MARTIN H. PHILIP
Attorney at Law
252 Delaware Avenue
P.O. Box 94
Palmerton, PA 18071
December 14, 1998
Philipp Brothers Chemicals, Inc.
One Parker Plaza
Fort Lee, New Jersey 07024
Re: Philipp Brothers Chemicals, Inc. Registration Statement on Form S-4
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Dear Sirs:
We have acted as special counsel to The Price Manufacturing Company, a
Pennsylvania corporation (the "Subsidiary"), in connection with the public
offering of $100,000,000 aggregate principal amount of 9 7/8% Senior
Subordinated Notes due 2008 (the "New Notes") of Philipp Brothers Chemicals,
Inc., a New York corporation (the "Company"), which will be guaranteed, on a
senior subordinated basis pursuant to the guarantees (the "Guarantees" and,
together with the New Notes, the "New Securities") by the Subsidiary,
Phibro-Tech, Inc., a Delaware corporation, Prince Argiproducts, Inc., a Delaware
corporation, MRT Management Corp., a Delaware corporation, Mineral Resource
Technologies, L.L.C. ("MRT") , a Delaware limited liability company, Koffolk,
Inc., a Delaware corporation, C.P. Chemicals, Inc., a New Jersey corporation,
Phibrochem, Inc., a New Jersey corporation, Phibro Chemicals, Inc., a New York
corporation, The Prince Manufacturing Company, an Illinois corporation, The
Prince Manufacturing Company, a Pennsylvania corporation, and Western Magnesium
Corp., a California corporation (collectively, the "Guarantors"). Such eight
Guarantors incorporated or formed under the laws of the States of New York,
Delaware or New Jersey are collectively referred to as the "Designated
Guarantors". The New Securities are to be issued pursuant to an exchange offer
(the "Exchange Offer" in exchange for a like principal amount of the issued and
outstanding 9 7/8% Senior Subordinated Notes due 2008 of the Company (the "Old
Securities") under an Indenture dated as of June 11, 1998 (the "Indenture"), by
and among the Company, the Guarantors and The Chase Manhattan Bank, as trustee
(the "Trustee"), as contemplated by the Registration Rights Agreement dated June
11, 1998 (the "Registration Rights Agreement"), by and among the Company, the
Guarantors and Schroder & Co., Inc.
This opinion is being furnished to you in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of
1933, as amended (the "Act") in
Philipp Brothers Chemicals, Inc.
December 14, 1998
Page 2
connection with the filing of the Registration Statement (hereinafter defined)
and for no other purpose.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the following
documents:
(1) The Registration Statement on Form S-4 (File No. 333-64641) as
filed with the Securities and Exchange Commission (the
"Commission") on September 29, 1998 under the Act,
Amendment No. 1 thereto as filed with the Commission
on November 23, 1998 and Amendment No. 2 thereto as
filed with the Commission on December 14, 1998. (Such
registration statement as so amended being hereinafter
referred as the Registration Statement).
(2) an executed copy of the Registration Rights Agreement;
(3) an executed copy of the Indenture;
(4) the Articles of Incorporation of the Subsidiary, certified as
true and correct by the Secretary of State of the Commonwealth
of Pennsylvania on May 20, 1998;
(5) the Bylaws of the Subsidiary, certified as true and complete
by an officer of such corporation;
(6) Certificate dated May 20, 1998 issued by the Secretary of
State of the Commonwealth of Pennsylvania certifying the
existence of the Subsidiary and its respective authority to
transact business in corporate form in the Commonwealth of
Pennsylvania;
(7) copies of resolutions of the Board of directors and
Shareholders of the Subsidiary authorizing and approving,
among other things, the issuance of the New Notes and the New
Securities and the Exchange Offer, certified by the Secretary
of Subsidiary as true and complete;
(8) Resolutions adopted by the Board of Directors and Shareholders
of the Subsidiary relating to, among other things, the
issuance of Guarantees by the Subsidiary, certified by the
Secretary of the Subsidiary as true and complete;
(9) the form T-1 of the Trustee filed as an exhibit to the
Registration Statement; and
Philipp Brothers Chemicals, Inc.
December 14, 1998
Page 3
(9) the form of the New Notes (including the form of Guarantees).
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such other documents, certificates and
records as we have deemed necessary or appropriate as a basis for the opinions
set forth herein.
In rendering these opinions we have assumed, with your permission and
without having made any independent investigation of the facts: (i) the
genuineness of all signatures, the legal capacity of all natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted tous as certified, conformed or
photostatic copies or by electronic means and the authenticity of the originals
of such latter documents; (ii) that all parties other than the Subsidiary have
the power, corporate or otherwise, to enter into and perform all obligations
under all documents we have examined in connection with these opinions (the
"Examined Documents"), (iii) that all the Examined Documents have been duly
authorized by all requisite action, corporate or other, and executed and
delivered by, and each of them constitutes the legally valid and binding
obligations of, such other parties, as applicable, enforceable against such
other parties in accordance with their respective terms; and (iv) that the
resolutions of the Board of Directors and Shareholders (and in the case of MRT,
the Managing Member) of the Subsidiary in connection with the Purchase Agreement
dated June 5, 1998 between the Company and Schroder & Co. Inc. and the sale of
the Old Securities have not been rescinded and revoked. As to any fact material
to the opinions expressed herein which we have not independently established or
verified, we have relied upon statements and representations of officers and
other representatives of the Company, the Guarantors and others. In addition, we
have assumed that there will be no changes in applicable law between the date of
this opinion and the date of issuance and delivery of the New Securities.
We note that the Indenture is by its terms governed by the laws of the
State of New York. We are not admitted to practice in the State of New York, and
accordingly express no opinion as to the laws of such State. We express no
opinion as to the validity of such choice of law. Our opinion should be
understood to the effect to be given to such documents under the internal laws
of the Commonwealth of Pennsylvania, if a court were to apply such law
notwithstanding the parties' choice of other law.
Members of our firm are admitted to the bar in the Commonwealth of
Pennsylvania and we express no opinion with regard to any matter which may be
governed by any law other than the federal laws of the Untied States of America
and the laws of the Commonwealth of Pennsylvania.
Based upon and subject to the foregoing and the limitations,
assumptions, qualifications and exceptions set forth herein, we are of the
opinion that when (i) the Registration Statement
Philipp Brothers Chemicals, Inc.
December 14, 1998
Page 4
becomes effective under the Act and the Indenture has been qualified under the
Trust Indenture Act of 1939, as amended, and (ii) the New Securities have been
duly executed and authenticated in accordance with the terms of the Indenture
and have been delivered upon consummation of the Exchange Offer against receipt
of Old Securities surrendered in exchange therefor in accordance with the terms
of the Exchange Offer, the Guarantee of the Subsidiary will constitute a valid
and binding obligations of the Subsidiary, enforceable against the Subsidiary in
accordance with its terms.
The opinion set forth above is qualified as follows:
A. The validity and enforceability of obligations, and the availability
of rights and remedies, under the Indenture and under the Guarantees are subject
to and may be limited or affected by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect affecting creditors'
rights, generally (including, without limitation, Section 548 of the United
States Bankruptcy Code, state fraudulent transfer laws and other similar laws,
relating to fraud of creditors, (ii) general principles of equity including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or injunctive
relief, regardless of whether such validity or enforceability of obligations or
availability of rights and remedies is considered in a proceeding in equity or
at law, and (iii) laws and legal principles imposing duties to act in good faith
or in a commercially reasonable manner.
B. The validity and enforceability of obligations, and the availability
or rights and remedies, under the Indenture and the Guarantees may be further
limited by other laws and judicial decisions with respect to or affecting
remedial or procedural provisions contained in such documents, but in our
judgment and subject to the other qualifications set forth in this letter, such
other laws and judicial decisions do not render the Indenture invalid as a whole
or substantially interfere with realization of the principal benefits intended
to be provided thereby.
C. The validity and enforceability of obligations, and the availability
of rights and remedies, under the Indenture, including the Guarantees under the
Indenture, may be further limited to other laws and judicial decisions with
respect to the enforceability of any waiver granted under Section 6.04 of the
Indenture.
D. In rendering the opinion expressed in this letter, we express no
opinion with respect to any provisions in the Indenture insofar as such
provisions purport
(i) to establish evidentiary standards or conclusive
presumptions as to factual matters,
Philipp Brothers Chemicals, Inc.
December 14, 1998
Page 5
(ii) to appoint any person or entity as attorney-in-fact for
the Subsidiary
(iii) to require amendments, modifications or waivers of any
provisions of the Indenture to be in writing, or
(iv) to provide that any person or entity (A) may have rights
to release, exculpations, indemnity or contribution, (B) may have rights to the
payment or reimbursement of attorneys' fees except to the extent that a court
determines that such fees are reasonable, (C) may have rights to forfeiture or
the payment of any sum as liquidated, penalties, late charges or repayment
premiums, (D) may have rights to any increase in any rate of interest upon
delinquency in payment or the occurrence of a default, (E) may pursue
inconsistent or cumulative remedies or (F) waives any right, remedy or defense.
E. We also express no opinion as to any securities laws of any
jurisdiction or the rules and regulations of the National Association of
Securities Dealers, Inc.
F. We call to your attention that:
(i) Under the laws of the Commonwealth of Pennsylvania, any
provision in an agreement requiring a party to pay another party's attorneys'
fees and costs in any action to enforce the provisions of such agreement will be
construed to entitle the prevailing party to any such action, whether or not
such party is the party specified in such agreement, to be awarded reasonable
attorneys' fees, costs and necessary disbursements; and
(ii) The courts of the Commonwealth of Pennsylvania will
consider extrinsic evidence (both oral and written) of circumstances of the
Indenture to ascertain the intent of the parties in using the language set forth
in the Indenture, regardless of whether or not the language set forth in the
Indenture is plain and unambiguous on its face and regardless of any statement
by the parties in the Indenture that the Indenture constitutes an integrated
expression of the agreement of the parties, and such courts may incorporate
additional or supplementary terms into the Indenture.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ Martin H. Philip