EXHIBIT 2.1
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
TABLE OF CONTENTS
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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
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TABLE OF CONTENTS
(continued)
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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
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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
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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.
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
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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
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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.
(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
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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.
(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
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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.
(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.
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
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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.
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
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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.
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,
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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
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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.
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
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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.
(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.
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
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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.
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(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
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Subsidiaries is the borrower, lender or guarantor) and all related
security agreements or similar agreements associated therewith;
(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
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box numbers and the name of each person or entity authorized to draw thereon or
have access thereto.
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:
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
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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.
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
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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.
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
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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
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the Confidentiality Agreement, such provisions in the Confidentiality Agreement
shall be amended correspondingly.
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.
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
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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
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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.
(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:
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(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;
(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
-32-
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.
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
-33-
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:
(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
-34-
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]
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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
EXHIBIT 1.3
CERTIFICATE OF MERGER
MERGING
DIESEL ACQUISITION LLC,
a Delaware limited liability company,
INTO
BLUE RHINO CORPORATION,
a Delaware corporation
Pursuant to Section 251(c) of the Delaware General Corporation Law (the
"DGCL") and Section 209(c) of the Delaware Limited Liability Company Act (the
"DLLC"), Blue Rhino Corporation, a Delaware corporation (the "Company"), does
hereby certify as follows:
1. Constituent Entities. The names and states of incorporation or
formation of each of the constituent entities (the "Constituent
Entities") of the merger (the "Merger") are:
(a) Blue Rhino Corporation, a Delaware corporation; and
(b) Diesel Acquisition LLC, a Delaware limited liability company.
2. Agreement and Plan of Merger. An Agreement and Plan of Merger dated
February 8, 2004 (the "Plan"), has been approved, adopted, certified,
executed and acknowledged by each of the Constituent Entities in
accordance with Section 251 of the DGCL and 209 of the DLLC.
3. Name of Surviving Entity. The surviving entity will be a Delaware
corporation and shall be named Blue Rhino Corporation (the "Surviving
Entity").
4. Certificate of Incorporation. The Second Amended and Restated
Certificate of Incorporation of the Company is hereby amended by (i)
the deletion of clause 2 of the Sixth paragraph, (ii) the replacement
of the word "three" with the word "one" in clause 1 of the Seventh
paragraph, (iii) the deletion of clauses 2, 3 and 4 of the Seventh
paragraph. The Second Amended and Restated Certificate of
Incorporation of the Company as amended by the prior sentence will be
the certificate of incorporation of the Surviving Entity.
5. Copy of Merger Agreement. A copy of the executed Agreement and Plan of
Merger is on file at the principal place of business of the Surviving
Entity located at 104 Cambridge Plaza Drive, Winston-Salem, North
Carolina 27104.
6. Provision of Merger Agreement. A copy of the Plan will be furnished by
the Surviving Entity, on request and without cost, to any member or
stockholder of either Constituent Entity.
IN WITNESS WHEREOF, the undersigned Surviving Entity has duly executed
this Certificate of Merger this ____ day of _________, 2004.
BLUE RHINO CORPORATION
By:
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Name:
Title:
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