Exhibit 99.2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
FCI TRADING CORP.,
DIESEL ACQUISITION LLC,
FERRELL COMPANIES, INC.,
and
BLUE RHINO CORPORATION
February 8, 2004
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is made and entered into as
of the 8th day of February, 2004, by and among FCI Trading Corp., a Delaware
corporation ("Parent"), Diesel Acquisition LLC, a Delaware limited liability
company ("Merger Sub"), Ferrell Companies, Inc., a Kansas corporation (the
"Ultimate Parent"), and Blue Rhino Corporation, a Delaware corporation (the
"Company").
WHEREAS, the Board of Directors of the Company, Parent (on behalf of itself
and as sole member of Merger Sub) and Ultimate Parent have approved and deem it
advisable and in the best interests of their respective equityholders to
consummate the business combination transaction provided for herein in which the
Merger Sub will merge with and into the Company with the Company being the
surviving entity in the merger (the "Merger"), thereby becoming a direct
wholly-owned subsidiary of Parent; and
WHEREAS, the Parent, Merger Sub and Ultimate Parent (collectively, the
"Ferrellgas Parties"), would not have entered into this Agreement but for the
simultaneous execution of a voting agreement with certain stockholders of the
Company to vote in favor of the Merger, a unit purchase agreement between
Ferrellgas Partners, L.P. and certain stockholders of the Company, the
Employment Agreement (as defined herein) and a contribution agreement with Billy
D. Prim related to the contribution of certain real estate to Ferrellgas
Partners, L.P.;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, mutual covenants and agreements herein contained
and intending to be legally bound hereby, the Ferrellgas Parties and the Company
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the General Corporation Law of the State
of Delaware (the "DGCL") and the Delaware Limited Liability Company Act (the
"DLLC"), at the Effective Time (as defined below), Merger Sub shall be merged
with and into the Company. Upon the Effective Time, the separate corporate
existence of the Merger Sub shall cease, and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Entity").
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the closing of the Merger (the "Closing") will take place as
promptly as practicable (and in any event within two business days) following
satisfaction or waiver of the conditions set forth in Article VI, other than
those conditions which by their terms are to be satisfied at the Closing (the
"Closing Date"), at the offices of Mayer, Brown, Rowe & Maw, LLP, 700 Louisiana,
Suite 3600, Houston, Texas 77002, unless another date, time or place is agreed
to in writing by the parties.
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1.3 Effective Time of the Merger. As soon as practicable after the
satisfaction of or waiver of the conditions set forth in Article VI, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") in substantially the form attached hereto
as Exhibit 1.3 with the Secretary of State of the State of Delaware, in such
form as required by, and executed in accordance with the relevant provisions of,
the DGCL and the DLLC (the date and time of the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware (or such later time
as is specified in the Certificate of Merger) being the "Effective Time").
1.4 Effects of the Merger. The Merger shall have the effects set forth in
Sections 259, 260 and 261 of the DGCL and Section 209 of the DLLC.
1.5 Certification of Incorporation; Bylaws.
(a) Certification of Incorporation. At the Effective Time, the Certificate
of Incorporation of the Surviving Entity shall be the Certificate of
Incorporation of the Company as in effect immediately prior to the Effective
Time (the "Certificate of Incorporation"), as amended by the Certificate of
Merger.
(b) Bylaws. At the Effective Time, the Bylaws of the Surviving Entity shall
be the Bylaws of the Company, as in effect immediately prior to the Effective
Time.
1.6 Directors and Officers. The directors and officers listed on Schedule
1.6 attached hereto shall be the initial directors and officers of the Surviving
Entity, in each case until their respective successors are duly elected or
appointed, as the case may be, and qualified.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of the holders of any shares of common stock,
par value $0.001 per share, of the Company (the "Company Common Stock") or any
membership interests of Merger Sub:
(a) Membership Interests of Merger Sub. All of the membership interests of
Merger Sub issued and outstanding immediately prior to the Effective Time and
owned by Parent shall be converted into an aggregate of 1,000 shares of common
stock, par value $0.001 per share, of the Company, which shares shall remain
issued and outstanding as validly issued, fully paid and nonassessable shares of
capital stock of the Surviving Entity and which shall be all of the issued and
outstanding shares of capital stock of the Surviving Entity as of the Effective
Time;
(b) Conversion of Company Common Stock. At the Effective Time, each issued
and outstanding share of Company Common Stock (other than Dissenting Shares
described in clause (h) below) shall (i) be converted into the right to receive
from Parent a cash payment of $17.00 (the "Merger Consideration"), (ii)
otherwise no longer be outstanding, (iii) automatically be cancelled and retired
and (iv) cease to exist. Each holder of a certificate representing any shares of
Company Common Stock shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration.
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(c) 1994 Stock Incentive Plan. Pursuant to Section 3.1 (and the authority
granted to the Board of Directors of the Company thereunder) of the Company's
Stock Incentive Plan (the "1994 Plan"), immediately prior to the Effective Time,
each outstanding option (to the extent then vested) to purchase a share of
Company Common Stock under the 1994 Plan (a "1994 Option") shall be converted
into the right to receive from the Company a cash payment equal to the
difference between the Merger Consideration and the exercise price for that 1994
Option. If that result is a negative number, that 1994 Option shall not be
entitled to any payment. As of the Effective Time, all 1994 Options outstanding
immediately prior to the Effective Time, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a 1994 Option shall cease to have any rights with respect thereto,
except the right to receive the payment from the Company set forth in this
Section 2.1(c), if any.
(d) 1998 Stock Incentive Plan. Pursuant to Section 4.6 of the Company's
1998 Stock Incentive Plan of the Company, as amended (the "1998 Plan"),
immediately prior to the Effective Time, each outstanding option (to the extent
then vested) to purchase a share of Company Common Stock under the 1998 Plan,
including such outstanding options granted pursuant to the Company's Executive
Incentive Plan (each, a "1998 Option") shall be converted into the right to
receive from the Company a cash payment equal to the difference between the
Merger Consideration and the exercise price of that 1998 Option. If that result
is a negative number, that 1998 Option shall not be entitled to any payment. The
Board of Directors of the Company may, at its option, approve the pro rata
vesting of all outstanding options under the 1998 Plan through the day
immediately prior to the Closing Date (such date determined by the Board of
Directors of the Company, the "Vesting Determination Date"), which proration
shall mean vesting each increment of a 1998 Option that has a separate vesting
date and that would otherwise not be vested under the terms of the applicable
option agreement as of the Vesting Determination Date in the percentage
determined by dividing (i) the number of days elapsed from the date of initial
grant of the 1998 Option through the Vesting Determination Date, by (ii) the
number of days from the date of initial grant of such 1998 Option through the
date on which the 1998 Option would have vested had all conditions therefor been
met. As of the Effective Time, all 1998 Options outstanding immediately prior to
the Effective Time, shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a 1998 Option
shall cease to have any rights with respect thereto, except the right to receive
the payment from the Company set forth in this Section 2.1(d), if any.
(e) Distributor Plan. Pursuant to Section IV.6 of the Company's Distributor
Option Plan, as amended (the "Distributor Plan"), immediately prior to the
Effective Time, each outstanding option (to the extent then vested) to purchase
a share of Company Common Stock under the Distributor Plan (a "Distributor
Option") shall be converted into the right to receive from the Company a cash
payment equal to the difference between the Merger Consideration and the
exercise price for that Distributor Option. If that result is a negative number,
that Distributor Option shall not be entitled to any payment. The Board of
Directors of the Company may, at its option, approve the pro rata vesting of all
outstanding options under the Distributor Plan through the Vesting Determination
Date, which proration shall mean vesting each increment of a Distributor Option
that has a separate vesting date and that would otherwise not be vested under
the terms of the applicable option agreement as of the Vesting Determination
Date in the percentage determined by dividing (i) the number of days elapsed
from the date of initial grant of the Distributor Option through the Vesting
Determination Date, by (ii) the number of days from the date of initial grant of
such Distributor Option through the date on which the Distributor Option would
have vested had all conditions therefor been met. As of the Effective Time, all
Distributor Options outstanding immediately prior to the Effective Time, shall
no longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a Distributor Option shall cease to
have any rights with respect thereto, except the right to receive the payment
from the Company set forth in this Section 2.1(e), if any.
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(f) Stock Option Plan for Non-Employee Directors. Pursuant to Section 9.2
of the Company's Amended and Restated Stock Option Plan for Non-Employee
Directors (the "Non-Employee Director Plan"), immediately prior to the Effective
Time, each outstanding option to purchase a share of Company Common Stock under
the Non-Employee Director Plan (a "Non-Employee Director Option") shall be
converted into the right to receive from the Company a cash payment equal to the
difference between the Merger Consideration and the exercise price for that
Non-Employee Director Option. If that result is a negative number, that
Non-Employee Director Option shall not be entitled to any payment. Prior to the
date hereof, all holders of Non-Employee Director Options have waived (effective
as of the Closing Date) any right under the Non-Employee Director Plan to
receive the highest reported sales price of a share of Company Common Stock
during the 60-day period immediately preceding the Effective Date rather than
the Merger Consideration as consideration for any Non-Employee Director Option.
As of the Effective Time, all Non-Employee Director Options outstanding
immediately prior to the Effective Time, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a Non-Employee Director Option shall cease to have any rights with
respect thereto, except the right to receive the payment from the Company set
forth in this Section 2.1(f), if any.
(g) Employee Stock Purchase Plan. Pursuant to Section 11.05 of the
Company's Employee Stock Purchase Plan (the "Employee Stock Purchase Plan"), the
Board of Directors of the Company shall amend the Employee Stock Purchase Plan
and take all other actions that it deems necessary or desirable to cause the
Offering (as defined in the Employee Stock Purchase Plan) which began as of
January 1, 2004 to be suspended immediately following the Purchase Period (as
defined in the Employee Stock Purchase Plan) ending on March 31, 2004, such that
participants will not be able to make payroll deductions or receive purchase
rights in the Employee Stock Purchase Plan for periods after March 31, 2004;
provided, that such suspension shall be conditioned upon this Agreement being in
effect on March 31, 2004. The Board of Directors of the Company shall take all
other actions required under the Employee Stock Purchase Plan to effect the
conditional suspension of the Offering as described in this Section 2.1(g). In
accordance with and subject to the terms of the Employee Stock Purchase Plan,
purchase rights under the Employee Stock Purchase Plan will be automatically
exercised on March 31, 2004 and participants will receive the maximum number of
whole shares of Company Common Stock with respect to each such purchase right.
For the avoidance of doubt, a participant receiving shares of Company Common
Stock under the Employee Stock Purchase Plan for the Purchase Period ending
March 31, 2004 will have the right to receive the Merger Consideration for such
shares, provided such shares are held by such participant at the Effective Time.
As of the Effective Time, the Employee Stock Purchase Plan shall be terminated,
and each participant shall cease to have any rights with respect thereto, except
the right to receive the shares of Company Common Stock set forth in this
Section 2.1(g), if any.
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(h) Warrants. Immediately prior to the Effective Time, each outstanding
warrant to purchase shares of the Company's Common Stock (a "Warrant ") shall,
pursuant to the terms of each such Warrant, be converted into the right to
receive from the Company a cash payment equal to the difference between the
Merger Consideration and the exercise price for that Warrant. If that result is
a negative number, that Warrant shall not be entitled to any payment. As of the
Effective Time, all Warrants outstanding immediately prior to the Effective Time
shall no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a Warrant shall cease to have any
rights with respect thereto, except the right to receive the payment from the
Company set forth in this Section 2.1(h), if any.
(i) Appraisal Rights. Any Company Common Stock held by a holder who has not
voted in favor of the Merger and who has delivered a written demand for
appraisal for such shares in accordance with the DGCL (a "Dissenting
Stockholder") shall not be converted into the right to receive the Merger
Consideration unless and until the Dissenting Stockholder fails to perfect or
effectively withdraws or otherwise loses that Dissenting Stockholder's right to
appraisal under the DGCL. A Dissenting Stockholder may receive payment of the
fair value of each outstanding share of Company Common Stock held by that
Dissenting Stockholder (the "Dissenting Shares") in accordance with the
provisions of the DGCL, provided that the Dissenting Stockholder complies with
Section 262 of the DGCL. All Dissenting Shares shall (i) otherwise no longer be
outstanding, (ii) automatically be cancelled and retired and (iii) shall cease
to exist. Each holder of a certificate representing any Dissenting Shares shall
cease to have any rights with respect thereto, except the right to receive the
fair value thereof in accordance with the DGCL. If, after the Effective Time,
any Dissenting Stockholder fails to perfect or effectively withdraws or
otherwise loses that Dissenting Stockholder's right to appraisal, that
Dissenting Stockholder's Dissenting Shares shall thereupon be treated as if they
had been converted, as of the Effective Time, into the right to receive the
Merger Consideration. The Company shall give Parent (y) prompt notice of any
written demands for appraisal, withdrawals of demands for appraisal and any
other instruments served under the DGCL, and (z) the opportunity to participate
in and direct all negotiations, proceedings or settlements with respect to
demands for appraisal under the DGCL.
(j) Appointment of Paying Agent. Prior to the mailing of the proxy
statement of the Company for approval of the Merger at the Stockholders' Meeting
(the "Proxy Statement"), the Parent shall appoint LaSalle Bank National
Association (or other entity qualified to serve as Paying Agent) to act as
paying agent (the "Paying Agent") for the payment of the Merger Consideration to
the holders of the Company Common Stock.
2.2 Exchange of Certificates.
(a) Paying Agent. Prior to the Closing, the Ferrellgas Parties or their
designee shall deposit with the Paying Agent, in its capacity as escrow agent
("Escrow Agent") and as agent for the payor under the escrow agreement in form
and substance substantially similar to Exhibit 2.2 attached hereto (the "Escrow
Agreement"), the aggregate Merger Consideration payable to all holders of
Company Common Stock (the "Fund"). Upon the satisfaction of the conditions set
forth in the Escrow Agreement, the Escrow Agent shall, pursuant to the terms of
the Escrow Agreement, disburse the Fund to itself in its capacity as the Paying
Agent, for the benefit of the holders of the Company Common Stock. The Paying
Agent will then be authorized by the Parent or its designee to pay the Merger
Consideration in exchange for all of the issued and outstanding Company Common
Stock in accordance with this Article II. No interest will be paid or will
accrue on any Merger Consideration to be paid pursuant to this Article II,
except as required by Section 262 of the DGCL.
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(b) Exchange Procedures for Company Common Stock. Promptly after the
Effective Time, the Parent or its designee shall cause the Paying Agent to mail
to each record holder, as of the Effective Time, of an outstanding certificate
or certificates that immediately prior to the Effective Time represented shares
of Company Common Stock (the "Certificates"), a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and instructions for use in effecting the surrender of the
Certificates and payment therefor. Upon surrender to the Paying Agent of such
Certificates, together with such letter of transmittal duly executed, and
acceptance thereof by the Paying Agent, the Paying Agent shall be required to
pay as soon as practicable the holder of a Certificate the Merger Consideration
into which the Certificates surrendered shall have been converted pursuant to
this Agreement. The Paying Agent shall accept such Certificates upon compliance
with such reasonable terms and conditions as the Paying Agent may impose to
effect an orderly exchange thereof in accordance with normal exchange practices.
After the Effective Time, there shall be no further transfer on the records of
the Company or its transfer agent of certificates representing shares of Company
Common Stock and if such certificates are presented to the Company for transfer,
they shall be cancelled against payment of the Merger Consideration as
hereinabove provided. If any Merger Consideration is to be paid to a person
other than the registered holder of a Certificate surrendered for exchange, it
shall be a condition of such exchange that the Certificate so surrendered shall
be properly endorsed, with signature guaranteed, or otherwise in proper form for
transfer. Until surrendered as contemplated by this Section 2.2(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration as
contemplated by Section 2.1.
(c) Payment for Company Securities. At Closing, the Company shall pay the
cash payments set forth in Sections 2.1 (c) through (f) and (h) to the holders
of the 1994 Options, the 1998 Options, the Distributor Options, the Non-Employee
Director Options and the Warrants (collectively, the "Company Securities") in
accordance with this Section 2.2(c), subject to the prior approval of such
amounts by Parent, which amounts shall be based on Schedule 3.3(e)(i), as
adjusted to reflect the actual Vesting Determination Date.
(d) Termination of Fund. Any portion of the Fund which remains
undistributed to the holders of the Certificates for twelve months after the
Effective Time shall be delivered to the Parent or its designee, upon demand,
and any holders of shares of Company Common Stock or Company Securities who have
not theretofore complied with this Article II shall thereafter look only to the
Parent or its designee and only as general creditors thereof for payment of
their claim for the Merger Consideration.
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(e) No Liability. None of the Ferrellgas Parties or Parent's designee, the
Company or the Paying Agent shall be liable to any person in respect of any
Merger Consideration delivered to a public official to the extent required by
any applicable abandoned property, escheat or similar law. If any Certificates
shall not have been surrendered prior to five years after the Effective Time, or
immediately prior to such earlier date on which any Merger Consideration in
respect of such Certificate would otherwise escheat to or become the property of
any Governmental Authority (as defined below), any such Merger Consideration in
respect of such Certificates or Company Securities shall, to the extent
permitted by applicable law, become the property of the payor of the Fund, free
and clear of all claims or interest of any person previously entitled thereto
other than rights of a holder of such Certificate to be paid the Merger
Consideration directly from such payor as specified in Section 2.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE company
The Company hereby represents and warrants to the Ferrellgas Parties:
3.1 Organization and Existence. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has full power and authority to own and hold the properties and
assets it now owns and holds and to carry on its business as and where such
properties are now owned or held and such business is now conducted. The Company
is duly licensed or qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the properties and
assets now owned or held by it or the nature of the business now conducted by it
requires it to be so licensed or qualified and where the failure so to qualify
would, individually or in the aggregate, reasonably be expected to have a
material adverse change in or effect on (a) the business, results of operations
or condition (financial or other) of the Company and its Subsidiaries, taken as
a whole, or (b) the ability of the Company to consummate the Merger ("Material
Adverse Effect"); provided, however, that a Material Adverse Effect shall not be
deemed to include any effect of (i) actions or omissions of any party hereto
taken with the prior written consent of the other in contemplation of the
Merger, (ii) the direct effects of compliance with this Agreement on the
operating performance of the Company, including expenses incurred by the Company
in consummating the Merger or relating to any litigation arising as a result of
this Agreement or the Merger, or (iii) any change in general economic
conditions, except to the extent that such change affects the Company in a
manner materially different from the manner in which it affects other similar
businesses. Schedule 3.1 contains a list of each jurisdiction in which the
Company is duly licensed or qualified to do business as a foreign corporation.
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3.2 Authority; Binding Effect. This Agreement has been duly authorized,
executed and delivered by the Company, subject only to the receipt of the
stockholder approval described in Section 6.1(a), and is the legal, valid and
binding obligation of the Company, enforceable against it in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally. The Board of Directors of the Company has approved
this Agreement and determined that it will, subject to the fiduciary duties of
the Board of Directors under applicable law, unanimously recommend to the
stockholders of the Company approval and adoption of this Agreement and the
Merger as set forth in Section 5.3. The only vote of the holders of any class or
series of outstanding securities of the Company required for approval of this
Agreement and the Merger is the affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock.
3.3 Subsidiaries.
(a) List. Set forth on Schedule 3.3(a) is a true and complete list of (i)
each of the Company's direct or indirect investment or interest in or control
over any other corporation, partnership, joint venture, limited liability
company or other business entity, whether incorporated or unincorporated, (ii)
the jurisdiction of incorporation or formation for each of the entities listed
in clause (i) of which the Company owns, directly or indirectly, 50% or more of
the voting control of such entity or otherwise has the power to direct the
management and operations of such entity (collectively, the "Subsidiaries"),
(iii) each foreign jurisdiction where each of the Subsidiaries is duly licensed
or qualified to do business as a entity, as applicable, and (iv) all of the
equity owners of the Subsidiaries.
(b) Authority. Each of the Subsidiaries is an entity validly existing and
in good standing under the laws of the State in which it was formed and has full
power and authority to own and hold the properties and assets it now owns and
holds and to carry on its business as and where such properties and assets are
now owned or held and such business is now conducted. Each of the Subsidiaries
is duly qualified and in good standing in the states or countries in which the
character of the properties and assets now owned or held by it or the nature of
the business now conducted by it requires it to be so licensed or qualified,
except where the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. There are no outstanding subscriptions, options, convertible
securities, warrants, calls, rights, or agreements or commitments of any kind
(issued or granted by, or binding upon, the Company or the Subsidiaries) to
purchase or otherwise acquire any security of or equity interest in any of the
Subsidiaries. The capital interests in all Subsidiaries are free and clear of
all liens, security interests, claims, charges, encumbrances, rights, options to
purchase, voting trusts or other voting agreement and calls and commitments of
every kind affecting the Subsidiary (other than such that may be contained in an
applicable partnership agreement for a Subsidiary with respect to a partnership
interest in that Subsidiary or in the Credit Agreement) and the holders thereof
have good and valid title to such interests.
(c) Copies. True and correct copies of the organizational documents of the
Subsidiaries, in effect as of the date of this Agreement, have been furnished by
the Company to Parent.
(d) Capitalization. The authorized capital stock of the Company consists of
100 million shares of Company Common Stock and 20 million shares of preferred
stock, par value $0.001 per share. As of the January 30, 2004:
(i) 17,884,540 shares of Company Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable
and were not issued in violation of the preemptive (or similar) rights of
any stockholder of the Company;
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(ii) no shares of preferred stock were issued and outstanding;
(iii) 104,803 shares of Company Common Stock were reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding 1994 Options, all of which are currently vested;
(iv) 4,532,563 shares of Company Common Stock were reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding 1998 Options and 2,522,606 shares of Company Common
Stock would be issuable based on vested 1998 Options assuming pro rata
vesting through May 1, 2004;
(v) 204,434 shares of Company Common Stock were reserved for issuance
and issuable upon or otherwise deliverable in connection with the exercise
of outstanding Distributor Options and 170,298 shares of Company Common
Stock would be issuable based on vested Distributor Options assuming pro
rata vesting through May 1, 2004;
(vi) 335,000 shares of Company Common Stock were reserved for issuance
and issuable upon or otherwise deliverable in connection with the exercise
of outstanding Non-Employee Director Options;
(vii) there were $28,637.95 in accumulated payroll deductions under
the Employee Stock Purchase Plan, which would result in 2,426 shares of
Company Common Stock being issuable upon the exercise of outstanding
purchase rights under such plan, assuming that the last sale price on
January 1, 2004 (or the nearest prior business day) is used to calculate
the 85% discounted purchase price under such plan; and
(viii) 969,093 shares of Company Common Stock were reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding Warrants.
(e) Other Securities. No shares of Company Common Stock have been issued
since January 30, 2004, other than pursuant to exercises of Company Securities.
Except for any awards earned for the period ended January 31, 2004, there are no
cash awards outstanding or due and payable under the Company's Executive
Incentive Plan. Set forth on Schedule 3.3(e)(i) is a list of the holders of the
Company Securities together with the number of shares of Company Common Stock
into which those Company Securities are exercisable assuming the Vesting
Determination Date is May 1, 2004. Except as set forth above, there were
outstanding as of January 31, 2004 and will be outstanding as of the Closing
Date (i) no shares of capital stock or other voting securities of the Company;
(ii) no securities of the Company convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities of the
Company; and (iii) no options, calls, warrants or other rights to acquire from
the Company, and no obligation of the Company to issue, any capital stock,
voting securities or securities convertible into or exchangeable or exercisable
for capital stock or other voting securities of the Company. Except as set forth
on Schedule 3.3(e)(ii), there are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any Company securities described in the
prior sentence or to provide funds to or make any investment (in the form of a
loan, capital contribution, guarantee or otherwise).
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3.4 SEC Filings.
(a) Filings. Since July 31, 2000, (i) the Company has made all filings
required to be made by the Securities Act of 1933, as amended ("Securities
Act"), and the Securities Exchange Act of 1934, as amended ("Exchange Act"),
(ii) all filings by the Company with the Securities and Exchange Commission (the
"SEC"), at the time filed (in the case of documents filed pursuant to the
Exchange Act) or when declared effective by the SEC (in the case of registration
statements filed under the Securities Act) complied in all material respects
with the applicable requirements of the Securities Act and the Exchange Act,
(iii) no such filing, at the time described above, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading, and (iv) all financial
statements contained or incorporated by reference therein complied as to form
when filed or, if applicable, as restated, in all material respects with the
rules and regulations of the SEC with respect thereto, were prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto), and fairly presented in all material respects
the financial condition and results of operations of the Company and its
Subsidiaries, as applicable, at and as of the respective dates thereof and the
consolidated results of its operations and changes in cash flows for the periods
indicated (subject in the case of unaudited statements, to normal year-end audit
adjustments).
(b) Balance Sheet. Except as and to the extent set forth on the balance
sheet of the Company contained in its Quarterly Report on Form 10-Q for the
period ended October 31, 2003, as filed with the SEC, including the notes
thereto, the Company does not have any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which would be required to
be reflected on a balance sheet or in the notes thereto prepared in accordance
with generally accepted accounting principles, except for liabilities or
obligations incurred in the ordinary course of business since October 31, 2003,
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.
3.5 Information Supplied. None of the information supplied or to be
supplied by the Company in writing or otherwise approved in writing by the
Company for inclusion in the Proxy Statement will, at the date it is first
mailed to the Company's stockholders or at the time of the Stockholders'
Meeting, as defined below, contain any statement which, in the light of the
circumstances under which such statement is made, is false or misleading with
respect to any material fact, or omit to state any material fact necessary to
make the statements therein not false or misleading or necessary to correct any
material statement in any earlier communication with respect to the solicitation
of any proxy for the Stockholders' Meeting or any amendment or supplement
thereto. The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder. The Proxy Statement shall include a copy of the
Financial Advisor Opinion.
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3.6 No Material Adverse Change. Since July 31, 2003, except as disclosed in
filings of the Company with the SEC ("SEC Reports") or on Schedule 3.6, the
Company has conducted its business only in the ordinary course and in a manner
consistent with past practice and, since such date, except as disclosed in the
SEC Reports or on Schedule 3.6 or in the ordinary course of business and
consistent with past practice, there has not been (a) any change, event or
development in or affecting the Company that constitutes or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
(b) any change by the Company in its accounting methods or principles except as
recommended by the Company's independent accountants prior to such change; (c)
any declaration, setting aside or payment of any dividends or distributions in
respect of any series of capital stock of the Company; or (d) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including without limitation
the granting of stock options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee benefit plan or
agreement or arrangement, or any other increase in the compensation payable or
to become payable to any present or former directors, officers above the rank of
Vice President of the Company, except for increases in base compensation and
annual cash bonuses.
3.7 Compliance.
(a) Permits. The Company holds, and is in compliance with, all permits,
licenses, franchises, registrations, variances, authority or application
therefor (collectively, "Permits"), exemptions, orders and approvals of any
United States federal, state or local court, administrative agency or
commission, or entity created by rule, regulation or order of any United States
federal, state or local commission or other governmental agency, authority or
instrumentality and committees thereof (a "Governmental Authority") necessary
for the operation of the business of the Company, except to the extent the
failure to so hold or comply would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. There are no
proceedings pending, or to the knowledge of those individuals listed on Schedule
3.7(a) (the "Knowledge of the Company"), threatened or contemplated, by any
Governmental Authority seeking to terminate, revoke or materially limit any such
Permit, exemption, order or approval.
(b) Investigations. Since July 31, 2000 or except as set forth on Schedule
3.7(b), neither the Company nor, to the Knowledge of the Company, any of its
respective executive officers, directors or employees has been the subject of
any investigation or order of any Governmental Authority arising under
applicable laws, and no such investigation or order is pending, or to the
Knowledge of the Company, threatened.
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3.8 No Conflict. Except for any required filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), any required filings with the SEC and the State of Delaware and the terms
of the Credit Agreement dated as of November 20, 2002, among the Company, Bank
of America, N.A., as administrative agent, swing line lender and letter of
credit issuer, Wachovia Bank, National Association, as syndication agent and the
other lenders party thereto (the "Credit Agreement"), the execution and delivery
of this Agreement do not, and the fulfillment and compliance with the terms and
conditions hereof and the consummation of the Merger will not (a) conflict with
any of, or require the consent of any person or entity under, the terms,
conditions or provisions of the charter documents or bylaws or equivalent
governing instruments of the Company or any of the Subsidiaries, as applicable,
(b) violate any provision of, or require any consent, authorization or approval
under, any law or administrative regulation or any judicial, administrative or
arbitration order, award, judgment, writ, injunction or decree applicable to the
Company or any of the Subsidiaries, (c) except as set forth on Schedule 3.8 and
except for such matters that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect, conflict with, result
in a breach of, constitute a default under (whether with notice or the lapse of
time or both) or accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval under, any
written or oral contract, agreement, undertaking, agreement regarding
indebtedness, indenture, debenture, note, bond, loan, collective bargaining
agreement, lease, mortgage, franchise, license agreement, purchase order,
binding bid, commitment, letter of credit or any other legally binding
arrangement (a "Contract") to which the Company or any of the Subsidiaries, as
applicable, is a party or by which any of the of the Company or the Subsidiaries
is bound or to which any asset of the Company or any of the Subsidiaries is
subject, or (d) result in the creation of any lien, charge or encumbrance on the
assets or properties of the Company or any of the Subsidiaries under any such
Contract.
3.9 No Default. Each of the Company and the Subsidiaries is not in default
under, and no condition exists that with notice or lapse of time or both would
constitute a default under, (a) any mortgage, loan agreement, indenture,
evidence of indebtedness or other instrument evidencing borrowed money to which
it or any of its properties are bound (except to the extent this Agreement is
prohibited by the Credit Agreement), (b) any judgment, order or injunction of
any court, arbitrator or governmental agency, or (c) any other Contract, except
for such defaults and conditions that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
3.10 Laws and Regulations; Litigation.
(a) Default. Except as set forth in Schedule 3.10(a) and except for those
violations which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, the Company and the Subsidiaries are
not in violation of or in default under any law, statute, ordinance, rule or
regulation (not including any Environmental Laws (as hereinafter defined) that
are the subject of Section 3.17), or under any order of any Governmental
Authority applicable to them.
(b) Claims. Except as set forth on Schedule 3.10(b), there are no claims,
fines, actions, suits, demands, investigations or proceedings pending or, to the
Knowledge of the Company, threatened in writing, against or affecting the
Company or the Subsidiaries, at law or in equity, or before or by any
Governmental Authority having jurisdiction over the Company and the
Subsidiaries.
3.11 Financial Statements. Attached as Schedule 3.11 are copies of the
Company's (i) unaudited consolidated and consolidating balance sheet as at
December 31, 2003, and the related consolidated and consolidating statement of
income, cash flows and stockholders' equity for the interim periods then ended
for the six months ended December 31, 2003 (collectively, the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied except as noted
therein and except for normal year-end adjustments and the absence of footnotes,
and fairly present, in all material respects, the consolidated financial
position of the Company and the results of operations and cash flows for the
Company for the fiscal period ended December 31, 2003.
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3.12 Taxes.
(a) Definition. For purposes of this Agreement, "Taxes" means all taxes,
however denominated, including any interest, penalties or other additions to tax
that may become payable in respect thereof, imposed by any Governmental
Authority, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including, but not limited to, federal
income taxes and state income taxes), gross receipts taxes, sales taxes, use
taxes, real property gains or transfer taxes, ad valorem taxes, property taxes,
value-added taxes, franchise taxes, production taxes, severance taxes, windfall
profit taxes, withholding taxes, payroll taxes, employment taxes, excise taxes
and other obligations of the same or similar nature to any of the foregoing. For
purposes of this Agreement, "Returns" means all reports, estimates, declarations
of estimated tax, information statements and returns relating to, or required to
be filed in connection with, any Taxes, including information returns or reports
with respect to backup withholding and other payments to third parties.
(b) Returns, etc. Except as set forth in Schedule 3.12 or as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect: (i) all Returns required to be filed by or on behalf of the
Company or the Subsidiaries, have been or will be duly filed on a timely basis
(taking into account all extensions of due dates) and such Returns are true,
complete and correct; (ii) all Taxes shown payable on such Returns have been or
will be paid in full on a timely basis and no other Taxes are payable by the
Company or the Subsidiaries with respect to items or periods covered by such
Returns; (iii) the Company and the Subsidiaries have withheld and paid over all
Taxes required to have been withheld and paid over, and complied with all
information reporting and backup withholding requirements, in connection with
amounts paid or owing to any employee, creditor, independent contractor, or
other third party; (iv) there are no liens on any of the assets of the Company
or the Subsidiaries with respect to Taxes, other than liens for Taxes not yet
due and payable or for Taxes that the Company or the Subsidiaries are contesting
in good faith through appropriate proceedings and for which appropriate reserves
have been established; (v) there are no outstanding agreements or waivers by or
with respect to the Company or the Subsidiaries extending the period for
assessment or collection of any Taxes; (vi) there is no pending action,
proceeding or investigation for assessment or collection of Taxes with respect
to the Company or the Subsidiaries; and (vii) to the Knowledge of the Company,
there is no claim, contingent liability or other outstanding obligation for
Taxes related to the Company or the Subsidiaries.
(c) Neither the Company nor any of the Subsidiaries has any liability for
any material federal, state, local, foreign or other Taxes of any corporation or
entity other than the Company and the Subsidiaries, including without limitation
any liability arising from the application of U.S. Treasury Regulation ss.
1.1502-6 or any analogous provision of state, local or foreign law.
(d) Neither the Company nor any of the Subsidiaries is or has been a party
to any material Tax sharing agreement with any corporation other than the
Company and the Subsidiaries.
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(e) Neither the Company nor any of the Subsidiaries are required to make
any material adjustment under Section 481(a) of the Code by reason of a change
or proposed change in accounting method or otherwise.
3.13 Labor Matters. The Company is not a party to any collective bargaining
agreement. Since July 31, 2000, the Company and the Subsidiaries have not (i)
had any employee strikes, work stoppages, slowdowns or lockouts; (ii) received
any requests for certifications of bargaining units or any other requests for
collective bargaining; or (ii) become aware of any efforts to organize employees
of the Company or any of the Subsidiaries into a collective bargaining unit.
3.14 Employee Benefit Plans.
(a) Company Plans. Except as set forth on Schedule 3.14(a), none of the
Company or any of the Subsidiaries maintains or sponsors, participates in,
contributes to or has an obligation to contribute to, has a commitment to create
or has any liability or contingent liability with respect to any employee
benefit plan (within the meaning of section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), each retirement or deferred
compensation plan, incentive compensation plan, stock plan, retention plan or
agreement, unemployment compensation plan, vacation pay, change in control,
severance pay, bonus or benefit arrangement, insurance or hospitalization
program or any fringe benefit arrangements for any current or former employee,
director, consultant or agent, whether pursuant to contract, arrangement, custom
or informal understanding, which does not constitute an employee benefit plan
(as defined in section 3(3) of ERISA) or any employment or consulting agreement.
All such plans, agreements, programs, policies and arrangements set forth (or
required to be set forth on Schedule 3.14(a) shall be collectively referred to
as the "Company Plans."
(b) Copies of Company Plans. Except as set forth on Schedule 3.14(b), with
respect to each Company Plan, the Company has delivered, or made available, to
the Parent a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof and, to the extent applicable, (i) any
related trust agreement, annuity Contract or other funding instrument; (ii) the
most recent Internal Revenue Service determination or opinion letter; (iii) any
summary plan description and other written communications (or a description or
any oral communications) by the Company or any of the Subsidiaries to their
employees concerning the extent of the benefits provided under a Company Plan;
and (iv) for the most recent year (w) the Form 5500 and attached schedules; (x)
audited financial statements; (y) actuarial valuation reports; and (z)
attorney's response to auditor's request for information.
(c) Compliance of Company Plans. Each Company Plan has been established and
administered in all material respects in accordance with its terms, and in all
material respects in compliance with the applicable provisions of ERISA, the
Internal Revenue Code of 1986, as amended (the "Code") and other applicable
laws, rules and regulations. Each Company Plan which is intended to be qualified
within the meaning of Code section 401(a) has received a favorable determination
letter which covers all amendment to such plan for which the remedial amendment
period has expired and, to the Knowledge of the Company, nothing has occurred,
whether by action or failure to act, which would cause the loss of such
qualification. With respect to any Company Plan, no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending or
threatened, and no facts or circumstances exist which, to the Knowledge of the
Company, would give rise to any such actions, suits or claims. The Company will
promptly notify Parent of any pending or threatened claims arising between the
date hereof and the Closing Date. The Company has not, nor to the Knowledge of
the Company, has any other party, engaged in a prohibited transaction, as such
term is defined under Code section 4975 or ERISA section 406, which would
subject the Company or any of the Subsidiaries or any of the Ferrellgas Parties
or their affiliates to any taxes, penalties or other liabilities under Code
section 4975 or ERISA sections 409 or 502(i) that is reasonably likely to result
in material liability. No event has occurred and no condition exists that would
subject the Company or any of the Subsidiaries to any tax, fine or penalty
imposed by ERISA, the Code or other applicable laws, rules and regulations
including, but not limited to, the taxes imposed by Code sections 4971, 4972,
4977, 4979, 4980B, 4976(a) or the fine imposed by ERISA section 502(c). All
insurance premiums required to be paid with respect to Company Plans have been
or will be paid prior to the Closing Date. All contributions required to be made
under the terms of any Company Plan, the Code, ERISA or other applicable laws,
rules and regulations have been or will be made by the Closing Date. No Company
Plan provides for an increase in benefits on or after the date hereof.
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(d) Unfunded Company Plans. No Company Plan is, or has ever been, subject
to Title IV of ERISA, no Company Plan is a multiemployer plan and, except as set
forth on Schedule 3.14(d), there are no unfunded Company Plans under which
benefits are payable presently, or in the future, to present or former employees
of the Company or any of the Subsidiaries. None of the assets of any Company
Plan are invested in employer securities or employer real property.
(e) Excess Payments. Except as set forth on Schedule 3.14(e) and for
payments specifically provided herein, no Company Plan exists which could result
in the payment to any employee of the Company or any of the Subsidiaries of any
money or other property or rights or accelerate or provide any other rights or
benefits to any such employee as a result of the Merger. None of the payments
contemplated by the Company Plans would, in the aggregate, constitute excess
parachute payments (as defined in section 280G of the Code (without regard to
subsection (b)(4) thereof)) or would exceed the amount deductible pursuant to
section 162(m) of the Code, except to the extent that payments provided under
the Employment Agreement, as defined below, which is being amended and restated
on the date hereof effective as of the Effective Time, might have constituted
excess parachute payments. There have been no act or omission that would impair
the ability of the Company or any Subsidiary (or any successor thereto) to
unilaterally amend or terminate any Company Plan.
15
3.15 Intellectual Property. Subject to liens created under the Credit
Agreement, the Company and the Subsidiaries own, are licensed or otherwise
possess legally enforceable rights to use (in each case, free and clear of any
liens or encumbrances of any kind), the patents, know-how, trademarks, service
marks, brand names and computer software and any applications for such patents,
know-how, trademarks, tradenames, service marks and brand names, computer
software or other intellectual property and proprietary rights used in or
necessary for the conduct of their business as currently conducted
(collectively, "Intellectual Property"). The Intellectual Property filed with
the United States Patent and Trademark Office is listed on Schedule 3.15. Each
license or other agreement relating to Intellectual Property to which the
Company or any of the Subsidiaries is a party has been complied with by the
Company or the applicable Subsidiaries in all material respects and is in full
force and effect. Neither the Company nor any of the Subsidiaries has licensed
or otherwise granted to any parties other than the Company or any of the
Subsidiaries any rights to use any such Intellectual Property except as set
forth in Schedule 3.15. To the Knowledge of the Company and except as set forth
on Schedule 3.15, the use of such Intellectual Property by the Company or any of
the Subsidiaries does not infringe on or otherwise violate the rights of any
person and is in accordance with any applicable license pursuant to which the
Company or any of the Subsidiaries acquired the right to use such Intellectual
Property. To the Knowledge of the Company and except as set forth in Schedule
3.15, no person is challenging, infringing on or otherwise violating any right
of the Company or any of the Subsidiaries with respect to such Intellectual
Property.
3.16 Title to Properties; Liens and Encumbrances. Schedule 3.16 sets forth
a complete and accurate list of all real property owned or leased by the Company
and any of the Subsidiaries. Except for any liens pursuant to the Credit
Agreement or as set forth on Schedule 3.16 and except for such defects in the
title as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, the Company and the Subsidiaries have valid fee
or leasehold interests in its respective real properties and have valid title to
all of their respective other properties and assets (except for leased
properties and assets, in which case the Company and the Subsidiaries have a
valid leasehold interest therein), subject only to statutory liens arising or
incurred in the ordinary course of business with respect to which the underlying
obligations are not delinquent or the validity of which is being contested in
good faith by appropriate proceedings. Any Contract regarding the lease of real
or personal property to which the Company or any of the Subsidiaries is a party
are valid, binding and enforceable obligations of the respective lessors.
3.17 Environmental.
(a) Definitions. As used in this Agreement:
(i) "Environmental Claim" means any and all written administrative,
regulatory or judicial actions, suits, demand, demand letters, claims,
liens, investigations, proceedings or notices of noncompliance or violation
from any person or entity (including any Governmental Authority) alleging
potential liability (including, without limitation, potential liability for
enforcement, investigatory costs, damages, contribution, indemnification,
cost recovery, compensation, injunctive relief, cleanup costs, governmental
resource costs, removal costs, remedial costs, natural resources damages,
property damages, personal injuries or penalties) arising out of, based on
or resulting from (A) the presence, or Release or threatened Release into
the environment, of any Hazardous Materials at any location operated,
leased or managed by the Company or any of the Subsidiaries; or (B) any
violation of any Environmental Law; or (C) any and all claims by any third
Person resulting from the presence or release of any Hazardous Materials.
16
(ii) "Environmental Laws" means all federal, state and local laws,
rules and regulations relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including, without
limitation, laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
(iii) "Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, and transformers or
other equipment that contain regulated quantities of polychlorinated
biphenyls; and (b) any chemicals, materials or substances which are now
defined as or included in the definition of "hazardous substances"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes"
"restricted hazardous wastes" "toxic substances" "toxic pollutants" or
words of similar import under any Environmental Law; and (c) any other
chemical material, substances or waste, exposure to which is now
prohibited, limited or regulated under Environmental Law in a jurisdiction
in which the Company or any of the Subsidiaries operates.
(iv) "Releases" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the atmosphere, soil, surface water, groundwater or property.
(b) Compliance. The Company and the Subsidiaries are in compliance with all
applicable Environmental Laws, except where the failure to be so in compliance
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any of the Subsidiaries have
received any written communication that alleges that any of them are not in
compliance with applicable Environmental Laws, except where the failure to be so
in compliance would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule
3.17(b), neither the Company nor any of the Subsidiaries have used any waste
disposal site, or otherwise disposed of, or transported, or arranged for the
transportation of, any Hazardous Materials to any location in violation of any
Environmental Law, except where the effect of such violation would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(c) Environmental Permits. Except as set forth on Schedule 3.17(c), the
Company and the Subsidiaries have obtained or have applied for all permits,
licenses, franchises, registrations, variances, authority or application
therefor issued pursuant to Environmental Laws (collectively, the "Environmental
Permits") necessary for the conduct of their respective businesses, and all such
Environmental Permits are in full force and effect or, where applicable, a
renewal application has been timely filed and is pending agency approval. The
Company and the Subsidiaries are in compliance with all terms and conditions of
each Environmental Permit, in each case except where the failure to obtain or be
in compliance with such Environmental Permit or the requirement to make any
expenditure in connection with such Environmental Permit would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect
17
(d) Environmental Claims. Except as set forth on Schedule 3.17(d), there is
no Environmental Claim pending (i) against the Company or any of the
Subsidiaries, (ii) against any person or entity whose liability for any
Environmental Claim the Company or any of the Subsidiaries have retained or
assumed either contractually or by operation of law, or (iii) against any real
or personal property or operations that the Company or any of the Subsidiaries
owns, leases or manages, in whole or in part, which, in the case of clauses (i),
(ii) and (iii), would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(e) Releases. Except as set forth on Schedule 3.17(e), there are and have
been no Releases of any Hazardous Material that would form the basis of any
Environmental Claims against the Company or any of the Subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company or
any of the Subsidiaries have retained or assumed either contractually or by
operation of law, except for Releases of Hazardous Materials, the liability for
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(f) Predecessors. Except as set forth on Schedule 3.17(f), there is no
Environmental Claim pending or threatened against any predecessor of Company or
any of the Subsidiaries and there is no Release of Hazardous Materials that
would form the basis of any such Environmental Claim, which Environmental Claim
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(g) Disclosure. With respect to the Company and the Subsidiaries and except
as set forth on Schedule 3.17(g), there are no facts that would, individually or
in the aggregate, form the basis of a Material Adverse Effect arising from (i)
the cost of pollution control equipment currently required or known to be
required in the future, or (ii) current remediation costs or remediation costs
known to be required in the future.
3.18 Material Contracts.
(a) List. Schedule 3.18 sets forth (classified by clause below) any
Contract of the type described below to which the Company or any of the
Subsidiaries are a party (collectively, the "Material Contracts"):
(i) any Contract or Permit that can reasonably be expected to result
in aggregate payments by the Company or any of the Subsidiaries of more
than $500,000 during the current or any subsequent fiscal year of the
Company (based solely on the terms thereof and without regard to any
expected increase in volumes or revenues);
(ii) any Contract that can reasonably be expected to result in
aggregate revenues to the Company or any of the Subsidiaries of more than
$500,000 during the current or any subsequent fiscal year of the Company
(based solely on the terms thereof and without regard to any expected
increase in volumes or revenues);
(iii) any indenture, mortgage, loan, note, credit or sale-leaseback or
similar Contract having a principal obligation on the date hereof of more
than $100,000 to which the Company or any of the Subsidiaries is bound
(whether the Company or any of the Subsidiaries is the borrower, lender or
guarantor) and all related security agreements or similar agreements
associated therewith;
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(iv) any Contract with any director or officer of the Company or any
of the Subsidiaries or with the spouse or lineal descendant of an officer
or director of the Company or any of the Subsidiaries that will not be
terminated prior to Closing;
(v) any Contract containing covenants limiting the freedom of the
Company or any of the Subsidiaries to engage in any line of business or
compete with any person or entity or operate at any location;
(vi) any Contract pending for the acquisition or disposition, directly
or indirectly (by merger or otherwise), of assets of the Company or any of
the Subsidiaries with a value in excess of $100,000 (other than the sale of
inventory in the ordinary course of business);
(vii) any Contract granting any power of attorney with respect to the
affairs of the Company or any of the Subsidiaries;
(viii) to the extent not otherwise identified on Schedule 3.18, any
suretyship Contract, performance bond, working capital maintenance or other
form of guaranty;
(ix) to the extent not otherwise identified on Schedule 3.18, any
Contract (other than a Company Plan) with any director, employee,
consultant, or agent other than the Company's employment agreement with the
Chief Executive Officer of the Company; and
(x) to the extent not otherwise identified on Schedule 3.18, any
Contracts or Permits a default or termination of which would, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(b) No Default. Except as set forth on Schedule 3.18 and except for such
matters that would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect (i) the Material Contracts and all other
Contracts to which the Company or any of the Subsidiaries is a party are in full
force and effect in accordance with their respective terms, (ii) to the
Knowledge of the Company, there exist no defaults by any person or entity other
than the Company or any of the Subsidiaries that is a party to such Contracts,
and (iii) no event has occurred that with notice or lapse of time or both would
constitute any default under any such Contract by the Company or any of the
Subsidiaries or, to the Knowledge of the Company, any other person or entity who
is a party to such Contract. Prior to the execution of this Agreement, the
Company has furnished or made available to Parent copies of each Material
Contract and all amendments thereto.
3.19 Bank Accounts. Schedule 3.19 sets forth (a) the name of each financial
institution in which the Company or any of the Subsidiaries have borrowing or
investment agreements, deposit or checking accounts or safe deposit boxes and
(b) the types of those arrangements and accounts, including, as applicable,
names in which accounts or boxes are held, the account or box numbers and the
name of each person or entity authorized to draw thereon or have access thereto.
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3.20 Customers. To the Knowledge of the Company, no customers that,
individually or in the aggregate, account for 5% or more of the Company's and
the Subsidiaries' aggregate sales in fiscal 2003 or suppliers that, individually
or in the aggregate, account for 5% or more of the Company's and the
Subsidiaries' aggregate cost of inventory in fiscal 2003 intends to terminate
their business relationship with the Company or any of the Subsidiaries or to
materially alter the terms of that relationship.
3.21 Accurate and Complete Records. The books, ledgers, financial records
and other records of the Company and the Subsidiaries for the period of time
which is not less than five years prior to the date hereof: (a) are, or will be
as of the Closing Date, in the possession of the Company and the Subsidiaries as
applicable; (b) have been, in all material respects, maintained in accordance
with all applicable laws, rules and regulations and generally accepted standards
of practice; and (c) are accurate and complete in all material respects and do
not contain or reflect any material discrepancies.
3.22 Copies Complete. Copies of the charter documents, bylaws and other
governing documents, each as amended to date, and the copies of all Contracts,
permits, certificates or other documents delivered to any of the Ferrellgas
Parties in connection with the transactions contemplated by this Agreement are
complete and accurate and are true and correct copies of the originals thereof.
3.23 Financial Advisor. The Company has received the opinion of Banc of
America Securities, LLC, the financial advisor to the Special Committee of the
Board of Directors of the Company, that the Merger Consideration contemplated by
this Agreement is fair to the stockholders of the Company (other than
stockholders who comprise management of the Company or such stockholders'
affiliates) from a financial point of view (the "Financial Advisor Opinion").
The Board of Directors of the Company has unanimously recommended the approval
and adoption of this Agreement and the Merger.
3.24 Brokerage Arrangements. None of the Company or any of its Subsidiaries
has entered (directly or indirectly) into any Contract with any person or entity
that would obligate any of the Ferrellgas Parties to pay any commission,
brokerage or "finder's fee" in connection with the transactions contemplated
herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE FERRELLGAS PARTIES
The Ferrellgas Parties hereby represent and warrant, jointly and severally, to
the Company:
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4.1 Organization and Existence. Each of the Ferrellgas Parties is duly
incorporated or formed, validly existing and in good standing under the laws of
the State of Delaware other than Ultimate Parent which is a Kansas corporation.
Each of the Ferrellgas Parties has full power and authority to own and hold the
properties and assets it now owns and holds and to carry on its businesses as
and where such properties are now owned or held and such business is now
conducted. Each of the Ferrellgas Parties are duly licensed or qualified to do
business as a foreign entity, as applicable, and are in good standing in each
jurisdiction in which the character of the properties and assets now owned or
held by them or the nature of the business now conducted by them requires them
to be so licensed or qualified and where the failure so to qualify would not
reasonably be expected to have, individually or in the aggregate, an adverse
change in or effect on (a) the business, results of operations or condition
(financial or other) of the Ferrellgas Parties, taken as a whole, or (b) the
ability of the Ferrellgas Parties to consummate the Merger ("Ferrellgas Material
Adverse Effect"); provided, however, that a Ferrellgas Material Adverse Effect
shall not be deemed to include any effect of (i) actions or omissions of any
party hereto taken with the prior written consent of the other in contemplation
of the Merger, (ii) the direct effects of compliance with this Agreement on the
operating performance of the Ferrellgas Parties, taken as a whole, including
expenses incurred by Ferrellgas Parties in consummating the Merger or relating
to any litigation arising as a result of this Agreement or the Merger, or (iii)
any change in general economic conditions, except to the extent that such change
affects the Ferrellgas Parties, taken as a whole, in a manner materially
different from the manner in which it affects other similar businesses.
4.2 Authority; Binding Effect. This Agreement has been duly authorized,
executed and delivered by the Ferrellgas Parties and is the legal, valid and
binding obligation of the Ferrellgas Parties, enforceable against each of them
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally. The Board of Directors
of Parent (on behalf of itself and as sole member of Merger Sub) and Ultimate
Parent have approved this Agreement. No vote of any other equity holders of the
Ferrellgas Parties is required for approval of this Agreement and the Merger.
4.3 No Conflict. Except for any required filings under the HSR Act and any
required filings with the SEC and the State of Delaware, the execution and
delivery of this Agreement do not, and the fulfillment and compliance with the
terms and conditions hereof and the consummation of the Merger will not (a)
conflict with any of, or require the consent of any person or entity under, the
terms, conditions or provisions of the charter documents or bylaws or equivalent
governing instruments of the Ferrellgas Parties, as applicable, (b) violate any
provision of, or require any consent, authorization or approval under, any law
or administrative regulation or any judicial, administrative or arbitration
order, award, judgment, writ, injunction or decree applicable to the Ferrellgas
Parties, (c) except for such matters that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect, conflict
with, result in a breach of, constitute a default under (whether with notice or
the lapse of time or both) or accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
under, any Contract to which the Ferrellgas Parties, as applicable, is a party
or by which any of the of the Ferrellgas Parties is bound or to which any asset
of the Ferrellgas Parties is subject, or (d) result in the creation of any lien,
charge or encumbrance on the assets or properties of the Ferrellgas Parties
under any such Contract.
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4.4 No Default. Each of the Ferrellgas Parties is not in default under, and
no condition exists that with notice or lapse of time or both would constitute a
default under, (a) any mortgage, loan agreement, indenture, evidence of
indebtedness or other instrument evidencing borrowed money to which it or any of
its properties are bound, (b) any judgment, order or injunction of any court,
arbitrator or governmental agency, or (c) any other Contract, except for such
defaults and conditions that, individually or in the aggregate, would not
reasonably be expected to have a Ferrellgas Material Adverse Effect.
4.5 Information Supplied. None of the information supplied or to be
supplied by the Ferrellgas Parties in writing or otherwise approved in writing
by the Ferrellgas Parties for inclusion in the Proxy Statement will, at the date
it is first mailed to the Company's stockholders or at the time of the
Stockholders' Meeting, as defined below, contain any statement which, in the
light of the circumstances under which such statement is made, is false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein not false or misleading or necessary to
correct any material statement in any earlier communication with respect to the
solicitation of any proxy for the Stockholders' Meeting or any amendment or
supplement thereto.
4.6 Copies Complete. Copies of the charter documents, bylaws and other
governing documents, each as amended to date, and the copies of all Contracts,
permits, certificates or other documents delivered to the Company in connection
with the transactions contemplated by this Agreement are complete and accurate
and are true and correct copies of the originals thereof.
(a) Brokerage Arrangements. None of the Ferrellgas Parties has entered
(directly or indirectly) into any agreement with any person, firm or corporation
that would obligate the Company to pay any commission, brokerage or "finder's
fee" in connection with the transactions contemplated herein.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER; OTHER COVENANTS
5.1 Conduct of Business of the Company Pending the Merger. The Company
covenants and agrees that, during the period from the date hereof to the
Effective Time, except as otherwise required by the terms of this Agreement or
unless Parent shall otherwise agree in writing, the business of the Company and
the Subsidiaries shall be conducted only in, and the Company and the
Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice and in compliance with
applicable laws; and the Company shall use its reasonable best efforts to
preserve intact the business organization of the Company and the Subsidiaries,
to keep available the services of the present officers, employees and
consultants of the Company and the Subsidiaries (except as the Company deems a
termination of non-management employees to be advisable in an individual case)
and to preserve the present relationships of the Company and the Subsidiaries
with its customers, suppliers and other persons with whom the Company or any of
the Subsidiaries has significant business relations and to preserve and maintain
in effect all of the Intellectual Property.
By way of amplification and not in limitation of the foregoing, the Company
shall not, and shall cause each of the Subsidiaries not to, between the date of
this Agreement and the Effective Time, directly or indirectly, do or propose or
commit to do any of the following without the prior written consent of Parent:
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(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, except with respect to
dividends or distributions from a Subsidiary to the Company or any of its
Subsidiaries, (ii) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for, shares of its capital stock, or (iii) purchase,
redeem or otherwise acquire or agree to acquire any shares of capital stock of
the Company or any of the Subsidiaries or any other securities convertible into
shares of capital stock or any rights, warrants or options to acquire any such
shares or convertible securities, except with respect to the retirement of the
outstanding stock options or warrants as described in this Agreement;
(b) except with respect to the issuance of Company Common Stock (i) upon
the exercise of stock options or warrants outstanding as of January 30, 2004,
and (ii) under the Employee Stock Purchase Plan through March 31, 2004,
authorize for issuance, grant, issue, deliver, sell or agree or commit to issue,
sell or deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), pledge or
otherwise encumber any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights warrants or options to
acquire, any such shares, voting securities or convertible securities or any
other securities or equity equivalents (including without limitation stock
appreciation rights);
(c) except to the extent required under existing Company Plans as in effect
on the date of this Agreement, (i) increase the compensation, benefits or fringe
benefits of any of its directors, officers or employees, except for increases in
compensation of employees and officers of the Company or its Subsidiaries in the
ordinary course of business in accordance with past practice, including the
grant of any cash awards under the Executive Incentive Plan for the period
ending January 31, 2004 or any subsequent period, (ii) grant any severance or
termination pay not currently required to be paid under existing Company Plans,
except on an individual basis in the ordinary course of business and consistent
with past practice, (iii) establish, adopt, enter into or amend or terminate any
Company Plan or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any directors, officers or employees except as required by law or
as provided in this Agreement, or (iv) fail to make any required contribution to
any Company Plan; provided that the provisions of this Section 5.1(c) shall not
prohibit the Company and its Subsidiaries from hiring personnel from time to
time in the ordinary course of their business, consistent with past practice;
provided, however, that any hiring of an officer of the Company or any of its
Subsidiaries, shall also be made only in consultation with Parent;
(d) amend the charter or organizational documents of the Company or any of
the Subsidiaries or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership of
the Company or any of the Subsidiaries;
(e) except as allowed pursuant to Section 5.7 of this Agreement, acquire or
agree to acquire (i) by merging or consolidation with, or by purchasing a
substantial portion of the stock or assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof or (ii) any assets (not otherwise
subject to paragraph (h) below) other than in the ordinary course of business
consistent with past practice;
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(f) sell, lease, license, mortgage or otherwise encumber or subject to any
lien or otherwise dispose of any of its properties or assets other than in the
ordinary course of business consistent with past practice and in amounts that
are not, individually or in the aggregate, material to the Company;
(g) (i) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person (other than or endorsements of negotiable
instruments and similar guarantees in the ordinary course of business consistent
with past practice), issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any of the Subsidiaries,
guarantee any debt securities of another person, enter into any "keep well" or
other agreement to maintain the financial condition of another person or enter
into any arrangement having the economic effect of any of the foregoing, except
for borrowings under the Company's revolving credit facility pursuant to the
Credit Agreement, in either case incurred in the ordinary course of business
consistent with past practice, or (ii) make any loans, advances or capital
contributions to, or investments in, any other person;
(h) expend, or commit to expend, funds for capital expenditures other than
in accordance with the Company's current capital expenditure plans in excess of
$50,000 in any one transaction or related series of transactions or $250,000 in
the aggregate;
(i) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(j) recognize any labor union (unless legally required to do so) or enter
into any collective bargaining agreement;
(k) except as may be required as a result of a change in generally accepted
accounting principles, change any of the accounting methods, practices or
principles used by the Company or any of the Subsidiaries, including any change
of an entity's fiscal year;
(l) make Tax elections or settle or compromise income Tax liabilities in
excess of $100,000 in the aggregate or file any federal income tax return prior
to the last day prescribed by law;
(m) settle or compromise any litigation, including appraisal demands,
requiring a payment in excess of $100,000 in the aggregate (but with no other
agreement of the Company or any of its Subsidiaries other than the payment of
such cash and a release of claim) in which the Company or any of the
Subsidiaries is a defendant (whether or not commenced prior to the date of this
Agreement) or settle, pay or compromise any claims not required to be paid;
(n) cancel or materially change any insurance policy;
(o) enter into any new line of business;
(p) enter into any Contract that restricts the Company from delivering any
information to Parent in accordance with Section 5.7 of this Agreement; or
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(q) authorize any of, or commit or agree to take any of, the foregoing
actions or any action that would make any of the representations or warranties
of the Company contained in this Agreement untrue and incorrect as of the date
when made if such action had then been taken.
5.2 Conduct of Business of Merger Sub. Merger Sub has not engaged, and
during the period from the date of this Agreement to the Effective Time, Merger
Sub shall not engage, in any activities of any nature except as provided in, or
in connection with the transactions contemplated by, this Agreement.
5.3 Stockholders' Meeting. The Company will take all action necessary in
accordance with and subject to applicable law and the Company's Certificate of
Incorporation and the Company's By-Laws to convene a meeting of its stockholders
(the "Stockholder's Meeting") as soon as practicable after the date of this
Agreement to consider and vote upon the adoption and approval of this Agreement.
Subject to the next succeeding sentence, the Company, through its Board of
Directors, shall unanimously recommend to its stockholders approval of the
foregoing matters, and such recommendation, together with a copy of the opinion
referred to in Section 3.23, shall be included in the Proxy Statement. The Board
of Directors of the Company may fail to make such recommendation, or withdraw,
modify or change such recommendation, if and only if the Board, after advice of
outside counsel, determines in good faith that the making of such
recommendation, or the failure to so withdraw, modify or change such
recommendation, would constitute a breach of its fiduciary duties under
applicable law in accordance with Section 5.7.
5.4 HSR Filings. As promptly as practicable following the execution of this
Agreement, the parties shall prepare and file with the Federal Trade Commission
and the Department of Justice the appropriate filings and any supplemental
information that may be reasonably requested in connection therewith under the
HSR Act.
5.5 Preparation of Proxy Statement. Promptly following the date of this
Agreement, the Company, in consultation with Parent and only after approved by
Parent, which approval shall not be unreasonably withheld, shall prepare and
file with the SEC the Proxy Statement. The Proxy Statement shall include the
notification to the Company's stockholders required by Section 262 of the DGCL
with respect to appraisal rights. The Company shall promptly forward in writing
any comments received by the Company from the SEC on the Proxy Statement. The
Company shall file any amendments to the Proxy Statement based on such comments
as required by the SEC after Parent has approved any such amendment, which
approval shall not be unreasonably withheld. The Company will use its reasonable
best efforts to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable.
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5.6 Access to Information; Confidentiality.
(a) Access. From the date hereof to the Effective Time, the Company (i)
shall, and shall cause its and its Subsidiaries' officers, directors, employees,
auditors and other agents to, afford the officers, auditors and other agents of
Ferrellgas Parties, reasonable access at all reasonable times (during normal
business hours so as not to unduly or unreasonably interfere with the business
of the Company or any of its Subsidiaries) to its senior officers, agents,
properties, offices and other facilities and to all books and records, and shall
furnish the Ferrellgas Parties and such other persons with all financial,
operating and other data and information as the Ferrellgas Parties, through its
officers, may from time to time reasonably request unless prohibited under
applicable law, and (ii) shall make available its senior officers, upon
reasonable prior notice and during normal business hours, to confer on a regular
basis with the appropriate officers of the Ferrellgas Parties regarding the
ongoing operations of the Company and its Subsidiaries, the implementation of
the Merger and other matters related hereto. No investigation pursuant to this
Section 5.6 shall affect any representations or warranties of the parties herein
or the conditions to the obligations of the parties hereto.
(b) Confidentiality. Each of the Ferrellgas Parties will hold information
it receives pursuant to Section 5.6(a)(i) which is nonpublic in confidence to
the extent required by, and in accordance with, the provisions of the letter
dated December 19, 2003 between Ferrellgas, L.P. and the Company (the
"Confidentiality Agreement"). The parties hereto agree that the terms of the
Confidentiality Agreement shall also apply to the Ferrellgas Parties, as if the
Company was the "Recipient" thereunder, and shall be enforceable against the
Company by the Ferrellgas Parties in the same manner the Confidentiality
Agreement is enforceable against Ferrellgas, L.P. by the Company thereunder.
5.7 No Solicitation. Except as provided hereinafter, the Company shall not,
nor shall the Company authorize or permit any of its or any of its Subsidiaries'
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative (collectively, "Representatives")
retained by it or any of its Subsidiaries to, solicit, initiate, encourage
(including by way of furnishing information or assistance), or take any other
action to facilitate, any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any Transaction Proposal
(as defined below) or enter into or maintain or continue any discussions or
negotiate with any person in furtherance of such inquiries or to obtain a
Transaction Proposal, or agree to or endorse any Transaction Proposal, and the
Company shall notify Parent in writing (as promptly as practicable, and in any
event within two business days) as to any Transaction Proposal which it, any of
its Subsidiaries or any of its Representatives may receive (including any
amendment or change thereto), specifying in reasonable detail the material terms
thereof. Notwithstanding the foregoing provisions of this Section 5.7, the Board
of Directors of the Company or any committee of the Board of Directors, or any
other person at the direction of the Board of Directors of such committee, shall
be permitted to (i) furnish information to any person or entity who makes an
unsolicited inquiry concerning a possible Transaction Proposal, (ii) enter into
negotiations or discussions with any person or entity that makes an unsolicited
Transaction Proposal regarding that Transaction Proposal, or (iii) enter into an
unsolicited Transaction Proposal, if, in the case of either clauses (ii) or
(iii), the Board of Directors of the Company determines in good faith, after
advice of counsel, that (A) the failure to do so would be a breach of its
fiduciary duties under applicable law or (B) failing to make, withdraw, modify
or change a recommendation to the Company's stockholders would be a breach of
its fiduciary duties under applicable law. The Company shall obtain a
confidentiality agreement from the person or entity making such inquiries or
proposals containing substantially the same terms and provisions as that
obtained from Parent to the extent practicable, provided that to the extent such
confidentiality agreement with such third party contains provisions that are
more favorable to such third party than the comparable provisions in the
Confidentiality Agreement, such provisions in the Confidentiality Agreement
shall be amended correspondingly.
26
As use herein, the term "Transaction Proposal" means (x) any acquisition or
purchase of substantially all of the assets of, or any controlling interest in,
or any debt or equity offering of, the Company or any Business Combination, as
defined below, or (y) any proposal, plan or agreement to do any of the
foregoing. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. This section shall not prohibit
accurate disclosure by the Company in any document that is required to be filed
by the Company with the SEC, including without limitation any filings made in
compliance with Rule 14e-2 promulgated under the Exchange Act.
5.8 Further Action; Reasonable Best Efforts. Upon the terms and subject to
the conditions hereof, each of the parties hereto shall use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do or
cause to be done, all things necessary, proper or advisable as required
hereunder and under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including but not
limited to (i) cooperating in the preparation and filing of the Proxy Statement,
and any amendments thereto and (ii) using its reasonable best efforts to make
all required regulatory filings and applications and to obtain all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to Contracts as are necessary for the
consummation of the transactions contemplated by this Agreement and to fulfill
the conditions to the Merger. To the extent practicable in the circumstances and
subject to applicable laws, each party shall provide the other with the
opportunity to review all information relating to the other party, or any of its
subsidiaries, which appears in any filing made with, or written materials
submitted to, any Governmental Authority in connection with obtaining the
necessary regulatory approvals for the consummation of the transactions
contemplated by this Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their reasonable best efforts to take all such necessary action.
5.9 Notification of Certain Matters. The Company shall give prompt notice
to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence or nonoccurrence of any event which would likely cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, and (ii) any failure of the Company or any
of the Ferrellgas Parties, as the case may be, to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.9 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
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5.10 Public Announcements. The Ferrellgas Parties and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any listing agreement with its securities exchange or
quotation system, provided, however, that each party may talk to their
equityholders in accordance with applicable law without the consent of the
other.
5.11 Directors and Officers Protection. The Surviving Entity and its
successors shall provide and keep in force for a period of five years after the
Effective Time directors' and officers' liability insurance providing coverage
to directors and officers of the Company and its Subsidiaries for acts or
omissions occurring prior to the Effective Time. Such insurance shall provide at
least the same coverage and amounts as contained in the Company's policies on
the date hereof. In addition to the foregoing, the Surviving Entity further
agrees to continue to indemnify all individuals who are or have been officers,
directors or employees of the Company or any Subsidiary prior to the Effective
Time from any acts or omissions in such capacities prior to the Effective Time,
to the fullest extent that such indemnification is provided pursuant to the
respective charter and bylaws of the Company and its Subsidiaries, as
applicable, on the date hereof.
5.12 Employee Benefits.
(a) Employment of Company Employees. In connection with the transactions
contemplated by this Agreement and immediately after the Effective Time, the
employees of the Company and its Subsidiaries (as determined immediately prior
to the Effective Date) shall become employees of the general partner of the
successor of the Surviving Entity (the "Employing Entity"). Employees of the
Company and its Subsidiaries who become employees of the Employing Entity in
accordance with this Section 5.12(a) shall be referred to herein collectively as
"Company Employees".
(b) Benefits for Company Employees. Except as otherwise provided in this
Section 5.12, on and after the Effective Time, the Employing Entity shall employ
Company Employees on substantially the same terms and conditions as their
employment with the Company and its Subsidiaries immediately prior to the
Effective Time and shall provide to Company Employees with employee benefit
plans, programs, policies and arrangements (other than equity based compensation
programs) which are substantially comparable in the aggregate to the Company
Plans as in effect immediately prior to the Closing Date. Such benefits may
provided under the Company Plans which are continued by the Employing Entity
after the Effective Time or by other plans of the Employing Entity. Nothing in
the foregoing shall restrict the right of the Employing Entity to change or
modify the terms and conditions of employment, amend or terminate any Company
Plan, or change or modify the benefits provided to any Company Employee after
the Effective Date.
(c) Credit for Service. To the extent applicable with respect to employee
benefit plans, programs and arrangements that are established or maintained by
the Employing Entity for the benefit of Company Employees, Company Employees
(and their eligible dependents) shall be given credit for their service with
Seller (i) for purposes of eligibility to participate and vesting (but not
benefit accrual) to the extent such service was taken into account under a
corresponding Company Plan, and (ii) for purposes of satisfying any waiting
periods, evidence of insurability requirements, or the application of any
pre-existing condition limitations and shall be given credit for amounts paid
under a corresponding Company Plan during the same period for purposes of
applying deductibles, copayments and out-of-pocket maximums as though such
amounts had been paid in accordance with the terms and conditions of the plans
and arrangements maintained by the Employing Entity. In no event shall a Company
Employee be given credit for eligibility to participate, vesting or benefit
accrual under the Ferrellgas Companies, Inc. Employee Stock Ownership Plan for
periods prior to the Effective Date unless otherwise required by applicable law.
Notwithstanding the foregoing provisions of this Section 5.12(c)), service and
other amounts shall not be credited to Company Employees (or their eligible
dependents) to the extent the crediting of such service or other amounts would
produce duplicate benefits.
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(d) Retention Agreements. Prior to the Closing, the Company shall use its
reasonable best efforts to enter into a retention agreement in form and
substance satisfactory to Parent, which consent shall not be unreasonably
withheld, with key executive officers identified by Parent, pursuant to which
such officers may be entitled to a specified cash bonus if they continue their
employment with the Surviving Entity, its successors or the general partner or
other affiliate thereof for a period of three years after the Closing Date or if
their employment is terminated not for "cause," as defined in such agreement,
prior to the end of that three-year period.
(e) Amendment of Employment Agreement. On the date hereof, the Company has
amended and restated the Employment Agreement dated May 31, 1999, effective as
of January 1, 1999, between the Company and the Chief Executive Officer of the
Company (the "Employment Agreement"), which amendment and restatement shall be
effective as of the Closing .
(f) Change of Trustee. Effective as of the Effective Time, the Company
agrees to take such action as may be necessary to remove the current trustee of
the Blue Rhino Corporation and Subsidiaries 401(k) Plan and immediately
thereafter, Parent shall appoint a new trustee of such plan Parent determines in
its sole discretion.
(g) No Third Party Beneficiaries. It is understood and agreed between the
parties that all provisions contained in this Agreement with respect to employee
benefit plans or employee compensation are included for the sole benefit of the
respective parties hereto and do not and shall not create any right in any other
person, including, but not limited to, any Company Employee, any participant in
any benefit or compensation plan or any beneficiary thereof.
5.13 Financial Statements. At least three days prior to Closing, the
Company shall deliver to the Parent the Company's unaudited consolidated and
consolidating balance sheet as at the end of the month immediately prior to
Closing or if impracticable, the next prior month ("Closing Balance Sheet Date")
and the related consolidated statement of income, cash flows and unit holders'
equity for the period ended as of the Closing Balance Sheet Date (collectively,
the "Closing Financial Statements"). The Closing Financial Statements shall have
been prepared in accordance with generally accepted accounting principles
consistently applied except as noted therein and except, in the case of
unaudited interim financial statements, for normal year-end adjustments, and in
all material respects fairly present the consolidated financial position of the
Company as of the respective dates set forth therein and the results of
operations and cash flows for the Company for the respective fiscal periods set
forth therein.
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5.14 Waiver of Rights. The Company shall use its reasonable best efforts to
cause all holders of 1994 Options to waive (effective as of the Closing Date)
any right under the 1994 Plan to receive the highest reported sales price of a
share of Company Common Stock during the 60-day period immediately preceding the
Effective Time rather than the Merger Consideration as consideration for any
1994 Option.
5.15 Internal Controls. The Company shall use its reasonable best efforts
to cause its auditors providing assistance with management's assessment of
internal controls required by Section 404 of the Sarbanes-Oxley Act of 2002
("Management's Assessment") to deliver to Parent, on or before the Target
Closing Date (as defined below), a written confirmation to the effect that in
the judgment of such auditors, and based on the actions previously taken and
proposed to be taken by the Company, the Company will have completed all
documentation, testing and procedures required for Management's Assessment as of
July 31, 2004 for the Company. In the event that (i) such written confirmation
shall not be delivered on or before the Target Closing Date, (ii) Management's
Assessment shall not be deemed to meet the standards required by the
Sarbanes-Oxley Act of 2002, in the reasonable judgment of the Parent, or (iii)
in the reasonable judgment of Parent, a management assessment attestation
opinion, as defined by the Public Company Accounting Oversight Board, acceptable
to the Parent related the Partnership and its subsidiaries as of July 31, 2004
cannot be provided by its independent auditor related to Management's Assessment
of the Company together with the Partnership and it subsidiaries, the Closing
Date shall be delayed (but not beyond August 2, 2004) until either i) the first
business day prior to July 30, 2004 following the acceptance by the Parent of
the written confirmation and the Parent's determination as to whether
Management's Assessment fails the conditions in clause (ii) or (iii) above or
ii) August 2, 2004 when delivery of such written confirmation shall not be
required. The failure of the Company to provide the written confirmation
required under this Section 5.15 shall not be grounds for termination of this
Agreement by any party hereto, but shall merely allow the Ferrellgas Parties to
delay the Closing until August 2, 2004, at which time this condition shall
automatically be deemed to be satisfied. The "Target Closing Date" shall mean
the second business day following satisfaction or waiver of the conditions to
Closing set forth in Sections 6.1 and 6.2 other than the conditions in Section
6.2(b) of performance of this Section 5.15 and Section 5.1, including those
conditions which by their terms are to be satisfied at the Closing. As of the
close of business on the Target Closing Date, all conditions to Closing in
Sections 6.1 and 6.2 shall be terminated and shall have no further force and
effect, except for (y) compliance with Section 5.1 and (z) compliance with this
Section 5.15 by delivery of the above-described written confirmation or passage
of time.
ARTICLE VI
CONDITIONS OF MERGER
6.1 Conditions to Obligation of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Effective Time of the following conditions:
30
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of the outstanding
shares of Company Common Stock entitled to vote thereon.
(b) Other Approvals. Other than the filing contemplated by Sections 1.3,
all consents, approvals, authorizations or permits of, actions by, or filings
with or notifications to, and all expirations of waiting periods imposed by, any
Governmental Authority or any third party (all the foregoing, "Consents") which
are necessary for the consummation of the Merger, other than immaterial Consents
the failure to obtain which would have no material adverse effect on the
consummation of the Merger or the business of the Surviving Corporation, shall
have been filed, occurred or been obtained (all such permits, approvals, filings
and consents and the lapse of all such waiting periods being referred to as the
"Requisite Regulatory Approvals"), all conditions, if any, to such Requisite
Regulatory Approvals shall have been satisfied and all such Requisite Regulatory
Approvals shall be in full force and effect.
(c) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect, nor shall any proceeding by any
Governmental Authority seeking any of the foregoing be pending. There shall not
be any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger, which makes the consummation of the
Merger illegal.
6.2 Conditions to Obligations of Parent and Merger Sub. The obligations of
Parent and Merger Sub to effect the Merger are subject to the satisfaction of
the following conditions unless waived by Parent and Merger Sub:
(a) Representations and Warranties. The representations and warranties of
the Company set forth in this Agreement shall be evaluated (a) as of the date of
this Agreement, and (b) as of the Closing Date as though made on and as of the
Closing Date, except to the extent such representations and warranties speak as
of an earlier date. There shall not exist any inaccuracies in the
representations and warranties of the Company set forth in this Agreement such
that the effect of such inaccuracies, individually or in the aggregate, has or
would reasonably be expected to have a Material Adverse Effect, and Parent shall
have received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company as to the
satisfaction of this condition. In making the determination in the preceding
sentence, materiality modifiers (including limitations requiring a Material
Adverse Effect) applicable to individual representations and warranties shall be
disregarded.
(b) Performance of Obligations of the Company. The Company shall have
performed all obligations required to be performed by it under this Agreement at
or prior to the Closing Date with such exceptions as, individually or in the
aggregate, do not have, and would not reasonably be expected to have, a Material
Adverse Effect, and Parent shall have received a certificate signed on behalf of
the Company by the Chief Executive Officer and the Chief Financial Officer of
the Company as to the satisfaction of this condition.
31
6.3 Conditions to Obligations of the Company. The obligation of the Company
to effect the Merger is subject to the satisfaction of the following unless
waived by the Company:
(a) Representations and Warranties. The representations and warranties of
the Ferrellgas Parties set forth in this Agreement shall be evaluated as of (a)
the date of this Agreement, and (b) as of the Closing Date as though made on and
as of the Closing Date, except to the extent such representations and warranties
speak as of an earlier date. There shall not exist any inaccuracies in the
representations and warranties of any of the Ferrellgas Parties set forth in
this Agreement such that the effect of such inaccuracies, individually or in the
aggregate, has or would reasonably be expected to have a Ferrellgas Material
Adverse Effect, and the Company shall have received a certificate signed on
behalf of each of the Ferrellgas Parties by its Chief Executive Officer and the
Chief Financial Officer as to the satisfaction of this condition. In making the
determination in the preceding sentence, materiality modifiers (including
limitations requiring a Ferrellgas Material Adverse Effect) applicable to
individual representations and warranties shall be disregarded.
(b) Performance of Obligations of the Ferrellgas Parties. Each of the
Ferrellgas Parties shall have performed all obligations required to be performed
by it under this Agreement at or prior to the Closing Date with such exceptions
as, individually or in the aggregate, do not have, and would not reasonably be
expected to have, a Ferrellgas Material Adverse Effect, and the Company shall
have received a certificate signed on behalf of each of the Ferrellgas Parties
by its Chief Executive Officer and the Chief Financial Officer as to the
satisfaction of this condition.
(c) Escrow Agreement. The Escrow Agreement shall be executed and delivered
at or prior to the Closing and the funds specified therein deposited with the
Escrow Agent.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company; or
(b) by Parent, upon any breach of any representation, warranty, covenant or
agreement of the Company set forth in this Agreement that, individually or in
the aggregate, would constitute grounds for Parent to elect not to consummate
the Merger pursuant to Section 6.2(a) or (b), if either (A) such breach cannot
be cured prior to the Closing Date, or (B) has not been cured within 45 days
after the date on which written notice of such breach is given by Parent to the
Company, specifying in reasonable detail the nature of such breach; provided,
that there shall be no right to terminate this Agreement pursuant to this
Section 7.1(b) following the Target Closing Date other than for a breach of
Section 5.1 of this Agreement by the Company;
32
(c) by the Company, upon any breach of any representation, warranty,
covenant or agreement of any of the Ferrellgas Parties set forth in this
Agreement that, individually or in the aggregate, would constitute grounds for
the Company to elect not to consummate the Merger pursuant to Section 6.3(a),
(b) or (c), if either (A) such breach cannot be cured prior to the Closing Date,
or (B) has not been cured within 45 days after the date on which written notice
of such breach is given by the Company to Parent, specifying in reasonable
detail the nature of such breach;
(d) by either Parent or the Company, if any permanent injunction or action
by any Governmental Authority preventing the consummation of the Merger shall
have become final and nonappealable; provided that such right of termination
shall not be available to any party if such party shall have failed to make
reasonable efforts to prevent or contest the imposition of such injunction or
action and such failure materially contributed to such imposition;
(e) by either Parent or the Company if (other than due to the willful
failure of the party seeking to terminate this Agreement to perform its
obligations hereunder which are required to be performed at or prior to the
Effective Time) the Merger shall not have been consummated on or prior to August
3, 2004 ("Termination Date"); provided, that there shall be no right to
terminate this Agreement pursuant to this Section 7.1(e) following the Target
Closing Date other than by Parent and Merger Sub for a breach of Section 5.1 of
this Agreement by the Company;
(f) by either Parent or the Company, if the approval of the stockholders of
the Company of this Agreement and the Merger required for the consummation of
the Merger shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of stockholders or at any adjournment
thereof;
(g) by either Parent or the Company, if (i) the Board of Directors of the
Company shall have approved or have recommended to the stockholders of the
Company a Transaction Proposal or shall have resolved to do the foregoing; or
(ii) a Takeover Proposal (as defined herein) is commenced (other than by Parent
or any of its subsidiaries or affiliates), and the Board of Directors of the
Company recommends that the stockholders of the Company tender their shares in
such Takeover Proposal or otherwise fails to recommend that such stockholders
reject such Takeover Proposal within ten business days of the commencement
thereof; provided, however, that in each case this Agreement may only be
terminated by the Company if, and only to the extent that, the Board of
Directors of the Company, after advice of independent legal counsel, determines
in good faith that failure to take such action would constitute a breach of the
Board's fiduciary duties under applicable law; or
(h) by Parent within 10 days after the date of the Stockholders' Meeting,
if it and its affiliates have exercised their good faith reasonable best efforts
to obtain financing on reasonable commercial terms (which reasonableness shall
be determined based on whether there has been a material adverse change in the
pricing then available for the securities of Ferrellgas Partners, L.P. from the
pricing available as of the date of this Agreement) for the payment of the
Merger Consideration and have been unable to do so.
33
7.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto except as set
forth in Section 5.6(b), Sections 7.3(a) and (b), if applicable, and Section
7.3(e) provided, however, that nothing herein shall relieve any party from
liability for any willful and material breach hereof causing termination of this
Agreement (with the Ferrellgas Parties being jointly and severally liable for
their liabilities under this Agreement); provided further, however, that the
recommendation of another transaction by the Company's Board of Directors in
accordance with Section 5.7 shall not constitute a willful and material breach
of this Agreement by the Company nor shall Parent's termination of this
Agreement pursuant to the terms of Section 7.1(h) constitute a willful and
material breach of this Agreement by the Ferrellgas Parties.
7.3 Fees and Expenses.
(a) Payment to Parent. The Company agrees that if Parent terminates this
Agreement pursuant to:
(i) Section 7.1 (f) because the Agreement and the Merger shall fail to
receive the requisite vote for approval and adoption by the stockholders of
the Company at a meeting of stockholders of the Company called to vote
thereon and at the time of such meeting there shall exist a tender offer or
exchange offer for not less than a majority of the outstanding Voting Stock
(as defined herein) of the Company (a "Takeover Proposal"); or
(ii) Sections 7.1(g); or
then in any such case, the Company shall pay to the Ferrellgas Parties, as
directed by Parent, $10 million.
(b) Payment to the Company. Parent agrees that if Parent terminates this
Agreement pursuant to Section 7.1(h), then Parent shall pay to the Company the
sum of $10 million as damages for such termination and such payment shall
constitute liquidated damages and not a penalty.
(c) Cash Payment. Any cash payment required to be made pursuant to Section
7.3(a) shall be made immediately upon the occurrence of the applicable event, by
wire transfer of immediately available funds to an account designated by Parent,
and termination of the Company's obligations under Section 7.3(a) shall not
occur until such payment shall have been made pursuant hereto. The Company
covenants and agrees that it will not enter into a definitive agreement relating
to a Transaction Proposal that would, if consummated, require the payment of any
amounts by the Company pursuant to Section 7.3(b) unless the other party or
parties thereto agree unconditionally in writing (a copy of which shall be
furnished to Parent as soon as practicable after the public announcement of such
proposed Transaction Proposal) to assume, undertake and perform all of the
Company's payment obligations under this Section 7.3 and to pay the Parent's
legal expenses incurred in connection with the enforcement of this Section 7.3.
(d) Definitions. For purposes of this Agreement:
34
(i) the term "Business Combination" shall mean (A) the acquisition by
any person (other than Parent or any of its subsidiaries) of beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act) of, or the right to acquire beneficial ownership of, or the
formation of any group (as such term is defined for purposes of Rule 13d-5
under the Exchange Act) which beneficially owns or has the right to acquire
beneficial ownership of, 50% or more of the total voting power of all then
outstanding Voting Stock of the Company; (B) the consolidation or merger of
the Company with or into any person (other that Parent or any of its
subsidiaries) in a transaction in which the Company shall not be the
surviving or continuing corporation; (C) the merger or consolidation of any
person (other than Parent or any of its subsidiaries) with or into the
Company in a transaction in which the Company is the surviving or
continuing corporation but in which the shares of Voting Stock outstanding
immediately prior to such transaction shall represent less than 50% of the
total voting power of all Voting Stock of the surviving or continuing
corporation outstanding immediately after such merger or consolidation; or
(D) any sale or other transfer (including by way of dividend or
distribution of assets to the Company's stockholders), in one transaction
or in a series of related transactions, of all or substantial portion of
the Company's consolidated assets or business to any person (other than
Parent or any of its subsidiaries) or group; and
(ii) the term "Voting Stock" means all outstanding stock and other
securities of the Company entitled (without regard to the occurrence of any
contingency) to vote in the election of directors of the Company.
(e) Expenses. Except as specifically provided in Section 7.2 and this
Section 7.3, each party shall bear its own expenses in connection with this
Agreement and the Merger.
ARTICLE VIII
MISCELLANEOUS
8.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the Closing. All
covenants and agreements contained herein which, by their terms, are to be
performed after the Closing shall survive the Closing.
8.2 Notices. Any notice, request, instruction, correspondence or other
document to be given hereunder by either party to the other (herein collectively
called "Notice") shall be in writing and delivered in person or by courier
service requiring acknowledgment of receipt of delivery or mailed by certified
mail, postage prepaid and return receipt requested, or by telecopier, as
follows:
If to the Company, addressed to:
Blue Rhino Corporation
104 Cambridge Plaza Drive
Winston-Salem, North Carolina 27104
Attention: Billy D. Prim
Telecopy: (336) 659-6750
35
with a copy to:
Womble Carlyle Sandridge & Rice, PLLC
One West Fourth Street
Winston-Salem, North Carolina 27101
Attention: Jeffrey C. Howland
Telecopy: (336) 733-8371
If to any of the Ferrellgas Parties, addressed to:
FCI Trading Corp.
One Liberty Plaza
Liberty, Missouri 64068
Attention: Kenneth A. Heinz
Telecopy: (816) 792-7836
with a copy to:
Mayer, Brown, Rowe & Maw LLP
700 Louisiana, Suite 3600
Houston, Texas 77002
Attention: David L. Ronn
Telecopy: (713) 632-1825
Notice given by personal delivery, courier service or mail shall be effective
upon actual receipt. Notice given by telecopier shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if received
during the recipient's normal business hours, or at the beginning of the
recipient's next business day after receipt if not received during the
recipient's normal business hours. Any party may change any address to which
Notice is to be given to it by giving Notice as provided above of such change of
address.
8.3 Governing Law. The provisions of this Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware
and the federal laws of the United States. Each party hereto hereby irrevocably
and unconditionally (a) consents and submits to the exclusive jurisdiction of
the courts of the State of Delaware and of the United States of America located
in the State of Delaware (each a "Delaware Court") for any actions, suits or
proceedings arising out of or relating to this Agreement or the Merger, (b)
agrees that any such action, suit or proceedings may be brought or maintained
only in a Delaware Court and in no other forum, (c) agrees that service of any
process, summons, notice or document by U.S. Registered or certified mail to
such party at the address specified in Section 8.2 shall be effective service of
process in any such action, suit or proceeding in any Delaware Court, and (d)
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of or related to this Agreement or
the Merger in any Delaware Court located in Wilmington, Delaware, and further
irrevocably and unconditionally waives and agrees not to plead a claim in any
such court that any such action, suit or proceeding has been brought in an
inconvenient forum.
36
8.4 Entire Agreement; Amendments and Waivers. This Agreement constitutes
the entire agreement between the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby; provided, however, that, after approval of the Merger by the
stockholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each share of the Company
Common Stock shall be converted upon consummation of the Merger. The failure of
a party to exercise any right or remedy shall not be deemed or constitute a
waiver of such right or remedy in the future. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (regardless of whether similar), nor shall any such waiver
constitute a continuing waiver unless otherwise expressly provided. Each party
to this Agreement agrees that (i) no other party to this Agreement (including
its agents and representatives) has made any representation, warranty, covenant
or agreement to or with such party relating to the Merger, other than those
expressly set forth in this Agreement and the agreements referenced herein, and
(ii) such party has not relied upon any representation, warranty, covenant or
agreement relating to the Merger, other than those referred to in clause (i)
above.
8.5 Binding Effect and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns; but neither this Agreement nor any of the rights,
benefits or obligations hereunder shall be assigned, by operation of law or
otherwise, by any party hereto without the prior written consent of either the
Parent or the Company, as applicable, other than as set forth herein. Nothing in
this Agreement, express or implied, is intended to confer upon any person or
entity other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
8.6 Severability. If any provision of the Agreement is rendered or declared
illegal or unenforceable by reason of any existing or subsequently enacted
legislation or by decree of a court of last resort, the parties hereto shall
promptly meet and negotiate substitute provisions for those rendered or declared
illegal or unenforceable, but all of the remaining provisions of this Agreement
shall remain in full force and effect.
8.7 Headings. The headings of the sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
8.8 Execution. This Agreement may be executed in multiple counterparts each
of which shall be deemed an original and all of which shall constitute one
instrument.
[The rest of this page has been intentionally left blank]
37
EXECUTED as of the date first set forth above.
BLUE RHINO CORPORATION
By: /s/ Billy D. Prim
-----------------------------------------------------
Name: Billy D. Prim
Title: Chairman and Chief Executive Officer
FCI TRADING CORP.
By: /s/ Kenneth A. Heinz
----------------------------------------------------
Name: Kenneth A. Heinz
Title: Senior Vice President, Corporate Development
DIESEL ACQUISITION LLC
By: FCI TRADING CORP., its sole member
By: /s/ Kenneth A. Heinz
----------------------------------------------------
Name: Kenneth A. Heinz
Title: Senior Vice President, Corporate Development
FERRELL COMPANIES, INC.
By: /s/ Kenneth A. Heinz
----------------------------------------------------
Name: Kenneth A. Heinz
Title: Senior Vice President, Corporate Development
Signature Page
Exhibits and Schedules
Exhibits
Exhibit 1.3 Certificate of Merger
Exhibit 2.2 Escrow Agreement
Schedules
Schedule 1.6 Directors and Officers of the Surviving Entity
Schedule 3.1 Foreign Qualifications of the Company
Schedule 3.3(a) Subsidiaries
Schedule 3.3(e)(i) Company Securities
Schedule 3.3(e)(ii) Company Repurchase or Investment Obligations
Schedule 3.6 Material Adverse Change
Schedule 3.7(a) Knowledge of the Company
Schedule 3.7(b) Compliance
Schedule 3.8 Consents
Schedule 3.10(a) Laws and Regulations
Schedule 3.10(b) Litigation
Schedule 3.11 Financial Statements
Schedule 3.12 Taxes
Schedule 3.14(a) Company Plans
Schedule 3.14(b) Company Plan Copies
Schedule 3.14(d) Unfunded Company Plans
Schedule 3.14(e) Excess Payments
Schedule 3.15 Intellectual Property
Schedule 3.16 Title To Properties
Schedule 3.17(b) Environmental Compliance
Schedule 3.17(c) Environmental Permits
Schedule 3.17(d) Environmental Claims
Schedule 3.17(e) Environmental Releases
Schedule 3.17(f) Environmental Predecessors
Schedule 3.17(g) Environmental Disclosure
Schedule 3.18 Material Contracts
Schedule 3.19 Bank Accounts
Exhibits and Schedules
Definitions
1998 Option...................................................................3
1998 Plan.....................................................................3
Agreement.....................................................................1
Business Combination.........................................................34
Certificate of Incorporation..................................................2
Certificate of Merger.........................................................1
Certificates..................................................................6
Closing.......................................................................1
Closing Balance Sheet Date...................................................29
Closing Date..................................................................1
Closing Financial Statements.................................................29
Code.........................................................................14
Company.......................................................................1
Company Common Stock..........................................................2
Company Employees............................................................28
Company Plans................................................................14
Company Securities............................................................6
Confidentiality Agreement....................................................26
Consents.....................................................................31
Contract.....................................................................12
Controlled Subsidiaries.......................................................8
Credit Agreement.............................................................11
Delaware Court...............................................................36
DGCL..........................................................................1
Dissenting Shares.............................................................5
Dissenting Stockholder........................................................5
DLLC..........................................................................1
Effective Time................................................................2
Employee Stock Purchase Plan..................................................4
Employing Entity.............................................................28
Employment Agreement.........................................................29
Environmental Claim..........................................................16
Environmental Laws...........................................................17
Environmental Permits........................................................17
ERISA........................................................................14
Escrow Agent..................................................................5
Escrow Agreement..............................................................5
Exchange Act.................................................................10
Exchange Agent................................................................5
Ferrellgas Material Adverse Effect...........................................21
Ferrellgas Parties............................................................1
Financial Advisor Opinion....................................................20
Financial Statements.........................................................12
Fund..........................................................................6
Governmental Authority.......................................................11
Definitions - i
Hazardous Materials..........................................................17
HSR Act......................................................................11
Intellectual Property........................................................15
Knowledge of the Company.....................................................11
Material Adverse Effect.......................................................7
Material Contracts...........................................................18
Merger........................................................................1
Merger Consideration..........................................................2
Merger Sub....................................................................1
Non-Employee Director Option...............................................4, 5
Non-Employee Director Plan....................................................4
Notice.......................................................................35
Parent........................................................................1
Permits......................................................................11
Proxy Statement...............................................................5
Recipient....................................................................26
Releases.....................................................................17
Representatives..............................................................26
Requisite Regulatory Approvals...............................................31
Returns......................................................................13
SEC..........................................................................10
SEC Reports..................................................................10
Securities Act...............................................................10
Stockholder's Meeting........................................................25
Surviving Corporation.........................................................1
Takeover Proposal............................................................34
Taxes........................................................................13
Termination Date.............................................................33
Transaction Proposal.........................................................27
Ultimate Parent...............................................................1
Vesting Determination Date....................................................3
Voting Stock.................................................................35
Definitions - ii
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER.....................................................1
1.1 The Merger.....................................................1
1.2 Closing........................................................1
1.3 Effective Time of the Merger...................................1
1.4 Effects of the Merger..........................................2
1.5 Certification of Incorporation; Bylaws.........................2
1.6 Directors and Officers.........................................2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES.........................2
2.1 Effect on Capital Stock........................................2
2.2 Exchange of Certificates.......................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE company..................7
3.1 Organization and Existence.....................................7
3.2 Authority; Binding Effect......................................7
3.3 Subsidiaries...................................................8
3.4 SEC Filings...................................................10
3.5 Information Supplied..........................................10
3.6 No Material Adverse Change....................................10
3.7 Compliance....................................................11
3.8 No Conflict...................................................11
3.9 No Default....................................................12
3.10 Laws and Regulations; Litigation..............................12
3.11 Financial Statements..........................................12
3.12 Taxes.........................................................13
3.13 Labor Matters.................................................14
3.14 Employee Benefit Plans........................................14
3.15 Intellectual Property.........................................15
3.16 Title to Properties; Liens and Encumbrances...................16
TOC - i
TABLE OF CONTENTS
(continued)
3.17 Environmental.................................................16
3.18 Material Contracts............................................18
3.19 Bank Accounts.................................................19
3.20 Customers.....................................................20
3.21 Accurate and Complete Records.................................20
3.22 Copies Complete...............................................20
3.23 Financial Advisor.............................................20
3.24 Brokerage Arrangements........................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE FERRELLGAS PARTIES......20
4.1 Organization and Existence....................................20
4.2 Authority; Binding Effect.....................................21
4.3 No Conflict...................................................21
4.4 No Default....................................................21
4.5 Information Supplied..........................................22
4.6 Copies Complete...............................................22
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER; OTHER COVENANTS.......22
5.1 Conduct of Business of the Company Pending the Merger.........22
5.2 Conduct of Business of Merger Sub.............................25
5.3 Stockholders' Meeting.........................................25
5.4 HSR Filings...................................................25
5.5 Preparation of Proxy Statement................................25
5.6 Access to Information; Confidentiality........................25
5.7 No Solicitation...............................................26
5.8 Further Action; Reasonable Best Efforts.......................27
5.9 Notification of Certain Matters...............................27
5.10 Public Announcements..........................................27
5.11 Directors and Officers Protection.............................28
TOC - ii
TABLE OF CONTENTS
(continued)
5.12 Employee Benefits.............................................28
5.13 Financial Statements..........................................29
5.14 Waiver of Rights..............................................30
5.15 Internal Controls.............................................30
ARTICLE VI CONDITIONS OF MERGER..........................................30
6.1 Conditions to Obligation of Each Party to Effect the Merger...30
6.2 Conditions to Obligations of Parent and Merger Sub............31
6.3 Conditions to Obligations of the Company......................32
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.............................32
7.1 Termination...................................................32
7.2 Effect of Termination.........................................33
7.3 Fees and Expenses.............................................34
ARTICLE VIII MISCELLANEOUS.................................................35
8.1 Nonsurvival of Representations and Warranties.................35
8.2 Notices.......................................................35
8.3 Governing Law.................................................36
8.4 Entire Agreement; Amendments and Waivers......................37
8.5 Binding Effect and Assignment.................................37
8.6 Severability..................................................37
8.7 Headings......................................................37
8.8 Execution.....................................................37
TOC - iii