EXHIBIT 2.2
AGREEMENT AND PLAN OF DISTRIBUTION
AGREEMENT AND PLAN OF DISTRIBUTION, dated as of , 1996 (this
"Distribution Agreement"), by and between First Mississippi Corporation, a
Mississippi corporation (the "Company") and [Newco], a Mississippi corporation
and a wholly owned subsidiary of the Company ("Newco").
RECITALS
A. The Merger Transaction. The Company, Mississippi Chemical Corporation, a
Mississippi corporation ("Parent") and Miss Sub, Inc., a Mississippi
corporation and a wholly owned subsidiary of Parent ("Sub"), have entered into
an Agreement and Plan of Merger and Reorganization, dated as of August 27,
1996 (the "Merger Agreement"), providing for the Merger (as defined in the
Merger Agreement) of Sub with and into the Company, with the Company as the
surviving corporation.
B. The Spin-Off. Immediately prior to the Effective Time (as defined in
Section 1.2 of the Merger Agreement), subject to the satisfaction or waiver of
the conditions set forth in Article VI of this Distribution Agreement, the
Board of Directors of the Company expects to distribute all of the then-
outstanding shares of Common Stock, par value $ per share, of Newco ("Newco
Common Stock") as a dividend to the holders of Common Stock, par value $1.00
per share, of the Company ("Company Common Stock"), on a pro rata basis (the
"Spin-Off").
C. Purpose. The purpose of the Spin-Off is to make possible the Merger by
divesting the Company of the businesses and operations conducted or to be
conducted by Newco, which Parent is unwilling to acquire. This Distribution
Agreement sets forth or provides for certain agreements between the Company
and Newco in consideration of the separation of their ownership.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I
Definitions
1.1 Definitions. As used in this Distribution Agreement, the following terms
shall have the following respective meanings (capitalized terms used but not
defined herein shall have the respective meanings ascribed thereto in the
Merger Agreement):
"Action" shall mean any suit, claim, action, arbitration, inquiry,
proceeding or investigation by or before any court, arbitral tribunal,
administrative agency or commission or other governmental, regulatory or
administrative agency or commission.
"Company Group" shall mean the Company and its Subsidiaries, other than the
Newco Group.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean, with respect to any asset or property, the
sale value that would be obtained in an arms length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"Indemnified Loss" shall mean, with respect to any claim by an Indemnified
Party for indemnification pursuant to Article V hereof, any and all losses,
Liabilities, claims, damages, obligations, payments, costs and
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expenses (including, without limitation, the costs and expenses of any and all
Actions, demands, assessments, judgments, settlements and compromises relating
thereto and reasonable costs of investigation and attorneys' fees and expenses
in connection therewith) suffered by such Indemnified Party with respect to
such claim.
"Initial Group" shall mean the Company and its Subsidiaries determined prior
to giving effect to the transfers and transactions contemplated by Section 4.1
hereof.
"Liabilities" shall mean, with respect to any party, except as otherwise
provided herein, any and all liabilities and obligations of such party,
whether absolute, accrued, contingent, reflected on a balance sheet (or in the
notes thereto) or otherwise, including, without limitation, those arising
under any law, rule, regulation, Action, order or consent decree of any
governmental entity or any judgement of any court of any kind or any award of
any arbitrator of any kind, and those arising under any contract, commitment
or undertaking.
"Newco Group" shall mean Newco and its Subsidiaries determined after giving
effect to the transfers and transactions contemplated by Section 4.1 and
Section 4.2 hereof.
"Registration Statement" shall mean a registration statement on Form S-1 to
effect the registration of Newco Common Stock pursuant to the Securities Act
and related registration statement on Form 8-A to effect the registration of
Newco Common Stock under the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Time of Distribution" shall mean the time as of which the Spin-Off is
effective.
"Transfer Agent" shall mean KeyCorp Shareholder Services, Inc., the transfer
agent for the Company Common Stock.
ARTICLE II
Capitalization of Newco; Mechanics of Spin-Off
2.1 Capitalization of Newco. The authorized capital stock of Newco currently
consists of shares of Newco Common Stock, all of which are issued and
outstanding and owned beneficially and of record by the Company.
2.2 Mechanics of Spin-Off. (a) The Spin-Off shall be effected by the
distribution to each holder of record of Company Common Stock, as of the close
of the stock transfer books on the record date designated by or pursuant to
the authorization of the Board of Directors of the Company (the "Record
Date"), of certificates representing [ of a share/ shares] of Newco
Common Stock multiplied by the number of shares of Company Common Stock held
by such holder, provided that no fractional shares of Newco Common Stock shall
be distributed.
(b) In the event a holder of Company Common Stock holds of record on the
Record Date a number of shares of Company Common Stock such that, but for the
proviso in Section 2.2(a) hereof, a fractional share of Newco Common Stock
would be distributed to such holder, the Transfer Agent shall distribute to
such holder certificates representing the number of shares of Newco Common
Stock to which such holder is entitled after excluding from that number the
fractional amount. The Transfer Agent shall aggregate all shares of Newco
Common Stock that would be distributable but for the proviso in Section 2.2(a)
hereof, shall sell such shares in the public market as soon as practicable
after the Time of Distribution and shall distribute the proceeds of the sale
of such shares pro rata (based upon the fractional shares of Newco Common
Stock which would otherwise be received by such holders) among the holders of
record of Company Common Stock who, but for the foregoing proviso of Section
2.2(a), would have received fractional shares of Newco Common Stock.
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2.3 Timing of Spin-Off. Prior to the Effective Time, the Board of Directors
of the Company shall formally declare the dividend constituting the Spin-Off,
which declaration shall be subject to the satisfaction or waiver of the
conditions set forth in Article VI of this Distribution Agreement, and pay
such dividend by delivery of certificates for Newco Common Stock to the
Transfer Agent for delivery to the holders entitled thereto. The Spin-Off
shall be deemed to be effective upon notification by the Company to the
Transfer Agent that such conditions have been satisfied or waived and that the
Transfer Agent is authorized to proceed with the distribution.
2.4 Registration and Listing. Prior to the Time of Distribution:
(a) The parties shall take such actions regarding the Registration
Statement and Proxy Statement (as defined in the Merger Agreement), as is
provided in the Merger Agreement. After the Registration Statement becomes
effective, the Company shall cause the final Prospectus which is part of
the Registration Statement to be delivered to all holders of record of
Company Common Stock on the Record Date.
(b) The parties hereto shall use reasonable efforts to take all such
action as may be necessary or appropriate under state securities and blue
sky laws in connection with the transactions contemplated by this
Agreement.
(c) Newco shall prepare, file and seek to make effective, an application
for the listing of the Newco Common Stock on the New York Stock Exchange,
subject to official notice of issuance.
(d) The parties hereto shall cooperate in preparing, filing with the
Securities and Exchange Commission and causing to become effective any
registration statements or amendments thereto which are necessary or
appropriate in order to effect the transactions contemplated hereby or to
reflect the establishment of, or amendments to, any employee benefit plans
contemplated hereby requiring registration under the Securities Act.
ARTICLE III
Tax Matters
Prior to the Time of Distribution, Newco and the Company shall enter into an
agreement relating to past and future tax sharing and certain issues
associated therewith in substantially the form attached hereto as Exhibit A
(the "Tax Disaffiliation Agreement").
ARTICLE IV
Certain Transactions
4.1 Transactions Relating to Spin-Off. (a) Prior to the Time of
Distribution, subject to the satisfaction or waiver of the conditions set
forth in Article VI of this Distribution Agreement, the Company shall
transfer, assign and convey to Newco as a capital contribution all of the
capital stock of the following companies that is owned by the Company:
(i) CALLIDUS TECHNOLOGIES INC.
wholly owned subsidiary of Callidus Technologies Inc.:
Callidus Technologies International, Inc.
majority-owned subsidiaries of Callidus Technologies
International, Inc.:
Callidus Technologies Benelux NV (minority ownership by Callidus
Technologies Inc.)
Callidus Technologies France, S.A.R.L. (minority ownership by
Callidus Technologies Inc.)
Callidus Technologies Germany (minority ownership by Callidus
Technologies Inc.)
Callidus Technologies Italy, sri (minority ownership by Callidus
Technologies Inc.)
Callidus Technologies U.K., Ltd. (minority ownership by Callidus
Technologies Inc.)
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(ii) DEW RESOURCES, INC.
(iii) FEC MARKETING, INC.
(iv) FIRST CHEMICAL CORPORATION
wholly owned subsidiaries of First Chemical Corporation:
Quality Chemicals, Inc.
First Chemical Holdings, Inc.
FT Chemical, Inc.
First Chemical Texas, L.P.
FCC Acquisition Corporation
wholly owned subsidiary FCC Acquisition Corporation:
EKC Technology, Inc.
wholly owned subsidiaries of EKC Technology, Inc.:
EKC International, Inc.
Mycosil, Inc.
Burmar Chemical, Inc.
Micropel, Inc.
majority-owned subsidiary of EKC Technology, Inc.:
EKC Technology, Ltd. (minority ownership by First Chemical
Corporation)
(v) FIRST ENERGY CORPORATION
(vi) FIRSTMISS, INC.
(vii) FRM, INC.
(viii) FRM INTERNATIONAL, INC.
(ix) FRM INDUSTRIES, INC.
wholly owned subsidiary of FRM Industries, Inc.:
FirstMiss Steel, Inc.
(x) INDUSTRIAL INSULATIONS OF TEXAS, INC.
(xi) MAXADYNE CORPORATION OF LOUISIANA
wholly owned subsidiary of Maxadyne Corporation of Louisiana:
Star Corrosion & Refractory, Inc.
(xii) MAXADYNE CORPORATION
(xiii) MELAMINE CHEMICALS, INC. (minority interest)
(xiv) OMNIRAD, INC.
subsidiary of OmniRad, Inc.
Opti-Rad Limited Partnership
(xv) PLASMA ENERGY CORPORATION
wholly owned subsidiary of Plasma Energy Corporation:
Plasma Energy Technologies Corporation
(xvi) PLASMA PROCESSING CORPORATION
subsidiary of Plasma Processing Corporation:
Newminco Joint Venture 50% joint venture
(xvii) POWER SOURCES, INC. (50% owned)
(xviii) SCE TECHNOLOGIES, INC.
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(xix) MISSISSIPPI CHEMICAL CORPORATION
(xx) PRIMEX, LTD.
(xxi) FIRST MISSISSIPPI CORPORATION FOUNDATION
(b) In addition to the transfers described in Section 4.1(a), prior to the
Time of Distribution, in accordance with the requirements of Article 11 of the
Mississippi Business Corporation Act, FirstMiss Fertilizer, Inc. shall be
merged with and into the Company with the Company as the surviving corporation
in the merger.
(c) In addition to the transfers referred to above, prior to the Time of
Distribution, the Company shall, or shall cause its Subsidiaries to, transfer,
assign and convey to Newco, as a capital contribution, all other assets of the
Company which are not primarily related to the Retained Business, including,
but not limited to, the following assets:
(i) the net assets recorded on the "FMF Equity" division of the
accounting records of FirstMiss Fertilizer, Inc., excluding the net assets
relating to the business of the Company Group;
(ii) all assets of the Company and its Subsidiaries located in the
Jackson, Mississippi metropolitan area (other than books and records of the
Company to the extent that they do not relate to the business of Newco);
(iii) all real property of the Company located in Hillsborough County,
Florida;
(iv) all cash and cash equivalents (including marketable securities) of
the Retained Business and all proceeds of the Financing (the full amount of
which shall be funded prior to such contribution) except cash (A) used to
refinance existing indebtedness for borrowed money of the Retained
Business, (B) retained by the Company to the extent provided in Section
6.14 of the Merger Agreement to pay for transaction and other costs payable
by the Company in connection with the transactions contemplated by this
Agreement or the Merger Agreement (except to the extent the obligations to
pay such transaction and other costs have been assumed by Newco, in which
case, cash in the amount of such assumed obligations shall be transferred
to Newco) or (C) retained by the Company pursuant to Section 5.1(k) of the
Merger Agreement;
(v) the Company's equity interest in the Jackson, Mississippi Country
Club and any other golf, tennis, country or other private clubs;
(vi) cash deposits;
(vii) receivables from employees of the Company (other than Retained
Employees);
(viii) Ammonia to which First Chemical Corporation has title used by
First Chemical Corporation in its manufacturing process;
(ix) the note receivable from FirstMiss Gold, Inc. (Xxxxxxxx Gold);
(x) receivable from Power Sources, Inc.;
(xi) interest receivables on investments;
(xii) prepaid insurance deposits and premiums;
(xiii) software of the Company;
(xiv) note receivable from Thunderbird Energy, Inc.;
(xv) prepaid interest on the Company's Deferred Compensation Plan;
(xvi) Home Insurance escrow account;
(xvii) stock of peer group companies;
(xviii) life insurance policies on executives;
(xix) Thermotech note receivable;
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(xx) Systems Industries note receivable;
(xxi) the Company's jet, the hanger and fuel farm lease related to the
hanger;
(xxii) prepaid taxes and tax refunds; and
(xxiii) any other items included as "Excluded Assets" on Schedule 3.7 of
the Merger Agreement to the extent not already covered in this Section
4.1(c).
(d) From and after the transfers referred to in subparagraph (c)(i) above,
each of the Company and its Subsidiaries, on the one hand, and Newco and its
Subsidiaries, on the other hand, shall have no liability to the other as a
result of the transactions occurring prior to the date of such transfer other
than pursuant to the provisions hereof and the other agreements referred to
herein.
(e) Prior to the Company's transfer of the capital stock of FEC Marketing,
Inc to Newco, FEC Marketing, Inc. shall transfer its interests in FirstMiss
Fertilizer Limited Partnership and FirstMiss Fertilizer of Texas LP to an
entity in the Retained Business designated by the Company.
4.2 Transfer of Liabilities. The parties further agree that, except as
otherwise provided in this Distribution Agreement, the Merger Agreement, the
Employee Benefits Agreement (defined below) or the Tax Disaffiliation
Agreement, at or prior to the Time of Distribution Newco shall assume all
Liabilities of the Initial Group, other than the Liabilities to the extent
arising out of, based upon, or resulting from the operation of the business
of, or to the extent relating to, the Retained Business (the "Newco Assumed
Liabilities"), and the Company shall retain all Liabilities (whether arising
before or after the Time of Distribution) to the extent arising out of, based
upon, or resulting from the operation of, or to the extent relating to, the
Retained Business (the "Company Assumed Liabilities"). Notwithstanding the
foregoing, for purposes of this Section 4.2, Company Assumed Liabilities shall
be deemed to include, but not be limited to, the liabilities reflected on the
Retained Business Balance Sheet and (ii) Company Assumed Liabilities shall be
deemed not to include and Newco Assumed Liabilities shall be deemed to include
any and all liabilities or obligations (environmental or otherwise) arising
out of, based upon, or resulting from, or relating to, the lease and former
operation by the Initial Group of a fertilizer manufacturing facility located
in Ft. Madison, Iowa.
4.3 Method of Transfer. The parties hereto agree that (a) the contribution
and transfer of assets contemplated pursuant to Section 4.1 hereof shall be
effected by delivery by the Company to Newco of (i) with respect to those
assets which are evidenced by capital stock certificates or similar
instruments, certificates duly endorsed in blank or accompanied by stock
powers or other instruments of assignment executed in blank and (ii) with
respect to all other assets, such good and sufficient instruments of
contribution, transfer and delivery in form and substance reasonably
satisfactory to the Company and Newco, as shall be necessary to vest in Newco
all of the rights, title and interest of the Company Group in and to such
assets, and (b) the assumption of the Newco Assumed Liabilities contemplated
pursuant to Section 4.2 hereof shall be effected by delivery by Newco to the
Company of such good and sufficient instruments of assumption, in form and
substance reasonably satisfactory to the Company and Newco, as shall be
necessary for the assumption by Newco of the Newco Assumed Liabilities.
4.4 Further Assurances. The parties agree that if, after the Time of
Distribution, either party holds assets or Liabilities which by the terms
hereof or of the Merger Agreement were intended to be assigned and transferred
to, or retained by, the other party, such party shall promptly assign and
transfer or cause to be assigned and transferred such assets or Liabilities to
the other party and such other party shall promptly accept such assignment and
transfer of the asset or Liability.
4.5 Use of Names. (a) Following the Time of Distribution, the Company Group
shall have the sole and exclusive ownership of and right to use, as between
the Company Group on the one hand, and the Newco Group on the other hand, each
of the names, trademarks, trade names and other proprietary rights set forth
in Schedule 4.5 (the "Retained Proprietary Name Rights"). Following the Time
of Distribution, the Newco Group shall have the sole and exclusive ownership
of and right to use, as between the Newco Group on the one hand, and the
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Company Group on the other hand, all names, trade marks, trade names, service
marks and other proprietary rights owned or used by the Initial Group
immediately prior to the Time of Distribution other than the Retained
Proprietary Name Rights (the "Newco Proprietary Name Rights"). The Newco
Proprietary Name Rights include, without limitation, the name First
Mississippi Corporation and derivatives thereof.
(b) Following the Time of Distribution, (i) the Company shall, and shall
cause its Subsidiaries and other affiliates to, take all action necessary to
cease using, and change as promptly as practicable (including by amending any
charter documents), any corporate or other names which are the same as or
confusing similar to any of the Newco Proprietary Name Rights, and (ii) Newco
shall, and shall cause its Subsidiaries and other affiliates to, take all
action necessary to cease using, and change as promptly as practicable
(including by amending any charter documents), any corporate or other names
which are the same as or confusing similar to any of the Retained Proprietary
Name Rights.
4.6 Assignment of Contracts and Permits. Notwithstanding any other provision
hereof or of the Merger Agreement, in connection with any Contract or any
permit, approval, license or authorization issued by a Governmental Entity (a
"Governmental Authorization") held by the Company which is to be transferred
or assigned to Newco and which, as a matter of law or by its terms, is (i) not
assignable, or (ii) not assignable without the prior approval or consent of
the issuer thereof or the other party or parties thereto (collectively "Non-
Assignable Rights") the Company shall:
(a) apply for and use all reasonable efforts to obtain all consents or
approvals contemplated by the Contracts or Governmental Authorizations, in
form and substance satisfactory to Newco;
(b) cooperate with Newco in any reasonable and lawful arrangements
designed to provide the benefits and burdens of such Non-Assignable Rights
to Newco, including holding any such Non-Assignable Rights in trust for
Newco or acting as agent for Newco;
(c) enforce any rights of the Company arising from such Non-Assignable
Rights against the issuer thereof or the other party or parties thereto;
(d) take all such actions and do, or cause to be done, all such things at
the request of Newco as shall reasonably be necessary and proper in order
that the value of any Non-Assignable Rights shall be preserved and shall
enure to the benefit of Newco; and
(e) pay over to Newco all monies or other assets collected by or paid to
the Company in respect of such Non-Assignable Rights.
Newco shall reimburse the Company for all reasonably incurred payments,
costs and expenses made, incurred or suffered in performing the Company's
obligations as requested by Newco under this Section 4.6. If the Company is
unable to lawfully provide the benefit of any Governmental Authorization to
Newco, it shall not, at any time, use such Governmental Authorization for its
own purposes or assign or provide the benefit of such Governmental
Authorization to any other party.
4.7 Intercompany Balances. All amounts owing between the Company Group, on
the one hand, and the Newco Group, on the other hand, other than amounts
arising in the ordinary course of business for the purchase of goods or
services in commercial transactions, shall be eliminated in full (without any
payment to either party) at or prior to the Time of Distribution.
ARTICLE V
Certain Covenants
5.1 Indemnity as between Newco and the Company from Assumed Liabilities. (a)
Effective upon the Spin-Off, Newco agrees to indemnify and hold the Company,
its affiliates, successors and assigns and the officers, directors, employees,
agents, advisors and representatives of any of them, harmless from and against
any and all Indemnified Losses arising out of or related to the Newco Assumed
Liabilities. Effective upon the
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Spin-Off, the Company agrees to indemnify and hold Newco, its affiliates,
successors and assigns and the officers, directors, employees, agents and
representatives of any of them, harmless from and against any and all
Indemnified Losses arising out of or related to the Company Assumed
Liabilities. If either of the foregoing indemnities is unavailable for any
reason, the parties shall contribute in respect of any such loss, claim,
damage or Liability on an equitable basis.
(b) Each of the Company and Newco shall indemnify, defend and hold harmless
the other party in the manner provided in Section 5.3, and each of such other
party's affiliates, successors, assigns, officers, directors, employees,
agents, advisors and representatives, from and against Indemnified Losses
arising out of or resulting from each Action over which such indemnifying
party has authority and control pursuant to Section 5.2 hereof.
5.2 Right to Control Actions. Following the Time of Distribution, (a) upon
acknowledgement of its liability for the matter in question, the Company shall
have exclusive authority and control over the investigation, prosecution,
defense and appeal of all pending Actions relating primarily to the Retained
Business, the assets of the Retained Business or the Company Assumed
Liabilities (each, a "Retained Action"), and may settle or compromise, or
consent to the entry of any judgment with respect to, any such Action without
the consent of Newco, and (b) upon acknowledgement of its liability for the
matter in question, Newco shall have exclusive authority and control over the
investigation, prosecution, defense and appeal of all pending Action relating
primarily to the Newco Group, the assets of the Newco Group or the Newco
Assumed Liabilities (each, a "Newco Action"), and may settle or compromise, or
consent to the entry of any judgment with respect to, any such Action without
the consent of the Company; provided that neither the Company nor Newco (nor
any of their respective Subsidiaries) may settle or compromise, or consent to
the entry of any judgment with respect to, any such Action without the prior
written consent of the other party if such settlement, compromise or consent
to such judgment (i) includes any form of injunctive relief binding upon such
other party or (ii) does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such other party which is subject to
such Action (and any related party of such other party subject to such Action)
of a full and final release from all liability in respect of such claim or
litigation.
5.3 Procedure for Third Party Indemnification. (a) If a party entitled to be
indemnified hereunder (an "Indemnified Party") shall receive notice of the
assertion by a person who is not a party to this Agreement of any claim or of
the commencement by any such person of any Action (a "Third Party Claim") with
respect to which a party hereto is obligated to provide indemnification (an
"Indemnifying Party"), such Indemnified Party shall give such Indemnifying
Party prompt notice thereof after becoming aware of such Third Party Claim;
provided that the failure of any Indemnitee to give notice as provided in this
Section 5.3 shall not relieve the related Indemnifying Party of its
obligations under this Article V, except to the extent that such Indemnifying
Party is actually prejudiced by such failure to give notice. Such notice shall
describe the Third Party Claim in reasonable detail, and, if practicable,
shall indicate the estimated amount of the Indemnified Loss that has been or
may be sustained by such Indemnified Party.
(b) An Indemnifying Party may elect to defend, at such Indemnifying Party's
own expense and by such Indemnifying Party's own counsel, any Third Party
Claim. If an Indemnifying Party elects to defend a Third Party Claim, it
shall, within 30 days of notice of such Third Party Claim (or sooner, if the
nature of such Third Party Claim so requires), notify the related Indemnified
Party of its intent to do so and acknowledge its liability therefor, and such
Indemnified Party shall cooperate in the defense of such Third Party Claim.
After notice from an Indemnifying Party to an Indemnified Party of its
election to assume the defense of a Third Party Claim, such Indemnifying Party
shall not be liable to such Indemnified Party under this Article V for any
legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof; provided that if, under applicable
standards of professional conduct (as advised by counsel to the Indemnifying
Party), a conflict on any significant issue between such Indemnified Party and
such Indemnifying Party or between any two or more Indemnified Parties may
exist in respect of such claim, then the Indemnifying Party shall pay the
reasonable fees and expenses of one such additional counsel as may be required
to be retained in light of such conflict. If an Indemnifying Party elects not
to defend against a Third Party Claim, or fails to notify an Indemnified Party
of its election as provided in this Section 5.3 within the time period
specified, such Indemnified
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Party may defend, compromise and settle such Third Party Claim.
Notwithstanding the foregoing, (i) neither an Indemnifying Party nor an
Indemnified Party, as the party controlling the defense of a Third Party
Claim, may compromise or settle any claim or consent to the entry of any
judgment for other than monetary damages without the prior written consent of
the other; provided that (upon reasonable notice thereof) consent to
compromise or settlement or the entry of a judgment shall not be unreasonably
withheld or delayed, and (ii) no Indemnifying Party shall consent to the entry
of any judgment or enter into any compromise or settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party and all other Indemnified Parties, as the
case may be, subject to such Third Party Claim of a full and final release
from all liability in respect of such claim or litigation.
5.4 Adjustment for Insurance and Taxes. The amount which either Newco or the
Company is required to pay to, for or on behalf of the other pursuant to
Section 5.1 and the amount which an Indemnifying Party is required to pay to,
for or on behalf of any Indemnified Party pursuant to Section 5.3, shall be
adjusted (including, without limitation, retroactively) (i) by any insurance
proceeds actually recovered by or on behalf of the Company, Newco or the
Indemnified Party, as the case may be, in reduction of the related Indemnified
Loss or Third Party Claim and (ii) (A) reduced by the present value of the
amount of any Tax savings resulting from any tax benefit to the Company, Newco
or the Indemnified Party, as the case may be as a result of the Indemnified
Loss or Third Party Claim, and (B) increased by the present value of the
amount of any Tax due with respect to the indemnification payment itself.
Amounts required to be paid, as so adjusted, are hereafter sometimes called an
"Indemnity Payment." If the Company, Newco or the Indemnified Party, as the
case may be, shall have received or shall have had paid on its behalf an
Indemnity Payment in respect of an Indemnified Loss or Third Party Claim and
shall subsequently receive insurance proceeds in respect of such Indemnified
Loss or Third Party Claim, or realize any net tax benefit (as computed in
clause (ii) above) as a result of such Indemnified Loss or Third Party Claim,
then the Company, Newco or the Indemnified Party, as the case may be, shall
pay to Newco, the Company or the Indemnifying Party, as the case may be, the
amount of such insurance proceeds or net tax benefit, or if lesser, the amount
of the Indemnity Payment.
5.5 Mutual Release, Etc. Effective at the Time of Distribution and except as
otherwise specifically set forth in this Distribution Agreement, the Company
releases and forever discharges Newco, and its officers, directors, agents,
affiliates, record and beneficial security holders (including, without
limitation, trustees and beneficiaries of trusts holding such securities),
advisors and representatives, of and from all debts, demands, actions, causes
of action, suits, accounts, covenants, contracts, agreements, damages, and any
and all claims, demands and Liabilities whatsoever of every name and nature,
both in law and in equity, against Newco or any of its assigns, which the
Company or the Company Group has or ever had, which arise out of or relate to
events, circumstances or actions prior to the Time of Distribution; provided,
however, that the foregoing general release shall not apply to this
Distribution Agreement or the transactions contemplated hereby and shall not
affect the Company's right to enforce this Distribution Agreement, the Merger
Agreement, the Tax Disaffiliation Agreement, the Employee Benefits Agreement
or any other agreement contemplated hereby in accordance with its terms.
Effective at the Time of Distribution and except as otherwise specifically set
forth in this Distribution Agreement, Newco releases and forever discharges
the Company and its officers, directors, agents, affiliates, record and
beneficial security holders (including, without limitation, trustees and
beneficiaries of trusts holding such securities), advisors and
representatives, of and from all debts, demands, actions, causes of action,
suits, accounts, covenants, contracts, agreements, damages, and any and all
claims, demands and Liabilities whatsoever of every name and nature, both in
law and in equity, against the Company or any of its assigns, which Newco has
or ever had, which arise out of or relate to events, circumstances or actions
prior to the Time of Distribution; provided, however, that the foregoing
general release shall not apply to this Distribution Agreement or the
transactions contemplated hereby and shall not affect Newco's right to enforce
this Distribution Agreement, the Merger Agreement, the Tax Disaffiliation
Agreement, the Employee Benefits Agreement or any other agreement contemplated
hereby in accordance with its terms. Each party understands and agrees that,
except as otherwise specifically provided herein, neither the other party nor
any of its Subsidiaries is, in this Distribution Agreement or any other
agreement or document representing or warranting to such party in any way as
to the assets, business or Liabilities transferred or assumed as contemplated
hereby or as to any consents or approvals required in
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connection with the consummation of the transactions contemplated by this
Distribution Agreement, it being agreed and understood that each party shall
take or keep all of its assets "as is" and that it shall bear the economic and
legal risk that conveyance of such assets shall prove to be insufficient or
that the title to any assets shall be other than good and marketable and free
from encumbrances.
5.6 Transfer of Employees. With respect to the operating personnel of the
Retained Business and such other employees of the Retained Business designated
by the Company prior to the Time of Distribution as employees who will remain
with the Company after the Distribution (collectively, the "Retained
Employees"), except as specifically provided in this Distribution Agreement,
the Company shall retain the liabilities and obligations with respect to, and
continue to be responsible for all liabilities and obligations whatsoever in
connection with, claims made by or on behalf of such persons in respect of
salary, wages, benefits, severance pay, salary continuation, COBRA
continuation and similar obligations relating to the continued employment, or
the termination or alleged termination of such persons' employment with the
Company Group by reason of the consummation of the transactions contemplated
in this Distribution Agreement or the Merger Agreement or otherwise and
neither Newco nor any member of the Newco Group shall assume such liability.
Effective as of the Time of Distribution, the Company and Newco shall
cooperate to transfer to the employ of Newco, each person employed by the
Company, other than the Retained Employees (such employees and any other
persons who become employees of the Newco Group immediately after the Time of
Distribution shall be hereinafter referred to as the "Transferred Employees").
With respect to the Transferred Employees and all other past, present, active
or inactive employees of the Initial Group (or their beneficiaries), other
than the Retained Employees, Newco shall assume the liabilities and
obligations with respect to, and continue to be responsible for all
liabilities and obligations whatsoever in connection with, claims made by or
on behalf of such persons in respect of salary, wages, benefits, severance
pay, salary continuation, COBRA continuation and similar obligations relating
to the continued employment, or the termination or alleged termination of such
persons' employment with the Newco Group by reason of consummation of the
transactions contemplated in this Distribution Agreement or the Merger
Agreement or otherwise and neither the Company nor any member of the Company
Group shall assume such liability.
5.7 Certain Employee Benefit Plans. Prior to the Time of Distribution, Newco
and the Company shall enter into an agreement relating to the parties'
responsibilities with respect to certain employee benefit liabilities and
obligations in substantially the form attached hereto as Exhibit B (the
"Employee Benefits Agreement").
5.8 Solicitation of Employees. For two years after the Time of Distribution,
neither party will, directly or indirectly, solicit the employment of any
employee of the other party and its Subsidiaries; (other than as a result of a
general solicitation for employment); provided, that Newco may solicit the
employment of those persons set forth on Schedule 5.8 hereto.
5.9 First Mississippi Foundation. Prior to the Time of Distribution, the By-
Laws of First Mississippi Corporation Foundation, Inc. (the "Foundation")
shall be amended to provide that the members and trustees of the Foundation
will be officers or directors of Newco, as designated by Newco.
Notwithstanding anything contained herein to the contrary, the parties hereto
expressly agree that all liabilities of the Initial Group related to the
Foundation are Newco Assumed Liabilities.
5.10 Insurance.
(a) Prior to the Time of Distribution, the Company shall transfer and
assign to Newco all of the Company's insurance policies other than (i) any
policy which relates solely to the Retained Business and (ii) any policy
that constitutes a Non-Assignable Right.
(b) In the event that any policy constitutes a Non-Assignable Right, it
is the intent of the parties that the Newco Group, to the extent possible,
receive benefit of any coverage under any such insurance policy. The
Company agrees to keep such policy in effect during the remaining term of
the policy and to refrain from taking any actions (other than making a
claim) which may affect the Newco Group's entitlement to benefits of, or
coverage under, such policy.
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(c) With respect to policies which are subject to a retrospective premium
adjustment, (i) in the event such policies are assigned to the Newco Group
pursuant to this Agreement, the Company agrees that it shall reimburse Newco
Group for the amount of any premium adjustment resulting from or attributable
to the Retained Business and (ii) in the event such policies are not assigned
to Newco pursuant to this Agreement, Newco agrees that it shall reimburse the
Company for the amount of any premium adjustment resulting from or
attributable to the Newco Group.
(d) With respect to the Company's (i) general liability policy with Zurich
Insurance Co. (which is an occurrence based policy) and (ii) excess casualty
policy with Primax, Ltd. (which is a claims made policy), in the event such
policy is assigned to Newco pursuant to this Agreement, it is the intent of
the parties that the Company Group receive the benefit of any coverage under
such policy until the end of the current term of such policy. Newco agrees to
keep such policy in effect during such period and to refrain from taking any
actions (other than making a claim) which may affect the Company Group's
entitlement to benefits of, or coverage under, such policy.
(e) The Company and Newco agree to cooperate with each other with respect to
the processing of any claims which are covered by any insurance policy in
existence prior to the Time of Distribution. Without limiting the generality
of the foregoing, Newco shall have the right to process and pursue any claim
for insurance (including negotiating with the company issuing the insurance
policy) in connection with any liability of the Newco Group, regardless of
whether the insurance policy under which such claim is made is transferred
pursuant to Section 5.10(a), and the Company shall have the right to process
and pursue any claim for insurance (including negotiating with the company
issuing the insurance policy) in connection with any liability of the Company
Group, regardless of whether the insurance policy under which such claim is
made is transferred pursuant to Section 5.10(a).
ARTICLE VI
Conditions
The obligations of the Company and Newco to consummate the Spin-Off shall be
subject to the fulfillment of each of the following conditions:
6.1 Tax Disaffiliation Agreement; Employee Benefits Agreement. The Tax
Disaffiliation Agreement and the Employee Benefits Agreement, substantially in
the forms of Exhibit A and Exhibit B hereto, respectively, shall have been
executed and delivered by each of the Company and Newco.
6.2 Certain Transactions. All of the transactions or obligations
contemplated by Section 2.4 and Article IV hereof to be consummated or
performed at or prior to the Time of Distribution shall have been successfully
consummated or so performed.
6.3 Conditions to Merger Satisfied. Each condition to the closing of the
Merger set forth in Article VII of the Merger Agreement, other than the
condition to each party's obligations set forth in Section 7.1(g) thereof as
to the consummation of the transactions contemplated by this Distribution
Agreement, shall have been satisfied or waived.
6.4 Other Approvals. All authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations of waiting periods imposed by,
any Governmental Entity or other public or private entity the failure of which
to obtain would have a material adverse effect on either the Newco Group taken
as a whole or the Company Group taken as a whole, shall have been filed,
occurred, or been obtained.
6.5 No Injunctions or Restraints. 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
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consummation of the Spin-Off shall be in effect (each party agreeing to use
all reasonable efforts to have any such order reversed or injunction lifted).
6.6 Opinion of Tax Counsel. The Company and Newco shall have received an
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx to the effect that the Spin-
Off qualifies as a tax-free distribution under Section 355 of the Code.
6.7 Financing. The Financing shall have been obtained and the transfer of
cash and cash equivalents to Newco as provided pursuant to Section 4.1(c)(iv)
shall have been consummated.
ARTICLE VII
Access to Information and Services
7.1 Provision of Corporate Records. Except as provided in the following
sentence, at the Time of Distribution, the Company shall deliver to Newco all
corporate books and records which are corporate records of the Initial Group
which relate primarily to the Newco Group, the assets of the Newco Group or
the Newco Assumed Liabilities, including, without limitation, original
corporate minute books, stock ledgers and certificates and corporate seals of
each corporation the capital stock of which is included in the assets of the
Newco Group, and all active agreements, active litigation files and government
filings.
7.2 Access to Information. From and after the Time of Distribution (i) the
Company shall afford to Newco and its authorized accountants, counsel and
other designated representatives reasonable access (including, without
limitation, using reasonable efforts to give access to persons or firms
possessing Information (as defined below)) and duplicating rights during
normal business hours to all records, books, contracts, instruments, computer
data and other data and information (collectively, "Information") within the
Company's possession relating to the Company Group, the assets of the Company
Group or the Company Assumed Liabilities, insofar as such access is reasonably
required by Newco, and (ii) Newco shall afford to the Company and its
authorized accountants, counsel and other designated representatives
reasonable access (including, without limitation, using reasonable efforts to
give access to persons or firms possessing Information) and duplicating rights
during normal business hours to all Information within Newco's possession
relating to the Newco Group, the assets of the Newco Group or the Newco
Assumed Liabilities, insofar as such access is reasonably required by the
Company. Information may be requested under this Section 7.2 for, without
limitation, audit, accounting, claims, litigation and tax purposes, as well as
for purposes of fulfilling disclosure and reporting obligations.
7.3 Production of Witnesses. From and after the Time of Distribution, each
party shall use reasonable efforts to make available to the other party, upon
written request, its officers, directors, employees and agents as witnesses to
the extent that any such person may reasonably be required in connection with
any legal, administrative or other proceedings in which the requesting party
may from time to time be involved.
7.4 Retention of Records. Except as otherwise required by law or agreed to
in writing, Newco and the Company shall each retain, for a period of at least
seven years following the Time of Distribution, all significant Information
relating to (i) in the case of Newco, the Company Group and (ii) in the case
of the Company, the Newco Group. Notwithstanding the foregoing, either Newco
or the Company may destroy or otherwise dispose of any of such Information at
any time, provided that, prior to such destruction or disposal (a) Newco or
the Company, as the case may be, shall provide no less than 90 or more than
120 days' prior written notice to the other party, specifying the Information
proposed to be destroyed or disposed of and (b) if the other party shall
request in writing prior to the scheduled date for such destruction or
disposal that any of the Information proposed to be destroyed or disposed of
be delivered to the other party, Newco or the Company, as the case may be,
shall promptly arrange for the delivery of such of the Information as was
requested, at the expense of the requesting party.
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7.5 Confidentiality. Each party shall hold, and shall cause its officers,
employees, agents, consultants and advisors to hold, in strict confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law or in order to comply with the terms of a binding stock
exchange listing application or agreement or applicable stock exchange rules,
all non-public Information concerning the other party furnished it by such
other party or its representatives or otherwise in its possession (except to
the extent that such Information can be shown to have been (a) available to
such party on a non-confidential basis prior to its disclosure by the other
party, (b) in the public domain through no fault of such party or (c) later
lawfully acquired from other sources by the party to which it was furnished),
and each party shall not release or disclose such Information to any other
person, except its auditors, attorneys, financial advisors, bankers and other
consultants and advisors who have a need to know such Information and who
agree to be bound by the provisions of this Section 7.5.
ARTICLE VIII
Miscellaneous and General
8.1 Modification or Amendment. The parties hereto may modify or amend this
Distribution Agreement by written agreement executed and delivered by
authorized officers of the respective parties.
8.2 Counterparts. For the convenience of the parties hereto, this
Distribution Agreement may be executed in separate counterparts, each such
counterpart being deemed to be an original instrument, and which counterparts
shall together constitute the same agreement.
8.3 Governing Law. This Distribution Agreement shall be governed by and
construed in accordance with the laws of the State of Mississippi, without
reference to its conflicts of law principles.
8.4 Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the other shall be in writing and shall be deemed to
have been duly given (i) on the date of delivery if delivered by facsimile
(upon confirmation of receipt) or personally, (ii) on the first business day
following the date of dispatch if delivered by Federal Express or other
reputable next-day courier service or (iii) on the third business day
following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
If to the Company:
c/o _____________________________
_________________________________
_________________________________
Attn: ___________________________
If to Newco:
[Newco]
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000-0000
Attn: R. Xxxxxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
8.5 Captions. All Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Distribution
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
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8.6 Assignment. Nothing contained in this Distribution Agreement or the
agreements referred to herein (except as otherwise expressly set forth
therein) is intended to confer on any person or entity other than the parties
hereto and their respective successors and permitted assigns any benefit,
rights or remedies under or by reason of this Distribution Agreement and such
other agreements, except that the provisions of Sections 5.1 and 5.2 hereof
shall inure to the benefit of the persons referred to therein.
8.7 Further Assurances. Subject to the terms and conditions hereof and, as
applicable, of the Merger Agreement, Newco and the Company will, and will
cause their respective Subsidiaries to, do such additional things as are
necessary or proper to carry out and effectuate the intent of this
Distribution Agreement or any part hereof or the transactions contemplated
hereby.
8.8 Attorney-Client Privilege; Work Product. Anything herein or in the
Merger Agreement notwithstanding, except with respect to matters addressed in
the opinion referred to in Section 6.6 hereof, the transactions contemplated
hereby and by the Merger Agreement shall not be deemed to transfer to or vest
in the Company Group (or the surviving corporation in the Merger) any right to
waive, nor shall they be deemed to waive, any attorney-client privilege
between the Newco Group and its legal counsel, with respect to legal advice
concerning the business or operations of the Newco Group including, without
limitation, the Newco Liabilities or the transactions contemplated hereby and
by the Merger Agreement, in either case, concerning privileged communications
(or work product related thereto) at any time prior to the Closing Date (as
defined in the Merger Agreement). The Company (and the surviving corporation
in the Merger) shall assign to Newco the Company's rights (if any) to any
attorney-client privilege with respect to legal advice concerning the business
or operations of the Newco Group including, without limitation, the Newco
Liabilities or the transactions contemplated hereby and by the Merger
Agreement concerning privileged communications (or work product related
thereto) at any time prior to the Closing Date. The Company Group (and the
surviving corporation in the Merger) and their successors and assigns shall
not be entitled to waive or have access, nor shall they attempt to waive or
seek access, to any privileged communications (or work product related
thereto) between the Newco Group and its legal counsel with respect to legal
advice concerning the business or operations of the Newco Group, including the
Newco Liabilities or the transactions contemplated hereby.
8.9 No Third-Party Beneficiaries. Except as provided in Section 5.1 hereof,
this Agreement, including the Tax Disaffiliation Agreement and the Employee
Benefits Agreement, are not intended to confer upon any person other than the
parties hereto and thereto any rights or remedies hereunder or thereunder.
8.10 Conflict with Tax Disaffiliation Agreement. In the event of any
conflict between this Agreement and the Tax Disaffiliation Agreement, the Tax
Disaffiliation Agreement shall control.
IN WITNESS WHEREOF, this Distribution Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first hereinabove written.
First Mississippi Corporation
By: _________________________________
Name:
Title:
[Newco]
By: _________________________________
Name:
Title:
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