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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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NU-WEST INDUSTRIES, INC.
(NAME OF SUBJECT COMPANY)
NU-WEST INDUSTRIES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
VOTING COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
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67019H308
(CUSIP NUMBER OF CLASS OF SECURITIES)
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STEVEN W. GAMPP
VICE PRESIDENT, SECRETARY AND TREASURER
NU-WEST INDUSTRIES, INC.
8400 EAST PRENTICE AVENUE
SUITE 1320
ENGLEWOOD, COLORADO 80111
(303) 721-1396
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
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WITH A COPY TO:
PAUL HILTON, ESQ. THOMAS A. RICHARDSON, ESQ.
JOHN L. MCCABE, ESQ. HOLME ROBERTS & OWEN LLC
DAVIS, GRAHAM & STUBBS, L.L.C. 1700 LINCOLN, SUITE 4100
370 SEVENTEENTH STREET, SUITE 4700 DENVER, COLORADO 80203
DENVER, COLORADO 80202 (303) 861-7000
(303) 892-9400
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Nu-West Industries, Inc., a Delaware
corporation (the "Company"), and the address of the principal executive
offices of the Company is 8400 East Prentice Avenue, Suite 1320, Englewood,
Colorado 80111. The title of the class of equity securities to which this
statement relates is the Voting Common Stock, par value $.01 per share (the
"Voting Common Stock").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to a cash tender offer by Agrium Acquisition
Corporation, a Delaware corporation (the "Purchaser"), a wholly owned
subsidiary of Agrium U.S. Inc., a Colorado corporation ("Agrium U.S."), a
wholly owned subsidiary of Agrium Inc., a Canadian corporation (the "Parent"),
described in a Tender Offer Statement filed pursuant to Section 14(d)(1) of
the Securities and Exchange Act of 1934, as amended (the "Exchange Act") on
Schedule 14D-1 (the "Schedule 14D-1"), dated August 16, 1995, to purchase all
of the outstanding shares of Voting Common Stock and the Nonvoting Common
Stock, par value $.01 per share (the "Nonvoting Common Stock" and, together
with the Voting Common Stock, the "Shares"), of the Company, at a purchase
price of $10.50 per Share (the "Offer Price") net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated August 16, 1995 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which with the Offer to Purchase, together with any amendments or
supplements, collectively constitute the "Offer"). Based on the information in
the Offer to Purchase, the principal executive offices of the Parent and the
Purchaser are located at 10333 Southport Road S.W., Suite 426, Calgary,
Alberta, Canada T2W 3X6.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of August 9, 1995 (the "Merger Agreement") among the Purchaser, the Parent and
the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by the Purchaser and further provides that, subject
to the satisfaction or waiver of certain conditions, the Purchaser will be
merged with and into the Company (the "Merger"), with the Company surviving
the Merger as a direct, wholly-owned subsidiary of Agrium U.S. (the "Surviving
Corporation"). In the Merger, each outstanding Share (other than Shares owned
by the Company or any subsidiary of the Company, the Parent, the Purchaser,
Agrium U.S. or any other subsidiary of the Parent, and Shares owned by
stockholders who shall have properly exercised their appraisal rights under
Delaware law) will be converted on the effective date of the Merger (the
"Effective Date") into the right to receive the Offer Price in cash, without
interest and less any required withholding taxes (the "Merger Consideration").
All other equity securities of the Company shall remain outstanding after the
Effective Date, subject to their respective terms and conditions. A copy of
the Merger Agreement is filed as Exhibit 1 hereto and is incorporated herein
by reference in its entirety. Certain provisions of the Merger Agreement are
described below in response to Item 3(b)(2).
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b)(1) Certain contracts, agreements, arrangements or understandings between
the Company and certain of its directors and executive officers are described
in the "Information Statement Pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder" (the "Information Statement"), that is
attached hereto as Annex II and incorporated herein by reference.
Except as described in Annex II and as described in response to Item 3(b)(2)
below, to the knowledge of the Company, there exists on the date hereof no
material contract, agreement, arrangement or understanding and no actual or
potential conflict of interest between the Company or its affiliates and (i)
the Company's executive officers, directors or affiliates or (ii) the
executive officers, directors or affiliates of the Parent or the Purchaser.
(b)(2) The following is a summary of certain provisions of the Merger
Agreement and the other agreements described under "Other Arrangements" below,
copies of which are filed as Exhibits hereto and are incorporated herein by
reference in their entirety. This summary is qualified in its entirety by
reference to such Exhibits.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions thereof
and is qualified in its entirety by reference to the full text thereof. See
Exhibit 1 to this Schedule 14D-9.
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The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer conditioned upon a sufficient number of Shares being properly
tendered and not withdrawn, which, when added together with any Shares owned
by the Parent and any of its subsidiaries or which the Purchaser and the
Parent have the right to acquire, will equal at least 60% of the Shares on a
fully diluted basis. The Merger Agreement provides that, without the prior
written consent of the Company, the Purchaser shall not decrease the Merger
Price, decrease the number of Shares being sought in the Offer, change the
form of consideration payable in the Offer, add additional conditions to the
Offer or make any other material change in the terms or conditions to the
Offer. After the time that the Purchaser's designees constitute at least a
majority of the Board and until the Effective Date, any amendment or
termination of the Merger Agreement, extension for the performance or waiver
of the obligations or other acts of the Purchaser or the Parent (except
pursuant to the Merger Agreement) or waiver of the Company's rights under the
Merger Agreement, which amendment, termination, extension or waiver would
adversely affect the stockholders, optionholders or employees of the Company,
will also require the approval of a majority (or such higher percentage as is
required under the By-laws of the Company) of the then serving directors, if
any, who were directors as of August 9, 1995 (the "Continuing Directors").
The Merger Agreement provides that upon the acquisition of Shares pursuant
to the Offer, which, when added together with Shares owned by the Parent or
any of its direct or indirect subsidiaries, equal at least a majority of the
then outstanding shares of Voting Common Stock, the Company will fill any
vacancies and increase the size of its Board as necessary to enable the Parent
to designate at its option a majority of the Company's Board, and shall cause
the Purchaser's designees to be so elected and shall mail promptly the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, the Purchaser shall be merged with and into the Company,
which shall be the Surviving Corporation on the Effective Date. Pursuant to
the Merger, (x) the Certificate of Incorporation of the Company will be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law, and (y) the By-laws of the Company will be the By-
laws of the Surviving Corporation until thereafter amended. The directors of
the Purchaser on the Effective Date will become the directors of the Surviving
Corporation until their respective successors are duly elected and qualified.
The officers of the Company on the Effective Date will continue as the
officers of the Surviving Corporation, to serve in accordance with the By-Laws
thereof until their respective successors are duly elected and qualified. The
Merger will have the effects set forth in the General Corporation Law of the
State of Delaware (the "DGCL").
Conversion of Shares. The Merger Agreement provides that each outstanding
Share (other than Shares which are held by the Company as treasury shares, all
authorized and unissued Shares and any Shares owned by the Purchaser, the
Parent or any other direct or indirect subsidiary of the Parent and Shares
held by stockholders who exercise their statutory dissenters' rights as
described below) will be converted into the right to receive $10.50 net in
cash or such higher amount per Share as may be paid to any holder of Shares
pursuant to the Offer.
The Merger Agreement provides that each issued and outstanding share of
capital stock of the Purchaser shall be converted into one validly issued,
fully paid and non-assessable share of Voting Common Stock of the Surviving
Corporation.
The Merger Agreement provides that any issued and outstanding shares of
capital stock of the Company held by a Stockholder who has not voted in favor
of nor consented to the Merger and who complies with all the provisions of the
DGCL concerning the right of holders of such stock to dissent from the Merger
and require appraisal of their shares (a "Dissenting Stockholder"), shall not
be converted as described above but shall become, at the Effective Date, by
virtue of the Merger and without any further action, the right to receive such
consideration as may be determined to be due to such Dissenting Stockholder
pursuant to the DGCL; provided, however, that Shares outstanding immediately
prior to the Effective Date and held by a Dissenting Stockholder
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who shall, after the Effective Date, withdraw his demand for appraisal or lose
his right of appraisal, in either case pursuant to the DGCL, shall be deemed
to be converted as of the Effective Date, into the right to receive the Merger
Price. The Merger Agreement provides that the Company will not, without the
prior written consent of the Purchaser, voluntarily make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any demands by
Dissenting Stockholders.
Stockholders' Meeting. Pursuant to the Merger Agreement, the Company has
agreed to take all action necessary in accordance with applicable law and its
Certificate of Incorporation and By-Laws to convene a meeting of the holders
of the Voting Shares as promptly as practicable after the expiration of the
Offer to consider and vote upon the adoption of the Merger Agreement, if such
stockholder approval is required by applicable law. The Company has agreed
that in the Proxy Statement with respect to the meeting, the Company will,
through its Board, recommend that the Company's stockholders adopt the Merger
Agreement, if such vote is required, except to the extent that the Board of
Directors will have withdrawn or modified its approval or recommendation of
the Tender Offer or the Merger Agreement after determining that it has a duty
in the proper discharge of its fiduciary responsibilities under applicable law
to withdraw or modify such approval or recommendation. The Parent has agreed
that at any stockholders' meeting, it will vote or cause all of the Shares
acquired pursuant to the Offer or otherwise by Purchaser or any affiliate of
Parent to be voted in favor of the Merger.
Interim Operations of the Company. In the Merger Agreement, the Company has
agreed that, except as expressly provided in the Merger Agreement or consented
to in writing by the Parent or unless the failure to comply with any of the
following covenants results from actions by the Board which are approved by a
majority of the directors appointed by the Parent pursuant to the Merger
Agreement, prior to the Effective Date, (i) the businesses of the Company and
its subsidiaries will be conducted only in the ordinary and usual course of
business and (ii) the Company will not (A) (1) increase the compensation
payable to or to become payable to any director or executive officer, except
for increases in salary or wages payable or to become payable in the ordinary
course of business and consistent with past practice; (2) grant any severance
or termination pay (other than pursuant to the normal severance policy of the
Company or its subsidiaries as in effect on the date of the Merger Agreement)
to, or enter into or amend any employment or severance agreement with, any
director, officer or employee; (3) establish, adopt or enter into any new
employee benefit plan or arrangement; or (4) except as may be required by
applicable law and actions that are not inconsistent with the provisions of
the Merger Agreement, amend, or take any other actions (other than the
acceleration of vesting or waiving of performance criteria permitted pursuant
to the employee benefit plans upon a change in control of the Company) with
respect to, any of the Company's employee benefit plans; (B) declare or pay
any dividend on, or make any other distribution in respect of, outstanding
shares of capital stock, except for dividends by a subsidiary to the Company
or another subsidiary; (C) (1) except as described in the Company Disclosure
Schedule (as defined in the Merger Agreement), redeem, purchase or otherwise
acquire any shares of its or any of its subsidiaries' capital stock or any
securities or obligations convertible into or exchangeable for any shares of
its or its subsidiaries' capital stock (other than any such acquisition
directly from any wholly owned subsidiary of the Company in exchange for
capital contributions or loans to such subsidiary), or any options, warrants
or conversion or other rights to acquire any shares of its or its
subsidiaries' capital stock or any such securities or obligations (except in
connection with the exercise of outstanding stock options or warrants in
accordance with their terms); (2) effect any reorganization or
recapitalization; or (3) split, combine or reclassify any of its or its
subsidiaries' capital stock or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution for, shares
of its or its subsidiaries' capital stock; (D) (1) except as described in the
Company Disclosure Schedule, issue, deliver, award, grant or sell, or
authorize or propose the issuance, delivery, award, grant or sale (including
the grant of any security interests, liens, claims, pledges, limitations in
voting rights, charges or other encumbrances) of, any shares of any class of
its or its subsidiaries' capital stock (including shares held in treasury),
any securities convertible into or exercisable or exchangeable for any such
shares, or any rights, warrants or options to acquire any such shares (except
as permitted for the issuance of shares upon the exercise of stock options
outstanding as of the date of this Agreement) other than the conversion of
Voting Shares and Nonvoting Shares as provided in the Company's Certificate of
Incorporation, the exercise of warrants or the exercise of options under the
Company's stock option plans; or (2) amend or otherwise modify the terms of
any such rights, warrants or options the effect of which shall be to make such
terms more favorable to the holders
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thereof; (E) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, 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 of any other person (other than the purchase of assets
from suppliers or vendors in the ordinary course of business) in each case
which are material, individually or in the aggregate, to the Company and its
subsidiaries, taken as a whole; (F) sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, or agree to sell, lease, exchange, mortgage,
pledge, transfer or otherwise dispose of, any of its material assets or any
material assets of any of its subsidiaries, except for dispositions in the
ordinary course of business and consistent with past practice; (G) adopt or
propose to adopt any amendments to its charter or By-Laws which would alter
the terms of its capital stock or would have an adverse impact on the
consummation of the transactions contemplated by the Merger Agreement; (H) (1)
change, in any material respect, any of its methods of accounting in effect at
June 30, 1995, or (2) make or rescind any express or deemed election relating
to taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to taxes
(except where the amount of such settlements or controversies, individually or
in the aggregate, would not have a Company Material Adverse Effect (as defined
in the Merger Agreement)), or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year ending June
30, 1994, except, in each case, as may be required by law or U.S. generally
accepted accounting principles; (I) other than as permitted by the Harris Loan
(as defined in the Merger Agreement), incur any material obligation for
borrowed money or purchase money indebtedness, whether or not evidenced by a
note, bond, debenture or similar instrument; (J) enter into any material
arrangement, agreement or contract with any third party (other than customers
in the ordinary course of business) that provides for an exclusive arrangement
with that third party or is substantially more restrictive on the Company or
substantially less advantageous to the Company than arrangements, agreements
or contracts existing on the date hereof unless such arrangement is entered
into in the ordinary course of business; or (K) agree in writing or otherwise
to do any of the foregoing.
No Solicitation. In the Merger Agreement, the Company has agreed that the
Company will not solicit, initiate or knowingly encourage any inquiries,
discussions or negotiations with any person (other than the Purchaser or the
Parent) concerning any Acquisition Proposal or solicit, initiate or knowingly
encourage any effort or attempt by any other person to do, make or seek an
Acquisition Proposal or, unless required in order for the Board to comply with
its fiduciary responsibilities, with a view to pursuing an Acquisition
Proposal with such person, engage in discussions or negotiations with or
disclose any nonpublic information relating to the Company or any of its
subsidiaries to such person or authorize or permit any of the officers,
directors or employees of the Company or any of its subsidiaries or any
investment banker, financial adviser, attorney, accountant or other
representative retained by the Company or any of its subsidiaries to take any
such action. The Company has agreed to immediately communicate to the Parent
in writing the terms of any Acquisition Proposal which it may receive. As used
in the Merger Agreement, "Acquisition Proposal" means any bona fide written
proposal or offer from a third party (each an "Acquisition Proposal") relating
to (i) the acquisition or purchase of all or substantially all of the assets
of, or more than a 50% equity interest (including any Shares theretofore
acquired) in the Company, (ii) a merger, consolidation or similar business
combination with the Company or (iii) a tender or exchange offer for the
Company conditioned on ownership of more than 50% of the outstanding Shares
following such tender or exchange offer.
Compensation and Benefits. Pursuant to the Merger Agreement, the Parent and
the Surviving Corporation have agreed for a period of two years from the
Effective Date, to honor in accordance with their terms the Company's employee
benefit plans, in each case to the extent the same have been delivered or made
available to the Purchaser for review, provided however that the Parent and
the Purchaser may amend or terminate any such plan at any time after the
Effective Date to the extent the amendment or termination is deemed to be
necessary or appropriate to comply with the requirements of applicable law.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to the Parent and the Purchaser
with respect to, among other things, its organization, authorization,
capitalization, potential conflicts, inventory, insurance, intellectual
property, financial
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statements, public filings, employee benefit plans, defaults, information in
the Proxy Statement, compliance with laws, litigation, tax matters, real and
personal property, environmental matters, consents and approvals, undisclosed
liabilities and the absence of certain events. None of the representations and
warranties in the Merger Agreement will survive the Effective Date of the
Merger.
Conditions to the Merger. Pursuant to the terms of the Merger Agreement, the
obligations of each party to effect the Merger are subject to the fulfillment
at or prior to the Effective Date of the following conditions: (i) the holders
of the Voting Shares must have duly approved the Merger if required by
applicable law; (ii) no preliminary or permanent injunction or other order by
a court of competent jurisdiction which prevents the consummation of the
Merger shall have been issued and remain in effect (each party agreeing to use
its reasonable best efforts to have any such injunction lifted); (iii) no
action shall have been taken nor shall any statute, rule or regulation have
been enacted by the government of the United States or any state thereof that
makes the consummation of the Offer or the Merger illegal in any material
respect; and (iv) the applicable waiting period under the HSR Act with respect
to the transactions contemplated by this Agreement must have expired or been
terminated. The obligations of the Purchaser and the Parent to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Date
of the following additional conditions: (i) the representations and warranties
of the Company set forth in the Merger Agreement must be true and correct in
all material respects on the Effective Date (or on such other date specified
in the Merger Agreement) with the same force and effect as though made on and
as of such date, and the Purchaser and the Parent must have received a
certificate to that effect from the Chief Executive Officer and the Treasurer
of the Company; (ii) all of the covenants and agreements of the Company to be
performed or complied with pursuant to the Merger Agreement prior to the
Effective Date must have been duly performed and complied with in all material
respects, and the Purchaser and the Parent must have received a certificate to
that effect from the Chief Executive Officer and the Treasurer of the Company;
(iii) holders of no more than 400,000 Shares, in the aggregate, shall have
filed with the Company a written objection to the Merger and made a written
demand for payment of the fair value of his shares in the manner permitted by
the DGCL; (iv) all of the Continuing Directors of the Company on the Effective
Date must have resigned; (v) since the date of the Merger Agreement, there
shall have been no Company Material Adverse Effect (provided, however, that
certain IRS Notices of Proposed Adjustment will not be considered a Company
Material Adverse Effect); and (vi) other than taxes duly paid, withheld or
reserved for by the Company, no taxes shall be payable, or reasonably expected
by the Company to be payable, with respect to items or periods covered by the
returns and reports referred to in the Merger Agreement (whether or not shown
on or reportable on such returns or reports or with respect to any period
prior to the Effective Date), other than any such taxes which would not have a
Company Material Adverse Effect. The obligation of the Company to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Date
of the following additional conditions: (i) the representations and warranties
of the Purchaser and the Parent set forth in the Merger Agreement shall be
true and correct in all material respects on the Effective Date (or on such
other date specified in the Merger Agreement) with the same force and effect
as though made on and as of such date, and the Company shall have received
certificates to that effect from the Chief Executive Officer and the Treasurer
of the Parent and the President of the Purchaser; (ii) all of the covenants
and agreements of the Purchaser and the Parent to be performed or complied
with pursuant to the Merger Agreement prior to the Effective Date shall have
been duly performed and complied with in all material respects, and the
Company shall have received certificates to that effect from the Chief
Executive Officer and the Treasurer of the Parent and the President of the
Purchaser.
Termination. The Merger Agreement may be terminated at any time prior to the
Effective Date, whether before or after approval by the stockholders of the
Company, if required, (i) by mutual consent of the Parent and the Board; (ii)
by the Parent or the Company if the Merger shall not have been consummated on
or before December 15, 1995, which date may be extended by mutual agreement of
the boards of directors of the Company and the Parent; (iii) by the Company
if, prior to the Effective Date, the Company, its Board or its stockholders
shall receive an Acquisition Proposal and the Board determines that it has a
duty in the proper discharge of its fiduciary responsibilities under
applicable law to consider such other proposal or offer, and then such Board
either (A) accepts such proposal or offer, (B) recommends to the stockholders
acceptance of such proposal or
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offer or (C) in the case of a tender or exchange offer, takes no position with
respect thereto and all conditions (other than terminating the Merger
Agreement) of such tender or exchange offer have been satisfied, in which
event the Merger Agreement shall be terminated without any liability to the
Company or the Company's Board as a result of such termination other than
payment of the (U.S.)$4,000,000 fee as set forth below; (iv) by the Parent
upon a breach of any material representation, warranty, covenant or agreement
on the part of the Company set forth in the Merger Agreement or if any
representation or warranty of the Company shall have become untrue and such
breach or untruth shall have caused a Company Material Adverse Effect; (v) by
the Company upon a breach of any material representation, warranty, covenant
or agreement on the part of the Parent set forth in this Agreement or if any
representation or warranty of the Parent shall have become untrue and such
breach or untruth shall have caused a Parent Material Adverse Effect (as
defined in the Merger Agreement). If the Merger Agreement is terminated
pursuant to (iii) above, the Company shall pay to Parent (U.S.)$4,000,000 in
cash. In the event of termination of the Merger Agreement by the Parent, the
Purchaser or the Company other than pursuant to (iii) above, there shall be no
liability under the Merger Agreement on the part of either the Company, the
Parent or the Purchaser or their respective officers or directors, with
certain exceptions as provided in the Merger Agreement including failure to
convene the meeting of Stockholders to vote on the Merger, certain
confidentiality provisions and a wilful breach of any representation,
warranty, covenant or agreement of the Purchaser, the Parent or the Company
contained in the Merger Agreement.
Amendment. The Merger Agreement may be amended by the parties thereto, by
action taken by the respective Boards of Directors of the Purchaser, the
Parent and the Company, at any time before or after approval hereof by the
stockholders of the Company, but, after any such approval, if required, no
amendment shall be made which changes the Merger Price without the further
approval of such stockholders. The Merger Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties thereto.
Timing. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by the Purchaser pursuant to the Offer. Although the Purchaser has
agreed to cause the Merger to be consummated on the terms set forth above,
there can be no assurance as to the timing of the Merger.
Delaware Law. The Board has approved the Merger Agreement and the
transactions contemplated by it, including the Offer, the Merger Agreement and
the Merger for purposes of Section 203 of the DGCL. Accordingly, the
restrictions of Section 203 do not apply to the transactions contemplated by
the Offer and the Merger Agreement. Section 203 of the DGCL prevents an
"interested stockholder" (generally, a stockholder owning 15% or more of a
corporation's outstanding voting stock or an affiliate or associate of that
stockholder) from engaging in a "business combination" (defined to include a
merger and certain other transactions) with a Delaware corporation for a
period of three years following the date on which the stockholder became an
interested stockholder, unless (i) prior to that date, the corporation's board
of directors approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder, (ii) upon
consummation of the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
corporation's voting stock outstanding at the time the transaction commenced
(excluding shares owned by certain employee stock plans and persons who are
directors and also officers of the corporation) or (iii) on or subsequent to
that date, the business combination is approved by the corporation's board of
directors and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock not owned by the interested stockholder. As described
above, Section 203 of the DGCL does not apply to the Offer or the Merger.
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OTHER ARRANGEMENTS
Stock Options. As a result of the Offer, each holder of an outstanding
option to purchase shares of the Company's Voting Common Stock under the
Company's 1988 Employee Stock Option Plan, 1994 Employee Stock Incentive Plan
and Nonemployee Director Stock Option Plan shall be entitled to exercise,
subject to the consummation of the Offer, his or her options, in order to be
able to tender such Shares in the Offer. In the event the Offer is not
completed, such options will remain outstanding but unexercised. The Company
has not received any indication from executive officers or directors as to
whether they intend to exercise their options or tender their Shares into the
Offer. In the event any director or executive officer conditionally tenders
his or her options in the Offer, such executive officer or director of the
Company will receive a net amount in settlement of such options as follows:
<TABLE>
<CAPTION>
NAME/TITLE AMOUNT
---------- --------
<S> <C>
Craig D. Harlen.................................................... $476,696
President, Chief Executive Officer and a Director
Mark R. Sanders.................................................... $297,802
Senior Vice President, Chief Financial Officer and a Director
Cecil D. Andrus.................................................... $ 8,334
Director
H. Alan Dahlbach................................................... $297,802
Executive Vice President
Steven W. Gampp.................................................... $297,802
Vice President, Secretary and Treasurer
John D. Yokley..................................................... $184,798
Vice President--National Sales
Larry C. Dearing................................................... $184,798
Vice President--Regional Sales
Don G. LaRue....................................................... $227,290
Vice President--Operations
Helen K. Smith..................................................... $143,040
Corporate Controller and Assistant Secretary
</TABLE>
Employment and Compensation Agreements. On December 1, 1994, the Company
entered into an employment agreement (the "Harlen Agreement") with Craig D.
Harlen to serve as the Company's President and Chief Executive Officer. The
Harlen Agreement provides for an annual base salary of $250,000 (which was
increased to $257,500 effective July 1, 1995) and automatically renews for
successive twelve month periods. The Harlen Agreement provides for severance
compensation equal to one year's base salary in the event of a termination
without cause, and severance compensation in the event of a termination by
reason of a change in control of the Company equal to three times the sum of
(i) Mr. Harlen's base salary at the time of the change in control, plus (ii)
the average of the performance bonus paid for the prior two fiscal years of
the Company. In no event, however, shall such severance compensation exceed
the amount that the Company may deduct for federal income tax purposes by
virtue of Section 280G of the Internal Revenue Code of 1986, as amended, or
any successor provision.
On December 1, 1994, the Company entered into employment agreements with
each of H. Alan Dahlbach, Mark R. Sanders, Steven W. Gampp, Larry C. Dearing
and John D. Yokley. Each of these employment agreements provides for an annual
base salary and for severance compensation in the event of termination without
cause or by reason of a change in control, calculated in the same manner as
described above with respect to the Harlen Agreement. Effective July 1, 1995,
the employment agreements provide for annual base salaries in the aggregate
amount for all individuals of $816,790 per year. The compensation paid to each
of the employees under his employment agreement for the three fiscal years
ended June 30, 1995 are listed in the Summary Compensation Table included in
the Information Statement attached hereto as Annex II.
The Harlen Agreement and each of the above described employment agreements
provides for certain payments in the event of death or disability. Also, each
such agreement contains non-competition and confidentiality provisions. For
purposes of the above agreements, a change in control occurs (i) if a person
other than the Company or Weiss, Peck & Greer, L.L.C. or its affiliates
acquires 40% or more of the outstanding
8
<PAGE>
Voting Common Stock, (ii) if any merger, share exchange, issuance of capital
stock, tender offer or similar transaction results in the existing
stockholders owning fewer than 50% of the outstanding Voting Common Stock
after the transaction, (iii) upon a sale, lease or exchange of all or
substantially all of the Company's assets other than a sale/leaseback or
similar financing transaction or (iv) upon the adoption of a plan for the
liquidation or dissolution of the Company. A termination by reason of a change
in control of the Company includes constructive termination, as defined in the
agreements, including, for example, resignation following a substantial change
in duties, a reduction in salary or benefits, a relocation of the employee to
an office other than his current office, an uncured material breach by the
Company of the agreement or the failure of the executive and the Company or
its successor to negotiate a mutually agreeable amendment to the current
employment agreement or a new employment agreement within 90 days after the
change in control of the Company. For further disclosure relating to these
employment agreements, see Annex II.
Compensation to Directors. The Company has agreed to pay Cecil D. Andrus an
annual retainer of $35,000 for his services as a non-employee director of the
Company during his current two-year term, which term ends in fiscal 1997.
Pursuant to the Merger Agreement, Governor Andrus has agreed to resign as a
director of the Company effective as of the Effective Date. The Company will
honor its agreement with Governor Andrus by the payment of the unpaid balance
of his retainer for the full two year term on or prior to the Effective Date.
No other director receives compensation for services as a director, but all
directors are reimbursed for travel and other expenses directly related to
their activities as directors. The Company also has a Company Non-Employee
Director Stock Option Plan, of which Governor Andrus is the sole participant.
See Annex II.
Confidentiality Agreement. The Parent and the Company entered into a
Confidentiality Agreement, dated as of February 1, 1995 (the "Confidentiality
Agreement"), pursuant to which the Parent and its Representatives (as defined
in the Confidentiality Agreement) agreed to keep confidential certain business
and/or technical information of the Company to be furnished to them in
connection with the evaluation of a possible business combination or other
transaction. The Confidentiality Agreement also provides, among other things,
that, without the prior written consent of the Company, for a period of one
year neither the Parent nor its affiliates or agents will attempt to employ
any person who is at the time an employee of the Company.
In addition, the Confidentiality Agreement provides that, for a period of
eighteen months, neither the Purchaser nor its affiliates will (or will assist
or encourage others to), without the prior written consent of the Company, (i)
acquire or agree to acquire, offer, seek or propose to acquire, or cause to be
acquired, ownership of any of the Company's assets or business or any voting
or debt securities or preferred stock issued by the Company or any rights or
options to acquire such ownership; (ii) seek or propose to influence or
control management or policies of the Company or to obtain representation on
the Company's Board of Directors, solicit or participate in the solicitation
of any proxies or consents with respect to any securities of the Company or
make any public announcement with respect to any of the foregoing; (iii) seek
to negotiate or influence the terms and conditions of employment of employees
of the Company; or (iv) enter into any discussions, negotiations, arrangements
or understandings with any third parties with respect to any of the foregoing.
Irrevocable Proxies. WPG Corporate Development Associates III (Overseas),
Ltd., Weiss, Peck & Greer Venture Associates, L.P. Liquidating Trust U/T/A
dated December 30, 1994, WPG Corporate Development Associates III, L.P. and
WPG Corporate Development Associates II, L.P. Liquidating Trust, U/T/A dated
December 31, 1993 (the "Committing Stockholders" or the "WPG Affiliates") have
agreed to tender the 4,614,281 Shares owned by them in the Offer and have
appointed employees of the Parent as proxies and attorneys-in-fact (with full
power of substitution) (i) to call a special meeting of stockholders of the
Company to consider the Merger and (ii) to vote (or, at their discretion,
execute a written consent with respect to) with or without the other, all the
voting securities of the Company owned by them ("Covered Shares") (A) in favor
of the Merger and adoption of the Merger Agreement and (B) against any
business combination proposal or other matter that may interfere or be
inconsistent with the Merger or the Merger Agreement (including, without
limitation, any Acquisition Proposal (as defined above in Item 3(b)(2) under
"No Solicitation")), at any meeting of stockholders of the Company (or consent
in lieu thereof) and any adjournment or adjournments thereof. The Committing
Stockholders have agreed not to sell or otherwise transfer or dispose of any
of the Covered Shares unless the following conditions are met: (i) prior
written notice of the Irrevocable Proxies is given to the transferee and the
transferee agrees that the shares transferred will remain subject to the
Irrevocable Proxies and, in connection therewith, executes and delivers to the
Parent a proxy covering such shares in form and substance satisfactory to the
Parent, which proxy shall be in substantially the form of the Irrevocable
Proxies or (ii) the transfer is to the Parent or its designee pursuant to the
Offer. The Irrevocable Proxies will terminate
9
<PAGE>
automatically on the earliest to occur of (i) the Effective Date, (ii)
termination of the Merger Agreement pursuant to Section 9.1 thereof (including
a termination by the Company upon a determination by its Board of Directors
that it has a duty in the proper discharge of its fiduciary responsibilities
to accept, recommend or take no position with respect to an Acquisition
Proposal) or (iii) amendment of the Merger Agreement with respect to the Offer
Price to be received upon consummation of the Merger or the Offer. Peter B.
Pfister and Wesley W. Lang are currently directors of the Company and are also
principals of Weiss, Peck & Greer, L.L.C. See "Compensation Committee
Interlocks and Insider Participation" in the Information Statement attached
hereto as Annex II.
Directors' and Officers' Indemnification. Pursuant to the Merger Agreement,
the Company must indemnify and hold harmless, and after the Effective Date,
the Parent and the Surviving Corporation must indemnify and hold harmless,
each present employee, agent, director or officer of the Company and the
Company's subsidiaries (the "Indemnified Parties") (a) with respect to any
losses, claims, damages, liabilities, costs and expenses, including reasonable
attorneys' and expert witness fees, arising out of or pertaining to any action
or omission occurring prior to the Effective Date (including any which arise
out of or pertain to the transactions contemplated by the Merger Agreement)
and (b) as provided in their respective charters or by-laws in effect at the
date hereof (to the extent consistent with applicable law), which provisions
will survive the Merger and will continue in full force and effect for a
period of not less than five years from the Effective Date. In the event any
claim or claims (a "Claim or Claims") are asserted or made pursuant to the
preceding sentence within such five-year period, all rights to indemnification
in respect of any such Claim or Claims shall continue until disposition of any
and all such Claims. In the event that a claim is asserted against any
Indemnified Party with respect to any matter to which the indemnities
contained in this section relate, the Indemnified Party shall give prompt
written notice to the Surviving Corporation setting forth in reasonable detail
the basis for such claim for indemnification. The Surviving Corporation has
the right, at its election, to take over the defense or settlement of such
claim at its own expense by giving prompt notice to that effect to the
Indemnified Party. If the Surviving Corporation has assumed the defense of any
Claim, the Surviving Corporation is authorized to consent to a settlement of,
or the entry of any judgment arising from, any such Claim, without the prior
written consent of the Indemnified Party; provided, however, that a condition
to any such settlement will be a complete release of the Indemnified Party
with respect to such Claim. If the Surviving Corporation does not, within
thirty days after receipt of the Indemnified Party's notice of Claim, (x) give
such notice to take over the defense of such Claim and proceed to defend the
Claim or (y) object to such Claim in writing to the Indemnified Party, then
the Indemnified Party will have the right to undertake the defense of such
Claim and the Surviving Corporation will pay to the Indemnified Party the
reasonable fees and expenses of its counsel. The Surviving Corporation will
not be liable for any settlement effected without its consent, which consent
will not be unreasonably withheld. The Indemnified Party will at all times
have the right, at its option and expense, to participate fully in, but not to
control, any such defense. Without limiting the foregoing, the Company and,
after the Effective Date, the Surviving Corporation, to the extent permitted
by applicable law, will periodically advance reasonable expenses as incurred
with respect to the foregoing to the fullest extent permitted under applicable
law provided the person to whom the expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification. In the event that within five years
from the Effective Date the Surviving Corporation consolidates or merges with
or into any other person or transfers all or substantially all of its assets
to any person and such person surviving such consolidation or merger or to
which such assets have been transferred is not a Delaware corporation, the
Surviving Corporation will enter into an agreement pursuant to which such
person must agree to provide indemnification substantially equivalent to that
required of the Company hereunder.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
A. RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of Directors has unanimously approved the Merger Agreement and the
transactions contemplated thereby and determined that each of the Offer and
the Merger is fair to and in the best interests of the stockholders of the
Company. The Board of Directors recommends that all holders of Shares accept
the Offer and tender their Shares pursuant to the Offer.
10
<PAGE>
B. BACKGROUND; REASONS FOR THE RECOMMENDATION.
In the Spring of 1994, following the completion of the recapitalization of
the Company in November 1993 and with fertilizer prices and demand steadily
improving, the Board of Directors of the Company began exploring alternatives
to enhance long-term stockholder value. On November 14, 1994, the Board of
Directors held a meeting, at which representatives of Kidder, Peabody & Co.
Incorporated ("Kidder, Peabody") were present, to discuss such alternatives,
including strategic relationships with other fertilizer producers, the sale or
merger of the Company, the formation of a joint venture or the continuation of
the Company as a stand-alone entity. The Board of Directors of the Company,
with the assistance of representatives of Kidder, Peabody, discussed the
possible process and timing for contacting potential acquirors.
In December 1994, following the announcement of the sale of certain assets
of Kidder, Peabody and its affiliates to the parent company of PaineWebber
Incorporated ("PaineWebber"), the Board of Directors of the Company informed
PaineWebber that it intended to engage PaineWebber as its exclusive financial
advisor. PaineWebber was so engaged by letter agreement dated as of January
11, 1995.
From mid-December 1994 through March 1995, pursuant to authorizations by the
Company, representatives of PaineWebber contacted twelve parties (including
the Parent) with respect to a possible business combination with the Company.
In mid-December 1994, representatives of the Parent received a telephone
call from representatives of PaineWebber, acting on behalf of the Company,
inquiring whether the Parent would have an interest in some form of business
combination with the Company. Later that month, the Parent was provided with
certain non-confidential information on the Company. In January 1995,
representatives of the Parent and PaineWebber had several telephone
discussions concerning the Parent's interest in potentially acquiring the
Company. The Parent and the Company entered into the Confidentiality Agreement
effective February 1, 1995. See "Other Arrangements" above.
On February 21, 1995, representatives of the Parent met in Denver with
representatives of the Company and PaineWebber and received a formal
presentation from senior management of the Company with respect to the
Company.
On March 7, 1995, the Company publicly announced its decision to explore
alternatives to enhance long-term stockholder value, as well as the engagement
of PaineWebber as its exclusive financial advisor. Following this public
announcement, PaineWebber received nine unsolicited inquiries regarding the
Company. None of such inquiries resulted in due diligence reviews or
negotiations following the initial inquiry.
Throughout the period from mid-February through May, the Company provided
detailed information to the Parent and the Parent conducted its assessment and
valuation of the Company. The Board of Directors of the Parent was apprised of
the potential acquisition at its regularly scheduled meeting on May 10, 1995.
A plant and mine tour of the Company's facilities was attended by
representatives of the Parent on May 23, 1995. Four other potential acquirors
of the Company, who had also executed confidentiality agreements to facilitate
further exploration of a possible acquisition of the Company, attended
separate presentations by senior management of the Company. Three of such
potential purchasers also attended separate plant and mine tours.
In late May 1995, following these further due diligence investigations,
three of the remaining four parties (including the Parent) continued to pursue
the possible acquisition of the Company. Pursuant to the Board of Directors'
instructions, PaineWebber invited these three potential acquirors (including
the Parent) to submit, on or before June 12, 1995, written proposals with
respect to the possible acquisition of the Company.
On May 31, 1995, the Parent submitted an acquisition proposal to the Company
conditioned upon, among other things, a commitment from WPG Affiliates to
support the transaction. By its terms, the proposal required acceptance by the
Company by the close of business on June 2, 1995 and would have prohibited
further negotiations with third parties for a period of time. On June 2, 1995,
the Executive Committee of the Board of Directors of the Company reviewed the
Parent's offer and concluded that the proposal did not justify termination of
the process of soliciting offers from the other interested parties and that
any discussions regarding a commitment from the WPG Affiliates should be held
directly with such WPG Affiliates. Following the June 2 meeting, PaineWebber
informed the Parent of the decision of the Executive Committee of the Board of
Directors and encouraged the Parent to submit a revised proposal.
11
<PAGE>
On June 12, 1995, the Company received a revised proposal from the Parent.
After reviewing this proposal and a proposal from one other party, the Company
concluded that they were both unacceptable, because of inadequacy of price
and/or omissions of certain material terms, among other reasons. Accordingly,
PaineWebber was instructed to continue to solicit proposals for the Company
and to review other alternatives available to the Company to increase
stockholder liquidity, including a secondary offering.
On June 28, 1995, a representative of the Parent met with PaineWebber in New
York to evaluate whether there was any basis for continued discussions between
the parties.
On July 5, 1995, a special meeting of the Executive Committee of the Board
of Directors of the Parent was held to review the proposed acquisition and
consider the various financial, strategic and legal matters as well as the
status of negotiations.
Following that meeting, on July 6, 1995, the Parent submitted a further
proposal to the Company. Also in early July, the Company received a revised
proposal from the other interested party. On July 12, 1995, PaineWebber,
pursuant to instructions from the Company, advised the Parent that its
proposal was not the most attractive alternative available to the Company and
its stockholders, and the Parent was given an opportunity to present its best
and final proposal. On July 14, 1995 the Parent submitted a revised proposal
to acquire the Company pursuant to a one-step merger transaction at $10.55 per
Share in cash. Also on July 14, 1995, the other potential acquiror submitted a
revised proposal.
On July 17, 1995, the Board of Directors held a meeting, at which
representatives of PaineWebber were present, to review and compare the terms
of the two pending proposals. At this meeting, the Board of Directors
determined that the Parent's proposal appeared to represent the best
alternative available to the Company and its stockholders, authorized
PaineWebber to conduct discussions with representatives of the Parent in order
to clarify certain terms of the Parent's proposal and, subject to obtaining
such clarification, authorized an exclusive period for discussion with the
Parent to permit the Parent to complete due diligence with respect to the
Company and to negotiate a definitive agreement for the sale of the Company.
On July 20, 1995, the other party submitted a further revised proposal,
which the Company believed was substantially similar to such party's July 14,
1995 proposal. On July 24, 1995, the Company agreed to an exclusive period
with the Parent, expiring on August 9, 1995, previously authorized by the
Board of Directors of the Company.
From July 24 through August 8, 1995, representatives of the Company and the
Parent held numerous meetings in which the terms of the Merger Agreement were
negotiated and due diligence was conducted. Separately, the Parent and
representatives of the WPG Affiliates negotiated the terms of the Irrevocable
Proxies pursuant to which the WPG Affiliates would support the transaction,
subject to the right of the WPG Affiliates to terminate such support if the
Company terminated the transaction with the Parent. As a result of further
discussion regarding the Parent's due diligence review and the price and
structure of the transaction, the Parent and the Company agreed to reduce the
consideration to be paid in the acquisition transaction from $10.55 to $10.50
per share. In addition, the Company and the Parent agreed to alter the
structure of the proposed acquisition from a one-step merger transaction to a
two-step transaction involving a tender offer followed by a merger. The
Company preferred the tender offer structure, which it believed would result
in a higher present value to holders of Shares because of the earlier receipt
of consideration for tendered Shares than would be expected in the one-step
merger transaction.
On the evening of August 8, 1995, the Board of Directors of the Company met
to consider the final terms of the Merger Agreement. At this meeting,
PaineWebber delivered its opinion to the Board of Directors to the effect
that, as of such date, the $10.50 cash consideration proposed to be received
by the holders of the Shares pursuant to the Offer and the Merger was fair,
from a financial point of view, to such holders (other than stockholders that
are affiliates of Weiss, Peck & Greer, L.L.C.). At this meeting, the Board of
Directors of the Company unanimously approved and adopted the Merger Agreement
and resolved to recommend the Offer and the Merger to the Company's
stockholders. See "Reasons for the Recommendation."
On August 9, 1995, the respective Boards of Directors of the Parent and the
Purchaser met, considered and each unanimously approved and adopted the Merger
Agreement. The Parent, the Purchaser and the Company
12
<PAGE>
executed the Merger Agreement in the evening of August 9, 1995 and issued a
joint press release announcing the transactions at 7:00 A.M. EDT on August 10,
1995. At the time of the execution of the Merger Agreement, the Irrevocable
Proxies were executed in favor of the Purchaser by the parties thereto.
REASONS FOR THE TRANSACTION; FACTORS CONSIDERED BY THE BOARD. In light of
the Board of Directors' review of the Company's competitive position, the
Company's financial history and current status, past and anticipated events in
the fertilizer industry and the prospects for the Company as an independent
entity, the Board of Directors determined that it would be in the best
interests of the stockholders to approve the Merger Agreement.
In approving the Merger Agreement and the transactions contemplated thereby
and recommending that all holders of Shares tender them pursuant to the Offer,
the Board of Directors considered a number of factors including:
(i) the opportunity to sell the Company at a time when the industry is
experiencing its first period of strong fertilizer prices since 1989 at a
price that reflects such strength, and the possibility that such strength
will not be sustained;
(ii) the recent trend toward consolidation among fertilizer producers;
(iii) the risks to the Company and its stockholders of remaining
independent in view of the Company's highly leveraged position, the
volatile and cyclical nature of the fertilizer industry, the Company's
dependence on a single type of fertilizer produced at a single facility,
the Company's future capital needs, the Company's ability to compete in an
increasingly global marketplace and the past and potential future effects
on the Company of market downturns caused by weather, changes in government
farm policies, political instability and other political considerations in
foreign countries, supply and demand imbalances, currency fluctuations,
changes in planted acreage, raw material costs and other uncontrollable and
unpredictable forces;
(iv) the presentation and opinion of PaineWebber at the August 8, 1995
meeting of the Board of Directors to the effect that, as of such date, the
$10.50 cash consideration proposed to be received by the holders of the
Company's Shares pursuant to the Offer and in the Merger was fair, from a
financial point of view, to such holders (other than stockholders that are
affiliates of Weiss, Peck & Greer, L.L.C.). A copy of the written opinion
of PaineWebber, which sets forth the procedures followed, matters
considered, assumptions made and limitations of the review undertaken by
PaineWebber, is attached hereto as Annex I. STOCKHOLDERS ARE URGED TO READ
THE OPINION CAREFULLY IN ITS ENTIRETY;
(v) the favorable price available to the Company's stockholders under the
Merger Agreement compared to selling prices in other recent sale
transactions in the fertilizer industry as measured by multiples of
earnings and revenues;
(vi) the historical market prices for the Voting Common Stock, including
the fact that, although the proposed purchase price for the Voting Common
Stock is less than recent Nasdaq National Market closing prices for the
Voting Common Stock, such purchase price is in excess of the historical
average trading prices of the Voting Common Stock over various periods
preceding the announcement of the engagement of PaineWebber by the Company;
(vii) the lack of liquidity in the market for the Voting Common Stock and
the adverse consequences thereof for the Company and its stockholders;
(viii) the stated intention of holders of 49.2% of the Shares (on a fully
diluted basis) to tender into the Offer;
(ix) the terms of the Merger Agreement, the Offer and the transactions
contemplated thereby, including, among others, the right of the Company's
Board of Directors to accept a proposal from another party and terminate
the Offer and Merger Agreement, provided that the Parent would be entitled
to a fee of $4.0 million in such event;
(x) the availability of dissenters' rights of appraisal in the Merger;
(xi) the financial strength of the Parent and the absence of any
financing condition in the Offer; and
(xii) the anticipated benefits of the Merger on the Company's employees
and the community in which the Company operates.
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<PAGE>
The Board of Directors did not assign relative weights to the above factors
or determine that any factor was of specific importance relative to any other
factor. Rather, the Board of Directors viewed its position and recommendations
as being based on the totality of the information presented to and considered
by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
PaineWebber has been retained by the Company to act as its exclusive
financial advisor with respect to the Offer, the Merger and matters arising in
connection therewith. Pursuant to a letter agreement dated January 11, 1995
between the Company and PaineWebber, the Company, as compensation for the
services of PaineWebber (i) paid PaineWebber $100,000 on April 3, 1995, (ii)
has agreed to pay PaineWebber a fee of $325,000 payable upon delivery of the
fairness opinion and (iii) has agreed to pay an additional fee, less any fees
paid pursuant to clauses (i) and (ii) above, based upon the aggregate value
paid or otherwise assumed in connection with the Offer and the Merger. As of
August 15, 1995, the additional fee is estimated to be approximately
$1,500,000. The Company has also agreed to reimburse PaineWebber for its
reasonable out-of-pocket expenses, including the reasonable fees and expenses
of its counsel, in an amount not to exceed $75,000, and to indemnify
PaineWebber against certain liabilities, including liabilities arising under
federal securities laws.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) No transactions in the Shares have been effected during the past 60 days
by the Company or, to the Company's knowledge, by any executive officer,
director, affiliate or subsidiary of the Company.
(b) Although the Company does not know of any commitments to tender Shares
in the Offer other than as described herein, the Company expects that, to the
extent permitted by applicable securities laws, rules or regulations, all of
the Company's directors, executive officers, affiliates and subsidiaries who
own Shares presently intend to tender such Shares to the Purchaser pursuant to
the Offer. See Item 3 for information concerning the Irrevocable Proxies to
the Purchaser by the Committing Stockholders, pursuant to which the Shares
covered thereby would be tendered pursuant to the Offer or, if not so
tendered, voted in favor of the Merger.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth herein, the Company is not engaged in any
negotiation in response to the Offer or Merger which relates to or would
result in (i) an extraordinary transaction such as a merger or reorganization,
involving the Company or any subsidiary of the Company; (ii) a purchase, sale
or transfer of a material amount of assets by the Company or any subsidiary of
the Company; (iii) a tender offer for or other acquisition of securities by or
of the Company; or (iv) any material change in the present organization or
dividend policy of the Company.
(b) Except as set forth herein, there are no transactions, Board of
Directors' resolutions, agreements in principle or signed contracts in
response to the Offer or the Merger that relate to or would result in one or
more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Certain Litigation Relating to the Offer. Since the commencement of the
Offer, three class action complaints have been filed in the Delaware Chancery
Court on behalf of all persons who own Shares against the Company and certain
of its directors. In the suits, filed as Civil Action Nos. 11468, 11469 and
14477, respectively, the plaintiffs have alleged, among other things, that the
defendants have breached their fiduciary duties to holders of the Shares by,
among other things, entering into an agreement with the Purchaser and failing
to attempt to maximize shareholder value. Each suit seeks various remedies,
including an injunction to prevent consummation of the transaction, and
damages, costs and disbursements of the action.
14
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
Exhibit 1 Agreement and Plan of Merger, dated as of August 9, 1995, by and
among Nu-West Industries, Inc., Agrium Inc. and Agrium Acquisition
Corporation.
Joint Press Release issued by Nu-West Industries, Inc. and Agrium
Exhibit 2 Inc.
Opinion of PaineWebber Incorporated, dated August 8, 1995. Filed
Exhibit 3 herewith as Annex I.
Exhibit 4 Irrevocable Proxies, dated August 9, 1995, from WPG Corporate
Development Associates III (Overseas), Ltd., Weiss, Peck & Greer
Venture Associates, L.P. Liquidating Trust, U/T/A dated December 30,
1994, WPG Corporate Development Associates III, L.P. and WPG
Corporate Development Associates II, L.P. Liquidating Trust, U/T/A
dated December 31, 1993.
Exhibit 5 Letter to Stockholders of Nu-West Industries, Inc. dated August 16,
1995.
</TABLE>
15
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Nu-West Industries, Inc.
/s/ Steven W. Gampp
By___________________________________
Name: Steven W. Gampp
Title: Vice President, Secretary
and Treasurer
Dated: August 16, 1995.
16
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ANNEX I
INVESTMENT BANKING DIVISION
PaineWebber Incorporated
1285 Avenue of the Americas
New York, NY 10019
212 713-2000
PAINEWEBBER
August 8, 1995
Board of Directors
Nu-West Industries, Inc.
3010 Conda Road
Soda Springs, ID 83276
Gentlemen:
Nu-West Industries, Inc. (the "Company") proposes to enter into an Agreement
and Plan of Merger (the "Agreement") with Agrium Inc. ("Agrium") and Agrium
Acquisition Corporation, a wholly owned indirect subsidiary of Agrium
("Acquisition"). Pursuant to the Agreement: (i) Acquisition will make a tender
offer (the "Offer") for all of the outstanding shares of voting and non-voting
common stock, par value $.01 per share ("Common Stock") of the Company at
$10.50 per share in cash (the "Consideration") and (ii) following completion
of the Offer, each issued and outstanding share of Common Stock (other than
shares owned by Agrium, Acquisition or any direct or indirect subsidiary of
Agrium and shares held by parties perfecting dissenters' rights) will be
converted in a merger (the "merger" and, together with the Offer, the
"Transaction") solely into the right to receive the Consideration.
You have asked us whether or not, in our opinion, the Consideration to be
received in the Transaction by the holders of the Common Stock is fair, from a
financial point of view, to such holders (other than holders that are
affiliates of Weiss, Peck & Greer).
In arriving at the opinion set forth below, we have among other things:
(1) Reviewed, among other public information, the Company's Annual Reports,
Forms 10-K and related financial information for the five fiscal years
ended June 30, 1994 and the Company's Form 10-Q and the related
unaudited financial information for the nine months ended March 31,
1995;
(2) Reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets and prospects of the
Company furnished to us by the Company;
(3) Conducted discussions with members of senior management of the Company
concerning its businesses and prospects;
(4) Reviewed the historical market prices and trading activity for the
voting Common Stock and compared such price and trading history with
that of certain other publicly traded companies which we deemed
relevant;
(5) Compared the financial position and operating results of the Company
with those of certain other publicly traded companies which we deemed
relevant;
(6) Reviewed the proposed financial terms of the Transaction and compared
such terms with the financial terms of certain other business
combinations which we deemed relevant;
(7) Reviewed a draft of the Agreement in the form presented to the Board of
Directors of the Company;
(8) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed appropriate, including our assessment of general economic,
market and monetary considerations.
I-1
<PAGE>
In preparing our opinion, we have relied on the accuracy and completeness of
all information that was publicly available or supplied or otherwise
communicated to us by the Company and we have not independently verified such
information. We have assumed that the financial forecasts examined by us were
reasonably prepared on bases reflecting the best currently available estimates
and good faith judgments of the management of the Company as to the future
performance of the Company. We have not undertaken, and have not been provided
with, an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Company and have assumed that all material
liabilities (contingent or otherwise, known or unknown) of the Company are as
set forth in the Company's consolidated financial statements. In connection
with our engagement, we were requested to and did solicit third party
indications of interest in acquiring the Company. Our opinion is based upon
the regulatory, economic, monetary and market conditions existing on the date
hereof.
Our opinion is directed to the Board of Directors of the Company and does
not constitute a recommendation to any holder of Common Stock as to whether or
not such holder should tender his or her shares pursuant to the Offer or
approve the Merger. This opinion does not address the relative merits of the
Transaction and any other potential transactions or business strategies
discussed by the Board of Directors of the Company.
This opinion has been prepared solely for the use of the Board of Directors
of the Company and shall not be reproduced, summarized, described or referred
to or given to any other person or otherwise made public without the prior
written consent of PaineWebber Incorporated; provided, however, that this
letter may be reproduced in full in the Schedule 14D-9 relating to the Offer.
PaineWebber Incorporated is currently acting as financial advisor to the
Company in connection with the Transaction and will receive a fee upon
delivery of this opinion and upon consummation of the Offer. We may provide
financial advisory or other investment banking services to Weiss, Peck & Greer
or its affiliates in the future.
In the ordinary course of our business, we may actively trade the securities
of the Company and Agrium for our own account and for the accounts of our
customers and, accordingly, may at any time hold long or short positions in
such securities.
On the basis of and subject to the foregoing, we are of the opinion that, as
of the date hereof, the Consideration to be received in the Transaction by the
holders of Common Stock is fair, from a financial point of view, to such
holders (other than shareholders that are affiliates of Weiss, Peck & Greer).
Very truly yours,
PAINEWEBBER INCORPORATED
I-2
<PAGE>
ANNEX II
NU-WEST INDUSTRIES, INC.
---------------
INFORMATION STATEMENT
---------------
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND
RULE 14F-1 THEREUNDER
---------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND YOU ARE REQUESTED
NOT TO SEND THE COMPANY A PROXY.
This Information Statement is being mailed on or about August 16, 1995 to
holders of shares of voting common stock, $.01 par value (the "Voting
Shares"), and non-voting common stock, $.01 par value (the "Non Voting
Shares," and collectively with the Voting Shares, the "Common Stock" or the
"Shares"), of Nu-West Industries, Inc., a Delaware corporation (the
"Company"). This Information Statement is being furnished in connection with
the possible designation by Agrium Acquisition Corporation (the "Purchaser"),
a Delaware corporation and a wholly owned subsidiary of Agrium U.S. Inc., a
Colorado corporation ("Agrium U.S."), a wholly owned subsidiary of Agrium
Inc., a Canadian corporation (the "Parent"), pursuant to an Agreement and Plan
of Merger dated as of August 9, 1995, by and among the Company, the Purchaser
and the Parent (the "Merger Agreement"), of certain persons (the "Purchaser
Designees") to be elected to the Board of Directors of the Company (the
"Board") by means other than through a meeting of the Company's stockholders.
Pursuant to the Merger Agreement, the Purchaser has commenced a tender offer
(the "Offer") disclosed in the Tender Offer Statement on Schedule 14D-1 dated
August 16, 1995. The terms and conditions of the Offer are set forth in the
Offer to Purchase dated August 16, 1995 (the "Offer to Purchase") and related
Letter of Transmittal, which are being mailed by the Purchaser to the holders
of the Shares concurrently herewith. The Offer is subject to certain
conditions, which are summarized in the Offer to Purchase, including the
condition that there be a sufficient number of Shares properly tendered and
not withdrawn that, when added together with any Shares owned by Parent and
any of its subsidiaries and any Shares that the Parent and the Purchaser have
the right to acquire, will equal at least 60% of the Shares on a fully-diluted
basis. The Merger Agreement also provides, among other things, for the merger
(the "Merger") of the Purchaser into the Company, with the Company surviving
as a wholly owned subsidiary of Agrium U.S., as more fully described in the
Offer to Purchase and in the Company's Solicitation/Recommendation Statement
on Schedule 14D-9 (the "Schedule 14D-9") to which this Annex II is attached.
Upon acquisition of Shares pursuant to the Offer that, when added together
with Shares owned by the Parent or any of its direct or indirect subsidiaries,
equal at least a majority of the then outstanding Voting Shares, the Parent
will be entitled to designate a number of individuals representing a majority
of the Board to be elected to the Board without action by the holders of the
Voting Shares. The Merger Agreement requires the Company to fill any vacancies
on the Board and increase the size of the Board to enable the Purchaser
Designees to be elected to the Board. The election of the Purchaser Designees
to the Board would result in a change in control of the Company.
No action is required by the holders of the Shares in connection with the
election of the Purchaser Designees to the Company's Board of Directors.
However, Section 14(f) of the Securities Exchange Act of 1934, as amended,
requires the mailing to the holders of the Shares of the information set forth
in this Information Statement prior to a change in a majority of the Company's
directors otherwise than at a meeting of the Company's stockholders.
IF THE PURCHASER DOES NOT ACQUIRE ANY SHARES PURSUANT TO THE OFFER, OR
TERMINATES THE OFFER, OR IF THE MERGER AGREEMENT IS TERMINATED PURSUANT TO ITS
TERMS BY THE PARENT, THE PURCHASER OR THE COMPANY PRIOR TO THE ELECTION OF THE
PURCHASER DESIGNEES, THE PURCHASER WILL NOT HAVE ANY RIGHT UNDER THE MERGER
AGREEMENT TO HAVE THE PURCHASER DESIGNEES ELECTED TO THE COMPANY'S BOARD OF
DIRECTORS.
The information contained in this Information Statement concerning the
Parent, the Purchaser, Agrium U.S. and the Purchaser Designees has been
furnished to the Company by the Parent, the Purchaser and Agrium U.S. The
Company assumes no responsibility for the accuracy or completeness of such
information. The principal executive offices of the Parent, the Purchaser and
Agrium U.S. are located at Suite 426, 10333 Southport Road S.W., Calgary,
Alberta, Canada T2W 3X6.
II-1
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
GENERAL
The Company's Restated Certificate of Incorporation provides for a Board of
Directors composed of not less than six nor more than nine persons. The Board
is divided into three classes, with each class consisting, as nearly as
possible, of one-third of the number of directors constituting the Board. Each
class of directors serves three year staggered terms, which expire at the
Annual Meetings during the fiscal years specified in the table below. The size
of the Board is presently five, with one vacancy in Class III Directors.
CURRENT DIRECTORS OF THE COMPANY
The following table sets forth certain information with respect to the
current directors of the Company. There are no family relationships among any
of the directors and executive officers of the Company.
<TABLE>
<CAPTION>
DIRECTOR TERM WILL POSITIONS WITH THE COMPANY AND BUSINESS
NAME AND AGE SINCE EXPIRE EXPERIENCE DURING THE PAST FIVE YEARS
------------ -------- --------- ---------------------------------------
<S> <C> <C> <C>
Craig D. Harlen, 46 .... 1987 1995 Mr. Harlen is the Chairman of the Board of
Directors, President and Chief Executive Officer
of the Company. Mr. Harlen joined the Company in
1987 as a Director and Senior Vice President and
General Manager of the Company's manufacturing
operations located near Soda Springs, Idaho (the
"Conda Plant"). Mr. Harlen was appointed President
and Chief Executive Officer of the Company in June
1989 and has served as Chairman of the Board since
1994. From 1975 through 1987, Mr. Harlen held
various positions with Beker Industries Corp.
("Beker"), including General Manager of its
western phosphate operations for more than five
years. Mr. Harlen is a member of the Executive
Committee of the Board.
Wesley W. Lang, 38 ..... 1988 1996 Mr. Lang is a Director of the Company. Mr. Lang is
a principal of Weiss, Peck & Greer, L.L.C.
("WPG"), an investment management firm, which he
joined in 1985. Mr. Lang became a Director of the
Company in May 1988. Mr. Lang is also a director
of Durakon Industries, Inc. Mr. Lang is a member
of the Audit, Executive and Compensation
Committees of the Board.
Mark R. Sanders, 45 .... 1991 1996 Mr. Sanders is a Director, Senior Vice President
and Chief Financial Officer of the Company. Mr.
Sanders joined the Company in 1987 as Controller
for the Conda Plant, and was appointed Senior Vice
President and Chief Financial Officer of the
Company in June 1989. Mr. Sanders became a
Director of the Company in 1991. From April 1981
through June 1987, Mr. Sanders served as Plant
Controller for Beker's western phosphate
operations.
Peter B. Pfister, 35 ... 1994 1997 Mr. Pfister is a Director of the Company. Mr.
Pfister is a principal of WPG, which he joined in
1987. Prior to his association with WPG, Mr.
Pfister was with Manufacturers Hanover Trust
Company where he specialized in acquisition
financing. Mr. Pfister became a Director of the
Company in February 1994. Mr. Pfister is also a
director of Empire of Carolina, Inc. Mr. Pfister
is a member of the Audit, Executive and
Compensation Committees of the Board.
Cecil D. Andrus, 63 .... 1995 1997 Governor Andrus is a Director of the Company.
Governor Andrus was elected governor of Idaho four
times--in 1970, 1974, 1986 and 1990. He served as
Secretary of the Interior in the Carter
Administration from 1977 to 1981. Governor Andrus
became a Director of the Company in January 1995,
and is a member of the Compensation Committee of
the Board.
</TABLE>
II-2
<PAGE>
INFORMATION REGARDING DIRECTORS AND COMMITTEES
During the twelve months ended June 30, 1995, the Company's Board of
Directors held five meetings by conference call or in person and took two
actions by written consent. All directors who were directors at the time of
such meetings attended each of the meetings of the Board of Directors. The
Board of Directors of the Company has established an Audit Committee, an
Executive Committee and a Compensation Committee. There is no standing
Nominating Committee to the Board of Directors of the Company.
Audit Committee. The Audit Committee has the responsibility of making
recommendations to the Board concerning the engagement of the Company's
independent auditors, consulting with the auditors with regard to the results
of the audit and the audit report, and conferring with the auditors with
regard to the adequacy of internal accounting controls. During fiscal 1995,
the Audit Committee was comprised of Messrs. Lang and Pfister, who are non-
employee Directors of the Company. The Audit Committee met once in fiscal
1995, and each member of the Audit Committee attended such meeting.
Executive Committee. The Executive Committee is authorized to act on most
matters to be decided by the Board, with certain specific exceptions required
by Delaware law. During fiscal 1995, the Executive Committee was comprised of
Messrs. Harlen, Lang and Pfister. The Executive Committee met once in fiscal
1995, and each member of the Executive Committee attended such meeting.
Compensation Committee. The Compensation Committee is authorized to
determine the compensation and benefits to be paid to the Chief Executive
Officer and, upon recommendation by the Chief Executive Officer, the other
executive officers of the Company. The Compensation Committee also administers
the Company's employee stock option plans. See "Executive Compensation--Stock
Incentive Plans." The Compensation Committee was comprised of Messrs. Lang and
Pfister and Governor Andrus, who are non-employee Directors of the Company. In
fiscal 1995, the Compensation Committee met once, and each member of the
Compensation Committee who was a member of the Compensation Committee at the
time of such meeting attended such meeting.
EXECUTIVE OFFICERS OF THE COMPANY
The following individuals currently serve as executive officers of the
Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Craig D. Harlen................ 46 Chairman of the Board of Directors,
President and Chief Executive Officer
H. Alan Dahlbach............... 50 Executive Vice President
Mark R. Sanders................ 46 Director, Senior Vice President and Chief
Financial Officer
Steven W. Gampp................ 43 Vice President, Secretary and Treasurer
Larry C. Dearing............... 52 Vice President--Regional Sales
John D. Yokley................. 54 Vice President--National Sales
Don G. LaRue................... 43 Vice President--Operations
Helen K. Smith................. 44 Controller and Assistant Secretary
</TABLE>
Biographical information regarding Mr. Harlen and Mr. Sanders is set forth
under the heading "Current Directors of the Company."
II-3
<PAGE>
Mr. Dahlbach joined the Company in September 1988 and is responsible for
overseeing all of the Company's sales and marketing activities. From 1972 to
1986, Mr. Dahlbach held various positions with Gardinier, Inc., a major
phosphate fertilizer mining and manufacturing firm based in Tampa, Florida.
From March 1986 to September 1988, he was self-employed and engaged in a
variety of private business ventures.
Mr. Gampp joined the Company in February 1989 as Corporate Treasurer and was
appointed Vice President, Secretary and Treasurer in June 1989. From 1983
until 1989, Mr. Gampp held various financial executive positions with Quinoco
Petroleum, Inc., an oil and gas syndication, exploration and production
company based in Denver, Colorado.
Mr. Dearing joined the Company in July 1987, and is responsible for the
regional sales activities of the Company. From 1978 to June 1986, Mr. Dearing
held various positions at Beker, including Senior Vice President--Marketing.
From November 1986 to June 1987, he was the Chief Executive Officer of an
employee benefits consulting firm.
Mr. Yokley joined the Company in August 1989, and is responsible for
national account sales and raw materials procurement. From 1981 to September
1988, Mr. Yokley was Executive Vice President of Chemex, Inc., a commodities
trading firm. From September 1988 to August 1989, he directed the marketing
operations of Chemtran, a fertilizer joint venture with the Pillsbury Company.
Mr. LaRue joined the Company in July 1987 as Production Manager for the
Conda Plant and, in July 1989, was appointed the General Manager of those
operations. In February 1994, Mr. LaRue was appointed Vice President--
Operations for the Company. From August 1986 through June 1987, he was
Production Manager for Beker's western phosphate operations.
Mrs. Smith joined the Company in August 1987 as General Accounting Manager,
was appointed the Corporate Controller in July 1989, and assumed her current
position in November 1991. Prior to her employment with the Company, Mrs.
Smith was a Senior Accountant with Peat Marwick & Main.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers to file with the Securities and Exchange
Commission (the "Commission") and The National Association of Securities
Dealers initial reports of ownership and reports of changes in ownership of
the Company's securities. Copies of all such Section 16(a) reports are
required to be furnished to the Company. These filing requirements also apply
to beneficial owners of more than ten percent of the Company's Common Stock.
To the Company's knowledge, based solely on a review of the copies of
Section 16(a) reports furnished to the Company and on representations from
reporting persons that no other reports were required, during the fiscal year
1995 all reports required to be filed pursuant to Section 16(a) have been
timely filed.
II-4
<PAGE>
INDIVIDUALS DESIGNATED BY PURCHASER AS
PROSPECTIVE PURCHASER DESIGNEES
The following table sets forth the name, citizenship, present principal
occupation or employment and material occupations, positions, offices or
employment for the past five years of each of the initial designees of the
Purchaser to the Board after the consummation of the Offer. Unless otherwise
indicated below, the address of each person is: Suite 426, 10333 Southport
Road S.W., Calgary, Alberta Canada T2W 3X6.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
---- ------------------------------------------
<S> <C>
Dale W. Massie
(U.S. citizen)......... Vice President, Marketing of the Parent and Agrium U.S.;
Director of Agrium U.S.
Dorothy E. A. Bower
(U.S. and Canadian
citizen)............... General Counsel and Corporate Secretary of the Parent and
Agrium U.S.; Director of Agrium U.S.; President, Secretary
and Director of the Purchaser
Larry A. Collins
(Canadian citizen)..... Vice President, Business Development of the Parent and
Agrium U.S.
</TABLE>
None of the Purchaser Designees (i) is currently a director of, or holds any
position with, the Company, (ii) has a familial relationship with any
directors or executive officers of the Company or (iii) to the best knowledge
of the Parent, beneficially owns any securities (or rights to acquire such
securities) of the Company. The Company has been advised by the Parent that,
to the best of Parent's knowledge, none of the Purchaser Designees has been
involved in any transactions with the Company or any of its directors,
executive officers or affiliates that are required to be disclosed pursuant to
the rules and regulations of the Commission, except as may be disclosed herein
or in the Schedule 14D-9.
The Purchaser has informed the Company that each of the above individuals
has consented to act as a director, if so designated by the Purchaser. Messrs.
Lang, Pfister and Sanders will resign as Directors of the Company upon
consummation of the Offer. It is expected that the Purchaser Designees will
assume office at any time following the consummation of the Offer and that,
upon assuming office, the Purchaser Designees will thereafter constitute at
least a majority of the Board.
RELATIONSHIPS BETWEEN THE COMPANY AND AGRIUM U.S.
The Company purchased approximately $4,083,000, $3,768,000 and $3,647,000 of
anhydrous ammonia from the Parent and its affiliates and sold approximately
$16,408,000, $13,877,000 and $14,755,000 of phosphate fertilizer products to
the Parent and its affiliates during the fiscal years ended June 30, 1995,
1994 and 1993, respectively.
II- 5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation earned by the Company's
Chief Executive Officer and by the four other most highly compensated
executive officers (collectively, the "Named Executive Officers") for services
rendered during the fiscal years ended June 30, 1995, 1994 and 1993. All of
the persons named below continue to serve as officers of the Company.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------
LONG-TERM
COMPENSATION
FISCAL SALARY BONUS OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($)(/1/) ($)(/1/)(/2/) (#)(/3/) COMPENSATION($)(/4/)
--------------------------- ------ -------- ------------- ------------ --------------------
<S> <C> <C> <C> <C> <C>
Craig D. Harlen......... 1995 $250,000 $150,000 41,666 $12,732
President and Chief Ex- 1994 250,000 235,000 39,080 8,533
ecutive Officer
1993 200,000 50,000 25,000 7,893
H. Alan Dahlbach........ 1995 $193,000 $ 95,000 16,666 $10,083
Executive Vice Presi-
dent 1994 193,000 185,000 29,366 6,346
1993 178,500 40,000 20,000 6,299
Mark R. Sanders......... 1995 $160,000 $ 80,000 16,666 $ 8,908
Senior Vice President
and Chief 1994 160,000 180,000 29,366 5,552
Financial Officer 1993 145,002 40,000 20,000 5,286
John D. Yokley.......... 1995 $154,000 $ 75,000 13,333 $ 8,955
Vice President--Na-
tional Sales 1994 154,000 55,000 16,641 5,353
1993 142,942 30,000 11,000 4,947
Steven W. Gampp......... 1995 $143,000 $ 60,000 16,666 $ 8,361
Vice President,
Secretary and 1994 143,000 165,000 29,366 5,353
Treasurer 1993 132,000 40,000 20,000 4,947
</TABLE>
(1) Amounts shown include cash compensation earned by the Named Executive
Officer during the fiscal year listed, including amounts deferred at the
election of those officers. Bonuses are paid in the fiscal year following
the year in which they are earned.
(2) Amounts shown include payment in April 1994 of cash bonuses deferred from
1991 in the following amounts: Mr. Harlen--$135,000; Mr. Dahlbach--
$105,000; Mr. Sanders--$105,000; Mr. Gampp--$105,000.
(3) All of the Company's executive officers voluntarily surrendered their
outstanding stock options granted in 1992 and 1993 for no consideration on
November 2, 1993 in connection with a refinancing of substantially all of
the Company's long-term debt (the "Recapitalization Plan"). No Stock
Appreciation Rights ("SARs") were granted by the Company in fiscal 1995,
and there are no outstanding SARs held by any employee or director of the
Company. The number shown for each year represents the number of shares of
Common Stock for which options were granted to the Named Executive Officer
in that year, and reflect the 1:6 reverse stock split of the Company's
Common Stock that occurred on December 9, 1994.
(4) Amounts shown are the matching contributions made by the Company to its
Employee Retirement Savings Plan, a qualified Section 401(k) profit
sharing plan, and the amount of premiums for term life insurance paid by
the Company for the Named Executive Officers as follows:
<TABLE>
<CAPTION>
401(K) LIFE
CONTRIBUTIONS INSURANCE
------------- ---------
<S> <C> <C>
Craig D. Harlen..... $10,512 $2,220
H. Alan Dahlbach.... 8,369 1,714
Mark R. Sanders..... 7,487 1,421
John D. Yokley...... 7,587 1,368
Steven W. Gampp..... 7,091 1,270
</TABLE>
II-6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning individual
grants of stock options made to each of the Named Executive Officers during
the fiscal year ended June 30, 1995:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE OF
ASSUMED
ANNUAL
% OF TOTAL RATES OF
OPTIONS STOCK
GRANTED PRICE
TO APPRECIATION
EMPLOYEES FOR OPTION
OPTIONS IN EXERCISE TERM
GRANTED FISCAL PRICE EXPIRATION ----------------------
NAME (#) YEAR(/1/) ($/SH)(/2/) DATE 5%(/3/) 10%(/4/)
---- ------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Craig D. Harlen 41,666 16.0% $6.375 11/22/04 $ 166,872 $ 423,535
H. Alan Dahlbach 16,666 6.9% $6.375 11/22/04 66,747 169,410
Mark R. Sanders 16,666 6.9% $6.375 11/22/04 66,747 169,410
John D. Yokley 13,333 5.1% $6.375 11/22/04 53,399 135,530
Steven W. Gampp 16,666 6.9% $6.375 11/22/04 66,747 169,410
</TABLE>
(1) In fiscal 1995, the Company granted incentive stock options exercisable
for an aggregate of 260,834 shares of Common Stock to 49 employees.
(2) The exercise price is 100% of the closing price of the Common Stock on the
NASDAQ/National Market on November 22, 1994 (adjusted for the 1:6 reverse
stock split in December 1994). All options shown in this table were
granted on November 22, 1994. The options vest 40% on January 1, 1997, and
20% on each of January 1, 1998, 1999 and 2000.
(3) Assumes a price of $10.38 at the end of ten years.
(4) Assumes a price of $16.54 at the end of ten years.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Set forth in the table below is information concerning the value of stock
options held as of June 30, 1995 by each of the Named Executive Officers:
<TABLE>
<CAPTION>
VALUE OF
SHARES UNEXERCISED
ACQUIRED NUMBER OF IN-THE-
ON VALUE UNEXERCISED MONEY
EXERCISE REALIZED OPTIONS AT OPTIONS AT
NAME (#) ($) FY END (#)(/1/) FY END(/1/)
---------------- -------- -------- --------------- -----------
<S> <C> <C> <C> <C>
Craig D. Harlen 0 $0 80,746 $446,417
H. Alan Dahlbach 0 0 46,032 280,540
Mark R. Sanders 0 0 46,032 280,540
John D. Yokley 0 0 29,974 173,558
Steven W. Gampp 0 0 46,032 280,540
</TABLE>
(/1/The)options outstanding at June 30, 1995 are not exercisable before
December 1, 1996. The value shown is based on the closing price of $10.125
per share for the Common Stock on June 30, 1995.
EMPLOYMENT AGREEMENTS
On December 1, 1994, the Company entered into an employment agreement (the
"Harlen Agreement") with Craig D. Harlen to serve as the Company's President
and Chief Executive Officer. The Harlen Agreement provides for an annual base
salary of $250,000 (which was increased to $257,500 effective July 1, 1995)
and is automatically extended for successive twelve month periods unless Mr.
Harlen or the Company gives 90 days written notice of its intention not to
renew the Harlen Agreement. Mr. Harlen's base salary for each successive
fiscal year is determined by the Compensation Committee of the Board, but
shall not be less than the base salary paid to Mr. Harlen in the previous
fiscal year. If the Company does not extend the Harlen Agreement or terminates
the Harlen Agreement without cause, the Company is obligated to pay, in
addition to accrued compensation, severance compensation equal to Mr. Harlen's
existing base salary in equal semi-monthly installments over the following
twelve months until paid in full. If the Harlen Agreement is terminated by
reason of a change in control (as defined below), the Company is obligated to
pay, in addition to accrued compensation, severance compensation of up to
three times the sum of (a) Mr. Harlen's existing base salary and (b) the
average of the incentive bonuses paid to Mr. Harlen for the two most recent
fiscal years of the Company preceding the
II-7
<PAGE>
date of termination. The severance compensation payable upon a change in
control is payable in equal semi-monthly installments over the following
thirty-six months until paid in full, or, at Mr. Harlen's election, is payable
by a lump sum payment equal to the present value of the such cash payments. In
no event, however, shall such severance compensation exceed the amount that
the Company may deduct for federal income tax purposes by virtue of Section
280G of the Internal Revenue Code of 1986, as amended, or any successor
provision. In addition, the Harlen Agreement provides for certain payments in
the event of death or disability, and for the continuation of medical and
other benefits programs for a period of 18 months in the event of Mr. Harlen's
disability. The Harlen Agreement also contains non-competition and
confidentiality provisions.
On December 1, 1994, the Company entered into employment agreements with
each of H. Alan Dalbach, Mark R. Sanders, Steven W. Gampp, Larry C. Dearing
and John D. Yokley. Each of these employment agreements contains annual base
salary, term, renewal, severance compensation in the event of non-renewal or
termination with or without cause, change of control, death and disability
benefit and non-competition and confidentiality provisions as described above
with respect to the Harlen Agreement. Effective July 1, 1995, these employment
agreements provide for annual base salaries in the aggregate amount of
$816,790 per year. The compensation paid to each of the employees under his
employment agreement for the three fiscal years ended June 30, 1995 is listed
in the Summary Compensation Table.
For the purposes of the above employment agreements, a change in control
occurs (i) if any person other than the Company or WPG or its affiliates
acquires 40% or more of the outstanding Voting Shares of the Company, (ii) if
any merger, share exchange, issuance of capital stock, tender offer or similar
transaction results in the existing stockholders owning fewer than 50% of the
outstanding Voting Shares after the transaction, (iii) upon a sale, lease or
exchange of substantially all of the Company's assets other than a
sale/leaseback or similar financing transaction, or (iv) upon the adoption of
a plan for the liquidation or dissolution of the Company. A change of control
also occurs if, following any of the foregoing events, there is a substantial
change in the executive's duties, a reduction in his salary or benefits, a
relocation of the executive to an office other than his current office, an
uncured material breach by the Company of the agreement, a failure to obtain
the assumption of the agreement by any successor of the Company, or a failure
of the executive and the Company or its successor to negotiate a mutually
agreeable amendment to the current employment agreement or a new employment
agreement within 90 days after the change in control of the Company.
The transactions contemplated by the Merger Agreement will result in a
change of control of the Company, as defined by the above agreements.
STOCK INCENTIVE PLANS
In May 1988, the Company adopted an Employee Stock Option Plan (the "1988
Plan") to provide long-term incentives and rewards to the Company's officers
and employees. Under the 1988 Plan, options to acquire up to 300,000 shares of
Common Stock were authorized (as adjusted for the 1:6 reverse stock split in
December 1994). In 1994, the Company adopted the 1994 Employee Stock Incentive
Plan (the "1994 Plan") to provide long-term incentives and rewards to the
Company's officers and employees. Under the 1994 Plan, options to acquire up
to 300,000 shares of Common Stock were authorized (as adjusted for the 1:6
reverse stock split in December 1994). Both the 1988 Plan and the 1994 Plan
are administered by the Compensation Committee of the Board of Directors.
Under the 1988 Plan and the 1994 Plan, the Company may grant both incentive
stock options intended to qualify under Section 422 of the Internal Revenue
Code of 1986, as amended ("ISOs"), and nonqualified stock options ("NSOs").
ISOs may be granted at exercise prices that are not less than the fair market
value of the Common Stock at the date of grant, except that the exercise price
of ISOs granted to any person who owns more than 10% of the outstanding Common
Stock must be at least 110% of the fair market value on the date of grant.
NSOs can be granted at exercise prices at or below the fair market value of
the Common Stock on the date of grant.
The exercise price of an ISO or NSO may be paid with cash, shares of Common
Stock or recourse promissory notes at the option of the Compensation
Committee. The 1988 Plan and the 1994 Plan also provide
II-8
<PAGE>
for the grant of SARs. An SAR permits the participant to surrender a specified
portion of his options in exchange for a payment representing the unrealized
appreciation of those options. No SARs have been granted under either of the
plans. Each of the plans also provides for supplemental bonuses granted at the
discretion of the Compensation Committee designed to offset all or part of the
tax liability incurred by participants who exercise ISOs or NSOs. The
supplemental bonus may not exceed the participant's tax liability arising from
the exercise.
At June 30, 1995, (i) NSOs had been granted for an aggregate of 236,887
shares of Common Stock to 42 officers and employees, and NSOs had been
exercised to purchase 63,111 shares of Common Stock in prior fiscal years and
(ii) ISOs had been granted for an aggregate of 260,834 shares of Common Stock
to 49 officers and employees, all of which remained unexercised.
As a result of the Offer, each holder of an outstanding option to purchase
Voting Shares under the 1988 Plan and the 1994 Plan shall be entitled to
exercise, subject to the consummation of the Offer, his or her options, in
order to tender such Shares in the Offer. In the event the Offer is not
completed, such options will remain outstanding but unexercised.
DIRECTOR COMPENSATION AND DIRECTOR STOCK OPTION PLAN
Each non-employee director of the Company, other than directors associated
with WPG, receives an annual retainer of $35,000. Directors receive no
separate compensation for service on any committee of the Board of Directors.
All directors receive reimbursement for travel and other expenses directly
related to activities as directors.
In November 1994, the Company adopted the Nonemployee Director Stock Option
Plan (the "Director Plan"), covering an aggregate of 50,000 shares of Common
Stock (adjusted for the reverse stock split in December 1994). Qualified non-
employee directors are eligible to receive grants of NSOs to purchase 4,167
shares of Common Stock on the date when service as a director commences, and
to receive NSOs for an additional 167 shares of Common Stock for each full
fiscal year of service as a director. All options to nonemployee Directors are
fully exercisable six months after the date of the grant. During the twelve
months ended June 30, 1995, Governor Andrus was granted an option to purchase
4,167 shares of Common Stock at an exercise price of $8.50. Such option
expires on January 3, 2005.
As a result of the Offer, each holder of an outstanding option to purchase
Voting Shares under the Director Plan will be entitled to exercise, subject to
the consummation of the Offer, his or her options, in order to tender such
Shares in the Offer. In the event the Offer is not completed, such options
will remain outstanding but unexercised.
Messrs. Land and Pfister are principals of WPG, which is a limited partner
of a company that provides management and financial consulting services to the
Company. See "--Compensation Committee Interlocks and Insider Participation."
Pursuant to the Merger Agreement, Mr. Harlen and Governor Andrus have agreed
to resign as a Directors of the Company upon the Effective Date (as defined in
the Merger Agreement). The Company will pay Governor Andrus the unpaid balance
of his retainer for his remaining two year term as a Director on or prior to
the Effective Date. The Company will not grant any additional options to
purchase Common Stock to Governor Andrus. Mr. Harlen will not receive any
consideration for his resignation as a Director, but will be entitled to
severance compensation as provided for in the Harlen Agreement. See "Executive
Compensation--Employment Agreements."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has appointed Messrs. Lang and Pfister as members of the
Compensation Committee and the Audit Committee. Neither Messrs. Lang or
Pfister is or has been an officer or employee of the Company or any
subsidiary. The Company has no Compensation Committee interlocks.
The Company and Weiss, Peck & Greer CDA, L.P. ("WPG-CDA") have entered into
an agreement under which WPG-CDA provides management and financial consulting
services to the Company for an annual fee of
II-9
<PAGE>
$250,000, plus expenses. WPG is a limited partner of WPG-CDA, and Messrs. Lang
and Pfister are principals of WPG. The Company paid WPG-CDA $259,000 in fees
and related expenses during fiscal 1995 for such services.
DIRECTORS AND OFFICERS' INDEMNIFICATION
Pursuant to the Merger Agreement, the Company must indemnify and hold
harmless, and after the Effective Date, the Parent and the Surviving
Corporation (as defined in the Schedule 14D-9) must indemnify and hold
harmless, each present employee, agent, director or officer of the Company and
the Company's subsidiaries (the "Indemnified Parties") (a) with respect to any
losses, claims, damages, liabilities, costs and expenses, including reasonable
attorneys' and expert witness fees, arising out of or pertaining to any action
or omission occurring prior to the Effective Date (including any which arise
out of or pertain to the transactions contemplated by the Merger Agreement)
and (b) as provided in their respective charters or by-laws in effect at the
date hereof (to the extent consistent with applicable law), which provisions
will survive the Merger and will continue in full force and effect for a
period of not less than five years from the Effective Date. In the event any
claim or claims (a "Claim or Claims") are asserted or made pursuant to the
preceding sentence within such five-year period, all rights to indemnification
in respect of any such Claim or Claims shall continue until disposition of any
and all such Claims. In the event that a claim is asserted against any
Indemnified Party with respect to any matter to which the indemnities
contained in this section relate, the Indemnified Party shall give prompt
written notice to the Surviving Corporation setting forth in reasonable detail
the basis for such claim for indemnification. The Surviving Corporation has
the right, at its election, to take over the defense or settlement of such
claim at its own expense by giving prompt notice to that effect to the
Indemnified Party. If the Surviving Corporation has assumed the defense of any
Claim, the Surviving Corporation is authorized to consent to a settlement of,
or the entry of any judgment arising from, any such Claim, without the prior
written consent of the Indemnified Party; provided, however, that a condition
to any such settlement will be a complete release of the Indemnified Party
with respect to such Claim. If the Surviving Corporation does not, within
thirty days after receipt of the Indemnified Party's notice of Claim, (x) give
such notice to take over the defense of such Claim and proceed to defend the
Claim or (y) object to such Claim in writing to the Indemnified Party, then
the Indemnified Party will have the right to undertake the defense of such
Claim and the Surviving Corporation will pay to the Indemnified Party the
reasonable fees and expenses of its counsel. The Surviving Corporation will
not be liable for any settlement effected without its consent, which consent
will not be unreasonably withheld. The Indemnified Party will at all times
have the right, at its option and expense, to participate fully in, but not to
control, any such defense. Without limiting the foregoing, the Company and,
after the Effective Date, the Surviving Corporation, to the extent permitted
by applicable law, will periodically advance reasonable expenses as incurred
with respect to the foregoing to the fullest extent permitted under applicable
law provided the person to whom the expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification. In the event that within five years
from the Effective Date the Surviving Corporation consolidates or merges with
or into any other person or transfers all or substantially all of its assets
to any person and such person surviving such consolidation or merger or to
which such assets have been transferred is not a Delaware corporation, the
Surviving Corporation will enter into an agreement pursuant to which such
person must agree to provide indemnification substantially equivalent to that
required of the Company hereunder.
II-10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of June 30, 1995 (except as otherwise noted),
information regarding the beneficial ownership of (i) the Company's voting and
non-voting securities by each person known by the Company to own beneficially
more than five percent of any class of the Company's voting securities; (ii)
the Company's equity securities owned by each director and the Named Executive
Officers of the Company; and (iii) all of the executive officers and directors
of the Company as a group. Except as otherwise indicated, the Company believes
that the beneficial owners of its capital stock listed below have sole
investment and voting power as to such shares.
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK PREFERRED STOCK PREFERRED STOCK
BENEFICIAL OWNERSHIP(/1/) BENEFICIAL OWNERSHIP(/1/) BENEFICIAL OWNERSHIP(/1/)
---------------------------------- ------------------------- -------------------------
NAME AND ADDRESS NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT
---------------- --------------- ------------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
PRINCIPAL STOCKHOLDERS:
Weiss, Peck & Greer,
L.L.C................... 4,614,281(/2/) 57.1% 0 * 0 *
and Affiliated Persons
One New York Plaza
New York, New York 10004
Glenbrook Partners....... 563,000 7.0% 4,000 1.4% 0 *
P.O. Box 12219
Zephyr Cove, Nevada,
89448
Indosuez CM II, Inc. .... 633,105(/3/) 7.8% 0 * 0 *
Les Lieberman............ 456,063(/4/) 5.3% 0 * 0 *
c/o Banque Indosuez
1211 Avenue of the
Americas
New York, New York 10036
DIRECTORS:
Craig D. Harlen.......... 87,031(/5/) 1.1% 0 * 0 *
Mark R. Sanders.......... 46,199(/5/) * 0 * 0 *
Cecil D. Andrus.......... 4,500(/5/) * 0 * 0 *
c/o Nu-West Industries,
Inc.
3010 Conda Road
Soda Springs, Idaho
83276
Wesley W. Lang........... 1,166(/6/) * 0 * 0 *
Peter B. Pfister......... 389(/6/) * 0 * 0 *
One New York Plaza
New York, New York 10004
NAMED EXECUTIVE OFFICERS:
H. Alan Dahlbach......... 46,199(/7/) * 0 * 0 *
John D. Yokley........... 32,132(/7/) * 0 * 0 *
Steven W. Gampp.......... 46,032(/7/) * 0 * 0 *
c/o Nu-West Industries,
Inc.
8400 East Prentice
Avenue, Suite 1320
Englewood, Colorado
80111
Executive Officers and
Directors as a Group
(11 Persons)............ 359,546(/8/) 4.3% 0 * 0 *
</TABLE>
--------
* Less than one percent.
II-11
<PAGE>
(1) A person is deemed to be a "beneficial owner" of a security if that person
has or shares "voting power," which includes the power to vote or direct
the voting of such security, or "investment power," which includes the
power to dispose of, or to direct the disposition of, such security. A
person is also deemed to be the beneficial owner of a security over which
he has the right to acquire either voting power or investment power within
60 days, either through the exercise of a warrant or option or the
conversion of a convertible security. More than one person may be deemed
to be a beneficial owner of the same securities, and a person maybe deemed
to be a beneficial owner of securities that he may not vote.
(2) Includes 2,488,005 shares of Common Stock held by WPG Corporate
Development Associates II, L.P. Liquidating Trust U/T/A dated December 31,
1993 ("CDA II"), 880,563 shares of Common Stock held by Weiss, Peck &
Greer Venture Associates, L.P. Liquidating Trust U/T/A dated December 30,
1994 ("WPGVA"), 1,027,714 shares of Common Stock held by WPG Corporate
Development Associates III, L.P. ("CDA III"), and 217,999 shares of Common
Stock held by WPG Corporate Development Associates III (Overseas) Ltd.
("Overseas, Ltd."). See "Executive Compensation--Compensation Committee
Interlocks and Insider Participation." Does not include shares held by
Messrs. Lang and Pfister--see Note 7 below. On August 9, 1995 CDA II,
WPGVA, CDA III and Overseas Ltd. executed Irrevocable Proxies appointing
employees of the Parent as proxy and attorney-in-fact with respect to
these shares of Common Stock. See "Change of Control."
(3) Consists of 633,105 Non Voting Shares issued upon the exercise of warrants
issued by the Company on November 2, 1993 in connection with the
Recapitalization Plan.
(4) Consists of 456,063 shares issuable upon exercise of warrants issued by
the Company on November 2, 1993 in connection with the Recapitalization
Plan to Indosuez CM II, Inc. and subsequently transferred to Mr.
Lieberman.
(5) Includes shares issuable under options granted by the Company in the
following amounts: Mr. Harlen--80,746; Mr. Sanders--46,032; Governor
Andrus--4,167.
(6) Messrs. Lang and Pfister are principals of WPG and Mr. Lang is a managing
partner of WPG CDA III, L.P. WPG is the sole trustee of CDA II and WPGVA;
WPG CDA III, L.P. is the general partner of CDA III. Another principal of
WPG is a director of Overseas, Ltd. Messrs. Lang and Pfister each disclaim
beneficial ownership of the shares held by CDA II, WPGVA, CDA III and
Overseas, Ltd., except to the extent of his own beneficial ownership
interest (direct or indirect) therein. Accordingly, the shares set forth
as beneficially owned by Messrs. Lang and Pfister exclude 2,488,005 shares
of Common Stock held by CDA II, 880,563 shares of Common Stock held by
WPGVA, 1,027,714 shares of Common Stock held by CDA III, and 217,999
shares of Common Stock held by Overseas, Ltd.--see Note 2 above.
(7) Includes shares issuable under options granted by the Company in the
following amounts: Mr. Dahlbach--46,032; Mr. Yokley--29,974; Mr. Gampp--
46,032.
(8) Includes 342,214 shares issuable under options granted by the Company.
As of June 30, 1995, there were 8,086,363 Shares issued and outstanding,
including 7,453,174 Voting Shares and 633,106 Non-Voting Shares, 290,000
shares of non-voting Class A Preferred Stock and 344 shares of non-voting
Class B Preferred Stock issued and outstanding. The holders of Voting Shares
are entited to one vote per Voting Share.
CHANGE OF CONTROL
Pursuant to Irrevocable Proxies dated August 9, 1995, CDA II, WPGVA, CDA III
and Overseas, Ltd. (collectively, the "Committing Stockholders") have agreed
to tender the 4,614,281 shares owned by them, constituting approximately 57%
of the outstanding Common Stock and approximately 62% of the outstanding
Voting Shares, in the Offer and have appointed employees of the Parent as
proxy and attorney-in-fact (with full power of substitution) (i) to call a
special meeting of stockholders of the Company to consider the Merger and (ii)
to vote (or, at their discretion, execute a written consent with respect to)
with or without the other, all the voting securities of the Company owned by
them ("Covered Shares") (A) in favor of the Merger and adoption of the Merger
Agreement and (B) against any business combination proposal or other matter
that may interfere
II-12
<PAGE>
or be inconsistent with the Merger or the Merger Agreement (including, without
limitation, any Acquisition Proposal (as defined in the Merger Agreement)), at
any meeting of stockholders of the Company (or consent in lieu thereof) and
any adjournment or adjournments thereof. The Committing Stockholders have
agreed not to sell or otherwise transfer or dispose of any of the Covered
Shares unless the following conditions are met: (i) prior written notice of
the Irrevocable Proxies is given to the transferee and the transferee agrees
that the shares transferred will remain subject to the Irrevocable Proxies
and, in connection therewith, executes and delivers to the Parent a proxy
covering such shares in form and substance satisfactory to the Parent, which
proxy shall be in substantially the form of the Irrevocable Proxies; or (ii)
the transfer is to the Parent or its designee pursuant to the Offer. The
Irrevocable Proxies will terminate automatically on the earliest to occur of
(i) the Effective Date, (ii) termination of the Merger Agreement pursuant to
Section 9.1 thereof (including a termination by the Company upon a
determination by its Board of Directors that it has a duty in the proper
discharge of its fiduciary responsibilities to accept, recommend or take no
position with respect to an Acquisition Proposal) or (iii) amendment of the
Merger Agreement with respect to the Offer Price to be received upon
consummation of the Merger or the Offer.
Pursuant to the Merger Agreement, the Purchaser has commenced the Offer to
purchase the Shares, as more fully described in the Offer to Purchase and the
Schedule 14D-9. The total amount of funds required by the Purchaser, Agrium
U.S. and the Parent to consummate the Offer and the Merger and to pay related
fees and expenses is estimated to be approximately $100 million. The Purchaser
intends to obtain the funds required by it from capital contributions and/or
loans from the working capital of Parent and Agrium U.S.
II-13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
Exhibit 1 Agreement and Plan of Merger, dated as of August 9, 1995, by and
among Nu-West Industries, Inc., Agrium Inc. and Agrium Acquisition
Corporation.
Exhibit 2 Joint Press Release issued by Nu-West Industries, Inc. and Agrium
Inc.
Exhibit 3 Opinion of PaineWebber Incorporated, dated August 8, 1995. Filed
herewith as Annex I.
Exhibit 4 Irrevocable Proxies, dated August 9, 1995, from WPG Corporate
Development Associates III (Overseas), Ltd., Weiss, Peck & Greer
Venture Associates, L.P. Liquidating Trust, U/T/A dated December 30,
1994, WPG Corporate Development Associates III, L.P. and WPG
Corporate Development Associates II, L.P. Liquidating Trust, U/T/A
dated December 31, 1993.
Letter to Stockholders of Nu-West Industries, Inc. dated August 16,
Exhibit 5 1995.
</TABLE>
<PAGE>
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 9, 1995
BY AND AMONG
AGRIUM INC.,
AGRIUM ACQUISITION CORPORATION
AND NU-WEST INDUSTRIES, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I THE TENDER OFFER................................................ 1
Section 1.1 The Tender Offer........................................ 1
Section 1.2 Action by the Company................................... 2
Section 1.3 Continuing Directors.................................... 2
ARTICLE II THE MERGER..................................................... 2
Section 2.1 The Merger.............................................. 2
Section 2.2 Consummation of the Merger.............................. 2
ARTICLE III CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION.................................................... 3
Section 3.1 Certificate of Incorporation............................ 3
Section 3.2 By-Laws................................................. 3
Section 3.3 Officers and Board of Directors......................... 3
ARTICLE IV CONVERSION OF SHARES........................................... 3
Section 4.1 Conversion of Shares.................................... 3
Section 4.2 Payment for Shares...................................... 3
Section 4.3 Shares of Dissenting Stockholders....................... 4
Section 4.4 Closing of the Company's Transfer Books................. 4
Section 4.5 Status of Share Certificates............................ 4
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER AND ACQUISITION..... 4
Section 5.1 Organization............................................ 4
Section 5.2 Authority Relative to this Agreement.................... 4
Section 5.3 No Conflicts; Required Filings and Consents............. 4
Section 5.4 Information............................................. 5
Section 5.5 Litigation.............................................. 6
Section 5.6 Financing............................................... 6
Section 5.7 Ownership of Capital Stock.............................. 6
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 6
Section 6.1 Organization and Qualification; Subsidiaries............ 6
Section 6.2 Charter and By-Laws..................................... 6
Section 6.3 Capitalization.......................................... 7
Section 6.4 Authority............................................... 8
Section 6.5 No Conflict; Required Filings and Consents.............. 8
Section 6.6 Permits; Compliance..................................... 8
Section 6.7 Reports; Financial Statements........................... 9
Section 6.8 Absence of Certain Changes or Events.................... 9
Section 6.9 Absence of Litigation................................... 10
Section 6.10 Employee Plans; Labor Matters........................... 10
Section 6.11 Taxes................................................... 12
Section 6.12 Environmental Matters................................... 12
Section 6.13 Delaware Law............................................ 13
Section 6.14 Inventory; Accounts Receivable.......................... 13
Section 6.15 Insurance............................................... 14
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Section 6.16 Properties............................................. 14
Section 6.17 Certain Contracts and Restrictions..................... 14
Section 6.18 Information Supplied................................... 14
Section 6.19 Opinion of Financial Advisor........................... 14
Section 6.20 Futures Trading and Fixed Price Exposure............... 14
Section 6.21 Intellectual Property.................................. 14
Section 6.22 Contributions, Etc..................................... 15
Section 6.23 Easements.............................................. 15
Section 6.24 Information............................................ 15
ARTICLE VII COVENANTS.................................................... 15
Section 7.1 Conduct of Business by the Company Pending the Merger.. 15
Section 7.2 Stockholders' Meeting and Proxy Statement.............. 17
Section 7.3 Certain Filings and Consents........................... 17
Section 7.4 Access................................................. 17
Section 7.5 Expenses............................................... 18
Section 7.6 Employee Stock Options; Warrant........................ 18
Section 7.7 Indemnification and Insurance.......................... 18
Section 7.8 Employee Benefits...................................... 19
Section 7.9 Maintenance of Financing............................... 19
Section 7.10 Resignation of Directors............................... 19
Section 7.11 Board of Directors..................................... 19
ARTICLE VIII CONDITIONS.................................................. 19
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger................................................. 19
Section 8.2 Conditions to Obligations of Purchaser and Acquisition
to Effect the Merger................................... 20
Section 8.3 Conditions to Obligation of the Company to Effect the
Merger................................................. 20
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER............................. 21
Section 9.1 Termination............................................ 21
Section 9.2 Break-Up Fee; Effect of Termination.................... 21
Section 9.3 Amendment.............................................. 21
Section 9.4 Waiver................................................. 22
ARTICLE X GENERAL PROVISIONS............................................. 22
Section 10.1 Notice of Breach....................................... 22
Section 10.2 Cooperation............................................ 22
Section 10.3 Non-Survival of Representations and Warranties......... 22
Section 10.4 Brokers................................................ 22
Section 10.5 Entire Agreement....................................... 22
Section 10.6 Applicable Law......................................... 22
Section 10.7 Interpretation; Headings............................... 22
Section 10.8 Assignment............................................. 22
Section 10.9 Separability........................................... 23
Section 10.10 Publicity.............................................. 23
Section 10.11 Notices................................................ 23
Section 10.12 Counterparts........................................... 23
Section 10.13 No Third Party Beneficiaries........................... 23
Section 10.14 Schedules.............................................. 24
</TABLE>
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger dated as of August 9, 1995 (this "Agreement")
by and among Agrium Inc., a Canadian corporation ("Purchaser"), Agrium
Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of
Purchaser ("Acquisition"), and Nu-West Industries, Inc., a Delaware
corporation (the "Company"). (Acquisition and the Company are hereinafter
collectively referred to as the "Constituent Corporations.")
Whereas, Purchaser and the Boards of Directors of the Constituent
Corporations (a) desire to enter into this Agreement and (b) have approved the
merger of Acquisition with and into the Company (the "Merger"), all upon the
terms and subject to the conditions set forth herein.
Now, Therefore, the parties hereto agree as follows:
ARTICLE I
Tender Offer
Section 1.1 The Tender Offer.
(a) As long as none of the events set forth in Exhibit A hereto shall have
occurred or be existing, Acquisition shall, and Purchaser shall cause
Acquisition to, commence as promptly as practicable, but in no event later
than five business days after the date hereof, a tender offer (as amended or
extended from time to time, the "Tender Offer") subject to the conditions set
forth in Exhibit A hereto, for all outstanding shares of Voting Common Stock,
par value $.01, and Nonvoting Common Stock, par value $.01 (collectively, the
"Shares") of the Company, which Tender Offer is conditioned upon a sufficient
number of Shares being properly tendered and not withdrawn, which, when added
together with any Shares owned by Purchaser and any of its subsidiaries or
which Purchaser and Acquisition have the right to acquire, will equal at least
60% of the Shares on a fully diluted basis. The per Share price to be paid in
the Tender Offer, which shall be paid net to the sellers in cash, shall be
$10.50. Purchaser agrees, subject to the terms and conditions of the Tender
Offer, to pay for all Shares tendered that it is obligated to purchase as soon
as legally permissible.
(b) Without the prior written consent of the Company, Acquisition shall not
decrease the Merger Price (as defined in Section 4.1), decrease the number of
Shares being sought in the Tender Offer, change the form of consideration
payable in the Tender Offer, add additional conditions to the Tender Offer or
make any other material change in the terms or conditions to the Tender Offer.
(c) On the date the Tender Offer is commenced, Purchaser and Acquisition
shall file with the Securities and Exchange Commission (the "SEC") a tender
offer statement on Schedule 14D-1 (together with all amendments and
supplements thereto, the "Schedule 14D-1") with respect to the Tender Offer.
The Schedule 14D-1 shall contain (included as an exhibit) or shall incorporate
by reference the Offer to Purchase (or portions thereof) and forms of the
related Letter of Transmittal and summary advertisement and shall comply as to
form in all material respects with the requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder (the "Rules and Regulations"). If at any time prior to
the expiration or termination of the Tender Offer any event occurs which is
required by the Act and the Rules and Regulations to be described in an
amendment to the Schedule 14D-1 or any supplement thereto, Purchaser and
Acquisition will file and disseminate, as required, an amendment or supplement
which complies in all material respects with the Act and the Rules and
Regulations. The Company and its counsel shall be given an opportunity to
review the Schedule 14D-1 and any amendment or supplement thereto prior to its
being filed with the SEC. Purchaser and Acquisition agree to provide the
Company and its counsel with any written comments (and to inform the Company
and its counsel of the tenor of any oral comments) Purchaser and Acquisition
or their counsel may receive from the SEC with respect to the Offer Documents
(as defined in Section 5.4) is made promptly after the receipt of such
comments.
1
<PAGE>
Section 1.2 Action by the Company. The Company hereby represents that the
Board of Directors of the Company, in connection with its approval of this
Agreement, by resolution has (a) approved the Tender Offer and the Merger and
(b) resolved to recommend acceptance of the Tender Offer and approval and
adoption of the Merger and this Agreement by the holders of the Shares if such
approval and adoption is required by the General Corporation Law of the State
of Delaware (the "GCL"). On the date the Schedule 14D-1 is filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") and shall mail the Schedule 14D-9 to the stockholders of the
Company. The Schedule 14D-9 shall comply as to form in all material respects
with the requirements of the Act and the Rules and Regulations. Purchaser,
Acquisition and their counsel shall be given the opportunity to review the
Schedule 14D-9 and any amendment or supplement thereto prior to its filing
with the SEC. The Company agrees to provide Purchaser and Acquisition and
their counsel with any written comments (and to inform them of the tenor of
any oral comments) that the Company or its counsel receive from the SEC with
respect to the Schedule 14D-9 promptly after the receipt of such comments. If
at any time prior to the expiration or termination of the Tender Offer any
event occurs which is required by applicable law to be described in an
amendment to the Schedule 14D-9 or any supplement thereto, the Company will
file and disseminate, as required, an amendment or supplement which complies
in all material respects with the Act, the Rules and Regulations and any other
applicable laws. In connection with the Tender Offer, the Company will or will
cause its transfer agent to furnish Purchaser with a list of stockholders and
mailing labels containing the names and addresses of all record holders of the
Shares held in stock depositories, each as of a recent date. The Company shall
furnish Purchaser with any additional information, including an updated list
of stockholders, mailing labels and lists of security positions, and any
assistance as Purchaser may reasonably request in communicating the Tender
Offer to the record and beneficial holders of the Shares.
Section 1.3 Continuing Directors. After the time that Acquisition's
designees constitute at least a majority of the Board of Directors of the
Company and until the Effective Date (as defined in Section 2.2), any
amendment or termination of this Agreement, extension for the performance or
waiver of the obligations or other acts of Purchaser or Acquisition (except
pursuant to this Agreement) or waiver of the Company's rights hereunder, which
amendment, termination, extension or waiver would adversely affect the
stockholders, optionholders or employees of the Company, shall also require
the approval of a majority (or such higher percentage as is required under the
By-laws of the Company) of the then serving directors, if any, who are
directors as of the date hereof (the "Continuing Directors"). If the number of
Continuing Directors prior to the Effective Date is reduced below two for any
reason, the remaining Continuing Directors or Continuing Director shall be
entitled to designate persons to fill such vacancies who shall be deemed
Continuing Directors for all purposes of this Agreement.
ARTICLE II
The Merger
Section 2.1 The Merger. Upon the terms and subject to the conditions hereof,
on the Effective Date, Acquisition shall be merged with and into the Company,
which shall be the surviving corporation (the Company in such capacity being
hereinafter sometimes called the "Surviving Corporation"). From and after the
Effective Date, the status, rights and liabilities of, and the effect of the
Merger on, each of the Constituent Corporations in the Merger and the
Surviving Corporation shall be as provided in Section 259 of the GCL. At any
time, and from time to time after the Effective Date, the last acting officers
of Acquisition, or the corresponding officers of the Surviving Corporation,
may, in the name of Acquisition, execute and deliver all such proper deeds,
assignments, and other instruments and take or cause to be taken all such
further or other action as the Surviving Corporation may deem necessary or
desirable in order to vest, perfect or confirm in the Surviving Corporation
title to and possession of all of the Company's property, rights, privileges,
powers, franchises, immunities and interests and otherwise to carry out the
purposes of this Agreement and the Merger.
Section 2.2 Consummation of the Merger. As soon as practicable (but in any
event within five business days) after the receipt of any required approval of
the Company's stockholders and Board of Directors (or, if
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such approval is not required, all other corporate action required as a
precondition to effect the Merger), and subject to the conditions hereinafter
set forth, the parties hereto shall cause the Merger to be consummated by the
approval and filing with the Secretary of the State of Delaware of a
certificate of merger (or a certified copy of this Agreement) in such form as
required by and executed in accordance with the relevant provisions of
applicable law (the time of such filing being the "Effective Date").
ARTICLE III
Certificate of Incorporation and By-Laws
of the Surviving Corporation
Section 3.1 Certificate of Incorporation. The Certificate of Incorporation
of the Company in effect on the Effective Date shall be the Certificate of
Incorporation of the Surviving Corporation, until thereafter amended as
provided by law.
Section 3.2 By-Laws. The By-Laws of the Company in effect on the Effective
Date shall be the By-Laws of the Surviving Corporation, until thereafter
amended as provided by law and the Surviving Corporation's Certificate of
Incorporation.
Section 3.3 Officers and Board of Directors. The directors of Acquisition on
the Effective Date shall become the directors of the Surviving Corporation
until their respective successors are duly elected and qualified. The officers
of the Company on the Effective Date shall continue as the officers of the
Surviving Corporation, to serve in accordance with the By-Laws thereof until
their respective successors are duly elected and qualified.
ARTICLE IV
Conversion of Shares
Section 4.1 Conversion of Shares. As of the Effective Date, by virtue of the
Merger and without any action on the part of Purchaser, Acquisition, the
Company or the holders of any securities of the Company:
(a) All Shares which are held by the Company as treasury shares, all
authorized and unissued Shares and any Shares owned by Purchaser,
Acquisition or any other direct or indirect subsidiary of Purchaser, shall
be canceled.
(b) Each other outstanding Share (other than Shares held by Dissenting
Stockholders (as defined in Section 4.3)) shall be converted into the right
to receive (U.S.)$10.50 net in cash or such higher amount per Share as may
be paid to any holder of Shares pursuant to the Tender Offer (the "Merger
Price").
(c) Each issued and outstanding share of capital stock of Acquisition
shall be converted into one validly issued, fully paid and non-assessable
share of Voting Common Stock, par value $.01 per share, of the Surviving
Corporation.
(d) Except as provided in Section 7.6 and as set forth in Schedule 4.1,
all notes and other debt or equity instruments of the Company which are
outstanding at the Effective Date shall continue to be outstanding
subsequent to the Effective Date as debt or equity instruments of the
Surviving Corporation, subject to their respective terms and provisions.
Section 4.2 Payment for Shares. Purchaser shall authorize one or more
persons to act as paying agent in connection with the Merger (the "Paying
Agent"). Upon or as soon as practicable after the Effective Date, Purchaser
shall make available and each former holder of Shares shall be entitled to
receive pursuant to Section 4.1(b), upon surrender to the Paying Agent of the
certificate or certificates, which immediately prior to the Effective Date
represented such outstanding Shares, for cancellation, the aggregate amount of
cash into which those Shares shall have been converted in the Merger. Until so
surrendered, each certificate, which immediately prior to the Effective Date
represented outstanding Shares, shall represent solely the right to receive,
upon
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surrender, the aggregate amount of cash into which the Shares represented
thereby shall have been converted. No interest shall accrue or be paid on the
cash payable upon the surrender of the certificate or certificates. Purchaser
shall pay on the Effective Date the amounts due in respect of the stock
options referred to in Section 7.6.
Section 4.3 Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding shares of capital
stock of the Company held by a stockholder who has not voted in favor of nor
consented to the Merger and who complies with all the provisions of the GCL
concerning the right of holders of such stock to dissent from the Merger and
require appraisal of their shares (a "Dissenting Stockholder"), shall not be
converted as described in Section 4.1 but shall become, at the Effective Date,
by virtue of the Merger and without any further action, the right to receive
such consideration as may be determined to be due to such Dissenting
Stockholder pursuant to the GCL; provided, however, that Shares outstanding
immediately prior to the Effective Date and held by a Dissenting Stockholder
who shall, after the Effective Date, withdraw his demand for appraisal or lose
his right of appraisal, in either case pursuant to the GCL, shall be deemed to
be converted as of the Effective Date, into the right to receive the Merger
Price. The Company shall give Purchaser (a) prompt notice of any written
demands for appraisal of shares of capital stock of the Company received by
the Company and (b) the opportunity to direct all negotiations and proceedings
with respect to any such demands. The Company shall not, without the prior
written consent of Purchaser, voluntarily make any payment with respect to, or
settle, offer to settle or otherwise negotiate, any such demands.
Section 4.4 Closing of the Company's Transfer Books. Upon the Effective
Date, the stock transfer books of the Company shall be closed and no transfer
of Shares (other than shares of Voting Common Stock, par value $.01 per share,
into which the capital stock of Acquisition is to be converted pursuant to the
Merger) shall thereafter be made.
Section 4.5 Status of Share Certificates. From and after the Effective Date,
the holders of certificates evidencing ownership of Shares outstanding
immediately prior to the Effective Date shall cease to have any rights with
respect to such Shares except as otherwise provided for herein or by
applicable law.
ARTICLE V
Representations and Warranties of Purchaser and Acquisition
Purchaser and Acquisition jointly and severally represent and warrant to the
Company as follows:
Section 5.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of Canada and has the requisite
corporate power to carry on its business as it is now being conducted.
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is a wholly-owned
subsidiary of Purchaser.
Section 5.2 Authority Relative to this Agreement. Purchaser and Acquisition
have the requisite corporate power and authority to make the Tender Offer,
execute and deliver this Agreement, to perform their obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Purchaser and Acquisition and the consummation by
Purchaser and Acquisition of the transactions contemplated hereby have been
duly authorized by all necessary corporate and, to the extent necessary,
stockholder action of Purchaser and Acquisition and no other acts or corporate
proceedings on the part of Purchaser or Acquisition are necessary to authorize
the Tender Offer, the Merger or this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Purchaser and Acquisition and is a valid and binding obligation
of Purchaser and Acquisition, enforceable against them in accordance with its
terms.
Section 5.3 No Conflicts; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Purchaser and
Acquisition does not, and the consummation of the transactions contemplated
hereby will not (i) conflict with or violate the charter or By-
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Laws, or the equivalent organizational documents, in each case as amended or
restated, of Purchaser or any of its subsidiaries, (ii) in any material
respect, conflict with or violate any federal, state, foreign or local law,
statute, ordinance, rule, regulation, order, judgment or decree (collectively,
"Laws") applicable to Purchaser or any of its subsidiaries or by which any of
their respective properties is bound or subject or (iii) result in any
material breach of or constitute a material default (or an event that with
notice or lapse of time or both would become a material default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of a lien
or encumbrance on any of the properties or assets of Purchaser or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Purchaser or any of its subsidiaries is a party or by or to which
Purchaser or any of its subsidiaries or any of their respective properties is
bound or subject, except for any such conflicts, violations, breaches,
defaults, events, rights of termination, amendment, acceleration or
cancellation, payment obligations or liens or encumbrances described in
clauses (ii) or (iii) that would not, in the aggregate, prevent the Purchaser
and Acquisition from performing, in any material respect, their respective
obligations under this Agreement (a "Purchaser Material Adverse Effect").
(b) The execution and delivery of this Agreement by Purchaser and
Acquisition does not, and consummation of the transactions contemplated hereby
will not, require either Purchaser or Acquisition to obtain any consent,
license, permit, approval, waiver, authorization or order of, or to make any
filing with or notification to, any governmental or regulatory authority,
domestic or foreign (collectively, "Governmental Entities"), except (i) for
applicable requirements, if any, of the Securities Act of 1933, as amended
(the "Securities Act"), the Exchange Act, state securities or blue sky laws
("Blue Sky Laws"), and the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "Hart-Scott-Rodino Act"), and the filing and recordation
of appropriate merger documents as required by the GCL, and (ii) where the
failure to obtain such consents, licenses, permits, approvals, waivers,
authorizations or orders, or to make such filings or notifications, would not,
either individually or in the aggregate, constitute a Purchaser Material
Adverse Effect.
Section 5.4 Information. (a) The documents pursuant to which the Tender
Offer is made, including a Schedule 14D-1, an Offer to Purchase and a related
Letter of Transmittal and any amendments thereof or supplements thereto (the
"Offer Documents"), will not at the respective times such documents are filed
with the SEC, contain any untrue statement of a material fact or omit to state
any material fact (other than information with respect to the Company supplied
by the Company, with respect to which no representation is made) required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. None of
the information to be supplied by Purchaser or Acquisition for inclusion in a
proxy statement in connection with the meeting of the Company's stockholders,
if required, described in Section 7.2 hereof (the "Proxy Statement") or in an
information statement mailed to the Company's stockholders (the "Information
Statement") or any amendments thereof or supplements thereto, will, at the
time of the meeting of stockholders to be held in connection with the Merger
or the mailing to stockholders, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) Since their inception, Purchaser and its subsidiaries have filed all
forms, reports, statements and other documents required to be filed with
applicable Canadian and United States securities authorities, except where the
failure to file such documents would not have a Purchaser Material Adverse
Effect (all such forms, reports, statements and other documents being referred
to herein, collectively, as the "Purchaser Reports"). The Purchaser Reports,
including all Purchaser Reports filed after the date of this Agreement and
prior to the Effective Date, (i) were or will be prepared in all material
respects in accordance with the requirements of applicable Law and (ii) did
not at the time they were filed, or will not at the time they are filed,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except where any such statement or omission would not have a
Purchaser Material Adverse Effect. Notwithstanding this Section 5.4(b),
Purchaser shall not be deemed to represent or warrant the preparation or
accuracy of any Purchaser Report, statement, document or other information
included in the Purchaser Reports that were provided to the Purchaser for
inclusion therein by a third party.
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Section 5.5 Litigation. There is no claim, action, suit, litigation,
proceeding, arbitration or, to the knowledge of Purchaser, any investigation
of any kind at law or in equity (including actions or proceedings seeking
injunctive relief), pending or, to the knowledge of Purchaser, threatened
against Purchaser or any of its subsidiaries or any properties or rights of
Purchaser or any of its subsidiaries (except for claims, actions, suits,
litigation, proceedings, arbitrations or investigations which would not
reasonably be expected to have a Purchaser Material Adverse Effect), and
neither Purchaser nor any of its subsidiaries is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, any Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Governmental Entity or arbitrator,
including, without limitation, cease and desist or other orders, except for
matters which would not have a Purchaser Material Adverse Effect.
Section 5.6 Financing. Purchaser and Acquisition have funds available to
them sufficient to consummate the Tender Offer and the Merger on the terms
contemplated hereby.
Section 5.7 Ownership of Capital Stock. As of the date hereof, each of
Purchaser, Acquisition and their respective affiliates is not an interested
stockholder of the Company (as defined in Section 203 of the GCL).
ARTICLE VI
Representations and Warranties of the Company
The Company represents and warrants to Purchaser and Acquisition as follows:
Section 6.1 Organization and Qualification; Subsidiaries. Each of the
Company and its subsidiaries (as defined in Section 10.7) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization, has all requisite corporate or partnership
power and authority to own, lease and operate its properties and to carry on
its business as it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties makes
such qualification necessary, other than where the failure to be so duly
qualified and in good standing would not have a Company Material Adverse
Effect. The term "Company Material Adverse Effect" as used in this Agreement
shall mean any change or effect that, individually or when taken together with
all other such changes or effects, would be materially adverse to the
financial condition, results of operations or fair market value of the Company
and its subsidiaries, taken as a whole. Schedule 6.1 of the disclosure
schedule delivered to Purchaser by the Company on the date hereof (the
"Company Disclosure Schedule") sets forth, as of the date of this Agreement, a
true and complete list of all the Company's subsidiaries and investments in
business entities together with (A) the jurisdiction of incorporation or
organization of each subsidiary and the percentage of each subsidiary's
outstanding capital stock or other equity interests owned by the Company or
another subsidiary of the Company, and (B) an indication of whether each such
subsidiary is a "Significant Subsidiary" as defined in Rule 1-02 of Regulation
S-X of the SEC. Neither the Company nor any of its subsidiaries owns or has
owned since its inception (other than Nu-South Industries, Inc., a Delaware
corporation, the Conda Partnership, an Idaho general partnership and Nu-Gulf
Industries, Inc., a Delaware corporation), an equity interest in any other
corporation, partnership or joint venture arrangement or other business entity
that is or was material to the financial condition, results of operations or
fair market value of the Company and its subsidiaries, taken as a whole.
Section 6.2 Charter and By-Laws. The Company has heretofore furnished to
Purchaser complete and correct copies of the charter and the By-Laws or the
equivalent organizational documents, in each case as amended or restated, of
the Company and each of its subsidiaries. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of its charter or any
material provision of its By-Laws (or equivalent organizational documents).
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Section 6.3 Capitalization.
(a) The authorized capital stock of the Company consists of 14,666,667
shares of Voting Common Stock, par value $.01 per share, of which 7,453,258
shares are issued and outstanding; 2,000,000 shares of Nonvoting Common Stock,
par value $.01 per share, of which 633,105 shares are issued and outstanding;
290,000 shares of Class A Preferred Stock, par value $100 per share, of which
290,000 shares are issued and outstanding; 20,000 shares of Class B Preferred
Stock, par value $100 per share, of which 344 shares are issued and
outstanding; and 500,000 shares of Serial Preferred Stock, par value $1.00 per
share, none of which is issued and outstanding. Except as described in this
Section 6.3 or in Schedule 6.3(a) of the Company Disclosure Schedule, as of
the date of this Agreement, no shares of capital stock of the Company are
reserved for any purpose. Each of the outstanding shares of capital stock of,
or other equity interests in, each of the Company and its subsidiaries is duly
authorized, validly issued and, in the case of shares of capital stock, fully
paid and nonassessable, and has not been issued in violation of (nor are the
authorized shares of capital stock of any of such corporate entities subject
to) any preemptive or similar rights created by statute, the charter or By-
Laws (or the equivalent organizational documents) of the Company or any of its
subsidiaries, or any agreement to which the Company or any of its subsidiaries
is a party or bound, and such outstanding shares or other equity interests
owned by the Company or a subsidiary of the Company are owned free and clear
of all security interests, liens, claims, pledges, agreements, limitations on
the Company's or such subsidiaries' voting rights, charges or other
encumbrances of any nature whatsoever, except as set forth in the Second
Amended and Restated Agreement of Limited Partnership of NuTec Mineral &
Chemical Company, a Colorado limited partnership, dated as of January 1, 1994,
and as provided in the documents evidencing the Company's credit facility with
Harris Trust and Savings Bank (the "Harris Loan").
(b) There are no existing options, warrants, calls, subscriptions,
convertible securities or other securities, agreements, commitments or
obligations which would require the Company to issue or sell Shares except
pursuant to (a) the 1988 Employee Stock Option Plan and the Company's 1994
Employee Stock Incentive Plan (collectively, the "Stock Option Plans") under
which, as of the close of business on the date hereof, 497,721 Shares were
issuable and reserved for issuance pursuant to outstanding options, (b) the
Company's Nonemployee Director Stock Option Plan (the "Nonemployee Plan")
under which, as of the close of business on the date hereof, 4,167 Shares were
issuable and reserved for issuance pursuant to outstanding options, (c) the
warrant issued September 18, 1989 by the Company to GE Capital Corporation
(the "GE Warrant") under which, as of the close of business on the date
hereof, 111,541 Shares were issuable and reserved for issuance, and (d) the
warrants issued November 2, 1993 by the Company originally to Indosuez CM II,
Inc. under which, as of the close of business on the date hereof, 677,626
Shares were issuable and reserved for issuance (together with the GE Warrant,
the "Warrants"). Except as set forth in Section 6.3 or in Schedule 6.3(b) to
the Company Disclosure Schedule, there are no obligations, contingent or
otherwise, of the Company or any of its subsidiaries (i) to repurchase, redeem
or otherwise acquire any shares of the capital stock of the Company, or the
capital stock or other equity interests of any subsidiary of the Company or
(ii) (other than advances to subsidiaries in the ordinary course of business)
to provide material funds to, or make any material investment in (in the form
of a loan, capital contribution or otherwise), or provide any guarantee with
respect to the obligations of, any subsidiary of the Company or any other
person. Except as described in Schedule 6.3(b) to the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries (x) directly or
indirectly owns, (y) has agreed to purchase or otherwise acquire or (z) holds
any interest convertible into or exchangeable or exercisable for, 5% or more
of the capital stock of any corporation, partnership, joint venture or other
business association or entity (other than the subsidiaries of the Company set
forth in Schedule 6.1 of the Company Disclosure Schedule). Except as set forth
in Schedule 6.3(b) of the Company Disclosure Schedule and except for any
agreements, arrangements or commitments between the Company and its
subsidiaries or between such subsidiaries, there are no agreements,
arrangements or commitments of any character (contingent or otherwise)
pursuant to which any person is or may be entitled to receive any payment
based on the revenues or earnings, or calculated in accordance therewith, of
the Company or any of its subsidiaries. There are no voting trusts, proxies or
other agreements or understandings to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound with respect to the voting of any shares of capital stock of the Company
or any of its subsidiaries.
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(c) The Company has delivered to Purchaser complete and correct copies of
the Stock Option Plans and the Nonemployee Plan and each form of option issued
thereunder and the Warrants, including all amendments thereto, and the Company
has delivered a complete and correct list of all outstanding awards under the
Stock Option Plans and the Nonemployee Plan, setting forth as of the date
hereof (i) the number and type of awards outstanding, (ii) the exercise price
of each outstanding option, (iii) the number of options exercisable, and
(iv) assuming no amendment or waiver of the terms thereof, the number of
options which will become exercisable, and the number of shares of restricted
stock with respect to which the restrictions will lapse, on account of the
Tender Offer, the Merger or any other transaction contemplated hereby.
Section 6.4 Authority. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby (subject to
the approval of the Merger, this Agreement and the transactions contemplated
hereby by the affirmative vote of the holders of a majority of the outstanding
shares of Voting Common Stock of the Company ("Stockholder Approval")). The
Company's Board of Directors has unanimously recommended approval and adoption
of this Agreement by the Company's stockholders entitled to vote on the
Merger. Subject to Stockholder Approval, 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 and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
the Company and is a valid and binding obligation of the Company, enforceable
against it in accordance with its terms.
Section 6.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company does not,
and the consummation of the transactions contemplated hereby will not (i)
conflict with or violate the charter or By-Laws, or the equivalent
organizational documents, in each case as amended or restated, of the Company
or any of its subsidiaries, (ii) in any material respect, conflict with or
violate any Laws applicable to the Company or any of its subsidiaries or by
which any of their respective properties is bound or subject or (iii) except
as described in Schedule 6.5 to the Company Disclosure Schedule, 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 require payment
under, or result in the creation of a lien or encumbrance on any of the
properties or assets of the Company or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or
any of its subsidiaries is a party or by or to which the Company or any of its
subsidiaries or any of their respective properties is bound or subject, except
for any such conflicts, violations, breaches, defaults, events, rights of
termination, amendment, acceleration or cancellation, payment obligations or
liens or encumbrances described in clauses (ii) or (iii) that would not have a
Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company does not,
and consummation of the transactions contemplated hereby will not, require the
Company to obtain any consent, license, permit, approval, waiver,
authorization or order of, or to make any filing with or notification to any
Governmental Entities, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, state securities or Blue Sky Laws, and the
Hart-Scott-Rodino Act, and the filing and recordation of appropriate merger
documents as required by the GCL and (ii) where the failure to obtain such
consents, licenses, permits, approvals, waivers, authorizations or orders, or
to make such filings or notifications, would not, either individually or in
the aggregate, prevent the Company from performing, in any material respect,
its obligations under this Agreement and would not have a Company Material
Adverse Effect.
Section 6.6 Permits; Compliance. Each of the Company and its subsidiaries is
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
(other than any thereof covered by Section 6.12) necessary to own, lease and
operate its properties and to carry on its business as it is now being
conducted (collectively, the "Company Permits"), and
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there is no action, proceeding or investigation pending or, to the knowledge
of the Company, threatened regarding suspension or cancellation of any of the
Company Permits, except where the failure to possess, or the suspension or
cancellation of, such Company Permits, or such action, proceeding or
investigation, would not have a Company Material Adverse Effect. Neither the
Company nor any of its subsidiaries is in conflict with, or in default or
violation of (a) any Law applicable to the Company or any of its subsidiaries
or by or to which any of their material respective properties is bound or
subject or (b) any of the Company Permits, except for any such conflicts,
defaults or violations which would not have a Company Material Adverse Effect.
During the period commencing on June 30, 1991 and ending on the date hereof,
neither the Company nor any of its subsidiaries has received from any
Governmental Entity any written notification, asserting that the Company was
in possible default or violation of any Laws, except as described in Schedule
6.6 to the Company Disclosure Schedule, and except for defaults or violations
that would not have a Company Material Adverse Effect.
Section 6.7 Reports; Financial Statements.
(a) Since June 30, 1991, the Company and its subsidiaries have filed all
forms, reports, statements and other documents required to be filed with (A)
the SEC including, without limitation, (1) all Annual Reports on Form 10-K,
(2) all Quarterly Reports on Form 10-Q, (3) all proxy statements relating to
meetings of stockholders (whether annual or special), (4) all Current Reports
on Form 8-K and (5) all other reports, schedules, registration statements or
other documents (collectively referred to as the "Company SEC Reports") and
(B) any applicable state securities authorities, except where the failure to
file such documents would not have a Company Material Adverse Effect (all such
forms, reports, statements and other documents being referred to herein,
collectively, as the "Company Reports"). The Company Reports, including all
Company Reports filed after the date of this Agreement and prior to the
Effective Date, (i) were or will be prepared in all material respects in
accordance with the requirements of applicable Law (including, with respect to
the Company SEC Reports, the Securities Act and the Exchange Act, as the case
may be, and the rules and regulations of the SEC thereunder applicable to such
Company SEC Reports) and (ii) did not at the time they were filed, or will not
at the time they are filed, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Notwithstanding this Section 6.7(a), the
Company shall not be deemed to represent or warrant the preparation or
accuracy of any form, report, statement, document or other information
included in the Company Reports that were provided to the Company for
inclusion therein by a third party.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports filed since
June 30, 1991, (i) have been or will be prepared in accordance with the
published rules and regulations of the SEC and U.S. generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except (A) to the extent required by changes in U.S. GAAP
and (B) with respect to the Company SEC Reports filed prior to the date of
this Agreement, as may be indicated in the notes thereto) and (ii) fairly
present or will fairly present the consolidated financial position of the
Company and its subsidiaries as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated
(including reasonable estimates of normal and recurring year-end adjustments),
except that any unaudited interim financial statements were or will be subject
to normal and recurring year-end adjustments.
Section 6.8 Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement or as
contemplated by this Agreement or as set forth in Schedule 6.8 of the Company
Disclosure Schedule, since June 30, 1994 the Company and its subsidiaries have
conducted their respective businesses only in the ordinary course and there
has not been: (i) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of the Company or any of its
subsidiaries which would have a Company Material Adverse Effect; (ii) any
material change by the Company or its subsidiaries in their accounting
methods, principles or practices; (iii) except for dividends by a subsidiary
to the Company or another subsidiary, any declaration, setting aside or
payment of any dividends or distributions in respect of shares of the
Company's capital stock or the shares of stock of, or other equity interests
in, any subsidiary, or any
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redemption, purchase or other acquisition by the Company or any of its
subsidiaries of any of the Company's securities or any of the securities of
any subsidiary; (iv) except in the ordinary course of business and consistent
with past practice, any increase in the benefits under, or the establishment
or amendment of, any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock purchase or other employee Plan (as
defined in Section 6.10) or any increase in the compensation payable or to
become payable to directors, officers or employees of the Company or its
subsidiaries, (v) any grant of stock options other than grants prior to March
31, 1995; (vi) any revaluation by the Company or any of its subsidiaries of
any of their assets, including the writing down of the value of inventory or
the writing down or off of notes or accounts receivable, other than in the
ordinary course of business; (vii) any entry by the Company or any of its
subsidiaries into any commitment or transaction material to the Company and
its subsidiaries, taken as a whole (other than this Agreement and the
transactions contemplated hereby); (viii) except pursuant to the Harris Loan,
any material increase in indebtedness for borrowed money; or (ix) a Company
Material Adverse Effect other than a Company Material Adverse Effect that is
caused by changes in the market price of raw materials, feedstocks or finished
goods.
Section 6.9 Absence of Litigation. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement or as set forth in Schedule
6.9 to the Company Disclosure Schedule, there is no claim, action, suit,
litigation, proceeding, arbitration or, to the knowledge of the Company,
investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries or any
properties or rights of the Company or any of its subsidiaries (except for
claims, actions, suits, litigation, proceedings, arbitrations or
investigations which would not reasonably be expected to have a Company
Material Adverse Effect), and neither the Company nor any of its subsidiaries
is subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with any Governmental Entity, or any judgment,
order, writ, injunction, decree or award of any Government Entity or
arbitrator, including, without limitation, cease and desist or other orders,
except for matters which would not have a Company Material Adverse Effect.
Section 6.10 Employee Plans; Labor Matters.
(a) Schedule 6.10 of the Company Disclosure Schedule sets forth, and the
Company has made available to Purchaser true and correct copies of, (i) all
employment agreements with officers of the Company or its subsidiaries and all
increases in their compensation and benefits since December 31, 1994; (ii) all
agreements with consultants of the Company or its subsidiaries obligating the
Company or any subsidiary to make annual cash payments in an amount exceeding
$50,000; (iii) all non-competition agreements with the Company or a subsidiary
executed by officers of the Company; and (iv) all material plans, programs,
agreements and other arrangements of the Company or its subsidiaries with or
relating to its employees.
(b) Except for the plans and arrangements set forth on Schedule 6.10 to the
Company Disclosure Schedule (the "Scheduled Plans"), neither the Company nor
any member of the Controlled Group now maintains, has ever maintained or
contributed to, or has any plans or commitments for, any employee Plans (as
such term is defined in the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (S) 3(3)) or any other retirement, pension, stock option,
stock appreciation right, profit sharing, incentive compensation, deferred
compensation, savings, thrift, vacation pay, severance pay, or other employee
compensation or Plan, agreement, practice, or arrangement, whether written or
unwritten, whether or not legally binding (collectively, the "Plans"). For
purposes of this Agreement, "Controlled Group" means a controlled or
affiliated group within the meaning of the Internal Revenue Code of 1986, as
amended ("Code") (S) 414(b), (c), (m), or (o) of which the Company is a
member. The Company has made available to Purchaser correct and complete
copies of all Scheduled Plans (including a detailed written description of any
Scheduled Plan that is unwritten, including a description of eligibility
criteria, participation, vesting, benefits, funding arrangements and assets
and any other provisions relating to the Company) and, with respect to each
Scheduled Plan, a copy of each of the following: (i) the most recent favorable
determination letter, (ii) materials submitted to the Internal Revenue Service
in support of a pending determination letter request, (iii) the most recent
letter issued by the Internal Revenue Service recognizing tax exemption, (iv)
each insurance contract, trust agreement, or other funding vehicle, (v) the
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most recently filed Forms 5500 plus all schedules and attachments, and (vi)
each summary plan description or other general explanation or communication
distributed or otherwise provided to employees with respect to each Scheduled
Plan that describes the terms of the Scheduled Plan.
(c) Each Scheduled Plan has at all times been in compliance, in form and in
operation, in all material respects with all applicable requirements of law
and regulations, including without limitation ERISA. Each Scheduled Plan that
is intended to be a qualified plan has received a favorable determination
letter from the Internal Revenue Service; nothing has occurred since the date
of the most recent favorable determination letter that would cause the loss of
the Scheduled Plan's qualification; and each such Scheduled Plan has at all
times been in compliance, in form and in operation, in all material respects
with the applicable requirement of the Code and the applicable Treasury
Regulations.
(d) Neither the Company nor any party in interest (as such term is defined
in ERISA (S) 3(14)) nor any disqualified person (as such term is defined in
Code (S) 4975) has engaged in any prohibited transaction within the meaning of
ERISA (S) 406 or Code (S) 4975 that would have a Company Material Adverse
Effect.
(e) All contributions to Scheduled Plans for all periods ending prior to the
Effective Date (including periods from the first day of the current plan year
to the Effective Date) will be made prior to or accrued as of the Effective
Date by the Company in accordance with past practice.
(f) All insurance premiums with respect to each Scheduled Plan have been
paid in full or accrued, subject only to normal retrospective adjustments in
the ordinary course for policy years or other applicable policy periods ending
on or before the Effective Date.
(g) Neither the Company nor any member of the Controlled Group has any
liability for failure to comply with ERISA or the Code for any action or
failure to act in connection with the administration or investment of any
Scheduled Plan, except where such liability would not have a Company Material
Adverse Effect.
(h) Neither the Company nor any member of the Controlled Group has ever
maintained, contributed to, or been obligated to contribute to any plan that
is subject to Title IV of ERISA or the minimum funding requirements of Code
(S) 412. Neither the Company nor any member of the Controlled Group has ever
contributed to or been obligated to contribute to a multiemployer plan (as
such term is defined in ERISA (S) 3(37)).
(i) With respect to each Scheduled Plan and Plan, there are no material
actions, suits, grievances, arbitrations or other manner of litigation or
material claims, with respect to any Scheduled Plan (except for routine claims
for benefits made in the ordinary course of plan administration for which plan
administrative procedures have not been exhausted) pending or, to the
Company's knowledge, threatened against or with respect to any Scheduled Plan
or Plan, any plan sponsor, or any fiduciary (as such term is defined in ERISA
(S) 3(21)) of such Scheduled Plan or Plan, other than actions, suits,
grievances, claims, arbitrations or other manner of litigation that would not
have a Company Material Adverse Effect.
(j) Except as set forth in Schedule 6.10 to the Company Disclosure Schedule,
neither the Company nor any member of the Controlled Group has any liability
for post-retirement welfare benefits except for the continuation coverage
required by Part 6 of Title I of ERISA.
(k) Neither the Company nor any of its subsidiaries is a party to any
collective bargaining or other labor union contracts. No collective bargaining
agreement is being negotiated by the Company or any of its subsidiaries. To
the Company's knowledge, there is no pending or threatened labor dispute,
strike or work stoppage against the Company or any of its subsidiaries which
may materially interfere with the respective business activities of the
Company or any of its subsidiaries. To the knowledge of the Company, none of
the Company, any of its subsidiaries or any of their respective
representatives or employees has committed any unfair labor practices in
connection with the operation of the respective businesses of the Company or
its subsidiaries and, to the knowledge of the Company, there is no pending or
threatened charge or complaint against
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the Company or any of its subsidiaries by the National Labor Relations Board
or any comparable state agency that would have a Company Material Adverse
Effect.
Section 6.11 Taxes. The Company has prepared and duly filed (and to its
knowledge has done so accurately and correctly) all material federal, state,
county and local income, franchise, use, real property and personal property
tax returns and reports (including all attached statements and schedules)
required to be filed as of the date hereof with respect to the Company and its
subsidiaries and has duly paid, withheld or reserved for all taxes, penalties
and other governmental charges required to be paid that have been assessed or
levied against or upon the Company and its subsidiaries or any of their
properties, assets, income, franchises, licenses or sales including without
limitation income, gross receipt and property taxes. To the extent that any
such taxes relate to periods on or prior to June 30, 1994, such taxes have
either been paid or are reflected as a liability on the Company's June 30,
1994 audited financial statements. If not paid, the Company is contesting such
amount in good faith by appropriate proceedings. In the event the Company is
contesting such amounts in good faith, the Company has set aside on its books
adequate reserves in accordance with U.S. GAAP with respect thereto and all of
such matters involving an amount in excess of $100,000 are described in
Schedule 6.11 to the Company Disclosure Schedule. Except as set forth in
Schedule 6.11 to the Company Disclosure Schedule, the Company does not know of
any proposal by any taxing authority for material additional taxes or
assessments against or upon the Company. Except as set forth in Schedule 6.11
to the Company Disclosure Schedule, to the knowledge of the Company all monies
required to be withheld by the Company from employees for income taxes, social
security taxes and unemployment insurance taxes have been collected or
withheld or either paid to the respective governmental agencies or set aside
in cash for such purpose. Except as set forth in Schedule 6.11 to the Company
Disclosure Schedule, the Company has not entered into any agreement for the
extension of time for the assessment of any tax or tax delinquency. The
Company has made available to Purchaser an accurate, correct and complete copy
of each return or statement filed by, on behalf of or including the Company
for federal income tax purposes or state and local income or franchise tax
purposes for the tax years of the Company ended June 30, 1992, June 30, 1993
and June 30, 1994. The Company is not subject to any joint venture,
partnership or other arrangement or contract that is treated as a partnership
for federal income tax purposes, except for NuTec Mineral & Chemical Company.
The net operating losses, net operating loss carry forwards and other tax
attributes of the Company as shown in the federal corporate income tax return
of the Company for the year ended June 30, 1994 are not subject to any
limitation under Code Sections 381, 382, 383 or 384, or any other provision of
the Code or the federal consolidated return regulations (or any predecessor
provision of any Code section or the regulations), and, to the knowledge of
the Company, no event has occurred since June 30, 1994 that would prevent the
Company from utilizing these net operating losses, net operating loss carry
forwards or other tax attributes if it had sufficient income. For purposes of
the prior sentence "any limitation" shall not include the specific tax issues
regarding the Company's net operating losses that have been raised by the
Internal Revenue Service in written communications to the Company that have
been provided to the Purchaser.
Section 6.12 Environmental Matters. Except for matters disclosed in the
Company SEC Reports or Schedule 6.12 to the Company Disclosure Schedule and
except for matters that would not result in a Company Material Adverse Effect,
to the knowledge of the Company, (i) the properties, operations and activities
of the Company and its subsidiaries are in compliance with all applicable
Environmental Laws; (ii) the Company and its subsidiaries and the properties
and operations of the Company and its subsidiaries are not subject to any
existing, pending or threatened action, suit, investigation, inquiry or
proceeding by or before any governmental authority under any Environmental Law
and neither the Company nor its subsidiaries have received any notice that
they are responsible or potentially responsible for clean up of any property;
(iii) all notices, permits, licenses, or similar authorizations, if any,
required to be obtained or filed by the Company or any of its subsidiaries
under any Environmental Law in connection with any aspect of the business of
the Company or its subsidiaries, including without limitation those relating
to the treatment, storage, disposal or release of a hazardous substance, have
been duly obtained or filed and the Company and its subsidiaries are in
compliance, in all material respects, with the terms and conditions of all
such notices, permits, licenses and similar authorizations; (iv) the Company
and its subsidiaries have satisfied and are currently in compliance with all
financial responsibility requirements applicable to their operations and
imposed by any governmental authority under any Environmental Law, and
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the Company and its subsidiaries have not received any notice of material
noncompliance with any such financial responsibility requirements; (v) there
are no physical or environmental conditions existing on any property of the
Company or its subsidiaries or resulting from the Company's or such
subsidiaries' operations or activities, past or present, at any location, that
would be reasonably likely to give rise to any on-site or off-site remedial
obligations imposed on the Company or any of its subsidiaries under any
Environmental Laws; (vi) since the effective date of the relevant requirements
of applicable Environmental Laws and to the extent required by such applicable
Environmental Laws, all hazardous substances and wastes generated by the
Company and its subsidiaries have been handled and stored in compliance with
Environmental Laws, transported only by carriers authorized under
Environmental Laws to transport such substances and wastes, and disposed of
only at treatment, storage, and disposal facilities authorized under
Environmental Laws to treat, store or dispose of such substances and wastes;
(vii) there has been no exposure of any person or property to hazardous
substances or any pollutant or contaminant, nor has there been any release of
hazardous substances, or any pollutant or contaminant into the environment by
the Company or its subsidiaries or in connection with their properties or
operations that could reasonably be expected to give rise to any claim against
the Company or any of its subsidiaries for costs, damages or compensation;
(viii) the Company and its subsidiaries have made available to Purchaser or
its agents all internal and external environmental audits and studies and all
correspondence on substantial environmental matters or liabilities in the
possession of the Company or its subsidiaries relating to any of the current
or former properties or operations of the Company and its subsidiaries (except
that in the case of any written materials for which the Company asserts an
attorney client privilege, the Company shall provide Purchaser with a list of
such materials and a summary of their contents, and the Company shall
cooperate with Purchaser to provide Purchaser with access to such materials if
such access can be provided without violation of the attorney client
privilege); and (ix) neither the Company nor its subsidiaries are subject to
or have entered into any agreement requiring that they pay to, defend,
indemnify or hold harmless any person for or against any environmental
liabilities and costs other than agreements disclosed in the Company SEC
Reports and the Harris Loan. For purposes of this Agreement, the term
"Environmental Laws" shall mean any and all laws, statutes, ordinances, rules,
regulations, or orders of any Governmental Entity pertaining to health or the
environment currently in effect in any and all jurisdictions in which the
party in question and its subsidiaries own property or conduct business,
including without limitation, the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"),
as amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Hazardous Materials Transportation Act, as amended, any state laws
implementing the foregoing federal laws, and any similar state laws, and all
other federal, state and local environmental conservation or protection laws.
For purposes of this Agreement, the terms "hazardous substance" shall mean
hazardous substance as defined in CERCLA, petroleum, and any other chemical or
material regulated under any Environmental Laws, "release" shall have the
meanings specified in CERCLA, and "disposal" shall have the meaning specified
in RCRA; provided, however, that to the extent the current laws of the state
in which the property is located have established a meaning for "hazardous
substance," "release," or "disposal" that is broader than that specified in
either CERCLA or RCRA, such broader meaning shall apply.
Section 6.13 Delaware Law. The Board of Directors of the Company has
approved the Tender Offer, the Merger and this Agreement, and such approval is
sufficient to render inapplicable the restrictions on business combinations
set forth in Section 203 of the GCL, to the Tender Offer, the Merger, this
Agreement, the transactions contemplated by this Agreement and any additional
acquisitions of the Shares by Purchaser or Acquisition.
Section 6.14 Inventory; Accounts Receivable. The inventory of the Company
and its subsidiaries consists of raw materials, work in process and finished
goods and supplies, all of which is merchantable and fit, in all material
respects, for the purpose for which it was procured or manufactured, and none
of which is slow-moving, obsolete, damaged or defective, subject only to the
reserve for inventory writedown provided for in the Company's March 31, 1995
financial statements, as adjusted for operations and transactions through the
date hereof in accordance with the past custom and practice of the Company and
its subsidiaries. All notes and
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accounts receivable of the Company and its subsidiaries are reflected properly
on their books and records in all material respects.
Section 6.15 Insurance. The Company and each of its subsidiaries are
currently insured for reasonable amounts against such risks as companies
engaged in a similar business would, in accordance with good business
practice, customarily be insured.
Section 6.16 Properties. Except for liens and encumbrances (a) referred to
in the reports described in Schedule 6.16 to the Company Disclosure Schedule,
(b) granted by a subsidiary of the Company to the Company or another
subsidiary, (c) granted pursuant to the Harris Loan, or (d) arising in the
ordinary course of business and for properties and assets disposed of in the
ordinary course of business after June 30, 1994, the Company and its
subsidiaries have defensible title or leasehold interest, free and clear of
all liens, the existence of which would have a Company Material Adverse
Effect, to all their material properties and assets, whether tangible or
intangible, real, personal or mixed. All buildings, and all fixtures,
equipment and other property and assets which are material to its business on
a consolidated basis, held under leases by any of the Company or its
subsidiaries are, to the Company's knowledge, held under valid instruments
enforceable by the Company or its subsidiaries in accordance with their
respective terms. In all material respects, the Company's and its
subsidiaries' plant and equipment have been maintained consistently with
industry standards and are in good and serviceable condition, reasonable wear
and tear excepted.
Section 6.17 Certain Contracts and Restrictions. The Company SEC Reports or
Schedule 6.17 to the Company Disclosure Schedule list, as of the date of this
Agreement, each agreement, contract or commitment (other than any thereof
entered into in the ordinary course of business) of a duration in excess of
six months to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound pursuant to which the
Company or its subsidiaries paid consideration during the previous twelve
months in excess of $1,000,000, or which is otherwise material to the
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. The Amendment to Ore Purchase Agreement,
effective as of June 1, 1995, between Rhone-Poulenc, Inc. and the Company
remains in effect and has not been amended or otherwise modified.
Section 6.18 Information Supplied. Without limiting any of the
representations and warranties contained herein, no representation or warranty
of the Company set forth herein contains any untrue statement of material
fact, or, at the date thereof, omits to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which such statements are made, not misleading.
Section 6.19 Opinion of Financial Advisor. The Company has received the
opinion of PaineWebber Incorporated to the effect that, as of August 8, 1995,
the consideration to be received by the holders of the Shares (other than
stockholders of the Company affiliated with Weiss, Peck & Greer) in the Tender
Offer and/or the Merger is fair, from a financial point of view, to such
holders.
Section 6.20 Futures Trading and Fixed Price Exposure. Except as set forth
in Schedule 6.20 of the Company Disclosure Schedule and except as contemplated
by the Harris Loan, none of the Company or any of its subsidiaries engages in
any futures or options trading or is a party to any price swaps, hedges,
futures or similar investments.
Section 6.21 Intellectual Property. Schedule 6.21 to the Company Disclosure
Schedule contains a complete list as of the date of this Agreement of all
material (i) patents owned or used by the Company or patent applications filed
by the Company, (ii) trademarks, service marks, tradenames, Company
copyrights, or applications therefor, owned or used by the Company. Schedule
6.21 of the Company Disclosure Schedule lists all officers of the Company who
have executed technology rights agreements with the Company. To the Company's
knowledge, no patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, trade secrets,
tradenames, copyrights, licenses, inventions, drawings, designs, customer
lists, proprietary know how or information or other rights with respect
thereto (collectively referred to
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as "Proprietary Rights"), are necessary to or presently being used in the
business of the Company other than those which have been lawfully obtained or
applied for; and to the Company's knowledge, the operations of the Company do
not in any material respect conflict with or infringe on the rights of any
third party. Any person who has asserted that the Company's operations
conflict with or infringe upon any of such person's rights, or any Proprietary
Rights owned, possessed or used by such other person has been disclosed.
Section 6.22 Contributions, Etc. The Company annually inquires of at least
its executive officers concerning conduct of the business including use of
funds for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activities unlawful payments to foreign or
domestic government officials, political parties, or campaigns and no material
violation or unlawful activity has been identified.
Section 6.23 Easements. The business of the Company and its subsidiaries has
been operated in a manner that does not violate the material terms of any
easements, rights of way, permits, servitudes, licenses, leasehold estates and
similar rights relating to real property used by the Company and its
subsidiaries in such business (collectively, "Easements") material to such
business. All material Easements are valid and enforceable and grant the
rights purported to be granted thereby and all rights necessary thereunder for
the current operation of such business.
Section 6.24 Information. Neither (a) the Proxy Statement or Information
Statement (other than information provided by Purchaser or Acquisition, as to
which no representation is made), nor (b) any information provided by the
Company for inclusion in any amendments or supplements to the Offer Documents,
nor (c) the Schedule 14D-9 to be filed by the Company in connection with the
Tender Offer and any amendments thereof or supplements thereto will contain,
at the respective times such documents are filed with the SEC, and, in the
case of the Proxy Statement or Information Statement or any amendments thereof
or supplements thereto, at the time of the meeting of stockholders to be held
in connection with the Merger, if required, or at the time of mailing to
stockholders, as the case may be, any untrue statement of a material fact or
will 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 were made, not misleading. The Schedule 14D-9,
the Proxy Statement or Information Statement, as the case may be, and any
amendments of or supplements to any of the foregoing, will comply as to form
in all material respects with the provisions of the Exchange Act.
ARTICLE VII
Covenants
Section 7.1 Conduct of Business by the Company Pending the
Merger. Subsequent to the date hereof and prior to the Effective Date, unless
Purchaser shall otherwise agree in writing or unless the failure to comply
with any of the following covenants results from actions by the Board of
Directors of the Company which are approved by a majority of the directors
appointed by Purchaser pursuant to Section 7.11 hereof and except as otherwise
specifically contemplated by this Agreement:
(a) the businesses of the Company and its subsidiaries shall be conducted
only in, and neither the Company nor any of its subsidiaries shall take any
action except in, the ordinary and usual course of business.
(b) the Company shall not
(i) increase the compensation payable to or to become payable to any
director or executive officer, except for increases in salary or wages
payable or to become payable in the ordinary course of business and
consistent with past practice; (ii) grant any severance or termination
pay (other than pursuant to the normal severance policy of the Company
or its subsidiaries as in effect on the date of this Agreement) to, or
enter into or amend any employment or severance agreement with, any
director, officer or employee; (iii) establish, adopt or enter into any
new employee Plan or arrangement; or (iv) except as may be required by
applicable law and actions that are not inconsistent with the
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provisions of Section 6.10 of this Agreement, amend, or take any other
actions (other than the acceleration of vesting or waiving of
performance criteria permitted pursuant to the Plans upon a change in
control of the Company) with respect to, any of the Plans;
(2) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of capital stock, except for dividends
by a subsidiary to the Company or another subsidiary;
(3) (i) except as described in Schedule 7.1(b)(3) to the Company
Disclosure Schedule, redeem, purchase or otherwise acquire any shares
of its or any of its subsidiaries' capital stock or any securities or
obligations convertible into or exchangeable for any shares of its or
its subsidiaries' capital stock (other than any such acquisition
directly from any wholly owned subsidiary of the Company in exchange
for capital contributions or loans to such subsidiary), or any options,
warrants or conversion or other rights to acquire any shares of its or
its subsidiaries' capital stock or any such securities or obligations
(except in connection with the exercise of outstanding stock options or
Warrants in accordance with their terms); (ii) effect any
reorganization or recapitalization; or (iii) split, combine or
reclassify any of its or its subsidiaries' capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its or its
subsidiaries' capital stock;
(4) (i) except as described in Schedule 7.1(b)(4) to the Company
Disclosure Schedule, issue, deliver, award, grant or sell, or authorize
or propose the issuance, delivery, award, grant or sale (including the
grant of any security interests, liens, claims, pledges, limitations in
voting rights, charges or other encumbrances) of, any shares of any
class of its or its subsidiaries' capital stock (including shares held
in treasury), any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to
acquire any such shares (except as permitted for the issuance of shares
upon the exercise of stock options outstanding as of the date of this
Agreement) other than (a) the conversion of Voting Common Stock and
Nonvoting Common Stock as provided in paragraph 4(D) of Section 2 of
Article IV of the Company's Certificate of Incorporation, (b) the
exercise of the Warrants or (c) the exercise of options under the Stock
Option Plans or the Nonemployee Plan; or (ii) amend or otherwise modify
the terms of any such rights, warrants or options the effect of which
shall be to make such terms more favorable to the holders thereof;
(5) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, 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 of any other person
(other than the purchase of assets from suppliers or vendors in the
ordinary course of business) in each case which are material,
individually or in the aggregate, to the Company and its subsidiaries,
taken as a whole;
(6) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its material assets or any
material assets of any of its subsidiaries, except for dispositions in
the ordinary course of business and consistent with past practice;
(7) solicit, initiate or knowingly encourage any inquiries,
discussions or negotiations with any person (other than Purchaser or
Acquisition) concerning any Acquisition Proposal (as defined in Section
9.1(c)) or solicit, initiate or knowingly encourage any effort or
attempt by any other person to do, make or seek an Acquisition Proposal
or, unless required in order for the Board of Directors of the Company
to comply with its fiduciary responsibilities, with a view to pursuing
an Acquisition Proposal with such person, engage in discussions or
negotiations with or disclose any nonpublic information relating to the
Company or any of its subsidiaries to such person or authorize or
permit any of the officers, directors or employees of the Company or
any of its subsidiaries or any investment banker, financial adviser,
attorney, accountant or other representative retained by the Company or
any of its subsidiaries to take any such action. The Company shall
immediately communicate to Purchaser in writing the terms of any
Acquisition Proposal which it may receive;
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(8) adopt or propose to adopt any amendments to its charter or By-
Laws, which would alter the terms of its capital stock or would have an
adverse impact on the consummation of the transactions contemplated by
this Agreement;
(9) (i) change, in any material respect, any of its methods of
accounting in effect at June 30, 1995, or (ii) make or rescind any
express or deemed election relating to taxes, settle or compromise any
claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to Taxes (except where the
amount of such settlements or controversies, individually or in the
aggregate, would not have a Company Material Adverse Effect), or change
any of its methods of reporting income or deductions for federal income
tax purposes from those employed in the preparation of the federal
income tax returns for the taxable year ending June 30, 1994, except,
in each case, as may be required by Law or U.S. GAAP;
(10) other than as permitted by the Harris Loan, incur any material
obligation for borrowed money or purchase money indebtedness, whether
or not evidenced by a note, bond, debenture or similar instrument;
(11) enter into any material arrangement, agreement or contract with
any third party (other than customers in the ordinary course of
business) that provides for an exclusive arrangement with that third
party or is substantially more restrictive on the Company or
substantially less advantageous to the Company than arrangements,
agreements or contracts existing on the date hereof unless such
arrangement is entered into in the ordinary course of business; or
(12) agree in writing or otherwise to do any of the foregoing.
Section 7.2 Stockholders' Meeting and Proxy Statement. Except as provided in
Section 9.1 of this Agreement, the Company shall take all action necessary in
accordance with applicable law and its Certificate of Incorporation and By-
Laws to convene a meeting of the holders of the shares of Voting Common Stock
of the Company as promptly as practicable after the expiration of the Tender
Offer to consider and vote upon the adoption of the Merger Agreement, if such
stockholder approval is required by applicable law. In connection with any
stockholders' meeting, if required, the Company shall prepare and file the
Proxy Statement with the SEC and Purchaser shall furnish all information
concerning Purchaser and Acquisition as the Company may reasonably request in
connection with the preparation of the Proxy Statement. At any stockholders'
meeting, Purchaser agrees to vote or cause all of the Shares acquired pursuant
to the Tender Offer or otherwise by Acquisition or any affiliate of Purchaser
to be voted in favor of the Merger. The Company shall in the Proxy Statement,
through its Board of Directors, recommend that the Company's stockholders
adopt the Merger Agreement, if such vote is required, except to the extent
that the Board of Directors shall have withdrawn or modified its approval or
recommendation of the Tender Offer or the Merger Agreement as contemplated by
Section 9.1(c).
Section 7.3 Certain Filings and Consents. Purchaser, Acquisition and the
Company shall (a) cooperate with each other in determining whether any filings
are required to be made or consents, approvals, permits or authorizations are
required to be obtained under any federal or state law or regulation or
whether any consents, approvals or waivers are required to be obtained from
other parties to loan agreements or other contracts material to the business
of the Company and its subsidiaries taken as a whole in connection with the
consummation of the Merger and (b) actively assist each other in making any
such filings and obtaining any consents, permits, authorizations, approvals or
waivers that are required.
Section 7.4 Access. Upon reasonable notice, the Company shall, and shall
cause each of its subsidiaries to, afford Purchaser and Acquisition, and their
respective representatives, full access during normal business hours until the
Effective Date to all of its properties, books, contracts, commitments and
records (including, but not limited to, tax returns) and, during that period,
the Company and each of its subsidiaries shall furnish promptly to Purchaser
and Acquisition, and their respective representatives, all information
concerning its business, properties, assets, liabilities, operations,
financial condition and personnel as Purchaser or Acquisition
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may reasonably request; except that in the case of all written materials for
which the Company asserts an attorney client privilege, the Company shall
provide Purchaser with a list of such materials and a summary of their
contents, and the Company shall cooperate with Purchaser to provide Purchaser
with access to such materials if such access can be provided without violation
of the attorney client privilege. Purchaser and Acquisition shall, and shall
use their reasonable best efforts to cause their consultants and advisors to,
hold in confidence all such information until such time as such information is
otherwise publicly available (unless otherwise required to disclose such
information by law), and if this Agreement is terminated, Purchaser and
Acquisition shall deliver to the Company all documents, work papers and other
material obtained by them from the Company pursuant to the terms of this
Agreement.
Section 7.5 Expenses.
(a) Except as provided in Section 9.2(a) of this Agreement, all Expenses (as
defined in Section 7.5(b) hereof) incurred by the parties hereto shall be
borne solely and entirely by the party which has incurred such Expenses.
(b) "Expenses" as used in this Agreement shall include all out-of-pocket
expenses (including, without limitation, all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of the Tender Offer, this Agreement, the preparation, printing,
filing and mailing of the Offer Documents, the Schedule 14D-1, the Schedule
14D-9, the Proxy Statement, the Information Statement, the solicitation of
stockholder approvals and all other matters related to the consummation of the
transactions contemplated hereby; provided, however, that "Expenses" shall not
include any fees of legal counsel or advisors of any stockholder of any party.
Section 7.6 Employee Stock Options; Warrant. On or before the Effective Date
of the Merger, the Company shall take all steps necessary for all outstanding
options granted under the Stock Option Plans and the Nonemployee Plan to be
converted by the Merger into the right to receive for each Share covered
thereby a cash amount equal to the excess of the Merger Price over the option
exercise price. Such amount shall be paid by Purchaser on the Effective Date.
On the Effective Date of the Merger, all rights under the Warrants shall be
converted by the Merger into the right to receive for each Share covered
thereby the right to receive the Merger Price upon payment to the Company of
the applicable Warrant exercise price. The Company shall take no action, or
allow any action to be taken, or fail to take any action, that would cause or
result in any acceleration of exercisability of outstanding options granted
under the Stock Option Plans and the Nonemployee Plan.
Section 7.7 Indemnification and Insurance. The Company shall indemnify and
hold harmless, and after the Effective Date, Purchaser and the Surviving
Corporation shall indemnify and hold harmless, each present employee, agent,
director or officer of the Company and the Company's subsidiaries (the
"Indemnified Parties") (a) with respect to any losses, claims, damages,
liabilities, costs and expenses, including reasonable attorneys' and expert
witness fees, arising out of or pertaining to any action or omission occurring
prior to the Effective Date (including any which arise out of or pertain to
the transactions contemplated by this Agreement) and (b) as provided in their
respective charters or by-laws in effect at the date hereof (to the extent
consistent with applicable law), which provisions shall survive the Merger and
shall continue in full force and effect for a period of not less than five
years from the Effective Date. In the event any claim or claims (a "Claim or
Claims") are asserted or made pursuant to the preceding sentence within such
five-year period, all rights to indemnification in respect of any such Claim
or Claims shall continue until disposition of any and all such Claims. In the
event that a claim is asserted against any Indemnified Party with respect to
any matter to which the indemnities contained in this section relate, the
Indemnified Party shall give prompt written notice to the Surviving
Corporation setting forth in reasonable detail the basis for such claim for
indemnification. The Surviving Corporation shall have the right, at its
election, to take over the defense or settlement of such claim at its own
expense by giving prompt notice to that effect to the Indemnified Party. If
the Surviving Corporation shall have so assumed the defense of any Claim, the
Surviving Corporation shall be authorized to consent to a settlement of, or
the entry of any judgment arising from, any such Claim, without the prior
written consent of the Indemnified Party; provided,
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however, that a condition to any such settlement shall be a complete release
of the Indemnified Party with respect to such Claim. If the Surviving
Corporation does not, within thirty days after receipt of the Indemnified
Party's notice of Claim, (x) give such notice to take over the defense of such
Claim and proceed to defend the Claim or (y) object to such Claim in writing
to the Indemnified Party, then the Indemnified Party shall have the right to
undertake the defense of such Claim and the Surviving Corporation shall pay to
the Indemnified Party the reasonable fees and expenses of its counsel. The
Surviving Corporation shall not be liable for any settlement effected without
its consent, which consent shall not be unreasonably withheld. The Indemnified
Party shall at all times have the right, at its option and expense, to
participate fully in, but not to control, any such defense. Without limiting
the foregoing, the Company and, after the Effective Date, the Surviving
Corporation, to the extent permitted by applicable law, will periodically
advance reasonable expenses as incurred with respect to the foregoing to the
fullest extent permitted under applicable law provided the person to whom the
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification. In
the event that within five years from the Effective Date the Surviving
Corporation shall consolidate or merge with or into any other person or shall
transfer all or substantially all of its assets to any person and such person
surviving such consolidation or merger or to which such assets shall have been
transferred is not a Delaware corporation, the Surviving Corporation shall
enter into an agreement pursuant to which such person shall agree to provide
indemnification substantially equivalent to that required of the Company
hereunder.
Section 7.8 Employee Benefits. For a period of two years from the Effective
Date, Purchaser and the Surviving Corporation agree to honor in accordance
with their terms the Company's employee benefit plans, in each case to the
extent the same have been delivered or made available to Purchaser for review,
provided however that Purchaser or the Surviving Corporation may amend or
terminate any such plan at any time after the Effective Date to the extent the
amendment or termination is deemed to be necessary or appropriate to comply
with the requirements of applicable law.
Section 7.9 Maintenance of Financing. Purchaser and Acquisition shall at all
times have available to them funds sufficient to consummate the Tender Offer
and the Merger on the terms contemplated by this Agreement.
Section 7.10 Resignation of Directors. The Company will obtain the
resignations of all of the Continuing Directors of the Company on the
Effective Date.
Section 7.11 Board of Directors. Upon the acquisition of Shares pursuant to
the Tender Offer, which, when added together with Shares owned by Purchaser or
any of its direct or indirect subsidiaries, equal at least a majority of the
then outstanding shares of Voting Common Stock, the Company shall fill any
vacancies and increase the size of its Board of Directors as necessary to
enable Purchaser to designate at its option a majority of the Company's Board
of Directors, and shall cause Purchaser's designees to be so elected and shall
mail promptly the information required by Section 14(f) of the Act and Rule
14f-1 promulgated thereunder.
ARTICLE VIII
Conditions
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of the following conditions:
(a) The holders of the Voting Common Stock of the Company entitled to
vote shall have duly approved the Merger if required by applicable law.
(b) No preliminary or permanent injunction or other order by a court of
competent jurisdiction which prevents the consummation of the Merger shall
have been issued and remain in effect (each party agreeing to use its
reasonable best efforts to have any such injunction lifted).
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(c) No action shall have been taken nor shall any statute, rule or
regulation have been enacted by the government of the United States or any
state thereof that makes the consummation of the Tender Offer or the Merger
illegal in any material respect.
(d) The applicable waiting period under the Hart-Scott-Rodino Act with
respect to the transactions contemplated by this Agreement shall have
expired or been terminated.
Section 8.2 Conditions to Obligations of Purchaser and Acquisition to Effect
the Merger. The obligations of Purchaser and Acquisition to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Date of the
following additional conditions:
(a) The representations and warranties of the Company set forth in
Article VI shall be true and correct in all material respects on the
Effective Date (or on such other date specified in Article VI) with the
same force and effect as though made on and as of such date, and Purchaser
and Acquisition shall have received a certificate to that effect from the
Chief Executive Officer and the Treasurer of the Company.
(b) All of the covenants and agreements of the Company to be performed or
complied with pursuant to this Agreement prior to the Effective Date shall
have been duly performed and complied with in all material respects, and
Purchaser and Acquisition shall have received a certificate to that effect
from the Chief Executive Officer and the Treasurer of the Company.
(c) Holders of no more than 400,000 Shares, in the aggregate, shall have
filed with the Company a written objection to the Merger and made a written
demand for payment of the fair value of his shares in the manner permitted
by the GCL.
(d) All of the Continuing Directors of the Company on the Effective Date
shall have resigned.
(e) Since the date of this Agreement, there shall have been no Company
Material Adverse Effect; provided, however, that an IRS Notice of Proposed
Adjustment (to the extent it relates to specific tax issues regarding the
Company's net operating losses that have been raised by the Internal
Revenue Service in a written communication referred to in the last sentence
of Section 6.11) shall not be considered a Company Material Adverse Effect
for this purpose.
(f) Other than taxes duly paid, withheld or reserved for by the Company,
no taxes are payable, or reasonably expected by the Company to be payable,
with respect to items or periods covered by the returns and reports
referred to in Section 6.11 (whether or not shown on or reportable on such
returns or reports or with respect to any period prior to the Effective
Date), other than any such taxes which would not have a Company Material
Adverse Effect.
Section 8.3 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 Date of the following additional
conditions.
(a) The representations and warranties of Purchaser and Acquisition set
forth in Article V shall be true and correct in all material respects on
the Effective Date (or on such other date specified in Article V) with the
same force and effect as though made on and as of such date, and the
Company shall have received certificates to that effect from the Chief
Executive Officer and the Treasurer of Purchaser and the President of
Acquisition.
(b) All of the covenants and agreements of Purchaser and Acquisition to
be performed or complied with pursuant to this Agreement prior to the
Effective Date shall have been duly performed and complied with in all
material respects, and the Company shall have received certificates to that
effect from the Chief Executive Officer and the Treasurer of Purchaser and
the President of Acquisition.
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ARTICLE IX
Termination, Amendment and Waiver
Section 9.1 Termination. This Agreement shall be subject to termination at
any time prior to the Effective Date, whether before or after approval by the
stockholders of the Company, if required, as follows:
(a) by mutual consent of Purchaser and the Board of Directors of the
Company;
(b) by Purchaser or the Company if the Merger shall not have been
consummated on or before December 15, 1995, which date may be extended by
mutual agreement of the Boards of Directors of the Company and Purchaser;
(c) by the Company if, prior to the Effective Date, the Company, its
Board of Directors or its stockholders shall receive a bona fide written
proposal or offer from a third party (each an "Acquisition Proposal")
relating to:
(i) the acquisition or purchase of all or substantially all of the
assets of, or more than a 50% equity interest (including any Shares
theretofore acquired) in the Company;
(ii) a merger, consolidation or similar business combination with the
Company;
(iii) a tender or exchange offer for the Company conditioned on
ownership of more than 50% of the outstanding Shares following such
tender or exchange offer;
and the Board of Directors of the Company determines that it has a duty in
the proper discharge of its fiduciary responsibilities under applicable law
to consider such other proposal or offer, and then such Board of Directors
either (A) accepts such proposal or offer, (B) recommends to the
stockholders acceptance of such proposal or offer, or (C) in the case of a
tender or exchange offer, takes no position with respect thereto and all
conditions (other than terminating this Agreement) of such tender or
exchange offer have been satisfied, in which event this Agreement shall be
terminated without any liability to the Company or the Company's Board of
Directors as a result of such termination other than as set forth in
Section 9.2(a).
(d) by Purchaser upon a breach of any material representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement or if any representation or warranty of the Company shall have
become untrue and such breach or untruth shall have caused a Company
Material Adverse Effect.
(e) by the Company upon a breach of any material representation,
warranty, covenant or agreement on the part of the Purchaser set forth in
this Agreement or if any representation or warranty of the Purchaser shall
have become untrue and such breach or untruth shall have caused a Purchaser
Material Adverse Effect.
Section 9.2 Break-Up Fee; Effect of Termination.
(a) If the Agreement is terminated pursuant to Section 9.1(c), the Company
shall pay to Purchaser U.S. $4,000,000 in cash. Any payment required to be
made pursuant to this Section 9.2(a) shall be made as promptly as practicable
but not later than three business days after termination of this Agreement,
and shall be made by wire transfer of immediately available funds to an
account designated by Purchaser.
(b) In the event of termination of this Agreement by Purchaser, Acquisition
or the Company (other than pursuant to Section 9.1(c)), there shall be no
liability under this Agreement on the part of either the Company, Purchaser or
Acquisition or their respective officers or directors, except for any breach
of the provisions of Section 7.2 and the confidentiality provisions of Section
7.4, and except for any termination pursuant to Section 9.1(d) or (e) as a
result of a wilful breach of any representation, warranty, covenant or
agreement of Purchaser, Acquisition or the Company contained herein.
Section 9.3 Amendment. This Agreement may be amended by the parties hereto,
by action taken by the respective Boards of Directors of Purchaser,
Acquisition and the Company, at any time before or after approval hereof by
the stockholders of the Company, but, after any such approval, if required, no
amendment shall be made which changes the Merger Price without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
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Section 9.4 Waiver. At any time prior to the Effective Date, the parties
hereto, by action taken by the respective Boards of Directors of Purchaser,
Acquisition or the Company, may (a) extend, for a reasonable time, the time
for the performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of the party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE X
General Provisions
Section 10.1 Notice of Breach. Each party shall promptly give written notice
to the other parties upon becoming aware of the occurrence, or impending or
threatened occurrence, of any event which would cause or constitute a breach
of any of its representations, warranties of covenants contained or referred
to in this Agreement and shall use its reasonable best efforts to prevent or
promptly remedy the same.
Section 10.2 Cooperation. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Merger and the other transactions
contemplated by this Agreement. In case at any time after the Effective Date
any further action is necessary or desirable to carry out the purpose of this
Agreement, the proper officers and/or directors of Purchaser, Acquisition or
the Company shall take, or cause to be taken, all such necessary action.
Purchaser shall cause Acquisition to comply with all of Acquisition's
obligations hereunder.
Section 10.3 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the Effective
Date of the Merger.
Section 10.4 Brokers. The Company represents and warrants that, except for
its financial advisor, PaineWebber Incorporated, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Tender Offer or the Merger.
Section 10.5 Entire Agreement. Other than the Confidentiality Agreement,
dated February 1, 1995, between the Company and Purchaser, this Agreement
contains the entire agreement among Purchaser, Acquisition and the Company
with respect to the Tender Offer, the Merger and the other transactions
contemplated hereby, and supersedes all prior agreements, understandings,
representations, and warranties with respect to the subject matter.
Section 10.6 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (without giving
effect to its choice of laws principles).
Section 10.7 Interpretation; Headings. When a reference is made in this
Agreement to subsidiaries of the Company or Purchaser, the word "subsidiaries"
means any corporation, partnership, limited liability company or other entity
more than 50% of whose outstanding voting securities are directly or
indirectly owned by the Company or Purchaser, as the case may be. The headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Section 10.8 Assignment. Purchaser and Acquisition shall have the right (a)
to assign to Purchaser or any direct or indirect wholly-owned subsidiary of
Purchaser any and all of the rights and obligations of Acquisition or
Purchaser under this Agreement, including, without limitation, the right to
substitute in Acquisition's place such a subsidiary as one of the Constituent
Corporations in the Merger (such subsidiary assuming all of the obligations of
Acquisition in connection with the Merger) and (b) to transfer to Purchaser or
to one or more
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directly or indirectly wholly-owned subsidiaries of Purchaser the right to
purchase Shares tendered pursuant to the Tender Offer.
Section 10.9 Separability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction, shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be interpreted to be only
so broad as is enforceable.
Section 10.10 Publicity. Except as required by law or the rules of any
exchange on which the shares of Purchaser or Company are traded, as long as
this Agreement is in effect, neither the Company nor Purchaser shall issue or
cause the publication of any press release or other announcement with respect
to the Tender Offer, the Merger or this Agreement without the prior consent of
the other, which consent shall not be unreasonably withheld.
Section 10.11 Notices. All notices or other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
personally or sent by first-class mail, postage prepaid, with return receipt
requested, addressed as follows:
If to Purchaser or Acquisition, to:
D.E.A. Bower, General Counsel
10333 Southport Road SW, Suite 426
Calgary, Alberta T2W 3X6
Fax # 403-258-5761
with copies to:
Thomas A. Richardson
Holme Roberts & Owen LLC
1700 Lincoln, Suite 4100
Denver, CO 80203
Fax # 303-866-0200
If to the Company, to:
Nu-West Industries, Inc.
3010 Conda Road
Soda Springs, Idaho 83276
Attn: Craig D. Harlen
Fax # 208-547-2550
with copies to:
Davis, Graham & Stubbs, L.L.C.
370 17th Street
Suite 4700
Denver, Colorado 80202
Attn: John L. McCabe, Esq.
Fax # 303-893-1379
Section 10.12 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 agreement.
Section 10.13 No Third Party Beneficiaries. No provision of this Agreement
is intended to benefit any person other than the parties hereto.
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Section 10.14 Schedules. Inclusion of, or reference to, matters in a schedule
to this Agreement does not constitute an admission of what is material or the
materiality of such matter.
In Witness Whereof, Purchaser, Acquisition and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
Agrium Inc.
/s/ Dorothy E.A. Bower
By: _________________________________
Title: Secretary and General Counsel
Agrium Acquisition Corporation
/s/ Dorothy E.A. Bower
By: _________________________________
Title: Secretary and Treasurer
Nu-West Industries, Inc.
/s/ Steven Gampp
By: _________________________________
Title: Vice President
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EXHIBIT A
The capitalized terms used herein have the meanings set forth in the
Agreement and Plan of Merger dated as of August 9, 1995 (the "Merger
Agreement") to which this Exhibit A is attached.
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Tender Offer, Acquisition shall
not be required to accept for payment, purchase or pay for any Shares tendered
and may terminate or (subject to the terms of the Merger Agreement) amend the
Tender Offer or may postpone the acceptance for payment, purchase of or
payment for Shares tendered, if before acceptance for payment for any such
Shares (whether or not any Shares have theretofore been accepted for payment
or paid for pursuant to the Tender Offer) (i) there shall not have been
validly tendered and not properly withdrawn pursuant to the Tender Offer at
least 60% of the Shares on a fully diluted basis (the "Minimum Condition"),
(ii) any waiting period under the Hart-Scott-Rodino Act applicable to the
purchase of Shares pursuant to the Tender Offer shall not have expired or been
terminated, or (iii) any of the following shall occur:
(a) Any representation or warranty of the Company in the Merger Agreement
shall have been untrue or incorrect in any material respect as of the date
of the Merger Agreement and the date of consummation of the Tender Offer
with the same force and effect as though made on and as of the date of
consummation of the Tender Offer, or there has been a breach by the Company
of any covenant or agreement set forth in the Merger Agreement which breach
shall not be remedied within five days (or by the Expiration Date if
sooner) of written notice specifying such breach in reasonable detail and
demanding that same be remedied (except where such failure to be true and
correct or such breach would not reasonably be expected to have a Company
Material Adverse Effect).
(b) There shall be any action taken, or any statute, rule, regulation,
decree, order or injunction promulgated, enacted, entered into or enforced
by any state, federal or foreign government or governmental agency or
authority or by any court (domestic or foreign) that would (i) make the
acceptance for payment of, the payment for, or the purchase of, some or all
of the Shares by Acquisition illegal or otherwise prohibit consummation of
the Tender Offer or the Merger, (ii) prohibit the ability of Acquisition,
or render Acquisition unable, to accept for payment, pay for or purchase
some or all of the Shares in a manner that is adverse in any material
respect to the transactions contemplated by the Tender Offer or the Merger,
(iii) require the divestiture by Purchaser, Acquisition or the Company or
any of their respective subsidiaries of all or any material portion of the
business, assets or property of any of them or any Shares, or impose any
material limitation on the ability of any of them to conduct their business
and own such assets, properties and Shares, (iv) impose material
limitations on the ability of Acquisition or Purchaser to acquire or hold
or to exercise effectively all rights of ownership of Shares, including,
without limitation, the right to vote any Shares purchased by Acquisition
on all matters properly presented to the stockholders of the Company or (v)
impose any material limitations on the ability of Purchaser or Acquisition
or any of their respective subsidiaries effectively to control in any
material respect the business or operations of the Company and its
subsidiaries.
(c) Since the date of the Merger Agreement there shall have been a
Company Material Adverse Effect.
(d) The Merger Agreement shall have been terminated in accordance with
its terms.
(e) The Company's Board of Directors shall have withdrawn, modified or
amended in any respect materially adverse to Purchaser or Acquisition its
recommendation of the Tender Offer and the Merger or resolved to do so.
A-1
<PAGE>
EXHIBIT 2
AUGUST 10, 1995
AGRIUM / NU-WEST
NEWS
FOR IMMEDIATE RELEASE
JOINT PRESS RELEASE--
AUGUST 10, 1995
AGRIUM INC. AND NU-WEST INDUSTRIES INC. ANNOUNCE AGREEMENT TO MERGE
Calgary, Alberta and Englewood, Colorado--Agrium Inc.
(TSE:AGU/NASDAQ/NM:AGMIF) and Nu-West Industries, Inc. (NASDAQ/NM:FERT)
announced today that they have entered into a definitive merger agreement
which provides for the acquisition of Nu-West by Agrium. Agrium will pay
US$10.50 in cash for each share of Nu-West common stock.
The announcement was made jointly by John Van Brunt, President and C.E.O. of
Agrium and Craig Harlen, President and C.E.O. of Nu-West.
Agrium will make a cash tender offer for all of the common shares of Nu-West.
The tender offer will be conditional upon the tender of at least 60% of the
approximately 9.4 million common shares on a fully diluted basis and upon the
expiration of the waiting period under the Hart-Scott-Rodino Anti-Trust
Improvements Act. Agrium expects to take up and pay for the common shares
under the offer by mid-September. The merger agreement provides that any
untendered shares will be converted into the right to receive US$10.50 per
share in cash as soon as practical after the completion of the tender.
The Board of Directors of Nu-West has unanimously approved the merger
agreement and the transaction. Paine Webber Incorporated has acted as
financial advisor to Nu-West and has rendered a fairness opinion in connection
with the transaction. The Board of Directors of Agrium has also unanimously
approved the merger agreement and the transaction.
Agrium also announced that Nu-West shareholders owning approximately 4.6
million common shares have agreed to tender into the offer.
<PAGE>
Mr. Van Brunt, commenting on the prospective merger, said "This merger creates
a strong strategic business combination for the production and sale of the
three primary plant nutrients; phosphate, nitrogen and potash. In addition,
Nu-West's products are sold into Agrium's primary western United States and
Canadian wholesale markets and strengthens the phosphate supply position to
our large U.S. retail subsidiaries and our Elephant Brand dealer network in
Canada."
Mr. Harlen stated, "This transaction is the next logical step in securing a
positive future for Nu-West and its various constituents. Over the last few
years we have established ourselves as a significant phosphate producer and
now seek to expand our horizons through a strategic relationship that will
strengthen and enhance our marketing and production. This merger will better
position both companies for the global marketplace that is upon us."
Agrium, based in Calgary, Alberta, is one of North America's largest
integrated and diversified fertilizer companies.
Nu-West is engaged in the manufacture and sale of phosphate fertilizer
products.
AGRIUM CONTACTS: NU-WEST CONTACTS:
---------------- -----------------
LARRY THIESSEN MARK SANDERS
Phone (403) 258-4615 Phone (208) 547-4381
DICK NICHOLS STEVEN W. GAMPP
Phone (403) 258-5746 Phone (303) 721-1396
<PAGE>
EXHIBIT 4
IRREVOCABLE PROXY
This irrevocable proxy (the "Proxy") is granted as of August 9, 1995.
Whereas, pursuant to an Agreement and Plan of Merger dated of even date
herewith (the "Merger Agreement") among Agrium Inc., a Canadian corporation
("Agrium"), Agrium Acquisition Corporation, a Delaware corporation and wholly-
owned subsidiary of Agrium ("Merger Sub"), and Nu-West Industries, Inc., a
Delaware corporation ("Nu-West"), providing for the merger of Merger Sub with
and into Nu-West (as defined in the Merger Agreement, the "Merger"), Nu-West
will become a wholly-owned subsidiary of Agrium and each share of common
stock, $.01 par value per share, of Nu-West ("Nu-West Common Stock") held by
the undersigned as of the Effective Time (as defined in the Merger Agreement)
of the Merger will be converted into the right to receive $10.50; and
Whereas, to induce Agrium and Merger Sub to enter into the Merger Agreement
and at the request of Agrium, the undersigned has agreed to appoint and
irrevocably grant a proxy to Dale W. Massie, Dorothy E.A. Bower and Ian Noble,
as designated employees of Agrium, with respect to all Nu-West Common Stock
beneficially owned by the undersigned on the date hereof and all voting
securities of Nu-West acquired from time to time by the undersigned after the
date hereof (such Nu-West Common Stock and securities being referred to herein
as the "Covered Shares");
Now, Therefore, in consideration of the foregoing, the undersigned hereby
agrees as follows:
1. Grant of Proxy. The undersigned hereby revokes all prior proxies with
respect to the Covered Shares and appoints Dale W. Massie, Dorothy E. A. Bower
and Ian Noble, in their respective capacities as employees of Agrium, and each
of them individually, as the undersigned's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of the
undersigned, (i) to call a special meeting of stockholders of Nu-West to
consider the Merger, and (ii) to vote (or, at their discretion, execute a
written consent with respect to) with or without the other, all the Covered
Shares (A) in favor of the Merger and adoption of the Merger Agreement, and
(B) against any business combination proposal or other matter that may
interfere or be inconsistent with the Merger or the Merger Agreement
(including, without limitation, an Acquisition Proposal, as defined in the
Merger Agreement), at any meeting of stockholders of Nu-West (or consent in
lieu thereof) and any adjournment or adjournments thereof.
2. Representations and Warranties. The undersigned hereby represents and
warrants to Agrium as follows: the undersigned has full power and authority to
grant this Proxy, and neither the execution or delivery of this Proxy nor the
performance of the undersigned's obligations hereunder will (A) conflict with
or result in a breach, default or violation of any agreement, proxy, document,
instrument, judgement, decree, order, governmental permit, certificate,
license, law, statute, rule or regulation to which he is a party or to which
the undersigned is subject, (B) result in the creation of any lien, charge or
other encumbrance on any Covered Shares (except for any encumbrance created by
this Proxy) or (C) require the undersigned to obtain the consent of any
private nongovernmental third party. The undersigned further represents and
warrants to Agrium that (i) as of the date hereof, the undersigned is the sole
record and beneficial owner of the number of Covered Shares set forth opposite
the undersigned's name below, free and clear of any lien, charge, proxy (other
than this Proxy) or other encumbrance, and that such Covered Shares constitute
all of the voting securities of Nu-West owned beneficially or of record by the
undersigned, and (ii) except as expressly provided in this Proxy, no consent,
action, approval or authorization of, or registration, declaration or filing
with, any governmental department, commission, agency or other instrumentality
or any other person or entity is required to authorize, or is otherwise
required in connection with, the execution and delivery of this Proxy or the
undersigned's performance of the terms of this Proxy or the validity or
enforceability of this Proxy (other than any required amendment to any
Statement on Schedule 13D of the undersigned caused by the existence and terms
of this Proxy).
3. Proxy Irrevocable. The undersigned agrees and acknowledges that, as a
stockholder of Nu-West, he will receive substantial consideration in
connection with the Merger, and that this Proxy is given in consideration
<PAGE>
of, and as an inducement to, the execution of the Merger Agreement by Agrium
and Agrium Sub, and that the proxy granted hereby is and shall be deemed to be
coupled with an interest and is not revocable, and shall not be terminated
(other than in accordance with Section 5 hereof) by any act of the undersigned
or by operation of law, whether by the death or incapacity of the undersigned
or by the occurrence of any other event or events whatsoever. The undersigned
further agrees that he will not grant any proxy or proxies inconsistent with
this Proxy. If requested by Agrium, the undersigned agrees that he will enter
into a voting agreement or similar arrangement with Agrium or its designee
relating to the Covered Shares, which agreement or arrangement will commit the
undersigned to vote the Covered Shares as specified in Section 1 hereof and
will contain substantially similar representations, restrictions on transfer
or disposition and termination provisions as this Proxy.
4. Transferability of Covered Shares. The undersigned will not sell or
otherwise transfer or dispose of any of the Covered Shares unless the
following conditions are met:
(a) prior written notice of this Proxy is given to the transferee and the
transferee agrees that the shares transferred will remain subject to this
Proxy and, in connection therewith, executes and delivers to Agrium a proxy
covering such shares in form and substance satisfactory to Agrium, which
proxy shall be in substantially the form of this Proxy; or
(b) the transfer is to Agrium or its designee pursuant to the tender
offer described in the Merger Agreement, it being agreed that the
undersigned will, subject to Section 5, tender the Covered Shares in such
tender offer.
5. Termination of Proxy. This Proxy (including the obligation referred to in
Section 4 to tender the Covered Shares) shall terminate automatically on the
earliest to occur of (i) the Effective Time, (ii) termination of the Merger
Agreement pursuant to Section 9.1 thereof, or (iii) amendment of the Merger
Agreement with respect to the price per share to be received upon the merger
tender.
6. Miscellaneous. The undersigned understands and agrees that Agrium is
relying on this Proxy and may enforce its terms against the undersigned, and
that irreparable damage would occur in the event of breach of any provision of
the Proxy. The undersigned agrees that, in the event of such breach, Agrium
shall be entitled to specific performance of the terms hereof, in addition to
any other remedies that may be available at law or in equity. This Proxy 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 conflicts of law.
In Witness Whereof, the undersigned has executed this Proxy as of the date
first set forth above.
Number of Covered Shares: 217,999 WPG Corporate Development Associates
------- III (Overseas), Ltd.
/s/ Robin Jarvis
By: _________________________________
ROBIN JARVIS DIRECTOR
2
<PAGE>
IRREVOCABLE PROXY
This irrevocable proxy (the "Proxy") is granted as of August 9, 1995.
Whereas, pursuant to an Agreement and Plan of Merger dated of even date
herewith (the "Merger Agreement") among Agrium Inc., a Canadian corporation
("Agrium"), Agrium Acquisition Corporation, a Delaware corporation and wholly-
owned subsidiary of Agrium ("Merger Sub"), and Nu-West Industries, Inc., a
Delaware corporation ("Nu-West"), providing for the merger of Merger Sub with
and into Nu-West (as defined in the Merger Agreement, the "Merger"), Nu-West
will become a wholly-owned subsidiary of Agrium and each share of common
stock, $.01 par value per share, of Nu-West ("Nu-West Common Stock") held by
the undersigned as of the Effective Time (as defined in the Merger Agreement)
of the Merger will be converted into the right to receive $10.50; and
Whereas, to induce Agrium and Merger Sub to enter into the Merger Agreement
and at the request of Agrium, the undersigned has agreed to appoint and
irrevocably grant a proxy to Dale W. Massie, Dorothy E.A. Bower and Ian Noble,
as designated employees of Agrium, with respect to all Nu-West Common Stock
beneficially owned by the undersigned on the date hereof and all voting
securities of Nu-West acquired from time to time by the undersigned after the
date hereof (such Nu-West Common Stock and securities being referred to herein
as the "Covered Shares");
Now, Therefore, in consideration of the foregoing, the undersigned hereby
agrees as follows:
1. Grant of Proxy. The undersigned hereby revokes all prior proxies with
respect to the Covered Shares and appoints Dale W. Massie, Dorothy E. A. Bower
and Ian Noble, in their respective capacities as employees of Agrium, and each
of them individually, as the undersigned's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of the
undersigned, (i) to call a special meeting of stockholders of Nu-West to
consider the Merger, and (ii) to vote (or, at their discretion, execute a
written consent with respect to) with or without the other, all the Covered
Shares (A) in favor of the Merger and adoption of the Merger Agreement, and
(B) against any business combination proposal or other matter that may
interfere or be inconsistent with the Merger or the Merger Agreement
(including, without limitation, an Acquisition Proposal, as defined in the
Merger Agreement), at any meeting of stockholders of Nu-West (or consent in
lieu thereof) and any adjournment or adjournments thereof.
2. Representations and Warranties. The undersigned hereby represents and
warrants to Agrium as follows: the undersigned has full power and authority to
grant this Proxy, and neither the execution or delivery of this Proxy nor the
performance of the undersigned's obligations hereunder will (A) conflict with
or result in a breach, default or violation of any agreement, proxy, document,
instrument, judgement, decree, order, governmental permit, certificate,
license, law, statute, rule or regulation to which he is a party or to which
the undersigned is subject, (B) result in the creation of any lien, charge or
other encumbrance on any Covered Shares (except for any encumbrance created by
this Proxy) or (C) require the undersigned to obtain the consent of any
private nongovernmental third party. The undersigned further represents and
warrants to Agrium that (i) as of the date hereof, the undersigned is the sole
record and beneficial owner of the number of Covered Shares set forth opposite
the undersigned's name below, free and clear of any lien, charge, proxy (other
than this Proxy) or other encumbrance, and that such Covered Shares constitute
all of the voting securities of Nu-West owned beneficially or of record by the
undersigned, and (ii) except as expressly provided in this Proxy, no consent,
action, approval or authorization of, or registration, declaration or filing
with, any governmental department, commission, agency or other instrumentality
or any other person or entity is required to authorize, or is otherwise
required in connection with, the execution and delivery of this Proxy or the
undersigned's performance of the terms of this Proxy or the validity or
enforceability of this Proxy (other than any required amendment to any
Statement on Schedule 13D of the undersigned caused by the existence and terms
of this Proxy).
3. Proxy Irrevocable. The undersigned agrees and acknowledges that, as a
stockholder of Nu-West, he will receive substantial consideration in
connection with the Merger, and that this Proxy is given in consideration
<PAGE>
of, and as an inducement to, the execution of the Merger Agreement by Agrium
and Agrium Sub, and that the proxy granted hereby is and shall be deemed to be
coupled with an interest and is not revocable, and shall not be terminated
(other than in accordance with Section 5 hereof) by any act of the undersigned
or by operation of law, whether by the death or incapacity of the undersigned
or by the occurrence of any other event or events whatsoever. The undersigned
further agrees that he will not grant any proxy or proxies inconsistent with
this Proxy. If requested by Agrium, the undersigned agrees that he will enter
into a voting agreement or similar arrangement with Agrium or its designee
relating to the Covered Shares, which agreement or arrangement will commit the
undersigned to vote the Covered Shares as specified in Section 1 hereof and
will contain substantially similar representations, restrictions on transfer
or disposition and termination provisions as this Proxy.
4. Transferability of Covered Shares. The undersigned will not sell or
otherwise transfer or dispose of any of the Covered Shares unless the
following conditions are met:
(a) prior written notice of this Proxy is given to the transferee and the
transferee agrees that the shares transferred will remain subject to this
Proxy and, in connection therewith, executes and delivers to Agrium a proxy
covering such shares in form and substance satisfactory to Agrium, which
proxy shall be in substantially the form of this Proxy; or
(b) the transfer is to Agrium or its designee pursuant to the tender
offer described in the Merger Agreement, it being agreed that the
undersigned will, subject to Section 5, tender the Covered Shares in such
tender offer.
5. Termination of Proxy. This Proxy (including the obligation referred to in
Section 4 to tender the Covered Shares) shall terminate automatically on the
earliest to occur of (i) the Effective Time, (ii) termination of the Merger
Agreement pursuant to Section 9.1 thereof, or (iii) amendment of the Merger
Agreement with respect to the price per share to be received upon the merger
tender.
6. Miscellaneous. The undersigned understands and agrees that Agrium is
relying on this Proxy and may enforce its terms against the undersigned, and
that irreparable damage would occur in the event of breach of any provision of
the Proxy. The undersigned agrees that, in the event of such breach, Agrium
shall be entitled to specific performance of the terms hereof, in addition to
any other remedies that may be available at law or in equity. This Proxy 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 conflicts of law.
In Witness Whereof, the undersigned has executed this Proxy as of the date
first set forth above.
Number of Covered Shares: 880,563 Weiss, Peck & Greer Venture
------- Associates, L.P. Liquidating Trust
U/T/A dated December 30, 1994
By: Weiss, Peck & Greer, L.L.C.
/s/ Wesley W. Lang, Jr.
By: _________________________________
WESLEY W. LANG, JR.
ATTORNEY-IN-FACT
2
<PAGE>
IRREVOCABLE PROXY
This irrevocable proxy (the "Proxy") is granted as of August 9, 1995.
Whereas, pursuant to an Agreement and Plan of Merger dated of even date
herewith (the "Merger Agreement") among Agrium Inc., a Canadian corporation
("Agrium"), Agrium Acquisition Corporation, a Delaware corporation and wholly-
owned subsidiary of Agrium ("Merger Sub"), and Nu-West Industries, Inc., a
Delaware corporation ("Nu-West"), providing for the merger of Merger Sub with
and into Nu-West (as defined in the Merger Agreement, the "Merger"), Nu-West
will become a wholly-owned subsidiary of Agrium and each share of common
stock, $.01 par value per share, of Nu-West ("Nu-West Common Stock") held by
the undersigned as of the Effective Time (as defined in the Merger Agreement)
of the Merger will be converted into the right to receive $10.50; and
Whereas, to induce Agrium and Merger Sub to enter into the Merger Agreement
and at the request of Agrium, the undersigned has agreed to appoint and
irrevocably grant a proxy to Dale W. Massie, Dorothy E.A. Bower and Ian Noble,
as designated employees of Agrium, with respect to all Nu-West Common Stock
beneficially owned by the undersigned on the date hereof and all voting
securities of Nu-West acquired from time to time by the undersigned after the
date hereof (such Nu-West Common Stock and securities being referred to herein
as the "Covered Shares");
Now, Therefore, in consideration of the foregoing, the undersigned hereby
agrees as follows:
1. Grant of Proxy. The undersigned hereby revokes all prior proxies with
respect to the Covered Shares and appoints Dale W. Massie, Dorothy E. A. Bower
and Ian Noble, in their respective capacities as employees of Agrium, and each
of them individually, as the undersigned's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of the
undersigned, (i) to call a special meeting of stockholders of Nu-West to
consider the Merger, and (ii) to vote (or, at their discretion, execute a
written consent with respect to) with or without the other, all the Covered
Shares (A) in favor of the Merger and adoption of the Merger Agreement, and
(B) against any business combination proposal or other matter that may
interfere or be inconsistent with the Merger or the Merger Agreement
(including, without limitation, an Acquisition Proposal, as defined in the
Merger Agreement), at any meeting of stockholders of Nu-West (or consent in
lieu thereof) and any adjournment or adjournments thereof.
2. Representations and Warranties. The undersigned hereby represents and
warrants to Agrium as follows: the undersigned has full power and authority to
grant this Proxy, and neither the execution or delivery of this Proxy nor the
performance of the undersigned's obligations hereunder will (A) conflict with
or result in a breach, default or violation of any agreement, proxy, document,
instrument, judgement, decree, order, governmental permit, certificate,
license, law, statute, rule or regulation to which he is a party or to which
the undersigned is subject, (B) result in the creation of any lien, charge or
other encumbrance on any Covered Shares (except for any encumbrance created by
this Proxy) or (C) require the undersigned to obtain the consent of any
private nongovernmental third party. The undersigned further represents and
warrants to Agrium that (i) as of the date hereof, the undersigned is the sole
record and beneficial owner of the number of Covered Shares set forth opposite
the undersigned's name below, free and clear of any lien, charge, proxy (other
than this Proxy) or other encumbrance, and that such Covered Shares constitute
all of the voting securities of Nu-West owned beneficially or of record by the
undersigned, and (ii) except as expressly provided in this Proxy, no consent,
action, approval or authorization of, or registration, declaration or filing
with, any governmental department, commission, agency or other instrumentality
or any other person or entity is required to authorize, or is otherwise
required in connection with, the execution and delivery of this Proxy or the
undersigned's performance of the terms of this Proxy or the validity or
enforceability of this Proxy (other than any required amendment to any
Statement on Schedule 13D of the undersigned caused by the existence and terms
of this Proxy).
3. Proxy Irrevocable. The undersigned agrees and acknowledges that, as a
stockholder of Nu-West, he will receive substantial consideration in
connection with the Merger, and that this Proxy is given in consideration
<PAGE>
of, and as an inducement to, the execution of the Merger Agreement by Agrium
and Agrium Sub, and that the proxy granted hereby is and shall be deemed to be
coupled with an interest and is not revocable, and shall not be terminated
(other than in accordance with Section 5 hereof) by any act of the undersigned
or by operation of law, whether by the death or incapacity of the undersigned
or by the occurrence of any other event or events whatsoever. The undersigned
further agrees that he will not grant any proxy or proxies inconsistent with
this Proxy. If requested by Agrium, the undersigned agrees that he will enter
into a voting agreement or similar arrangement with Agrium or its designee
relating to the Covered Shares, which agreement or arrangement will commit the
undersigned to vote the Covered Shares as specified in Section 1 hereof and
will contain substantially similar representations, restrictions on transfer
or disposition and termination provisions as this Proxy.
4. Transferability of Covered Shares. The undersigned will not sell or
otherwise transfer or dispose of any of the Covered Shares unless the
following conditions are met:
(a) prior written notice of this Proxy is given to the transferee and the
transferee agrees that the shares transferred will remain subject to this
Proxy and, in connection therewith, executes and delivers to Agrium a proxy
covering such shares in form and substance satisfactory to Agrium, which
proxy shall be in substantially the form of this Proxy; or
(b) the transfer is to Agrium or its designee pursuant to the tender
offer described in the Merger Agreement, it being agreed that the
undersigned will, subject to Section 5, tender the Covered Shares in such
tender offer.
5. Termination of Proxy. This Proxy (including the obligation referred to in
Section 4 to tender the Covered Shares) shall terminate automatically on the
earliest to occur of (i) the Effective Time, (ii) termination of the Merger
Agreement pursuant to Section 9.1 thereof, or (iii) amendment of the Merger
Agreement with respect to the price per share to be received upon the merger
tender.
6. Miscellaneous. The undersigned understands and agrees that Agrium is
relying on this Proxy and may enforce its terms against the undersigned, and
that irreparable damage would occur in the event of breach of any provision of
the Proxy. The undersigned agrees that, in the event of such breach, Agrium
shall be entitled to specific performance of the terms hereof, in addition to
any other remedies that may be available at law or in equity. This Proxy 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 conflicts of law.
In Witness Whereof, the undersigned has executed this Proxy as of the date
first set forth above.
Number of Covered Shares: 1,027,714 WPG Corporate Development Associates
--------- III, L.P.
By: WPG CDA III, L.P.
/s/ Wesley W. Lang, Jr.
By: _________________________________
WESLEY W. LANG, JR.
2
<PAGE>
IRREVOCABLE PROXY
This irrevocable proxy (the "Proxy") is granted as of August 9, 1995.
Whereas, pursuant to an Agreement and Plan of Merger dated of even date
herewith (the "Merger Agreement") among Agrium Inc., a Canadian corporation
("Agrium"), Agrium Acquisition Corporation, a Delaware corporation and wholly-
owned subsidiary of Agrium ("Merger Sub"), and Nu-West Industries, Inc., a
Delaware corporation ("Nu-West"), providing for the merger of Merger Sub with
and into Nu-West (as defined in the Merger Agreement, the "Merger"), Nu-West
will become a wholly-owned subsidiary of Agrium and each share of common
stock, $.01 par value per share, of Nu-West ("Nu-West Common Stock") held by
the undersigned as of the Effective Time (as defined in the Merger Agreement)
of the Merger will be converted into the right to receive $10.50; and
Whereas, to induce Agrium and Merger Sub to enter into the Merger Agreement
and at the request of Agrium, the undersigned has agreed to appoint and
irrevocably grant a proxy to Dale W. Massie, Dorothy E.A. Bower and Ian Noble,
as designated employees of Agrium, with respect to all Nu-West Common Stock
beneficially owned by the undersigned on the date hereof and all voting
securities of Nu-West acquired from time to time by the undersigned after the
date hereof (such Nu-West Common Stock and securities being referred to herein
as the "Covered Shares");
Now, Therefore, in consideration of the foregoing, the undersigned hereby
agrees as follows:
1. Grant of Proxy. The undersigned hereby revokes all prior proxies with
respect to the Covered Shares and appoints Dale W. Massie, Dorothy E. A. Bower
and Ian Noble, in their respective capacities as employees of Agrium, and each
of them individually, as the undersigned's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of the
undersigned, (i) to call a special meeting of stockholders of Nu-West to
consider the Merger, and (ii) to vote (or, at their discretion, execute a
written consent with respect to) with or without the other, all the Covered
Shares (A) in favor of the Merger and adoption of the Merger Agreement, and
(B) against any business combination proposal or other matter that may
interfere or be inconsistent with the Merger or the Merger Agreement
(including, without limitation, an Acquisition Proposal, as defined in the
Merger Agreement), at any meeting of stockholders of Nu-West (or consent in
lieu thereof) and any adjournment or adjournments thereof.
2. Representations and Warranties. The undersigned hereby represents and
warrants to Agrium as follows: the undersigned has full power and authority to
grant this Proxy, and neither the execution or delivery of this Proxy nor the
performance of the undersigned's obligations hereunder will (A) conflict with
or result in a breach, default or violation of any agreement, proxy, document,
instrument, judgement, decree, order, governmental permit, certificate,
license, law, statute, rule or regulation to which he is a party or to which
the undersigned is subject, (B) result in the creation of any lien, charge or
other encumbrance on any Covered Shares (except for any encumbrance created by
this Proxy) or (C) require the undersigned to obtain the consent of any
private nongovernmental third party. The undersigned further represents and
warrants to Agrium that (i) as of the date hereof, the undersigned is the sole
record and beneficial owner of the number of Covered Shares set forth opposite
the undersigned's name below, free and clear of any lien, charge, proxy (other
than this Proxy) or other encumbrance, and that such Covered Shares constitute
all of the voting securities of Nu-West owned beneficially or of record by the
undersigned, and (ii) except as expressly provided in this Proxy, no consent,
action, approval or authorization of, or registration, declaration or filing
with, any governmental department, commission, agency or other instrumentality
or any other person or entity is required to authorize, or is otherwise
required in connection with, the execution and delivery of this Proxy or the
undersigned's performance of the terms of this Proxy or the validity or
enforceability of this Proxy (other than any required amendment to any
Statement on Schedule 13D of the undersigned caused by the existence and terms
of this Proxy).
3. Proxy Irrevocable. The undersigned agrees and acknowledges that, as a
stockholder of Nu-West, he will receive substantial consideration in
connection with the Merger, and that this Proxy is given in consideration
<PAGE>
of, and as an inducement to, the execution of the Merger Agreement by Agrium
and Agrium Sub, and that the proxy granted hereby is and shall be deemed to be
coupled with an interest and is not revocable, and shall not be terminated
(other than in accordance with Section 5 hereof) by any act of the undersigned
or by operation of law, whether by the death or incapacity of the undersigned
or by the occurrence of any other event or events whatsoever. The undersigned
further agrees that he will not grant any proxy or proxies inconsistent with
this Proxy. If requested by Agrium, the undersigned agrees that he will enter
into a voting agreement or similar arrangement with Agrium or its designee
relating to the Covered Shares, which agreement or arrangement will commit the
undersigned to vote the Covered Shares as specified in Section 1 hereof and
will contain substantially similar representations, restrictions on transfer
or disposition and termination provisions as this Proxy.
4. Transferability of Covered Shares. The undersigned will not sell or
otherwise transfer or dispose of any of the Covered Shares unless the
following conditions are met:
(a) prior written notice of this Proxy is given to the transferee and the
transferee agrees that the shares transferred will remain subject to this
Proxy and, in connection therewith, executes and delivers to Agrium a proxy
covering such shares in form and substance satisfactory to Agrium, which
proxy shall be in substantially the form of this Proxy; or
(b) the transfer is to Agrium or its designee pursuant to the tender
offer described in the Merger Agreement, it being agreed that the
undersigned will, subject to Section 5, tender the Covered Shares in such
tender offer.
5. Termination of Proxy. This Proxy (including the obligation referred to in
Section 4 to tender the Covered Shares) shall terminate automatically on the
earliest to occur of (i) the Effective Time, (ii) termination of the Merger
Agreement pursuant to Section 9.1 thereof, or (iii) amendment of the Merger
Agreement with respect to the price per share to be received upon the merger
tender.
6. Miscellaneous. The undersigned understands and agrees that Agrium is
relying on this Proxy and may enforce its terms against the undersigned, and
that irreparable damage would occur in the event of breach of any provision of
the Proxy. The undersigned agrees that, in the event of such breach, Agrium
shall be entitled to specific performance of the terms hereof, in addition to
any other remedies that may be available at law or in equity. This Proxy 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 conflicts of law.
In Witness Whereof, the undersigned has executed this Proxy as of the date
first set forth above.
Number of Covered Shares: 2,488,005 WPG Corporate Development Associates
--------- II, L.P. Liquidating Trust U/T/A,
dated December 31, 1993
By: Weiss, Peck & Greer, L.L.C., the
sole trustee
/s/ Wesley W. Lang, Jr.
By: _________________________________
WESLEY W. LANG, JR. PRINCIPAL
2
<PAGE>
EXHIBIT 5
[LOGO OF NUWEST INDUSTRIES, INC. APPEARS HERE]
August 16, 1995
TO OUR STOCKHOLDERS:
We are pleased to inform you that Nu-West Industries, Inc. has entered into
a merger agreement with Agrium Inc., pursuant to which Agrium has agreed to
acquire Nu-West. Agrium is one of North America's largest integrated and
diversified fertilizer companies.
Under the terms of the merger agreement, a wholly-owned subsidiary of Agrium
has today commenced a tender offer for all of the outstanding shares of common
stock of Nu-West at $10.50 per share in cash. The tender offer will be
followed by a merger pursuant to which any remaining holders of Nu-West common
stock will receive $10.50 per share in cash and Nu-West will become a wholly-
owned subsidiary of Agrium.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT,
DETERMINED THAT THE TENDER OFFER AND THE MERGER, CONSIDERED AS A WHOLE, ARE
FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF NU-WEST, AND
RECOMMENDS THAT ALL OF THE HOLDERS OF COMMON STOCK OF NU-WEST ACCEPT THE
TENDER OFFER AND TENDER ALL OF THEIR SHARES AND APPROVE THE MERGER AGREEMENT
AND THE MERGER, IF REQUIRED BY LAW.
In arriving at its decision, the Board of Directors considered a number of
factors, including the opinion of PaineWebber Incorporated, Nu-West's
financial advisor, that the consideration to be received in the tender offer
and the merger by the holders of common stock is fair, from a financial point
of view, to such shareholders (other than shareholders that are affiliates of
Weiss, Peck & Greer, L.L.C.).
Accompanying this letter is a copy of Nu-West's Solicitation/Recommendation
Statement on Schedule 14D-9, which contains information regarding the factors
considered by the Board of Directors and its deliberations, a copy of the
opinion of PaineWebber Incorporated and certain other information regarding
the tender offer and the merger, and a copy of an Information Statement
pursuant to Rule 14f-1 under the Exchange Act of 1934, as amended. In
addition, enclosed is the Offer to Purchase dated August 16, 1995, of the
subsidiary of Agrium, together with related materials, including a Letter of
Transmittal to be used for tendering your shares. WE URGE YOU TO READ THE
ENCLOSED MATERIALS CAREFULLY BEFORE MAKING A DECISION WITH RESPECT TO
TENDERING YOUR SHARES IN THE TENDER OFFER.
I personally, along with the Board of Directors, management and employees of
Nu-West, wish to thank you for your loyal support through the years. The Board
of Directors recommends that you accept the tender offer and tender all of
your shares.
On behalf of the Board of Directors
/s/ Craig D. Harlen
Craig D. Harlen
Chairman, President and Chief
Executive Officer
