerals and PCS/Potash Company of
America--Rio Algom Ltd. Lehman Brothers determined that an approximate equity
value of Vigoro based upon this analysis ranged from $50 to $60 per Vigoro
share. However, because the reasons for and the circumstances surrounding each
of the transactions analyzed were specific to each transaction and because of
the inherent differences between the businesses, operations and prospects of
Vigoro and the businesses, operations and prospects of the selected acquired
companies or businesses analyzed, Lehman Brothers believed that it was
inappropriate to, and therefore did not, rely solely on the quantitative
results of the analysis, and accordingly also made qualitative judgments
concerning differences between the characteristics of these transactions and
the Merger that would affect the acquisition value of Vigoro and such acquired
companies or businesses.
Discounted Cash Flow Analyses. Lehman Brothers performed five and ten year
discounted cash flow analyses of Vigoro utilizing the Base Case and Lower
Price Case projections. Utilizing these projections, Lehman Brothers
calculated Vigoro's unlevered free cash flows over five and ten year periods.
The cash flow streams and terminal values were then discounted to present
values using a range of discount rates, which were chosen based on several
assumptions regarding factors such as the inflation rate, interest rates, the
inherent business risk of Vigoro and the cost of capital. Lehman Brothers
calculated terminal values for Vigoro by applying to projected EBIT a range of
multiples based on the analysis of the trading multiples of the Comparable
Universe and on Lehman Brothers' general experience in mergers and
acquisitions. For purposes of this analysis, Lehman Brothers utilized annual
discount rates of 9.0%, 11.0% and 13.0% and terminal multiples of Vigoro's
EBIT in the years 2000 and 2005 of 9.0x, 10.0x and 11.0x. Lehman Brothers
determined that an equity value of Vigoro based upon this analysis was
approximately $52 to $64 per share using the Base Case projections and
approximately $40 to $50 per Vigoro share using the Lower Price Case
projections.
Lehman Brothers also performed a five year discounted cash flow analysis of
IMC utilizing the Base Case and Lower Price Case projections, discount rates
of 9.0%, 11.0% and 13.0%, and terminal values of 8.0x, 9.0x and 10.0x and
compared these results to the results of the five year discounted cash flow
analyses of Vigoro in order to analyze the relative equity values of IMC and
Vigoro. Based on this analysis, Lehman Brothers calculated the relative equity
value of Vigoro to IMC to be approximately 1.70 to 1.80 using the Base Case
projections and 2.30 to 2.40 using the Lower Price Case projections as
compared to the proposed Conversion Number of 1.60.
Leveraged Buyout Analysis of Vigoro. Lehman Brothers performed a leveraged
buyout analysis of Vigoro utilizing the Base Case projections in order to
calculate the theoretical maximum value that an investor would pay in a
leveraged buyout using current leveraged financing market parameters. The
parameters considered included, but were not limited to, appropriate returns
to equity holders over a five year horizon of at least 30% and over a seven
year horizon of at least 25%, appropriate capital structure in the current
financing environment, bank debt paydown in no more than eight years, and
current market interest rates. However, no consideration was given to
institutions' willingness to provide the requisite financing in light of the
inherent volatility of applicable commodity prices. Based upon this analysis,
Lehman Brothers estimated the value of Vigoro to be approximately $45 to $55
per Vigoro share.
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Contribution Analysis. Lehman Brothers analyzed the percentage of sales,
EBIT, EBITDA and net income that each of IMC and Vigoro would contribute to
the total of the combined entity for the fiscal year ended June 30, 1996 using
the Base Case projections. Based upon these projections, IMC's contribution of
sales, EBIT, EBITDA and net income is projected to be approximately 69%, 77%,
76% and 68%, respectively. Lehman Brothers noted that, based upon the
Conversion Number of 1.60, the current stockholders of IMC would own
approximately 74% of the combined entity.
Pro Forma Analysis. Based upon an analysis of the pro forma effects of the
Merger, Lehman Brothers noted that, at a Conversion Number of 1.60, assuming
Base Case projections, no cost savings and excluding one-time charges
attributable to the Merger, the Merger will be slightly dilutive to earnings
per share for IMC for fiscal years 1996 and 1997. Based upon the Conversion
Number of 1.60, assuming Lower Price Case projections, no cost savings and
other synergies and excluding one-time charges attributable to the Merger, the
Merger will be accretive to earnings per share for IMC for fiscal 1996 and
fiscal 1997.
Lehman Brothers is an internationally recognized investment banking firm
and, as part of its investment banking activities, is regularly engaged in the
evaluation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private placements, and
valuations for corporate, estate and other purposes. The IMC Board selected
Lehman Brothers to act as its financial advisor because of its experience,
reputation and familiarity with the industry in general and because its
investment banking professionals have substantial experience in transactions
similar to the Merger.
Pursuant to the terms of the Lehman Engagement Letter, IMC has agreed to pay
Lehman Brothers for its services in connection with the Merger an aggregate
financial advisory fee of $4.75 million, which is contingent upon consummation
of the Merger. IMC also has agreed to reimburse Lehman Brothers for reasonable
expenses incurred by Lehman Brothers in performing its services, including the
reasonable fees and expenses of its legal counsel, and to indemnify Lehman
Brothers and related persons against certain liabilities that might arise out
of Lehman Brothers' engagement. In the past, Lehman Brothers has performed
various investment banking services for IMC and has received customary fees
for such services. Lehman Brothers actively trades in the equity and debt
securities of IMC and Vigoro for its own account and for the accounts of its
customers and, accordingly, may at any time hold a long or short position in
such securities.
VIGORO'S REASONS FOR THE MERGER; RECOMMENDATION OF THE VIGORO BOARD
The Vigoro Board has unanimously determined that the Merger is advisable and
fair to and in the best interests of Vigoro and its stockholders. Accordingly,
the Vigoro Board has approved the Merger Agreement and recommends that the
stockholders of Vigoro vote in favor of approval and adoption of the Merger
Agreement. In reaching its determination, the Vigoro Board consulted with
Vigoro management, as well as its legal counsel and its financial advisors,
and considered a number of factors, including, without limitation, the
following:
(i) recent consolidating trends within the crop nutrients industry and
the potential impact of these trends on Vigoro's position within the
industry;
(ii) information concerning the financial condition, results of
operations, businesses, competitive positions, the business risks and
prospects of Vigoro and IMC;
(iii) the opportunities for operating efficiencies and synergies as a
result of the Merger;
(iv) significant enhancement of the strategic and market position of the
combined companies beyond that achievable by Vigoro alone;
(v) the terms and conditions of the Merger Agreement, including the
condition that Vigoro receive comfort that the Merger will be accounted for
as a pooling of interests and will be a tax-free reorganization for United
States federal income tax purposes;
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(vi) recent trading prices for Vigoro Common Stock and IMC Common Stock;
(vii) the opportunity for the holders of Vigoro Common Stock to receive a
premium over the market price for their shares immediately prior to the
announcement of the Merger of approximately 32% over the closing sales
price of $45.25 per share of Vigoro Common Stock on November 10, 1995, the
last trading day prior to the announcement of the Merger, based upon 1.60
times the closing sales price per share of IMC Common Stock ($37.313) on
such date; and
(viii) the presentation of J.P. Morgan delivered to the Vigoro Board,
including the opinion of J.P. Morgan rendered on November 13, 1995, that
the consideration to be received by the holders of Vigoro Common Stock in
connection with the Merger is fair, to such holders, from a financial point
of view.
The Vigoro Board believes that the Merger offers the opportunity to create a
combined company with greater financial resources and flexibility, competitive
strengths and business opportunities than would be possible for Vigoro alone.
In view of the wide variety of factors considered in connection with its
evaluation of the Merger, the Vigoro Board did not find it practicable to, and
did not, quantify or otherwise attempt to assign relative weights to the
specific factors considered in reaching its determination. In addition,
individual members of the Vigoro Board may have given different weights to
different factors.
THE VIGORO BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF VIGORO VOTE
"FOR" THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
OPINION OF VIGORO'S FINANCIAL ADVISOR
Pursuant to an engagement letter dated June 10, 1995, Vigoro retained J.P.
Morgan as its financial advisor with respect to any sale, merger,
consolidation or other business combination involving all or a portion of the
stock, assets or business of Vigoro.
At the meeting of the Vigoro Board on November 13, 1995, J.P. Morgan
rendered its oral and written opinion to the Vigoro Board that, as of such
date and based upon and subject to the various considerations set forth in its
written opinion, the consideration to be received by holders of Vigoro Common
Stock in the Merger was fair, from a financial point of view, to such holders.
No limitations were imposed by the Vigoro Board upon J.P. Morgan with respect
to the investigations made or procedures followed by it in rendering its
opinion.
THE FULL TEXT OF THE WRITTEN OPINION OF J.P. MORGAN DATED NOVEMBER 13, 1995,
WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITS ON THE
REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX VI TO THIS PROXY STATEMENT/PROSPECTUS
AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF VIGORO COMMON STOCK ARE
URGED TO READ THE OPINION IN ITS ENTIRETY. J.P. MORGAN'S WRITTEN OPINION IS
ADDRESSED TO THE VIGORO BOARD, IS DIRECTED ONLY TO THE CONSIDERATION TO BE
RECEIVED BY HOLDERS OF VIGORO COMMON STOCK IN THE MERGER AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY VIGORO STOCKHOLDER AS TO HOW SUCH
STOCKHOLDER SHOULD VOTE AT THE VIGORO SPECIAL MEETING. THE SUMMARY OF THE
OPINION J.P. MORGAN SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION. THE CONVERSION
NUMBER AND SHARE PRICE INFORMATION FOR IMC IN THE FOLLOWING DESCRIPTION OF THE
OPINION OF J.P. MORGAN HAVE BEEN ADJUSTED TO GIVE EFFECT TO THE IMC STOCK
SPLIT.
In arriving at its opinion, J.P. Morgan reviewed, among other things, (i)
the Merger Agreement; (ii) the Stock Option Agreement and the Voting
Agreement; (iii) certain publicly available information concerning the
business of Vigoro and IMC and of certain other companies engaged in
businesses comparable to Vigoro and IMC, and the reported market prices for
certain other companies' securities deemed comparable; (iv) publicly available
terms of certain transactions involving companies comparable to Vigoro and IMC
and the consideration received for such companies; (v) the terms of other
relevant business combinations; (vi) current and historical market prices of
the common stock of Vigoro and IMC; (vii) the audited financial statements of
Vigoro for the six-month transition period ended December 31, 1994, and
unaudited quarterly financials of Vigoro for the
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quarter ended September 30, 1995, the audited financial statements of IMC for
the period ended June 30, 1995, and certain unaudited financial projections of
IMC for the period ended June 30, 1996; (viii) certain agreements with respect
to outstanding indebtedness or obligations of Vigoro and IMC; (ix) certain
financial analyses and forecasts prepared with input from Vigoro and its
management; (x) certain key fertilizer product price forecasts developed by
Vigoro management; and (xi) certain key fertilizer product price forecasts
developed by Fertecon Limited, a United Kingdom based consulting firm
specializing in the fertilizer industry ("Fertecon").
J.P. Morgan also held discussions with members of the management of Vigoro
and IMC with respect to certain aspects of the Merger, and the past and
current business operations, financial condition and future prospects and
operations of Vigoro and IMC, and certain other matters believed necessary or
appropriate to J.P. Morgan's inquiry. In addition, J.P. Morgan reviewed such
other financial studies and analyses and considered such other information as
it deemed appropriate for the purpose of its opinion.
In performing such analysis, J.P. Morgan used such valuation methodologies
as J.P. Morgan deemed necessary or appropriate for the purposes of its
opinion. J.P. Morgan's view is based on (i) J.P. Morgan's consideration of the
information Vigoro and IMC have supplied to J.P. Morgan through November 13,
1995, (ii) J.P. Morgan's understanding of the terms upon which Vigoro and IMC
intend to consummate the Merger, (iii) the currently contemplated capital
structure and the anticipated credit standing of IMC and its subsidiaries upon
consummation of the Merger, (iv) J.P. Morgan's application of sound investment
banking analyses premised on analyzing the long-term value of Vigoro and IMC
upon consummation of the Merger, and (v) the consummation of the Merger within
the time period contemplated by the Merger Agreement.
J.P. Morgan relied upon and assumed, without independent verification, the
accuracy and completeness of all information that was publicly available or
was furnished to it by Vigoro and IMC or otherwise reviewed by Vigoro or IMC,
and J.P. Morgan has not assumed any responsibility or liability therefor. J.P.
Morgan has not conducted any valuation or appraisal of any assets or
liabilities, nor have any valuations or appraisals been provided to J.P.
Morgan. In relying on financial analyses and forecasts provided to J.P.
Morgan, J.P. Morgan has assumed that they have been reasonably prepared based
on assumptions reflecting the best currently available estimates and judgments
by management of Vigoro and IMC as to the expected future results of
operations and financial condition of Vigoro and IMC to which such analyses
and forecasts relate.
The financial projections developed for Vigoro were based on input from
Vigoro management. Vigoro does not publicly disclose projections of the type
developed in connection with J.P. Morgan's analysis of the Merger. These
projections were based on numerous variables and assumptions that are
inherently uncertain and may be beyond the control of management including,
without limitation, global supply and demand factors that influence pricing
for commodities such as white and red potash, anhydrous ammonia, urea ammonium
nitrate solutions, diammonium phosphate, and natural gas. Accordingly, actual
results could vary significantly from those set forth in such projections.
J.P. Morgan's opinions are based on economic, market and other conditions as
well as the information it received as of the date of such opinions.
Subsequent developments may affect the written opinion dated November 13,
1995, and J.P. Morgan does not have any obligation to update, revise, or
reaffirm such opinion. Notwithstanding the foregoing, J.P. Morgan has
determined that the amendments to the Partnership Agreement as described above
under the heading "THE MERGER--General" do not affect its opinion.
J.P. Morgan expressed no opinion as to the price at which Vigoro Common
Stock and IMC Common Stock will trade at any future time or as to the effect
of the Merger on the trading price of IMC Common Stock. Such trading price may
be affected by a number of factors, including but not limited to (i)
dispositions of IMC Common Stock by the stockholders within a short period of
time after the effective date of the Merger, (ii) changes in prevailing
interest rates and other factors which generally influence the price of
securities, (iii) adverse changes in the current capital markets, (iv) the
occurrence of adverse changes in the financial condition, business, assets,
results of operations or prospects of Vigoro or of IMC or in the fertilizer
market, (v) any necessary actions by or restrictions of federal, state, or
other governmental agencies or regulatory authorities, and (vi) timely
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execution of all necessary agreements to complete the Merger on terms and
conditions that are acceptable to all parties at interest.
In accordance with customary investment banking practice, J.P. Morgan
employed generally accepted valuation methods in reaching its opinion. The
following is a summary of the material financial analyses utilized by J.P.
Morgan in connection with providing its opinion.
Pro Forma Merger Analysis
J.P. Morgan's merger analysis was conducted utilizing two product pricing
forecasts. The first pricing forecast (the "Base Case") utilized pricing
estimates for such commodities as potash (red and white), anhydrous ammonia,
urea ammonium nitrate solutions and diammonium phosphate that Vigoro
management deemed appropriate. Pricing estimates were based on current global
weather conditions and macroeconomic factors (including, without limitation,
crop conditions, weather, governmental policies, developing country demand and
political climate) affecting the supply and demand for each of these
commodities as well as Vigoro's historical expertise in marketing these
products. The second pricing forecast (the "Fertecon Case") utilized pricing
estimates for such commodities as potash (red and white), anhydrous ammonia,
urea ammonium nitrate solutions and diammonium phosphate obtained from
Fertecon.
Using these two pricing forecasts, J.P. Morgan analyzed certain pro forma
effects resulting from the Merger based on (i) management projections through
December 31, 1999 and June 30, 1999 for Vigoro and IMC, respectively, and IMC
management estimates for the year ended June 30, 1996, in conjunction with
projected earnings estimates of equity analysts as compiled by IBES
(Institutional Brokers Estimates System) and First Call (brokers' earnings
estimates and news surveys which are updated weekly and daily, respectively),
and (ii) pooling accounting where IMC issued approximately 31.8 million shares
of IMC Common Stock (adjusted to reflect the IMC Stock Split) in order to
acquire 19.9 million shares of Vigoro Common Stock outstanding at the time of
the Merger (applying a Conversion Number of 1.60). The analysis indicated that
the Merger would be accretive to stockholders of IMC from an earnings per
share perspective in 1996 and 1997 under the Base Case, and accretive to such
stockholders in 1997 and 1998 under the Fertecon Case.
Discounted Cash Flow
J.P. Morgan prepared a discounted cash flow analysis of Vigoro and IMC based
on certain financial and operating assumptions. In order to calculate the
value of a business using a discounted cash flow analysis, projected cash
flows for each year during the period for which projections are available,
together with an estimate of the terminal value of the business, are
discounted to the present. For purposes of its analysis, J.P. Morgan used the
Base Case product price forecast resulting in (i) Vigoro's projections having
a compound annual sales growth of approximately 5% for the years ended
December 31, 1996 through December 31, 1999, an average operating margin of
15%, and average annual capital expenditures of $66 million, and (ii) IMC's
projections having a compound annual sales growth of approximately 5% for the
years ended June 30, 1996 through June 30, 1999, an average operating margin
of 25%, and average annual capital expenditures of $94 million. For purposes
of calculating the terminal value, J.P. Morgan assumed that Vigoro's and IMC's
terminal sales growth rate would be in the range of 2%-4%. The terminal values
were reconfirmed using conventional price to earnings, Firm Value/EBIT and
Firm Value/EBITDA multiples. These assumptions yielded average projected free
cash flows per year for Vigoro of $91 million and $195 million for IMC in the
projected period. J.P. Morgan then discounted Vigoro's and IMC's projected
free cash flows and terminal values at a weighted average cost of capital of
approximately 8%-9% and 9%-10%, respectively.
Upon adjusting these cash flows for debt, preferred stock, cash and the
exercise of all options (for Vigoro, net of cash proceeds), J.P. Morgan's
analysis yielded a discounted cash flow equity value of approximately $42- $48
per share for Vigoro and $34-$37.50 per share for IMC (using the Base Case
pricing and terminal value assumptions). In addition to the Base Case
discounted cash flow analysis, J.P. Morgan estimated the discounted cash flow
value of Vigoro and IMC based on general sensitivity analyses of varied
pricing assumptions for Vigoro's and IMC's core product offerings. J.P.
Morgan's valuation ranges for Vigoro and IMC change significantly under
different pricing scenarios. Utilizing the "Upside Case" (Vigoro's internal
management
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forecast developed in conjunction with the Base Case), J.P. Morgan yielded a
discounted cash flow valuation range of $46-$51 per share for Vigoro.
Utilizing the Fertecon Case, J.P. Morgan yielded a discounted cash flow
valuation range of $52-$55 per share for Vigoro and $36-$40 per share for IMC.
Selected Company Analysis
Using publicly available information, J.P. Morgan compared selected
financial data (including sales, operating income, operating margins and
capital structure) of Vigoro and IMC with similar data for selected publicly
traded companies engaged in businesses which J.P. Morgan judged to be
analogous to Vigoro and IMC. For each comparable company, publicly available
financial performance through the twelve months ended September 30, 1995 was
measured. J.P. Morgan divided the nine publicly traded fertilizer peers into
subsets depending on product focus, such as: potash producers, nitrogen
producers, phosphate producers, retail distributors, and peers that exhibited
a shelf space business comparable to Vigoro. J.P. Morgan then developed a
weighted average multiple of the 1995 and 1996 price to earnings ratios and
Firm Value to EBITDA ratios for Vigoro and IMC. Vigoro's average valuation
multiples were 11.5x and 9.9x for 1995 and 1996 price to earnings multiples
and 7.3x and 6.6x for 1995 and 1996 Firm Value to EBITDA multiples. IMC's
average valuation multiples were 11.3x and 9.9x for 1996 and 1997 price to
earnings multiples and 8.1x and 7.3x for 1996 and 1997 Firm Value to EBITDA
multiples. This selected company analysis implied a trading value range of
$37-$44 per share for Vigoro and $32-$40.50 per share for IMC.
Selected Transaction Analysis
Using publicly available information, J.P. Morgan compared selected
financial data (including sales, operating income, operating margins and
capital structure) for Vigoro with similar data for selected transactions
involving companies engaged in businesses which J.P. Morgan judged to be
analogous to Vigoro. For its comparable transaction analysis, J.P. Morgan
analyzed certain information relating to fifteen mergers and acquisitions that
took place in the fertilizer industry between March 1987 and August 1995 where
the Firm Values of the target companies ranged between approximately $50
million and $900 million. The median sales, EBIT, and EBITDA multiples for
these fifteen transactions were approximately 1.2x, 10.3x, and 7.6x,
respectively, and the median price to last twelve month earnings multiple was
14.2x. These median multiples were then applied to Vigoro's sales, EBIT,
EBITDA, and earnings for the twelve month period ending September 30, 1995,
yielding implied values of approximately $44 to $53 per share for Vigoro.
The summary set forth above does not purport to be a complete description of
the analyses or data presented by J.P. Morgan. The preparation of a fairness
opinion is a complex process and is not necessarily susceptible to partial
analysis or summary description. J.P. Morgan believes that the summary set
forth above and its analyses must be considered as a whole and that selecting
portions thereof, without considering all of its analyses, could create an
incomplete view of the processes underlying its analyses and opinion. J.P.
Morgan based its analyses on assumptions that it deemed reasonable, including
assumptions concerning general business and economic conditions and industry-
specific factors. J.P. Morgan's analyses are not necessarily indicative of
actual values or future results that might be achieved, since values may be
higher or lower than those indicated. Moreover, J.P. Morgan's analyses are not
and do not purport to be appraisals or otherwise reflective of the prices at
which businesses actually could be bought or sold.
As part of its investment banking business, J.P. Morgan and its affiliates
are continually engaged in the valuations of businesses and their securities
in connection with mergers and acquisitions, investments for passive and
control purposes, negotiated underwritings, secondary distributions of listed
and unlisted securities, private placements, and valuations for estate,
corporate, and other purposes. The Vigoro Board selected J.P. Morgan to act as
Vigoro's financial advisor due to its familiarity with Vigoro and its
knowledge of mergers and acquisitions.
For services rendered in connection with the Merger, Vigoro has paid J.P.
Morgan $300,000 and has agreed to pay J.P. Morgan an additional fee of 0.50%
of the aggregate amount of consideration received by Vigoro and/or its
stockholders (treating any shares issuable upon exercise of options, warrants,
or other rights of conversion as outstanding) in the Merger, plus the amount
of any debt securities assumed less certain other
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advisory fees paid by Vigoro to J.P. Morgan in 1995. In addition, Vigoro has
agreed to reimburse J.P. Morgan for its out-of-pocket expenses incurred in
connection with its services, including the fees and disbursements of counsel,
and to indemnify J.P. Morgan against certain liabilities relating to or
arising out of its engagement, including liabilities under the securities
laws.
J.P. Morgan and its affiliates maintain banking and other business
relationships with both Vigoro and IMC, including financial advisory and
capital markets services, for which J.P. Morgan receives customary fees. In
addition, from time to time, J.P. Morgan and its affiliates have engaged in
lending and securities trading activities with Vigoro and IMC, and in
executing an interest rate cap for Vigoro.
In the ordinary course of their businesses, J.P. Morgan and its affiliates
may actively trade the equity and debt securities of Vigoro and IMC for their
own accounts or for the account of customers and, accordingly, may at certain
times hold long or short positions in such securities.
CERTAIN TRANSACTIONS BETWEEN IMC AND VIGORO AND GAMI
The following is a summary of the material provisions of the Voting
Agreement and Stock Option Agreement, which are attached as Annexes II and
III, respectively, to this Proxy Statement/Prospectus and are incorporated
herein by reference. The following summary does not purport to be complete and
is qualified in its entirety by reference to the Stock Option Agreement and
the Voting Agreement.
Stock Option Agreement. Pursuant to the Stock Option Agreement, Vigoro has
granted to IMC the IMC Option to purchase 3,959,330 authorized and unissued
shares of Vigoro Common Stock (subject to standard antidilution protection),
which, if exercised, would represent approximately 16.4% of the outstanding
Vigoro Common Stock as of the Vigoro Record Date, at a price of $57.21 per
share under certain circumstances. So long as IMC is not in material breach of
the Merger Agreement, the IMC Option will become immediately exercisable by
IMC, if (i) any person, corporation, partnership or other entity or group
(other than IMC or any of its Affiliates (as defined in Rule 405 under the
Securities Act) (an "Acquiring Person") or any group (as defined in Section
13(d) of the Exchange Act) which includes IMC or any of its Affiliates)
acquires or becomes the beneficial owner (as defined in Section 13(d) of the
Exchange Act) of 30% or more of the outstanding shares of Vigoro Common Stock;
(ii) any Acquiring Person is formed which, at the time of the formation
thereof, beneficially owns 30% or more of the outstanding shares of Vigoro
Common Stock; (iii) any Acquiring Person has commenced a tender or exchange
offer for 30% or more of the then outstanding shares of Vigoro Common Stock or
publicly announced any bona fide merger, consolidation or other business
combination (involving 30% or more of then outstanding shares of Vigoro Common
Stock or 30% or more of the equity interests in the surviving entity) with, or
the acquisition of all or substantially all of the assets of, Vigoro, or any
other similar business combination involving Vigoro; (iv) Vigoro enters into,
or announces that it proposes to enter into, an agreement providing for a
merger, consolidation or other business combination (involving 30% or more of
then outstanding shares of Vigoro Common Stock or 30% or more of the equity
interests in the surviving entity) involving Vigoro or a "significant
subsidiary" (as defined in Rule 1.02(v) of Regulation S-X promulgated by the
SEC) of Vigoro or the acquisition of a substantial interest in, or a
substantial portion of the properties, assets or business of, Vigoro or a
significant subsidiary of Vigoro; or (v) any Acquiring Person is granted any
option or right, conditional or otherwise, to acquire or otherwise become the
beneficial owner of shares of Vigoro Common Stock which, together with all
shares of Vigoro Common Stock beneficially owned by such Acquiring Person,
results or would result in such Acquiring Person being the beneficial owner of
30% or more of the outstanding shares of Vigoro Common Stock. IMC may elect to
pay the exercise price of the IMC Option in cash, IMC Common Stock or a
combination thereof. The IMC Option will terminate upon the earlier of (i) the
Effective Time and (ii) the 135th day after the termination of the Merger
Agreement in accordance with its terms. Vigoro is required to register, at its
expense, shares of Vigoro Common Stock acquired by IMC upon exercise of the
IMC Option.
Voting Agreement/Irrevocable Proxy. Pursuant to the Voting Agreement, GAMI
has agreed, among other things, to attend the Vigoro Special Meeting in person
or by proxy and to vote its shares of Vigoro Common Stock (a) for approval and
adoption of the Merger Agreement and the Merger and the transactions
contemplated by the Merger Agreement and (b) against any recapitalization,
merger, sale of assets or other business
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combination or similar transaction involving Vigoro or any of its
subsidiaries, securities or assets which is not endorsed in writing by IMC or
any other action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of Vigoro
under the Merger Agreement or which could result in any of the conditions of
Vigoro's obligations under the Merger Agreement not being fulfilled. GAMI has
also agreed in the Voting Agreement to neither, directly or indirectly, (i)
sell, offer to sell, grant any option for the sale of or otherwise transfer or
dispose of, or enter into any agreement to sell, any shares of Vigoro Common
Stock or (ii) solicit, or authorize any person to solicit, any inquiries or
proposals from any person other than IMC relating to the merger or
consolidation of Vigoro with any person other than IMC or its subsidiaries, or
the acquisition of Vigoro's or its subsidiaries' voting securities by, or the
direct or indirect acquisition or disposition of a significant amount of
assets of Vigoro or any of its subsidiaries otherwise than in the ordinary
course of business, from or to any person other than IMC or its subsidiaries
or directly or indirectly enter into or continue any discussions, negotiations
or agreements relating to, or vote in favor of, any such transaction. Pursuant
to the Voting Agreement, GAMI has granted to IMC the Irrevocable Proxy to vote
its shares of Vigoro Common Stock in favor of the Merger and against any
competing business combination proposal. The Voting Agreement will terminate
upon the earlier of (i) the close of business on August 14, 1996, if the
Merger is not effected by such time, (ii) upon the termination of the Merger
Agreement in accordance with its terms or (iii) immediately prior to the
Vigoro Special Meeting, to the extent that IMC has exercised the IMC Option,
except that the Voting Agreement will remain in effect if, prior to the
acquisition of Vigoro Common Stock upon exercise of the IMC Option, a record
date has been established for the vote of stockholders of Vigoro with respect
to any matter covered by the Voting Agreement.
As of the date of this Proxy Statement/Prospectus, GAMI owns 4,068,929
shares of Vigoro Common Stock, representing approximately 20.17% of the
outstanding Vigoro Common Stock.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Vigoro Board with respect to the
Merger Agreement and of the IMC Board with respect to the Share Issuance and
the Charter Amendments, stockholders should be aware that certain members of
the management of Vigoro and IMC, and the Vigoro Board and the IMC Board have
certain interests in the Merger that are in addition to the interests of
stockholders of Vigoro and IMC generally.
Severance Plan. The Vigoro Board has adopted the Severance Plan applicable
to 28 employees of Vigoro and its subsidiaries (including all executive
officers of Vigoro other than Messrs. Sullivan and Jay D. Proops, who is
currently Vice Chairman and a Director of Vigoro) which provides that a
covered employee will receive "Severance Benefits" if the employee is
terminated in circumstances that constitute a "Severance Event" and such
employee executes a release of claims and a covenant agreeing, among other
things, not to solicit for employment any employees of Vigoro or its
subsidiaries or disclose any confidential information or proprietary data of
Vigoro. Severance Benefits consist of an amount equal to the employee's then
annualized base salary or, if greater, annualized base salary as of November
13, 1995 ("Base Salary"), plus an amount generally equal to the employee's
highest annual bonus and other incentive payments received for any of the
prior three years ("Bonus Base") paid in 12 equal monthly installments plus
unpaid salary and pro-rated bonus and earned but unused vacation. Eligible
employees will also be entitled to continuation of benefits for the lesser of
one year or until the employee finds new employment providing comparable
benefits. A Severance Event occurs if within three years of November 13, 1995,
an eligible employee's employment with Vigoro (or related entities) is
terminated: (i) by the applicable employer other than because such employee
engaged in willful and intentional conduct which has caused demonstrable and
serious injury to Vigoro, was convicted of or entered a plea of nolo
contendere to any felony, was convicted of a criminal offense or entered a
plea of nolo contendere to any offense involving dishonesty, breach of trust
or moral turpitude, committed a breach of fiduciary duty involving personal
profit or willfully refused to perform or was grossly negligent in the
performance of his or her duties or responsibilities (unless significantly
changed without the consent of the employee) (collectively, "Cause"); (ii) by
such employee within 90 days after such employee has or should have knowledge
that his or her Base Salary was not maintained in accordance with prior
levels, he or she is not included on a comparable basis with similar
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employees in bonus plans or stock option or similar plans, he or she is not
included on a comparable basis with similar employees in benefit plans or
vacation or other perquisite plans or the Severance Plan is not assumed by any
successor of Vigoro (collectively, "Good Reason"); or (iii) by such employee
on or after the date such employee has reached the age of 60. A covered
employee is not entitled to Severance Benefits if the employee terminates his
or her employment other than in circumstances constituting a Severance Event
or the employee's employment is terminated as a result of the death or
disability of the employee.
The maximum aggregate Severance Benefits payable to Vigoro's five most
highly compensated executive officers are: Robert E. Fowler ($790,000), John
Huber ($460,000), Robert van Patten ($386,000) and James Patterson ($312,000).
Joseph P. Sullivan will not receive a Severance Benefit. The maximum aggregate
Severance Benefits payable to all covered employees is approximately
$5,974,000.
The IMC Board has adopted the IMC Severance Plan applicable to 28 employees
of IMC, its subsidiaries and its affiliates. The terms and conditions of the
IMC Severance Plan are substantially similar to the terms and conditions of
the Vigoro Severance Plan except with regard to the following. First, the
"Effective Date," representing the effective date of the IMC Severance Plan,
the date on which the "Severance Period" commences and the date on which the
employee's "Base Salary" is determined, is designated as December 21, 1995.
Also, a covered employee's "Bonus Base" includes the highest annual bonus
earned by the employee for the prior three years, but does not include any
other incentive payments earned by the employee. In addition, an employee-
initiated termination on or after reaching age 60 does not constitute a
"Severance Event" for purposes of the IMC Severance Plan. Lastly, in addition
to the eligibility exclusions contained in the Vigoro Severance Plan, the IMC
Severance Plan provides that a covered employee is not entitled to "Severance
Benefits" in the event that: (i) the employee takes a leave of absence which
does not constitute a termination of employment; (ii) the employee is
transferred to another facility on a nondiscriminatory basis and for a bona
fide business reason and such employee declines to accept the position; or
(iii) the employee is terminated in connection with the sale of stock or
assets of IMC, its subsidiaries or its affiliates and is offered a comparable
position with IMC's successor in interest.
The maximum aggregate Severance Benefits payable to IMC's five most highly
compensated executive officers are: James D. Speir ($565,000), Robert C.
Brauneker ($442,000), C. Steven Hoffman ($382,000) and Marschall I. Smith
($351,000). Wendell F. Bueche will not receive a Severance Benefit. The
maximum aggregate Severance Benefits payable to all IMC covered employees is
approximately $6,074,000.
Bonus Agreements. The Merger Agreement provides that IMC and Vigoro, after
the Merger, will enter into Transition Bonus Agreements ("Bonus Agreements")
with five officers and key employees of Vigoro and its subsidiaries. The Bonus
Agreements will provide that an employee will be entitled to a "Transition
Bonus" paid in nine equal monthly installments if, within one year of the
Effective Time (the "Transition Period"), the employee is terminated in
circumstances that constitute a "Transition Bonus Event" and such employee
executes a release of claims and a covenant agreeing, among other things, not
to solicit for employment any employees of Vigoro or its subsidiaries or
disclose any confidential information or proprietary data of Vigoro. A
Transition Bonus is an amount equal to 75%, or 150% in the case of one
employee who is an executive officer of Vigoro, of the sum of the employee's
Base Salary and Bonus Base (each as defined above under "Severance Plan"). A
Transition Bonus Event will have occurred if during the Transition Period: (i)
the employee's employment with Vigoro (or any related entity) is terminated
(A) by the applicable employer other than for Cause (as defined under
"Severance Plan") or (B) by the employee for Good Reason (as defined under
"Severance Plan") or (ii) Vigoro or IMC or any related entity does not make an
offer of continued employment to the employee after the Effective Time with
compensation, authority and status at least equivalent to the compensation,
authority and status of the employee immediately prior to the Effective Time.
A covered employee would not be entitled to a Transition Bonus if the
employee's employment is terminated other than in circumstances constituting a
Transition Bonus Event or the employee's employment is terminated as a result
of the death or disability of the employee.
Of Vigoro's five most highly compensated executive officers, only Mr.
Patterson will receive a Transition Bonus, the maximum amount of which would
be $468,000. The maximum aggregate Transition Bonuses payable to all Vigoro
covered employees is approximately $1,053,000.
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IMC intends to enter into Transition Bonus Agreements with seven key
employees of IMC substantially similar to the Bonus Agreements described
above. Of IMC's five most highly compensated executive officers, only Mr.
Brauneker and Mr. Smith will receive a Transition Bonus, the maximum amounts
of which would be $663,000 and $526,500, respectively. The maximum aggregate
Transition Bonuses payable to all covered employees is approximately
$2,304,000.
Non-Competition Agreements. The Merger Agreement provides that upon
consummation of the Merger, IMC will enter into Non-Competition Agreements
(the "Non-Competition Agreements") with a total of 14 officers and key
employees of Vigoro and its subsidiaries which will provide that such
employees will not compete with IMC or any of its affiliates for specified
periods following the termination of their employment with Vigoro or its
subsidiaries because of a Severance Event (as defined under "Severance Plan")
and will receive scheduled amounts of payments (totalling, in the aggregate,
approximately $9.2 million if all covered employees receive the maximum
potential payments) in equal monthly installments during the period of non-
competition (except for Mr. Proops, who would be paid in 24 monthly
installments regardless of the period of noncompetition). Employees entering
into Non-Competition Agreements will agree not to compete for a period of
three years if a Severance Event occurs on or before the first anniversary of
the Effective Time, for two years if a Severance Event occurs after the first
anniversary and on or before the second anniversary of the Effective Time and
for one year if a Severance Event occurs after the second anniversary and on
or before the third anniversary of the Effective Time (the "Non-Competition
Periods"). During the Non-Competition Periods, Messrs. Fowler, Proops, John U.
Huber, Robert M. Van Patten and Kenneth W. Holbrook will be prohibited from
rendering employment or consulting services to any business enterprise in
North America in a capacity in which such employee will directly supervise a
business which is directly competitive with the business which the employee
supervised during the one year period preceding the Severance Event. All other
employees with Non-Competition Agreements will be prohibited from rendering
employment or consulting services to any business enterprise located within 50
miles of the facility at which the employee was employed at the time of the
Severance Event in a capacity in which the employee will directly supervise a
business which is directly competitive with the business which the employee
supervised during the six month period preceding the Severance Event. Each
employee also agrees to keep confidential and comply with Vigoro's and its
successors' policies regarding confidential and proprietary information for
the longest time permitted by law.
The maximum aggregate payments under the Non-Competition Agreements payable
to Vigoro's five most highly compensated executive officers are: Mr. Fowler
($2,370,000), Mr. Huber ($1,380,000) and Mr. van Patten ($1,158,000). Mr.
Sullivan and Mr. Patterson will not receive payments under the Non-Competition
Agreements. The maximum aggregate amount payable to all covered Vigoro
employees under the Non-Competition Agreements is approximately $9,231,000.
IMC intends to enter into Non-Competition Agreements with nine key employees
of IMC substantially similar to the Non-Competition Agreements described
above. Of IMC's five most highly compensated executive officers, only Mr.
Speir and Mr. Hoffman will receive Non-Competition Agreements, the maximum
amounts of which would be $1,695,000 and $764,000, respectively. The maximum
aggregate payment under the Non-Competition Agreements payable to all covered
employees is approximately $4,357,000.
Indemnification and Insurance. IMC has agreed to indemnify and advance
expenses to each person who was on November 13, 1995, or has been at any time
prior to November 13, 1995 or who becomes prior to the Effective Time, an
officer, director, employee, trustee or agent of Vigoro (or any subsidiary
thereof) or a director, officer, employee, agent or trustee of any employee
benefit plan for employees of Vigoro (or any subsidiary thereof), including
without limitation, each person controlling any of the foregoing persons (the
"Indemnified Parties"), to the fullest extent permitted under applicable law,
against all losses, claims, damages, liabilities, costs or expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in settlement
in connection with any threatened or actual claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged
acts or omissions, by them in their capacities as such (whether or not alleged
in the capacities as such), whether commenced, asserted or claimed before or
after the Effective Time and including, without limitation, liabilities
arising under the Securities Act, the Exchange Act and state
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corporation laws in connection with the Merger. In addition, IMC has agreed
not to amend the provisions of Vigoro's Certificate of Incorporation and By-
laws providing for exculpation of director and officer liability and
indemnification, except as required by applicable law or except to make
changes permitted by law that would enlarge the Indemnified Parties' right of
indemnification. For a period of six years after the Effective Time, IMC is
obligated to maintain in effect policies of directors' and officers' liability
insurance that are substantially no less advantageous to the Indemnified
Parties than the policies presently maintained by Vigoro, subject to certain
maximum annual payments. See "OTHER TERMS OF THE MERGER AGREEMENT--
Indemnification; Directors and Officers Insurance."
IMC Directorships. IMC and Vigoro presently anticipate that the Vigoro
Designees will be Joseph P. Sullivan, Robert E. Fowler, Jr., and Rod F.
Dammeyer, each of whom is currently a member of the Vigoro Board, and an
individual currently serving as an outside Director of Vigoro to be mutually
designated by IMC and Vigoro at or prior to the Effective Time. See "The
MERGER--General."
Ray A. Goldberg, a member of the Vigoro Board, is party to a Retainer
Agreement with Vigoro, pursuant to which Vigoro has retained Mr. Goldberg to
provide consulting services for a three-year period from June 1, 1995 to June
1, 1998. Pursuant to this agreement, Mr. Goldberg is paid a monthly retainer
at an annual rate of $30,000. This agreement will not be affected by the
Merger. See "OTHER TERMS OF THE MERGER AGREEMENT--Employee Benefits" for a
description of the benefits provided by the Merger Agreement for Vigoro
employees generally.
STOCK OPTION PLANS
As provided in the Merger Agreement, by virtue of the Merger, all options
(the "Vigoro Options") outstanding at the Effective Time under any Vigoro
stock option plan (collectively, the "Vigoro Stock Option Plans"), whether or
not then exercisable, will become and represent an option to purchase the
number of shares of IMC Common Stock (a "Substitute Option") equal to the
product, decreased to the nearest whole share, of (i) the number of shares of
Vigoro Common Stock subject to the original Vigoro Option immediately prior to
the Effective Time times (ii) the Conversion Number, at an exercise price per
share of IMC Common Stock equal to (A) the per share exercise price for the
shares of Vigoro Common Stock subject to such Vigoro Option immediately prior
to the Effective Time divided by (B) the Conversion Number, rounded upward to
the nearest full cent. After the Effective Time, each Substitute Option will
be exercisable upon the same terms and conditions as were applicable to the
related Vigoro Option immediately prior to the Effective Time. The Merger will
not result in the acceleration of vesting of those Vigoro Options which are
issued but not yet vested. As of December 12, 1995, employees (or former
employees) of Vigoro owned Vigoro Options to purchase an aggregate of
1,303,386 shares of Vigoro Common Stock at a weighted average price of $35.25
per share (at exercise prices ranging from $20.05 to $52.88 per share). IMC
has agreed to register under the Securities Act all Substitute Options and all
shares of IMC Common Stock issuable pursuant to Substitute Options.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of all material United States federal
income tax consequences of the Merger under current law and does not purport
to be a complete analysis or description of all potential tax effects of the
Merger. The summary does not address all of the tax consequences that may be
important to stockholders subject to special tax treatment, such as insurance
companies, corporations subject to the alternative minimum tax, banks, dealers
in securities, tax-exempt organizations or non-United States persons, or to
stockholders who acquired their shares of Vigoro Common Stock as compensation.
No information is provided herein with respect to the tax consequences, if
any, of the Merger under applicable state, local, and foreign tax laws other
than Canadian federal income tax, discussed below. The discussion is based on
the current provisions of the Code, final and proposed Treasury regulations
thereunder and current administrative rulings of the Internal Revenue Service
(the "IRS") and court decisions. All of the foregoing are subject to change
and any such change could affect the accuracy of this discussion. Vigoro
stockholders are urged to consult their own tax advisors as to the specific
tax consequences to them of the Merger.
The obligation of Vigoro to consummate the Merger is conditioned on the
receipt by Vigoro of an opinion of Arnold & Porter, special counsel to Vigoro,
to the effect that the Merger will be treated for United States federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code. Such opinion
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will be based on representations by the parties and certain factual
assumptions and will include various qualifications to the extent appropriate.
See "OTHER TERMS OF THE MERGER AGREEMENT--Conditions Precedent to the Merger."
If so treated, no gain or loss will be recognized to Vigoro stockholders upon
the receipt of IMC Common Stock in exchange for Vigoro Common Stock for United
States federal income tax purposes, except as described below with respect to
cash received in lieu of fractional shares. Vigoro stockholders will have a
tax basis for the shares of IMC Common Stock received in the Merger equal to
the tax basis for the shares of Vigoro Common Stock surrendered in exchange
therefor, excluding any basis allocated to fractional shares for which cash is
received. If the shares of Vigoro Common Stock are held as capital assets, the
holding period of the shares of IMC Common Stock received will include the
period during which the shares of Vigoro Common Stock were held. Furthermore,
if the Merger is treated as a reorganization, the Merger will result in no
gain or loss to IMC, to IMC's stockholders or to Vigoro on the exchange of
shares of Vigoro Common Stock for IMC Common Stock.
The IRS has announced a ruling policy of treating cash paid in lieu of
fractional share interests arising in corporate reorganizations as having been
received by the stockholders in payment for the fractional share interests if
the cash distribution is undertaken solely for the purpose of saving the
corporation the expense and inconvenience of issuing and transferring
fractional shares and is not a separately bargained for consideration. The IRS
has stated further that the purpose of the transaction giving rise to the
fractional share interests, the maximum amount of cash that may be received by
any one stockholder, and the percentage of the total consideration that will
be cash are among the factors that will be considered in this connection. If
so treated in the present case, gains and losses realized by Vigoro
stockholders with respect to the receipt of cash in lieu of fractional shares
will be capital gain or loss, provided that the shares surrendered are held as
capital assets. Such capital gain or loss will be long-term capital gain or
loss if the shares of Vigoro Common Stock were held for more than one year at
the Effective Time. To determine the amount of gain or loss, a portion of the
basis in the Vigoro Common Stock will be allocated to the fractional shares
and the amount of gain or loss will be the difference between the amount of
cash received and the amount of such basis.
EACH HOLDER OF VIGORO COMMON STOCK IS URGED TO CONSULT SUCH STOCKHOLDER'S
OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH STOCKHOLDER OF THE
MERGER.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the principal Canadian federal income
tax consequences of the Merger generally applicable to holders of Vigoro
Common Stock who, for purposes of the Canada Tax Act, are residents of Canada,
hold Vigoro Common Stock as capital property and for whom Vigoro is not a
foreign affiliate as defined in the Canada Tax Act. Under the Canada Tax Act,
certain taxpayers, including certain financial institutions, registered
securities dealers and corporations controlled by one or more of the
foregoing, generally are precluded from treating securities acquired in the
ordinary course of business as capital property.
This summary is based on the current provisions of the Canada Tax Act, the
regulations thereunder (the "Canada Tax Regulations") and current
administrative and assessing practices of Revenue Canada. In addition, this
summary takes into account all specific proposals to amend the Canada Tax Act
and Canada Tax Regulations publicly announced by the Canada Department of
Finance prior to the date hereof (collectively, the "Proposed Tax
Amendments"). This summary does not otherwise take into account or anticipate
any changes in law, whether by judicial, governmental or legislative decision
or action, nor does it take into account provincial, territorial or foreign
tax legislation or considerations, which may differ significantly from those
discussed herein.
A stockholder will realize a capital gain (or capital loss) to the extent
that the aggregate of the fair market value (in Canadian dollars) of the IMC
Common Stock (including any IMC Rights) received in the Merger and the amount
of any cash (in Canadian dollars) received in lieu of a fractional share of
IMC Common Stock, net of any reasonable costs of disposition, exceeds (or is
less than) the adjusted cost base (in Canadian dollars) to the holder of
Vigoro Common Stock exchanged in the Merger. The stockholder will be
considered to have acquired IMC Common Stock in the Merger at a cost for
Canadian tax purposes equal to such fair market value, to be averaged with the
adjusted cost base to the stockholder of any other IMC Common Stock held by
the stockholder as capital property at the time of the Merger.
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A stockholder will be required to include in income three-quarters of the
amount of any capital gain (a "taxable capital gain") and will generally be
entitled to deduct three-quarters of the amount of any capital loss against
taxable capital gains realized by the stockholder, subject to and in
accordance with the provisions of the Canada Tax Act. Under the Proposed Tax
Amendments, a refundable tax of 6 2/3% will be imposed on the investment
income, including taxable capital gains, earned by a Canadian-controlled
private corporation. This tax, together with a corporation's "refundable
dividend tax on hand," will be refunded, when the corporation pays dividends,
at the rate of C$1.00 for every C$3.00 of dividends paid. This new tax is
proposed to apply for taxation years ending after June 1995 and will be pro-
rated for taxation years beginning before July 1995.
EACH HOLDER OF VIGORO COMMON STOCK IS URGED TO CONSULT SUCH STOCKHOLDER'S
OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH STOCKHOLDER OF THE
MERGER.
ANTICIPATED ACCOUNTING TREATMENT
IMC and Vigoro believe that the Merger will qualify as a pooling of
interests for accounting and financial reporting purposes in accordance with
APB No. 16. Under this method of accounting, the assets and liabilities of IMC
and Vigoro will be combined based on the respective carrying values of the
accounts in the historical financial statements of each entity. Results of
operations of the combined company will include income or loss of IMC and
Vigoro for the entire fiscal period in which the combination occurs, and the
historical results of operations of the separate companies for fiscal years
prior to the Merger will be combined and reported as the results of operations
of the combined company.
It is a condition to the consummation of the Merger that each of IMC and
Vigoro receives a copy, dated as of the Effective Time, of (i) an opinion of
Arthur Andersen LLP, addressed to Vigoro, that Vigoro qualifies as an entity
that may be a party to a business combination for which the pooling-of-
interest method of accounting would be available and (ii) an opinion of Ernst
& Young LLP, addressed to IMC, that the Merger will qualify as a pooling of
interests under generally accepted accounting principles if the Merger is
consummated in accordance with the terms of the Merger Agreement.
Certain events, including certain transactions with respect to Vigoro Common
Stock or IMC Common Stock by affiliates of Vigoro or IMC, respectively, may
prevent the Merger from qualifying as a pooling of interests for accounting
and financial reporting purposes. See "--Resales of IMC Common Stock" and
"OTHER TERMS OF THE MERGER AGREEMENT--Conditions Precedent to the Merger."
GOVERNMENTAL AND REGULATORY APPROVALS
The consummation of the Merger is conditioned upon the expiration or
termination of the applicable waiting period under the HSR Act. In addition,
other filings with, notifications to and authorizations and approvals of
various governmental agencies, both domestic and foreign, with respect to the
transactions contemplated by the Merger Agreement, relating primarily to
antitrust and securities law issues, must be made and received prior to the
consummation of the Merger.
United States. Under the HSR Act and the regulations promulgated thereunder
by the FTC, the Merger may not be consummated until notifications have been
given and certain information has been furnished to the FTC and the Antitrust
Division and the applicable waiting period has expired or been terminated. On
November 17, 1995, IMC and Vigoro filed Premerger Notification and Report
Forms under the HSR Act with the FTC and the Antitrust Division and requested
early termination of the waiting period. The waiting period expired on
December 17, 1995. However, at any time before or after consummation of the
Merger, notwithstanding that the waiting period under the HSR Act has expired,
the FTC, the Antitrust Division or any state entity could seek under federal
or state antitrust laws, among other things, to enjoin the consummation of the
Merger.
In general, a person who is to receive shares of IMC Common Stock pursuant
to the Merger may be required to file a Premerger Notification and Report Form
pursuant to the HSR Act and observe the applicable waiting period under the
HSR Act prior to acquiring IMC Common Stock pursuant to the Merger, if (i)
such person would own, upon consummation of the Merger, IMC Common Stock that
exceeds $15 million in value or 15%
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of the outstanding voting securities of IMC (whichever is larger), (ii)
certain jurisdictional requirements are met regarding the amount of assets
currently held by the acquiring person, and (iii) no exemption applies. If
such waiting period has not expired or been terminated at the Effective Time
with respect to such recipient, IMC may be required to deliver such
recipient's shares of IMC Common Stock into an escrow facility pending the
expiration or termination of such waiting period. Holders of Vigoro Common
Stock are urged to consult their legal counsel to determine whether the
requirements of the HSR Act will apply to the receipt by them of shares of IMC
Common Stock in the Merger.
Canada. Under the Canadian Competition Act, certain transactions involving
an amalgamation or the acquisition of voting shares of a corporation that
carries on, or that controls a corporation that carries on, an operating
business in Canada require notification to the Canadian Director. If a merger
is subject to the notification requirement, notification must be made either
on the basis of a short-form filing (with a seven day waiting period) or a
long-form filing (with a 21 day waiting period). A merger may not be completed
until the applicable waiting period has expired. However, the Canadian
Director's review of a merger may take longer than the statutory waiting
period. The Canadian Director may at any time before, or within three years
after, completion of a merger seek an order of the Competition Tribunal
enjoining or unwinding a merger on the basis that it is likely to
substantially lessen or prevent competition, unless the parties obtain from
the Canadian Director an ARC. Where an ARC is issued and the merger to which
the ARC relates is substantially completed within one year after the ARC is
issued, the Canadian Director cannot seek such an order of the Competition
Tribunal solely on the basis of information that is the same or substantially
the same as the information on the basis of which the ARC was issued. The
decision as to whether to make a short-form or long-form filing is at the
discretion of the parties; however, if a short-form filing is made, the
Canadian Director may, within the seven day waiting period, require that the
parties make a long-form filing, thereby extending the waiting period for a
further 21 days following receipt of the long-form filing. As the Merger
exceeds the notification thresholds, IMC and Vigoro filed a short-form
notification with the Canadian Director on December 14, 1995 and have also
requested that an ARC be issued. There can be no assurance that the Canadian
Director will issue an ARC. The seven-day waiting period in which the Canadian
Director could require the parties to make a long-form filing expired on
December 21, 1995. By letters dated January 15, 1996, the Canadian Director
requested that IMC and Vigoro provide additional information to assist the
Canadian Director in the evaluation of the Merger. IMC and Vigoro are in the
process of complying with these information requests.
IMC is required to file an Application in respect of the Merger under the
Investment Canada Act with the Director of Investments, either prior to
implementation of the Merger or within 30 days thereafter. The Minister is
required to determine whether a reviewable acquisition is likely to be of "net
benefit to Canada" taking into account certain factors specified in the
Investment Canada Act. The Investment Canada Act contemplates an initial
review period of 45 days after filing; however, if the Minister has not
completed the review by that date, he may extend the review period by a
further 30 days (or such longer period as may be agreed to by IMC) to permit
completion of the review. The prescribed factors of assessment to be
considered by the Minister include, among other things, the effect of the
investment on the level and nature of economic activity in Canada (including
the effect on employment, resource processing, utilization of Canadian
products and services and exports), the degree and significance of
participation by Canadians in the acquired business, the effect of the
investment on productivity, industrial efficiency, technology developments,
product innovation and product variety in Canada, the effect of the investment
on competition within any industry in Canada, the compatibility of the
investment with national industrial, economic and cultural policies, and the
contribution of the investment to Canada's ability to compete in world
markets. If the Minister determines that he is not satisfied that the Merger
is likely to be of net benefit to Canada, IMC may not implement the Merger or,
if the Merger has been implemented, must divest itself of control of the
Canadian business that is the subject of the acquisition. IMC filed an
Application on December 15, 1995.
Closing Condition. The respective obligations of IMC and Vigoro to
consummate the Merger are subject to the condition that no court or other
governmental entity having jurisdiction over IMC or Vigoro, or any of their
respective subsidiaries, shall have entered any injunction or other order
(whether temporary, preliminary or permanent) which is then in force and has
the effect of making the Merger or any of the transactions contemplated by the
Merger Agreement illegal. See "OTHER TERMS OF THE MERGER AGREEMENT--Conditions
Precedent to the Merger."
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Based on available information, IMC and Vigoro believe that the Merger can
be effected in compliance with federal, state and foreign antitrust laws.
However, there can be no assurance that a challenge to consummation of the
Merger on antitrust grounds will not be made or that, if such a challenge were
made, IMC and Vigoro would prevail or would not be required to accept certain
adverse conditions in order to consummate the Merger.
PERCENTAGE OWNERSHIP INTEREST OF VIGORO STOCKHOLDERS AFTER THE MERGER
Based on the number of shares of IMC Common Stock outstanding on the IMC
Record Date and assuming that the Conversion Number is 1.60 and approximately
32.3 million shares of IMC Common Stock are issued in the Share Issuance, upon
consummation of the Merger there will be approximately 91.8 million shares of
IMC Common Stock outstanding at the Effective Time, of which the stockholders
of Vigoro will own approximately 35% (approximately 36% assuming the exercise
of all currently outstanding options to purchase shares of IMC Common Stock
and all currently outstanding options to purchase shares of Vigoro Common
Stock which will be converted into options to purchase shares of IMC Common
Stock at the Effective Time).
APPRAISAL RIGHTS
Holders of shares of Vigoro Preferred Stock are entitled to appraisal rights
under Section 262 of the DGCL. Pursuant to Section 262, any holder of shares
of Vigoro Preferred Stock who files a written demand for appraisal prior to
the taking of the vote to approve and adopt the Merger Agreement at the Vigoro
Special Meeting, who continuously holds such shares through the Effective Time
and who does not vote in favor of such approval and adoption, is entitled to
an appraisal by the Delaware Court of Chancery of the fair value of such
shares (exclusive of any element of value arising from the expectation or
accomplishment of the Merger). Vigoro, as the Surviving Corporation in the
Merger, must pay to such stockholder the fair value of the shares of Vigoro
Preferred Stock held by such stockholder. Under the DGCL, the holders of
Vigoro Common Stock are not entitled to appraisal rights with respect to the
Merger, and stockholders of IMC are not entitled to appraisal rights with
respect to the Share Issuance or the Charter Amendments.
Any holder of Vigoro Preferred Stock who wishes to make a demand for
appraisal is urged to review carefully the provisions of Section 262,
particularly the provisions setting forth the procedural steps required to
perfect the appraisal rights provided for therein. Appraisal rights will be
lost if such procedural requirements are not fully satisfied.
SET FORTH BELOW IS A SUMMARY OF THE PROCEDURES RELATING TO THE EXERCISE OF
APPRAISAL RIGHTS. THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE A COMPLETE
STATEMENT OF, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, SECTION 262 OF
THE DGCL WHICH, TOGETHER WITH ANY AMENDMENTS TO THE LAW AS MAY BE ADOPTED
AFTER THE DATE OF THIS PROXY STATEMENT/PROSPECTUS, IS INCORPORATED HEREIN BY
REFERENCE. A COPY OF SECTION 262 IS ATTACHED AS ANNEX VII TO THIS PROXY
STATEMENT/PROSPECTUS.
Before the stockholders' vote is taken on the proposal to approve and adopt
the Merger Agreement, a holder of Vigoro Preferred Stock who intends to
exercise appraisal rights must deliver to Vigoro a written demand for
appraisal of such shares. Such written demand should be addressed to The
Vigoro Corporation, 225 North Michigan Avenue, Suite 2500, Chicago, Illinois
60601, Attn.: Secretary. The written demand must reasonably inform Vigoro of
the stockholder's identity and the stockholder's intent to demand an appraisal
and must be in addition to and separate from any proxy or vote against the
Merger. Neither voting against, nor failing to vote for, the Merger will
constitute the written demand required to be filed by a stockholder seeking
appraisal.
If the Merger Agreement is approved and adopted at the Vigoro Special
Meeting and the Merger becomes effective, Vigoro will, within 10 days after
the Effective Time, notify each holder of Vigoro Preferred Stock who has filed
a written demand meeting the requirements of Section 262 of the DGCL, and
whose shares of Vigoro Preferred Stock were not voted in favor of the proposal
to approve and adopt the Merger Agreement, of the date that the Merger became
effective. Any holder of Vigoro Preferred Stock shall have the right to
withdraw his demand for appraisal within 60 days after the Effective Time and
accept the terms of the Merger.
The DGCL provides that, from and after the Effective Time, any stockholder
who has demanded appraisal rights under the DGCL shall not be entitled to vote
such stock for any purpose or to receive payment of dividends
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or other distributions on such stock (except dividends and distributions
payable to stockholders of record as of any time prior to the Effective Time)
unless (i) no petition for appraisal is filed (as described below) within 120
days after the Effective Time or (ii) such stockholder, within 60 days after
the Effective Time or with the written approval of Vigoro, as the Surviving
Corporation in the Merger, delivers to Vigoro a written withdrawal of his
demand for appraisal and an acceptance of the Merger.
Any stockholder who has complied with Section 262 of the DGCL shall be
entitled, within 120 days after the Effective Time, upon written request, to
receive a statement of the aggregate number of shares of Vigoro Preferred
Stock not voted in favor of the Merger and with respect to which demands for
appraisal have been received and of the aggregate number of holders of such
shares of Vigoro Preferred Stock. Such written statement shall be mailed to
the stockholder within 10 days after the later of (i) the receipt of the
request by Vigoro and (ii) the expiration of the period for delivery of
demands for appraisal.
Either any holder of Series E Preferred Stock or Series F Preferred Stock
who has complied with Section 262 of the DGCL or Vigoro, as the Surviving
Corporation, may file a petition in the Delaware Court of Chancery within 120
days after the Effective Time demanding a determination of the value of the
Series E Preferred Stock or Series F Preferred Stock of all stockholders
seeking such an appraisal.
If a petition is filed by a stockholder seeking appraisal, service of the
petition must be made upon Vigoro, as the Surviving Corporation in the Merger,
and Vigoro must file with the Register in Chancery within 20 days after such
service a duly verified list of the names and addresses of all stockholders
who have demanded payment for their shares and who have not reached agreement
with Vigoro as to the value of their shares of Vigoro Preferred Stock. If a
petition is filed by Vigoro, such a duly verified list must accompany Vigoro's
petition. The Register in Chancery, when ordered by the court, will give
notice of a hearing for such petition by registered or certified mail to
Vigoro and to the stockholders shown on the list at the addresses stated
therein. Notice will also be given by publication in a newspaper of general
circulation published in Wilmington, Delaware or such other publication as the
court deems advisable. At the hearing, the Delaware Court of Chancery will
determine which holders of Vigoro Preferred Stock have become entitled to
appraisal rights. The court may require all stockholders who have demanded an
appraisal to submit their certificates of stock to the Register in Chancery
for notation on the certificates of the pending appraisal proceedings. Failure
to comply with the direction to submit certificates for such notation may
result in dismissal of proceedings with respect to such stockholders.
The court will determine the fair value of the shares of Vigoro Preferred
Stock (exclusive of any element of value arising from the expectation or
accomplishment of the Merger) of those holders thereof who have become
entitled to the valuation thereof and the fair rate of interest, if any, to be
paid. Upon application by Vigoro or any stockholder entitled to participate in
the appraisal proceeding, the court may permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the final
determination of the stockholders entitled to an appraisal. When the value is
so determined, the court will direct the payment by Vigoro, as the Surviving
Corporation in the Merger, of such value, with interest, if any, to the
stockholders entitled to receive the same upon surrender to Vigoro by such
stockholders of their certificates evidencing Vigoro Preferred Stock. The
court's decree may be enforced as other decrees in the court may be enforced.
The costs of such a proceeding will be determined by the court and assessed
against the parties in such manner as the court deems equitable, except that
all costs of giving notice to stockholders of the hearing to determine which
stockholders are entitled to appraisal rights must be paid by Vigoro. Upon
application of a stockholder, the court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding to be charged pro rata against the value of all the shares entitled
to an appraisal.
ANY SERIES E PREFERRED STOCK OR SERIES F PREFERRED STOCK STOCKHOLDER WHO
DESIRES TO EXERCISE APPRAISAL RIGHTS SHOULD CAREFULLY REVIEW THE DGCL AND IS
ADVISED TO CONSULT HIS OR HER LEGAL ADVISOR BEFORE EXERCISING OR ATTEMPTING TO
EXERCISE SUCH RIGHTS.
STOCK EXCHANGE LISTING
It is a condition to the consummation of the Merger that the shares of IMC
Common Stock constituting the Share Issuance be authorized for listing on the
NYSE, upon official notice of issuance. The shares constituting the Share
Issuance have been authorized for listing on the NYSE, subject to approval of
the Share Issuance by the stockholders of IMC.
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DELISTING AND DEREGISTRATION OF VIGORO COMMON STOCK
If the Merger is consummated, the Vigoro Common Stock will be delisted from
the NYSE.
RESALES OF IMC COMMON STOCK
United States Securities Law Considerations. All shares of IMC Common Stock
constituting the Share Issuance will be freely transferable, except that
shares received by any person who may be deemed to be an "affiliate" (as used
in paragraphs (c) and (d) of Rule 145 under the Securities Act, including,
without limitation, directors and certain executive officers) of Vigoro for
purposes of such Rule 145 may not be resold except in transactions permitted
by such Rule 145 or as otherwise permitted under the Securities Act. See
"OTHER TERMS OF THE MERGER AGREEMENT--Conditions Precedent to the Merger." In
addition, SEC guidelines provide that the pooling of interests method of
accounting generally will not be challenged on the basis of sales of shares by
"affiliates" of the acquiring or acquired company if such "affiliates" do not
dispose of any of the shares of the acquiring or acquired company that they
own or receive in connection with a merger during the period beginning 30 days
before the merger and ending when financial results covering at least 30 days
of post-merger operations of the combined enterprise have been published (the
"Resale Period").
Vigoro has agreed to prepare and deliver to IMC a list identifying each
person who, at the time of the Vigoro Special Meeting, may be deemed to be an
"affiliate" (as described in the preceding paragraph) of Vigoro (a "Vigoro
Affiliate Stockholder") and to use its reasonable best efforts to cause each
person so identified to deliver to IMC on or prior to the Effective Time a
written agreement, in the form previously approved by IMC and Vigoro,
providing that such person will not (i) sell, pledge, transfer or otherwise
dispose of, or in any other way reduce such person's risk relative to, any
Vigoro Common Stock or any shares of IMC Common Stock issued to such person in
connection with the Merger, except pursuant to an effective registration
statement or in compliance with such Rule 145 or another exemption from the
registration requirements of the Securities Act or (ii) sell or in any other
way reduce such person's risk relative to any Vigoro Common Stock or any
shares of IMC Common Stock received in the Merger (within the meaning of
Section 201.01 of the SEC's Financial Reporting Release No. 1) during the
Resale Period except as permitted by Staff Accounting Bulletin No. 76 issued
by the SEC.
IMC has agreed to prepare and deliver to Vigoro a list identifying each
person who, at the time of the IMC Special Meeting, may be deemed to be an
"affiliate" (as used in the preceding two paragraphs) of IMC and to use its
reasonable best efforts to cause each person so identified to deliver to
Vigoro on or prior to the Effective Time a written agreement, in the form
previously approved by IMC and Vigoro, providing that such person will not
sell, pledge, transfer or otherwise dispose of, or in any other way reduce
such person's risk relative to, any shares of IMC Common Stock or any Vigoro
Common Stock during the Resale Period, except as permitted by such Staff
Accounting Bulletin No. 76.
The Merger Agreement provides that IMC shall enter into a Registration
Rights Agreement with each of the Vigoro Affiliate Stockholders (the
"Registration Rights Agreement"). The Registration Rights Agreement will
permit holders of not less than 50% of the outstanding Registrable Securities
(defined generally as IMC Common Stock issued to Vigoro Affiliate Stockholders
pursuant to the Merger that have not been previously sold) to request
registration under the Securities Act of all or part of the Registrable
Securities (each such request being referred to herein as a "Demand
Registration"). The holders of Registrable Securities are entitled to two
Demand Registrations. The Registration Rights Agreement also permits each of
the Vigoro Affiliate Stockholders to cause IMC to register its Registrable
Securities concurrently with certain offerings of securities by IMC, subject
to the right of the managing underwriters of any such offering to exclude some
or all of such shares from such registration if, in the judgment of the
managing underwriters, the inclusion of the shares would adversely affect the
marketing of the securities. IMC is required to bear the expenses of all
registrations. The term of the Registration Rights Agreement commences as of
the Effective Time and expires on the earlier of (i) the first date on which
all Registrable Securities may be sold by the holders thereof without regard
to the provisions of paragraph (d) of Rule 145 or (ii) the fifth anniversary
of the date of the Registration Rights Agreement. Notwithstanding the
provisions of the Registration Rights Agreement, the Vigoro Affiliate
Stockholders have agreed not to sell or in any other way reduce such person's
risk relative to any Vigoro Common Stock or any
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shares of IMC Common Stock received in the Merger (within the meaning of
Section 201.01 of the SEC's Financial Reporting Release No. 1) during the
Resale Period except as permitted by Staff Accounting Bulletin No. 76 issued
by the SEC.
IMC has agreed that as soon as reasonably practicable, but in no event later
than 30 days after the end of the first full fiscal quarter of IMC which
includes results covering at least 30 days of post-Merger combined operations
of IMC and Vigoro, IMC will publish its results of operations for such fiscal
quarter.
Canadian Securities Law Considerations. The issuance of IMC Common Stock
pursuant to the Merger to residents of Canada will be exempt from the
registration and prospectus filing requirements of Canadian securities
legislation. Canadian residents receiving shares of IMC Common Stock in the
Merger may make gifts of such shares and, except residents of Nova Scotia, may
resell them over the NYSE or CSE. Resales may be made by residents of the
Provinces of Manitoba, New Brunswick, Prince Edward Island and Quebec. Other
resales may also be made by residents of British Columbia and Saskatchewan
provided that (i) IMC is a reporting issuer in such Provinces and is not in
default in its reporting obligations, and (ii) no effort is made to prepare
the market or create demand and no extraordinary commission or consideration
is paid in connection with such sales. The foregoing discussion assumes that
no such Canadian resident is a person or company or a member of a combination
of persons or companies holding a sufficient number of IMC securities to
affect materially the control of IMC. Canadian residents should consult their
legal advisers with respect to transactions not covered by the above
discussion.
OTHER TERMS OF THE MERGER AGREEMENT
CONVERSION OF SHARES IN THE MERGER
At the Effective Time, by virtue of the Merger and without any further
action on the part of any stockholder of Vigoro or Merger Sub:
(i) each issued and outstanding common share of Merger Sub will be
converted into 500 shares of common stock of the Surviving Corporation;
(ii) all Vigoro Common Stock that is held in the treasury of Vigoro and
any Vigoro Common Stock owned by IMC will be cancelled, and no capital
stock of IMC or other consideration will be delivered in exchange therefor;
(iii) each share of Vigoro Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be cancelled
as described in subparagraph (ii) above) will be converted into 1.60
validly issued, fully paid and nonassessable shares of IMC Common Stock;
provided, however, that if the average of the per share daily closing
prices on the NYSE of IMC Common Stock (as reported in the NYSE Composite
Transactions in The Wall Street Journal, Midwest Edition) during the 20
consecutive trading days ending on the fifth trading day prior to the date
that the Vigoro Special Meeting is held is less than $30.938, then the
Conversion Number will be equal to the lesser of: (a) 1.70; and (b) the
number obtained by dividing $49.50 by the Average Price; and provided,
further, that if the Average Price is greater than $40.00, then the
Conversion Number will be equal to the greater of: (x) 1.50; and (y) the
number obtained by dividing $64.00 by the Average Price; and
(iv) the Series E Preferred Stock and the Series F Preferred Stock will
not be converted or cancelled (except to the extent that the holder of any
such Series E Preferred Stock or Series F Preferred Stock has perfected and
not lost or withdrawn any right to appraisal for such shares under any
applicable provisions of the DGCL) but will remain Series E Preferred Stock
and Series F Preferred Stock, respectively, of the Surviving Corporation
without alteration of their relative rights, preferences, terms and
conditions.
The Conversion Number is subject to adjustment under certain circumstances.
See "--November Stock Dividend; Adjustment of Conversion Number."
All shares of Vigoro Common Stock when converted as provided in subparagraph
(iii) of the preceding paragraph will no longer be outstanding and will
automatically be cancelled and retired; and each holder of a
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certificate (a "Vigoro Certificate") representing immediately prior to the
Effective Time any such Vigoro Common Stock will cease to have any rights with
respect thereto, except the right to receive, as hereinafter described: (i)
certificates ("IMC Certificates") representing the shares of IMC Common Stock
into which such shares of Vigoro Common Stock have been converted; (ii)
certain dividends and other distributions; and (iii) cash, without interest,
in lieu of any fractional share of IMC Common Stock. See "--Exchange Agent;
Procedures for Exchange of Certificates."
The Merger Agreement provides that, from and after the Effective Time until
surrendered for exchange for IMC Certificates, Vigoro Certificates will be
deemed for all purposes to represent the number of shares of IMC Common Stock
into which the shares of Vigoro Common Stock represented by such Vigoro
Certificate have been converted pursuant to the Merger. The Merger Agreement
requires IMC to establish appropriate procedures so that each holder of a
Vigoro Certificate at the Effective Time will be entitled to vote on all
matters subject to vote of holders of IMC Common Stock with a record date on
or after the date of the Effective Time, whether or not the holder of such
Vigoro Certificate has surrendered such Vigoro Certificates for exchange for
shares of IMC Common Stock in accordance with the Merger Agreement. The Merger
Agreement provides that IMC may rely conclusively on the stockholder records
of Vigoro in determining the identity of, and the number of shares of Vigoro
Common Stock held by, each holder of a Vigoro Certificate at the Effective
Time.
All references in this Proxy Statement/Prospectus to shares of IMC Common
Stock to be received pursuant to the Merger in accordance with the Merger
Agreement will be deemed to include the associated IMC Rights.
NO FRACTIONAL SHARES
No certificates or scrip representing a fractional share of IMC Common Stock
will be issued upon the surrender of Vigoro Certificates for exchange; no IMC
dividend or other distribution or stock split, combination or reclassification
will relate to any such fractional share; and no such fractional share will
entitle the record or beneficial owner thereof to any voting or other rights
of a stockholder of IMC. In lieu of any such fractional share, each holder of
Vigoro Common Stock who would otherwise have been entitled, based on all
Vigoro Certificates surrendered for exchange by such holder, thereto upon the
surrender of Vigoro Certificates for exchange will be paid an amount in cash
(without interest) rounded to the nearest whole cent, determined by
multiplying (i) the per share closing price on the NYSE Composite Transactions
Tape of IMC Common Stock on the date on which the Effective Time shall occur
(or, if IMC Common Stock does not trade on the NYSE on such date, the first
day of trading in IMC Common Stock on the NYSE thereafter) by (ii) the
fractional share to which such holder would otherwise be entitled.
NOVEMBER STOCK DIVIDEND; ADJUSTMENT OF CONVERSION NUMBER
The Conversion Number and certain share price information contained in this
Proxy Statement/Prospectus reflect the IMC Stock Split. In the event of any
other stock split, combination, reclassification or stock dividend with
respect to IMC Common Stock, any change or conversion of IMC Common Stock into
other securities or any other dividend or distribution with respect to IMC
Common Stock (other than quarterly cash dividends not to exceed $0.08 per
share on IMC Common Stock and dividends paid by subsidiaries of IMC in the
ordinary course of business and consistent with past practice), or the
issuance of any securities, property or cash upon the exercise of, or in
exchange for, IMC Rights or if a record date with respect to any of the
foregoing should occur, prior to the Effective Time, appropriate, equitable
and proportionate adjustments will be made to the Conversion Number and
related numbers and stock prices used in calculating the Conversion Number.
EXCHANGE AGENT; PROCEDURES FOR EXCHANGE OF CERTIFICATES
IMC has appointed American Stock Transfer & Trust Company to act as exchange
agent (the "Exchange Agent") under the Merger Agreement. As soon as
practicable after the Effective Time, IMC will deposit IMC Certificates with
the Exchange Agent, in trust for the holders of Vigoro Certificates. The
Exchange Agent will deliver the IMC Certificates upon the surrender for
exchange of the Vigoro Certificates.
Promptly after the Effective Time, the Exchange Agent will mail to each
record holder of a Vigoro Certificate a letter of transmittal in customary and
reasonable form (which will specify that delivery will be
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effected, and risk of loss and title to the Vigoro Certificates will pass,
only upon actual delivery thereof to the Exchange Agent and will contain
instructions for use in effecting the surrender of Vigoro Certificates in
exchange for the property described in the next sentence). Upon surrender for
cancellation to the Exchange Agent of Vigoro Certificates held by any record
holder, together with such letter of transmittal duly executed, such holder
will be entitled to receive in exchange therefor: (i) an IMC Certificate
representing the number of whole shares of IMC Common Stock into which the
Vigoro Common Stock represented by the surrendered Vigoro Certificates have
been converted at the Effective Time; (ii) cash in lieu of any fractional
share of IMC Common Stock and (iii) the dividends and other distributions
described below. All Vigoro Certificates so surrendered will be cancelled. All
IMC Common Stock issued in the Merger will be issued as of, and be deemed to
be outstanding as of, the Effective Time. IMC will cause all such shares of
IMC Common Stock issued pursuant to the Merger to be duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
In the event any Vigoro Certificates are lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such certificates
to be lost, stolen or destroyed and, if reasonably required by IMC or the
Surviving Corporation, upon the posting by such person of a bond in such
amount as IMC or the Surviving Corporation may reasonably direct as indemnity
against any claim that may be made against it with respect to such
certificates, the Exchange Agent will issue in respect of such lost, stolen or
destroyed certificates, the consideration to be received by virtue of the
Merger with respect to the Vigoro Common Stock represented thereby (subject to
the payment of cash in lieu of fractional shares in accordance with the Merger
Agreement) and such person will be entitled to the voting, dividend and other
distribution rights provided with respect thereto.
No dividends or other distributions that are declared on or after the
Effective Time on IMC Common Stock, or are payable to the holders of record
thereof who became such on or after the Effective Time, and no cash payment in
lieu of any fractional share of IMC Common Stock, will be paid to any person
entitled by reason of the Merger to receive IMC Certificates representing such
shares of IMC Common Stock until the Vigoro Certificates of such person to be
exchanged therefor have been surrendered for exchange as described above.
Subject to applicable law, there will be paid to each person receiving an IMC
Certificate representing such shares of IMC Common Stock: (i) at the time of
such surrender or as promptly as practicable thereafter, the amount of any
dividends or other distributions theretofore paid with respect to the shares
of IMC Common Stock represented by such IMC Certificate having a record date
on or after the Effective Time and a payment date prior to such surrender; and
(ii) at the appropriate payment date or as promptly as practicable thereafter,
the amount of any dividends or other distributions payable with respect to
such shares of IMC Common Stock having a record date on or after the Effective
Time but prior to such surrender and a payment date on or after such
surrender. In no event will the person entitled to receive such dividends or
other distributions be entitled to receive interest on such dividends or other
distributions.
If any IMC Certificate representing shares of IMC Common Stock is to be
registered in a name other than that of the registered holder of the Vigoro
Certificate surrendered in exchange therefor, or if any cash is to be paid to
a person who is not the registered holder of such surrendered Vigoro
Certificate, it will be a condition of the exchange that the Vigoro
Certificate so surrendered be properly endorsed and otherwise in proper form
for transfer and that the person requesting such exchange pay to the Exchange
Agent any transfer or other taxes required by reason of the issuance of such
IMC Certificate or the distribution of such cash payment in a name other than
that of the registered holder of the Vigoro Certificate so surrendered, or
establish to the satisfaction of the Exchange Agent that such taxes have been
paid or are not applicable. IMC or the Exchange Agent will be entitled to
deduct and withhold from the consideration otherwise payable pursuant to the
Merger Agreement to any holder of Vigoro Common Stock such amounts as IMC or
the Exchange Agent are required to deduct and withhold under the Code, or
under any provision of state, local or foreign tax law, with respect to the
making of such payment. To the extent that amounts are withheld by IMC or the
Exchange Agent, such withheld amounts will be treated for all purposes of the
Merger Agreement as having been distributed to the holder of the Vigoro Common
Stock in respect of whom such deduction and withholding was made by IMC or the
Exchange Agent.
All shares of IMC Common Stock which are required by virtue of the Merger to
be issued to a holder of Vigoro Common Stock whose acquisition of such shares
of IMC Common Stock is subject to the reporting requirements of the HSR Act
will, at the written request of such holder, be placed in an escrow by the
Exchange
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Agent for the benefit of such holder, pending expiration or termination of the
waiting period under the HSR Act with respect to the acquisition of such IMC
Common Stock on terms which are consistent with 16 CFR Section 801.31(d).
However, if such escrow is not permitted under applicable law or any rules or
regulations or interpretations thereunder or if such escrow would cause the
Merger not to qualify as a pooling of interests under generally accepted
accounting principles, such IMC Common Stock may not be placed in escrow.
At the Effective Time, the stock transfer books of Vigoro will be closed,
and no transfer of Vigoro Common Stock will thereafter be made. Subject to any
applicable abandoned property, escheat or similar laws, if, after the
Effective Time, Vigoro Certificates are presented to the Surviving Corporation
for transfer, they will be cancelled and exchanged as described in the
preceding paragraphs. After the Effective Time and until surrendered for IMC
Certificates as above described, Vigoro Certificates which immediately prior
to the Effective Time represented Vigoro Common Stock converted in the Merger
will be deemed for all purposes, other than the right to receive payments of
dividends and distributions and cash in lieu of any fractional share of IMC
Common Stock, to represent the number of whole shares of IMC Common Stock into
which such Vigoro Common Stock was converted.
STOCKHOLDERS OF VIGORO SHOULD NOT FORWARD THEIR VIGORO CERTIFICATES WITH THE
ENCLOSED PROXY CARD, NOR SHOULD THEY RETURN THEIR VIGORO CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED A TRANSMITTAL LETTER.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of IMC,
Vigoro and Merger Sub relating, among other things, to: (i) their
incorporation, existence, good standing, corporate power and similar corporate
matters; (ii) their capitalization; (iii) their authorization, execution and
delivery of the Merger Agreement, the enforceability of their obligations
thereunder and related matters; (iv) the absence of conflicts, violations and
defaults under their certificate or articles of incorporation and by-laws and
certain other agreements and documents; (v) their documents and reports filed
with the SEC and the accuracy and completeness of the information contained
therein; (vi) the Registration Statement and this Proxy Statement/Prospectus
and the accuracy and completeness of the information contained therein and
herein; (vii) the absence of Material Adverse Changes; (viii) the absence of
certain violations or defaults; (ix) their licenses and permits; (x)
environmental and tax matters; (xi) pending or threatened litigation and other
proceedings; (xii) labor matters; (xiii) material contracts; (xiv) employee
benefit matters; (xv) undisclosed liabilities; (xvi) the receipt of opinions
from their financial advisors; (xvii) the inapplicability of certain takeover
defense mechanisms to the transaction contemplated by the Merger Agreement;
(xviii) the availability of pooling of interests accounting treatment and the
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code; and (xix) no ownership of capital stock of the other
party. All representations and warranties of IMC, Vigoro and Merger Sub expire
at the Effective Time.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of IMC and Vigoro has agreed that during the period from the date of
the Merger Agreement through the Effective Time, except as otherwise expressly
required or permitted by the Merger Agreement, it will, and will cause each of
its subsidiaries to, in all material respects carry on its business in, and
not enter into any material transaction other than in accordance with, the
ordinary course of its business as being conducted at such date and, to the
extent consistent therewith, use its reasonable best efforts to preserve
intact its business organization, keep available the services of its officers
and employees and preserve its relationships with customers, suppliers and
others having business dealings with it, all to the end that its goodwill and
ongoing business will be unimpaired at the Effective Time. Each of IMC and
Vigoro has agreed to promptly advise the other orally and in writing of any
change or event having, or which would reasonably be expected to have, a
material adverse effect on IMC or Vigoro, as the case may be.
Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated or permitted by the Merger Agreement, IMC has agreed
that it will not, and that it will not permit any of its subsidiaries to,
without the prior written consent of Vigoro: (i) (A) declare, set aside or pay
any dividends on, or
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make any other actual, constructive or deemed distributions in respect of, any
of its capital stock, or otherwise make any payments to its stockholders in
their capacity as such (other than regular quarterly dividends (before giving
effect to the IMC Stock Split) of not more than $0.16 per share on IMC Common
Stock, dividends paid by subsidiaries of IMC in the ordinary course of
business and consistent with past practice and the IMC Stock Split), or (B)
purchase, redeem or otherwise acquire any shares of its capital stock or those
of any of its subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities, if the
result of any such purchase, redemption or acquisition would be to impair the
ability of IMC to account for the Merger as a pooling of interests; (ii)
issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of
its capital stock, any other voting securities or equity equivalent or any
securities convertible into, or any rights, warrants or options to acquire,
any such shares, voting securities, equity equivalent or convertible
securities (other than the distribution of the IMC Rights in accordance with
the IMC Rights Agreement and the issuance of any securities upon the exercise
thereof, the issuance of IMC Common Stock during the period from the date of
the Merger Agreement through the Effective Time upon the exercise of options
to purchase IMC Common Stock outstanding on the date of the Merger Agreement
under IMC's existing stock option plans, the granting of options to purchase
IMC Common Stock which may be granted pursuant to IMC's existing stock option
plans in the ordinary course of business consistent with past practice, and
the issuance of IMC Common Stock upon the exercise thereof, the issuance of
IMC Common Stock pursuant to the IMC Stock Split, and the issuance of IMC
Common Stock pursuant to any other stock split or dividend, which such split
or dividend would give rise to an adjustment to the Conversion Number pursuant
to the terms of the Merger Agreement, and other than issuances or sales of any
of the foregoing securities in an amount in the aggregate, pursuant to one or
more transactions, not exceeding 10% of the shares of IMC Common Stock
outstanding as of the date of the Merger Agreement); (iii) amend its charter
or organization documents, or amend its by-laws if such amendment would
adversely affect the rights of Vigoro or the holders of Vigoro Common Stock
upon the consummation of the Merger; (iv) acquire or agree to acquire, by
merging or consolidating with, by purchasing a substantial portion of the
assets of or equity in or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets, other
than transactions that are not material to IMC and its subsidiaries taken as a
whole; (v) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than transactions that are not
material to IMC and its subsidiaries taken as a whole; (vi) incur any
indebtedness for borrowed money or guarantee any such indebtedness, or make
any loans, advances or capital contributions to, or other investments in, any
other person, other than (A) borrowings or guarantees incurred in the ordinary
course of business and consistent with past practice and (B) any loans,
advances or capital contributions to, or other investments in, IMC or any
majority-owned subsidiary of IMC; (vii) violate or fail to perform any
material obligation or duty imposed upon IMC or any subsidiary thereof by any
applicable federal, state, local, foreign or provincial law, rule, regulation,
guideline or ordinance; (viii) take any action, other than reasonable and
usual actions in the ordinary course of business consistent with past
practice, with respect to accounting policies or procedures; (ix) authorize,
recommend, propose or announce an intention to do any of the foregoing, or
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing; or (x) acquire any shares of capital stock of Vigoro.
Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated or permitted by the Merger Agreement, Vigoro has agreed
that it will not, and that it will not permit any of its subsidiaries to,
without the prior written consent of IMC: (i) (A) declare, set aside or pay
any dividends on, or make any other actual, constructive or deemed
distributions in respect of, any of its capital stock, or otherwise make any
payments to its stockholders in their capacity as such (other than regular
quarterly dividends of not more than $180 per share of Series E Preferred
Stock, of not more than $180 per share of Series F Preferred Stock and of not
more than $0.23 per share of Vigoro Common Stock (it being the express
understanding of IMC and Vigoro that the holders of Vigoro Common Stock will
be entitled to either a dividend on Vigoro Common Stock or shares of IMC
Common Stock, but not both, for the calendar quarter in which the Effective
Time occurs, and the Vigoro Board will not declare any dividend or fix any
record date therefor which would have such effect; provided however, that if
(x) Vigoro has not declared any regular quarterly dividend in respect of any
quarter after the date of the Merger Agreement in order to provide its
stockholders an opportunity to receive a quarterly dividend in respect of IMC
Common Stock for such quarter and (y) the Merger is not effected on a date
which would enable such stockholders
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to receive such dividend on IMC Common Stock, then Vigoro will be entitled to
declare a special dividend of not more than $0.23 per share of Vigoro Common
Stock with respect to any quarter to compensate such stockholders for such
regular quarterly dividend they would otherwise have received in respect of
their Vigoro Common Stock) and dividends paid by subsidiaries of Vigoro in the
ordinary course of business and consistent with past practice); (B) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock; or (C) purchase, redeem or otherwise acquire
any shares of its capital stock or those of any of its subsidiaries or any
other securities thereof or any rights, warrants or options to acquire any
such shares or other securities; (ii) issue, deliver, sell, pledge, dispose of
or otherwise encumber any shares of its capital stock, any other voting
securities or equity equivalent or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting securities,
equity equivalent or convertible securities (other than the issuance of Vigoro
Common Stock upon the exercise of options to purchase Vigoro Common Stock
outstanding on the date of the Merger Agreement in accordance with their
current terms and the issuance of shares pursuant to the IMC Stock Option);
(iii) amend its charter or organization documents, or amend its by-laws unless
such amendment is consented to in writing by IMC (which consent will not be
unreasonably withheld); (iv) acquire or agree to acquire, by merging or
consolidating with, by purchasing a substantial portion of the assets of or
equity in or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets, other than (A) transactions
that are in the ordinary course of business and consistent with past practice
and not material to Vigoro and its subsidiaries taken as a whole and (B)
acquisitions for an aggregate consideration paid or payable by Vigoro and its
subsidiaries (valuing any non-cash consideration at its fair market value and
any contingent payments at the maximum amount payable and treating any
liabilities assumed as consideration paid) in an amount not to exceed $10
million other than transactions pending and disclosed to IMC as of the date of
the Merger Agreement; (v) sell, lease or otherwise dispose of, or agree to
sell, lease or otherwise dispose of, any of its assets, other than (A)
transactions that are in the ordinary course of business and consistent with
past practice and not material to Vigoro and its subsidiaries taken as a
whole, (B) dispositions for an aggregate consideration paid or payable to
Vigoro and its subsidiaries (valuing any non-cash consideration at its fair
market value and any contingent payments at the maximum amount payable and
treating any liabilities assumed as consideration paid) in an amount not to
exceed $10 million other than transactions pending as of the date of the
Merger Agreement and (C) transactions between Vigoro and any wholly owned
subsidiary of Vigoro or between one subsidiary of Vigoro and another
subsidiary of Vigoro; (vi) incur any indebtedness for borrowed money or
guarantee any such indebtedness, or make any loans, advances or capital
contributions to, or other investments in, any other person, or retire any
outstanding indebtedness for borrowed money, other than (A) borrowings or
guarantees incurred in the ordinary course of business and consistent with
past practice and (B) any loans, advances or capital contributions to, or
other investments in, Vigoro or any majority-owned or 50% owned subsidiary of
Vigoro; (vii) enter into or adopt any benefit plan other than a benefit plan
which is not material in the ordinary course of business consistent with past
practices, or amend in any material respect any existing benefit plan, other
than as required by law or in the ordinary course of business consistent with
past practices; (viii) materially increase the compensation payable or to
become payable to its officers or employees, except for increases in the
ordinary course of business and consistent with past practice, or grant any
severance or termination pay to, or enter into, or amend or modify, any
employment, severance or consulting agreement with, any director or officer of
Vigoro or any of its subsidiaries, or, except in the ordinary course of
business consistent with past practices, establish, adopt, enter into or,
except as may be required to comply with applicable law or, except in the
ordinary course of business consistent with past practices, amend in any
material respect or take action to enhance in any material respect or
accelerate any rights or benefits under, any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee; (ix) violate or fail to perform any material
obligation or duty imposed upon Vigoro or any of its subsidiaries by any
applicable federal, state, local, foreign or provincial law, rule, regulation,
guideline or ordinance; (x) take any action, other than reasonable and usual
actions in the ordinary course of business consistent with past practice, with
respect to accounting policies or procedures; (xi) authorize, recommend,
propose or announce an intention to do any of the foregoing, or enter into any
contract, agreement, commitment or arrangement to do any of the foregoing; or
(xii) acquire any shares of capital stock of IMC.
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Each of IMC and Vigoro has also agreed that, subject to existing contractual
and legal restrictions applicable to it (which each of IMC and Vigoro has
represented and warranted do not require it to withhold information which is
material and adverse to it and its subsidiaries taken as a whole), it will,
and will cause each of its subsidiaries to, afford, during normal business
hours during the period from the date of the Merger Agreement through the
Effective Time, to the accountants, counsel, financial advisors, officers and
other representatives of the other reasonable access to, and permit them to
make such inspections as may reasonably be requested of, its properties,
books, contracts, commitments and records (including, without limitation, the
work papers of independent public accountants), and also permit such
interviews with its officers and employees as may be reasonably requested;
and, during such period, each of IMC and Vigoro will, and will cause each of
its respective subsidiaries to, furnish promptly to the other (i) a copy of
each report, schedule, registration statement and other document filed by it
pursuant to the requirements of federal or state securities laws and (ii) all
other information concerning its properties, assets, business and personnel as
the other may reasonably request. All confidential information obtained by IMC
or Vigoro, as the case may be, will be kept confidential pursuant to existing
confidentiality agreements between the parties. Each of IMC and Vigoro has
expressly reaffirmed its obligations under such confidentiality agreements and
agreed and acknowledged that such confidentiality agreements will survive the
termination of the Merger Agreement.
Each of IMC and Vigoro has further agreed that from the date of the Merger
Agreement through the Effective Time, unless the other parties to the Merger
Agreement otherwise agree in writing, neither it nor its respective
subsidiaries will (i) knowingly take or fail to take any action which action
or failure would result in the failure of the Merger to qualify as a pooling
of interests for accounting purposes or (ii) knowingly take or fail to take
any action which action or failure would result in the failure of the Merger
to qualify as a reorganization within the meaning of Section 368(a) of the
Code or would cause certain of its tax-related representations and warranties
to be untrue or incorrect in any material respect.
NO SOLICITATION
Vigoro has agreed that, from and after the date of the Merger Agreement, it
will not, and will use its reasonable best efforts to not permit any of its
directors, officers, employees, attorneys, financial advisors, agents or other
representatives or those of any of its subsidiaries to, directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing information) any Takeover Proposal (as hereinafter defined) from
any person, or engage in or continue discussions or negotiations relating to
any Takeover Proposal. However, Vigoro may engage in discussions or
negotiations with, or furnish information concerning Vigoro and its
properties, assets and business to, any person which makes, indicates in
writing an intention or desire to make, or in respect of which the Vigoro
Board has concluded in good faith is reasonably likely to make, a Superior
Proposal (as hereinafter defined), in each case if the Vigoro Board has
concluded in good faith on the basis of the advice of its outside counsel that
the failure to take such action would be inconsistent with the fiduciary
obligations of such Vigoro Board under applicable law. Furthermore,
notwithstanding anything to the contrary contained in the Merger Agreement,
the Vigoro Board may take and disclose to Vigoro's stockholders a position
contemplated by Rule 14e-2 promulgated under the Exchange Act, comply with
Rule 14d-9 thereunder and make all disclosures required by applicable law in
connection therewith. Vigoro has agreed to promptly notify IMC of any Takeover
Proposal received by it or any of its directors, officers, employees,
attorneys, financial advisors, agents or other representatives or those of any
of its subsidiaries or the receipt by Vigoro or any of the foregoing of any
notice of any intention to make a Superior Proposal, including the material
terms and conditions thereof (but expressly not including the identity of the
person (or group) making such Takeover Proposal or indicating such intention
or desire). As used in the Merger Agreement: (i) "Takeover Proposal" means any
proposal or offer, or any expression of interest by any person relating to
Vigoro's willingness or ability to receive or discuss any proposal or offer
(other than a proposal or offer by IMC or any of its subsidiaries), for any
merger, consolidation or other business combination involving Vigoro or any of
its subsidiaries or any acquisition in any manner (including, without
limitation, by tender or exchange offer) of a substantial equity interest in,
or a substantial portion of the assets of, Vigoro or any of its subsidiaries;
and (ii) "Superior Proposal" means a bona fide proposal or offer made by any
person (x) to acquire Vigoro pursuant to any tender or exchange offer or any
acquisition of all or substantially all of the assets of Vigoro and its
subsidiaries or (y) to enter into a merger, consolidation or other business
consolidation with Vigoro or any of its
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subsidiaries, in each case on terms which a majority of the members of the
Vigoro Board determines in good faith, and based on the advice of independent
financial advisors, to be more favorable to Vigoro and its stockholders than
the transactions contemplated by the Merger Agreement (or contemplated by any
revised transaction proposed by IMC, as permitted by the Merger Agreement).
THIRD PARTY STANDSTILL AGREEMENTS
Vigoro has agreed that, during the period from the date of the Merger
Agreement through the Effective Time, it will not terminate, amend, modify or
waive any provision of any confidentiality or standstill agreement to which it
or any of its subsidiaries is a party (other than any involving IMC or its
subsidiaries). During such period, Vigoro has agreed to 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 any such agreement and to enforce specifically the terms and
provisions thereof in any court of the United States or of any state having
jurisdiction unless, in any case, the Vigoro Board concludes in good faith,
and based on the advice of its outside counsel, that the enforcement of such
provisions would be inconsistent with the fiduciary obligations of the Vigoro
Board under applicable law.
CONDITIONS PRECEDENT TO THE MERGER
The respective obligations of IMC, Vigoro and Merger Sub to effect the
Merger are subject, among other things, to the fulfillment of the following
conditions at or prior to the Effective Time: (i) approval of the Merger
Agreement by the requisite vote of the stockholders of Vigoro, and adoption of
the Charter Amendments by a majority of the outstanding shares of IMC Common
Stock and approval of the Share Issuance by a majority of the votes cast at
the IMC Special Meeting by the holders of the IMC Common Stock; (ii) the
authorization for listing on the NYSE of the shares of IMC Common Stock
constituting the Share Issuance and the shares of IMC Common Stock issuable
upon the exercise of Substitute Options, subject to official notice of
issuance; (iii) expiration or termination of the waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act, and the obtaining, making or occurrence of all authorizations, consents,
orders, declarations or approvals of, or filings with, or terminations or
expirations of waiting periods imposed by, any governmental entity, which the
failure to obtain, make or occur would have the effect of making the Merger or
any of the transactions contemplated by the Merger Agreement illegal or would
have a Material Adverse Effect on IMC or Vigoro (as the Surviving
Corporation), assuming the Merger had taken place; (iv) the absence of any
stop order suspending the effectiveness of the Registration Statement, any
initiation of a proceeding for such purpose or any threat of such a proceeding
by the SEC, and all necessary state securities authorizations having been
received and being in full force and effect; (v) no court or other
governmental entity having jurisdiction over IMC or Vigoro, or any of their
respective subsidiaries, having enacted, issued, promulgated, enforced or
entered any law, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) then in force which
has the effect of making the Merger or any of the transactions contemplated by
the Merger Agreement illegal; and (vi) each of IMC and Vigoro having received
a copy, dated as of the Effective Time, of (x) an opinion of Arthur Andersen
LLP, in form and substance reasonably satisfactory to IMC and Vigoro,
addressed to Vigoro, that, based on such procedures as were deemed relevant,
Vigoro qualifies as an entity that may be a party to a business combination
for which the pooling-of-interest method of accounting would be available and
(y) an opinion of Ernst & Young LLP, in form and substance reasonably
satisfactory to Vigoro and IMC, addressed to IMC, that, based on such
procedures as were deemed relevant, the Merger will qualify as a pooling of
interests under generally accepted accounting principles.
The obligation of Vigoro to effect the Merger is also subject to the
fulfillment of the following additional conditions at or prior to the
Effective Time: (i) each of IMC and Merger Sub having performed in all
respects each of its agreements contained in the Merger Agreement required to
be performed at or prior to the Effective Time, each of the representations
and warranties of IMC and Merger Sub contained in the Merger Agreement that is
qualified by materiality being true and correct at and as of the Effective
Time as if made at and as of the Effective Time and each of such
representations and warranties that is not so qualified being true and correct
in all material respects at and as of the Effective Time as if made at and as
of the Effective Time, in each case
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except as contemplated or permitted by the Merger Agreement, and Vigoro having
received a certificate signed on behalf of IMC by its Chief Executive Officer
and its Chief Financial Officer to such effect; (ii) Vigoro having received an
opinion of counsel reasonably satisfactory to Vigoro and IMC relating to
certain tax matters (see "THE MERGER--Certain United States Federal Income Tax
Consequences"); (iii) IMC having obtained any necessary non-governmental
consents and approvals required to consummate the transactions contemplated by
the Merger Agreement, except where the failure to obtain the same would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on IMC or upon the consummation of such transactions; (iv)
Vigoro having received the written agreements described under "THE MERGER--
Resales of IMC Common Stock" from certain affiliates of IMC; (v) the absence
since the date of the Merger Agreement of any Material Adverse Change with
respect to IMC, and Vigoro having received a certificate signed on behalf of
IMC by its Chief Executive Officer and its Chief Financial Officer to such
effect; (vi) the absence of any pending or threatened litigation by any
governmental entity as a result of the Merger Agreement or any of the
transactions contemplated thereby which, if such governmental entity were to
prevail, would reasonably be expected, in the good faith opinion of Vigoro, to
have a Material Adverse Effect on IMC or Vigoro; and (vii) IMC having entered
into the Registration Rights Agreement with each of the parties thereto.
The respective obligations of IMC and Merger Sub to effect the Merger are
also subject to the fulfillment of the following additional conditions at or
prior to the Effective Time: (i) Vigoro having performed in all material
respects each of its agreements contained in the Merger Agreement required to
be performed at or prior to the Effective Time, each of the representations
and warranties of Vigoro contained in the Merger Agreement that is qualified
by materiality being true and correct at and as of the Effective Time as if
made at and as of the Effective Time and each of such representations and
warranties that is not so qualified being true and correct in all material
respects at and as of the Effective Time as if made at and as of the Effective
Time, in each case except as contemplated or permitted by the Merger
Agreement, and IMC having received a certificate signed on behalf of Vigoro by
its Chief Executive Officer and its Chief Financial Officer to such effect;
(ii) Vigoro having obtained any necessary non-governmental consents and
approvals required to consummate the transactions contemplated by the Merger
Agreement, except where the failure to obtain the same would not reasonably be
expected, in the good faith opinion of IMC, individually or in the aggregate,
to have a Material Adverse Effect on Vigoro or IMC or upon the consummation of
such transactions; (iii) IMC having received the written agreements described
under "THE MERGER--Resales of IMC Common Stock" from certain affiliates of
Vigoro; (iv) the absence of any pending or threatened litigation by any
governmental entity as a result of the Merger Agreement or any of the
transactions contemplated thereby which, if such governmental entity were to
prevail, would reasonably be expected, in the good faith opinion of IMC, to
have a Material Adverse Effect on IMC or Vigoro; (v) the Stock Option
Agreement remaining in full force and effect without breach by Vigoro; and
(vi) the absence since the date of the Merger Agreement of any Material
Adverse Change with respect to Vigoro, and IMC having received a certificate
signed on behalf of Vigoro by its Chief Executive Officer and its Chief
Financial Officer to such effect.
VIGORO STOCK OPTIONS AND RESTRICTED STOCK
At the Effective Time, each Vigoro Option which is outstanding immediately
prior to the Effective Time pursuant to any Vigoro Stock Option Plan in effect
on the date of the Merger Agreement will become and represent a Substitute
Option to purchase the number of shares of IMC Common Stock, decreased to the
nearest whole share, determined by multiplying (i) the number of shares of
Vigoro Common Stock subject to such Vigoro Option immediately prior to the
Effective Time by (ii) the Conversion Number, at an exercise price per share
of IMC Common Stock (increased to the nearest whole cent) equal to the
exercise price per share of Vigoro Common Stock immediately prior to the
Effective Time divided by the Conversion Number. After the Effective Time,
each Substitute Option will be exercisable upon the same terms and conditions
as were then applicable to the related Vigoro Stock Option immediately prior
to the Effective Time and each Substitute Option will be vested to the extent
provided in the related Vigoro Option. Vigoro will not permit cash payments to
holders of Vigoro Options in lieu of the substitution therefor of Substitute
Options. IMC has agreed to register under the Securities Act on Form S-8 or
another appropriate form all Substitute Options and all shares of IMC Common
Stock issuable pursuant to all Substitute Options.
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EMPLOYEE BENEFITS
IMC has agreed that, during the one-year period immediately following the
Effective Time, it will cause (i) to be provided to each employee (an
"Employee") who was employed by Vigoro or any of its subsidiaries at the
Effective Time who (a) continues employment with the Surviving Corporation or
any of its subsidiaries, compensation and benefits no less favorable in the
aggregate than the compensation and benefits provided to such Employee by
Vigoro or any of its subsidiaries immediately prior to the Effective Time or
(b) terminates employment with the Surviving Corporation or any of its
subsidiaries, benefits no less favorable in the aggregate than the benefits
provided to such Employee by Vigoro or any of its subsidiaries immediately
prior to the Effective Time, and (ii) to be maintained for each Employee whose
employment with the Surviving Corporation or any of its subsidiaries is
terminated after the Effective Time a severance policy which is no less
favorable in the aggregate than the severance policy of Vigoro or any of its
subsidiaries as applied to the class of employees of which such Employee is a
part prior to the Effective Time.
IMC has also agreed to cause service with Vigoro or any of its subsidiaries
(or their respective predecessors) prior to the Effective Time to be treated
as service for all benefit plans and arrangements described in the preceding
paragraph for all purposes under such benefit plans and arrangements,
including, without limitation, for purposes of pre-existing conditions
limitations, waiting period and vesting requirements and to cause all benefits
accrued by any Employee under any Vigoro benefit plan or arrangement prior to
the Effective Time to be provided to such Employee; provided, however, that
this paragraph will not be applicable to any benefit accrual under any IMC
Plan that is a defined benefit pension plan or result in a duplication of
benefits.
Nothing in the Merger Agreement prevents the Surviving Corporation from
terminating the employment of any Employee at any time.
IMC has agreed to cause the Surviving Corporation to honor, in accordance
with its terms, the Severance Plan. In addition, at the Effective Time, IMC
and the Surviving Corporation will offer to enter into (and enter into with
respect to each offer that is accepted) (A) a Transition Bonus Agreement with
certain employees of Vigoro and its subsidiaries, and (B) a Non-Competition
Agreement with certain employees of Vigoro and its subsidiaries. See "THE
MERGER--Interests of Certain Persons in the Merger."
INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE
IMC has agreed, for six years after the Effective Time, to cause the
Surviving Corporation to indemnify and hold harmless to the full extent
permitted under applicable law each person who was on or at any time prior to
the date of the Merger Agreement, or who becomes prior to the Effective Time,
a Director, officer, employee or agent of Vigoro or any of its subsidiaries or
a Director, officer, employee, agent or trustee of any employee benefit plan
for employees of Vigoro or any of its subsidiaries, including, without
limitation, each person controlling any of the foregoing persons
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties"), against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any threatened or actual claim, action, suit,
proceeding or investigation (whether civil, criminal or administrative)
arising out of or pertaining to acts or omissions, or alleged acts or
omissions, by them in their capacities as such (whether or not alleged in
their capacities as such) whether commenced, asserted or claimed before or
after the Effective Time and including, without limitation, liabilities
arising under the Securities Act, the Exchange Act and state corporation laws
in connection with the Merger. IMC has agreed to cause the Surviving
Corporation, from and after the Effective Time, to pay expenses in advance of
the final disposition of any such action or proceeding to each Indemnified
Party to the full extent permitted under applicable law. The Merger Agreement
provides that, without limiting the foregoing, in the event any such claim,
action, suit, proceeding or investigation is brought against any Indemnified
Parties (whether arising before or after the Effective Time), (i) the
Indemnified Parties may retain counsel satisfactory to them and Vigoro (or to
them and IMC and the Surviving Corporation after the Effective Time), and
Vigoro will (or after the Effective Time, IMC will cause the Surviving
Corporation to) pay all fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; and (ii) Vigoro (or
after the Effective Time, IMC and the Surviving Corporation) will use all
reasonable efforts
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to assist in the defense of any such matter, provided that neither Vigoro, IMC
nor the Surviving Corporation will be liable for any settlement effected
without its prior written consent which consent shall not unreasonably be
withheld. Any Indemnified Party wishing to claim indemnification under these
provisions of the Merger Agreement is required, upon learning of any such
claim, action, suit, proceeding or investigation, to notify Vigoro (or after
the Effective Time, the Surviving Corporation) and IMC (but the failure to so
notify will not relieve a party from any liability which it may have under the
Merger Agreement with respect to such indemnification except to the extent
such failure materially prejudices such party), and to deliver to Vigoro (or
after the Effective Time, IMC and the Surviving Corporation) the undertaking
contemplated by Section 145(e) of the DGCL. These provisions of the Merger
Agreement permit the Indemnified Parties as a group to retain only one law
firm to represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. Vigoro,
IMC and Merger Sub have agreed that all rights to indemnification and the
like, including provisions relating to advances of expenses incurred in
defense of any action or suit, existing in favor of the Indemnified Parties
with respect to matters occurring through the Effective Time will survive the
Merger and IMC will cause the Surviving Corporation to honor such rights in
full.
IMC has agreed to cause the Surviving Corporation to keep in effect
provisions in its Certificate of Incorporation and By-laws providing for
exculpation of director and officer liability and its indemnification of the
Indemnified Parties to the full extent permitted under the DGCL, and not to
modify or amend such provisions except as required by applicable law or except
to make changes permitted by law that would enlarge the Indemnified Parties'
right of indemnification.
The Merger Agreement also requires IMC or the Surviving Corporation to
maintain Vigoro's existing directors' and officers' liability insurance policy
("D&O Insurance") for a period of not less than six years after the Effective
Time; provided that IMC may substitute therefor policies of substantially
similar coverage and amounts containing terms no less advantageous to such
former directors or officers; and provided further that neither IMC nor the
Surviving Corporation is required to pay an annual premium for D&O Insurance
in excess of 200% of the last annual premium paid by Vigoro prior to the date
of the Merger Agreement. If such premium limitation becomes applicable, IMC is
required to purchase as much coverage as possible for such amount.
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval by the stockholders of IMC or Vigoro of
the matters presented in connection with the Merger:
(a) by mutual written consent of IMC and Vigoro;
(b) by either IMC or Vigoro, by written notice from the terminating party
to the other party: (i) if there has been a material breach by the other
(or Merger Sub if Vigoro is the terminating party) of any representation or
warranty that is not qualified as to materiality or if there has been a
breach by the other (or Merger Sub if Vigoro is the terminating party) of
any representation or warranty that is qualified as to materiality, in each
case which breach has not been cured within five business days after
receipt by the breaching party of notice of the breach; (ii) if there has
been a failure by the other to comply in all material respects with any of
its covenants or agreements contained in the Merger Agreement required to
be complied with prior to the date of such termination, which failure to
comply has not been cured within five business days after receipt by the
other of notice of such failure to comply; (iii) if the stockholders of
Vigoro do not approve the Merger at the Vigoro Special Meeting or any
adjournment thereof; (iv) if the stockholders of IMC do not approve and
adopt the Share Issuance or the Charter Amendments at the IMC Special
Meeting or any adjournment thereof; (v) if the Merger has not been effected
on or prior to the close of business on August 14, 1996; provided, however,
that the right to terminate the Merger Agreement under such circumstances
will not be available to any party whose failure to fulfill any obligation
of the Merger Agreement has been the cause of, or resulted in, the failure
of the Merger to have occurred on or prior to such date; (vi) if any court
or other governmental entity having jurisdiction over either party has
issued an order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting
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the transactions contemplated by the Merger Agreement and such order,
decree, ruling or other action has become final and nonappealable or (vii)
at any time during the 30-day period commencing on March 12, 1996 and
ending on April 11, 1996, by written notice from the terminating party to
the other parties, if the Merger has not been effected;
(c) by Vigoro, by written notice to IMC, if: (i) the Vigoro Board
determines in good faith that a Takeover Proposal constitutes a Superior
Proposal; provided, however, that Vigoro may not so terminate the Merger
Agreement unless (A) five business days have elapsed after delivery to IMC
of a written notice of such determination by the Vigoro Board and at all
reasonable times during such five business-day period Vigoro has cooperated
with IMC in informing IMC of the terms and conditions of such Takeover
Proposal and the identity of the person or group making such Takeover
Proposal, with the objective of providing IMC a reasonable opportunity,
during such five business-day period, to propose a modification of the
terms and conditions of the Merger Agreement so that a business combination
between Vigoro and IMC (or an affiliate of IMC) may be effected, and (B) at
the end of such five business-day period, the Vigoro Board continues to
believe in good faith that such Takeover Proposal constitutes a Superior
Proposal and simultaneously therewith Vigoro enters into a definitive
acquisition, merger or similar agreement to effect such Superior Proposal;
provided further that, simultaneously with and as a condition to any such
termination, Vigoro is required to pay to IMC the Vigoro Termination Fee
(as defined below); (ii) the IMC Board has not recommended the Share
Issuance or the Charter Amendments to IMC's stockholders, or has resolved
not to make such recommendation, or has modified in a manner adverse to
Vigoro or rescinded its recommendation of the Share Issuance or the Charter
Amendments to IMC's stockholders as being advisable and fair to and in the
best interests of IMC and its stockholders, or has modified in a manner
adverse to Vigoro or rescinded its approval of the Merger Agreement, or has
resolved to do any of the foregoing; (iii) the Average Price is less than
$29.115 and notice of termination is delivered to IMC prior to the Vigoro
Special Meeting; (iv) IMC has entered into a definitive acquisition, merger
or similar agreement under which the holders of IMC Common Stock
outstanding immediately before the consummation of the acquisition, merger
or similar transaction contemplated thereby will not own immediately after
such consummation more than 50% of the outstanding voting securities (as
such term is defined in Rule 405 under the Securities Act) of the acquiring
or surviving corporation or its parent or (v) the IMC Board recommends
acceptance of a tender or exchange offer by any person for more than 50% of
the outstanding IMC Common Stock; and
(d) by IMC, by written notice to Vigoro, if: (i) the Vigoro Board has not
recommended the Merger to Vigoro's stockholders, or has resolved not to
make such recommendation, or has modified in a manner adverse to IMC or
rescinded its recommendation of the Merger to Vigoro's stockholders as
being advisable and fair to and in the best interests of Vigoro and its
stockholders, or has modified or rescinded its approval of the Merger
Agreement, or has resolved to do any of the foregoing; (ii) the Vigoro
Board has recommended to the stockholders of Vigoro any Takeover Proposal
or has resolved to do so; (iii) a tender offer or exchange offer for 30% or
more of the outstanding shares of capital stock of Vigoro is commenced, and
the Vigoro Board fails to recommend against acceptance of such tender offer
or exchange offer by its stockholders within the 10 business-day period (or
such shorter period) required by Section 14e-2 of the Exchange Act (the
taking of no position by the expiration of such 10 business-day period (or
such shorter period) with respect to the acceptance of such tender offer or
exchange offer by its stockholders constituting such a failure); (iv)
Vigoro has breached any of its covenants or agreements related to the
solicitation of other proposals (see "-- No Solicitation"); or (v) the
Average Price is greater than $42.665 and notice of termination is
delivered to Vigoro prior to the IMC Special Meeting.
FEES AND EXPENSES
Vigoro Fee. The Merger Agreement requires Vigoro to pay IMC a fee in the
amount of $30 million less the Stock Option Gain Amount (as defined below)
(the "Vigoro Termination Fee"), if (i) Vigoro terminates the Merger Agreement
upon a determination by the Vigoro Board that a Takeover Proposal constitutes
a Superior Proposal or (ii) there is a Takeover Proposal and IMC terminates
the Merger Agreement, as permitted by the
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Merger Agreement, as a result of (x) the Vigoro Board not having recommended
the Merger to Vigoro's stockholders, or having resolved not to make such
recommendation, or having modified in a manner adverse to IMC or rescinded its
recommendation of the Merger to Vigoro's stockholders as being advisable and
fair to and in the best interests of Vigoro and its stockholders, or having
modified or rescinded its approval of the Merger Agreement, or resolving to do
any of the foregoing, (y) the Vigoro Board recommending to Vigoro's
stockholders any Takeover Proposal or resolving to do so or (z) the
commencement of a tender offer or exchange offer for 30% or more of the
outstanding shares of capital stock of Vigoro and the failure of the Vigoro
Board to recommend against the acceptance of such tender offer or exchange
offer (or failure to take any position with respect to such tender offer or
exchange offer) within the 10 business-day period (or shorter period) required
by Section 14e-2 of the Exchange Act.
In addition, Vigoro will be required to pay the Vigoro Termination Fee, if
(i) (a) prior to the Vigoro Special Meeting, the Merger Agreement has not been
terminated and there is a Takeover Proposal or Vigoro has received an
indication of a possible Takeover Proposal by any person other than IMC or an
affiliate of IMC, or any person other than IMC or an affiliate of IMC has
filed a Statement on Schedule 13D under the Exchange Act, or Vigoro has
engaged in discussions or negotiations with, or furnished information to, any
person as permitted by the Merger Agreement in connection with discussions on
negotiations likely to result in a Superior Proposal, (b) the stockholders of
Vigoro do not approve the Merger at the Vigoro Special Meeting or any
adjournment thereof, (c) within twelve months after the Vigoro Special Meeting
or the last adjournment thereof Vigoro enters into any letter of intent
(whether or not binding), acquisition agreement, merger agreement or other
similar agreement or agreement in principle in respect of a Takeover Proposal
with such person or any such person shall commence any tender or exchange
offer for shares of Vigoro Common Stock and (d) upon or within twelve months
after such entry into any agreement or such commencement of any tender or
exchange offer any such person consummates a transaction similar to that
contemplated by such Takeover Proposal or any tender or exchange offer for the
shares of Vigoro Common Stock or (ii) after a Takeover Proposal has been made
by any person, the Merger Agreement is terminated by Vigoro, as permitted by
the Merger Agreement, during the 30 day period commencing on March 12, 1996
and ending on April 11, 1996 and (x) within twelve months after such
termination, Vigoro enters into a letter of intent (whether or not binding),
acquisition agreement, merger agreement or other similar agreement or
agreement in principle with such person (or any affiliate of such person or
other person related to such person) with respect to such Takeover Proposal
and (y) upon or within twelve months after such entry into a letter of intent,
acquisition agreement, merger agreement or other similar agreement or
agreement in principle, such person (or any such affiliate or related person)
consummates a transaction similar to that contemplated by such Takeover
Proposal.
The term "Stock Option Gain Amount" is defined in the Merger Agreement as
the aggregate of all Spread Amounts (as defined below) with respect to
exercises of the IMC Option simultaneously with, or prior to, the event giving
rise to the payment of any Vigoro Termination Fee described above. "Spread
Amount" means, with respect to each exercise of the IMC Option, the amount, in
cash, equal to the dollar amount by which the average of the per share closing
prices on the NYSE of Vigoro Common Stock (as reported in the NYSE Composite
Transactions) during the 20 consecutive trading days ending on the trading day
immediately prior to the date on which such exercise occurs exceeds the
Exercise Price (as defined in the Stock Option Agreement) then in effect,
multiplied by the number of Optioned Shares (as defined in the Stock Option
Agreement) as to which the IMC Option is then so exercised. If, at the time of
payment of the Vigoro Termination Fee, the IMC Option has not been exercised
by IMC, the Stock Option Gain Amount will be zero.
The Merger Agreement provides that in no event will Vigoro be required to
pay more than one Vigoro Termination Fee.
IMC Fee. The Merger Agreement requires IMC to pay Vigoro a fee in the amount
of $30 million (the "IMC Termination Fee"), if Vigoro terminates the Merger
Agreement as a result of the IMC Board's not having recommended the Share
Issuance or the Charter Amendments to IMC's stockholders, or having resolved
not to make such recommendation, or having modified in a manner adverse to
Vigoro or rescinded its recommendation
61
<PAGE>
of the Share Issuance or the Charter Amendments as being advisable and fair to
and in the best interests of IMC and its stockholders, or having modified in
any manner adverse to Vigoro or rescinded its approval of the Merger
Agreement, or having resolved to do any of the foregoing.
In addition, if the Merger Agreement is terminated by Vigoro, as permitted
by the Merger Agreement, in the event that (i) IMC enters into a definitive
acquisition, merger or similar agreement under which the holders of IMC Common
Stock outstanding immediately before the consummation of the acquisition,
merger or similar transaction contemplated thereby will not own immediately
after such consummation more than 50% of the outstanding voting securities (as
defined in Rule 405 under the Securities Act) of the acquiring or surviving
corporation or its parent or (ii) the IMC Board recommends acceptance of a
tender or exchange offer by any person for more than 50% of the outstanding
shares of IMC Common Stock, then IMC is required to reimburse Vigoro for all
costs and expenses incurred by it in connection with the Merger Agreement, the
Stock Option Agreement and the transactions contemplated thereby, including,
without limitation, the fees and disbursements of counsel, financial advisors,
accountants, actuaries and consultants and Vigoro's share of printing expenses
and filing fees, up to $5 million in the aggregate.
Except as provided above and except for (i) printing expenses and filing
fees, which will be shared equally, and (ii) all stock, local or foreign
taxes, if any, attributable to the transfer of the beneficial ownership of
Vigoro's and its subsidiaries' real property and any penalties or interest
with respect thereto payable, in connection with the consummation of the
Merger, which shall be paid by Vigoro or the Surviving Corporation, each of
IMC and Vigoro will pay its own costs and expenses in connection with the
Merger Agreement, the Stock Option Agreement and the transactions contemplated
thereby, whether or not the Merger is consummated.
None of the provisions in the Merger Agreement regarding payment of fees or
expenses limit any remedies available to any party for any breach of the
Merger Agreement by any other party which such remedies will be in addition to
any amounts received by any party pursuant to such provisions; provided,
however, that, with respect to any breach by Vigoro of the provisions under
"--No Solicitation" that is not the result of willful action (or willful
failure to take action) or bad faith on the part of Vigoro, IMC's exclusive
remedy in respect of such breach will be to the right to receive the fee
described above.
AMENDMENT
The Merger Agreement may be amended by the parties thereto, by or pursuant
to action taken by their respective Boards of Directors, at any time before or
after approval by the stockholders of IMC and Vigoro of the matters presented
to them in connection with the Merger. However, after any such approval, no
amendment can be made if applicable law would require further approval by such
stockholders, unless such further approval is obtained. The Merger Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties thereto.
WAIVER
At any time prior to the Effective Time, the Merger Agreement permits the
parties thereto to: (i) extend the time for the performance of any of the
obligations or other acts of the other parties thereto; (ii) waive any
inaccuracies in the representations and warranties contained therein or in any
instrument delivered pursuant thereto; and (iii) waive compliance with any of
the agreements or conditions contained therein which may legally be waived; in
each case pursuant to a written instrument.
62
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1995 and Unaudited Pro Forma Condensed Consolidated Statements
of Operations for the three months ended September 30, 1995 and 1994 and the
years ended June 30, 1995, 1994 and 1993 have been prepared from the
historical financial statements of IMC and Vigoro.
The unaudited pro forma condensed consolidated financial information gives
effect to accounting for the Merger as a pooling of interests, in accordance
with APB No. 16, based on an assumed conversion of each share of Vigoro Common
Stock into 1.60 shares of IMC Common Stock (see "THE MERGER--Conversion of
Shares"). The unaudited pro forma results of operations presented herein have
been prepared as if the Merger occurred on July 1, 1992. The Unaudited Pro
Forma Condensed Consolidated Balance Sheet as of September 30, 1995 reflects
the Merger as if it had occurred on September 30, 1995.
The unaudited pro forma condensed consolidated financial information for the
respective periods presented should be read in conjunction with the
accompanying notes and the historical financial statements and notes thereto
of IMC and Vigoro incorporated herein by reference.
Vigoro's most recent fiscal year ended December 31, 1994 differs from IMC's
most recent fiscal year end by more than 93 days. Accordingly, the Unaudited
Pro Forma Condensed Consolidated Statement of Operations for the year ended
June 30, 1995 has been updated to include Vigoro's results for the twelve-
month period July 1, 1994 through June 30, 1995.
The following unaudited pro forma condensed consolidated financial
information does not include pro forma financial information for certain
acquisition transactions consummated by IMC or Vigoro that individually, or in
the aggregate, are not material in relation to IMC's or Vigoro's respective
consolidated financial position or results of operations.
The unaudited pro forma condensed consolidated information is not
necessarily indicative of the financial position or results which actually
would have been attained if the Merger had been consummated on the dates
indicated above, nor are the pro forma combined results of operations for the
three months ended September 30, 1995 necessarily indicative of the results to
be expected for the entire fiscal 1996 year.
63
<PAGE>
IMC GLOBAL INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL MERGER PRO FORMA
IMC(A) VIGORO(A) ADJUSTMENTS(F) COMBINED
---------- ---------- -------------- ---------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales....................... $484.9 $129.6 $(15.9)(b) $598.6
Cost of goods sold.............. 372.4 95.2 (15.9)(b) 451.7
------ ------ ------ ------
Gross margins................... 112.5 34.4 146.9
Selling, general and
administrative expenses........ 17.5 26.7 44.2
Other operating (income) and
expense, net................... (1.6) (1.6)
------ ------ ------ ------
Operating earnings.............. 96.6 7.7 104.3
Interest earned and other non-
operating (income) and expense,
net............................ (1.4) (1.6) (3.0)
Interest charges................ 11.4 5.4 16.8
------ ------ ------ ------
Earnings before minority
interest, income taxes,
extraordinary item and the
cumulative effect of accounting
change......................... 86.6 3.9 90.5
Minority interest............... 38.3 0.5 (d) 38.8
------ ------ ------ ------
Earnings before income taxes,
extraordinary item and the
cumulative effect of accounting
change......................... 48.3 3.9 (0.5) 51.7
Provision for income taxes...... 18.1 1.5 19.6
------ ------ ------ ------
Earnings before extraordinary
item and the cumulative effect
of accounting change........... 30.2 2.4 (0.5) 32.1
Preferred stock dividends....... 0.5 (0.5)(d)
------ ------ ------ ------
Earnings before extraordinary
item and the cumulative effect
of accounting change applicable
to common stock................ $ 30.2 $ 1.9 $ $ 32.1
====== ====== ====== ======
Earnings per common share(e).... $ 0.51 $ 0.35
Weighted average number of
shares and equivalent shares
outstanding(e)................. 59.7 91.5
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
64
<PAGE>
IMC GLOBAL INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL MERGER PRO FORMA
IMC(A) VIGORO(A) ADJUSTMENTS(F) COMBINED
---------- ---------- -------------- ---------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales....................... $420.8 $107.9 $(12.6)(b) $516.1
Cost of goods sold.............. 345.7 77.3 (12.6)(b) 410.4
------ ------ ------ ------
Gross margins................... 75.1 30.6 105.7
Selling, general and
administrative expenses........ 14.3 25.1 39.4
Other operating (income) and
expense, net................... (6.1) (1.0) (7.1)
------ ------ ------ ------
Operating earnings.............. 66.9 6.5 73.4
Interest earned and other non-
operating (income) and expense,
net............................ (2.7) (0.4) (3.1)
Interest charges................ 15.0 2.6 17.6
------ ------ ------ ------
Earnings before minority
interest, income taxes,
extraordinary item and the
cumulative effect of accounting
change......................... 54.6 4.3 58.9
Minority interest............... 21.5 0.5 (d) 22.0
------ ------ ------ ------
Earnings before income taxes,
extraordinary item and the
cumulative effect of accounting
change......................... 33.1 4.3 (0.5) 36.9
Provision for income taxes...... 11.3 1.6 12.9
------ ------ ------ ------
Earnings before extraordinary
item and the cumulative effect
of accounting change........... 21.8 2.7 (0.5) 24.0
Preferred stock dividends....... 0.5 (0.5)(d)
------ ------ ------ ------
Earnings before extraordinary
item and the cumulative effect
of accounting change applicable
to common stock................ $ 21.8 $ 2.2 $ $ 24.0
====== ====== ====== ======
Earnings per common share(e).... $ 0.37 $ 0.26
Weighted average number of
shares and equivalent shares
outstanding(e)................. 59.1 90.6
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
65
<PAGE>
IMC GLOBAL INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL HISTORICAL PRO FORMA VIGORO PRIOR MERGER PRO FORMA
IMC(A) VIGORO(A) ACQUISITION(C) TO MERGER ADJUSTMENTS(F) COMBINED
---------- ---------- -------------- ------------ -------------- ---------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Net sales............... $1,924.0 $871.4 $31.7 $903.1 $(59.3)(b) $2,767.8
Cost of goods sold ..... 1,482.0 630.1 22.4 652.5 (59.3)(b) 2,075.2
-------- ------ ----- ------ ------ --------
Gross margins........... 442.0 241.3 9.3 250.6 692.6
Selling, general and
administrative
expenses............... 75.2 114.0 1.8 115.8 191.0
Other operating (income)
and expense, net....... (8.5) (0.5) (0.5) (9.0)
-------- ------ ----- ------ ------ --------
Operating earnings...... 375.3 127.8 7.5 135.3 510.6
Interest earned and
other non-operating
(income) and expense,
net.................... (6.2) (0.1) (0.1) (6.3)
Interest charges........ 52.2 18.0 3.4 21.4 73.6
-------- ------ ----- ------ ------ --------
Earnings before minority
interest, income taxes,
extraordinary item and
the cumulative effect
of accounting change... 329.3 109.9 4.1 114.0 443.3
Minority interest....... 128.4 2.0 (d) 130.4
-------- ------ ----- ------ ------ --------
Earnings before income
taxes, extraordinary
item and the cumulative
effect of accounting
change................. 200.9 109.9 4.1 114.0 (2.0) 312.9
Provision for income
taxes.................. 73.8 41.7 1.6 43.3 117.1
-------- ------ ----- ------ ------ --------
Earnings before
extraordinary item and
the cumulative effect
of accounting change... 127.1 68.2 2.5 70.7 (2.0) 195.8
Preferred stock
dividends.............. 2.0 2.0 (2.0)(d)
-------- ------ ----- ------ ------ --------
Earnings before
extraordinary item and
the cumulative effect
of accounting change
applicable to common
stock.................. $ 127.1 $ 66.2 $ 2.5 $ 68.7 $ $ 195.8
======== ====== ===== ====== ====== ========
Earnings per common
share (e).............. $ 2.15 $ 2.15
Weighted average number
of shares and
equivalent shares
outstanding (e)........ 59.2 90.9
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
66
<PAGE>
IMC GLOBAL INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL MERGER PRO FORMA
IMC(A) VIGORO(A) ADJUSTMENTS(F) COMBINED
---------- ---------- -------------- ---------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales....................... $1,441.5 $719.6 $(35.8)(b) $2,125.3
Cost of goods sold.............. 1,238.9 544.4 (35.8)(b) 1,747.5
-------- ------ ------ --------
Gross margins................... 202.6 175.2 377.8
Selling, general and
administrative expenses........ 66.0 95.0 161.0
Other operating (income) and
expense, net................... (25.7) (2.0) (27.7)
-------- ------ ------ --------
Operating earnings.............. 162.3 82.2 244.5
Interest earned and other non-
operating (income) and expense,
net............................ 23.4 (4.9) 18.5
Interest charges................ 81.0 10.2 91.2
-------- ------ ------ --------
Earnings before minority
interest, income taxes,
extraordinary item and the
cumulative effect of accounting
change......................... 57.9 76.9 134.8
Minority interest............... 55.1 0.5 (d) 55.6
-------- ------ ------ --------
Earnings before income taxes,
extraordinary item and the
cumulative effect of accounting
change......................... 2.8 76.9 (0.5) 79.2
Provision for income taxes...... 6.4 28.4 34.8
-------- ------ ------ --------
Earnings (loss) before
extraordinary item and the
cumulative effect of accounting
change......................... (3.6) 48.5 (0.5) 44.4
Preferred stock dividends....... 0.5 (0.5)(d)
-------- ------ ------ --------
Earnings (loss) before
extraordinary item and the
cumulative effect of accounting
change applicable to common
stock ......................... $ (3.6) $ 48.0 $ $ 44.4
======== ====== ====== ========
Earnings (loss) per common
share(e)....................... $ (0.07) $ 0.54
Weighted average number of
shares and equivalent shares
outstanding(e)................. 50.5 82.1
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
67
<PAGE>
IMC GLOBAL INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1993
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL MERGER PRO FORMA
IMC(A) VIGORO(A) ADJUSTMENTS(F) COMBINED
---------- ---------- -------------- ---------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales....................... $ 897.1 $571.3 $(30.3)(b) $1,438.1
Cost of goods sold.............. 776.7 414.9 (30.3)(b) 1,161.3
------- ------ ------ --------
Gross margins................... 120.4 156.4 276.8
Selling, general and
administrative expenses........ 60.4 84.3 144.7
Sterlington litigation
settlement, net................ 169.1 169.1
Other operating (income) and
expense, net................... 25.1 25.1
------- ------ ------ --------
Operating earnings (loss)....... (134.2) 72.1 (62.1)
Interest earned and other non-
operating (income) and expense,
net............................ 2.8 (3.5) (0.7)
Interest charges ............... 44.8 10.8 55.6
------- ------ ------ --------
Earnings (loss) before income
taxes, extraordinary item and
the cumulative effect of
accounting change.............. (181.8) 64.8 (117.0)
Provision (credit) for income
taxes.......................... (61.8) 22.7 (39.1)
------- ------ ------ --------
Earnings (loss) before
extraordinary item and the
cumulative effect of accounting
change applicable to common
stock.......................... $(120.0) $ 42.1 $ $ (77.9)
======= ====== ====== ========
Loss per common share(e)........ $ (2.72) $ (1.02)
Weighted average number of
shares and equivalent shares
outstanding(e)................. 44.2 76.2
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
68
<PAGE>
IMC GLOBAL INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
(a) Certain amounts in the historical financial statements of IMC and Vigoro
have been reclassified for the pro forma combined presentation.
(b) As a result of the Merger, sales from IMC to Vigoro are eliminated. The
impact of the related gross margin on inventories purchased by Vigoro from IMC
is not significant.
(c) In January 1995, Vigoro acquired substantially all of the assets of the
Central Canada Potash division (CCP) of Noranda, Inc. The purchase price for
the acquisition was $121.1, plus $16.2 for working capital. The Unaudited Pro
Forma Condensed Consolidated Statement of Operations reflects the acquisition
as if it occurred on July 1, 1994.
(d) After the Merger, the Vigoro Preferred Stock will represent preferred
stock of a subsidiary and accordingly the related dividends will be classified
as minority interest.
(e) All issued share and per share data appearing in the Unaudited Pro Forma
Condensed Consolidated Statements of Operations give effect to the IMC Stock
Split.
The pro forma combined weighted average shares outstanding calculation for
each period presented assumes that each share of Vigoro Common Stock will be
converted to the right to receive 1.60 shares of IMC Common Stock.
(f) IMC expects to achieve cost savings through the consolidation and
elimination of certain duplicative functions and operational and logistical
efficiencies. The cost savings are expected to be achieved in various amounts
at various times during the year subsequent to closing. No adjustment has been
included in the unaudited pro forma condensed consolidated financial
statements for the anticipated cost savings.
69
<PAGE>
IMC GLOBAL INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL MERGER PRO FORMA
IMC(A) VIGORO(A) ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.... $ 218.0 $ 2.5 $ 220.5
Receivables, net............. 112.1 118.4 (6.3)(b) 224.2
Inventories.................. 255.5 160.6 416.1
Deferred income taxes........ 70.9 8.7 15.6 (c) 95.2
Other current assets......... 5.6 18.5 24.1
-------- ------ ------ --------
Total current assets........... 662.1 308.7 9.3 980.1
Property, plant and equipment,
net........................... 1,855.7 406.3 2,262.0
Other assets................... 77.8 62.1 139.9
-------- ------ ------ --------
Total assets................... $2,595.6 $777.1 $ 9.3 $3,382.0
======== ====== ====== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable, accrued
liabilities and income taxes
payable..................... $ 250.5 $ 90.1 $ 3.9 (b)(d) $ 344.5
Short-term debt and current
maturities of long-term
debt........................ 40.8 112.6 153.4
-------- ------ ------ --------
Total current liabilities.. 291.3 202.7 3.9 497.9
Long-term debt, less current
maturities.................... 515.5 226.0 741.5
Deferred income taxes.......... 231.8 70.4 15.6 (c) 317.8
Other noncurrent liabilities... 280.9 0.4 281.3
Minority interest.............. 479.3 30.3 (e) 509.6
Preferred stock................ 30.3 (30.3)(e)
Stockholders' equity:
Common stock................. 64.9 0.2 31.6 (f) 96.7
Capital in excess of par
value....................... 712.4 115.7 (39.2)(f) 788.9
Retained earnings............ 126.9 144.2 (10.2)(d) 260.9
Treasury stock............... (107.4) (7.6) 7.6 (f) (107.4)
Foreign currency translation
adjustment.................. (5.2) (5.2)
-------- ------ ------ --------
Total stockholders' equity. 796.8 247.3 (10.2) 1,033.9
-------- ------ ------ --------
Total liabilities and
stockholders' equity.......... $2,595.6 $777.1 $ 9.3 $3,382.0
======== ====== ====== ========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
70
<PAGE>
IMC GLOBAL INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
(a) Certain amounts in the historical financial statements of IMC and Vigoro
have been reclassified for the pro forma combined presentation.
(b) Elimination of IMC's receivable from Vigoro.
(c) As a result of the Merger, IMC's net operating loss carryforwards are
expected to be utilized earlier than estimated on a stand-alone basis.
Therefore, current deferred tax assets have been increased by $15.6, with
a corresponding increase in long-term deferred tax liabilities.
(d) Fees related to the Merger are expected to be $17.0 ($10.2 net of taxes).
The amount of merger-related costs included herein is estimated using
information presently available, and could change as additional
information becomes known. In addition, IMC and Vigoro expect to incur
employee-related and other restructuring charges as a result of the
Merger. The amount of such charges is not currently determinable.
(e) After the Merger, the Vigoro Preferred Stock will represent preferred
stock of a subsidiary and accordingly will be classified as minority
interest.
(f) At September 30, 1995, Vigoro had 19.9 shares of common stock outstanding,
which, upon consummation of the Merger, will convert into 31.8 shares of
IMC Common Stock having a par value of $31.8, assuming a Conversion Number
of 1.60. The merger adjustment to common stock reflects the issuance of
the IMC Common Stock and eliminates Vigoro's Common Stock having a par
value of $0.2. The offset is to capital in excess of par value.
Vigoro's treasury stock retains no value after the Merger, and therefore is
eliminated as a merger adjustment. The offset is to capital in excess of
par value.
71
<PAGE>
COMPARISON OF THE RIGHTS OF HOLDERS OF
IMC COMMON STOCK AND VIGORO COMMON STOCK
The following is a summary of material differences between the rights of
holders of IMC Common Stock and the rights of holders of Vigoro Common Stock.
As each of IMC and Vigoro is organized under the laws of Delaware, these
differences arise principally from provisions of the charter and by-laws of
each of IMC and Vigoro.
The following summaries do not purport to be complete statements of the
rights of IMC stockholders under the IMC Charter and IMC By-laws as compared
with the rights of Vigoro stockholders under the Vigoro Restated Certificate
of Incorporation, as amended (the "Vigoro Charter"), and Amended and Restated
By-laws (the "Vigoro By-laws") or a complete description of the specific
provisions referred to herein. The identification of specific differences is
not meant to indicate that other equal or more significant differences do not
exist. These summaries are qualified in their entirety by reference to the
DGCL and governing corporate instruments of IMC and Vigoro, to which
stockholders are referred.
DIRECTORS
The DGCL provides that a corporation's board of directors may be divided
into various classes with staggered terms of office. The IMC Charter provides
that the IMC Board is divided into three classes of directors, as nearly equal
in number as practicable. One class of Directors is elected each year for a
three-year term. Directors elected by holders of stock of IMC entitled to vote
generally in the election of directors may be removed at any time by majority
vote of such stockholders, but only for cause. Vacancies or newly created
directorships in the IMC Board may be filled for the unexpired term only by a
majority vote of the remaining directors. Accordingly, the IMC Board could
prevent any stockholder from enlarging the IMC Board and filling the new
directorships with such stockholder's own nominees.
Classification of Directors has the effect of making it more difficult for
stockholders to change the composition of the IMC Board. At least two annual
meetings of stockholders, instead of one, will generally be required to effect
a change in the majority of the IMC Board. Such a delay may help ensure that
IMC's Directors, if confronted by a holder attempting to force a proxy
contest, a tender, or exchange offer or other extraordinary corporate
transaction, would have sufficient time to review the proposal and all
available alternatives. The classification provisions could also have the
effect of discouraging a third party from initiating a proxy contest, making a
tender offer or otherwise attempting to obtain control of IMC. Directors of
Vigoro may be removed by a majority of the stockholders of Vigoro, with or
without cause.
The Vigoro Charter does not contain a classified board provision. The Vigoro
By-laws provide that generally any vacancy in the Vigoro Board and any newly
created directorships may be filled by a majority of the directors then in
office.
STOCKHOLDER RIGHTS PLAN
Pursuant to the IMC Rights Agreement, each holder of IMC Common Stock has
received and each person receiving a share of IMC Common Stock constituting a
portion of the Share Issuance will receive, one IMC Right. Each IMC Right
entitles the registered holder to purchase from IMC one two-hundredth of a
share of IMC Series C Preferred Stock at a price of $75 (the "Purchase
Price").
Each share of IMC Series C Preferred Stock will be entitled to a quarterly
dividend payment of 200 times the dividend declared per share of IMC Common
Stock. In the event of liquidation, each share of IMC Series C Preferred Stock
will be entitled to an aggregate payment of 200 times the aggregate payment
made per share of IMC Common Stock. Each share of IMC Series C Preferred Stock
will have 200 votes, voting together with shares of IMC Common Stock. In the
event of any merger, consolidation or other transaction in which shares of IMC
Common Stock are exchanged, each share of IMC Series C Preferred Stock will be
entitled to receive 200
72
<PAGE>
times the amount received per share of IMC Common Stock. These rights are
protected by customary antidilution provisions. Shares of IMC Series C
Preferred Stock purchasable upon exercise of IMC Rights will not be
redeemable.
Because of the nature of the dividend, liquidation and voting rights of
shares of IMC Series C Preferred Stock, the value of the one two-hundredth
interest in a share of IMC Series C Preferred Stock purchasable upon exercise
of each IMC Right should approximate the value of one share of IMC Common
Stock.
Until the earlier of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons (a "Rights Plan Acquiring
Person") has acquired beneficial ownership of 15% or more of the outstanding
IMC Common Stock or (ii) 10 business days (or such later date as may be
determined by action of the IMC Board prior to such time as any Person (as
defined in the IMC Rights Agreement) becomes a Rights Plan Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of such outstanding
IMC Common Stock (the earlier of such dates being called the "Distribution
Date"), the IMC Rights will be evidenced by (x) with respect to any IMC
Certificate outstanding as of July 12, 1989, which remains outstanding as of
the Distribution Date, by such IMC Certificate and (y) with respect to any IMC
Certificates issued after July 12, 1989, upon transfer or new issuance of IMC
Common Stock, by a notation on such IMC Certificate incorporating the IMC
Rights Agreement by reference. The IMC Rights Agreement provides that, if the
IMC Board determines in good faith that a Person who would otherwise be a
"Rights Plan Acquiring Person" has become such inadvertently and such Person
divests as promptly as practicable a sufficient number of shares of IMC Common
Stock so that such Person would no longer be a "Rights Plan Acquiring Person,"
then such Person shall not be deemed to be a "Rights Plan Acquiring Person"
for any purpose under the IMC Rights Agreement. The term "Rights Plan
Acquiring Person" does not include (i) IMC, (ii) any subsidiary of IMC, (iii)
any employee benefit plan of IMC or any subsidiary of IMC or (iv) any entity
holding IMC Common Stock for or pursuant to the terms of any such plan.
The IMC Rights Agreement provides that, until the Distribution Date, the IMC
Rights will be transferred with and only with the IMC Common Stock. As soon as
practicable following the Distribution Date, separate certificates evidencing
the IMC Rights ("IMC Right Certificates") will be mailed to holders of record
of the IMC Common Stock on the Distribution Date, and such separate IMC Right
Certificates alone will evidence the IMC Rights.
The IMC Rights are not exercisable until the Distribution Date. The IMC
Rights will expire on June 21, 1999 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the IMC Rights are earlier
redeemed by IMC as described below.
The number of outstanding IMC Rights and the number of shares of IMC Series
C Preferred Stock issuable upon exercise of each IMC Right are also subject to
adjustment in the event of a stock split of the shares of IMC Common Stock or
subdivisions, consolidations or combinations of the shares of IMC Common Stock
occurring, in any such case, prior to the Distribution Date.
In the event that, after the Shares Acquisition Date, IMC is acquired in a
merger or other business combination transaction or 50% or more of its
consolidated assets or earning power is sold or otherwise transferred (other
than the transfer of certain assets to IMC-Agrico pursuant to the Contribution
Agreement dated as of April 5, 1993, as amended, between Freeport-McMoran
Resource Partners, Limited Partnership, a Delaware limited partnership, and
IMC) proper provision will be made so that each holder of an IMC Right will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the IMC Right, that number of shares of common stock
of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the IMC Right. In the event
that any person becomes a Rights Plan Acquiring Person, proper provision shall
be made so that each holder of an IMC Right, other than IMC Rights
beneficially owned by the Rights Plan Acquiring Person and its affiliates and
associates (which will thereafter be void), will thereafter have the right to
receive upon exercise that number of shares of IMC Common
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Stock having a market value of two times the exercise price of the IMC Right.
If IMC does not have sufficient IMC Common Stock to satisfy such obligation to
issue IMC Common Stock, or if the IMC Board so elects, IMC shall deliver upon
payment of the exercise price of an IMC Right an amount of cash or securities
equivalent in value to the IMC Common Stock issuable upon exercise of an IMC
Right; provided, that if IMC fails to meet such obligation within 30 days
following the later of (x) the first occurrence of an event triggering the
right to purchase IMC Common Stock and (y) the date on which IMC's right to
redeem the IMC Rights expires, IMC must deliver, upon exercise of an IMC Right
but without requiring payment of the exercise price then in effect, IMC Common
Stock (to the extent available) and cash equal in value to the difference
between the value of the IMC Common Stock otherwise issuable upon the exercise
of an IMC Right and the exercise price then in effect. The IMC Board may
extend the 30-day period described above for up to an additional 60 days to
permit the taking of action that may be necessary to authorize sufficient
additional IMC Common Stock to permit the issuance of IMC Common Stock upon
the exercise in full of the IMC Rights.
At any time after the acquisition by a Rights Plan Acquiring Person of
beneficial ownership of 15% or more of the outstanding IMC Common Stock and
prior to the acquisition by such person or group of 50% or more of the
outstanding IMC Common Stock, the IMC Board may exchange the IMC Rights (other
than IMC Rights owned by such Rights Plan Acquiring Person which have become
void), in whole or in part, for shares of IMC Common Stock, at an exchange
ratio of one-half of the number of shares of IMC Common Stock which each
holder of an IMC Right would have a right to receive upon exercise of an IMC
Right.
At any time prior to the acquisition by a Rights Plan Acquiring Person of
beneficial ownership of 15% or more of the outstanding IMC Common Stock, the
IMC Board may redeem the IMC Rights in whole, but not in part, at a price of
$.005 per IMC Right (the "Redemption Price"). The redemption of the IMC Rights
may be made effective at such time, on such basis and with such conditions as
the IMC Board in its sole discretion may establish. Immediately upon any
redemption of the IMC Rights, the right to exercise the IMC Rights will
terminate and the only right of the holders of IMC Rights will be to receive
the Redemption Price.
The terms of the IMC Rights may be amended by the IMC Board without the
consent of the holders of the IMC Rights, except that from and after such time
as any person becomes a Rights Plan Acquiring Person no such amendment may
adversely affect the interests of the holders of IMC Rights (other than the
Rights Plan Acquiring Person and its affiliates and associates).
Vigoro does not have a rights plan.
NO STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS
The IMC Charter provides that stockholder action can be taken at only an
annual or special meeting and not by written consent in lieu of a meeting. The
IMC By-laws provide that, subject to the rights of holders of any series of
IMC Preferred Stock to elect additional directors under specified
circumstances, special meetings of stockholders can be called only by the
Chairman of the Board or the President of IMC or a majority of the IMC Board.
Because special meetings may be called only by the Chairman of the Board or
the President of IMC or a majority of the IMC Board, the provisions of the IMC
Charter prohibiting stockholder action by written consent may have the effect
of delaying consideration of a stockholder proposal until a meeting of
stockholders has been convened.
The Vigoro By-laws provide that any action required or permitted to be taken
at any meeting of stockholders of Vigoro, may be taken without a meeting, if a
consent in writing, setting forth the action so taken, is signed by the
holders of the minimum number of outstanding shares of stock of Vigoro
entitled to vote thereon. In addition, the Vigoro By-laws provide that special
meetings of the stockholders for any purpose or purposes, unless otherwise
prescribed by statute or the Vigoro Charter, may be called by either the
Chairman of the Board or the President of Vigoro and shall be called by the
President or the Secretary at the request in writing of a majority of the
Vigoro Board.
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ANTI-GREENMAIL AND FAIR PRICE PROVISIONS
The IMC Charter provides that the affirmative vote of not less than a
majority of the IMC Common Stock is required before IMC may purchase any
outstanding shares of IMC Common Stock at a price known by IMC to be above
market price from a person known by IMC to be the beneficial owner of 3% or
more of the outstanding shares of IMC Common Stock (and who has purchased or
agreed to purchase any of such shares within the most recent two-year period)
(a "Selling Stockholder"), unless the purchase is made by IMC on the same
terms and as a result of a duly authorized offer to purchase any and all of
the outstanding shares of IMC Common Stock. For purposes of such stockholder
vote, shares of IMC Common Stock held by such Selling Stockholder will be
counted as having abstained.
The Vigoro Charter has a similar provision restricting Vigoro's ability to
repurchase its securities from a holder of 5% or more of its voting stock.
The IMC Charter contains a "fair price" provision, requiring that certain
transactions, including a merger or consolidation, a sale, lease or exchange
of a substantial portion of assets, issuing voting securities, voluntary
dissolution, or reclassification or recapitalization of securities
("Transactions") involving an "Interested Stockholder" (defined generally to
be holders of 20% or more of IMC Common Stock), be approved by the affirmative
vote of the holders of at least 80% of the voting power of all of the then
outstanding shares of voting stock voting together as a single class, unless
the Transaction meets certain fair price criteria and is approved by a
majority of the IMC Board and by a majority of the disinterested Directors.
The "fair price" provision is intended to ensure that all stockholders
receive equal treatment in the event of a tender or exchange offer and to
protect stockholders against coercive or two-tiered takeover bids.
Notwithstanding the foregoing, the provision could also have the effect of
discouraging a third party from making a tender or exchange offer for IMC
Common Stock.
The Vigoro Charter and the Vigoro By-laws do not contain any "fair price"
provision.
ADVANCE NOTICE PROVISIONS FOR NOMINATIONS AND PROPOSALS
The IMC By-laws establish an advance notice procedure for stockholders to
make nominations of candidates for election as Directors or bring other
business before an annual meeting of stockholders of IMC. To be timely, notice
of stockholder nominations or proposals to be made at an annual meeting must
be received by IMC no less than 60 days prior to the scheduled date of the
meeting or within 10 days after IMC has mailed to stockholders a notice of
annual meeting of stockholders, whichever is later.
Notice to IMC by any stockholder proposing to nominate a person for election
as a Director must contain certain information, including, without limitation,
the class and number of shares of stock of IMC which are beneficially owned by
such stockholder, the reasons for such nomination and all information
regarding the proposed nominee that would be required to be included in a
proxy statement soliciting proxies for the proposed nominee. A stockholder's
notice relating to the conduct of business other than the nomination of
Directors must contain certain information about such business and about the
proposing stockholder, including, without limitation, a brief description of
the business the stockholder proposes to bring before the meeting, the reasons
for conducting such business at such meeting, the name and address of such
stockholder, the class and number of shares of stock of IMC beneficially owned
by such stockholder, and any material interest of such stockholder in the
business so proposed and all information regarding the proposed business that
would be required to be included in a proxy statement soliciting proxies for
the approval of such business. If the chairman of the meeting determines that
a person was not nominated, or other business was not brought before the
meeting, in accordance with the IMC By-laws, such person will not be eligible
for election as a Director or such business will not be conducted at such
meeting, as the case may be.
Although the IMC Charter does not give the IMC Board any power to approve or
disapprove stockholder nominations for the election of Directors or proposals
for action, the foregoing provision may have the effect of
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precluding a contest for the election of Directors or the consideration of
stockholder proposals if the proper procedures are not followed, and of
discouraging or deterring a third party from conducting a solicitation of
proxies to elect its own slate of Directors or to approve its own proposal.
Neither the Vigoro Charter nor the Vigoro By-laws contains advance notice
procedures for nomination of Directors or other business to be brought before
a stockholders' meeting by a stockholder.
PREFERRED STOCK
Pursuant to the IMC Charter, the IMC Board is authorized, subject to the
limitations prescribed by law, to provide for the issuance of shares of up to
12,000,000 shares of Preferred Stock, par value $1.00 per share (the "IMC
Preferred Stock"), in one or more series (of which 9,000,000 shares are
authorized, unissued and undesignated and 3,000,000 shares have been
designated as IMC Series C Preferred Stock), to establish the number of shares
of each such series, and to fix the designations, powers, preferences and
rights of the shares of each such series, and any qualifications, limitations
or restrictions thereof. The ability of the IMC Board to issue a series of IMC
Preferred Stock could have the effect of impeding the completion of a merger
or discouraging a third party from making a tender or exchange offer for IMC
Common Stock.
The Vigoro Charter contains substantially similar provisions authorizing,
subject to the limitations prescribed by law, up to 89,050 shares of preferred
stock, par value $100 per share, in one or more series (of which (i) 85,250
shares are authorized, unissued and undesignated, (ii) 3,500 shares have been
designated as Series E Preferred Stock, of which 2,826.2018 shares were issued
and outstanding as of December 12, 1995 and (iii) 300 shares have been
designated as Series F Preferred Stock, of which 200 shares were issued and
outstanding as of December 12, 1995).
AMENDMENT OF THE CERTIFICATE OF INCORPORATION AND BY-LAWS
The DGCL provides that a corporation may amend its certificate of
incorporation with the approval of a majority of the outstanding stock
entitled to vote thereon. An amendment of the "fair price" provision of the
IMC Charter must be approved by the affirmative vote of the holders of at
least 80% of the voting power of all then outstanding shares of voting stock
voting together as a single class.
The Vigoro Charter is silent on the procedure to amend the Vigoro Charter
but provides that the Vigoro Board has the power to adopt, amend and repeal
the Vigoro By-laws. The Vigoro By-laws provide that they may be altered,
amended or repealed by the Vigoro stockholders or the Vigoro Board.
SECTION 203 OF THE DGCL
Section 203 of the DGCL ("Section 203") prohibits generally a public
Delaware corporation, including IMC, from engaging in a "Business Combination"
with an "Interested Stockholder" for a period of three years after the date of
the transaction in which an "Interested Stockholder" became such, unless: (i)
the board of directors of such corporation approved, prior to the date such
"Interested Stockholder" became such, either such "Business Combination" or
such transaction; (ii) upon consummation of such transaction, such "Interested
Stockholder" owns at least 85% of the voting shares of such corporation
(excluding specified shares); or (iii) such "Business Combination" is approved
by the board of directors of such corporation and authorized by the
affirmative vote (at an annual or special meeting and not by written consent)
of at least 66 2/3% of the outstanding voting shares of such corporation
(excluding shares held by such Interested Stockholder). A "Business
Combination" includes (i) mergers, consolidations and sales or other
dispositions of 10% or more of the assets of a corporation to or with an
"Interested Stockholder", (ii) certain transactions resulting in the issuance
or transfer to an "Interested Stockholder" of any stock of such corporation or
its subsidiaries and (iii) other transactions resulting in a disproportionate
financial benefit to an "Interested Stockholder." An "Interested Stockholder"
is a person who, together with its affiliates and associates, owns (or within
a three-year period did own) 15% or more of a corporation's stock entitled to
vote generally in the election of directors.
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Under certain circumstances, Section 203 of the DGCL may make it more
difficult for a person who would be an "Interested Stockholder" to effect
various business combinations with a corporation which a majority of the
stockholders of the corporation approve.
The DGCL contains provisions permitting a corporation to elect not to be
subject to Section 203. IMC has not elected out of Section 203, and therefore
the restrictions imposed by Section 203 apply to IMC. Vigoro has elected out
of Section 203 and therefore is not subject to the restrictions imposed under
Section 203.
LIMITATION ON LIABILITY OF DIRECTORS
The DGCL permits a corporation to include a provision in its certificate of
incorporation eliminating or limiting the personal liability of a Director to
the corporation or its stockholders for monetary damages for a breach of the
Director's fiduciary duty as a Director, except for liability (i) for any
breach of the Director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL, which concerns unlawful payments of dividends, stock purchases or
redemptions or (iv) for any transaction from which the director derived an
improper personal benefit. Both the IMC Charter and the Vigoro Charter contain
provisions limiting the liability of their respective Directors, to the full
extent permitted by the DGCL for monetary damages for breach of their
fiduciary duty as Directors.
While these provisions provide directors with protection from awards for
monetary damages for breaches of their duty of care, they do not eliminate
such duty. Accordingly, these provisions will have no effect on the
availability of equitable remedies such as an injunction or rescission based
on a Director's breach of his or her duty of care.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The DGCL permits a corporation to indemnify officers, Directors, employees
and agents for actions taken in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the corporation,
and with respect to any criminal action, which they had no reasonable cause to
believe was unlawful. The DGCL provides that a corporation may pay expenses
(including attorneys' fees) incurred by an officer or Director in defending
any civil, criminal, administrative or investigative action (upon receipt of a
written undertaking to reimburse the corporation if indemnification is not
appropriate), and must reimburse a successful defendant for expenses,
including attorney's fees, actually and reasonably incurred, and permits a
corporation to purchase and maintain liability insurance for its directors and
officers. The DGCL provides that indemnification may be made for any claim,
issue or matter as to which a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation, unless and only to the extent a court determines that the person
is entitled to indemnity for such expenses as the court deems proper.
The IMC Charter provides that IMC will indemnify each officer and Director
of IMC to the fullest extent permitted by applicable law. The IMC By-laws
provide that each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the
fact that he or she is or was a Director or officer, of IMC, or is or was
serving at the request of IMC as a Director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan, will
be indemnified by the corporation to the full extent permitted by the DGCL.
The indemnification rights conferred by the IMC Charter are not exclusive of
any other right to which persons seeking indemnification may be entitled under
any law, by-law, agreement, vote of stockholders or disinterested Directors or
otherwise. IMC is authorized to purchase and maintain (and IMC maintains)
insurance on behalf of its Directors and officers. The Vigoro Charter and
Vigoro By-laws contain substantially similar provisions relating to
indemnification and insurance.
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BUSINESS OF IMC
GENERAL
IMC is one of the world's leading producers of crop nutrients for the
international community. IMC mines and processes potash in the United States
and Canada, and is a joint venture partner in IMC-Agrico, the nation's largest
producer, marketer and distributor of phosphate crop nutrients and a leading
producer and marketer of animal feed ingredients. IMC believes that it is one
of the lower-cost North American producers of phosphate rock, potash and
concentrated phosphates. IMC also manufactures high-value crop nutrients which
are marketed principally in the Southeastern United States under the
Rainbow(R) brand name.
IMC's business strategy focuses on maintaining its worldwide position as a
leading crop nutrient producer and supplier through extensive customer
service, efficient distribution and transportation, and supplying crop
nutrient products worldwide at competitive prices by taking advantage of
economies of scale and state-of-the-art technology to reduce costs.
Phosphorus, contained in phosphate rock, potassium, contained in potash, and
nitrogen constitute the three major nutrients required for plant growth.
Phosphorus plays a key role in the photosynthesis process. Potassium is an
important regulator of plants' physiological functions. Nitrogen is an
essential element for most organic compounds and plants. These elements are
naturally present in soil but need to be replaced through the use of crop
nutrients as crops exhaust them. There are currently no viable substitutes in
the quantities required for concentrated phosphates, potash and nitrogen crop
nutrients in the development and maintenance of high-yield crops.
In 1993, IMC contributed its phosphate crop nutrient business to IMC-Agrico.
The activities of IMC-Agrico, which is operated by IMC, include the mining and
sale of phosphate rock and the production, distribution and sale of phosphate
based crop nutrients, uranium oxide and related products.
Summarized below is a description of IMC's principal products and current
operating information.
PHOSPHATE ROCK
IMC-Agrico is the leading United States phosphate rock miner in terms of
capacity and output. IMC-Agrico's central Florida phosphate mining operations
and production plants produce phosphate rock, which is the primary raw
material used in the manufacture of concentrated phosphates. IMC-Agrico sells
phosphate rock principally to other crop nutrients manufacturers and
distributors throughout the world and uses it internally in the production of
concentrated phosphates. IMC-Agrico has 27 million tons of annual phosphate
rock capacity. Product shipments to customers in fiscal year 1995 by IMC-
Agrico phosphate rock operations totaled approximately 10.8 million tons. For
the three months ended September 30, 1995, IMC-Agrico shipped approximately
2.4 million tons of phosphate rock to customers.
CONCENTRATED PHOSPHATES
IMC-Agrico is the largest United States producer of concentrated phosphates.
IMC-Agrico's New Wales concentrated phosphates complex in central Florida is
the largest concentrated phosphates plant in the world with an estimated
annual capacity of 1.76 million tons of phosphoric acid (P/2/O/5/ equivalent).
P/2/O/5/ is an industry term indicating a product's phosphate content measured
chemically in units of phosphorous pentoxide. Concentrated phosphates are
produced by reacting phosphate rock with sulfuric acid and other materials.
IMC-Agrico's concentrated phosphates products are marketed worldwide to crop
nutrient manufacturers, distributors and retailers. In fiscal year 1995, IMC-
Agrico's concentrated phosphates operations shipped approximately 4.0 million
P/2/O/5/ tons of concentrated phosphates. For the three months ended September
30, 1995, IMC-Agrico shipped approximately 1.1 million P/2/O/5/ tons of
concentrated phosphates.
POTASH
IMC has three mines and refineries in Saskatchewan and New Mexico and is one
of the world's largest miners of potash, with a combined capacity of over 5.2
million tons per year and fiscal year 1995 shipments of
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4.5 million tons including .5 million tons produced for PCS under a Mining and
Processing Agreement. IMC's potash products are marketed worldwide to crop
nutrient manufacturers, distributors and retailers. IMC has reserves of 161
million tons of recoverable ore in New Mexico and 1.4 billion tons of
recoverable ore in Saskatchewan.
OTHER PRODUCTS
In October 1995, IMC-Agrico acquired the animal feed ingredients business of
Mallinckrodt Group Inc. The acquired business is one of the world's largest
producers of phosphate-based animal feed ingredients with an annual capacity
in excess of 700,000 tons. The principal facilities are located adjacent to
IMC-Agrico's concentrated phosphate complex at New Wales, Florida.
IMC manufactures retail crop nutrient products which are marketed under the
Rainbow brand name primarily in the southeastern United States. IMC has a 25
percent interest in the Main Pass 299 ("Main Pass") sulphur mine located in
the Gulf of Mexico. In fiscal year 1995, FRP, the joint venture operator,
produced sulphur at levels which average 6,263 tons per day or 2.3 million
tons per year. This production level exceeded the plant's designed operating
rate of 5,500 long tons per day. Using a hot-water injection process, Main
Pass is one of the most thermally efficient sulphur mines ever operated. IMC's
share of sulphur produced is used to satisfy a portion of IMC's obligations to
supply sulphur to IMC-Agrico for the production of concentrated phosphates. At
June 30, 1995, the underwater sulphur deposit contained an estimated 69.2
million long tons of recoverable sulphur, or 17.3 million long tons net to
IMC, before royalties.
Oil and gas reserves which are located in the Main Pass area are also being
developed by the Main Pass joint venture. At June 30, 1995, the field
contained proved and probable reserves of 3.2 million barrels of oil. All gas
production is consumed internally in heating water for extraction of sulphur.
IMC is incorporated in the State of Delaware. Its principal executive
offices are located at 2100 Sanders Road, Northbrook, Illinois 60062 and its
telephone number is (708) 272-9200. For further information concerning IMC,
see "AVAILABLE INFORMATION," "INCORPORATION OF DOCUMENTS BY REFERENCE" and
"SUMMARY--Selected Historical Consolidated Financial Information."
BUSINESS OF VIGORO
GENERAL
Vigoro is one of the world's leading producers and distributors of potash
and one of the largest distributors in the United States of crop nutrients and
related products through its retail distribution network. Vigoro believes it
is the lowest cost producer of potash in the world. Vigoro's retail
distribution network extends principally to corn and soybean farmers in the
Midwestern and Southeastern United States. Vigoro also sells potash and
certain other products to industrial users in the United States and Canada.
POTASH
Vigoro operates a 2.4 million ton capacity potash mine and refinery at Belle
Plaine, Saskatchewan, Canada, which utilizes solution mining technology for
its mining operations, and a 1.5 million ton capacity potash mine and mill
near Colonsay, Saskatchewan, Canada, which utilizes shaft mining methods for
its mining operations. According to a published independent study, the Belle
Plaine mine had the lowest operating costs of any potash producer in the world
in 1992, the most recent year for which this information is available, and the
Colonsay mine had the fourth lowest operating costs of any potash producer in
the world for that year.
Vigoro's principal production facilities for nitrogen-based crop nutrients
and related products are located in the Midwestern and Southeastern United
States with direct access to barge transportation and plentiful supplies of
raw materials.
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DISTRIBUTION NETWORK
Vigoro sells crop nutrients and related products to corn and soybean farmers
in the Midwestern and Southeastern United States on a wholesale basis through
crop nutrients dealers and cooperatives, and on a retail basis through the
FARMARKET network, a distribution network consisting of approximately 200
retail farm service outlets. The FARMARKET network provides a wide range of
services for farmers, including soil testing, custom crop nutrients blending
and crop nutrients application. Vigoro also sells specialty crop nutrients
products consisting of lawn and garden products and turf and nursery products.
The lawn and garden products are sold primarily to major national retail
chains, and the turf and nursery products are sold to golf courses, nurseries,
landscape contractors and institutions, directly and through independent
distributors.
Vigoro is incorporated in the State of Delaware. Its principal executive
offices are located at 225 North Michigan Avenue, Suite 2500, Chicago,
Illinois 60601 and its telephone number is (312) 819-2020.
For further information concerning Vigoro, see "AVAILABLE INFORMATION,"
"INCORPORATION OF DOCUMENTS BY REFERENCE" and "SUMMARY--Selected Historical
Consolidated Financial Information."
PROPOSED IMC CHARTER AMENDMENTS
Stock Amendment. At the IMC Special Meeting, the stockholders of IMC will be
asked to consider and vote upon the Stock Amendment which would increase the
number of authorized shares of IMC Common Stock from 100,000,000 to
250,000,000.
At the close of business on the IMC Record Date, there were 59,548,268
shares of IMC Common Stock outstanding and 5,719,695 shares of IMC Common
Stock reserved for future issuance. Depending on the Conversion Number as
adjusted based on the Average Price, IMC may not have a sufficient number of
authorized shares to satisfy the Share Issuance.
Furthermore, the IMC Board believes it is desirable to authorize additional
shares of IMC Common Stock in addition to those necessary to satisfy IMC's
obligations under the Merger Agreement so that there will be sufficient shares
available for issuance for purposes that the IMC Board may hereafter determine
to be in the best interests of IMC and its stockholders. Such purposes could
include the offer of shares for cash, the declaration of stock splits and
stock dividends, mergers and acquisitions and other general corporate
purposes. In many situations, prompt action may be required which would not
permit seeking stockholder approval to authorize additional shares for the
specific transaction on a timely basis. The IMC Board believes it should have
the flexibility to act promptly in the best interests of stockholders. The
terms of any future issuance of shares of IMC Common Stock will be dependent
largely on market and financial conditions and other factors existing at the
time of issuance. Although there are no present plans or commitments for their
use, such shares would be available for issuance without further action by
stockholders except as required by law or applicable stock exchange
requirements. The current rules of the NYSE would require stockholder approval
if the number of shares of IMC Common Stock to be issued would equal or exceed
20% of the number of shares of IMC Common Stock outstanding immediately prior
to such issuance.
Although the IMC Board has no current intention of issuing any additional
shares of IMC Common Stock as an anti-takeover defense, the issuance of
additional shares could be used to create impediments to or otherwise
discourage persons attempting to gain control of IMC. For example, the
issuance of additional shares could be used to dilute the voting power of
shares then outstanding. Shares of IMC Common Stock could also be issued to
persons or entities who would support the IMC Board in opposing a takeover bid
which the IMC Board determines to be not in the best interests of IMC and its
stockholders. In the case of a hostile tender offer, the ability of the IMC
Board to issue additional shares of IMC Common Stock could be viewed as
beneficial to management by stockholders who want to participate in such
tender offer.
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Director Amendment. The Merger Agreement requires the IMC Board to elect
four new Directors, which would increase the size of the IMC Board to 13
Directors. The IMC Charter currently provides that the range of the number of
Directors of the IMC Board is not less than 3 nor more than 12 Directors.
Accordingly, in order to expand the IMC Board to allow for the additional four
Directors and to provide for the ability to have three classes of Directors
with an equal number of Directors in each class, at the IMC Special Meeting
the stockholders of IMC will also be asked to consider and vote upon the
Director Amendment, which would increase the range of the number of directors
to not less than 5 nor more than 15 Directors.
Approval of each of the Charter Amendments will require the affirmative vote
of a majority of the outstanding shares of IMC Common Stock entitled to vote
thereon. The form of the proposed Charter Amendments is attached as Annex VIII
to this Proxy Statement/Prospectus.
The IMC Board has unanimously determined that each of the Charter Amendments
is advisable and in the best interests of the stockholders of IMC. THE IMC
BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF IMC VOTE IN FAVOR OF
EACH OF THE CHARTER AMENDMENTS.
EXPERTS
The consolidated financial statements appearing in IMC's Annual Report on
Form 10-K for the year ended June 30, 1995, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements appearing in Vigoro's Annual Report on
Form 10-K for the transition period from July 1, 1994 through December 31,
1994 have been audited by Arthur Andersen LLP, independent public accountants,
as set forth in their reports thereon included therein and incorporated herein
by reference. Such consolidated financial statements are incorporated herein
by reference in reliance upon the authority of such firm as experts in
accounting and auditing in giving said reports.
The financial statements of the Central Canada Potash division of Noranda,
Inc. (the assets of which were purchased by Vigoro on January 5, 1995) as of
and for the years ended December 31, 1992 and 1993 incorporated herein by
reference to Vigoro's Current Report on Form 8-K dated January 5, 1995 have
been audited by Ernst & Young, Chartered Accountants, as indicated in their
report with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in giving said report.
Representatives of Ernst & Young LLP and Arthur Andersen LLP are expected to
be present at the IMC Special Meeting and the Vigoro Special Meeting,
respectively, and will have the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
LEGAL OPINIONS
Arnold & Porter, special tax counsel to Vigoro, will deliver an opinion
concerning certain federal income tax consequences of the Merger.
The validity of the shares of IMC Common Stock being offered hereby is being
passed upon for IMC by Marschall I. Smith, Senior Vice President, General
Counsel and Secretary of IMC. Mr. Smith beneficially owned 71,276 shares of
IMC Common Stock as of the Record Date (including 70,100 shares issuable upon
the exercise of stock options, 38,400 of which are immediately exercisable).
81
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STOCKHOLDER PROPOSALS
Any IMC stockholder who wishes to submit a proposal for presentation to
IMC's 1996 Annual Meeting of Stockholders must have submitted the proposal to
IMC, Attention: Secretary, not later than May 10, 1996 for inclusion, if
appropriate, in IMC's proxy statement and form of proxy relating to its 1996
Annual Meeting. In addition, IMC's By-laws contain certain requirements with
respect to the submission of proposals and the nomination of Directors at any
stockholder meeting.
Any stockholder proposal intended to be presented at Vigoro's next annual
meeting of stockholders, if any, must be received by Vigoro a reasonable time
before the solicitation of proxies for that meeting is made in order to be
considered for inclusion in the proxy statement for that meeting. The annual
meeting will be held only if the Merger is not consummated.
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ANNEXES TO THE PROXY STATEMENT/PROSPECTUS
ANNEX I MERGER AGREEMENT
ANNEX II VOTING AGREEMENT
ANNEX III STOCK OPTION AGREEMENT
ANNEX IV REGISTRATION RIGHTS AGREEMENT
ANNEX V OPINION OF LEHMAN BROTHERS INC.
ANNEX VI OPINION OF J.P. MORGAN SECURITIES INC.
ANNEX VII DELAWARE GENERAL CORPORATION LAW SECTION 262
ANNEX VIII PROPOSED IMC CHARTER AMENDMENTS
83
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ANNEX I
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
AMONG
IMC GLOBAL INC.
BULL MERGER COMPANY
AND
THE VIGORO CORPORATION
DATED AS OF NOVEMBER 13, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
THE MERGER
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Section 1.1 The Merger................................................. I-1
Section 1.2 Effective Time............................................. I-1
Section 1.3 Effects of the Merger...................................... I-2
Section 1.4 Certificate of Incorporation; By-laws; Directors and
Officers................................................... I-2
Section 1.5 Conversion of Securities................................... I-2
Section 1.6 Parent to Make Stock Certificates Available................ I-3
Section 1.7 Dividends; Transfer Taxes; Withholding..................... I-4
Section 1.8 No Fractional Shares....................................... I-5
Section 1.9 Return of Exchange Fund.................................... I-5
Section 1.10 November Stock Dividend; Adjustment of Conversion Number... I-5
Section 1.11 No Further Ownership Rights in Company Common Shares....... I-6
Section 1.12 Closing of Company Transfer Books.......................... I-6
Section 1.13 Further Assurances......................................... I-6
Section 1.14 Closing.................................................... I-6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 2.1 Organization, Standing and Power........................... I-6
Section 2.2 Capital Structure.......................................... I-7
Section 2.3 Authority.................................................. I-7
Section 2.4 Consents and Approvals; No Violation....................... I-8
Section 2.5 SEC Documents and Other Reports............................ I-9
Section 2.6 Registration Statement and Joint Proxy Statement........... I-9
Section 2.7 Absence of Certain Changes or Events....................... I-9
Section 2.8 No Existing Violation, Default, Etc........................ I-10
Section 2.9 Licenses and Permits....................................... I-10
Section 2.10 Environmental Matters...................................... I-11
Section 2.11 Tax Matters................................................ I-11
Section 2.12 Actions and Proceedings.................................... I-11
Section 2.13 Labor Matters.............................................. I-12
Section 2.14 Contracts.................................................. I-12
Section 2.15 ERISA...................................................... I-12
Section 2.16 Liabilities................................................ I-13
Section 2.17 Opinion of Financial Advisor............................... I-13
Section 2.18 Pooling of Interests; Reorganization....................... I-13
Section 2.19 Operations of Sub.......................................... I-13
Section 2.20 Brokers.................................................... I-13
Section 2.21 Ownership of Company Capital Stock......................... I-13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power........................... I-14
Section 3.2 Capital Structure.......................................... I-14
Section 3.3 Authority.................................................. I-14
Section 3.4 Consents and Approvals; No Violation....................... I-15
</TABLE>
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Section 3.5 SEC Documents and Other Reports............................ I-15
Section 3.6 Registration Statement and Joint Proxy Statement........... I-16
Section 3.7 Absence of Certain Changes or Events....................... I-16
Section 3.8 No Existing Violation, Default, Etc........................ I-16
Section 3.9 Licenses and Permits....................................... I-17
Section 3.10 Environmental Matters...................................... I-17
Section 3.11 Tax Matters................................................ I-17
Section 3.12 Actions and Proceedings.................................... I-18
Section 3.13 Labor Matters.............................................. I-18
Section 3.14 Contracts.................................................. I-18
Section 3.15 ERISA...................................................... I-19
Section 3.16 Liabilities................................................ I-20
Section 3.17 Opinion of Financial Advisor............................... I-20
Section 3.18 State Takeover Statutes; Absence of Stockholder Rights
Plan....................................................... I-20
Section 3.19 Pooling of Interests; Reorganization....................... I-20
Section 3.20 Brokers.................................................... I-20
Section 3.21 Ownership of Parent Capital Stock.......................... I-20
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger..................... I-20
Section 4.2 No Solicitation............................................ I-23
Section 4.3 Third Party Standstill Agreements.......................... I-24
Section 4.4 Pooling of Interests; Reorganization....................... I-24
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meetings....................................... I-24
Section 5.2 Preparation of the Registration Statement and the Joint
Proxy Statement............................................ I-25
Section 5.3 Comfort Letters............................................ I-25
Section 5.4 Access to Information...................................... I-25
Section 5.5 Compliance with the Securities Act......................... I-26
Section 5.6 Stock Exchange Listings.................................... I-26
Section 5.7 Fees and Expenses.......................................... I-26
Section 5.8 Company Stock Options...................................... I-28
Section 5.9 Reasonable Best Efforts; Pooling of Interests.............. I-28
Section 5.10 Public Announcements....................................... I-29
Section 5.11 Real Estate Transfer and Gains Tax......................... I-29
Section 5.12 State Takeover Laws........................................ I-29
Section 5.13 Indemnification; Directors and Officers Insurance.......... I-30
Section 5.14 Notification of Certain Matters............................ I-31
Section 5.15 Board of Directors......................................... I-31
Section 5.16 Employee Benefits.......................................... I-31
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger. I-32
Section 6.2 Conditions to Obligation of the Company to Effect the
Merger..................................................... I-33
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the
Merger..................................................... I-34
</TABLE>
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ARTICLE VII
TERMINATION; AMENDMENT AND WAIVER
<C> <S> <C>
Section 7.1 Termination.................................................. I-35
Section 7.2 Effect of Termination........................................ I-37
Section 7.3 Amendment.................................................... I-37
Section 7.4 Waiver....................................................... I-37
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties............... I-37
Section 8.2 Notices...................................................... I-37
Section 8.3 Interpretation............................................... I-38
Section 8.4 Counterparts................................................. I-38
Section 8.5 Entire Agreement; No Third-Party Beneficiaries............... I-38
Section 8.6 Governing Law................................................ I-38
Section 8.7 Assignment................................................... I-38
Section 8.8 Severability................................................. I-38
Section 8.9 Enforcement of this Agreement................................ I-38
</TABLE>
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AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger dated as of November 13, 1995 (this
"Agreement") among IMC Global Inc., a Delaware corporation ("Parent"), Bull
Merger Company, a Delaware corporation and a wholly-owned subsidiary of Parent
("Sub"), and The Vigoro Corporation, a Delaware corporation (the "Company")
(Sub and the Company being hereinafter collectively referred to as the
"Constituent Corporations").
WITNESSETH:
Whereas, the respective Boards of Directors of Parent, Sub and the Company
have approved and declared advisable the merger of Sub into the Company (the
"Merger"), upon the terms and subject to the conditions herein set forth,
whereby each issued and outstanding share of Common Stock, $.01 par value, of
the Company ("Company Common Shares"), not owned directly or indirectly by
Parent or the Company, will be converted into shares of Common Stock, $1.00
par value, of Parent ("Parent Common Stock");
Whereas, the respective Boards of Directors of Parent and the Company have
determined that the Merger is in furtherance of and consistent with their
respective long-term business strategies and is fair to and in the best
interests of their respective stockholders, and Parent has approved this
Agreement and the Merger as the sole stockholder of Sub;
Whereas, in order to induce Parent and Sub to enter into this Agreement,
concurrently herewith the Company is entering into a Stock Option Agreement
dated as of the date hereof (the "Stock Option Agreement") with Parent, the
form of which is attached hereto as Exhibit A;
Whereas, concurrently herewith Parent and Great American Management and
Investment, Inc. (the "Principal Stockholder") are entering into a Voting
Agreement dated as of the date hereof (the "Voting Agreement") and a Limited
Irrevocable Proxy (the "Irrevocable Proxy"), the forms of which are attached
hereto as Exhibit B;
Whereas, for United States income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
Whereas, it is intended that the Merger shall be recorded for accounting
purposes as a pooling of interests.
Now, Therefore, in consideration of the premises, representations,
warranties and agreements herein contained, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions herein
set forth, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Sub shall be merged with and into the Company at the
Effective Time (as hereinafter defined). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub in accordance with the DGCL.
Section 1.2 Effective Time. The Merger shall become effective when a
Certificate of Merger (the "Certificate of Merger"), executed in accordance
with the relevant provisions of the DGCL, has been filed with the Secretary of
State of the State of Delaware; provided, however, that, upon the mutual
consent of the Constituent Corporations, the Certificate of Merger may provide
for a later date of effectiveness of the Merger, but not to exceed 30 days
after the date that the Certificate of Merger has been filed. When used in
this
I-1
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Agreement, the term "Effective Time" means the later of the date and time at
which the Certificate of Merger has been filed or such later date and time as
is established by the Certificate of Merger. The filing of the Certificate of
Merger shall be made as soon as practicable after the satisfaction or waiver
of the conditions to the Merger herein set forth.
Section 1.3 Effects of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the DGCL and as
set forth in this Agreement. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, except as otherwise provided
herein, all of the property, rights, privileges, powers and franchises of Sub
and the Company shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Sub and the Company shall become the debts,
liabilities and duties of the Surviving Corporation.
Section 1.4 Certificate of Incorporation; By-laws; Directors and Officers.
(a) At the Effective Time, the Certificate of Incorporation of the Company,
as in effect prior to the Effective Time, shall be amended so that the first
paragraph of ARTICLE FOURTH thereof shall read in its entirety as follows:
"The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 1,003,800 consisting of 3,800 shares of
Preferred Stock, $100.00 par value per share, and 1,000,000 shares of
Common Stock, $.01 par value per share."
As so amended, such Certificate of Incorporation shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law. From and after the Effective Time,
the Surviving Corporation shall have the power to amend and restate such
Certificate of Incorporation to delete any Certificates of Designations
relating to any series of Preferred Stock of the Surviving Corporation that is
not then outstanding.
(b) The By-Laws of the Company, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or in the Certificate of
Incorporation of the Surviving Corporation or as provided by applicable law.
(c) The Board of Directors of the Surviving Corporation shall consist of not
less than three directors to be designated by Parent, who shall serve until
respective successors are duly elected and qualified.
(d) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until their respective
successors are duly elected and qualified.
Section 1.5 Conversion of Securities. As of the Effective Time, by virtue of
the Merger and without any action on the part of any stockholder of either of
the Constituent Corporations:
(a) Each issued and outstanding common share, $.01 par value, of Sub
shall be converted into 500 Common Shares of the Surviving Corporation.
(b) All Company Common Shares that are held in the treasury of the
Company and any Company Common Shares owned by Parent shall be cancelled
and no capital stock of Parent or other consideration shall be delivered in
exchange therefor.
(c) Subject to the provisions of Sections 1.8 and 1.10, each Company
Common Share issued and outstanding immediately prior to the Effective Time
(other than shares to be cancelled in accordance with Section 1.5(b)) shall
be converted into 0.80 (such number being hereinafter referred to as the
"Conversion Number") of a validly issued, fully paid and nonassessable
share of Parent Common Stock; provided, however, that if the average of the
per share daily closing prices on the New York Stock Exchange (the "NYSE")
of Parent Common Stock (as reported in the NYSE Composite Transactions in
the Wall Street Journal, Midwest Edition) during the 20 consecutive trading
days ending on the fifth trading day prior to
I-2
<PAGE>
the date that the Company Stockholder Meeting is held (the "Average Price")
is less than $61.875, then the Conversion Number shall be equal to the
lesser of: (a) 0.85; and (b) the number obtained by dividing $49.50 by the
Average Price; and provided, further, that if the Average Price is greater
than $80.00, then the Conversion Number shall be equal to the greater of:
(x) 0.75; and (y) the number obtained by dividing $64.00 by the Average
Price. All such Company Common Shares, when so converted, shall no longer
be outstanding and shall automatically be cancelled and retired; and each
holder of a certificate representing prior to the Effective Time any such
Company Common Shares shall cease to have any rights with respect thereto,
except the right to receive (i) certificates representing the shares of
Parent Common Stock into which such Company Common Shares have been
converted, (ii) any dividends and other distributions in accordance with
Section 1.7 and (iii) any cash, without interest, to be paid in lieu of any
fractional share of Parent Common Stock in accordance with Section 1.8.
(d) The Company Series E Preferred Shares and the Company F Preferred
Shares (as such terms are defined in Section 3.2) shall not be converted or
cancelled (except to the extent that the holder of any such Series E
Preferred Shares or Series F Preferred Shares shall have perfected and not
lost or withdrawn any right to appraisal for such shares under any
applicable provisions of the DGCL) but shall remain Company Series E
Preferred Shares and Company Series F Preferred Shares, respectively, of
the Surviving Corporation (collectively, the "Preferred Shares") without
alteration of their relative rights, preferences, terms and conditions.
Section 1.6 Parent to Make Stock Certificates Available. (a) Exchange of
Certificates. Parent shall authorize a commercial bank having capital of not
less than $5 billion (or such other person or persons as shall be acceptable
to Parent and the Company) to act as exchange agent hereunder (the "Exchange
Agent"). As soon as practicable after the Effective Time, Parent shall deposit
with the Exchange Agent, in trust for the holders of certificates (the
"Company Certificates") which immediately prior to the Effective Time
represented Company Common Shares converted in the Merger, certificates (the
"Parent Certificates") representing the shares of Parent Common Stock (such
shares of Parent Common Stock, together with any dividends or distributions
with respect thereto deposited in accordance with Section 1.7, being
hereinafter referred to as the "Exchange Fund") issuable pursuant to Section
1.5(c) in exchange for the outstanding Company Common Shares. The Exchange
Fund shall not be used for any other purpose.
(b) Exchange Procedures. Promptly after the Effective Time, the Exchange
Agent shall mail to each record holder of a Company Certificate at the
Effective Time a letter of transmittal in customary and reasonable form (which
shall specify that delivery shall be effected, and risk of loss and title to
the Company Certificates shall pass, only upon actual delivery thereof to the
Exchange Agent and shall contain instructions for use in effecting the
surrender of the Company Certificates in exchange for the property described
in the next sentence). Upon surrender for cancellation to the Exchange Agent
of Company Certificate(s) held by any record holder of a Company Certificate,
together with such letter of transmittal duly executed, such holder shall be
entitled to receive in exchange therefor a Parent Certificate representing the
number of whole shares of Parent Common Stock into which the Company Common
Shares represented by the surrendered Company Certificate(s) shall have been
converted at the Effective Time pursuant to this Article I, cash in lieu of
any fractional share of Parent Common Stock in accordance with Section 1.8 and
any dividends and other distributions payable in accordance with Section 1.7;
and the Company Certificate(s) so surrendered shall forthwith be cancelled.
Shares of Parent Common Stock issued in the Merger shall be issued as of, and
be deemed to be outstanding as of, the Effective Time. Parent shall cause all
such shares of Parent Common Stock issued pursuant to the Merger to be duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
In the event any Company Certificate(s) shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate(s) to be lost, stolen or destroyed and, if reasonably
required by Parent or the Surviving Corporation, upon the posting by such
person of a bond in such amount as Parent or the Surviving Corporation may
reasonably direct as indemnity against any claim that may be made against it
with respect to such Certificate(s), the Exchange Agent will issue in respect
of such lost, stolen or destroyed Certificate(s), the consideration to be
received by virtue of the Merger with respect to the Company
I-3
<PAGE>
Common Shares represented thereby (subject to the payment of cash in lieu of
fractional shares in accordance herewith) and such person shall be entitled to
the voting, dividend and other distribution rights provided herein with
respect thereto.
(c) Status of Company Certificates. Subject to the provisions of Sections
1.7 and 1.8, each Company Certificate which immediately prior to the Effective
Time represented Company Common Shares to be converted in the Merger shall,
from and after the Effective Time until surrendered in exchange for Parent
Certificate(s) in accordance with this Section 1.6, be deemed for all purposes
to represent the number of shares of Parent Common Stock into which such
Company Common Shares shall have been so converted. Appropriate procedures
shall be established by Parent and the Exchange Agent so that each holder of a
Company Certificate at the Effective Time shall be entitled to vote on all
matters subject to vote of holders of Parent Common Stock with a record date
on or after the date of the Effective Time, whether or not such Certificate
holder shall have surrendered Certificates in accordance with the provisions
of this Agreement. For purposes of this Section 1.6, Parent may rely
conclusively on the shareholder records of the Company in determining the
identity of, and the number of Company Common Shares held by, each holder of a
Company Certificate at the Effective Time.
(d) Notwithstanding anything contained in the preceding provisions of this
Section 1.6 or elsewhere in this Agreement to the contrary, all shares of
Parent Common Stock which are required by virtue of the Merger to be issued to
a holder of Company Common Shares whose acquisition of such shares of Parent
Common Stock is subject to the reporting requirements of the Hart Scott Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall at the
written request of such holder be placed in an escrow by the Exchange Agent
for the benefit of such holder, pending expiration or termination of the
waiting period under the HSR Act with respect to the acquisition of such
Parent Common Stock on terms which are consistent with 16 CFR Section
801.31(d) (it being understood that, if such escrow is not permitted under
applicable law or any rules or regulations or interpretations thereunder or if
such escrow would cause the Merger not to qualify as a pooling of interests
under generally accepted accounting principles, the foregoing provisions of
this paragraph (d) shall not apply).
(e) To the extent that any holder of Preferred Shares shall make a demand
for appraisal of such holder's Preferred Shares pursuant to any applicable
provision of the DGCL, the Company shall give Parent prompt notice upon
receipt of such demand or appraisal. The Company agrees that, prior to the
Effective Time, it will not, except with the prior written consent of Parent,
voluntarily make any payment with respect to, or settle or offer to settle
with, any such holder of Preferred Shares. Each holder of Preferred Shares who
shall become entitled, pursuant to any applicable appraisal rights provisions
of the DGCL, to payment for his or her Preferred Shares shall receive payment
therefor from the Surviving Corporation (but only after the amount thereof
shall have been agreed upon or finally determined pursuant to such provisions)
and such Preferred Shares shall be cancelled.
Section 1.7 Dividends; Transfer Taxes; Withholding. (a) No dividends or
other distributions that are declared on or after the Effective Time on Parent
Common Stock, or are payable to the holders of record thereof who became such
on or after the Effective Time, shall be paid to any person entitled by reason
of the Merger to receive Parent Certificates representing Parent Common Stock,
and no cash payment in lieu of any fractional share of Parent Common Stock
shall be paid to any such person pursuant to Section 1.8, until such person
shall have surrendered its Company Certificate(s) as provided in Section 1.6.
Subject to applicable law, there shall be paid to each person receiving a
Parent Certificate representing such shares of Parent Common Stock: (i) at the
time of such surrender or as promptly as practicable thereafter, the amount of
any dividends or other distributions theretofore paid with respect to the
shares of Parent Common Stock represented by such Parent Certificate and
having a record date on or after the Effective Time and a payment date prior
to such surrender; and (ii) at the appropriate payment date or as promptly as
practicable thereafter, the amount of any dividends or other distributions
payable with respect to such shares of Parent Common Stock and having a record
date on or after the Effective Time but prior to such surrender and a payment
date on or subsequent to such surrender. In no event shall the person entitled
to receive such dividends or other distributions be entitled to receive
interest on such dividends or other distributions.
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(b) If any cash or Parent Certificate representing shares of Parent Common
Stock is to be paid to or issued in a name other than that in which the
Company Certificate surrendered in exchange therefor is registered, it shall
be a condition of such exchange that the Company Certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of such Parent
Certificate and the distribution of such cash payment in a name other than
that of the registered holder of the Company Certificate so surrendered, or
shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. Parent or the Exchange Agent shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to
this Agreement to any holder of Company Common Shares such amounts as Parent
or the Exchange Agent are required to deduct and withhold under the Code or
any provision of state, local or foreign tax law, with respect to the making
of such payment. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the Company Common Shares
in respect of whom such deduction and withholding was made by Parent or the
Exchange Agent.
Section 1.8 No Fractional Shares. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender
for exchange of Company Certificates pursuant to this Article I (taking into
account all Company Certificates held by a stockholder); no dividend or other
distribution by Parent and no stock split, combination or reclassification
shall relate to any such fractional share; and no such fractional share shall
entitle the record or beneficial owner thereof to vote or to any other rights
of a stockholder of Parent. In lieu of any such fractional share, each holder
of Company Common Shares who would otherwise have been entitled, based on all
Company Certificate(s) surrendered for exchange by such holder, thereto upon
the surrender of Company Certificate(s) for exchange pursuant to this Article
I will promptly be paid an amount in cash (without interest) rounded to the
nearest whole cent, determined by multiplying (i) the per share closing price
on the New York Stock Exchange, Inc. (the "NYSE") of Parent Common Stock (as
reported in the NYSE Composite Transactions) on the date on which the
Effective Time shall occur (or, if the Parent Common Stock shall not trade on
the NYSE on such date, the first day of trading in Parent Common Stock on the
NYSE thereafter) by (ii) the fractional share to which such holder would
otherwise be entitled. Parent shall make available to the Exchange Agent the
cash necessary for this purpose.
Section 1.9 Return of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the former holders of Company Common Shares for one
year after the Effective Time shall be delivered to Parent, upon its request,
and any such former holders who have not theretofore surrendered to the
Exchange Agent their Company Certificate in compliance with this Article I
shall thereafter look only to Parent for payment of their claim for shares of
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to such shares of Parent
Common Stock. Neither Parent nor the Company shall be liable to any former
holder of Company Common Shares for any such shares of Parent Common Stock
held in the Exchange Fund (and any such cash, dividends and distributions
payable in respect thereof) which is delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
Section 1.10 November Stock Dividend; Adjustment of Conversion Number. The
Board of Directors of Parent has declared a two-for-one stock split which is
to be effected in the form of a 100% stock dividend to be distributed on
November 30, 1995 to stockholders of record of Parent Common Stock as of the
close of business on November 15, 1995 (the "November Stock Dividend").
Section 1.5 sets forth the Conversion Number and certain share price
information before giving effect to the November Stock Dividend.
Notwithstanding anything contained herein to the contrary, from and after the
record date for the November Stock Dividend, Section 1.5 shall be deemed
automatically amended and restated to the effect set forth in Schedule 1.5 and
thereafter all references in this Agreement to Section 1.5 or the Conversion
Number shall refer to such amended and restated Section 1.5 and the Conversion
Number set forth in Schedule 1.5. In the event of any other stock split,
combination, reclassification or stock dividend with respect to Parent Common
Stock, any change or conversion of Parent Common Stock into other securities
or any other dividend or distribution with respect to Parent
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Common Stock (other than quarterly cash dividends permitted by Section
4.1(a)(i)(A)), or the issuance of any securities, property or cash upon the
exercise of, or in exchange for, Parent Rights (as defined in Section 2.2
herein) or if a record date with respect to any of the foregoing should occur,
prior to the Effective Time, appropriate, equitable and proportionate
adjustments shall be made to the Conversion Number and related numbers and
stock prices set forth in Section 1.5 (or Schedule 1.5 as the case may be),
and thereafter all references in this Agreement to the Conversion Number shall
be deemed to be to the Conversion Number as so adjusted.
Section 1.11 No Further Ownership Rights in Company Common Shares. All
certificates representing shares of Parent Common Stock delivered upon the
surrender for exchange of any Company Certificate in accordance with the terms
hereof (including any cash paid pursuant to Section 1.7 or 1.8) shall be
deemed to have been delivered (and paid) in full satisfaction of all rights
pertaining to the Company Common Shares represented by such Company
Certificate.
Section 1.12 Closing of Company Transfer Books. At the Effective Time, the
transfer books of the Company for the Company Common Shares shall be closed,
and no transfer of Company Common Shares shall thereafter be made. Subject to
the last sentence of Section 1.9, if, after the Effective Time, Company
Certificates are presented to the Surviving Corporation, they shall be
cancelled and exchanged as provided in this Article I.
Section 1.13 Further Assurances. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills
of sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (i) to vest, perfect or confirm, of record or otherwise,
in the Surviving Corporation its right, title and interest in, to or under any
of the rights, privileges, powers, franchises, properties or assets of either
of the Constituent Corporations or (ii) otherwise to carry out the purposes of
this Agreement, the Surviving Corporation and its proper officers and
directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either Constituent Corporation, all such deeds,
bills of sale, assignments and assurances and to do, in the name and on behalf
of either Constituent Corporation, all such other acts and things as may be
necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title and interest in, to and under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
Section 1.14 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Sidley & Austin,
One First National Plaza, Chicago, Illinois at 10:00 A.M., local time, on the
first business day on which each of the conditions set forth in Article VI
shall have been (and continue to be) fulfilled or waived, or at such other
time and place as Parent and the Company may agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant, jointly and severally, to the Company,
except as set forth in the Parent Letter (as hereinafter defined) as follows:
Section 2.1 Organization, Standing and Power. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware; all of Sub's outstanding shares of capital
stock are owned directly by Parent; and each of Parent and Sub has the
requisite corporate power and authority to carry on its business as now being
conducted. Each Subsidiary of Parent is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it
is incorporated and has the requisite corporate power and authority to carry
on its business as now being conducted. Parent and each of its Subsidiaries
are duly qualified to do business, and are in good standing, in each
jurisdiction where the character of their properties owned or held under lease
or the nature of their activities makes such qualification necessary, except
where the failure to be so qualified would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent. For
purposes of this Agreement: (i) "Material Adverse Change" or "Material Adverse
Effect" means, when used with respect to Parent or the Company, as the case
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may be, any change or effect that is materially adverse to the business,
properties, assets, liabilities, condition (financial or otherwise) or results
of operations of Parent and its Subsidiaries taken as a whole, or the Company
and its Subsidiaries taken as a whole, as the case may be, except, in the case
of a Material Adverse Change, for any change resulting from conditions or
circumstances generally affecting the businesses in which Parent or the
Company, as the case may be, operates; and (ii) "Subsidiary" means any
corporation, partnership, joint venture or other legal entity and of which
Parent or the Company, as the case may be (either alone or through or together
with any other Subsidiary), owns, directly or indirectly, 50% or more of the
capital stock or other equity interests the holders of which are generally
entitled to vote with respect to matters to be voted on in such corporation,
partnership, joint venture or other legal entity. Except as disclosed in the
Parent SEC Documents or the Parent Letter, Parent and its Subsidiaries are not
subject to any material joint venture, joint operating or similar arrangement
or any material shareholders agreement relating thereto.
Section 2.2 Capital Structure. As of the date hereof, the authorized capital
stock of Parent consists of: 100,000,000 shares of Parent Common Stock and
12,000,000 shares of Series Preferred Stock, $1.00 par value (the "Parent
Preferred Stock"), of which 3,000,000 shares have been designated as "Junior
Participating Preferred Stock, Series C" (the "Parent Series C Preferred
Stock"). At the close of business on October 31, 1995, 29,748,273 shares of
Parent Common Stock were issued and outstanding, all of which were validly
issued, are fully paid and nonassessable and are free of preemptive rights. No
shares of Parent Preferred Stock have been issued, and there has been no
material change in the number of issued and outstanding shares of Parent
Common Stock between October 31 and November 10, 1995. All of the shares of
Parent Common Stock issuable in exchange for Company Common Shares at the
Effective Time in accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and nonassessable and free of
preemptive rights. As of the date of this Agreement, except for this
Agreement, except as provided in Parent's Restated Certificate of
Incorporation, except for the rights ("Parent Rights") to purchase shares of
Parent Series C Preferred Stock pursuant to the Rights Agreement (the "Parent
Rights Agreement") dated June 21, 1989 between Parent and the First National
Bank of Chicago, as Rights Agent, except for stock options covering not in
excess of 300,000 shares of Parent Common Stock (collectively, the "Parent
Stock Options") and except for the November Stock Dividend, there are no
options, warrants, calls, rights or agreements to which Parent or any of its
Subsidiaries is a party or by which any of them is bound obligating Parent or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Parent or any such
Subsidiary or obligating Parent or any such Subsidiary to grant, extend or
enter into any such option, warrant, call, right or agreement. Each
outstanding share of capital stock of each Subsidiary of Parent is duly
authorized, validly issued, fully paid and nonassessable and, except as
disclosed in the Parent SEC Documents or the Parent Letter (as such terms are
hereinafter defined), each such share is beneficially owned by Parent or
another Subsidiary of Parent, free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
voting rights, charges and other encumbrances of any nature whatsoever. As of
the date of its filing, Exhibit 21 to Parent's Annual Report on Form 10-K for
the year ended June 30, 1995, as filed with the United States Securities and
Exchange Commission (the "SEC") (the "Parent Annual Report"), is a true,
accurate and correct statement in all material respects of all of the
information required to be set forth therein by the regulations of the SEC.
Pursuant to the Parent Rights Agreement, all shares of Parent Common Stock are
issued with Rights attached thereto.
Section 2.3 Authority. The Board of Directors of Parent (a) has declared as
advisable and fair to and in the best interests of the stockholders of Parent
(and, in the case of clauses (ii) and (iii) below, has resolved to recommend
to such stockholders for approval) (i) the Merger, (ii) amendments to the
Restated Certificate of Incorporation of Parent to increase to not less than
13 the number of directors that may from time to time comprise the Board of
Directors and to increase the number of authorized shares of Parent Common
Stock to 250,000,000 (collectively, the "Charter Amendments") and (iii) the
issuance (the "Parent Share Issuance") of shares of Parent Common Stock in
accordance with the Merger and (b) has approved this Agreement. The Board of
Directors of Sub has declared the Merger advisable and approved this
Agreement. Parent has all requisite power and authority to enter into this
Agreement, the Stock Option Agreement and (subject to (x) approval of the
Parent Share Issuance by a majority of the votes cast at the Parent
Stockholder Meeting (as hereinafter
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defined) by the holders of the shares of Parent Common Stock, provided that
the total number of votes cast on the Parent Share Issuance represents more
than 50% of the shares of Parent Common Stock entitled to vote thereon at the
Parent Stockholder Meeting, and (y) adoption of the Charter Amendments by the
holders of a majority of the outstanding shares of Parent Common Stock) to
consummate the transactions contemplated hereby and thereby. Sub has all
requisite power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, the execution and delivery of the Stock Option
Agreement by Parent and the consummation by Parent and Sub of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Parent and Sub, subject, in the case of this
Agreement, to (x) approval of the Parent Share Issuance by a majority of the
votes cast at the Parent Stockholder Meeting by the holders of the shares of
Parent Common Stock, provided that the total number of votes cast on the
Parent Share Issuance represents more than 50% of the shares of Parent Common
Stock entitled to vote thereon at the Parent Stockholder Meeting, and (y)
adoption of the Charter Amendments by the holders of a majority of the
outstanding shares of Parent entitled to vote thereon. This Agreement has been
duly executed and delivered by Parent and Sub and the Stock Option Agreement
has been duly executed and delivered by Parent and (assuming the valid
authorization, execution and delivery hereof and thereof by the Company and
the validity and binding effect hereof and thereof on the Company) each
constitutes the valid and binding obligation of Parent and Sub enforceable
against Parent and Sub in accordance with its terms. The Parent Share Issuance
and the preparation of a registration statement on Form S-4 to be filed with
the SEC by Parent under the Securities Act of 1933, as amended (together with
the rules and regulations promulgated thereunder, the "Securities Act"), for
the purpose of registering the shares of Parent Common Stock to be issued in
connection with the Merger (together with any amendments or supplements
thereto, whether prior to or after the effective date thereof, the
"Registration Statement"), including the Joint Proxy Statement (as hereinafter
defined), have been duly authorized by Parent's Board of Directors.
Section 2.4 Consents and Approvals; No Violation. Except as set forth in the
letter dated and delivered to the Company on the date hereof (the "Parent
Letter"), which relates to this Agreement and is designated therein as being
the Parent Letter, the execution and delivery of this Agreement and the Stock
Option Agreement do not, and the consummation of the transactions contemplated
hereby and thereby and compliance with the provisions hereof and thereof will
not, result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation
or acceleration of any obligation or to the loss of a material benefit under,
or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Parent or any of its
Subsidiaries under: (i) subject to adoption of the Charter Amendments as
described in the second sentence of Section 2.3, any provision of the Restated
Certificate of Incorporation or By-laws of Parent or the comparable charter or
organization documents or by-laws of any of its Subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease, agreement,
instrument, permit, concession, franchise or license applicable to Parent or
any of its Subsidiaries or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or any of its Subsidiaries
or any of their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such violations, defaults, rights, liens, security
interests, charges or encumbrances that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on Parent
and would not materially impair the ability of Parent or Sub to perform their
respective obligations hereunder or under the Stock Option Agreement or
prevent the consummation of any of the transactions contemplated hereby or
thereby. No filing or registration with, or authorization, consent or approval
of, any domestic (federal and state), foreign (including provincial) or
supranational court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or with respect
to Parent or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by Parent and Sub, the execution and delivery of
the Stock Option Agreement by Parent or is necessary for the consummation of
the Merger and the other transactions contemplated by this Agreement or the
Stock Option Agreement, except: (i) in connection, or in compliance, with the
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Securities Act and the Securities Exchange Act of
1934, as amended (together with the rules and regulations promulgated
thereunder, the "Exchange Act"), (ii) for the filing with the Secretary of
State of the State of Delaware of a Certificate of Amendment to Parent's
Restated Certificate of Incorporation relating to the Charter Amendments
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and the filing of a Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant authorities of
other states in which the Company or any of its Subsidiaries is qualified to
do business, (iii) for such filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, (iv) for such filings,
authorizations, orders and approvals, if any, as may be required by state
takeover laws (the "State Takeover Approvals"), (v) for such filings as may be
required in connection with the taxes described in Section 5.11, (vi) for such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under the laws of any foreign country (including,
without limitation, any political subdivision thereof) in which Parent or the
Company or any of their respective Subsidiaries conducts any business or owns
any property or assets and (vii) for such other consents, orders,
authorizations, registrations, declarations and filings the failure of which
to obtain or make would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent and would not materially
impair the ability of Parent or Sub to perform their respective obligations
hereunder or under the Stock Option Agreement or prevent the consummation of
any of the transactions contemplated hereby or thereby.
Section 2.5 SEC Documents and Other Reports. Parent has filed all documents
required to be filed by it with the SEC since June 30, 1993. As of their
respective dates, all documents filed by Parent with the SEC since June 30,
1993 (the "Parent SEC Documents") complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and none of the Parent SEC Documents contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements of Parent included in the Parent SEC Documents complied
as to form in all material respects with the applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of the unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and
fairly present the consolidated financial position of Parent and its
consolidated Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the respective periods then ended (subject, in the case of the unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein). Except as set forth in the Parent SEC Documents, since
June 30, 1995 Parent has not made any change in the accounting practices or
policies applied in the preparation of its financial statements.
Section 2.6 Registration Statement and Joint Proxy Statement. None of the
information (other than information provided by the Company) included or
incorporated by reference in the Registration Statement or the joint proxy
statement/prospectus included therein relating to the Stockholder Meetings (as
defined in Section 5.1) (together with any amendments or supplements thereto,
the "Joint Proxy Statement") will (i) in the case of the Registration
Statement, at the time it becomes effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading or (ii) in
the case of the Joint Proxy Statement, at the time of the mailing thereof, at
the time of each of the Stockholder Meetings and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. If at any time prior to the Effective Time any event with
respect to Parent, its directors and officers or any of its Subsidiaries shall
occur which is required to be described in the Joint Proxy Statement or the
Registration Statement, such event shall be so described, and an appropriate
amendment or supplement shall be promptly filed with the SEC and, to the
extent required by law, disseminated to the stockholders of Parent. The
Registration Statement will comply as to form in all material respects with
the provisions of the Securities Act, and the Joint Proxy Statement will
comply as to form in all material respects with the provisions of the Exchange
Act, in each case other than as to information provided for inclusion therein
by the Company.
Section 2.7 Absence of Certain Changes or Events. Except as set forth in the
Parent SEC Documents filed prior to the date hereof or the Parent Letter,
since June 30, 1994: (i) Parent and its Subsidiaries have not incurred
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any material liability or obligation (indirect, direct or contingent), or
entered into any material oral or written agreement or other transaction, that
is not in the ordinary course of business or that has resulted or would
reasonably be expected to result in a Material Adverse Effect on Parent; (ii)
Parent and its Subsidiaries have not sustained any loss or interference with
their business or properties from fire, flood, windstorm, accident or other
calamity (whether or not covered by insurance) that has had or that would
reasonably be expected to have a Material Adverse Effect on Parent; (iii)
there has been no material change in the indebtedness of Parent and its
Subsidiaries (other than changes in the ordinary course of business), no
change in the outstanding shares of capital stock of Parent except for the
issuance of shares of Parent Common Stock pursuant to the Parent Stock Options
and no dividend or distribution of any kind declared, paid or made by Parent
on any class of its capital stock except for regular quarterly dividends
(before giving effect to the November Stock Dividend) of not more than $0.16
per share on Parent Common Stock and except for the November Stock Dividend
and (iv) there has been no Material Adverse Change with respect to Parent, nor
any event or development that would, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change with respect to
Parent.
Section 2.8 No Existing Violation, Default, Etc. Neither Parent nor any of
its Subsidiaries is in violation of (i) its charter or other organization
documents or by-laws, (ii) any applicable law, ordinance or administrative or
governmental rule or regulation or (iii) any order, decree or judgment of any
Governmental Entity having jurisdiction over Parent or any of its
Subsidiaries, except for any violations that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
on Parent. The properties, assets and operations of Parent and its
Subsidiaries are in compliance in all material respects with all applicable
federal, state, local and foreign (including without limitation, provincial)
laws, rules and regulations, orders, decrees, judgments, permits and licenses
relating to public and worker health and safety (collectively, "Worker Safety
Laws") and the protection and clean-up of the environment and activities or
conditions related thereto, including, without limitation, those relating to
the generation, handling, disposal, transportation or release of hazardous
materials (collectively, "Environmental Laws"), except for any violations
that, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Parent. With respect to such properties,
assets and operations, including any previously owned, leased or operated
properties, assets or operations, there are no past or current events,
conditions, circumstances, activities, practices, incidents, actions or plans
of Parent or any of its Subsidiaries that may interfere with or prevent
compliance or continued compliance in all material respects with applicable
Worker Safety Laws and Environmental Laws, other than any such interference or
prevention as, individually or in the aggregate with any such other
interference or prevention, has not had and would not reasonably be expected
to have a Material Adverse Effect on Parent. The term "hazardous materials"
shall mean those substances that are regulated by or form the basis for
liability under any applicable Environmental Laws.
Except as may be set forth in the Parent SEC Documents or the Parent Letter:
(i) there is no existing event of default or event that, but for the giving of
notice or lapse of time, or both, would constitute an event of default under
any loan or credit agreement, note, bond, mortgage, indenture or guarantee of
indebtedness for borrowed money and (ii) there is no existing event of default
or event that, but for the giving of notice or lapse of time, or both, would
constitute an event of default under any lease, other agreement or instrument
to which Parent or any of its Subsidiaries is a party or by which Parent or
any such Subsidiary or any of their respective properties, assets or business
is bound, in the case of each of clause (i) and (ii) immediately above, which,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect on Parent.
Section 2.9 Licenses and Permits. Parent and its Subsidiaries have received
such certificates, permits, licenses, franchises, consents, approvals, orders,
authorizations and clearances from appropriate Governmental Entities (the
"Parent Licenses") as are necessary to own or lease and operate their
respective properties and to conduct their respective businesses substantially
in the manner described in the Parent SEC Documents and as currently owned or
leased and conducted, and all such Parent Licenses are valid and in full force
and effect, except for any such certificates, permits, licenses, franchises,
consents, approvals, orders, authorizations and clearances which the failure
to have or to be in full force and effect would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent.
Parent and its Subsidiaries are in
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compliance in all material respects with their respective obligations under
the Parent Licenses, with only such exceptions as, individually or in the
aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect on Parent, and no event has occurred that allows, or
after notice or lapse of time, or both, would allow, revocation or termination
of any material Parent License.
Section 2.10 Environmental Matters. Except as set forth in the Parent SEC
Documents or the Parent Letter, (i) neither Parent nor any of its Subsidiaries
is the subject of any federal, state, local, foreign or provincial
investigation, and neither Parent nor any of its Subsidiaries has received any
notice or claim (or is aware of any facts that would form a reasonable basis
for any claim), or entered into any negotiations or agreements with any other
person, relating to any material liability or obligation or material remedial
action or potential material liability or obligation or material remedial
action under any Environmental Law; and (ii) there are no pending, reasonably
anticipated or, to the knowledge of Parent, threatened actions, suits or
proceedings (or facts that would form a reasonable basis for any such action,
suit or proceeding) against Parent, any of its Subsidiaries or any of their
respective properties, assets or operations asserting any such material
liability or obligation or seeking any material remedial action in connection
with any Environmental Laws.
Section 2.11 Tax Matters. Except as otherwise set forth in the Parent
Letter: (i) Parent and each of its Subsidiaries have filed all federal, and
all material state, local, foreign and provincial, Tax Returns (as hereinafter
defined) required to have been filed on or prior to the date hereof, or
appropriate extensions therefor have been properly obtained, and such Tax
Returns are correct and complete, except to the extent that any failure to be
correct and complete would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent; (ii) all Taxes (as
hereinafter defined) shown to be due on such Tax Returns have been timely paid
or extensions for payment have been duly obtained, or such Taxes are being
timely and properly contested, and Parent and each of its Subsidiaries have
complied in all material respects with all rules and regulations relating to
the withholding of Taxes, except to the extent that any failure to comply with
such rules and regulations would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent; (iii)
neither Parent nor any of its Subsidiaries has waived any statute of
limitations in respect of its Taxes; (iv) such Tax Returns relating to federal
and state income Taxes have been examined by the Internal Revenue Service or
the appropriate state taxing authority or the period for assessment of the
Taxes in respect of which such Tax Returns were required to be filed has
expired; (v) no material issues that have been raised in writing by the
relevant taxing authority in connection with the examination of such Tax
Returns are currently pending; and (vi) all deficiencies asserted or
assessments made as a result of any examination of such Tax Returns by any
taxing authority have been paid in full or are being timely and properly
contested. The charges, accruals and reserves on the books of Parent and its
Subsidiaries in respect of Taxes have been established and maintained in
accordance with generally accepted accounting principles. To the knowledge of
Parent, the representations set forth in the Parent Tax Certificate attached
to the Parent Letter, if made on the date hereof (assuming the Merger were
consummated on the date hereof), would be true and correct in all material
respects. For purposes of this Agreement: (i) "Taxes" means any federal,
state, local, foreign or provincial income, gross receipts, property, sales,
use, license, excise, franchise, employment, payroll, withholding, alternative
or added minimum, ad valorem, transfer or excise tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, imposed by any Governmental
Entity; and (ii) "Tax Return" means any return, report or similar statement
(including any attached schedules) required to be filed with respect to any
Tax, including, without limitation, any information return, claim for refund,
amended return or declaration of estimated Tax.
Section 2.12 Actions and Proceedings. Except as set forth in the Parent SEC
Documents or the Parent Letter, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against Parent or
any of its Subsidiaries, any of its or their properties, assets or business,
any Parent Plan (as defined in Section 2.15) or, to the knowledge of Parent,
any of its or their current or former directors or officers, as such, that
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent. Except as set forth in the Parent SEC
Documents or the Parent Letter, there are no actions, suits or claims or
legal, administrative or arbitration proceedings or investigations pending or,
to the knowledge of
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Parent, threatened against Parent or any of its Subsidiaries, any of its or
their properties, assets or business, any Parent Plan or, to the knowledge of
Parent, any of its or their current or former directors or officers, as such,
that would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent. Except as set forth in the Parent SEC
Documents or the Parent Letter, as of the date hereof, there are no actions,
suits or claims or legal, administrative or arbitration proceedings or
investigations pending or, to the knowledge of Parent, threatened against
Parent or any of its Subsidiaries, any of its or their properties, assets or
business, any Parent Plan or, to the knowledge of Parent, any of its or their
current or former directors or officers, as such, relating to the transactions
contemplated by this Agreement.
Section 2.13 Labor Matters. Except as disclosed in the Parent SEC Documents
or the Parent Letter, neither Parent nor any of its Subsidiaries has any labor
contracts, collective bargaining agreements or material employment or
consulting agreements with any persons employed by or otherwise performing
services primarily for Parent or any of its Subsidiaries (the "Parent Business
Personnel") or any representative of any Parent Business Personnel. Except as
set forth in the Parent SEC Documents or the Parent Letter, neither Parent nor
any of its Subsidiaries has engaged in any unfair labor practice with respect
to Parent Business Personnel, and there is no unfair labor practice complaint
pending against Parent or any of its Subsidiaries with respect to Parent
Business Personnel, which, in either case, would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent.
Except as set forth in the Parent SEC Documents or the Parent Letter, there is
no material labor strike, dispute, slowdown or stoppage pending or, to the
knowledge of Parent, threatened against Parent or any of its Subsidiaries, and
neither Parent nor any of its Subsidiaries has experienced any material
primary work stoppage or other material labor difficulty involving its
employees during the last three years.
Section 2.14 Contracts. All of the material contracts of Parent and its
Subsidiaries that are required to be described in the Parent SEC Documents or
to be filed as exhibits thereto have been described or filed as required.
Neither Parent or any of its Subsidiaries nor, to the knowledge of Parent, any
other party is in breach of or default under any such contracts which are
currently in effect, except for such breaches and defaults which are described
in the Parent Letter or which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent. Except
as set forth in the Parent SEC Documents or the Parent Letter, neither Parent
nor any of its Subsidiaries is a party to or bound by any non-competition
agreement or any other agreement or obligation which purports to limit in any
material respect the manner in which, or the localities in which, Parent or
any such Subsidiary is entitled to conduct all or any material portion of the
business of Parent and its Subsidiaries taken as whole.
Section 2.15 ERISA. Each Parent Plan complies in all material respects with
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the
Code and all other applicable laws and administrative or governmental rules
and regulations. No "reportable event" (within the meaning of Section 4043 of
ERISA) has occurred with respect to any Parent Plan for which the 30-day
notice requirement has not been waived (other than with respect to the
transactions contemplated by this Agreement), and no condition exists which
would subject Parent or any ERISA Affiliate (as hereinafter defined) to any
fine under Section 4071 of ERISA; except as disclosed in the Parent Letter,
neither Parent nor any of its ERISA Affiliates has withdrawn from any Parent
Plan or Parent Multiemployer Plan (as hereinafter defined) or has taken, or is
currently considering taking, any action to do so; and no action has been
taken, or is currently being considered, to terminate any Parent Plan subject
to Title IV of ERISA. No Parent Plan, nor any trust created thereunder, has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived. To the knowledge of Parent, there are no
actions, suits or claims pending or threatened (other than routine claims for
benefits) with respect to any Parent Plan which would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on
Parent. Neither Parent nor any of its ERISA Affiliates has incurred or would
reasonably be expected to incur any material liability under or pursuant to
Title IV of ERISA. No prohibited transactions described in Section 406 of
ERISA or Section 4975 of the Code have occurred which would reasonably be
expected to result in material liability to Parent or its Subsidiaries. Except
as set forth in the Parent Letter, all Parent Plans that are intended to be
qualified under Section 401(a) of the Code have received a favorable
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determination letter as to such qualification from the Internal Revenue
Service, and no event has occurred, either by reason of any action or failure
to act, which would cause the loss of any such qualification. Parent is not
aware of any reason why any Parent Plan is not so qualified in operation.
Neither Parent nor any of its ERISA Affiliates has been notified by any Parent
Multiemployer Plan that such Parent Multiemployer Plan is currently in
reorganization or insolvency under and within the meaning of Section 4241 or
4245 of ERISA or that such Parent Multiemployer Plan intends to terminate or
has been terminated under Section 4041A of ERISA. As used herein: (i) "Parent
Plan" means a "pension plan" (as defined in Section 3(2) of ERISA, other than
a Parent Multiemployer Plan) or a "welfare plan" (as defined in Section 3(1)
of ERISA) established or maintained by Parent or any of its ERISA Affiliates
or to which Parent or any of its ERISA Affiliates has contributed or otherwise
may have any liability; (ii) "Parent Multiemployer Plan" means a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) to which
Parent or any of its ERISA Affiliates is or has been obligated to contribute
or otherwise may have any liability; and (iii) with respect to any person,
"ERISA Affiliate" means any trade or business (whether or not incorporated)
which is under common control or would be considered a single employer with
such person pursuant to Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated thereunder or pursuant to Section 4001(b) of ERISA and
the regulations promulgated thereunder.
Section 2.16 Liabilities. Except as fully reflected or reserved against in
the most recent audited consolidated financial statements included in the
Parent SEC Documents filed prior to the date hereof, or disclosed in the
footnotes thereto, or set forth in the Parent Letter, Parent and its
Subsidiaries had no liabilities (including, without limitation, Tax
liabilities) at the date of such consolidated financial statements, absolute
or contingent, of a nature which are required by generally accepted accounting
principles to be reflected on such consolidated financial statements or
disclosed in the footnotes thereto, that were material, either individually or
in the aggregate, to Parent and its Subsidiaries taken as a whole. Except as
so reflected, reserved, disclosed or set forth, Parent and its Subsidiaries
have no commitments which are reasonably expected to be materially adverse,
either individually or in the aggregate, to Parent and its Subsidiaries taken
as a whole.
Section 2.17 Opinion of Financial Advisor. Parent has received the opinion
of Lehman Brothers Inc., dated the date hereof, to the effect that, as of the
date hereof, the financial terms of the Merger are fair to Parent from a
financial point of view, a copy of which opinion has been delivered to the
Company.
Section 2.18 Pooling of Interests; Reorganization. To the knowledge of
Parent after due investigation, neither Parent nor any of its Subsidiaries has
(i) taken any action or failed to take any action which action or failure
would jeopardize the treatment of the Merger as a pooling of interests for
accounting purposes or (ii) taken any action or failed to take any action
which action or failure would result in the failure of the Merger to qualify
as a reorganization within the meaning of Section 368(a) of the Code.
Section 2.19 Operations of Sub. Sub has been formed solely for the purpose
of engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
Section 2.20 Brokers. No broker, investment banker or other person, other
than Lehman Brothers Inc., the fees and expenses of which will be paid by
Parent (as reflected in an agreement between Lehman Brothers Inc. and Parent,
a copy of which has been furnished to the Company), is entitled to any
broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent.
Section 2.21 Ownership of Company Capital Stock. None of Parent, Sub or any
of Parent's other Subsidiaries owns any shares of the capital stock of the
Company.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub, except as set forth
in the Company Letter (as hereinafter defined), as follows:
Section 3.1 Organization, Standing and Power. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to carry
on its business as now being conducted. Each Subsidiary of the Company is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being conducted.
The Company and each of its Subsidiaries are duly qualified to do business,
and are in good standing, in each jurisdiction where the character of their
properties owned or held under lease or the nature of their activities makes
such qualification necessary, except where the failure to be so qualified
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. Except as disclosed in the Company SEC
Documents or the Company Letter, the Company and its Subsidiaries are not
subject to any material joint venture, joint operating or similar arrangement
or any material shareholders agreement relating thereto.
Section 3.2 Capital Structure. As of the date hereof, the authorized capital
stock of the Company consists of: 50,000,000 Company Common Shares and 600,000
shares of Preferred Stock, $100 par value ("Company Preferred Shares"), of
which 3,500 shares have been designated as "Series E Preferred Stock"
("Company Series E Preferred Shares") and 300 shares have been designated as
"Series F Preferred Stock" ("Company Series F Preferred Shares"). At the close
of business on November 10, 1995: (i) 19,896,132 Company Common Shares were
issued and outstanding, all of which were validly issued, are fully paid and
nonassessable and are free of preemptive rights; (ii) 2826.2018 Company Series
E Preferred Shares were issued and outstanding, all of which were validly
issued, are fully paid and nonassessable and are free of preemptive rights;
and (iii) 200 Company Series F Preferred Shares were issued and outstanding,
all of which were validly issued, are fully paid and nonassessable and are
free of preemptive rights. As of the date of this Agreement, except as
provided in the Company's Certificate of Incorporation, except for stock
options covering not in excess of 1,310,033 Company Common Shares
(collectively, the "Company Stock Options"), and except for the Stock Option
Agreement, there are no options, warrants, calls, rights or agreements to
which the Company or any of its Subsidiaries is a party or by which any of
them is bound obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares
of capital stock of the Company or any such Subsidiary or obligating the
Company or any such Subsidiary to grant, extend or enter into any such option,
warrant, call, right or agreement. Each outstanding share of capital stock of
each Subsidiary of the Company is duly authorized, validly issued, fully paid
and nonassessable and, except as disclosed in the Company SEC Documents or the
Company Letter (as such terms are hereinafter defined), each such share is
beneficially owned by the Company or another Subsidiary of the Company, free
and clear of all security interests, liens, claims, pledges, options, rights
of first refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever. As of the date of its filing, Exhibit
21 to the Company's Annual Report on Form 10-K for the transition period from
July 1, 1994 to December 31, 1994, as filed with the SEC (the "Company Annual
Report"), is a true, accurate and correct statement in all material respects
of all of the information required to be set forth therein by the regulations
of the SEC.
Section 3.3 Authority. The Board of Directors of the Company has declared as
advisable and fair to and in the best interests of the stockholders of the
Company (and has resolved to recommend to stockholders for approval) the
Merger and has approved this Agreement, and the Company has all requisite
power and authority to enter into this Agreement and the Stock Option
Agreement and (subject to approval of the Merger by a majority of the
outstanding stock of the Company entitled to vote thereon) to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Stock Option Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the
part of the Company, subject to
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the approval of the Merger by a majority of the outstanding stock of the
Company entitled to vote thereon. The holders of the Company Preferred Shares
are entitled to vote together with the holders of the Company Common Shares on
the Merger and are entitled to one vote for each Company Preferred Share held.
This Agreement and the Stock Option Agreement have been duly executed and
delivered by the Company and (assuming the valid authorization, execution and
delivery hereof by Parent and Sub and the validity and binding effect hereof
on Parent and Sub) each constitutes the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms. The
issuance of up to 3,959,330 Company Common Shares pursuant to the Stock Option
Agreement has been duly authorized by the Company's Board of Directors. The
preparation of the Joint Proxy Statement to be filed with the SEC has been
duly authorized by the Company's Board of Directors.
Section 3.4 Consents and Approvals; No Violation. Except as set forth in the
letter dated and delivered to Parent on the date hereof (the "Company
Letter"), which relates to this Agreement and is designated therein as being
the Company Letter, the execution and delivery of this Agreement and the Stock
Option Agreement do not, and the consummation of the transactions contemplated
hereby and thereby and compliance with the provisions hereof and thereof will
not, result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation
or acceleration of any obligation or to the loss of a material benefit under,
or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any of its
Subsidiaries under: (i) any provision of the Certificate of Incorporation or
By-Laws of the Company or the comparable charter or organization documents or
by-laws of any of its Subsidiaries, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease, agreement, instrument, permit, concession,
franchise or license applicable to the Company or any of its Subsidiaries or
(iii) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such violations, defaults, rights, liens, security interests,
charges or encumbrances that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company and
would not materially impair the ability of the Company to perform its
obligations hereunder or under the Stock Option Agreement or prevent the
consummation of any of the transactions contemplated hereby or thereby. No
filing or registration with, or authorization, consent or approval of, any
Governmental Entity is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this
Agreement or the Stock Option Agreement by the Company or is necessary for the
consummation of the Merger and the other transactions contemplated by this
Agreement or the Stock Option Agreement, except: (i) in connection, or in
compliance, with the provisions of the HSR Act, the Securities Act and the
Exchange Act, (ii) for the filing of a Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (iii) for such filings and consents
as may be required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval triggered by
the Merger or the transactions contemplated by this Agreement, (iv) for such
filings, authorizations, orders and approvals, if any, as may be required to
obtain the State Takeover Approvals, (v) for such filings as may be required
in connection with the taxes described in Section 5.11, (vi) for such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under the laws of any foreign country (including,
without limitation, any political subdivision thereof) in which Parent or the
Company or any of their respective Subsidiaries conducts any business or owns
any property or assets and (vii) for such other consents, orders,
authorizations, registrations, declarations and filings the failure of which
to obtain or make would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company and would not
materially impair the ability of the Company to perform its obligations
hereunder or under the Stock Option Agreement or prevent the consummation of
any of the transactions contemplated hereby or thereby.
Section 3.5 SEC Documents and Other Reports. The Company has filed all
documents required to be filed by it with the SEC since June 30, 1993. As of
their respective dates, all documents filed by the Company with the SEC since
June 30, 1993 (the "Company SEC Documents") complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and none of the Company SEC
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Documents contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company included
in the Company SEC Documents complied as to form in all material respects with
the applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles (except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated therein or in
the notes thereto) and fairly present the consolidated financial position of
the Company and its consolidated Subsidiaries as at the respective dates
thereof and the consolidated results of their operations and their
consolidated cash flows for the respective periods then ended (subject, in the
case of the unaudited statements, to normal year-end audit adjustments and to
any other adjustments described therein). Except as set forth in the Company
SEC Documents, since December 31, 1994, the Company has not made any change in
the accounting practices or policies applied in the preparation of its
financial statements.
Section 3.6 Registration Statement and Joint Proxy Statement. None of the
information included or incorporated by reference in the Joint Proxy Statement
and provided by the Company will, at the time of the mailing thereof, at the
time of each of the Stockholder Meetings and at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event with respect
to the Company, its directors and officers or any of its Subsidiaries shall
occur which is required to be described in the Joint Proxy Statement, such
event shall be so described, and an appropriate amendment or supplement shall
be promptly filed with the SEC and, to the extent required by law,
disseminated to the stockholders of the Company. The Joint Proxy Statement
will comply (with respect to the Company) as to form in all material respects
with the provisions of the Exchange Act.
Section 3.7 Absence of Certain Changes or Events. Except as set forth in the
Company SEC Documents filed prior to the date hereof or the Company Letter,
since December 31, 1994: (i) the Company and its Subsidiaries have not
incurred any material liability or obligation (indirect, direct or
contingent), or entered into any material oral or written agreement or other
transaction, that is not in the ordinary course of business or that has
resulted or would reasonably be expected to result in a Material Adverse
Effect on the Company; (ii) the Company and its Subsidiaries have not
sustained any loss or interference with their business or properties from
fire, flood, windstorm, accident or other calamity (whether or not covered by
insurance) that has had or that would reasonably be expected to have a
Material Adverse Effect on the Company; (iii) there has been no material
change in the indebtedness of the Company and its Subsidiaries (other than
changes in the ordinary course of business), no change in the outstanding
shares of capital stock of the Company except for the issuance of Company
Common Shares pursuant to the Company Stock Options and no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock except for regular quarterly dividends of not more than $175
per Company Series E Preferred Share, of not more than $175 per Company Series
F Preferred Share and of not more than $.23 per Company Common Share; and (iv)
there has been no Material Adverse Change with respect to the Company, nor any
event or development that would, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Change with respect to the
Company.
Section 3.8 No Existing Violation, Default, Etc. Neither the Company nor any
of its Subsidiaries is in violation of (i) its charter or other organization
documents or by-laws, (ii) any applicable law, ordinance or administrative or
governmental rule or regulation or (iii) any order, decree or judgment of any
Governmental Entity having jurisdiction over the Company or any of its
Subsidiaries, except for any violations that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
on the Company. The properties, assets and operations of the Company and its
Subsidiaries are in compliance in all material respects with all applicable
Worker Safety Laws and Environmental Laws, except for any violations that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company. With respect to such properties,
assets and operations, including any previously owned, leased or operated
properties, assets or operations, there are no past or current events,
conditions, circumstances, activities, practices, incidents,
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actions or plans of the Company or any of its Subsidiaries that may interfere
with or prevent compliance or continued compliance in all material respects
with applicable Worker Safety Laws and Environmental Laws, other than any such
interference or prevention as, individually or in the aggregate with any such
other interference or prevention, has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company.
Except as may be set forth in the Company SEC Documents or the Company
Letter: (i) there is no existing event of default or event that, but for the
giving of notice or lapse of time, or both, would constitute an event of
default under any loan or credit agreement, note, bond, mortgage, indenture or
guarantee of indebtedness for borrowed money and (ii) there is no existing
event of default or event that, but for the giving of notice or lapse of time,
or both, would constitute an event of default under any lease, other agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any such Subsidiary or any of their respective
properties, assets or business is bound, in the case of each of clause (i) and
(ii) immediately above, which, individually or in the aggregate, has had or
would reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.9 Licenses and Permits. The Company and its Subsidiaries have
received such certificates, permits, licenses, franchises, consents,
approvals, orders, authorizations and clearances from appropriate Governmental
Entities (the "Company Licenses") as are necessary to own or lease and operate
their respective properties and to conduct their respective businesses
substantially in the manner described in the Company SEC Documents and as
currently owned or leased and conducted, and all such Company Licenses are
valid and in full force and effect, except for any such certificates, permits,
licenses, franchises, consents, approvals, orders, authorizations and
clearances which the failure to have or to be in full force and effect would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. The Company and its Subsidiaries are
in compliance in all material respects with their respective obligations under
the Company Licenses, with only such exceptions as, individually or in the
aggregate, have not had or would not reasonably be expected to have a Material
Adverse Effect on the Company, and no event has occurred that allows, or after
notice or lapse of time, or both, would allow, revocation or termination of
any material Company License.
Section 3.10 Environmental Matters. Except as set forth in the Company SEC
Documents or the Company Letter, (i) neither the Company nor any of its
Subsidiaries is the subject of any federal, state, local, foreign or
provincial investigation, and neither the Company nor any of its Subsidiaries
has received any notice or claim (or is aware of any facts that would form a
reasonable basis for any claim), or entered into any negotiations or
agreements with any other person, relating to any material liability or
obligation or material remedial action or potential material liability or
obligation or material remedial action under any Environmental Law; and (ii)
there are no pending, reasonably anticipated or, to the knowledge of the
Company, threatened actions, suits or proceedings (or facts that would form a
reasonable basis for any such action, suit or proceeding) against the Company,
any of its Subsidiaries or any of their respective properties, assets or
operations asserting any such material liability or obligation or seeking any
material remedial action in connection with any Environmental Laws.
Section 3.11 Tax Matters. Except as otherwise set forth in the Company
Letter: (i) the Company and each of its Subsidiaries have filed all federal,
and all material state, local, foreign and provincial, Tax Returns required to
have been filed on or prior to the date hereof, or appropriate extensions
therefor have been properly obtained, and such Tax Returns are correct and
complete, except to the extent that any failure to be correct and complete
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company; (ii) all Taxes shown to be due on such
Tax Returns have been timely paid or extensions for payment have been duly
obtained, or such Taxes are being timely and properly contested, and the
Company and each of its Subsidiaries have complied in all material respects
with all rules and regulations relating to the withholding of Taxes, except to
the extent that any failure to comply with such rules and regulations would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company; (iii) neither the Company nor any of
its Subsidiaries has waived any statute of limitations in respect of its
Taxes; (iv) such Tax
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Returns relating to federal and state income Taxes have been examined by the
Internal Revenue Service or the appropriate state taxing authority or the
period for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired; (v) no material issues that have been raised
in writing by the relevant taxing authority in connection with the examination
of such Tax Returns are currently pending; and (vi) all deficiencies asserted
or assessments made as a result of any examination of such Tax Returns by any
taxing authority have been paid in full or are being timely and properly
contested. The charges, accruals and reserves on the books of the Company and
its Subsidiaries in respect of Taxes have been established and maintained in
accordance with generally accepted accounting principles. To the knowledge of
the Company, the representations set forth in the Company Tax Certificate
attached to the Company Letter, if made on the date hereof (assuming the
Merger were consummated on the date hereof), would be true and correct in all
material respects.
Section 3.12 Actions and Proceedings. Except as set forth in the Company SEC
Documents or the Company Letter, there are no outstanding orders, judgments,
injunctions, awards or decrees of any Governmental Entity against the Company
or any of its Subsidiaries, any of its or their properties, assets or
business, any Company Plan (as defined in Section 3.15) or, to the knowledge
of the Company, any of its or their current or former directors or officers,
as such, that would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. Except as set forth in
the Company SEC Documents or the Company Letter, there are no actions, suits
or claims or legal, administrative or arbitration proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries, any of its or their properties, assets
or business, any Company Plan or, to the knowledge of the Company, any of its
or their current or former directors or officers, as such, that would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Except as set forth in the Company SEC
Documents or the Company Letter, as of the date hereof, there are no actions,
suits or claims or legal, administrative or arbitration proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries, any of its or their properties, assets
or business, any Company Plan or, to the knowledge of the Company, any of its
or their current or former directors or officers, as such, relating to the
transactions contemplated by this Agreement.
Section 3.13 Labor Matters. Except as disclosed in the Company SEC Documents
or the Company Letter, neither the Company nor any of its Subsidiaries has any
labor contracts, collective bargaining agreements or material employment or
consulting agreements with any persons employed by or otherwise performing
services primarily for the Company or any of its Subsidiaries (the "Company
Business Personnel") or any representative of any Company Business Personnel.
Except as set forth in the Company SEC Documents or the Company Letter,
neither the Company nor any of its Subsidiaries has engaged in any unfair
labor practice with respect to Company Business Personnel, and there is no
unfair labor practice complaint pending against the Company or any or its
Subsidiaries with respect to Company Business Personnel, which, in either
case, would reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company. Except as set forth in the Company
SEC Documents or the Company Letter, there is no material labor strike,
dispute, slowdown or stoppage pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, and neither the
Company nor any of its Subsidiaries has experienced any material primary work
stoppage or other material labor difficulty involving its employees during the
last three years.
Section 3.14 Contracts. All of the material contracts of the Company and its
Subsidiaries that are required to be described in the Company SEC Documents or
to be filed as exhibits thereto have been described or filed as required.
Neither the Company or any of its Subsidiaries nor, to the knowledge of the
Company, any other party is in breach of or default under any such contracts
which are currently in effect, except for such breaches and defaults which are
described in the Company Letter or which would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company. Except as set forth in the Company SEC Documents or the Company
Letter, neither the Company nor any of its Subsidiaries is a party to or bound
by any non-competition agreement or any other agreement or obligation which
purports to limit in any material respect the manner in which, or the
localities in which, the Company or any such Subsidiary is entitled to conduct
all or any material portion of the business of the Company and its
Subsidiaries taken as a whole.
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Section 3.15 ERISA. Schedule A to the Company Letter sets forth the name of
(a) each Company Plan which is a single-employer plan as defined in Section
4001(a)(15) of ERISA and (b) each employment, severance, termination,
consulting or retirement plan or agreement providing for payment of benefits
in excess of twelve months compensation and benefits, and which contains any
special provision becoming effective upon the occurrence of a change in
control of the Company, excluding any such payments required under any
domestic or foreign law. True copies of each of the documents described in
clause (a) and (b) above have heretofore been delivered to Parent. Each
Company Plan complies in all material respects with ERISA, the Code and all
other applicable laws and administrative or governmental rules and
regulations. Except as set forth in the Company Letter, no "reportable event"
(within the meaning of Section 4043 of ERISA) has occurred with respect to any
Company Plan for which the 30-day notice requirement has not been waived
(other than with respect to the transactions contemplated by this Agreement),
and no condition exists which would subject the Company or any ERISA Affiliate
to any fine under Section 4071 of ERISA; except as disclosed in the Company
Letter, neither the Company nor any of its ERISA Affiliates has withdrawn from
any Company Plan or Company Multiemployer Plan (as hereinafter defined) or has
taken, or is currently considering taking, any action to do so; and no action
has been taken, or is currently being considered, to terminate any Company
Plan subject to Title IV of ERISA. No Company Plan, nor any trust created
thereunder, has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived. To the knowledge of the Company,
there are no actions, suits or claims pending or threatened (other than
routine claims for benefits) with respect to any Company Plan which would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Neither the Company nor any of its ERISA
Affiliates has incurred or would reasonably be expected to incur any material
liability under or pursuant to Title IV of ERISA. No prohibited transactions
described in Section 406 of ERISA or Section 4975 of the Code have occurred
which would reasonably be expected to result in material liability to the
Company or its Subsidiaries. Except as set forth in the Company Letter, all
Company Plans that are intended to be qualified under Section 401(a) of the
Code have received a favorable determination letter as to such qualification
from the Internal Revenue Service, and no event has occurred, either by reason
of any action or failure to act, which would cause the loss of any such
qualification. The Company is not aware of any reason why any Company Plan is
not so qualified in operation. Neither the Company nor any of its ERISA
Affiliates has been notified by any Company Multiemployer Plan that such
Company Multiemployer Plan is currently in reorganization or insolvency under
and within the meaning of Section 4241 or 4245 of ERISA or that such Company
Multiemployer Plan intends to terminate or has been terminated under Section
4041A of ERISA. As used herein: (i) "Company Plan" means a "pension plan" (as
defined in Section 3(2) of ERISA, other than a Company Multiemployer Plan) or
a "welfare plan" (as defined in Section 3(1) of ERISA) established or
maintained by the Company or any of its ERISA Affiliates or to which the
Company or any of its ERISA Affiliates has contributed or otherwise may have
any liability; and (ii) "Company Multiemployer Plan" means a "multiemployer
plan" (as defined in Section 4001(a)(3) of ERISA) to which the Company or any
of its ERISA Affiliates is or has been obligated to contribute or otherwise
may have any liability. Except as disclosed in the Company SEC Documents or
the Company Letter, since January 1, 1995, neither the Company or any
Subsidiary of the Company has entered into or adopted any Company Plan other
than a Company Plan which is not material in the ordinary course of business
consistent with past practices or amended in any material respect any existing
Company Plan, except as required by law or in the ordinary course of business
consistent with past practices nor has the Company or any Subsidiary of the
Company materially increased the compensation payable or to become payable to
its officers or employees, except for increases in the ordinary course of
business and consistent with past practice, or granted any severance or
termination pay to, or entered into, or amended or modified, any employment,
severance or consulting agreement with, any director or officer of the Company
or any of its Subsidiaries, or, except in the ordinary course of business
consistent with past practices, established, adopted, entered into or, except
as may be required to comply with applicable law, or except in the ordinary
course of business consistent with past practices, amended in any material
respect or taken action to enhance in any material respect or accelerate any
rights or benefits under, any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or employee. Under the circumstances of the Merger, the execution and
delivery by the Company of this Agreement and the consummation of the
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Merger will not, by operation of the terms of any stock option plan of the
Company or any Subsidiary of the Company, result in the acceleration of the
vesting of any options granted under any such plan, but will result in a
benefit under the Company's 1994 Shareholder Value Plan becoming fully payable
in shares.
Section 3.16 Liabilities. Except as fully reflected or reserved against in
the most recent audited consolidated financial statements included in the
Company SEC Documents filed prior to the date hereof, or disclosed in the
footnotes thereto, or set forth in the Company Letter, the Company and its
Subsidiaries had no liabilities (including, without limitation, Tax
Liabilities) at the date of such consolidated financial statements, absolute
or contingent, of a nature which are required by generally accepted accounting
principles to be reflected on such consolidated financial statements or
disclosed in the footnotes thereto, that were material, either individually or
in the aggregate, to the Company and its Subsidiaries taken as a whole. Except
as so reflected, reserved, disclosed or set forth, the Company and its
Subsidiaries have no commitments which are reasonably expected to be
materially adverse, either individually or in the aggregate, to the Company
and its Subsidiaries taken as a whole.
Section 3.17 Opinion of Financial Advisor. The Company has received the
opinion of J.P. Morgan & Co., Inc., dated the date hereof, to the effect that,
subject to the provisions set forth in such letter, as of the date hereof, the
consideration to be received in the Merger by the Company's stockholders is
fair to the Company's stockholders from a financial point of view, a copy of
which opinion has been delivered to Parent.
Section 3.18 State Takeover Statutes; Absence of Stockholder Rights Plan.
The restrictions on business combinations contained in Section 203 of the DGCL
will not apply with respect to or as a result of the Merger, this Agreement,
the Stock Option Agreement, the Voting Agreement, the Irrevocable Proxy or the
transactions contemplated hereby or thereby. The Board of Directors of the
Company has adopted a resolution as follows: "The transactions contemplated by
the Merger Agreement, the Stock Option Agreement, the Voting Agreement and the
Irrevocable Proxy are hereby authorized and approved with the intent that no
State Takeover Laws shall be applicable to the Merger, the Merger Agreement,
the Stock Option Agreement, the Irrevocable Proxy, the Voting Agreement or the
transactions contemplated thereby." The Company has not adopted or executed,
and is not a party or subject to, any "Shareholder Rights Plan" or similar
instrument, plan or agreement.
Section 3.19 Pooling of Interests; Reorganization. To the knowledge of the
Company after due investigation, neither the Company nor any of its
Subsidiaries has (i) taken any action or failed to take any action which
action or failure would jeopardize the treatment of the Merger as a pooling of
interests for accounting purposes or (ii) taken any action or failed to take
any action which action or failure would result in the failure of the Merger
to qualify as a reorganization within the meaning of Section 368(a) of the
Code.
Section 3.20 Brokers. No broker, investment banker or other person, other
than J.P. Morgan & Co., Inc. the fees and expenses of which will be paid by
the Company (as reflected in an agreement between J.P. Morgan & Co., Inc. and
the Company, a copy of which has been furnished to Parent), is entitled to any
broker's, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
Section 3.21 Ownership of Parent Capital Stock. Neither the Company nor any
of its Subsidiaries owns any shares of the capital stock of Parent.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business Pending the Merger.
(a) Actions by Parent. During the period from the date of this Agreement
through the Effective Time, except as otherwise expressly required by this
Agreement or as set forth in the Parent Letter, Parent shall, and shall cause
each of its Subsidiaries to, in all material respects carry on its business
in, and not enter into any material transaction other than in accordance with,
the ordinary course of its business as currently conducted and, to the
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extent consistent therewith, use its reasonable best efforts to preserve
intact its current business organization, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it, all to the end that its
goodwill and ongoing business shall be unimpaired at the Effective Time.
Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement or as set forth in the Parent Letter,
Parent shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of the Company:
(i) (A) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to its stockholders in their
capacity as such (other than regular quarterly dividends (before giving
effect to the November Stock Dividend) of not more than $0.16 per share on
Parent Common Stock, dividends paid by Subsidiaries of Parent in the
ordinary course of business and consistent with past practice and the
November Stock Dividend); or (B) purchase, redeem or otherwise acquire any
shares of its capital stock or those of any Subsidiary or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities, if the result of any such purchase, redemption
or acquisition would be to impair the ability of Parent to account for the
Merger as a pooling of interest;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities, equity equivalent
or convertible securities (other than the distribution of the Parent Rights
in accordance with the Parent Rights Agreement and the issuance of any
securities upon the exercise thereof, the issuance of Parent Common Stock
during the period from the date of this Agreement through the Effective
Time upon the exercise of Parent Stock Options outstanding on the date of
this Agreement under Parent's existing stock option plans, grant options
for Parent Common Stock and issue Parent Common Stock upon the exercise of
Parent Stock Options which may be granted pursuant to Parent's existing
stock option plans in the ordinary course of business consistent with past
practice, the issuance of Parent Common Stock pursuant to the November
Stock Dividend, the issuance of Parent Common Stock pursuant to any other
stock split or dividend, which such split or dividend would give rise to an
adjustment to the Conversion Number under Section 1.10 hereof, and other
than issuances or sales of any of the foregoing securities in an amount in
the aggregate, pursuant to one or more transactions, not exceeding 10% of
the shares of Parent Common Stock outstanding as of the date hereof);
(iii) amend its charter or organization documents; or amend its by-laws
if such amendment would adversely affect the rights of the Company
hereunder or holders of Company Common Shares upon consummation of the
Merger;
(iv) acquire or agree to acquire, by merging or consolidating with, by
purchasing a substantial portion of the assets of or equity in or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire or
agree to acquire any assets, other than transactions that are not material
to Parent and its Subsidiaries taken as a whole;
(v) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than transactions that are
not material to Parent and its Subsidiaries taken as a whole;
(vi) incur any indebtedness for borrowed money or guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
other investments in, any other person, other than (A) borrowings or
guarantees incurred in the ordinary course of business and consistent with
past practice and (B) any loans, advances or capital contributions to, or
other investments in, Parent or any majority-owned Subsidiary of Parent;
(vii) violate or fail to perform any material obligation or duty imposed
upon Parent or any Subsidiary by any applicable federal, state, local,
foreign or provincial law, rule, regulation, guideline or ordinance;
(viii) take any action, other than reasonable and usual actions in the
ordinary course of business consistent with past practice, with respect to
accounting policies or procedures;
(ix) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing; or
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(x) acquire any shares of capital stock of the Company.
Parent shall promptly advise the Company orally and in writing of any change
or event having, or which would reasonably be expected to have, a Material
Adverse Effect on Parent.
(b) Actions by the Company. During the period from the date of this
Agreement through the Effective Time, except as otherwise expressly required
by this Agreement or as set forth in the Company Letter, the Company shall,
and shall cause each of its Subsidiaries to, in all material respects carry on
its business in, and not enter into any material transaction other than in
accordance with, the ordinary course of its business as currently conducted
and, to the extent consistent therewith, use its reasonable best efforts to
preserve intact its current business organization, keep available the services
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it, all to the
end that its goodwill and ongoing business shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, and except
as otherwise expressly contemplated by this Agreement or as set forth in the
Company Letter, the Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to its stockholders in their
capacity as such (other than regular quarterly dividends of not more than
$180 per Company Series E Preferred Share, of not more than $180 per
Company Series F Preferred Share and of not more than $.23 per Company
Common Share (it being the express understanding of Parent and the Company
that the stockholders of the Company shall be entitled to either a dividend
on Company Common Shares or shares of Parent Common Stock, but not both,
for the calendar quarter in which the Closing shall occur, and the Board of
Directors of the Company shall not declare any dividend or fix any record
date therefor which would have such effect; provided however, that if (i)
the Company shall not have declared any regular quarterly dividend in
respect of any quarter after the date hereof in order to provide its
stockholders an opportunity to receive a quarterly dividend in respect of
Parent Common Stock for such quarter and (ii) the Merger is not effected on
a date which would enable such stockholders to receive such dividend on
Parent Common Stock, then the Company shall be entitled to declare a
special dividend of not more than $.23 per Company Common Share with
respect to any quarter to compensate such stockholders for such regularly
quarterly dividend they would otherwise have received in respect of their
Company Common Shares) and dividends paid by Subsidiaries of the Company in
the ordinary course of business and consistent with past practice); (B)
split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (C) purchase, redeem or
otherwise acquire any shares of its capital stock or those of any
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber any
shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities, equity equivalent
or convertible securities (other than the issuance of Company Common Shares
upon the exercise of Company Stock Options outstanding on the date of this
Agreement in accordance with their current terms and the issuance of shares
pursuant to the Stock Option Agreement);
(iii) amend its charter or organization documents; or amend its by-laws,
other than such amendments consented to in writing by Parent (which consent
shall not be unreasonably withheld);
(iv) acquire or agree to acquire, by merging or consolidating with, by
purchasing a substantial portion of the assets of or equity in or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire or
agree to acquire any assets, other than (A) transactions that are in the
ordinary course of business and consistent with past practice and not
material to the Company and its Subsidiaries taken as a whole and (B)
acquisitions for an aggregate consideration paid or payable by the Company
and its Subsidiaries (valuing any non-cash consideration at its fair market
value and any contingent payments at the maximum amount payable and
treating any liabilities assumed as consideration paid) in an amount not to
exceed $10 million;
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(v) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than (A) transactions that
are in the ordinary course of business and consistent with past practice
and not material to the Company and its Subsidiaries taken as a whole, (B)
dispositions for an aggregate consideration paid or payable to the Company
and its Subsidiaries (valuing any non-cash consideration, contingent
payments and liabilities assumed as provided in clause (iv) above) in an
amount not to exceed $10 million and (C) transactions between the Company
and any wholly-owned Subsidiary of the Company or between one Subsidiary of
the Company and another Subsidiary of the Company;
(vi) incur any indebtedness for borrowed money or guarantee any such
indebtedness, or make any loans, advances or capital contributions to, or
other investments in, any other person, or retire any outstanding
indebtedness for borrowed money, other than (A) borrowings or guarantees
incurred in the ordinary course of business and consistent with past
practice and (B) any loans, advances or capital contributions to, or other
investments in, the Company or any majority-owned or 50% owned Subsidiary
of the Company;
(vii) enter into or adopt any Company Plan other than a Company Plan
which is not material in the ordinary course of business consistent with
past practices, or amend in any material respect any existing Company Plan,
other than as required by law or in the ordinary course of business
consistent with past practices;
(viii) materially increase the compensation payable or to become payable
to its officers or employees, except for increases in the ordinary course
of business and consistent with past practice, or grant any severance or
termination pay to, or enter into, or amend or modify, any employment,
severance or consulting agreement with, any director or officer of the
Company or any of its Subsidiaries, or, except in the ordinary course of
business consistent with past practices, establish, adopt, enter into or,
except as may be required to comply with applicable law or, except in the
ordinary course of business consistent with past practices, amend in any
material respect or take action to enhance in any material respect or
accelerate any rights or benefits under, any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee;
(ix) violate or fail to perform any material obligation or duty imposed
upon the Company or any Subsidiary by any applicable federal, state, local,
foreign or provincial law, rule, regulation, guideline or ordinance;
(x) take any action, other than reasonable and usual actions in the
ordinary course of business consistent with past practice, with respect to
accounting policies or procedures;
(xi) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing; or
(xii) acquire any shares of capital stock of Parent.
The Company shall promptly advise Parent orally and in writing of any change
or event having, or which would reasonably be expected to have, a Material
Adverse Effect on the Company. Any transaction which is expressly permitted by
this Section 4.1(b) to be engaged in or consummated by the Company or any
Subsidiary of the Company shall not be deemed otherwise prohibited by Section
4.2 or be deemed to constitute a "Takeover Proposal" hereunder.
Section 4.2 No Solicitation. From and after the date hereof, the Company
shall not, and shall use its reasonable best efforts to not permit any of its
directors, officers, employees, attorneys, financial advisors, agents or other
representatives or those of any of its Subsidiaries to, directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing information) any Takeover Proposal (as hereinafter defined) from
any person, or engage in or continue discussions or negotiations relating to
any Takeover Proposal; provided, however, that the Company may engage in
discussions or negotiations with, or furnish information concerning the
Company and its properties, assets and business to, any person which makes,
indicates in writing an intention or desire to make, or in respect of which
the Board of Directors of the Company has concluded in good faith is
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reasonably likely to make, a Superior Proposal (as hereinafter defined), in
each case if the Board of Directors of the Company shall conclude in good
faith on the basis of the advice of its outside counsel that the failure to
take such action would be inconsistent with the fiduciary obligations of such
Board of Directors under applicable law; and provided further that
notwithstanding anything to the contrary herein contained, the Board of
Directors of the Company may take and disclose to the Company's stockholders a
position contemplated by Rule 14e-2 promulgated under the Securities Exchange
Act of 1934, as amended, comply with Rule 14d-9 thereunder and make all
disclosures required by applicable law in connection therewith. The Company
shall promptly notify Parent of any Takeover Proposal received by it or any of
its directors, officers, employees, attorneys, financial advisors, agents or
other representatives or those of any of its Subsidiaries or the receipt by
the Company or any of the foregoing of any notice of any intention to make a
Superior Proposal, including the material terms and conditions thereof (but
expressly not including the identity of the person (or group) making such
Takeover Proposal or indicating such intention or desire). As used in this
Agreement: (i) "Takeover Proposal" means any proposal or offer, or any
expression of interest by any person relating to the Company's willingness or
ability to receive or discuss any proposal or offer (other than a proposal or
offer by Parent or any of its Subsidiaries), for any merger, consolidation or
other business combination involving the Company or any of its Subsidiaries or
any acquisition in any manner (including, without limitation, by tender or
exchange offer) of a substantial equity interest in, or a substantial portion
of the assets of, the Company or any of its Subsidiaries; and (ii) "Superior
Proposal" means a bona fide proposal or offer made by any person (x) to
acquire the Company pursuant to any tender or exchange offer or any
acquisition of all or substantially all of the assets of the Company and its
Subsidiaries or (y) to enter into a merger, consolidation or other business
consolidation with the Company or any of its Subsidiaries, in each case on
terms which a majority of the members of the Board of Directors of the Company
determines in good faith, and based on the advice of independent financial
advisors, to be more favorable to the Company and its stockholders than the
transactions contemplated hereby (including any revised transaction proposed
by Parent pursuant to Section 7.1(f)).
Section 4.3 Third Party Standstill Agreements. During the period from the
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its Subsidiaries is a party (other
than any involving Parent or its Subsidiaries). During such period, the
Company 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 unless, in any
case, the Board of Directors of the Company concludes in good faith, and based
on the advice of its outside counsel, that the enforcement of such provisions
would be inconsistent with the fiduciary obligations of such Board of
Directors under applicable law.
Section 4.4 Pooling of Interests; Reorganization. During the period from the
date of this Agreement through the Effective Time, unless the other parties
hereto shall otherwise agree in writing, none of Parent, the Company or any of
their respective Subsidiaries shall (i) knowingly take or fail to take any
action which action or failure would result in the failure of the Merger to
qualify as a pooling of interests for accounting purposes or (ii) knowingly
take or fail to take any action which action or failure would result in the
failure of the Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code or would cause any of the representations and
warranties set forth in the Company Tax Certificate attached to the Company
Letter or the Parent Tax Certificate attached to the Parent Letter to be
untrue or incorrect in any material respect.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Stockholder Meetings. The Company and Parent shall each call a
meeting of its stockholders (respectively, the "Company Stockholder Meeting"
and the "Parent Stockholder Meeting" and, collectively, the "Stockholder
Meetings") to be held as promptly as practicable (but in no event prior to the
fulfillment of the conditions specified in Section 6.1(c) to each party's
obligation to effect the Merger) for the purpose of voting
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upon the Merger (in the case of the Company) and the Parent Share Issuance and
the Charter Amendments (in the case of Parent). The Company and Parent shall,
through their respective Boards of Directors, recommend to their respective
stockholders approval of such matters and shall not withdraw such
recommendation; provided, however, that neither such Board of Directors shall
be required to make, and each such Board shall be entitled to withdraw, such
recommendation if such Board of Directors concludes in good faith on the basis
of the advice of its outside counsel that the making of, or the failure to
withdraw, such recommendation would be inconsistent with the fiduciary
obligations of such Board of Directors under applicable law. The respective
Boards of Directors of the Company, Parent and Sub shall not rescind their
respective declarations that the Merger is advisable unless, in any such case,
any such Board of Directors concludes in good faith on the basis of the advice
of its outside counsel that the failure to rescind such determination would be
inconsistent with the fiduciary obligations of such Board of Directors under
applicable law. The Company and Parent shall coordinate and cooperate with
respect to the timing of such meetings and shall use their reasonable best
efforts to hold such meetings on the same day.
Section 5.2 Preparation of the Registration Statement and the Joint Proxy
Statement. The Company and Parent shall promptly prepare and file with the SEC
the Joint Proxy Statement and Parent shall prepare and file with the SEC the
Registration Statement, in which the Joint Proxy Statement will be included as
a prospectus. Parent shall use its reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing and the Company shall reasonably cooperate
with Parent in connection therewith. Parent shall also take any action (other
than qualifying to do business in any jurisdiction in which it is now not so
qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Parent Common Stock in connection with the
Merger and upon any exercise of the Substitute Options (as defined in Section
5.8). The Company shall use its reasonable best efforts to furnish all
information concerning the Company and the holders of Company Common Shares as
may be reasonably requested by Parent in connection with any such action.
Section 5.3 Comfort Letters. (a) The Company shall use its reasonable best
efforts to cause to be delivered to Parent "comfort" letters of Arthur
Andersen LLP, the Company's independent public accountants, dated the date on
which the Registration Statement shall become effective and as of the
Effective Time, and addressed to Parent and the Company, in form and substance
reasonably satisfactory to Parent and as is reasonably customary in scope and
substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
(b) Parent shall use its reasonable best efforts to cause to be delivered to
the Company "comfort" letters of Ernst & Young LLP, Parent's independent
public accountants, dated the date on which the Registration Statement shall
become effective and as of the Effective Time, and addressed to the Company
and Parent, in form and substance reasonably satisfactory to the Company and
as is reasonably customary in scope and substance for letters delivered by
independent public accountants in connection with transactions such as those
contemplated by this Agreement.
Section 5.4 Access to Information. Subject to currently existing contractual
and legal restrictions applicable to Parent (which Parent represents and
warrants do not require it to withhold information which is material and
adverse to Parent and its Subsidiaries taken as a whole) or to the Company
(which the Company represents and warrants do not require it to withhold
information which is material and adverse to the Company and its Subsidiaries
taken as a whole), Parent and the Company shall, and shall cause each of its
respective Subsidiaries to, afford, during normal business hours during the
period from the date of this Agreement through the Effective Time, to the
accountants, counsel, financial advisors, officers and other representatives
of the other reasonable access to, and permit them to make such inspections as
may reasonably be requested of, its properties, books, contracts, commitments
and records (including, without limitation, the work papers of independent
public accountants), and also permit such interviews with its officers and
employees as may be reasonably requested; and, during such period, Parent and
the Company shall, and shall cause each of its respective Subsidiaries to,
furnish promptly to the other (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and (ii) all
other
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information concerning its properties, assets, business and personnel as the
other may reasonably request. From the date of this Agreement through the
Effective Time, Parent and the Company shall consult with each other regarding
any inquiries made by antitrust regulatory authorities, including as to any
issues raised by such authorities and the possible resolutions thereof. No
investigation pursuant to this Section 5.4 shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto. All information obtained by Parent or the
Company pursuant to this Section 5.4 shall be kept confidential in accordance
with the Confidentiality Agreements dated July 7, 1995 between Parent and the
Company. Parent and the Company each hereby expressly reaffirms its
obligations under such Confidentiality Agreements and agrees and acknowledges
that such Confidentiality Agreements shall survive the termination of this
Agreement.
Section 5.5 Compliance with the Securities Act. (a) Prior to the Effective
Time, the Company shall cause to be prepared and delivered to Parent a list
(reasonably satisfactory to counsel for Parent) identifying each person who,
at the time of the Company Stockholder Meeting, may be deemed to be an
"affiliate" of the Company, as such term is used in paragraphs (c) and (d) of
Rule 145 under the Securities Act (the "Company Rule 145 Affiliates"). The
Company shall use its reasonable best efforts to cause each person who is
identified as a Company Rule 145 Affiliate in such list to deliver to Parent
on or prior to the Effective Time a written agreement, in the form previously
approved by the parties hereto, that such Company Rule 145 Affiliate will not
(i) sell, transfer or otherwise dispose of any Company Common Shares or any
shares of Parent Common Stock issued to such Company Rule 145 Affiliate in
connection with the Merger, except pursuant to an effective registration
statement or in compliance with such Rule 145 or another exemption from the
registration requirements of the Securities Act, or (ii) sell, pledge,
transfer or otherwise dispose of or in any other way reduce such Company Rule
145 Affiliate's risk relative to any Company Common Shares or any shares of
Parent Common Stock received in the Merger (within the meaning of Section
201.01 of the SEC's Financial Reporting Release No. 1) during the period
commencing 30 days prior to the Effective Time and ending at such time as the
financial results (including combined sales and net income) covering at least
30 days of post-Merger operations have been published, except as permitted by
Staff Accounting Bulletin No. 76 issued by the SEC.
(b) Prior to the Effective Time, Parent shall cause to be prepared and
delivered to the Company a list (reasonably satisfactory to counsel for the
Company) identifying all persons who, at the time of the Parent Stockholder
Meeting, may be deemed to be an "affiliate" of Parent, as such term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Parent Rule
145 Affiliates"). Parent shall use its reasonable best efforts to cause each
person who is identified as a Parent Rule 145 Affiliate in such list to
deliver to the Company on or prior to the Effective Time a written agreement,
in the form previously approved by the parties hereto, that such Parent Rule
145 Affiliate will not sell, pledge, transfer or otherwise dispose of or in
any other way reduce such Parent Rule 145 Affiliate's risk relative to any
shares of Parent Common Stock or any Company Common Shares (within the meaning
of Section 201.01 of the SEC's Financial Reporting Release No. 1) during the
period commencing 30 days prior to the Effective Time and ending at such time
as the financial results (including combined sales and net income) covering at
least 30 days of post-Merger operations have been published, except as
permitted by Staff Accounting Bulletin No. 76 issued by the SEC. As soon as
reasonably practicable, but in no event later than 30 days after the end of
the first full fiscal quarter of Parent which includes results covering at
least 30 days of post-Merger combined operations of Parent and the Company,
Parent shall publish its results of operations for such fiscal quarter.
Section 5.6 Stock Exchange Listings. Parent shall use its reasonable best
efforts to list on the NYSE, upon official notice of issuance, the shares of
Parent Common Stock to be issued in connection with the Merger and upon any
exercise of the Substitute Options.
Section 5.7 Fees and Expenses. (a) Except as otherwise provided in this
Section 5.7 and in Section 5.11, whether or not the Merger shall be
consummated, all costs and expenses incurred in connection with this
Agreement, the Stock Option Agreement and the transactions contemplated hereby
and thereby, including, without limitation, the fees and disbursements of
counsel, financial advisors, accountants, actuaries and consultants, shall be
paid by the party incurring such costs and expenses, provided that all
printing expenses and filing fees shall be divided equally between Parent and
the Company.
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(b) Notwithstanding any provision in this Agreement to the contrary, if this
Agreement shall be terminated by the Company pursuant to Section 7.1(f), the
Company shall simultaneous therewith pay to Parent an amount in cash equal to
$30 million less the Stock Option Gain Amount, if any.
(c) Notwithstanding any provision in this Agreement to the contrary, if
there shall be a Takeover Proposal and if this Agreement shall be terminated
by Parent pursuant to Section 7.1(g), the Company shall immediately pay to
Parent an amount in cash equal to $30 million less the Stock Option Gain
Amount, if any.
(d) Notwithstanding any provision in this Agreement to the contrary, if (i)
prior to the Company Stockholder Meeting this Agreement shall not have been
terminated and (x) there shall be a Takeover Proposal or the Company shall
receive an indication of a possible Takeover Proposal by any person other than
Parent or an Affiliate of Parent, (y) any person other than Parent or an
Affiliate of Parent shall file a Statement on Schedule 13D under the Exchange
Act or (z) the Company shall engage in discussions or negotiations with, or
furnish information to, any person pursuant to the first proviso of the first
sentence of Section 4.2, (ii) the stockholders of the Company shall not
approve the Merger at the Company Stockholder Meeting or any adjournment
thereof, (iii) within twelve months after the Company Stockholder Meeting or
the last adjournment thereof the Company shall enter into any letter of intent
(whether or not binding), acquisition agreement, merger agreement or other
similar agreement or agreement in principle in respect of a Takeover Proposal
with any person contemplated by subparts (x), (y) or (z) of clause (i) above
or such person shall commence any tender or exchange offer for the Company
Common Shares and (iv) upon, or at any time within twelve months after, such
entry into any agreement or such commencement of any tender or exchange offer
such person shall consummate a transaction similar to that contemplated by
such Takeover Proposal or any tender or exchange offer for the Company Common
Shares, the Company shall immediately pay to Parent an amount in cash equal to
$30 million less the Stock Option Gain Amount, if any.
(e) Notwithstanding any provision in this Agreement to the contrary, if (i)
this Agreement shall be terminated by the Company pursuant to Section 7.1(l)
after a Takeover Proposal has been made by any person, (ii) within twelve
months after such termination, the Company shall enter into a letter of intent
(whether or not binding), acquisition agreement, merger agreement or other
similar agreement or agreement in principle with such person (or any Affiliate
of such person or other person related to such person) with respect to such
Takeover Proposal and (iii) upon, or at any time within twelve months after,
such entry into a letter of intent, acquisition agreement, merger agreement or
other similar agreement or agreement in principle such person (or any such
Affiliate or related person) shall consummate a transaction similar to that
contemplated by such Takeover Proposal, the Company shall immediately pay to
Parent an amount in cash equal to $30 million less the Stock Option Gain
Amount, if any.
(f) Notwithstanding any provision in this Agreement to the contrary, if this
Agreement shall be terminated by the Company pursuant to Section 7.1(h),
Parent shall immediately pay to the Company an amount in cash equal to $30
million.
(g) Notwithstanding any provision in this Agreement to the contrary, if this
Agreement shall be terminated by the Company pursuant to Section 7.1(m),
Parent shall reimburse the Company for all costs and expenses incurred by it
in connection with this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby, including, without limitation,
the fees and disbursements of counsel, financial advisors, accountants,
actuaries and consultants, and the Company share of printing expenses and
filing fees, immediately upon presentation by the Company of a statement
therefore which expenses will be conclusively established by such statement;
provided, however, that in no event shall Parent be required to reimburse the
Company for more than $5 million of costs and expenses, in the aggregate,
pursuant to this Section 5.7(g).
For purposes of this Section 5.7, the term "Stock Option Gain Amount" shall
mean the aggregate of all Spread Amounts (as defined below) with respect to
exercises of the Option simultaneously with, or prior to, the event giving
rise to the payment of the fee specified in this Section 5.7. "Spread Amount"
means, with respect to each exercise of the Option, the amount, in cash, equal
to the dollar amount by which the average of the per
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share closing prices on the NYSE of the Company Common Shares (as reported in
the New York Stock Exchange Composite Transactions) during the 20 consecutive
trading days (or such fewer number of trading days after the date hereof, as
the case may be) ending on the trading day immediately prior to the date on
which such exercise occurs exceeds the Exercise Price (as defined in the Stock
Option Agreement) then in effect, multiplied by the number of Optioned Shares
(as defined in the Stock Option Agreement) as to which the Option is then so
exercised. If, at the time of payment of the fee specified in this Section
5.7, the Option has not been exercised by Parent, the Stock Option Gain Amount
shall be zero.
In no event shall the Company be required to pay more than one such fee
specified in any of subsections (b), (c), (d) or (e) of this Section 5.7.
Nothing contained in this Section 5.7 shall be deemed to limit any remedies
available to any party for any breach of this Agreement by any other party
which such remedies shall be in addition to any amounts received by any party
pursuant to this Section 5.7; provided, however, that, with respect to any
breach by the Company of the provisions of Section 4.2 that is not the result
of willful action (or willful failure to take action) or bad faith on the part
of the Company, Parent's exclusive remedy in respect of such breach shall be
limited to the right to receive the fee described in subsection (b), (c), (d)
or (e) of this Section 5.7 and, upon payment of such fee to Parent in
accordance with the provisions of such subsection (b), (c), (d) or (e), the
Company shall have no further liability to Parent in respect of such breach.
Section 5.8 Company Stock Options. Not later than the Effective Time, each
Company Stock Option which is outstanding immediately prior to the Effective
Time pursuant to any stock option plan (other than any "stock purchase plan"
within the meaning of Section 423 of the Code) of the Company in effect on the
date hereof (the "Company Stock Plans") shall become and represent an option
to purchase the number of shares of Parent Common Stock (a "Substitute
Option"), decreased to the nearest whole share, determined by multiplying (i)
the number of Company Common Shares subject to such Company Stock Option
immediately prior to the Effective Time by (ii) the Conversion Number, at an
exercise price per share of Parent Common Stock (increased to the nearest
whole cent) equal to the exercise price per Company Common Share immediately
prior to the Effective Time divided by the Conversion Number. After the
Effective Time, except as provided above in this Section 5.8, each Substitute
Option shall be exercisable upon the same terms and conditions as were
applicable to the related Company Stock Option immediately prior to the
Effective Time, and each Substitute Option shall be vested to the extent
provided in the related Company Stock Option. This Section 5.8 shall be
subject to any contrary provision contained in the applicable Company Stock
Plan or in the option agreement with respect to any Company Stock Option
outstanding thereunder, but the Company shall use its reasonable best efforts
to obtain any necessary consents of the holders of such Company Stock Options
to effect this Section 5.8. The Company shall not grant any stock appreciation
rights or limited stock appreciation rights and shall not permit cash payments
to holders of Company Stock Options in lieu of the substitution therefor of
Substitute Options as provided in this Section 5.8. Parent shall register
under the Securities Act on Form S-8 or another appropriate form all
Substitute Options and all shares of Parent Common Stock issuable pursuant to
all Substitute Options.
Section 5.9 Reasonable Best Efforts; Pooling of Interests; Reorganization.
(a) Upon the terms and subject to the conditions set forth in this Agreement,
each of the parties hereto agrees to use its reasonable best efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable, to consummate and make effective, as soon as reasonably
practicable, the Merger and the other transactions contemplated by this
Agreement, including, but not limited to: (i) the obtaining of all necessary
actions or non-actions, waivers, consents and approvals from all Governmental
Entities and the making of all necessary registrations and filings with, and
the taking of all other reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity (including those in connection with the HSR Act and any
State Takeover Approvals); (ii) the obtaining of all necessary consents,
approvals or waivers from persons other than Governmental Entities; (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement, the Stock Option Agreement, the
Voting Agreement or the consummation of the transactions contemplated hereby
or thereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed;
provided, however, that no party hereto shall be obligated to defend any such
lawsuit or proceedings initiated by a
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Governmental Entity beyond any lawsuit or proceeding in a Federal District
Court (and any appeal thereof); and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated
by this Agreement.
(b) Each of Parent and the Company shall cooperate and work together, with
its respective accountants, with the objective that the Merger qualify as a
pooling of interests under generally accepted accounting principles.
(c) Each party hereto shall use its reasonable best efforts not to take any
action, or to enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or to
result in a breach of any of its covenants in this Agreement.
(d) Notwithstanding any provision in this Agreement to the contrary: (i)
neither Parent nor the Company shall be obligated to use its reasonable best
efforts or to take any action (or omit to take any action) pursuant to this
Agreement if the Board of Directors of Parent or the Company, as the case may
be, shall conclude in good faith on the basis of the advice of its outside
counsel that such action would be inconsistent with the fiduciary obligations
of such Board of Directors under applicable law; and (ii) in connection with
any filing or submission or other action required to be made or taken by
either Parent or the Company to effect the Merger and to consummate the other
transactions contemplated hereby and by the Stock Option Agreement, neither
Parent nor the Company shall, without the other's prior written consent,
commit to any divestiture transaction, and neither Parent, the Company nor any
of their Affiliates shall be required to divest or hold separate or otherwise
take or commit to take any action that limits its freedom of action with
respect to, or its ability to retain, the Company and its Subsidiaries or any
material portions thereof or any of the business, product lines, properties or
assets of Parent or any of its Affiliates.
(e) From and after the Effective Time, Parent shall not (and shall cause the
Surviving Corporation and any other Subsidiary of Parent not to) knowingly
take or fail to take any action which would result in the failure of the
Merger to qualify as a reorganization within the meaning of Section 368(a) of
the Code.
Section 5.10 Public Announcements. Parent and the Company shall consult with
each other before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation and without the written approval (which shall not
unreasonably be withheld) of the other, except as may be required by
applicable law or by existing obligations pursuant to any listing agreement
with any national securities exchange.
Section 5.11 Real Estate Transfer and Gains Tax. Either the Company or the
Surviving Corporation shall pay all state, local or foreign taxes, if any
(collectively, the "Gains Taxes"), attributable to the transfer of the
beneficial ownership of the Company's and its Subsidiaries' real properties,
and any penalties or interest with respect thereto, payable in connection with
the consummation of the Merger. The Company shall cooperate with Parent in the
filing of any returns with respect to the Gains Taxes, including supplying in
a timely manner a complete list of all real property interests held by the
Company and its Subsidiaries and any information with respect to such
properties that is reasonably necessary to complete such returns. The portion
of the consideration allocable to the real properties of the Company and its
Subsidiaries shall be determined by Parent in its reasonable discretion. The
stockholders of the Company shall be deemed to have agreed to be bound by the
allocation established pursuant to this Section 5.11 in the preparation of any
return with respect to the Gains Taxes.
Section 5.12 State Takeover Laws. If any "fair price" or "control share
acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, Parent and the Company and
their respective Boards of Directors shall use their reasonable best efforts
to grant such approvals and to take such other actions as are necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and shall otherwise use their
reasonable best efforts to eliminate the effects of any such statute or
regulation on the transactions contemplated hereby.
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Section 5.13 Indemnification; Directors and Officers Insurance. (a) From and
after the Effective Time, Parent shall cause the Surviving Corporation to
indemnify and hold harmless to the fullest extent permitted under applicable
law each person who is now, or has been at any time prior to the date hereof
or who becomes prior to the Effective Time, an officer, director, employee or
agent of the Company or any of its Subsidiaries or a director, officer,
employee, agent or trustee of any employee benefit plan for employees of the
Company or any of its Subsidiaries, including, without limitation, each person
controlling any of the foregoing persons (individually, an "Indemnified Party"
and collectively, the "Indemnified Parties"), against all losses, claims,
damages, liabilities, costs or expenses (including attorneys' fees),
judgements, fines, penalties and amounts paid in settlement in connection with
any threatened or actual claim, action, suit, proceeding or investigation
(whether civil, criminal or administrative) arising out of or pertaining to
acts or omissions or alleged acts or omissions, by them in their capacities as
such (whether or not alleged in their capacities as such) whether commenced,
asserted or claimed before or after the Effective Time and including, without
limitation, liabilities arising under the Securities Act, the Exchange Act and
state corporation laws in connection with the Merger. From and after the
Effective Time, Parent shall cause the Surviving Corporation to pay expenses
in advance of the final disposition of any such action or proceeding to each
Indemnified Party to the full extent permitted under applicable law. Without
limiting the foregoing, in the event any such claim, action, suit, proceeding
or investigation is brought against any Indemnified Parties (whether arising
before or after the Effective Time), (i) the Indemnified Parties may retain
counsel satisfactory to them and the Company (or them and Parent and the
Surviving Corporation after the Effective Time) and the Company shall (or
after the Effective Time, Parent shall cause the Surviving Corporation to) pay
all fees and expenses of such counsel for the Indemnified Parties promptly as
statements therefor are received; and (ii) the Company (or after the Effective
Time, Parent and the Surviving Corporation) will use all reasonable efforts to
assist in the defense of any such matter, provided that neither the Company,
Parent nor the Surviving Corporation shall be liable for any settlement
effected without its prior written consent which consent shall not
unreasonably be withheld. Any Indemnified Party wishing to claim
indemnification under this Section 5.13, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Company (or after
the Effective Time, the Surviving Corporation) and Parent (but the failure to
so notify shall not relieve a party from any liability which it may have under
this Section 5.13 except to the extent such failure materially prejudices such
party), and shall deliver to the Company (or after the Effective Time, Parent
and the Surviving Corporation) the undertaking contemplated by Section 145(e)
of the DGCL. The Indemnified Parties as a group may retain only one law firm
to represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties. The
Company, Parent and Sub agree that all rights to indemnification and the like,
including provisions relating to advances of expenses incurred in defense of
any action or suit, existing in favor of the Indemnified Parties with respect
to matters occurring through the Effective Time, shall survive the Merger and
Parent shall cause the Surviving Corporation to honor such rights in full.
(b) Parent shall cause the Surviving Corporation to keep in effect
provisions in its Certificate of Incorporation and Bylaws providing for
exculpation of director and officer liability and its indemnification of the
Indemnified Parties to the fullest extent permitted under the DGGL, which
provisions shall not be modified or amended except as required by applicable
law or except to make changes permitted by law that would enlarge the
Indemnified Parties' right of indemnification.
(c) Parent or the Surviving Corporation shall maintain the Company's
existing directors' and officers' liability insurance policy ("D&O Insurance")
for a period of not less than six years after the Effective Date; provided,
that Parent may substitute therefor policies of substantially similar coverage
and amounts containing terms no less advantageous to such former directors or
officers; and provided further that neither Parent nor the Surviving
Corporation shall be required to pay an annual premium for such D&O Insurance
in excess of 200% of the last annual premium paid prior to the date hereof,
but in such case shall purchase as much coverage as possible for such amount.
(d) The provisions of this Section 5.13 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Person, his or her heirs and
his or her personal representatives and shall be binding on all
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successors and assigns of Parent, Sub, the Company and the Surviving
Corporation. In the event Parent or the Surviving Corporation or any of the
successors or assigns of either of them transfers or conveys all or
substantially all of its properties and assets to any person, then, in each
such case, proper provision shall be made to cause the transferee of such
properties and assets to assume the obligations of Parent or the Surviving
Corporation or such successors or assigns, as the case may be, under this
Section 5.13.
Section 5.14 Notification of Certain Matters. Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent, of:
(i) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which does or would be likely to cause (A) any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect or (B) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied; and (ii) any failure of Parent
or the Company, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
5.14 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
Section 5.15 Board of Directors. Parent and the Company shall mutually
select from among the current members of the Board of Directors of the Company
four individuals for nomination as directors of Parent. If an individual so
selected consents to serve as a director, such individual shall be elected as
a director of Parent, effective as of the Effective Time, for a term expiring
(a) at Parent's 1996 annual meeting of stockholders in the case of two of such
individuals, (b) at Parent's 1997 annual meeting of stockholders in the case
of one other of such individuals and (c) at Parent's 1998 annual meeting of
stockholders in the case of the remaining of such four individuals, in each
case subject to being renominated as a director following the expiration of
such terms at the discretion of the nominating committee of Parent's Board of
Directors.
Section 5.16 Employee Benefits. (a) During the one-year period immediately
following the Effective Time, Parent shall cause to be provided each of the
employees who were employed by the Company or any of its Subsidiaries at the
Effective Time and continue or terminate employment with the Surviving
Corporation or any of its Subsidiaries ("Employee") compensation and benefits
(including any Company Plans, Parent Plans, vacation pay, holiday pay, sick
pay, incentive pay, bonuses, salary continuation, fringe benefits and other
benefit plans or arrangements) no less favorable in the aggregate than the
compensation and benefits provided the Employee by the Company or any of its
Subsidiaries immediately prior to the Effective Time, all of which
compensation and benefit plans and arrangements are reasonable under the
circumstances and were entered into in the ordinary course of business.
(b) During the one-year period immediately following the Effective Time,
Parent shall cause to be maintained for each Employee whose employment with
the Surviving Corporation or any of its Subsidiaries is terminated after the
Closing a severance policy which is no less favorable in the aggregate than
the severance policy of the Company or any of its Subsidiaries as applied to
the class of employees of which such Employee is a part prior to the Effective
Time, which severance policy is reasonable under the circumstances and was
entered into in the ordinary course of business.
(c) Parent shall cause service with the Company or any of its Subsidiaries
(or their respective predecessors) prior to the Effective Time to be treated
as service for all benefit plans and arrangements described in Section 5.16(a)
for all purposes under such benefit plans and arrangements, including, without
limitation, for purposes of pre-existing conditions limitations, waiting
period and vesting requirements and shall cause all benefits accrued by any
Employee under any Company Plan or other benefit plan or arrangement prior to
the Effective Time to be provided to such Employee; provided, however, that
this Section 5.16(c) shall not be applicable to any benefit accrual under any
Parent Plan that is a defined benefit pension plan or result in a duplication
of benefits.
(d) Nothing in this Section 5.17 shall prevent the Surviving Corporation
from terminating the employment of any Employee at anytime.
(e) (i) The Surviving Corporation shall, and Parent shall cause the
Surviving Corporation to, honor in accordance with its terms The Vigoro
Corporation Severance Plan, in substantially the form attached to the
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Company Letter (the "Severance Plan"), and which will be applicable to those
persons listed on Schedule 5.16(e)(i) to the Company Letter. Schedule
5.16(e)(i) sets forth the approximate amount of the Severance Benefit (as
defined in the Severance Plan) for each person listed on such Schedule as if
the Severance Benefit were calculated as of the date hereof. Notwithstanding
anything to the contrary contained in this Agreement, the adoption and
implementation of the Severance Plan in accordance with its terms shall not
constitute a breach by the Company of any representation, warranty or covenant
contained in this Agreement.
(ii) Simultaneously with the consummation of the Merger, Parent and the
Surviving Corporation shall offer to enter into (and enter into with respect
to each offer that is accepted) (A) a Transition Bonus Agreement, in
substantially the form attached to the Company Letter (the "Bonus Agreement"),
with each of the persons listed on Schedule 5.16(e)(ii)(A) to the Company
Letter and (B) a Non-Competition Agreement, in substantially the form attached
to the Company Letter (the "Non-Compete"), with each of the persons listed on
Schedule 5.16(i)(ii)(B) to the Company Letter. Schedule 5.16(e)(ii)(A) sets
forth the approximate amount of the Transition Bonus (as defined in the Bonus
Agreement) for each person listed on such schedule as if the Transition Bonus
were calculated as of the date hereof. Schedule 5.16(e)(ii)(B) sets forth the
approximate amount of the payment to be made pursuant to the Non-Competes for
each person listed on such schedule.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party hereto to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. The Merger shall have been duly approved by a
majority of the outstanding stock of the Company entitled to vote thereon, in
accordance with applicable law and the Certificate of Incorporation and By-
laws of the Company, the Parent Charter Amendments shall have been duly
adopted by the holders of a majority of the outstanding shares of Parent
entitled to vote thereon and the Parent Share Issuance shall have been duly
approved by the holders of a majority of the votes cast at the Parent
Stockholder Meeting by the holders of the shares of Parent Common Stock,
provided, that the total number of votes cast on the Parent Share Issuance
represents more than 50% of the shares of Parent Common Stock entitled to vote
thereon at the Parent Stockholder Meeting.
(b) Stock Exchange Listings. The shares of Parent Common Stock issuable in
accordance with the Merger and upon exercise of the Substitute Options shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
(c) HSR and Other Approvals. (i) The waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
(ii) All authorizations, consents, orders, declarations or approvals of, or
filings with, or terminations or expirations of waiting periods imposed by,
any Governmental Entity, which the failure to obtain, make or occur would have
the effect of making the Merger or any of the transactions contemplated hereby
illegal or would have a Material Adverse Effect on Parent or the Company (as
the Surviving Corporation), assuming the Merger had taken place, shall have
been obtained, shall have been made or shall have occurred.
(d) Registration Statement. The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act. No stop
order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated or, to the knowledge of Parent or the Company, threatened by the
SEC. All necessary state securities authorizations (including State Takeover
Approvals) shall have been received and shall be in full force and effect.
(e) No Order. No court or other Governmental Entity having jurisdiction over
the Company or Parent, or any of their respective Subsidiaries, shall have
enacted, issued, promulgated, enforced or entered any law, rule,
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regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is then in effect and has the
effect of making illegal or prohibiting the Merger or any of the transactions
contemplated hereby.
(f) Accounting. Each of Parent and the Company shall have received a copy of
an opinion of (i) Arthur Andersen LLP, in form and substance reasonably
satisfactory to Parent and the Company, addressed to the Company, that, based
on such procedures as were deemed relevant, the Company qualifies as an entity
that may be a party to a business combination for which the pooling-of-
interests method of accounting would be available and (ii) Ernst & Young LLP,
in form and substance reasonably satisfactory to Parent and the Company,
addressed to Parent, that, based on such procedures as were deemed relevant,
the Merger will qualify as a pooling of interests under generally accepted
accounting principles.
Section 6.2 Conditions to Obligation of the Company to Effect the Merger.
The obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Performance of Obligations; Representations and Warranties. Each of
Parent and Sub shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed at or prior to
the Effective Time, each of the representations and warranties of Parent and
Sub contained in this Agreement that is qualified by materiality shall be true
and correct at and as of the Effective Time as if made at and as of the
Effective Time and each of such representations and warranties that is not so
qualified shall be true and correct in all material respects at and as of the
Effective Time as if made at and as of the Effective Time, in each case except
as contemplated or permitted by this Agreement; and the Company shall have
received a certificate signed on behalf of Parent by its Chief Executive
Officer and its Chief Financial Officer to such effect.
(b) Tax Opinion. The Company shall have received an opinion of Altheimer &
Gray (or such other outside counsel as shall be reasonably satisfactory to the
Company and Parent), in form and substance reasonably satisfactory to the
Company, dated the Effective Time, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing as of the Effective
Time, for United States federal income tax purposes:
(i) The Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and the Company, Sub and Parent will each be a
party to such reorganization within the meaning of Section 368(b) of the
Code;
(ii) No gain or loss will be recognized by Parent or the Company as a
result of the Merger;
(iii) No gain or loss will be recognized by the stockholders of the
Company who are United States persons (within the meaning of the Code) upon
the exchange of their Company Common Shares solely for shares of Parent
Common Stock pursuant to the Merger, except with respect to cash, if any,
received in lieu of fractional shares of Parent Common Stock;
(iv) The aggregate tax basis of the shares of Parent Common Stock
received by such a stockholder solely in exchange for Company Common Shares
pursuant to the Merger (including fractional shares of Parent Common Stock
for which cash is received) will be the same as the aggregate tax basis of
the Company Common Shares exchanged therefor;
(v) The holding period for shares of Parent Common Stock received by such
a stockholder in exchange for Company Common Shares pursuant to the Merger
will include the holding period of the Company Common Shares exchanged
therefor, provided such Company Common Shares were held as capital assets
by the stockholder at the Effective Time; and
(vi) A stockholder of the Company who receives cash in lieu of a
fractional share of Parent Common stock will recognize gain or loss equal
to the difference, if any, between such stockholder's tax basis in such
fractional share (as described in clause (iv) above) and the amount of cash
received.
In rendering such opinion, Altheimer & Gray (or such other counsel) may
receive and rely upon representations, made as of the Effective Time contained
in a certificate of the Company substantially in the form of the Company
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Tax Certificate attached to the Company Letter, a certificate of Parent
substantially in the form of the Parent Tax Certificate attached to the Parent
Letter and other appropriate certificates of the Company, Parent and others,
including, without limitation, a certificate by the Company as to the
historical and present status of the Company's stockholders and the
stockholdings thereof.
(c) Consents Under Agreements. Parent shall have obtained the consent or
approval of each person (other than the Governmental Entities referred to in
Section 6.1(c)) whose consent or approval shall be required in connection with
the transactions contemplated hereby under any indenture, mortgage, evidence
of indebtedness, Parent License, lease or other agreement or instrument,
except where the failure to obtain the same would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on Parent
or upon the consummation of the transactions contemplated hereby.
(d) Parent Affiliate Agreements. The Company shall have received the written
agreements from the Parent Rule 145 Affiliates described in Section 5.5(b).
(e) Material Adverse Change. Since the date of this Agreement, there shall
have been no Material Adverse Change with respect to Parent; and the Company
shall have received a certificate signed on behalf of Parent by its Chief
Executive Officer and its Chief Financial Officer to such effect.
(f) Litigation. There shall not have been instituted or be pending, or
threatened, any suit, action or proceeding by any Governmental Entity as a
result of this Agreement or any of the transactions contemplated hereby which,
if such Governmental Entity were to prevail, would reasonably be expected, in
the good faith opinion of the Company, to have a Material Adverse Effect on
Parent or the Company.
(g) Registration Rights Agreement. Parent shall enter into the Registration
Rights Agreement with each of the parties thereto attached hereto as Exhibit
C.
Section 6.3 Conditions to Obligations of Parent and Sub to Effect the
Merger. The obligation of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) Performance of Obligations; Representations and Warranties. The Company
shall have performed in all material respects each of its agreements contained
in this Agreement required to be performed at or prior to the Effective Time,
each of the representations and warranties of the Company contained in this
Agreement that is qualified by materiality shall be true and correct at and as
of the Effective Time as if made at and as of the Effective Time and each of
such representations and warranties that is not so qualified shall be true and
correct in all material respects at and as of the Effective Time as if made at
and as of the Effective Time, in each case except as contemplated or permitted
by this Agreement; and Parent shall have received a certificate signed on
behalf of the Company by its Chief Executive Officer and its Chief Financial
Officer to such effect.
(b) Consents Under Agreements. The Company shall have obtained the consent
or approval of each person (other than the Governmental Entities referred to
in Section 6.1(c)) whose consent or approval shall be required in connection
with the transactions contemplated hereby under any indenture, mortgage,
evidence of indebtedness, Company License, lease or other agreement or
instrument, except where the failure to obtain the same would not reasonably
be expected, in the good faith opinion of Parent, individually or in the
aggregate, to have a Material Adverse Effect on the Company or Parent or upon
the consummation of the transactions contemplated hereby.
(c) Company Affiliate Agreements. Parent shall have received the written
agreements from the Company Rule 145 Affiliates described in Section 5.5(a).
(d) Litigation. There shall not have been instituted or be pending, or
threatened, any suit, action or proceeding by any Governmental Entity as a
result of this Agreement or any of the transactions contemplated hereby which,
if such Governmental Entity were to prevail, would reasonably be expected, in
the good faith opinion of Parent, to have a Material Adverse Effect on Parent
or the Company (as the Surviving Corporation).
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(e) Stock Option Agreement. The Company and Parent shall have entered into
the Stock Option Agreement, which shall have remained in full force and effect
without breach by the Company.
(f) Material Adverse Change. Since the date of this Agreement, there shall
have been no Material Adverse Change with respect to the Company; and Parent
shall have received a certificate signed on behalf of the Company by its Chief
Executive Officer and its Chief Financial Officer to such effect.
ARTICLE VII
TERMINATION; AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after any approval by the
stockholders of Parent or the Company of the matters presented in connection
with the Merger:
(a) by mutual written consent of Parent and the Company;
(b) by Parent, by written notice to the Company, if (i) the Company shall
have failed to comply in any material respect with any of its covenants or
agreements contained in this Agreement required to be complied with prior
to the date of such termination, which failure to comply has not been cured
within five business days after receipt by the Company of notice of such
failure to comply, (ii) the stockholders of the Company shall not approve
the Merger at the Company Stockholder Meeting or any adjournment thereof or
(iii) the stockholders of Parent shall not approve and adopt the Parent
Share Issuance or the Charter Amendments at the Parent Stockholder Meeting
or any adjournment thereof;
(c) by the Company, by written notice to Parent, if (i) Parent or Sub
shall have failed to comply in any material respect with any of its
respective covenants or agreements contained in this Agreement required to
be complied with prior to the date of such termination, which failure to
comply has not been cured within five business days after receipt by Parent
of notice of such failure to comply, (ii) the stockholders of the Company
shall not approve the Merger at the Company Stockholder Meeting or any
adjournment thereof or (iii) the stockholders of Parent shall not approve
and adopt the Parent Share Issuance or the Charter Amendments at the Parent
Stockholder Meeting or any adjournment thereof;
(d) by either Parent or the Company, by written notice from the
terminating party to the other parties, if there has been (i) a material
breach by the other (or Sub if the Company is the terminating party) of any
representation or warranty that is not qualified as to materiality or (ii)
a breach by the other (or Sub if the Company is the terminating party) of
any representation or warranty that is qualified as to materiality, in each
case which breach has not been cured within five business days after
receipt by the breaching party of notice of the breach;
(e) by either Parent or the Company, by written notice from the
terminating party to the other parties, if: (i) the Merger has not been
effected on or prior to the close of business on August 14, 1996; provided,
however, that the right to terminate this Agreement pursuant to this clause
(e) shall not be available to any party whose failure to fulfill any
obligation of this Agreement has been the cause of, or resulted in, the
failure of the Merger to have occurred on or prior to such date; or (ii)
any court or other Governmental Entity having jurisdiction over a party
hereto shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and nonappealable;
(f) by the Company, by written notice to Parent, if the Board of
Directors of the Company shall determine in good faith that a Takeover
Proposal constitutes a Superior Proposal; provided, however, that the
Company may not terminate this Agreement pursuant to this clause (f) unless
(i) five business days shall have elapsed after delivery to Parent of a
written notice of such determination by such Board of Directors and at all
reasonable times during such five business-day period the Company shall
have cooperated with Parent in informing Parent of the terms and conditions
of such Takeover Proposal and the identity of the person or group making
such Takeover Proposal, with the objective of providing Parent a reasonable
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opportunity, during such five business-day period, to propose a
modification of the terms and conditions of this Agreement so that a
business combination between the Company and Parent (or an Affiliate of
Parent) may be effected, and (ii) at the end of such five business-day
period such Board of Directors shall continue to believe in good faith that
such Takeover Proposal constitutes a Superior Proposal and simultaneously
therewith the Company shall enter into a definitive acquisition, merger or
similar agreement to effect such Superior Proposal; provided further that,
simultaneously with any such termination under this Section 7.1(f), the fee
set forth in Section 5.7(b) shall have been paid to Parent by the Company;
(g) by Parent, by written notice to the Company, if: (i) the Board of
Directors of the Company shall not have recommended the Merger to the
Company's stockholders, or shall have resolved not to make such
recommendation, or shall have modified in a manner adverse to Parent or
rescinded its recommendation of the Merger to the Company's stockholders as
being advisable and fair to and in the best interests of the Company and
its stockholders, or shall have modified or rescinded its approval of this
Agreement, or shall have resolved to do any of the foregoing, (ii) the
Board of Directors of the Company shall have recommended to the
stockholders of the Company any Takeover Proposal or shall have resolved to
do so or (iii) a tender offer or exchange offer for 30% or more of the
outstanding shares of capital stock of the Company is commenced, and the
Board of Directors of the Company fails to recommend against acceptance of
such tender offer or exchange offer by its stockholders within the 10
business day period (or such shorter period) required by Section 14e-2 of
the Exchange Act (the taking of no position by the expiration of such 10
business day period (or such shorter period) with respect to the acceptance
of such tender offer or exchange offer by its stockholders constituting
such a failure);
(h) by the Company, by written notice to Parent, if the Board of
Directors of Parent shall not have recommended the Parent Share Issuance or
the Charter Amendments to Parent's stockholders, or shall have resolved not
to make such recommendation, or shall have modified in a manner adverse to
the Company or rescinded its recommendation of the Parent Share Issuance or
the Charter Amendments to Parent's stockholders as being advisable and fair
to and in the best interests of Parent and its stockholders, or shall have
modified in a manner adverse to the Company or rescinded its approval of
this Agreement, or shall have resolved to do any of the foregoing;
(i) by Parent, by written notice to the Company if the Company shall
breach any of its covenants or agreements in Section 4.2;
(j) by the Company, by written notice to Parent, prior to the Company
Stockholder Meeting if the Average Price is less than $58.23 (this
provision to be deemed amended and restated to the effect set forth in
Schedule 7.1 after the November Stock Dividend);
(k) by Parent, by written notice to the Company prior to the Parent
Stockholder Meeting if the Average Price is greater than $85.33 (this
provision to be deemed amended and restated to the effect set forth in
Schedule 7.1 after the November Stock Dividend);
(l) by either Parent or the Company, at any time during the 30-day period
commencing on March 12, 1996 and ending on April 11, 1996, by written
notice from the terminating party to the other parties, if the Merger has
not been effected; or
(m) by the Company, by written notice to Parent, if (i) Parent shall have
entered into a definitive acquisition, merger or similar agreement under
which the holders of Parent Common Stock outstanding immediately before the
consummation of the acquisition, merger or similar transaction contemplated
thereby will not own immediately after such consummation more than 50% of
the outstanding voting securities (as such term is defined in Rule 405
under the Securities Act) of the acquiring or surviving corporation or its
parent, or (ii) the Board of Directors of Parent recommends acceptance of a
tender or exchange offer by any person for more than 50% of the outstanding
Parent Common Stock.
The right of Parent or the Company to terminate this Agreement pursuant to
this Section 7.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of such party, whether
prior to or after the execution of this Agreement.
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Section 7.2 Effect of Termination. In the event of the termination of this
Agreement by either Parent or the Company as provided in Section 7.1, this
Agreement shall forthwith become void without any liability hereunder on the
part of the Company, Parent, Sub or their respective directors or officers,
except for the last two sentences of Section 5.4 and the entirety of Section
5.7, which shall survive any such termination; provided, however, that nothing
contained in this Section 7.2 shall relieve any party hereto from any
liability for any breach of this Agreement; provided, however, that, with
respect to any breach by the Company of the provisions of Section 4.2 that is
not the result of willful action (or willful failure to take action) or bad
faith on the part of the Company, Parent's exclusive remedy in respect of such
breach shall be limited to the right to receive the fee described in
subsection (b), (c), (d) or (e) of Section 5.7 and, upon payment of such fee
to Parent in accordance with the provisions of such subsection (b), (c), (d)
or (e), the Company shall have no further liability to Parent in respect of
such breach.
Section 7.3 Amendment. This Agreement may be amended by the parties hereto,
by or pursuant to action taken by their respective Boards of Directors, at any
time before or after approval by the stockholders of Parent and the Company of
the matters presented to them in connection with the Merger; provided,
however, that after any such approval, no amendment shall be made if
applicable law would require further approval by such stockholders, unless
such further approval shall be obtained. This Agreement shall not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 7.4 Waiver. At any time prior to the Effective Time, the parties
hereto may (i) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any instrument delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein which may legally be waived. Any agreement on the
part of any party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant hereto shall survive the Effective Time.
Section 8.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered personally, one day after
being delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the other parties hereto at
the following addresses (or at such other address for any party as shall be
specified by like notice):
(a) if to Parent or Sub, to
IMC Global Inc.
2100 Sanders Road
Northbrook, Illinois 60062
Attention: Marschall I. Smith
Senior Vice President and
General Counsel
Facsimile: (708) 205-4894
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole and
Larry A. Barden
Facsimile: (312) 853-7036
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<PAGE>
(b) if to the Company, to
The Vigoro Corporation
225 North Michigan Avenue, Suite 2500
Chicago, Illinois 60601
Attention: Robert E. Fowler, Jr.
President and Chief Executive Officer
Facsimile: (312) 819-2027
with a copy to:
Altheimer & Gray
10 South Wacker Drive
Chicago, Illinois 60606
Attention: Norman M. Gold
Facsimile: (312) 715-4800
Section 8.3 Interpretation. When reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
Section 8.4 Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts shall have been signed by
each of the parties hereto and delivered to the other parties.
Section 8.5 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
the Stock Option Agreement, the Company Letter, the Parent Letter and the
Confidentiality Agreements described in Section 5.4, (and the schedules and
attachments to the foregoing) except as provided in the last sentence of
Section 5.4, constitutes the entire agreement of the parties hereto and
supersede all prior agreements and understandings, both written and oral,
among such parties with respect to the subject matter hereof. This Agreement,
except for the provisions of Sections 5.9(e), 5.13 or 5.16, is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 8.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflict
of laws of such state.
Section 8.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by operation of law or
otherwise by any of the parties hereto without the prior written consent of
the other parties.
Section 8.8 Severability. If any term or provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other terms, provisions and conditions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party hereto. Upon any determination that any
term or other provision hereof is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of such parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally contemplated
to the fullest extent possible.
Section 8.9 Enforcement of this Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the terms or
provisions of this Agreement were not performed in accordance with their
specific wording or were otherwise breached. It is accordingly agreed that
each of the parties hereto shall be
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entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of
the United States of America or any state having jurisdiction, such remedy
being in addition to any other remedy to which any party may be entitled at
law or in equity.
In Witness Whereof, Parent, Sub and the Company have caused this Agreement
to be executed and attested by their respective officers thereunto duly
authorized, all as of the date first written above.
IMC Global Inc.
/s/ Wendell F. Bueche
By: _________________________________
Wendell F. Bueche
Chairman and Chief Executive
Officer
Attest:
/s/ Marschall I. Smith
- -------------------------------------
Marschall I. Smith
Senior Vice President and General Counsel
Bull Merger Company
/s/ Wendell F. Bueche
By: _________________________________
Wendell F. Bueche
Chairman and Chief Executive
Officer
Attest:
/s/ Marschall I. Smith
- -------------------------------------
Marschall I. Smith
Senior Vice President and General Counsel
The Vigoro Corporation
/s/ Joseph P. Sullivan
By: _________________________________
Joseph P. Sullivan
Chairman of the Board
Attest:
/s/ Robert E. Fowler, Jr.
- -------------------------------------
Robert E. Fowler, Jr.
President and Chief Executive Officer
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<PAGE>
ANNEX II
CONFORMED COPY
VOTING AGREEMENT
Voting Agreement, dated as of November 13, 1995, by and among IMC Global
Inc., a Delaware corporation ("Parent"), on the one hand, and Great American
Management and Investment, Inc., in its capacity as stockholder
("Stockholder") of The Vigoro Corporation, a Delaware corporation (the
"Company"), on the other hand (this "Agreement");
Whereas, concurrently herewith, Parent, Bull Merger Company, a Delaware
corporation and wholly owned subsidiary of Parent, and the Company are
entering into an Agreement and Plan of Merger (the "Merger Agreement";
capitalized terms used without definition herein having the meanings ascribed
thereto in the Merger Agreement);
Whereas, concurrently herewith, Parent and the Company are entering into a
Stock Option Agreement (the "Stock Option Agreement");
Whereas, Stockholder is as of the date hereof the beneficial owner of
Company Common Shares (collectively, the "Shares");
Whereas, approval of the Merger Agreement by the Company's stockholders is a
condition to the consummation of the Merger;
Whereas, as a condition to its entering into the Merger Agreement, Parent
has required that Stockholder agree, and Stockholder has agreed, to enter into
this Agreement; and
Whereas, Stockholder has been informed that the Board of Directors of the
Company has approved the Merger Agreement.
Now, Therefore, in consideration of the foregoing and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
Section 1. Agreement to Vote, Restrictions on Dispositions, Etc.
a. Stockholder hereby agrees to attend the Company Stockholder Meeting,
in person or by proxy, and to vote (or cause to be voted) all Shares, and
any other voting securities of the Company, owned by Stockholder whether
issued heretofore or hereafter, that such person owns or has the right to
vote, for approval and adoption of the Merger Agreement (as amended from
time to time) and the Merger, and the transactions contemplated by the
Merger Agreement, such agreement to vote to apply also to any adjournment
of the Company Stockholder Meeting. Stockholder agrees not to grant any
proxies or enter into any voting agreement or arrangement inconsistent with
this Agreement or the Limited Irrevocable Proxy of even date herewith
executed by Stockholder in favor of Parent ("Irrevocable Proxy").
b. Stockholder hereby agrees that, without the prior written consent of
Parent, Stockholder shall not, directly or indirectly, sell, offer to sell,
grant any option for the sale of or otherwise transfer or dispose of, or
enter into any agreement to sell, any Shares and any other voting
securities of the Company that Stockholder owns beneficially or otherwise.
Stockholder agrees that Parent may instruct the Company to enter stop
transfer orders with the transfer agent(s) and the registrar(s) of the
Company Common Shares against the transfer of Shares and any other voting
securities of the Company that Stockholder owns beneficially or otherwise.
If requested by Parent, Stockholder agrees to surrender to the transfer
agent(s) and registrar(s) of the Company Common Shares certificates
representing Company Common Shares registered in the name of Stockholder,
in exchange for certificates representing Company Common Shares containing
a legend to the effect of the following:
The shares represented by this certificate are subject to
restrictions on transfer and disposition as set forth in the Voting
Agreement dated as of November 13, 1995 among IMC Global Inc., a
Delaware
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<PAGE>
corporation, and Great American Management and Investment, Inc. A copy
of such agreement may be obtained from the Secretary of the Company.
Upon the termination of this Agreement pursuant to Section 6,
Stockholder shall have the right to unilaterally instruct the transfer
agent(s) and registrar(s) of the Company Common Shares to deliver to
the Stockholder certificates representing Company Common Shares
registered in the name of the Stockholder and not bearing the foregoing
legend in exchange for certificates representing Company Common Shares
registered in the name of the Stockholder and bearing such legend.
c. Stockholder agrees to vote (or cause to be voted) all Shares, and any
other voting securities of the Company, owned by Stockholder whether issued
heretofore or hereafter, that such person owns or has the right to vote,
(i) against any recapitalization, merger, consolidation, sale of assets or
other business combination or similar transaction involving the Company or
any of its Subsidiaries, securities or assets which is not endorsed in
writing by Parent and (ii) any other action or agreement that would result
in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or which
could result in any of the conditions to the Company's obligations under
the Merger Agreement not being fulfilled.
d. Stockholder agrees not to directly or indirectly solicit, or authorize
any person to solicit, any inquiries or proposals from any person other
than Parent relating to the merger or consolidation of the Company with any
person other than Parent or its Subsidiaries, or the acquisition of the
Company's or any of its Subsidiaries' voting securities by, or the direct
or indirect acquisition or disposition of a significant amount of assets of
the Company or any of its Subsidiaries otherwise than in the ordinary
course of business of the Company or such Subsidiary, from or to any person
other than Parent or its Subsidiaries or directly or indirectly enter into
or continue any discussions, negotiations or agreements relating to, or
vote (or cause to be voted) in favor of, any such transaction. Nothing
contained herein shall be construed to limit or otherwise affect any
Affiliate or representative of Stockholder who shall serve as a director of
the Company from taking any action permitted by Section 4.2 of the Merger
Agreement in his or her capacity as such director.
e. Stockholder agrees to promptly notify Parent in writing of the nature
and amount of any acquisition by Stockholder after the date hereof of any
voting securities of the Company.
Section 2. Securities Act Covenants, Representations and Warranties.
Stockholder hereby agrees, represents and warrants to Parent as follows:
a. Stockholder will not make any sale, transfer or other disposition of
Parent Common Stock received by Stockholder in the Merger in violation of
the Securities Act.
b. Stockholder has been advised that the offering, sale and delivery of
shares of Parent Common Stock pursuant to the Merger will be registered
under the Securities Act on a registration statement on Form S-4.
Stockholder has also been advised, however, that to the extent Stockholder
is considered an Affiliate of the Company at the time the Merger Agreement
is submitted for a vote of the stockholders of the Company, any public
offering or sale by Stockholder of any shares of Parent Common Stock
received by Stockholder in the Merger will, under current law, require
either (i) the further registration under the Securities Act of any shares
of Parent Common Stock to be sold by Stockholder, (ii) compliance with Rule
145 promulgated by the SEC under the Securities Act or (iii) the
availability of another exemption from such registration under the
Securities Act.
c. Stockholder has read this Agreement and the Merger Agreement and has
discussed their requirements to the extent Stockholder believed necessary,
with Stockholder's counsel or counsel for the Company.
d. Stockholder understands that stop transfer instructions will be given
to Parent's transfer agents with respect to Parent Common Stock and that a
legend will be placed on the certificates for the shares of Parent Common
Stock issued to Stockholder, or any substitutions therefor, to the extent
Stockholder is considered
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<PAGE>
an Affiliate of the Company at the time the Merger Agreement is submitted
for a vote of the stockholders of the Company.
Section 3. Additional Representations and Warranties of Stockholder.
Stockholder represents and warrants to Parent as follows: Stockholder has all
necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Stockholder. Assuming the due authorization, execution and delivery of this
Agreement by Parent, this Agreement constitutes the valid and binding
agreement of Stockholder enforceable against Stockholder in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application which
may affect the enforcement of creditors' rights generally and by general
equitable principles. The Company Common Shares of Stockholder are the only
voting securities of the Company owned (beneficially or of record) by
Stockholder and are owned free and clear of all liens, charges, encumbrances,
restrictions and commitments of any kind. Other than the Irrevocable Proxy,
Stockholder has not appointed or granted any irrevocable proxy, which
appointment or grant is still effective, with respect to the Shares. The
execution and delivery of this Agreement by Stockholder does not (a) conflict
with or violate any agreement, law, rule, regulation, order, judgment or
decision or other instrument binding upon it, nor require any consent,
notification, regulatory filing or approval or (b) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a
lien or encumbrance on any of the Shares owned by Stockholder pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Stockholder is a party or
by which Stockholder or the Shares owned by Stockholder are bound or affected.
Stockholder acknowledges that the restrictions imposed upon it are so imposed
only in Stockholder's capacity as a stockholder of the Company.
Section 4. Further Assurances. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
(including, without limitation, in the case of Stockholder, any amendments to
this Agreement which Parent may reasonably request) as may be necessary or
appropriate to effectuate, carry out and comply with all of their obligations
under this Agreement. Without limiting the generality of the foregoing,
neither of the parties hereto shall enter into any agreement or arrangement
(or alter, amend or terminate any existing agreement or arrangement) if such
action would materially impair the ability of either party to effectuate,
carry out or comply with all the terms of this Agreement.
Section 5. Representations and Warranties of Parent. Parent represents and
warrants to Stockholder as follows: Each of this Agreement and the Merger
Agreement has been approved by the Board of Directors of Parent. Each of this
Agreement and the Merger Agreement has been duly executed and delivered by a
duly authorized officer of Parent. Assuming the due authorization, execution
and delivery of this Agreement by Stockholder and the Merger Agreement by the
Company, each of this Agreement and the Merger Agreement constitutes a valid
and binding agreement of Parent, enforceable against Parent in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application which
may affect the enforcement of creditors' rights generally and by general
equitable principles.
Section 6. Effectiveness and Termination. It is a condition precedent to the
effectiveness of this Agreement that the Merger Agreement shall have been
executed and delivered and be in full force and effect. This Agreement shall
automatically terminate and be of no further force or effect: (i) upon the
close of business on August 14, 1996, if the Merger shall not have been
effected by such time, or (ii) upon the earlier termination of the Merger
Agreement in accordance with its terms, or (iii) immediately prior to the
Company Stockholder Meeting, if Parent has: (a) pursuant to the exercise of
the Option (as defined in the Stock Option Agreement), acquired Optioned
Shares (as defined in the Stock Option Agreement); provided that, if, prior to
the acquisition of Optioned Shares, a record date has been established for the
vote of stockholders of the Company with respect to any matter described in
paragraph a or b of Section 1, this Agreement shall remain in effect with
respect to such vote; and (b) the full legal right and authority to vote all
such Optioned Shares at the Company Stockholder
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<PAGE>
Meeting for approval and adoption of the Merger Agreement and the Merger, and
the transactions contemplated by the Merger Agreement. Notwithstanding
anything contained in clause (iii) above to the contrary, this Voting
Agreement shall not terminate if the Option has been exercised for less than
all of the Optioned Shares; provided, however, that from and after any partial
exercise of the Option, this Agreement shall relate to the number of Shares
equal to (i) the total number of Shares initially subject hereto less (ii) the
aggregate number of Optioned Shares as to which the Option shall have been
exercised. Upon any termination of this Agreement, except for any rights
either party may have in respect of any breach by either party of its
obligations hereunder, none of the parties hereto shall have any further
obligation or liability hereunder. The provisions of Section 1 of this
Agreement shall terminate and be of no further force or effect from and after
the Effective Time of the Merger.
Section 7. Covenants of Stockholder Not to Enter Into Inconsistent
Agreements. Stockholder hereby agrees that, except as contemplated by this
Agreement, the Irrevocable Proxy and the Merger Agreement, Stockholder shall
not enter into any voting agreement or grant an irrevocable proxy or power of
attorney with respect to the Shares which is inconsistent with this Agreement.
Section 8. Miscellaneous.
a. Notices, Etc. All notices, requests, demands or other communications
required by or otherwise given with respect to this Agreement shall be in
writing and shall be deemed to have been duly given to either party when
delivered personally (by courier service or otherwise), when delivered by
telecopy and confirmed by return telecopy, or seven days after being mailed by
first-class mail, postage prepaid in each case to the applicable addresses set
forth below:
If to Parent:
IMC Global Inc.
2100 Sanders Road
Northbrook, Illinois 60062
Attention:Marschall I. Smith
Facsimile:708/205-4894
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention:Thomas A. Cole and
Larry A. Barden
Facsimile:312/853-7036
If to Stockholder:
Great American Management
and Investment, Inc.
2 North Riverside Plaza
Suite 600
Chicago, Illinois 60606
Attention:President
Facsimile:
with a copy to:
Altheimer & Gray
10 South Wacker Drive
Chicago, Illinois 60606
Attention:Norman M. Gold
Facsimile:312/715-4800
or to such other address as such party shall have designated by notice so
given to each other party.
II-4
<PAGE>
b. Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by Parent and Stockholder.
c. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns, including without limitation any corporate successor
by merger or otherwise. Notwithstanding any transfer of Company Common Shares,
the transferor shall remain liable for the performance of all obligations of
the transferor under this Agreement.
d. Entire Agreement. This Agreement (together with the Merger Agreement, the
Stock Option Agreement, the Irrevocable Proxy and the Confidentiality
Agreements dated July 7, 1995 among Parent, the Company and the Stockholder)
embodies the entire agreement and understanding among the parties relating to
the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter. There are no representations,
warranties or covenants by the parties hereto relating to such subject matter
other than those expressly set forth in this Agreement, the Merger Agreement,
the Stock Option Agreement, the Irrevocable Proxy or such Confidentiality
Agreements.
e. Severability. If any term of this Agreement or the application thereof to
either party or circumstance shall be held invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such term to
the other parties or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by applicable law; provided that in
such event the parties shall negotiate in good faith in an attempt to agree to
another provision (in lieu of the term or application held to be invalid or
unenforceable) that will be valid and enforceable and will carry out the
parties' intentions hereunder.
f. Specific Performance. The parties acknowledge that money damages are not
an adequate remedy for violations of this Agreement and that either party may,
in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunction or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief.
g. Remedies Cumulative. All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall
be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by either party shall not preclude the simultaneous or
later exercise of any other such rights, power or remedy by such party.
h. No Waiver. The failure of either party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by the other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
i. No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of and shall not be enforceable by any person or entity who or
which is not a party hereto.
j. Jurisdiction. Each party hereby irrevocably submits to the exclusive
jurisdiction of the Court of Chancery in the State of Delaware in any action,
suit or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such court (and
waives any objection based on forum non conveniens or any other objection to
venue therein) provided, however, that such consent to jurisdiction is solely
for the purpose referred to in this paragraph (j) and shall not be deemed to
be in general submission to the jurisdiction of said Court or in the State of
Delaware other than for such purposes. Each party hereto waives any right to a
trial by jury in connection with any such action, suit or proceeding.
k. Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Delaware without regard to principles of conflicts of law.
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<PAGE>
l. Name, Captions, Gender. The name assigned this Agreement and the section
captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Whenever the context may
require, any pronoun used herein shall include the corresponding masculine,
feminine or neuter forms.
m. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one instrument. Each counterpart may consist
of a number of copies each signed by less than all, but together signed by
all, the parties hereto.
n. Expenses. Each party shall bear its own expenses incurred in connection
with this Agreement and the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
IMC Global Inc.
/s/ Wendell F. Bueche
By: _________________________________
Wendell F. Bueche
Chairman and Chief Executive
Officer
Great American Management and
Investment, Inc.
/s/ Gus J. Athas
By: _________________________________
Gus J. Athas
Senior Vice President
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<PAGE>
LIMITED IRREVOCABLE PROXY
The undersigned stockholder of The Vigoro Corporation, a Delaware
corporation (the "Company"), hereby irrevocably appoints IMC Global, Inc., a
Delaware corporation ("Parent"), the attorney-in-fact and proxy of the
undersigned, within the limitations of this Proxy, with respect to shares of
Common Stock, $.01 par value per share, of the Company owned of record or
beneficially by the undersigned (the "Shares"). Upon the execution hereof, all
prior proxies given by the undersigned with respect to the Shares are hereby
revoked and no subsequent proxies will be given. This Proxy is irrevocable (to
the extent permitted under Delaware law), and coupled with an interest and is
granted in consideration of the Company and Parent entering into the Agreement
and Plan of Merger dated November 13, 1995 among Parent, Bull Merger Co. and
the Company (the "Merger Agreement"). The attorney and proxy named above will
be empowered at any time prior to the earliest of (i) the effectiveness of the
Merger as defined in the Merger Agreement, (ii) August 14, 1996, (iii) notice
from Parent that Parent elects to terminate this Proxy or (iv) the termination
of the Voting Agreement (as defined in the Merger Agreement) in accordance
with its terms, to exercise all voting and other rights to the extent
specified in the succeeding paragraph; provided, however, that, in the event
that the number of Shares subject to the Voting Agreement is reduced pursuant
to the provisions of Section 6 thereof, then this Proxy shall thereafter be
deemed to relate only to such number of Shares then remaining subject to the
Voting Agreement. Upon the occurrence of the earliest of the foregoing events
described in clauses (i), (ii), (iii) or (iv) above, this Proxy shall expire
and be of no further force or effect.
The attorney and proxy named above may only exercise this proxy to vote the
Shares subject hereto in favor of approval of the Merger Agreement and the
Merger at any annual, special or other meeting of the holders of capital stock
of the Company and any adjournments thereof (including, without limitation,
the power to execute and deliver written consents with respect to the Shares)
or for the purpose of voting against a business combination of the Company or
any of its subsidiaries and affiliates with any party other than Parent or any
of its subsidiaries and affiliates and may not exercise this Proxy on any
other matters. The undersigned stockholder may vote the Shares on all other
matters. The undersigned will, upon request, execute and deliver any
additional documents deemed by the above-named attorney-in-fact and proxy to
be necessary or desirable to effect the limited irrevocable proxy created
hereby.
Great American Management and
Investment, Inc.
/s/ Gus J. Athas
-------------------------------------
Company Common Shares Owned:
4,068,929
Dated: November 13, 1995
II-7
<PAGE>
ANNEX III
CONFORMED COPY
STOCK OPTION AGREEMENT
Stock Option Agreement dated as of November 13, 1995 (this "Agreement")
between IMC Global Inc., a Delaware corporation ("Parent"), and The Vigoro
Corporation, a Delaware corporation (the "Company").
Whereas, Parent, Bull Merger Company, a Delaware corporation and a wholly-
owned subsidiary of Parent ("Sub"), and the Company are concurrently entering
into an Agreement and Plan of Merger dated as of November 13, 1995 (the
"Merger Agreement"; capitalized terms used without definition herein have the
meanings ascribed thereto in the Merger Agreement), whereby, upon the terms
and subject to the conditions set forth in the Merger Agreement, each issued
and outstanding Common Share, $.01 par value, of the Company ("Company Common
Shares"), not owned directly or indirectly by Parent or the Company, will be
converted into shares of Common Stock, $1.00 par value, of Parent ("Parent
Common Stock");
Whereas, in connection with the execution and delivery of the Merger
Agreement, Parent has requested that the Company grant to Parent an option to
purchase up to 3,959,330 authorized and unissued Company Common Shares upon
the terms and subject to the conditions hereinafter set forth; and
Whereas, in order to induce Parent and Sub to enter into the Merger
Agreement and to consummate the Merger, the Company desires to grant to Parent
the requested option;
Now, Therefore, in consideration of the premises, representations,
warranties and agreements herein contained, the parties hereto agree as
follows:
1. The Option; Exercise; Adjustments. (a) Upon the terms and subject to the
conditions herein set forth, the Company hereby grants to Parent an
irrevocable option (the "Option") to purchase up to 3,959,330 authorized and
unissued Company Common Shares (the "Optioned Shares") at the purchase price
per Optioned Share specified in Section 3. Subject to the conditions set forth
in Section 2, the Option may be exercised by Parent, in whole at any time or
in part from time to time, after the date hereof and prior to the termination
of the Option in accordance with Section 19. In the event Parent shall elect
to exercise the Option, in whole or in part, Parent shall send written notice
to the Company (an "Option Exercise Notice") specifying the total number of
Optioned Shares Parent elects to purchase and a date (which shall not be later
than 20 business days nor earlier than two business days after the date such
Option Exercise Notice is given) for the closing of such purchase (a "Closing
Date"). Parent may revoke any such election at any time prior to the specified
Closing Date by written notice to the Company.
(b) In the event of any change in the number of issued and outstanding
Company Common Shares by reason of any stock dividend, stock split,
combination of shares, reclassification, recapitalization, merger,
consolidation, conversion, exchange of shares or exercise of rights or
warrants, or any other change in the corporate or capital structure of the
Company (including, without limitation, the declaration or distribution of an
extraordinary dividend payable in cash or securities) which would have the
effect of diluting or otherwise adversely affecting Parent's rights and
privileges under this Agreement, the number and kind of Optioned Shares and
the consideration payable in respect of such Optioned Shares shall be
appropriately adjusted to restore to Parent its rights, privileges and
economic benefits under this Agreement. Without limiting the generality of the
foregoing, in any such event, at the election of Parent, the Option shall
represent the right to purchase, in lieu of the Optioned Shares, whatever
securities, cash or other property the Optioned Shares would have been
converted into or otherwise exchanged for, together with any securities, cash
or other property which would have been distributed with respect to the
Optioned Shares, had Parent acquired the Optioned Shares prior to such event
and elected, to the fullest extent that it would have been permitted to do so,
to receive all such securities, cash or other property.
(c) In the event that Parent exercises the Option hereunder after the
Company has paid Parent a fee (the "Fee") under Section 5.7(b), 5.7(c), 5.7(d)
or 5.7(e) of the Merger Agreement, Parent shall at each closing hereunder,
remit to the Company an amount, in cash, equal to the lesser of (i) the dollar
amount by which the
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<PAGE>
average of the per share closing prices on the New York Stock Exchange, Inc.
("NYSE") of the Company Common Shares (as reported in the New York Stock
Exchange Composite Transactions) during the 20 consecutive trading days (or
such fewer number of trading days after the date hereof, as the case may be)
ending on the trading day prior to the date on which the exercise relating to
such closing occurs exceeds the Exercise Price then in effect, multiplied by
the number of Optioned Shares as to which the Option was then exercised (it
being understood that the operation of this clause shall not reduce any Stock
Option Gain Amount previously paid or credited to the Company) or (ii) the
amount of the Fee paid to Parent; provided, however, that in the event of more
than one exercise of the Option, the aggregate amount to be remitted to the
Company pursuant to all exercises of the Option shall not exceed the amount of
the Fee received.
2. Conditions to Exercise of Option and Delivery of Optioned Shares. (a)
Parent's right to exercise the Option is subject to the following conditions:
(i) No preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States of
America invalidating the grant or prohibiting the exercise of the Option or
the delivery of the Optioned Shares shall be in effect;
(ii) One or more of the following events shall occur on or after the date
hereof and be continuing or Parent shall become aware on or after the date
hereof that any of such events shall have occurred prior to the date hereof
and which have not been previously disclosed publicly: (A) any person,
corporation, partnership or other entity or group (such person,
corporation, partnership or other entity or group being hereinafter
referred to, singularly or collectively, as a "Person"), other than Parent
or any of its Affiliates (as defined in Rule 405 under the Securities Act
of 1933, as amended (the "Securities Act") (or any group which shall
include or may reasonably be deemed to include Parent or any of its
Affiliates, a "Parent Group") shall acquire or become the beneficial owner
of 30% or more of the outstanding Company Common Shares; (B) any new group
(other than a Parent Group) shall be formed which, at the time of the
formation thereof, shall beneficially own 30% or more of the outstanding
Company Common Shares; (C) any Person (other than Parent or any of its
Affiliates or any Parent Group) shall have commenced a tender or exchange
offer for 30% or more of the then outstanding Company Common Shares or
publicly announced any bona fide merger, consolidation or other business
combination (involving 30% or more of then outstanding Company Common
Shares or 30% or more of the equity interests in the surviving entity)
with, or the acquisition of all or substantially all of the assets, of the
Company, or any other similar business combination involving the Company;
(D) the Company shall enter into, or shall announce that it proposes to
enter into, an agreement, including, without limitation, an agreement in
principle, providing for a merger, consolidation or other business
combination (involving 30% or more of then outstanding Company Common
Shares or 30% or more of the equity interests in the surviving entity)
involving the Company or a "significant subsidiary" (as defined in Rule
1.02(v) of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of the Company or the acquisition of a substantial
interest in, or a substantial portion of the properties, assets or business
of, the Company or a significant subsidiary of the Company (other than the
transactions permitted by Section 4.1(b) of the Merger Agreement); or (E)
any Person (other than Parent or any of its Affiliates or any Parent Group)
shall be granted any option or right, conditional or otherwise, to acquire
or otherwise become the beneficial owner of Company Common Shares which,
together with all Company Common Shares beneficially owned by such Person,
shall result or would result in such Person being the beneficial owner of
30% or more of the outstanding Company Common Shares. For purposes of this
subparagraph (ii), the terms "group" and "beneficial owner" shall have the
meaning attributed thereto for the purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); and
(iii) Parent shall not be in material breach of the Merger Agreement.
(b) Parent's obligation to purchase Optioned Shares after the exercise of
the Option, in whole or in part, and the Company's obligation to deliver such
Optioned Shares, are subject to the conditions that:
(i) No preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States of
America prohibiting the delivery of such Optioned Shares shall be in
effect;
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<PAGE>
(ii) The purchase of such Optioned Shares shall not violate Rule 10b-13
under the Exchange Act; and
(iii) All applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have
expired or been terminated.
3. Exercise Price for Optioned Shares. At any Closing Date, the Company
shall deliver to Parent a certificate or certificates representing the
Optioned Shares then being purchased in the denominations designated by Parent
in its applicable Option Exercise Notice, and Parent shall purchase such
Optioned Shares from the Company at a price per Optioned Share equal to $57.21
(the "Exercise Price"), payable in Parent Common Stock and/or cash, at
Parent's option, as specified in such Option Exercise Notice. Any cash payment
by Parent shall be made by wire transfer of immediately available funds to a
bank in the United States of America designated in writing by the Company or
by check payable in immediately available funds. Any payment in Parent Common
Stock shall be valued on the basis of the average of the per share closing
prices on the NYSE of Parent Common Stock (as reported in the New York Stock
Exchange Composite Transactions) during the 20 consecutive trading days ending
on the third trading day preceding the applicable Closing Date. Any payment in
Parent Common Stock shall be made by delivery of a certificate or certificates
representing the Parent Common Stock then being delivered in respect of such
payment in the denominations designated by the Company. After payment of the
Exercise Price for the Optioned Shares covered by any Stock Exercise Notice,
the Option shall be deemed exercised to the extent of the Optioned Shares
specified in such Option Exercise Notice as of the date such Option Exercise
Notice is given to the Company. Any Parent Common Stock delivered in respect
of such payment shall be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights.
4. Representations and Warranties of the Company. The Company represents and
warrants to Parent that: (a) the execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Company, and this Agreement has been duly executed
and delivered by the Company and (assuming the valid authorization, execution
and delivery hereof by Parent and the validity and binding effect hereof on
Parent) constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms; (b) the Company
has taken all necessary corporate action to reserve the Optioned Shares for
issuance upon exercise of the Option, and the Optioned Shares, when issued and
delivered by the Company to Parent upon exercise of the Option as provided
herein, will be duly authorized, validly issued, fully paid and nonassessable
and free of preemptive rights and will, as soon as practicable after the
issuance thereof, have been listed on the NYSE; and (c) except as otherwise
required by the HSR Act, except for other routine filings and except as
required by Section 8 or as set forth in the Merger Agreement, including the
Company Letter, the execution and delivery of this Agreement by the Company do
not, and the consummation by the Company of the transactions contemplated
hereby and compliance with the provisions hereof will not, require the
consent, approval or authorization of, or any filing or registration with, any
governmental authority or other person and will not result in any violation
of, or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or the loss of a material benefit under, or result in the creation
of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its subsidiaries under: (i) any
provision of the Certificate of Incorporation or By-Laws of the Company or the
comparable charter or organization documents or by-laws of any of its
subsidiaries; (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, agreement, instrument, permit, concession, franchise or
license applicable to the Company or any of its subsidiaries; or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its subsidiaries or any of their
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such violations, defaults, rights, liens, security interests,
charges or encumbrances that, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the Company and
its subsidiaries taken as a whole and would not materially impair the ability
of the Company to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
5. Representations and Warranties of Parent. Parent represents and warrants
to the Company that: (a) the execution and delivery of this Agreement by
Parent and the consummation by Parent of the transactions
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<PAGE>
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Parent, and this Agreement has been duly executed and
delivered by Parent and (assuming the valid authorization, execution and
delivery hereof by the Company and the validity and binding effect hereof on
the Company) constitutes the valid and binding obligation of Parent
enforceable against Parent in accordance with its terms; and (b) Parent is
acquiring the Option and, if and to the extent that it exercises the Option,
will be acquiring the Optioned Shares issuable upon such exercise for its own
account and not with a view to the distribution or resale thereof in a manner
which would be in violation of the Securities Act and will not sell or
otherwise dispose of the Optioned Shares except pursuant to an effective
registration under the Securities Act or a valid exemption from registration
under the Securities Act. A legend to such effect may be inscribed on all
certificates representing the Optioned Shares.
6. Closing. Any closing hereunder shall take place on the Closing Date
specified by Parent in the applicable Option Exercise Notice at 10:00 A.M.,
local time, or on the first business day thereafter on which all of the
conditions specified in Section 2 are satisfied, at the principal office of
the Company, or at such other time and place as the parties hereto may agree.
7. Listing of Optioned Shares; HSR Filing. The Company shall promptly file
an application to list on the NYSE, upon official notice of issuance, any
Optioned Shares issued hereunder and shall use its reasonable best efforts to
obtain approval of such listing; provided, however, that if the Company shall
be unable to effect such listing on the NYSE by any Closing Date, the Company
shall nevertheless be obligated to deliver Optioned Shares upon such Closing
Date. In addition, the Company shall use its reasonable best efforts to effect
promptly all necessary filings by the Company under the HSR Act.
8. Parent Registration Rights. (a) If at any time within three years after
the latest Closing Date the Company shall file under the Securities Act any
registration statement (other than a registration statement on Form S-4, Form
S-8 or any successor form) covering Company Common Shares or Other Securities
(as hereinafter defined) for its own account or for the account of any holder
of Company Common Shares or Other Securities, the Company shall permit Parent
to include in such registration statement any or all of the Optioned Shares
(or, in the case of any adjustment pursuant to Section 1(b), the other
securities (the "Other Securities") issuable upon exercise of the Option)
which have been or are to be acquired upon the exercise of the Option;
provided, however, that if the managing underwriters in any proposed
registered public offering shall advise the Company that, in their opinion,
the number of Optioned Shares (and/or Other Securities, if applicable) to be
included in such registration statement at the request of Parent exceeds the
number of Company Common Shares (and/or Other Securities, if applicable) which
can be sold in such offering, the Company may exclude from such registration
statement all or any portion, as appropriate, of the Optioned Shares (and/or
Other Securities, if applicable) requested to be included by Parent.
(b) At any time within three years after the latest Closing Date, upon the
request of Parent, the Company shall promptly file and use its reasonable best
efforts to cause to be declared effective a registration statement under the
Securities Act (and all applicable state securities laws) with respect to any
or all of the Optioned Shares (and/or Other Securities, if applicable) which
have been or are to be acquired upon the exercise of the Option and to cause
such registration statement to remain effective for a period of not less than
30 days thereafter (or any shorter period within which all of the Optioned
Shares (and/or Other Securities, if applicable) covered by such registration
statement shall have been sold or withdrawn from sale or longer period
required by any underwriting agreement pursuant to Section 8(e)); provided,
however, that the Company shall not be required to have declared effective
more than two registration statements pursuant to this paragraph (b) (and not
more than one in any consecutive 12-months' period) and shall be entitled to
delay the effectiveness of any such registration statement if the commencement
of the offering contemplated thereby would, in the good faith judgment of the
Board of Directors of the Company, require premature disclosure of any
material corporate development or otherwise interfere with or adversely affect
any pending or proposed offering of securities by the Company.
(c) In connection with any registration of the Optioned Shares pursuant to
Section 8(a) or 8(b), the Company shall indemnify and hold harmless Parent,
its Affiliates, any underwriters involved in the sale of Optioned Shares
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<PAGE>
and their respective controlling persons, directors, officers, agents and
representatives from and against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, all out-of-pocket
expenses, investigation expenses, expenses incurred with respect to any
judgment or settlement and fees and disbursements of counsel and accountants)
arising out of or based upon any untrue statement or alleged untrue statement
contained in, or any omission or alleged omission from, each registration
statement (and any related prospectus) relating to any such registration;
provided, however, that the Company shall not be liable in any such case to
Parent or any such Affiliate, controlling person, director, officer, agent or
representative to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement (or any related prospectus) in
reliance upon, and in conformity with, written information with respect to
Parent or any such Affiliate, controlling person, director, officer, agent or
representative furnished by Parent to the Company for use in the preparation
of such registration statement.
(d) Any registration effected in accordance with this Section 8 shall be at
the Company's expense, except for underwriting discounts and commissions and
the fees and disbursements of counsel to Parent.
(e) At the request of Parent, Company shall enter into an underwriting
agreement with such underwriter or underwriters (or their representative or
representatives) designated by Parent and reasonably acceptable to Company
providing for the offer and sale of the Optioned Shares and containing terms
and conditions customary in secondary offerings of common stock of issuers
comparable to the Company on the registration form utilized for such offering.
The Company shall cooperate with Parent and such underwriter(s) or
representative(s), and will permit them and their respective counsel and
representative(s) to make such "due diligence" investigation to be made of its
business, properties, financial condition, results and affairs as they shall
reasonably request, in connection with the registration, offer and sale of the
Optioned Shares.
9. Company Registration Rights. (a) If Parent delivers any shares of Parent
Common Stock in payment for Optioned Shares upon the exercise of the Option,
in whole or in part, and Parent within three years after the latest Closing
Date at which shares of Parent Common Stock are delivered files under the
Securities Act any registration statement (other than a registration statement
on Form S-4, Form S-8 or any successor form) covering shares of Parent Common
Stock for its own account or for the account of any stockholder of Parent,
Parent will permit the Company to include in such registration statement any
or all of the shares of Parent Common Stock so acquired; provided, however,
that if the managing underwriters in any proposed registered public offering
shall advise Parent that, in their opinion, the number of shares of Parent
Common Stock to be included in such registration statement at the request of
the Company exceeds the number of shares which can be sold in such offering,
Parent may exclude from such registration statement all or any portion, as
appropriate, of the shares of Parent Common Stock requested to be included by
the Company.
(b) At any time within three years after the latest Closing Date at which
shares of Parent Common Stock are delivered, upon the request of the Company,
Parent shall promptly file and use its reasonable best efforts to cause to be
declared effective a registration statement under the Securities Act (and all
applicable state securities laws) with respect to any or all of the shares of
Parent Common Stock acquired in payment for Optioned Shares upon the exercise
of the Option, in whole or in part, and to cause such registration statement
to remain effective for a period of not less than 30 days thereafter (or any
shorter period within which the shares of Parent Common Stock covered by such
registration statement shall have been sold or withdrawn from sale or longer
period required by any underwriting agreement pursuant to Section 9(e));
provided, however, that Parent shall not be required to have declared
effective more than two registration statements pursuant to this paragraph (b)
(and not more than one in any consecutive 12-months' period) and shall be
entitled to delay the effectiveness of any such registration statement if the
commencement of the offering contemplated thereby would, in the good faith
judgment of the Board of Directors of Parent, require premature disclosure of
any material corporate development or otherwise interfere with or adversely
affect any pending or proposed offering of securities by Parent.
III-5
<PAGE>
(c) In connection with any registration of shares of Parent Common Stock
pursuant to Section 9(a) or 9(b), Parent shall indemnify and hold harmless the
Company, its Affiliates, any underwriters involved in the sale of Optioned
Shares and their respective controlling persons, directors, officers, agents
and representatives from and against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, all out-of-pocket
expenses, investigation expenses, expenses incurred with respect to any
judgment or settlement and fees and disbursements of counsel and accountants)
arising out of or based upon any untrue statement or alleged untrue statement
contained in, or any omission or alleged omission from, each registration
statement (and any related prospectus) relating to any such registration;
provided, however, that Parent shall not be liable in any such case to the
Company or any such Affiliate, controlling person, director, officer, agent or
representative to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement (or any related prospectus) in
reliance upon, and in conformity with, written information with respect to the
Company or any such Affiliate, controlling person, director, officer, agent or
representative furnished by the Company to Parent for use in the preparation
of such registration statement.
(d) Any registration effected in accordance with this Section 9 shall be at
Parent's expense, except for underwriting discounts and commissions and the
fees and disbursements of counsel to the Company.
(e) At the request of Company, Parent shall enter into an underwriting
agreement with such underwriter or underwriters (or their representative or
representatives) designated by Company and reasonably acceptable to Parent
providing for the offer and sale of the Parent Common Stock and containing
terms and conditions customary in secondary offerings of common stock of
issuers comparable to Parent on the registration form utilized for such
offering. Parent shall cooperate with Company and such underwriter(s) or
representative(s), and will permit them and their respective counsel and
representative(s) to make such "due diligence" investigation to be made of its
business, properties, financial condition, results and affairs as they shall
reasonably request, in connection with the registration, offer and sale of the
Parent Common Stock.
10. Expenses. Each party hereto shall pay its own expenses in connection
with this Agreement, except as otherwise provided in Sections 8 and 9.
11. Further Assurances. The Company and Parent shall execute and deliver all
such further documents and instruments and take all such further action as may
be necessary, desirable or proper in order to consummate the transactions
contemplated hereby.
12. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally, one day after
being sent by overnight courier or when telecopied (with a confirmatory copy
sent by overnight courier) to the other party hereto at the following
addresses (or at such other address for any party as shall be specified by
like notice):
(a) if to Parent, to
IMC Global Inc.
2100 Sanders Road
Northbrook, Illinois 60062
Attention: Marschall I. Smith
Senior Vice President and
General Counsel
Facsimile: (708) 205-4894
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole and
Larry A. Barden
Facsimile: (312) 853-7036
III-6
<PAGE>
(b) if to the Company, to
The Vigoro Corporation
225 North Michigan Avenue, Suite 2500
Chicago, Illinois 60601
Attention: Robert E. Fowler, Jr.
President
Facsimile: (312) 819-2027
with a copy to:
Altheimer & Gray
10 South Wacker Drive
Chicago, Illinois 60606
Attention: Norman M. Gold
Facsimile: (312) 715-4800
13. Interpretation. When reference is made in this Agreement to a Section,
such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or interpretation
of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when a counterpart shall have been signed by each of
the parties hereto and delivered to the other party.
15. Entire Agreement; No Third-Party Beneficiaries. This Agreement, the
Merger Agreement, the Company Letter, the Parent Letter and the
Confidentiality Agreements (and the schedules and attachments to the
foregoing) constitute the entire agreement of the parties hereto and thereto
and supersede all prior agreements and understandings, both written and oral,
among such parties with respect to the subject matter hereof and thereof. This
Agreement, except for the provisions of Sections 8(c) and 9(c), is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
16. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflict of laws of
such state.
17. Assignment. Neither this Agreement or the Option nor any of the rights,
interests or obligations hereunder or thereunder shall be assigned by either
of the parties hereto without the prior written consent of the other party,
except that Parent, in its sole discretion, may assign any or all of its
rights, interests and obligations (other than its obligations under Section 9)
hereunder or thereunder to any direct or indirect wholly-owned subsidiary of
Parent, but no such assignment shall relieve Parent of any of its obligations
hereunder or thereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties hereto and their respective successors and assigns.
18. Severability. If any term or provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or public policy,
all other terms, provisions and conditions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby and by the Merger Agreement
are not affected in any manner materially adverse to either party hereto. Upon
any determination that any term or other provision hereof is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of such
parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement and by the Merger Agreement
may be consummated as originally contemplated to the fullest extent possible.
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<PAGE>
19. Termination. The Option shall terminate upon the earlier of (i) the
Effective Time (as defined in the Merger Agreement) and (ii) the 135th day
after the termination of the Merger Agreement in accordance with its terms;
provided, however, that no such termination shall affect any of the rights of
Parent or its successors or assigns in respect of any previous exercise of the
Option or the acquisition of Optioned Shares pursuant to any such exercise,
nor shall any such termination affect any of the rights of the Company under
Section 9 hereof.
20. Enforcement of this Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the terms or provisions of this
Agreement were not performed in accordance with their specific wording or were
otherwise breached. It is accordingly agreed that each of the parties hereto
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States of America or any state having jurisdiction, such
remedy being in addition to any other remedy to which either party may be
entitled at law or in equity.
In Witness Whereof, Parent and the Company have caused this Agreement to be
executed and attested by their respective officers thereunto duly authorized,
all as of the date first written above.
The Vigoro Corporation
/s/ Joseph P. Sullivan
By: _________________________________
Joseph P. Sullivan
Chairman of the Board
/s/ Robert E. Fowler, Jr.
Attest: _____________________________
Robert E. Fowler, Jr.
President and Chief Executive Officer
IMC Global Inc.
/s/ Wendell F. Bueche
By: _________________________________
Wendell F. Bueche
Chairman and Chief Executive
Officer
/s/ Marschall I. Smith
Attest: _____________________________
Marschall I. Smith
Senior Vice President and General Counsel
III-8
<PAGE>
ANNEX IV
REGISTRATION RIGHTS AGREEMENT
This Agreement (this "Agreement"), dated , 199 , is between IMC
Global Inc., a Delaware corporation (the "Company"), and those parties listed
under the heading "Stockholders" on the signature page to this Agreement (the
"Stockholders").
Whereas, concurrently with the execution and delivery of this Agreement,
Bull Merger Company, a Delaware corporation and a wholly-owned subsidiary of
the Company ("Sub"), has been merged (the "Merger") into The Vigoro
Corporation, a Delaware corporation ("Vigoro"), and each issued and
outstanding share of Common Stock, $.01 par value of Vigoro, not owned
directly or indirectly by the Company or Vigoro, has been converted to shares
of Common Stock, $1.00 par value, of the Company ("Company Common Stock");
Whereas, immediately prior to the Merger, the Stockholders were stockholders
of Vigoro;
Whereas, upon the effectiveness of the Merger, the Stockholders will be
subject to the restrictions of paragraph (d) of Rule 145 under the Securities
Act with respect to the sale of shares of Company Common Stock received by
them in the Merger;
Whereas, the Company and the Stockholders desire to provide a mechanism for
the registration of the shares of Company Common Stock issued to the
Stockholders in the Merger,
Now, Therefore, in consideration of the premises and the representations,
warranties and agreements contained herein and intending to be legally bound
hereby, the parties hereto agree as follows:
Section 21. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
(A) The term "Commission" shall have the meaning assigned thereto in Section
2(c) of this Agreement.
(B) The term "Demand" shall have the meaning assigned thereto in Section
2(a) of this Agreement.
(C) The term "Demand Registration" shall have the meaning assigned thereto
in Section 2(a) of this Agreement.
(D) The term "Demanding Sellers" shall have the meaning assigned thereto in
Section 2(e) of this Agreement.
(E) The term "Internal Expenses" shall have the meaning assigned thereto in
Section 7 of this Agreement.
(F) The term "Maximum Demand Number" shall have the meaning assigned thereto
in Section 2(e) of this Agreement.
(G) The term "Maximum Piggyback Number" shall have the meaning assigned
thereto in Section 3(b) of this Agreement.
(H) The term "Merger Shares" means the shares of Company Common Stock issued
to the Stockholders pursuant to the Merger.
(I) The term "Other Demand Rights" shall have the meaning assigned thereto
in Section 3(b) of this Agreement.
(J) The term "Other Demanding Sellers" shall have the meaning assigned
thereto in Section 3(b) of this Agreement.
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<PAGE>
(K) The term "Person" means any individual, firm, corporation, partnership,
limited liability company or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(L) The term "Piggyback Notice" shall have the meaning assigned thereto in
Section 3(a) of this Agreement.
(M) The term "Piggyback Registration" shall have the meaning assigned
thereto in Section 3(a) of this Agreement.
(N) The term "Piggyback Seller" shall have the meaning assigned thereto in
Section 3(b) of this Agreement.
(O) The term "Primary Offering" shall have the meaning assigned thereto in
Section 3(b) of this Agreement.
(P) The term "Registrable Securities" means (i) the Merger Shares and (ii)
securities issued or issuable with respect to the Merger Shares or other
Registrable Securities by virtue of this clause (ii), in each case by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, reorganization, reclassification, merger, consolidation,
compulsory share exchange or any other transaction or series of related
transactions in which shares of Company Common Stock or Registrable Securities
are changed into, converted into or exchanged for other securities. As to any
particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a registration statement registering such
securities under the Securities Act has been declared effective and such
securities have been sold or otherwise transferred by the holder thereof
pursuant to such effective registration statement, (ii) such securities are
sold in compliance with paragraph (d) of Rule 145 or (iii) such securities may
be sold without regard to the provisions of paragraph (d) of Rule 145. For
purposes of this Agreement, a Person will be deemed to be a holder of
Registrable Securities whenever such Person has the right to acquire such
Registrable Securities (by conversion, exercise or otherwise) whether or not
such acquisition has actually been effected; provided, however, that if more
than one Person would be deemed to be the holder of Registrable Securities by
virtue of this sentence, then the Person who then owns such Registrable
Securities shall be deemed to be the holder thereof.
(Q) The term "Registration Expenses" shall have the meaning assigned thereto
in Section 6(a) of this Agreement.
(R) The term "Registration Period" means the period commencing as of the
date of this Agreement and expiring on the earlier of (i) the first date on
which all Registrable Securities may be sold by the holders thereof without
regard to the provisions of paragraph (d) of Rule 145 or (ii) the fifth
anniversary of the date of this Agreement.
(S) The term "Requisite Amount" means 50% of the then outstanding
Registerable Securities.
(T) The term "Rule 145" means Rule 145 (or any successor provisions)
promulgated under the Securities Act.
(U) The term "Securities Act" shall have the meaning assigned thereto in
Section 2(a) of this Agreement.
Section 22. Demand Registrations.
(A) Requests for Registration. During the Registration Period, holders of
the Requisite Amount of Registrable Securities shall be entitled to make
written requests of the Company (each such request being a "Demand") for
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of all or part of the Registrable Securities (a "Demand Registration").
Such Demand shall specify: (i) the aggregate number and kind of Registrable
Securities requested to be registered; and (ii) the intended method of
distribution in connection with such Demand Registration to the extent then
known. No Demand shall be effective or impose any obligation upon the Company
unless such Demand shall request the registration of not less than the
Requisite Amount of Registrable Securities. Within ten (10) days after receipt
of a Demand, the Company shall give written notice of such Demand to all other
holders of Registrable Securities and shall include in such registration all
Registrable Securities of each holder thereof with respect to which the
Company has received a written request for inclusion therein within twenty
(20) days after the receipt by such holder of the Company's notice required by
this paragraph.
IV-2
<PAGE>
(B) Number of Demand Registrations. The holders of Registrable Securities
shall be entitled to two (2) Demand Registrations.
(C) Satisfaction of Obligations. Subject to Section 4, a registration shall
not be treated as a Demand Registration until (i) the applicable registration
statement under the Securities Act has been filed with the Securities and
Exchange Commission (the "Commission") with respect to such Demand
Registration and (ii) such registration statement shall have been maintained
continuously effective for a period of at least one hundred twenty (120) days
or such shorter period when all Registrable Securities included therein have
been sold thereunder in accordance with the manner of distribution set forth
in such registration statement.
(D) Restrictions on Demand Registrations. The Company shall not be obligated
to file any Demand Registration within one hundred eighty (180) days after the
effective date of a so-called "firm commitment" underwritten registration in
which all holders of Registrable Securities were given so-called "piggyback"
rights pursuant to Section 3 hereof (provided that, with respect to such a
registration in which such piggyback rights were exercised, each such holder
exercising such piggyback rights was permitted to include in such registration
all Registrable Securities that such holder sought to include therein). In
addition, the Company shall be entitled to postpone (upon written notice to
all holders of Registrable Securities) for up to ninety (90) days the filing
or the effectiveness of a registration statement in respect of a Demand (but
no more than once in any period of nine (9) consecutive months and no more
than two times in total) if the Company's Board of Directors determines in
good faith and in its reasonable judgment (based upon the written advice of a
nationally recognized investment banking firm selected by the Company and
reasonably acceptable to the holders of a majority of the Registrable
Securities sought to be registered in respect of such Demand) that effecting
the Demand Registration in respect of such Demand would have a material
adverse affect on any proposal or plan by the Company to engage in any
material, public debt or equity financing, acquisition or disposition of
assets (other than in the ordinary course of business) or any material merger,
consolidation, tender offer or other similar transaction (in each case,
authorization for the negotiation of which has been obtained from the Board of
Directors of the Company prior to the service of such Demand).
(E) Participation in Demand Registrations. Neither the Company nor any other
Person shall include any securities other than Registerable Securities in a
Demand Registration, except with the written consent of the holders of the
majority of the Registrable Securities sought to be registered pursuant to
such Demand Registration. If, in connection with a Demand Registration, any
managing underwriter (or, if such Demand Registration is not an underwritten
offering, a nationally recognized independent underwriter selected by the
holders of a majority of the Registrable Securities sought to be registered in
such Demand Registration (which such underwriter shall be reasonably
acceptable to the Company and whose fees and expenses shall be borne solely by
the Company)) advises the Company and the holders of the Registrable
Securities sought to be included in such Demand Registration that, in its
opinion, the inclusion of all the Registrable Securities and, if authorized
pursuant to this paragraph, other securities of the Company, in each case,
sought to be registered in connection with such Demand Registration would
adversely affect the marketability of the Registrable Securities sought to be
sold pursuant thereto, then the Company shall include in the registration
statement applicable to such Demand Registration only such securities as the
Company and the holders of Registrable Securities sought to be registered
therein ("Demanding Sellers") are advised by such underwriter can be sold
without such an effect (the "Maximum Demand Number"), as follows and in the
following order of priority:
(i) first, the number of Registrable Securities sought to be registered
by each Demanding Seller, pro rata in proportion to the number of
Registrable Securities sought to be registered by all Demanding Sellers;
and
(ii) second, if the number of Registrable Securities to be included under
clause (i) next above is less than the Maximum Demand Number, the number of
securities sought to be included by each other seller, pro rata in
proportion to the number of securities sought to be sold by all such other
sellers, which in the aggregate, when added to the number of securities to
be included pursuant to clause (i) next above, equals the Maximum Demand
Number.
IV-3
<PAGE>
(F) Selection of Underwriters. If the holders of a majority of the
Registrable Securities sought to be registered in a Demand Registration
request that such Demand Registration be an underwritten offering, then such
holders shall select a nationally recognized underwriter or underwriters to
manage and administer such offering, such underwriter or underwriters, as the
case may be, to be subject to the approval of the Company's Board of
Directors, which such approval shall not be unreasonably withheld.
(G) Other Registrations. If the Company has received a Demand pursuant to
this Section 2 and if the applicable registration statement in respect of such
Demand has not been withdrawn or abandoned, the Company will not file or cause
to be effected any other registration of any of its equity securities or
securities convertible or exchangeable into or exercisable for its equity
securities under the Securities Act (except on Form S-4 or S-8 or any
successor form), whether on its own behalf or at the request of any holder or
holders of such securities, until a period of at least one hundred and twenty
(120) days has elapsed from the effective date of a firm commitment
underwritten Demand Registration (or, if later, the date of an underwriting
agreement with respect thereto) or a period of at least ninety (90) days has
elapsed from the effective date of any other Demand Registration, unless, in
each case, a shorter period of time is approved by the holders of a majority
of the Registrable Securities included in such Demand Registration.
Section 23. Piggyback Registrations.
(A) Right to Piggyback. During the Registration Period, whenever the Company
proposes to register any of its securities under the Securities Act (other
than pursuant to a Demand Registration or on a Form S-4 or S-8 (or any
successor form)) (a "Piggyback Registration"), the Company shall give all
holders of Registrable Securities prompt written notice thereof (but not less
than thirty (30) days prior to the filing by the Company with the Commission
of any registration statement with respect thereto). Such notice (a "Piggyback
Notice") shall specify, at a minimum, to the extent known, the number and kind
of securities proposed to be registered, the proposed date of filing of such
registration statement with the Commission, the proposed means of
distribution, the proposed managing underwriter or underwriters (if any and if
known), and a good faith estimate by the Company of the proposed minimum
offering price of such securities, as such price is proposed to appear on the
facing page of such registration statement. Upon the written request of a
holder of Registrable Securities given within ten (10) business days of such
holder's receipt of the Piggyback Notice (which written request shall specify
the number and kind of Registrable Securities intended to be disposed of by
such holder and the intended method of distribution thereof), the Company
shall include in such registration all Registrable Securities with respect to
which the Company has received such written requests for inclusion.
(B) Priority on Piggyback Registrations. If, in connection with a Piggyback
Registration, any managing underwriter (or, if such Piggyback Registration is
not an underwritten offering, a nationally recognized independent underwriter
selected by the Company (reasonably acceptable to the holders of a majority of
the Registrable Securities sought to be included in such Piggyback
Registration and whose fees and expenses shall be borne by solely by the
Company)) advises the Company and the holders of the Registrable Securities to
be included in such Piggyback Registration, that, in its opinion, the
inclusion of all the securities sought to be included in such Piggyback
Registration by the Company, any Persons who have sought to have shares
registered thereunder pursuant to rights to demand (other than pursuant to so-
called "piggyback" or other incidental or participation registration rights)
such registration (such demand rights being "Other Demand Rights" and such
Persons being "Other Demanding Sellers"), any holders of Registrable
Securities seeking to sell such securities in such Piggyback Registration
("Piggyback Sellers") and any other proposed sellers, in each case, if any,
would adversely affect the marketability of the securities sought to be sold
pursuant thereto, then the Company shall include in the registration statement
applicable to such Piggyback Registration only such securities as the Company
and the Piggyback Sellers are so advised by such underwriter can be sold
without such an effect, which may exclude any class of Registrable Securities
if, in the judgment of such underwriter, the inclusion of such Registrable
Securities would adversely affect the marketability of the securities sought
to be sold pursuant thereto, (the "Maximum Piggyback Number"), as follows and
in the following order of priority:
(i) if the Piggyback Registration is an offering on behalf of the Company
and not any Person exercising Other Demand Rights (whether or not other
Persons seek to include securities therein pursuant to so-called
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<PAGE>
"piggyback" or other incidental or participatory registration rights) (a
"Primary Offering"), then (A) first, such number of securities to be sold
by the Company as the Company shall have determined, (B) second, if the
number of securities to be included under clause (A) next above is less
than the Maximum Piggyback Number, the number of Registrable Securities of
each Piggyback Seller, pro rata in proportion to the number of securities
sought to be registered by all the Piggyback Sellers, which in the
aggregate, when added to the number of securities to be registered under
clause (A) next above, equals the Maximum Piggyback Number and (C) third,
if the number of securities to be included under clauses (A) and (B) next
above is less than the Maximum Piggyback Number, the number of securities
of each other proposed seller, pro rata in proportion to the number of
securities sought to be registered by all such other proposed sellers,
which in the aggregate, when added to the number of securities to be
registered under clauses (A) and (B) next above, equals the Maximum
Piggyback Number;
(ii) if the Piggyback Registration is an offering other than pursuant to
a Primary Offering, then (A) first, such number of securities sought to be
registered by each Other Demanding Seller, pro rata in proportion to the
number of securities sought to be registered by all such Other Demanding
Sellers, (B) second, if the number of securities included under clause (A)
next above is less than the Maximum Piggyback Number, the number of
securities sought to be registered by each Piggyback Seller, pro rata in
proportion to be number of securities sought to be registered by all the
Piggyback Sellers, which in the aggregate, when added to the number of
securities to be registered pursuant to clause (A) next above, equals the
Maximum Piggyback Number of (C) third, if the number of securities to be
included when clauses (A) and (B) next above is less than the Maximum
Piggyback Number, the number of securities of each other proposed seller,
pro rata in proportion the number of securities sought to be included by
all such other proposed sellers, which in the aggregate, when added to the
number of securities to be registered under clause (A) next above, equals
the Maximum Piggyback Number.
(C) Withdrawal by the Company. If, at any time after giving written notice
of its intention to register any of its securities as set forth in Section
3(a) and prior to time the registration statement filed in connection with
such registration is declared effective, the Company shall determine for any
reason not to register such securities, the Company may, at its election, give
written notice of such determination to each holder of Registrable Securities
and thereupon shall be relieved of its obligation to register any Registrable
Securities in connection with such particular withdrawn or abandoned
registration (but not from its obligation to pay the Registration Expenses in
connection therewith as provided herein).
Section 24. Withdrawal Rights. Any holder of Registrable Securities having
notified or directed the Company to include any or all of its Registrable
Securities in a registration statement under the Securities Act (whether
pursuant to Section 2 or 3 hereof) shall have the right to withdraw any such
notice or direction with respect to any or all of the Registrable Securities
designated for registration thereby by giving written notice to such effect to
the Company prior to the effective date of such registration statement. In the
event of any such withdrawal, the Company shall not include such Registrable
Securities in the applicable registration and such Registrable Securities
shall continue to be Registrable Securities hereunder. No such withdrawal
shall affect the obligations of the Company with respect to the Registrable
Securities not so withdrawn; provided that in the case of a registration
pursuant to Section 2 hereof, if such withdrawal shall reduce the number of
Registrable Securities sought to be included in such registration below the
Requisite Amount, then the Company shall as promptly as practicable give each
holder of Registrable Securities so to be registered notice to such effect,
referring to this Agreement and summarizing this Section, and within five (5)
business days following the effectiveness of such notice, either the Company
or the holders of a majority of the Registrable Securities may, by written
notice to each holder of Registrable Securities or the Company, respectively,
elect that such registration statement not be filed or, if theretofore filed,
be withdrawn. During such five (5) business day period, the Company shall not
file such registration statement if not theretofore filed or, if such
registration statement has been theretofore filed, the Company shall not seek,
and shall use its best efforts to prevent, the effectiveness thereof. Any
registration statement not filed or withdrawn in accordance with an election
by the Company shall not be counted as a Demand for purposes of Section 2
hereof. Any registration statement not filed or withdrawn in accordance with
an election by the holders of the Registrable Securities (even though,
technically, such
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withdrawal is effected by the Company) shall be counted as a Demand for
purposes of Section 1 hereof unless holders of Registrable Securities
reimburse the Company for its reasonable out-of-pocket expenses (but, without
implication that the contrary would otherwise be true, not including any
Internal Expenses) related to the preparation and filing of such registration
statement (in which event such registration statement shall not be counted as
a Demand hereunder). Upon the written request of the holders of a majority of
Registrable Securities, the Company shall promptly prepare a definitive
statement of such out-of-pocket expenses in connection with such registration
statement in order to assist such holders with a determination in accordance
with the next preceding sentence.
Section 25. Holdback Agreements.
(A) Holders. Each holder of Registrable Securities agrees not to effect any
public sale or distribution (including sales pursuant to Rule 144) of equity
securities of the Company, or any securities convertible into or exchangeable
or exercisable for such securities, during the seven (7) days immediately
prior to and the one hundred eighty (180)-day period beginning on the
effective date of any Demand Registration or any Piggyback Registration (in
each case, except as part of such registration), or, in each case, if later,
the date of any underwriting agreement with respect thereto. The holders of a
majority of the Registrable Securities included in a Demand Registration may
waive the limitation contained in this paragraph with respect to such Demand
Registration.
(B) The Company. The Company agrees (i) not to effect, whether for itself or
for any other Person, any public sale or distribution of its securities of the
same class as any Registrable Securities to be registered by the Company
pursuant to this Agreement, or any securities convertible into or exchangeable
or exercisable for such securities, during the seven (7) days immediately
prior to and the one hundred twenty (120)-day period beginning on the
effective date of any registration in connection with a Demand Registration or
a Piggyback Registration with respect to such Registrable Securities (except
as part of such registration to the extent permitted pursuant to this
Agreement or pursuant to registrations on Form S-8 or Form S-4 (or any
successor form)) or, in each case, if later, the date of any underwriting
agreement with respect thereto, and (ii) in connection with a Demand
Registration will use reasonable efforts to cause each of the Company's
officers and each holder (other than a holder of Registrable Securities and a
holder eligible to report its holdings on Schedule 13G pursuant to Section
13(d) of the Securities Exchange Act of 1934) of at least 5% of its Common
Stock, or Common Stock and any securities convertible into or exchangeable or
exercisable for Common Stock, representing, in the aggregate, at least 5% of
the Common Stock (on a fully diluted basis) to agree not to effect any public
sale or distribution (excluding sales pursuant to Rule 144) of any such
securities during such period (except as part of such registration to the
extent permitted pursuant to the terms of this Agreement). This Section 4(b)
shall not be deemed to limit the exercise of Demands hereunder by the holders
of Registrable Securities and the disposition of such securities by such
holders as permitted by the other terms of this Agreement.
26. Registration Procedures. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Agreement (whether pursuant to Section 2 or Section 3 of this Agreement), the
Company shall use its best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof and, in connection therewith, the Company shall as
expeditiously as possible:
(A) prepare and file with the Commission a registration statement with
respect to such Registrable Securities, on any form for which the Company then
qualifies and which counsel for the Company shall deem appropriate for the
sale of such Registrable Securities in accordance with the intended method of
distribution thereof, and use its best efforts to cause such registration
statement to become effective;
(B) prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a
continuous period of not less than one hundred twenty (120) days (or, if
earlier, until all Registrable Securities included in such registration
statement have been sold thereunder in accordance with the manner of
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distribution set forth therein) and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof as set forth in such
registration statement (including, without limitation, by incorporating in a
prospectus supplement or post-effective amendment, at the request of a seller
of Registrable Securities, the terms of the sale of such Registrable
Securities);
(C) before filing with the Commission any such registration statement or
prospectus or any amendments or supplements thereto, the Company shall furnish
to counsel selected by the holders of a majority of the Registrable Securities
covered by such registration statement and counsel for the underwriter or
sales or placement agent, if any, in connection therewith, drafts of all such
documents proposed to be filed and provide such counsel with a reasonable
opportunity for review thereof and comment thereon, such review to conducted
and such comments to be delivered with reasonable promptness;
(D) promptly (i) notify the selling holders of Registrable Securities of
each of (x) the filing and effectiveness of the registration statement and
prospectus and any amendments or supplements thereto, (y) the receipt of any
comments from the Commission or any state securities law authorities or any
other governmental authorities with respect to any such registration statement
or prospectus or any amendments or supplements thereto, and (z) any oral or
written stop order with respect to such registration, any suspension of the
registration or qualification of the sale of such Registrable Securities in
any jurisdiction or any initiation or threatening of any proceedings with
respect to of the foregoing and (ii) use its best efforts to obtain the
withdrawal of any order suspending the registration or qualification (or the
effectiveness thereof) or suspending or preventing the use of any related
prospectus in any jurisdiction with respect thereto;
(E) furnish to each seller of Registrable Securities, the underwriters and
the sales or placement agent, if any, and counsel for each of the foregoing, a
conformed copy of such registration statement and each amendment and
supplement thereto (in each case, including all exhibits thereto and documents
incorporated by reference therein) and such additional number of copies of
such registration statement, each amendment and supplement thereto, the
prospectus (including each preliminary prospectus) included in such
registration statement and prospectus supplements and all exhibits thereto and
documents incorporated by reference therein and such other documents as such
seller, underwriter, agent or counsel may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such seller,
the use of each of which thereby and therefor to which the Company hereby
consents;
(F) if requested by the managing underwriter or underwriters of any
registration or by the holders of a majority of the Registrable Securities
included in any registration statement, subject to approval of counsel to the
Company in its reasonable judgment, promptly incorporate in a prospectus,
supplement or post-effective amendment to the registration statement such
information concerning underwriters and the plan of distribution of the
Registrable Securities as such managing underwriter or underwriters or such
holders reasonably shall furnish to the Company in writing and request be
included therein, including, without limitation, with respect to the number of
Registrable Securities being sold by such holders to such underwriter or
underwriters, the purchase price being paid therefor by such underwriter or
underwriters and with respect to any other terms of the underwritten offering
of the Registrable Securities to be sold in such offering; and make all
required filings of such prospectus, supplement or post-effective amendment as
soon as reasonably possible after being notified of the matters to be
incorporated in such prospectus, supplement or post-effective amendment;
(G) use its best efforts to register or qualify such Registrable Securities
under such securities or "blue sky" laws of such jurisdictions as any seller
reasonably requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller and keep such registration or qualification in effect for so long as
the registration statement remains effective under the Securities Act
(provided that the Company shall not be required to (i) qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph, (ii) subject itself to taxation in any such
jurisdiction where it would not otherwise be subject to taxation but for this
paragraph or (iii) consent to general service of process in any jurisdiction
where it would not otherwise be subject to general service of process but for
this paragraph);
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(H) notify each seller of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon the discovery that, or of the happening of any event as a result of
which, the registration statement covering such Registrable Securities, as
then in effect, contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or any fact necessary to
make the statements therein not misleading, and promptly prepare and furnish
to each such seller a supplement or amendment to the prospectus contained in
such registration statement so that such Registration Statement shall not, and
such prospectus as thereafter delivered to the purchasers of such Registrable
Securities shall not, contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or any fact necessary
to make the statements therein not misleading;
(I) cause all such Registrable Securities to be listed on each securities
exchange and included in each established over-the-counter market on which or
through which securities of the same class of the Company are then listed or
traded and, if not so listed or traded, to be listed on the NASD automated
quotation system ("NASDAQ") and if listed on NASDAQ, use its reasonable
efforts to secure designation of all such Registrable Securities covered by
such registration statement as a NASDAQ "national market system security"
within the meaning of Rule 11Aa2-1 under the Securities Exchange Act of 1934,
as amended, or, failing that, to secure NASDAQ authorization for such
Registrable Securities and, without limiting the generality of the foregoing,
to arrange for at least two (2) market makers to register as such with respect
to such Registrable Securities with the NASD;
(J) provide a transfer agent, registrar and CUSIP number for all of such
Registrable Securities not later than the effective date of such registration
statement;
(K) make available for inspection by any seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees, attorneys and independent accountants to supply all
information, in each case reasonably requested by any such sellers,
underwriters, attorneys, accountants or agents in connection with such
registration statement, subject to right of the Company to limit access to any
such information (i) to the extent that the Company is restricted from
providing such information pursuant to any bona fide confidentiality agreement
to which the Company or any of its subsidiaries is a party and (ii) the
Company shall have delivered to each seller of the Registrable Securities a
certificate duly executed by the chief executive or chief financial officer of
the Company stating that such information does not contain any material
information that has not been publicly disclosed and which would be required
to be disclosed in, or which would materially affect any information required
to be disclosed in, such registration statement;
(L) use its best efforts to comply with all applicable laws related to such
registration statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including, without limitation, the Securities Act and the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated by the
Commission) and make generally available to its security holders as soon as
practicable (but in any event not later than fifteen (15) months after the
effectiveness of such registration statement) an earnings statement of the
Company and its subsidiaries complying with Section 11(a) of the Securities
Act;
(M) furnish to each seller of Registrable Securities a signed counterpart of
(x) an opinion of counsel for the Company (which counsel shall be reasonably
acceptable to the holders of a majority of the Registrable Securities being so
registered) and (y) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial statements included or
incorporated by reference in such registration statement, covering such
matters with respect to such registration statement and, in the case of the
accountants' comfort letter, with respect to events subsequent to the date of
such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities for the account of, or on behalf
of, an issuer of common stock, such opinion and comfort letters to be dated
the date such opinions and comfort letters are customarily dated in such
transactions, and covering, in
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<PAGE>
the case of such legal opinion, such other legal matters and, in the case of
such comfort letter, such other financial matters, as any seller of such
Registrable Securities may reasonably request; and
(N) take all such other actions as the holders of a majority of the
Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities.
Without limiting any of the foregoing, in the event that the offering of
Registrable Securities is to be made by or through an underwriter, the Company
shall enter into an underwriting agreement with a managing underwriter or
underwriters containing representations, warranties, indemnities and
agreements customarily included (but not inconsistent with the agreements
contained herein) by an issuer of common stock in underwriting agreements with
respect to offerings of common stock for the account of, or on behalf of,
selling stockholders. In connection with the sale of Registrable Securities
hereunder, any seller of such Registrable Securities may, at its option,
require that any and all representations and warranties by, and indemnities
and agreements of, the Company to or for the benefit of such underwriter or
underwriters (or which would be made to or for the benefit of such an
underwriter or underwriter if such sale of Registrable Securities were
pursuant to a customary underwritten offering) be made to and for the benefit
of such seller and that any or all of the conditions precedent to the
obligations of such underwriter or underwriters (or which would be so for the
benefit of such underwriter or underwriters under a customary underwriting
agreement) be conditions precedent to the obligations of such seller in
connection with the disposition of its securities pursuant to the terms hereof
(it being agreed that in connection with any Demand Registration, without
limiting any rights or remedies of the holders of Registerable Securities,
subject to Section 4, in the event any such condition precedent shall not be
satisfied and, if not so satisfied, shall not be waived by the holders of a
majority of the Registerable Securities to be included in such Demand
Registration, such Demand Registration shall not be counted as a permitted
Demand hereunder). No seller of Registrable Securities pursuant to the terms
of this Agreement shall be required to make any representations or warranties
to, or agreements with, the Company or underwriter or underwriters or any
other Person, other than representations and warranties regarding such
seller's ownership of such Registrable Securities and the intended method of
distribution and other than any agreements contemplated by the terms of this
Agreement. In connection with any offering of Registrable Securities
registered pursuant to this Agreement, the Company shall (x) furnish to the
underwriter, if any (or, if no underwriter, the sellers of such Registrable
Securities), unlegended certificates representing ownership of the Registrable
Securities being sold, in such denominations as requested for sale pursuant to
such registration and (y) instruct any transfer agent and registrar of the
Registrable Securities to release any stop transfer order with respect
thereto.
Each seller of Registrable Securities hereunder agrees that upon receipt of
any notice from the Company of the happening of any event of the kind
described in paragraph (h) of this Section 6, such seller shall forthwith
discontinue such seller's disposition of Registrable Securities pursuant to
the applicable registration statement and prospectus relating thereto until
such seller's receipt of the copies of the supplemented or amended prospectus
contemplated by paragraph (h) of this Section 6 and, if so directed by the
Company, deliver to the Company (at the Company's sole cost and expense) all
copies, other than permanent file copies, then in such seller's possession of
the prospectus current at the time of receipt of such notice relating to such
Registrable Securities. In the event the Company shall give such notice, the
one hundred twenty (120)-day period during which such registration statement
must remain effective pursuant to this Agreement shall be extended by the
number of days during the period from the date of giving of a notice regarding
the happening of an event of the kind described in paragraph (h) of this
Section to the date when all such sellers shall receive such a supplemented or
amended prospectus and such prospectus shall have been filed with the
Commission.
27. Registration Expenses. All expenses incident to the Company's
performance of, or compliance with, its obligations under this Agreement
(without implication that the contrary would otherwise be true, whether or not
a registration statement under the Securities Act is filed with the Commission
or becomes effective under the Securities Act) including, without limitation,
all registration and filing fees, all fees and expenses of compliance with
securities and "blue sky" laws (including, without limitation, the fees and
expenses of counsel for underwriters or placement or sales agents in
connection therewith to the extent provided for in the underwriting
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agreement), all printing and copying expenses, all messenger and delivery
expenses, all fees and expenses of underwriters and sales and placement agents
in connection therewith (excluding discounts and commissions), all fees and
expenses of the Company's independent certified public accountants and counsel
(including, without limitation, with respect to "comfort" letters and
opinions) and other Persons retained by the Company in connection therewith,
and the reasonable fees and expenses of no more than one counsel for the
holders (as a group) of Registrable Securities to be registered hereunder
(collectively, the "Registration Expenses") shall be borne by the Company
unless otherwise provided in this Agreement except that the Company will, in
any event (and without implication that the contrary would otherwise be true),
pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties,
the expense of any annual audit) (collectively, "Internal Expenses") and the
expenses and fees for listing the securities to be registered on each
securities exchange and included in each established over-the-counter market
on which securities of the same class issued by the Company are then listed or
traded or for listing on the NASDAQ pursuant to paragraph (i) of Section 6 of
this Agreement.
28. Indemnification.
(A) By the Company. The Company agrees to indemnify, to the fullest extent
permitted by law, each holder of Registrable Securities, its officers,
directors, employees and agents and each Person who controls (within the
meaning of the Securities Act) such holder or such an other indemnified Person
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or a fact necessary to make the
statements therein not misleading, except insofar as the same are caused by
and contained in any information furnished in writing to the Company by such
holder expressly for use therein. In connection with an underwritten offering
and without limiting any of the Company's other obligations under this
Agreement, the Company shall indemnify such underwriters, their officers,
directors, employees and agents and each Person who controls (within the
meaning of the Securities Act) such underwriters or such an other indemnified
Person to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(B) By Holders. In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder will
furnish to the Company in writing information regarding such holder's
ownership of Registrable Securities and its intended method of distribution
thereof and, to the extent permitted by law, shall indemnify the Company, its
directors, officers, employees and agents and each Person who controls (within
the meaning of the Securities Act) the Company or such an other indemnified
Person against any losses, claims, damages, liabilities and expenses
(including with respect to any claim for indemnification hereunder asserted by
any other indemnified Person) resulting from any untrue or alleged untrue
statement of material fact contained in the registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only
to the extent that such untrue statement or omission is caused by and
contained in such information so furnished in writing by such holder; provided
that the obligation to indemnify will be several, not joint and several, among
holders of Registrable Securities and the liability of each such holder of
Registrable Securities will be in proportion to and limited to the net amount
received by such holder from the sale of Registrable Securities pursuant to
such registration statement.
(C) Notice. Any Person entitled to indemnification hereunder shall give
prompt written notice to the indemnifying party of any claim with respect to
which its seeks indemnification; provided, however, the failure to give such
notice shall not release the indemnifying party from its obligation under this
Section 8, except to the extent that the indemnifying party has been
materially prejudiced by such failure to provide such notice.
(D) Defense of Actions. In any case in which any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after
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notice from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not (so long as
it shall continue to have the right to defend, contest, litigate and settle
the matter in question in accordance with this paragraph) be liable to such
indemnified party hereunder for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation, supervision and monitoring
(unless such indemnified party reasonably objects to such assumption on the
grounds that there may be defenses available to it which are different from or
in addition to the defenses available to such indemnifying party, in which
event the indemnified party shall be reimbursed by the indemnifying party for
the expenses incurred in connection with retaining separate legal counsel;
provided that the indemnifying party shall not be obligated to reimburse the
indemnified parties for the fees and expenses of more than one counsel for all
indemnified parties who do not have different or additional defenses among
themselves). An indemnifying party shall not be liable for any settlement of
an action or claim effected without its consent. The indemnifying party shall
lose its right to defend, contest, litigate and settle a matter if it shall
fail to diligently contest such matter (except to the extent settled in
accordance with the next following sentence). No matter shall be settled by an
indemnifying party without the consent of the indemnified party (which consent
shall not be unreasonably withheld).
(E) Survival. The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified Person and will survive the transfer of the
Registrable Securities.
(F) Contribution. If recovery is not available under the foregoing
indemnification provisions for any reason or reasons other than as specified
therein, any Person who would otherwise be entitled to indemnification by the
terms thereof shall nevertheless be entitled to contribution with respect to
any losses, claims, damages, liabilities or expenses with respect to which
such Person would be entitled to such indemnification but for such reason or
reasons. In determining the amount of contribution to which the respective
Persons are entitled, there shall be considered the Persons' relative
knowledge and access to information concerning the matter with respect to
which the claim was asserted, the opportunity to correct and prevent any
statement or omission, and other equitable considerations appropriate under
the circumstances. It is hereby agreed that it would not necessarily be
equitable if the amount of such contribution were determined by pro rata or
per capita allocation.
29. Participation in Underwritten Registrations. No Person may participate
in any underwritten registration hereunder unless such Person (a) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
30. Miscellaneous.
(A) Existing Registration Rights; No Inconsistent Agreements. The Company
represents and warrants that there are no existing rights to require or
request the Company to register any equity securities of the Company, or any
securities convertible or exchangeable into or exercisable for such
securities. The Company shall not grant to any Person the right to require or
request the Company to register any equity securities of the Company, or any
securities convertible or exchangeable into or exercisable for such securities
which is inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement without the prior written consent of the holders
of a majority of the Registrable Securities.
(B) Rule 144. The Company shall timely file the reports required to be filed
by it under the Securities Act or the Exchange Act (including, without
limitation, the reports under Sections 13 and 15(d) of the Exchange Act
referred to in subparagraph (c)(1) of Rule 144 promulgated under the
Securities Act). Upon the request of the holder of Registrable Securities, the
Company shall: (i) deliver to such holder a written statement as to its
compliance with the reporting requirements of Rule 144, as such rule may be
amended from time to time, and (ii) take such further action, including,
without limitation, supply and make publicly available any other information
in the possession of or reasonably obtainable by the Company, with the purpose
of allowing such holder to avail itself of Rule 144 or any other rule or
regulation of the SEC allowing it to sell securities without registration
under the Securities Act.
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<PAGE>
(C) Remedies. Any Person having rights under any provision of this Agreement
will be entitled to enforce such rights specifically, to recover damages
caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.
(D) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent holders
of at least a majority of the Registrable Securities; provided that no such
amendment or waiver may be made and the Company may not take any such action
or fail to perform any such act if such amendment, action or failure to
perform adversely affects any holder or group of holders of Registrable
Securities in a manner that does not adversely affect the holders of
Registrable Securities in general, without the written consent of such holder
or members of such group of holders holding a majority of the Registrable
Securities held by such group. Notwithstanding the foregoing, holders of
Registrable Securities outstanding from time to time shall not be entitled to
adversely affect the rights of former holders of Registrable Securities under
this Agreement without the consent of a majority in interest of such former
holders so affected.
(E) Successors and Assigns. All covenants and agreements in this Agreement
by or on behalf of any of the parties hereto will bind and inure to the
benefit of the respective successors and assigns of the parties hereto whether
so expressed or not. In addition, whether or not any express assignment has
been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of,
and enforceable by, any subsequent holder of Registrable Securities.
(F) Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(G) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one
and the same Agreement.
(H) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(I) Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement and the exhibits and schedules hereto will be
governed by the internal law, and not the law of conflicts, of Illinois.
(J) GAMI Directorship. If the ownership, direct or indirect, of Company
Common Stock by Great American Management and Investment, Inc. ("GAMI"),
whether or not Merger Shares, is reduced below 3.5% of the outstanding Company
Common Stock, GAMI will cause any affiliate or associate of GAMI, within the
meaning of Rule 405 under the Securities Act, who is then serving as a
director of the Company to resign as such a director.
(K) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given (i) when delivered personally or
transmitted by a recognized overnight courier service, or (ii) five days after
they are mailed by certified or registered mail, return receipt requested and
postage prepaid, to the recipient. Such notices, demands and other
communications will be sent to each holder of Registrable Securities at the
address set forth in the records of the Company with respect to such holder
and to the Company at its principal executive office or, in each case, to such
other address or to the attention of such other person as the recipient party
has specified by prior written notice to the sending party.
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<PAGE>
In Witness Whereof, the parties have executed this Agreement as of the date
first written above.
IMC Global Inc.
By: _________________________________
Name:
Title:
Stockholders:
[To Be Signed By Vigoro Rule 145
Affiliates]
-------------------------------------
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ANNEX V
LOGO OF LEHMAN BROTHERS
November 12, 1995
Board of Directors
IMC Global Inc.
2100 Sanders Road
Northbrook, Illinois 60062
Members of the Board:
We understand that pursuant to an Agreement and Plan of Merger to be dated
November 13, 1995 (the "Agreement") among IMC Global Inc. ("IMC Global" or the
"Company"), its wholly-owned subsidiary Bull Merger Co. ("Sub") and The Vigoro
Corporation ("Vigoro"), IMC Global and Vigoro intend to consummate a
transaction in which Sub will merge with and into Vigoro (the "Merger"), with
Vigoro as the surviving corporation and a subsidiary of IMC Global. In the
Merger, each outstanding share of common stock of Vigoro would be converted
into the right to receive 0.80 shares of IMC Global common stock, subject to
adjustment to as many as 0.85 shares or as few as 0.75 shares under
circumstances set forth in the Agreement (the "Exchange Ratio"). The Exchange
Ratio will be adjusted to reflect the Company's pending stock split. Based on
the advice of the Company and its accounting advisors, we further understand
that the Merger will qualify for pooling-of-interests accounting treatment.
The terms and conditions of the Merger are set forth in more detail in the
Agreement and related documents.
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, to
the Company of the Exchange Ratio. We have not been requested to opine as to,
and our opinion does not in any manner address, the Company's underlying
business decision to proceed with or effect the Merger.
In arriving at our opinion, we have reviewed and analyzed: (1) the current
draft of the Agreement and related documents and the specific terms of the
Merger, (2) the Company's Annual Reports to Shareholders and Annual Reports on
Form 10-K for the fiscal years ended June 1993 through 1995 and the current
draft of its Quarterly Report on Form 10-Q for the quarter ended September
1995, (3) Vigoro's Annual Reports to Shareholders and Annual Reports on Form
10-K for the fiscal years ended June 1992 through 1994, its Transition Report
on Form 10-K for the six month period ended December 1994 and its Quarterly
Reports on Form 10-Q for the quarters ended March and June 1995 and a draft
dated November 7, 1995 of the Quarterly Report on Form 10-Q for the quarter
ended September 1995, (4) certain operating and financial information provided
to us by the management of the Company relating to its business, including
projections of future financial results, (5) certain operating and financial
information relating to the business of Vigoro provided to us by the
managements of the Company and Vigoro, including projections of future
financial results provided to us by the Company and projections of near-term
future financial results provided to us by Vigoro, (6) the anticipated pro
forma financial impact of the Merger on the Company, (7) trading histories of
the common stock of IMC Global and Vigoro and a comparison of such trading
histories with other and with those of certain other companies that we deemed
relevant, (8) historical price trends for certain of the agricultural
commodities produced by Vigoro and IMC Global, (9) a comparison of the
historical financial results and present financial condition of IMC Global and
Vigoro with those of certain other companies that we deemed relevant and (10)
a comparison of the financial terms of the Merger with the financial terms of
certain other transactions that we deemed relevant.
In addition, we have had discussions with certain of the Company's senior
management regarding the Company's business, operations, financial condition
and prospects, as well as their views with respect to the business,
operations, financial condition and prospects of Vigoro and the potential cost
savings, production efficiencies and other business, operational and strategic
impacts expected to result from a combination of the businesses of IMC Global
and Vigoro. Furthermore, we have had discussions with certain of Vigoro's
senior management regarding Vigoro's business, operations, financial condition
and prospects, as well as their views with respect to the business,
operations, financial condition and prospects of IMC Global and the potential
cost savings and production efficiencies and other business, operational and
strategic impacts expected to result from
V-1
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<PAGE>
a combination of the businesses of IMC Global and Vigoro. We also undertook
such other studies, analyses and investigation as we deemed appropriate for
the purposes of the opinion expressed herein.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information used by us without
assuming any responsibility for independent verification of such information.
With respect to the financial projections of the Company and Vigoro and the
potential cost savings and other benefits that could be achieved upon
consummation of the Merger, upon advice of the Company we have assumed that
such projections have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the respective managements of
the Company and Vigoro as to the future financial performance of the Company
or Vigoro, as the case may be. However, for purposes of our analysis, we also
have considered financial projections for the Company and Vigoro based on
certain more conservative assumptions and estimates. We have discussed these
adjusted projections with the management of the Company and they have agreed
with the appropriateness of the use of such adjusted projections in performing
our analysis. In arriving at our opinion, we have not conducted a physical
inspection of the properties and facilities of the Company or Vigoro and have
not made or obtained any evaluations or appraisals of the assets or
liabilities of the Company or Vigoro. Our opinion necessarily is based upon
market, economic and other conditions as they exist on, and can be evaluated
as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the Exchange Ratio is fair
to the Company.
We have acted as financial advisor to the Company in connection with the
Merger and will receive a fee for our services which is contingent upon the
consummation of the Merger. In addition, the Company has agreed to indemnify
us for certain liabilities that may arise out of the rendering of this
opinion. We also have performed various investment banking services for the
Company in the past and have received customary fees for such services. In the
ordinary course of our business, we actively trade in the debt and equity
securities of the Company and Vigoro for our own account and for the accounts
of our customers and, accordingly, may at any time hold a long or short
position in such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company. This opinion is not intended to be and does not constitute a
recommendation to any stockholder of the Company as to how such stockholder
should vote with respect to the Merger.
Very truly yours,
Lehman Brothers
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<PAGE>
ANNEX VI
[J.P. MORGAN LETTERHEAD]
November 13, 1995
The Board of Directors
The Vigoro Corporation
225 North Michigan Avenue, Suite 2500
Chicago, IL 60601
Attn: Joseph P. Sullivan
Chairman
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the common stockholders of The Vigoro Corporation (the "Company") of
the consideration to be received by the Company's common stockholders in the
strategic merger (the "Merger") that would be effected through a merger of the
Company and a subsidiary (the "Subsidiary") of IMC Global Inc. (the "Parent"),
with the Company as the surviving corporation. As a result of the merger, the
Company would become a wholly-owned subsidiary of the Parent. Pursuant to the
Agreement and Plan of Merger dated as of November 13, 1995 (the "Agreement")
among the Company, the Subsidiary, and the Parent, the Company's common
stockholders will receive 0.80 shares of common stock of the Parent ("Parent
Common Stock") for every one share of common stock of the Company, subject to
the following adjustments.
Under the terms of the Agreement, at the effective time of the Merger, each
outstanding share of common stock of the Company will be converted into the
right to receive 0.80 shares of Parent Common Stock, provided the average of
the per share daily closing prices on the New York Stock Exchange ("Average
Price") of the Parent Common Stock for the 20 consecutive trading days ending
on the fifth trading day prior to the date that the meeting of the Company's
stockholders is held is between $61.875 per share and $80.00 per share. If the
Average Price is less than $61.875 per share, the exchange ratio shall be
equal to lesser of 0.85 and the number obtained by dividing $49.50 by the
Average Price providing a minimum value of $49.50 per Company common share. If
the Average Price is below $58.23, then the Company can give notice and has
the right not to consummate the Merger.
If the Average Price exceeds $80.00, then the exchange ratio should be equal
to the greater of 0.75 and the number obtained by dividing $64.00 by the
Average Price so that the Average Price times the increased modified exchange
ratio equals $64.00. If the Average Price is greater than $85.23, then Parent
can give notice and has the right not to consummate the Merger.
Please be advised that while certain provisions of the Merger are summarized
above, the terms of the Merger are more fully described in the Agreement. As a
result, the description of the Merger and certain other information contained
herein is qualified in its entirety by reference to the more detailed
information appearing or incorporated by reference in the Agreement.
In arriving at our opinion, we have reviewed (i) the Agreement; (ii) the
Stock Option Agreement and the Voting Agreement; (iii) certain publicly
available information concerning the business of the
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<PAGE>
J.P. MORGAN LOGO
Company and the Parent and of certain other companies engaged in businesses
comparable to the Company and the Parent, and the reported market prices for
certain other companies' securities deemed comparable; (iv) publicly available
terms of certain transactions involving companies comparable to the Company
and the Parent and the consideration received for such companies; (v) current
and historical market prices of the common stock of the Company and the
Parent; (vi) the audited financial statements of the Company for the fiscal
year ended December 31, 1994, and unaudited quarterly financials ended
September 30, 1995, the audited financial statements of the Parent furnished
to us by the Parent for the period ended June 30, 1995, and certain unaudited
financial projections of the Parent for the period ended June 30, 1996; (vii)
certain agreements with respect to outstanding indebtedness or obligations of
the Company and the Parent; (viii) certain financial analyses and forecasts
prepared with input from the Company and its management; (ix) the terms of
other relevant business combinations; (x) certain key fertilizer product price
forecasts developed by Company management; and (xi) certain key fertilizer
product price forecasts developed by Fertecon, a consulting firm specializing
in the fertilizer industry.
In addition, we have held discussions with certain members of the management
of the Company and the Parent with respect to certain aspects of the Merger,
and the past and current business operations of the Company and the Parent,
the financial condition and future prospects and operations of the Company and
the Parent, the effects of the Merger on the financial condition and future
prospects of the Company and the Parent, and certain other matters we believed
necessary or appropriate to our inquiry.
In performing such analysis, we have used such valuation methodologies as we
have deemed necessary or appropriate for the purposes of this opinion. Our
view is based on (i) our consideration of the information the Company and the
Parent have supplied to us to date, (ii) our understanding of the terms upon
which the Company and the Parent intend to consummate the Merger, (iii) the
currently contemplated capital structure and the anticipated credit standing
of the Parent and its subsidiaries upon consummation of the Merger, (iv) our
application of sound investment banking analysis premised on analyzing the
long-term value of the Company and of the Parent upon consummation of the
Merger, and (v) the consummation of the Merger within the time periods
contemplated by the Agreement.
In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was
publicly available or was furnished to us by the Company and the Parent or
otherwise reviewed by J.P. Morgan, and we have not assumed any responsibility
or liability therefor. We have not conducted any valuation or appraisal of any
assets or liabilities, nor have any such valuations or appraisals been
provided to us. In relying on financial analyses and forecasts provided to us,
we have assumed that they have been reasonably prepared based on assumptions
reflecting the best currently available estimates and judgments by management
of the Company and the Parent as to the expected future results of operations
and financial condition of the Company and the Parent to which such analyses
or forecasts relate.
Our opinion is necessarily based on economic, market and other conditions as
in effect on, and the information made available to us as of, the date hereof.
It should be understood that subsequent developments may affect this opinion
and that we do not have any obligation to update, revise, or reaffirm this
opinion.
We are expressing no opinion herein as to the price at which the common
stock of the Company and the Parent will trade at any future time or as to the
effect of the Merger on the trading price of the Parent Common Stock. Such
trading price may be effected by a number of factors, including but not
limited to (i) dispositions of the common stock of the Parent by stockholders
within a short period of time after the effective date of the Merger, (ii)
changes in prevailing interest rates and other factors
VI-2
<PAGE>
J.P. MORGAN LOGO
which generally influence the price of securities, (iii) adverse changes in
the current capital markets, (v) the occurrence of adverse changes in the
financial condition, business, assets, results of operations or prospects of
the Company or of the Parent or in the fertilizer market, (vi) any necessary
actions by or restrictions of federal, state or other governmental agencies or
regulatory authorities, and (vii) timely execution of all necessary agreements
to complete the Merger on terms and conditions that are acceptable to all
parties at interest.
We have acted as financial advisor to the Company with respect to the
proposed Merger and will receive a fee from the Company for our services. We
will also receive an additional fee if the proposed Merger is consummated.
J.P. Morgan has advised the Company from time to time with respect to other
potential transactions. Morgan Guaranty Trust Company of New York, an
affiliate of J.P. Morgan, is a member of the Company's bank syndicate. In the
ordinary course of their businesses, affiliates of J.P. Morgan may actively
trade the debt and equity securities of the Company or the Parent for their
own account or for the accounts of customers, and accordingly, they may at any
time hold long or short positions in such securities.
On the basis of and subject to the foregoing, it is our opinion as of the
date hereof that the consideration to be received by the Company's common
stockholders in the proposed Merger is fair, from a financial point of view,
to such stockholders.
This letter is provided to the Board of Directors of the Company in
connection with and for the purposes of its evaluation of the Merger. This
opinion does not constitute a recommendation to any stockholder of the Company
as to how such stockholder should vote with respect to the Merger. This
opinion may not be disclosed, referred to, or communicated by you (in whole or
in part) to any third party for any purpose whatsoever except with our prior
written consent in each instance. This opinion may be reproduced in full in
any proxy or information statement mailed to stockholders of the Company but
may not otherwise be disclosed publicly in any manner without our prior
written approval and must be treated as confidential.
Very truly yours,
J.P. Morgan Securities Inc.
By: /s/ Joseph A. Walker
---------------------------
Name: Joseph A. Walker
Title: Managing Director
VI-3
<PAGE>
ANNEX VII
CONFORMED COPY
262 APPRAISAL RIGHTS.--(a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to (S)228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of his shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock " and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to (S)251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsections (f) or (g) of (S)251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by terms of an agreement of merger or consolidation pursuant to (S)(S)251,
252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on
a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than
2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of the stock, depository receipts
and cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
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<PAGE>
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsections (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation,
a written demand for appraisal of his shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to (S)228 or 253
of this title, the surviving or resulting corporation, either before the
effective date of the merger or consolidation or within 10 days thereafter,
shall notify each of the stockholders entitled to appraisal rights of the
effective date of the merger or consolidation and that appraisal rights are
available for any or all of the shares of the constituent corporation, and
shall include in such notice a copy of this section. The notice shall be
sent by certified or registered mail, return receipt requested, addressed
to the stockholder at his address as it appears on the records of the
corporation. Any stockholder entitled to appraisal rights may, within 20
days after the date of mailing of the notice, demand in writing from the
surviving or resulting corporation the appraisal of his shares. Such demand
will be sufficient if it reasonably informs the corporation of the identity
of the stockholder and that the stockholder intends thereby to demand the
appraisal of his shares.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw his demand
for appraisal and to accept the terms offered upon the merger or
consolidation. Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which
demands for appraisal have been received and the aggregate number of holders
of such shares. Such written statement shall be mailed to the stockholder
within 10 days after his written request for such a statement is received by
the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their
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<PAGE>
shares have not been reached by the surviving or resulting corporation. If the
petition shall be filed by the surviving or resulting corporation, the
petition shall be accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the time and place
fixed for the hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown on the list
at the addresses listed therein stated. Such notice shall also be given by 1
or more publications at least 1 week before the day of the hearing, in a
newspaper or general circulation published in the City of Wilmington, Delaware
or such publication as the Court deems advisable. The forms of the notices by
mail and by publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted his certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that he is not entitled to
appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of his demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any
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<PAGE>
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation. (Last amended by Ch. 79, L.
'95, eff. 7-1-95.)
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<PAGE>
ANNEX VIII
CONFORMED COPY
CERTIFICATE OF AMENDMENT
OF RESTATED CERTIFICATE OF INCORPORATION
OF IMC GLOBAL, INC.
PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
IMC Global Inc. (the "Corporation"), a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
("DGCL"), Does Hereby Certify That:
First: At a meeting of the Board of Directors of the Corporation duly called
and held on , 1996 resolutions were duly adopted setting forth the
following proposed amendments to the Restated Certificate of Incorporation of
the Corporation, declaring said amendments to be advisable and directing such
amendments be submitted to stockholders of the Corporation for approval at a
special meeting of the stockholders of said Corporation. Such resolutions
recommended that the Restated Certificate of Incorporation of the Corporation
be amended as set forth below:
(i) the first paragraph of ARTICLE FOURTH of the Restated Certificate of
Incorporation of the Corporation be amended to read as follows:
"The aggregate number of shares which the Corporation shall have
authority to issue is 262,000,000 divided into 12,000,000 shares of Series
Preferred Stock, $1.00 par value per share (hereafter called "Series
Preferred Stock"), and 250,000,000 shares of Common Stock, $1.00 par value
per share (hereafter called "Common Stock"). All of such shares shall be
issued as fully-paid and non-assessable shares, and the holders thereof
shall not be liable for any further payments in respect thereto."; and
(ii) the first sentence of ARTICLE NINTH of the Restated Certificate of
Incorporation of the Corporation be amended to read as follows:
(a) The number of directors of the Corporation, exclusive of directors,
if any, to be elected by the holders of one or more series of Series
Preferred Stock, shall be not less than five nor more than fifteen.
Second: pursuant to a resolution of its Board of Directors, a special
meeting of the stockholders of the Corporation was duly called and held on
, 1996, upon notice in accordance with Section 222 of the DGCL, at
which meeting the necessary number of the outstanding shares of common stock
of the Corporation entitled to vote on such amendments by the DGCL and the
Restated Certificate of Incorporation were voted in favor of such amendments.
Third: That such amendments were duly adopted in accordance with the
provisions of Section 242 of the DGCL.
In Witness Whereof, the Corporation has caused this Certificate of Amendment
to be signed by Marschall I. Smith, Senior Vice President, Secretary and
General Counsel of the Corporation, as of this day of ,
1996.
IMC Global Inc.
By: _________________________________
Marschall I. Smith
Senior Vice President,
Secretary and General Counsel
VIII-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
IMC's Charter and By-laws provide for indemnification of IMC Directors and
officers for liabilities and expenses that they may incur in such capacities.
In general, Directors and officers are indemnified with respect to actions
taken in good faith in a manner reasonably believed to be in, or not opposed
to, the best interests of IMC, and with respect to any criminal action or
proceeding, actions that the indemnitee had no reasonable cause to believe
were unlawful. Reference is made to IMC's Charter and By-laws incorporated by
reference as set forth below as Exhibits 3.1 and 3.2 hereto, respectively.
Section 145 of the DGCL gives corporations the power to indemnify directors
and officers under certain circumstances.
IMC also maintains directors and officers liability and corporate
reimbursement insurance which provides for coverage against loss arising from
claims made against directors and officers in their capacity as such. The
general scope of coverage is any breach of duty, neglect, error, misstatement,
misleading statement or omission.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following is a list of Exhibits included as part of this
Registration Statement. IMC agrees to furnish supplementally a copy of any
omitted schedule to the SEC upon request. Items marked with an asterisk are
filed herewith.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated as of November 13, 1995 among
IMC Global Inc., Bull Merger Company and The Vigoro Corporation
(included as Annex I to the Proxy Statement/Prospectus).
2.2 Voting Agreement dated as of November 13, 1995 among IMC Global
Inc., Great American Management and Investment, Inc. and The
Vigoro Corporation (included as Annex II to the Proxy
Statement/Prospectus filed as part of this Registration
Statement).
2.3 Limited Irrevocable Proxy granted by Great American Management
and Investment, Inc. to IMC Global Inc. on November 13, 1995
(included as an exhibit to the Voting Agreement included as
Annex II to the Proxy Statement/Prospectus filed as part of
this Registration Statement).
2.4 Stock Option Agreement dated as of November 13, 1995 among IMC
Global Inc. and The Vigoro Corporation (included as Annex III
to the Proxy Statement/Prospectus filed as part of this
Registration Statement)
3.1 Certificate of Amendment to Restated Certificate of
Incorporation, dated October 23, 1995 (incorporated by
reference to Exhibit 3.2 to IMC's Registration Statement on
Form
8-A/A-1 dated January 12, 1996).
3.2 Bylaws of IMC Global Inc. (incorporated by reference to Item 5
of IMC's Report on Form 8-K dated July 2, 1991).
4.1 Rights Agreement, dated June 21, 1989, between IMC Global Inc.
and The First National Bank of Chicago, as Rights Agent
(incorporated by reference to Exhibit 10.35 to IMC's Annual
Report on Form 10-K for the fiscal year ended June 30, 1989).
4.2 Amendment to Rights Agreement, effective as of April 29, 1993
(incorporated by reference to Exhibit 3.2 to IMC's Registration
Statement on Form 8-A/A-1 dated January 12, 1996).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.3 Amendment to Rights Agreement, dated August 17, 1995
(incorporated by reference to Exhibit 1 to the Company's
Registration Statement on Form 8-A/A dated September 7, 1995).
4.3 The instruments defining the rights of holders of long-term debt
securities of IMC and its subsidiaries are omitted pursuant to
Item 601(b)(4)(iii)(A) of Regulation S-K. IMC hereby agrees to
furnish copies of these instruments to the SEC upon request.
*5.1 Opinion of Marschall I. Smith, Esq., Senior Vice President,
General Counsel and Secretary of the Registrant, as to the
legality of the shares of the securities being registered.
*8.1 Opinion of Arnold & Porter, as to certain United States federal
income tax consequences of the Merger.
*8.2 Opinion of Tory Tory DesLauriers & Binnington, as to certain
Canadian federal income tax consequences of the Merger.
*10.1 Retainer Agreement between Professor Ray A. Goldberg and The
Vigoro Corporation dated May 25, 1995.
*23.1 Consent of Ernst & Young LLP.
*23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of Ernst & Young.
23.4 Consent of Marschall I. Smith, Esq. (included in Exhibit 5.1 to
this Registration Statement).
23.5 Consent of Arnold & Porter (included in Exhibit 8.1 to this
Registration Statement).
*24.1 Powers of Attorney.
*99.1 Form of proxy card to be mailed to holders of IMC Common Stock.
*99.2 Form of proxy cards to be mailed to holders of Vigoro Voting
Stock.
</TABLE>
(b) Not applicable.
(c) The opinion of Lehman Brothers Inc. is included as Annex V to the Proxy
Statement/Prospectus. The opinion of J.P. Morgan Securities Inc. is included
as Annex VI to the Proxy Statement/Prospectus.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the Registration
Statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to
be new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) That prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is part of this
Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the Registrant undertakes
that such reoffering prospectus will contain the information called for by
Form S-4 with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of Form S-4.
(6) That every prospectus (i) that is filed pursuant to paragraph (5)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as part of an amendment to
the Registration Statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(8) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(9) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CHICAGO,
STATE OF ILLINOIS, ON JANUARY 25, 1996.
IMC Global Inc.
Wendell F. Bueche
By: _________________________________
Wendell F. Bueche
Chairman and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
Wendell F. Bueche Chairman and Chief Executive January 25, 1996
____________________________________ Officer (principal
Wendell F. Bueche executive officer)
James D. Spier President (principal January 25, 1996
____________________________________ operating officer)
James D. Spier
Robert C. Brauneker Executive Vice President January 25, 1996
____________________________________ (principal financial
Robert C. Brauneker officer and principal
accounting officer)
* Director January 25, 1996
____________________________________
Raymond F. Bentele
* Director January 25, 1996
____________________________________
Frank W. Considine
* Director January 25, 1996
____________________________________
Dr. James M. Davidson
* Director January 25, 1996
____________________________________
Richard A. Lenon
* Director January 25, 1996
____________________________________
David B. Mathis
* Director January 25, 1996
____________________________________
Thomas H. Roberts, Jr.
* Director January 25, 1996
____________________________________
</TABLE> Billie B. Turner
Marschall I. Smith
*By: __________________________
Marschall I. Smith
Attorney in Fact
II-4
<PAGE>
EXHIBIT 5.1
[IMC GLOBAL INC. LETTERHEAD]
January 25, 1996
IMC Global Inc.
2100 Sanders Road
Northbrook, Illinois 60062
Re: Registration of 36,495,589 Shares of Common Stock
and Associated Preferred Stock Purchase Rights
-------------------------------------------------
Ladies and Gentlemen:
I have acted as counsel to IMC Global Inc., a Delaware corporation (the
"Company"), in connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), of the Company's registration statement on Form
S-4 (the "Registration Statement") relating to the registration of 36,495,589
shares of Common Stock, $1.00 par value, of the Company (the "New Shares"),
together with 36,495,589 Preferred Stock Purchase Rights (the "Rights")
associated therewith, to be issued pursuant to the terms of the Agreement and
Plan of Merger dated as of November 13, 1995 (the "Merger Agreement") among the
Company, Bull Merger Company, a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and The Vigoro Corporation, a Delaware
corporation ("Vigoro"), which provides for the merger (the "Merger") of Sub with
and into Vigoro, with Vigoro surviving as a wholly-owned subsidiary of the
Company. The terms of the Rights are set forth in the Rights Agreement dated as
of June 21, 1989, as amended (the "Rights Agreement"), between the Company and
The First National Bank of Chicago, as Rights Agent. At the effective time of
the Merger, the outstanding shares of common stock, par value $.01 per share,
of Vigoro (other than shares owned by IMC and its subsidiaries which will be
cancelled) will be converted into New Shares, all as more fully set forth in the
Merger Agreement.
<PAGE>
I am familiar with the proceedings to date with respect to the proposed
issuance of the New Shares and the Rights in the Merger and have examined such
records, documents and questions of law, and satisfied myself as to such
matters of law as I have considered relevant and necessary as a basis for this
opinion. Based on the foregoing, it is my opinion that:
1. The Company is duly incorporated and validly existing under the
laws of the State of Delaware.
2. The New Shares will be legally issued, fully paid and
non-assessable when: (i) the Registration Statement, as finally amended,
shall have become effective under the Securities Act; and (ii) the Merger
shall have become effective under the General Corporation Law of the State
of Delaware.
3. Each Right associated with a New Share will be legally issued
when: (i) the Registration Statement, as finally amended, shall have become
effective under the Securities Act; (ii) such Right shall have been duly
issued in accordance with the terms of the Rights Agreement; and (iii) the
associated New Shares shall have been duly issued as set forth in
paragraph 2.
The foregoing opinions are limited to the federal laws of the United States
of America and the General Corporation Law of the State of Delaware. I express
no opinion as to the application of the securities or blue sky laws of the
various states to the sale of the Common Stock.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to all references to me included in or made part of
the Registration Statement.
Very truly yours,
Marschall I. Smith
------------------------------
Marschall I. Smith
Senior Vice President,
Secretary and General Counsel
IMC Global Inc.
-2-
<PAGE>
EXHIBIT 8.1
, 1996
[ARNOLD & PORTER LETTERHEAD]
[EFFECTIVE TIME]
The Vigoro Corporation
225 North Michigan Avenue
Suite 2500
Chicago, Illinois 60601
Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the proposed merger (the "Merger") of Bull Merger Company
("Merger Sub"), a wholly-owned subsidiary of IMC Global Inc. ("IMC"), with and
into The Vigoro Corporation ("Vigoro").
IMC is a corporation organized under the laws of the State of Delaware and
is headquartered in Northbrook, Illinois. Merger Sub will be a corporation
organized under the laws of the State of Delaware solely for the purpose of
facilitating the Merger. Vigoro is a holding company organized under the laws
of the State of Delaware and is headquartered in Chicago, Illinois.
The terms of the proposed Merger are contained in the Agreement and Plan of
Merger dated as of November 13, 1995, between IMC, Merger Sub and Vigoro (the
"Merger Agreement"). Terms not otherwise defined in this letter shall have the
meanings assigned to them in the Merger Agreement.
You have permitted us to assume in preparing this opinion that (1) the
Merger will be consummated in accordance with the terms, conditions and other
provisions of the Merger Agreement, (2) all of the factual information,
descriptions, representations and assumptions set forth in the Merger
Agreement and in the letters to us from Vigoro dated , 1996 and
from IMC dated , 1996 (the "Letters") were accurate and complete at
the respective dates of such letters and will be accurate and complete at the
time the Merger becomes effective (the "Effective Time"), and (3) the
disclosure set forth in the Joint Proxy Statement/Prospectus dated
, 1996, that is to be mailed to Vigoro and IMC stockholders in
connection with the special meetings of stockholders (at which the Vigoro
stockholders will be asked to approve the Merger, among other proposals, and
the IMC stockholders will be asked to approve the issuance of shares of IMC
Common Stock pursuant to the Merger, among other proposals), was accurate and
complete and will be accurate and complete at the Effective Time. You have
also received an advance copy of this letter and recognize that we are relying
upon the assumptions set forth herein. We have not independently verified any
factual matters relating to the Merger with or apart from our preparation of
this opinion and, accordingly, our opinion does not take into account any
matters not set forth herein which might have been disclosed by independent
verification.
Subject to the qualifications and other matters set forth herein and based
on all the assumptions set forth in the preceding paragraph, it is our opinion
that for federal income tax purposes--
1. The Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code");
2. Vigoro, Merger Sub and IMC will each be a party to the reorganization
within the meaning of Section 368(b) of the Code;
3. No gain or loss will be recognized by IMC or Vigoro as a result of the
Merger;
4. To the extent Vigoro Common Stock is exchanged in the Merger for IMC
Common Stock, no gain or loss will be recognized by the stockholders of
Vigoro, except with respect to cash, if any, received in lieu of fractional
shares of IMC Common Stock;
5. The aggregate tax basis of the shares of IMC Common Stock received by
each Vigoro stockholder pursuant to the Merger will be the same as the
aggregate tax basis of the shares of Vigoro Common Stock exchanged
therefor;
<PAGE>
6. The holding period for shares of IMC Common Stock received by each
Vigoro stockholder pursuant to the Merger will include the holding period
of the shares of Vigoro Common Stock exchanged therefor, provided such
shares were held as capital assets by the stockholder at the Effective
Time; and
7. A Vigoro stockholder who receives cash in lieu of fractional shares of
IMC Common Stock will recognize gain or loss equal to the difference, if
any, between such stockholder's tax basis in such fractional share and the
amount of cash received.
Our opinion is limited to the foregoing federal income tax consequences of
the Merger, which are the only matters as to which you have requested our
opinion, and you must judge whether the matters addressed herein are
sufficient for your purposes. We do not address any other federal income tax
consequences of the Merger or other matters of federal law and have not
considered matters (including state or local tax consequences) arising under
the laws of any jurisdiction other than matters of federal law arising under
the laws of the United States.
Our opinion is based on the understanding that the relevant facts are, and
will be at the Effective Time, as set forth or referred to in this letter. If
this understanding is incorrect or incomplete in any respect, our opinion
could be affected.
Our opinion is also based on the Code, Treasury Regulations, case law, and
Internal Revenue Service rulings as they now exist, none of which squarely
addresses every precise factual circumstance present in connection with the
Merger but all of which, taken together, in our opinion provide a sufficient
legal basis for our opinions set forth herein. However, the possibility exists
that our opinion as to the proper application of the law to the facts of the
Merger would not be accepted by the Internal Revenue Service or would not
prevail in court. In addition, the authorities upon which we have relied are
all subject to change and such change may be made with retroactive effect. We
can give no assurance that after any such change, our opinion would not be
different.
We undertake no responsibility to update or supplement our opinion. Our
opinion is directed to the Board of Directors of Vigoro. We consent to the
filing with the Securities and Exchange Commission of this opinion as an
exhibit to IMC's Registration Statement on Form S-4 relating to shares of IMC
Common Stock that may be issued in connection with the Merger and to the
reference to our firm under the headings "Summary--Certain Federal Income Tax
Consequences" and "Certain Federal Income Tax Consequences" in the Joint Proxy
Statement/Prospectus. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933.
Very truly yours,
ARNOLD & PORTER
<PAGE>
EXHIBIT 8.2
[TORY TORY DESLAURIERS & BINNINGTON LETTERHEAD]
January 25, 1996
The Vigoro Corporation
225 North Michigan Avenue
Suite 2500
Chicago, Illinois 60601
U.S.A.
Dear Sirs:
We have reviewed the Joint Proxy Statement and Prospectus (the "Joint
Proxy Statement/Prospectus") being furnished to stockholders of IMC Global Inc.
("IMC") and The Vigoro Corporation ("Vigoro") in connection with the proposed
merger (the "Merger") of a wholly-owned subsidiary of IMC into Vigoro.
In our opinion, the section of the Joint Proxy Statement/Prospectus
entitled "Certain Canadian Federal Income Tax Consequences" fairly summarizes
the principal Canadian federal income tax consequences of the Merger generally
applicable to those holders of Vigoro common stock to whom the section is
addressed.
The summary provided in the Joint Proxy Statement/Prospectus is of a
general nature only and should not be taken as being legal or tax advice to any
particular stockholder. Each holder of Vigoro common stock should consult his or
her own tax advisor as to the specific tax consequences to him or her of the
Merger.
Yours very truly,
<PAGE>
EXHIBIT 10.1
May 25, 1995
RETAINER AGREEMENT BETWEEN PROFESSOR RAY A. GOLDBERG
AND THE VIGORO CORPORATION
This agreement is made for a three year period beginning June 1, 1995, to
June 1, 1998. The terms of this arrangement would be a retainer fee of $30,000
a year payable on a monthly basis. Because of the long-term nature of the
relationship, the per diem fee would be consistent with long-term assignments
currently undertaken by Professor Goldberg at a rate of $3,000 per day. This
means that at least ten days a year will be set aside for consulting
activities appropriate to the needs of the Vigoro Corporation. If for any
reason the need for these services is increased beyond the ten day period,
then each additional day would be compensated at the same rate.
At the same time if Professor Goldberg's services are not needed, or if he
is unable to perform these services, the retainer would be reduced on a
proportional basis. Any monies that are owed for work that has been completed
in the event of Professor Goldberg's death would be made payable to his wife,
Thelma E. Goldberg.
Ray A. Goldberg
Agreed to by ___________________________________
Professor Ray A. Goldberg
5/25/95
Date____________________________________________
Joseph P. Sullivan
Approved by ____________________________________
Mr. Joseph P. Sullivan, Chairman
The Vigoro Corporation
6/5/95
Date____________________________________________
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the references to our firm under the captions "IMC GLOBAL
INC.--Selected Historical Consolidated Financial Information" and "Experts"
and to the use of our report dated July 26, 1995, incorporated by reference in
the Joint Proxy Statement/Prospectus of IMC Global Inc. that is made a part of
the Registration Statement (Form S-4 No. 33-00000) and Prospectus of IMC
Global Inc. for the registration of 36,495,589 shares of its common stock.
ERNST & YOUNG LLP
Chicago, Illinois
January 25, 1996
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated May 12, 1995,
included in The Vigoro Corporation's Transition Report on Form 10-K for the
Transition Period from July 1, 1994 through December 31, 1994 and to all
references to our firm included in this registration statement.
ARTHUR ANDERSEN LLP
Chicago, Illinois
January 22, 1996
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We consent (a) to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-4) and related Prospectus of IMC Global
Inc. ("IMC") which also comprises this Joint Proxy Statement of IMC and The
Vigoro Corporation ("Vigoro"), in connection with (i) the registration of
36,495,589 common shares of IMC to be issued in the proposed merger (the
"Merger") of a wholly-owned subsidiary of IMC into Vigoro and (ii) the
consideration of the Merger by the stockholders of IMC and Vigoro, and (b) to
the incorporation by reference of our report dated August 17, 1994 (except for
Note 8 which is as of November 28, 1994 and Note 1 which is as of December 16,
1994) with respect to the financial statements of Central Canada Potash (then
a division of Noranda Inc.) included in Vigoro's Current Report on Form 8-K
dated January 5, 1995 filed with the Securities and Exchange Commission.
ERNST & YOUNG
Saskatoon, Canada
January 25, 1996
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC Global Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Marschall
I. Smith and Robert C. Brauneker his or her true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute and deliver in the name and on behalf of the undersigned as such
Director and/or Officer a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended, with respect to the registration of Common
Stock, par value $1.00 per share (the "Common Stock"), of the Company, together
with the associated Preferred Stock Purchase Rights of the Company, pursuant to
the terms of the Agreement and Plan of Merger dated as of November 13, 1995 (the
"Merger Agreement") among the Company, Bull Merger Company and The Vigoro
Corporation, including the registration of Common Stock issuable upon exercise
of the Substitute Options (as defined in the Merger Agreement), and to execute
and deliver any and all amendments to such Registration Statement, including
amendments filed on Form S-8, for filing with the Securities and Exchange
Commission; and in connection with the foregoing, to do any and all acts and
things and execute any and all instruments which such attorneys and agents may
deem necessary or advisable to enable the Company to comply with the securities
laws of the United States and of any state or other political subdivision
thereof. The undersigned hereby grants unto such attorney and agents, and each
of them, full power of substitution and revocation in the premises and hereby
ratifies and confirms all that such attorneys and agents may do or cause to be
done by virtue of these presents.
Dated this 21st day of December, 1995.
Wendell F. Bueche
- -----------------------------
Wendell F. Bueche
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC Global Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Marschall
I. Smith and Robert C. Brauneker his or her true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute and deliver in the name and on behalf of the undersigned as such
Director and/or Officer a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended, with respect to the registration of Common
Stock, par value $1.00 per share (the "Common Stock"), of the Company, together
with the associated Preferred Stock Purchase Rights of the Company, pursuant to
the terms of the Agreement and Plan of Merger dated as of November 13, 1995 (the
"Merger Agreement") among the Company, Bull Merger Company and The Vigoro
Corporation, including the registration of Common Stock issuable upon exercise
of the Substitute Options (as defined in the Merger Agreement), and to execute
and deliver any and all amendments to such Registration Statement, including
amendments filed on Form S-8, for filing with the Securities and Exchange
Commission; and in connection with the foregoing, to do any and all acts and
things and execute any and all instruments which such attorneys and agents may
deem necessary or advisable to enable the Company to comply with the securities
laws of the United States and of any state or other political subdivision
thereof. The undersigned hereby grants unto such attorney and agents, and each
of them, full power of substitution and revocation in the premises and hereby
ratifies and confirms all that such attorneys and agents may do or cause to be
done by virtue of these presents.
Dated this 21st day of December, 1995.
Raymond F. Bentele
- -----------------------------
Raymond F. Bentele
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC Global Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Marschall
I. Smith and Robert C. Brauneker his or her true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute and deliver in the name and on behalf of the undersigned as such
Director and/or Officer a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended, with respect to the registration of Common
Stock, par value $1.00 per share (the "Common Stock"), of the Company, together
with the associated Preferred Stock Purchase Rights of the Company, pursuant to
the terms of the Agreement and Plan of Merger dated as of November 13, 1995 (the
"Merger Agreement") among the Company, Bull Merger Company and The Vigoro
Corporation, including the registration of Common Stock issuable upon exercise
of the Substitute Options (as defined in the Merger Agreement), and to execute
and deliver any and all amendments to such Registration Statement, including
amendments filed on Form S-8, for filing with the Securities and Exchange
Commission; and in connection with the foregoing, to do any and all acts and
things and execute any and all instruments which such attorneys and agents may
deem necessary or advisable to enable the Company to comply with the securities
laws of the United States and of any state or other political subdivision
thereof. The undersigned hereby grants unto such attorney and agents, and each
of them, full power of substitution and revocation in the premises and hereby
ratifies and confirms all that such attorneys and agents may do or cause to be
done by virtue of these presents.
Dated this 21st day of December, 1995.
Thomas H. Roberts, Jr.
- -----------------------------
Thomas H. Roberts, Jr.
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC Global Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Marschall
I. Smith and Robert C. Brauneker his or her true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute and deliver in the name and on behalf of the undersigned as such
Director and/or Officer a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended, with respect to the registration of Common
Stock, par value $1.00 per share (the "Common Stock"), of the Company, together
with the associated Preferred Stock Purchase Rights of the Company, pursuant to
the terms of the Agreement and Plan of Merger dated as of November 13, 1995 (the
"Merger Agreement") among the Company, Bull Merger Company and The Vigoro
Corporation, including the registration of Common Stock issuable upon exercise
of the Substitute Options (as defined in the Merger Agreement), and to execute
and deliver any and all amendments to such Registration Statement, including
amendments filed on Form S-8, for filing with the Securities and Exchange
Commission; and in connection with the foregoing, to do any and all acts and
things and execute any and all instruments which such attorneys and agents may
deem necessary or advisable to enable the Company to comply with the securities
laws of the United States and of any state or other political subdivision
thereof. The undersigned hereby grants unto such attorney and agents, and each
of them, full power of substitution and revocation in the premises and hereby
ratifies and confirms all that such attorneys and agents may do or cause to be
done by virtue of these presents.
Dated this 21st day of December, 1995.
Frank W. Considine
- -----------------------------
Frank W. Considine
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC Global Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Marschall
I. Smith and Robert C. Brauneker his or her true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute and deliver in the name and on behalf of the undersigned as such
Director and/or Officer a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended, with respect to the registration of Common
Stock, par value $1.00 per share (the "Common Stock"), of the Company, together
with the associated Preferred Stock Purchase Rights of the Company, pursuant to
the terms of the Agreement and Plan of Merger dated as of November 13, 1995 (the
"Merger Agreement") among the Company, Bull Merger Company and The Vigoro
Corporation, including the registration of Common Stock issuable upon exercise
of the Substitute Options (as defined in the Merger Agreement), and to execute
and deliver any and all amendments to such Registration Statement, including
amendments filed on Form S-8, for filing with the Securities and Exchange
Commission; and in connection with the foregoing, to do any and all acts and
things and execute any and all instruments which such attorneys and agents may
deem necessary or advisable to enable the Company to comply with the securities
laws of the United States and of any state or other political subdivision
thereof. The undersigned hereby grants unto such attorney and agents, and each
of them, full power of substitution and revocation in the premises and hereby
ratifies and confirms all that such attorneys and agents may do or cause to be
done by virtue of these presents.
Dated this 21st day of December, 1995.
James D. Speir
- -----------------------------
James D. Speir
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC Global Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Marschall
I. Smith and Robert C. Brauneker his or her true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute and deliver in the name and on behalf of the undersigned as such
Director and/or Officer a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended, with respect to the registration of Common
Stock, par value $1.00 per share (the "Common Stock"), of the Company, together
with the associated Preferred Stock Purchase Rights of the Company, pursuant to
the terms of the Agreement and Plan of Merger dated as of November 13, 1995 (the
"Merger Agreement") among the Company, Bull Merger Company and The Vigoro
Corporation, including the registration of Common Stock issuable upon exercise
of the Substitute Options (as defined in the Merger Agreement), and to execute
and deliver any and all amendments to such Registration Statement, including
amendments filed on Form S-8, for filing with the Securities and Exchange
Commission; and in connection with the foregoing, to do any and all acts and
things and execute any and all instruments which such attorneys and agents may
deem necessary or advisable to enable the Company to comply with the securities
laws of the United States and of any state or other political subdivision
thereof. The undersigned hereby grants unto such attorney and agents, and each
of them, full power of substitution and revocation in the premises and hereby
ratifies and confirms all that such attorneys and agents may do or cause to be
done by virtue of these presents.
Dated this 21st day of December, 1995.
James M. Davidson
- -----------------------------
James M. Davidson
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC Global Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Marschall
I. Smith and Robert C. Brauneker his or her true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute and deliver in the name and on behalf of the undersigned as such
Director and/or Officer a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended, with respect to the registration of Common
Stock, par value $1.00 per share (the "Common Stock"), of the Company, together
with the associated Preferred Stock Purchase Rights of the Company, pursuant to
the terms of the Agreement and Plan of Merger dated as of November 13, 1995 (the
"Merger Agreement") among the Company, Bull Merger Company and The Vigoro
Corporation, including the registration of Common Stock issuable upon exercise
of the Substitute Options (as defined in the Merger Agreement), and to execute
and deliver any and all amendments to such Registration Statement, including
amendments filed on Form S-8, for filing with the Securities and Exchange
Commission; and in connection with the foregoing, to do any and all acts and
things and execute any and all instruments which such attorneys and agents may
deem necessary or advisable to enable the Company to comply with the securities
laws of the United States and of any state or other political subdivision
thereof. The undersigned hereby grants unto such attorney and agents, and each
of them, full power of substitution and revocation in the premises and hereby
ratifies and confirms all that such attorneys and agents may do or cause to be
done by virtue of these presents.
Dated this 21st day of December, 1995.
Billie B. Turner
- -----------------------------
Billie B. Turner
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC Global Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Marschall
I. Smith and Robert C. Brauneker his or her true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute and deliver in the name and on behalf of the undersigned as such
Director and/or Officer a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended, with respect to the registration of Common
Stock, par value $1.00 per share (the "Common Stock"), of the Company, together
with the associated Preferred Stock Purchase Rights of the Company, pursuant to
the terms of the Agreement and Plan of Merger dated as of November 13, 1995 (the
"Merger Agreement") among the Company, Bull Merger Company and The Vigoro
Corporation, including the registration of Common Stock issuable upon exercise
of the Substitute Options (as defined in the Merger Agreement), and to execute
and deliver any and all amendments to such Registration Statement, including
amendments filed on Form S-8, for filing with the Securities and Exchange
Commission; and in connection with the foregoing, to do any and all acts and
things and execute any and all instruments which such attorneys and agents may
deem necessary or advisable to enable the Company to comply with the securities
laws of the United States and of any state or other political subdivision
thereof. The undersigned hereby grants unto such attorney and agents, and each
of them, full power of substitution and revocation in the premises and hereby
ratifies and confirms all that such attorneys and agents may do or cause to be
done by virtue of these presents.
Dated this 21st day of December, 1995.
Richard A. Lenon
- -----------------------------
Richard A. Lenon
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC Global Inc., a
Delaware corporation (the "Company"), hereby constitutes and appoints Marschall
I. Smith and Robert C. Brauneker his or her true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute and deliver in the name and on behalf of the undersigned as such
Director and/or Officer a Registration Statement on Form S-4 under the
Securities Act of 1933, as amended, with respect to the registration of Common
Stock, par value $1.00 per share (the "Common Stock"), of the Company, together
with the associated Preferred Stock Purchase Rights of the Company, pursuant to
the terms of the Agreement and Plan of Merger dated as of November 13, 1995 (the
"Merger Agreement") among the Company, Bull Merger Company and The Vigoro
Corporation, including the registration of Common Stock issuable upon exercise
of the Substitute Options (as defined in the Merger Agreement), and to execute
and deliver any and all amendments to such Registration Statement, including
amendments filed on Form S-8, for filing with the Securities and Exchange
Commission; and in connection with the foregoing, to do any and all acts and
things and execute any and all instruments which such attorneys and agents may
deem necessary or advisable to enable the Company to comply with the securities
laws of the United States and of any state or other political subdivision
thereof. The undersigned hereby grants unto such attorney and agents, and each
of them, full power of substitution and revocation in the premises and hereby
ratifies and confirms all that such attorneys and agents may do or cause to be
done by virtue of these presents.
Dated this 21st day of December, 1995.
David B. Mathis
- -----------------------------
David B. Mathis
<PAGE>
Exhibit 99.1
IMC GLOBAL INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
IMC GLOBAL INC. FOR SPECIAL MEETING, FEBRUARY 28, 1996
The undersigned hereby constitutes and appoints Wendell F. Bueche, James D.
Speir and Marschall I. Smith, and each of them, with full power of
substitution, proxies to represent the undersigned at the Special Meeting of
Stockholders of IMC Global Inc. to be held at the offices of Sidley & Austin, 2
South Dearborn, Suite 5500, Chicago, Illinois on February 28, 1996, at 10:00
a.m. Local Time, and at any adjournments thereof, and to vote on all matters
coming before said meeting, hereby revoking any proxy heretofore given.
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations as noted in the proxy
statement and on the reverse side. The proxies specified above cannot vote your
shares unless you sign and return this card.
This Proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR proposals 1, 2
and 3.
(Continued on reverse side)
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
FOR AGAINST ABSTAIN
1. Approve the issuance of Common
Stock of IMC Global Inc. in
connection with the Agreement
and Plan of Merger dated as of
November 13, 1995 among IMC
Global Inc., Bull Merger Company
and The Vigoro Corporation [_] [_] [_]
2. Approve the proposed amendment
to the Restated Certificate of
Incorporation to increase the
authorized shares of Common
Stock of IMC Global Inc. to 250
million [_] [_] [_]
3. Approve the proposed amendment
to the Restated Certificate of
Incorporation to increase the
range of the number Board of
Directors of IMC Global Inc. to
5 to 15 Directors [_] [_] [_]
Please check this box if you plan to attend the Special Meeting[_]
SIGNATURE(S) ______________________________ DATE ______________________________
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
NOTE: Please date this proxy and sign exactly as your name or names appear(s)
hereon. If the stock is held jointly, signatures should include both names.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
<PAGE>
Exhibit 99.2
THE VIGORO CORPORATION
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD ON FEBRUARY 28, 1996.
The undersigned hereby appoints Joseph P. Sullivan, Robert E. Fowler, Jr. and
Rose Marie Williams, or any of them, with individual power of substitution,
proxies to vote all shares of the Common Stock of The Vigoro Corporation (the
"Company") which the undersigned may be entitled to vote at the Special Meeting
of Stockholders of the Company to be held in Chicago, Illinois, at 10:00 a.m.
Chicago time, on February 28, 1996 and at any adjournment thereof, as
designated on the reverse side of this proxy card, and in their discretion, the
proxies are authorized to vote upon such other business as may properly come
before the meeting. You are encouraged to specify your choice by marking the
appropriate box on the reverse side. If you do not mark any box, your proxy
will be voted in accordance with the Board of Directors' recommendations. The
proxies cannot vote your shares unless you sign and return this card. The
undersigned hereby acknowledges receipt of the Notice of the Special Meeting of
Stockholders and the related Joint Proxy Statement and Prospectus (with all
annexes and enclosures) dated January 30, 1996.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR AUTHORITY TO VOTE FOR THE PROPOSAL AND IF ANY OTHER MATTERS
SHOULD PROPERLY COME BEFORE THE SPECIAL MEETING, SUCH SHARES WILL BE VOTED WITH
RESPECT TO SUCH MATTERS IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS VOTING
SUCH PROXIES.
(Continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT
THE MERGER.
FOR AGAINST ABSTAIN
Proposal to approve and adopt the
Agreement and Plan of Merger
dated as of November 13, 1995
among IMC Global Inc., Bull
Merger Company and The Vigoro
Corporation. [_] [_] [_]
Please check this box if you plan to attend the Special Meeting[_]
SIGNATURE(S) ______________________________ DATE ______________________________
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
IMPORTANT: Please date this proxy and sign exactly as your name or names
appear(s) hereon. If the stock is held jointly, signatures should
include both names. Executors, administrators, trustees, guardians and
others signing in a representative capacity should give full title. In
order to insure that your shares will be represented at the Special
Meeting of Stockholders, please sign, date and return this proxy
promptly in the enclosed business reply envelope. If you do attend the
meeting, you may, if you wish, withdraw your proxy and vote in person.
<PAGE>
THE VIGORO CORPORATION
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD ON FEBRUARY 28, 1996.
The undersigned hereby appoints Joseph P. Sullivan, Robert E. Fowler, Jr. and
Rose Marie Williams, or any of them, with individual power of substitution,
proxies to vote all shares of the Series E Preferred Stock of The Vigoro
Corporation (the "Company") which the undersigned may be entitled to vote at
the Special Meeting of Stockholders of the Company to be held in Chicago,
Illinois, at 10:00 a.m. Chicago time, on February 28, 1996 and at any
adjournment thereof, as designated on the reverse side of this proxy card, and
in their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. You are encouraged to specify
your choice by marking the appropriate box on the reverse side. If you do not
mark any box, your proxy will be voted in accordance with the Board of
Directors' recommendations. The proxies cannot vote your shares unless you sign
and return this card. The undersigned hereby acknowledges receipt of the Notice
of the Special Meeting of Stockholders and the related Joint Proxy Statement
and Prospectus (with all annexes and enclosures) dated January 30, 1996.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR AUTHORITY TO VOTE FOR THE PROPOSAL AND IF ANY OTHER MATTERS
SHOULD PROPERLY COME BEFORE THE SPECIAL MEETING, SUCH SHARES WILL BE VOTED WITH
RESPECT TO SUCH MATTERS IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS VOTING
SUCH PROXIES.
(Continued and to be signed on reverse side)
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT
THE MERGER.
FOR AGAINST ABSTAIN
Proposal to approve and adopt the
Agreement and Plan of Merger
dated as of November 13, 1995
among IMC Global Inc., Bull
Merger Company and The Vigoro
Corporation. [_] [_] [_]
Please check this box if you plan to attend the Special Meeting[_]
SIGNATURE(S) ______________________________ DATE ______________________________
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
IMPORTANT: Please date this proxy and sign exactly as your name or names
appear(s) hereon. If the stock is held jointly, signatures should
include both names. Executors, administrators, trustees, guardians and
others signing in a representative capacity should give full title. In
order to insure that your shares will be represented at the Special
Meeting of Stockholders, please sign, date and return this proxy
promptly in the enclosed business reply envelope. If you do attend the
meeting, you may, if you wish, withdraw your proxy and vote in person.
<PAGE>
THE VIGORO CORPORATION
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD ON FEBRUARY 28, 1996.
The undersigned hereby appoints Joseph P. Sullivan, Robert E. Fowler, Jr. and
Rose Marie Williams, or any of them, with individual power of substitution,
proxies to vote all shares of the Series F Preferred Stock of The Vigoro
Corporation (the "Company") which the undersigned may be entitled to vote at
the Special Meeting of Stockholders of the Company to be held in Chicago,
Illinois, at 10:00 a.m. Chicago time, on February 28, 1996 and at any
adjournment thereof, as designated on the reverse side of this proxy card, and
in their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. You are encouraged to specify
your choice by marking the appropriate box on the reverse side. If you do not
mark any box, your proxy will be voted in accordance with the Board of
Directors' recommendations. The proxies cannot vote your shares unless you sign
and return this card. The undersigned hereby acknowledges receipt of the Notice
of the Special Meeting of Stockholders and the related Joint Proxy Statement
and Prospectus (with all annexes and enclosures) dated January 30, 1996.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR AUTHORITY TO VOTE FOR THE PROPOSAL AND IF ANY OTHER MATTERS
SHOULD PROPERLY COME BEFORE THE SPECIAL MEETING, SUCH SHARES WILL BE VOTED WITH
RESPECT TO SUCH MATTERS IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS VOTING
SUCH PROXIES.
(Continued and to be signed on reverse side)
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT
THE MERGER.
FOR AGAINST ABSTAIN
Proposal to approve and adopt the
Agreement and Plan of Merger
dated as of November 13, 1995
among IMC Global Inc., Bull
Merger Company and The Vigoro
Corporation. [_] [_] [_]
Please check this box if you plan to attend the Special Meeting[_]
SIGNATURE(S) ______________________________ DATE ______________________________
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
IMPORTANT: Please date this proxy and sign exactly as your name or names
appear(s) hereon. If the stock is held jointly, signatures should
include both names. Executors, administrators, trustees, guardians and
others signing in a representative capacity should give full title. In
order to insure that your shares will be represented at the Special
Meeting of Stockholders, please sign, date and return this proxy
promptly in the enclosed business reply envelope. If you do attend the
meeting, you may, if you wish, withdraw your proxy and vote in person.
