As filed with the Securities and Exchange Commission on December 22, 2011
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ARCHER-DANIELS-MIDLAND COMPANY
(Exact
(Exact name of the Registrant as specified in its charter)
| Delaware | 2070 | 41-0129150 | ||
(State or Incorporation or Organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification |
4666 FARIES PARKWAY
DECATUR, ILLINOIS 62526
Faries Parkway, Box 1470
Decatur, Illinois 62525
(217) 424-5200
(Address
(Address, Including Zip Code, and telephone numberTelephone Number, Including Area Code, of the Registrant's principal executive offices)
D.Registrant’s Principal Executive Offices)
David J. SMITH
VICE PRESIDENT, SECRETARY, AND GENERAL COUNSEL
ARCHER-DANIELS-MIDLAND COMPANY
Smith
Executive Vice President, Secretary and General Counsel
Archer-Daniels-Midland Company
4666 FARIES PARKWAY
DECATUR, ILLINOIS 62526
Faries Parkway, Box 1470
Decatur, Illinois 62525
(217) 424-6183
(Name, address424-5200
(Name, Address, Including Zip Code, and telephone numberTelephone Number, Including Area Code, of agentAgent for service)
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COPIES TO:
JAMES E. NICHOLSON DELMER R. MITCHELL
Steven C. Kennedy Schmiedeskamp, Robertson, Neu &
Mitchell
Service)
Copies to:
W. Morgan Burns
Faegre & Benson LLP 525 Jersey
2200 NorwestWells Fargo Center Quincy, Illinois 62301
90 South Seventh Street
Minneapolis, Minnesota 55402 (217) 223-3030
(612) 336-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: UPON THE EFFECTIVE TIME OF THE MERGER DESCRIBED HEREIN.
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55402-3901
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. / /
¨
If this formForm is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
¨
If this formForm is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
CALCULATION OF REGISTRATION FEE
¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | x | Accelerated filer | ¨ | |||
| Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
| * | If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction: |
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ¨
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ¨
Calculation of Registration Fee
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Title of Each Class of Securities to be Registered | Amount to be Registered | Proposed Maximum Offering Price per Security | Proposed Maximum Aggregate Offering Price (1) | Amount of Registration Fee | ||||
4.535% Debentures due 2042 | $527,688,000 | 100% | $527,688,000 | $60,473 | ||||
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| (1) | Estimated pursuant to Rule 457(f) under the Securities Act of |
The Registrant hereby amends this Registration Statement on such date or dates as may be issued in the Merger
described herein, which is based upon the number of shares of Moorman
Manufacturing Company Common Stock, $1.00 par value per share, outstanding
immediately priornecessary to the Merger (54,770 shares) and assumes an Exchange
Ratio (as defined herein) of 270.
(2) Estimated solely for the purpose of calculating the registration fee under
Rule 457(f)(2), based upon the book value per share of Moorman Manufacturing
Company common stock of $4,907 on August 30, 1997.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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[MMC Letterhead]
November 6, 1997
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Moorman Manufacturing Company ("MMC") to be held at the Blessing Conference
Center, 28th and Chestnut Streets, Quincy, Illinois, on Monday, December 8,
1997, at 10:00 a.m., local time.
At the Special Meeting you will be asked to vote on a proposal to approve
and adopt an Agreement and Plan of Merger dated as of September 12, 1997 (the
"Merger Agreement"), providing for the merger of ADM Acquisition Corp.
("ADMAC"), a wholly owned subsidiary of Archer-Daniels-Midland Company ("ADM"),
with and into MMC (the "Merger"). Upon consummation of the Merger, MMC will
become a wholly owned subsidiary of ADM, and MMC shareholders will be entitled
to receive a number of shares of ADM Common Stock (rounded to the nearest whole
share) for each share of MMC common stock held by them determined pursuant to
the exchange ratio set forth in the Merger Agreement.
The exchange ratio is calculated by dividing $5,400 (the "Base Value") by
the average of the per share closing sale prices of ADM Common Stock on the New
York Stock Exchange, Inc. Composite Tape for the twenty trading days immediately
prior to the third trading day before the closing date. The closingdelay its effective date will be
the later of the date of the Special Meeting or the date when all conditions
precedent to the Merger have been satisfied or waived. The Merger Agreement
provides for an adjustment to the exchange ratio if the shareholders' equity of
MMC 15 days before the closing date is less than $265 million. In that case, the
exchange ratio will be recalculated by reducing the Base Value by an amount
equal to the quotient of (1) the difference between $265 million and the actual
MMC shareholders' equity as of that date divided by (2) the total number of
outstanding shares of MMC common stock issued and outstanding; provided,
however, that the Base Value will not be lower than $5,126.13.
You will be asked also to vote on a proposal to approve certain existing
compensatory arrangements with members of MMC's senior management, under which
such persons would receive certain payments upon a change of control of MMC,
provided certain other conditions are fulfilled (collectively, the
"Change-of-Control Arrangements"). If consummated, the Merger would constitute a
change of control of MMC. The purposes of shareholder approval are (i) to permit
MMC to report the full amount of payments under the Change-of-Control
Arrangements as deductions for income tax purposes and (ii) to make it so that
members of MMC's senior management receiving such payments should not be
required to pay excise taxes on any portion of the payments. Shareholder
approval for the payments under the Change-of-Control Arrangements is not a
condition to either the consummation of the Merger or the payment by MMC of all
amounts due under the Change-of-Control Arrangements, since MMC is contractually
obligated to make such payments.
ADDITIONAL INFORMATION REGARDING THE MERGER, THE MERGER AGREEMENT AND THE
CHANGE-OF-CONTROL ARRANGEMENTS IS SET FORTH IN THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS AND THE EXHIBITS THERETO, WHICH YOU ARE URGED TO READ
CAREFULLY IN ITS ENTIRETY.
The Board of Directors of MMC has carefully considered the terms and
conditions of the proposed Merger and the approval of the Change-of-Control
Arrangements for the tax purposes described above. In addition, in connection
with its approval of the proposed Merger with ADM, the Board of Directors of MMC
has received a written opinion from its financial advisor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, to the effect that the exchange ratio under
the Merger Agreement is fair to MMC shareholders from a financial point of view.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE TERMS OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND THAT THE APPROVAL OF THE
CHANGE-OF-CONTROL ARRANGEMENTS ARE IN THE BEST INTERESTS OF MMC AND
THE MMC SHAREHOLDERS. ACCORDINGLY, THE BOARD RECOMMENDS THAT MMC SHAREHOLDERS
VOTE FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER AND
FOR THE APPROVAL OF THE CHANGE-OF-CONTROL ARRANGEMENTS.
Approval and adoption of the Merger Agreement and the Merger requires the
affirmative vote of the holders of two-thirds of the outstanding shares of MMC
common stock. Approval, for tax purposes, of certain payments under the
Change-of-Control Arrangements requires the affirmative vote of the holders of
more than three-fourths of the outstanding shares of MMC common stock. Certain
principal MMC stockholders, who as of November 3, 1997, beneficially owned in
the aggregate approximately 52.4% of the outstanding MMC common stock, have each
agreed to vote or direct the vote of all MMC common stock over which they have
voting control in favor of the Merger Agreement and the Merger.
In view of the importance of the actions to be taken at the Special Meeting,
we urge you to review carefully the accompanying Notice of Special Meeting of
Shareholders and the Proxy Statement/ Prospectus, including the exhibits
thereto, which also includes information on ADM, ADMAC and MMC. Whether or not
you expect to attend the Special Meeting, please complete, sign and date the
enclosed proxy and return it as promptly as possible.
Sincerely,
Thomas M. McKenna
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MOORMAN MANUFACTURING COMPANY
1000 NORTH 30TH STREET
QUINCY, ILLINOIS 62301
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 8, 1997
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To the Shareholders of
MOORMAN MANUFACTURING COMPANY:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Moorman
Manufacturing Company, an Illinois corporation ("MMC"), will be held on Monday,
December 8, 1997, at 10:00 a.m., local time, at the Blessing Conference Center,
28th and Chestnut Streets, Quincy, Illinois, for the following purposes:
1. To consider and vote on a proposal to approve and adopt the Agreement
and Plan of Merger dated as of September 12, 1997 (the "Merger
Agreement"), among MMC, Archer-Daniels-Midland Company ("ADM") and ADM
Acquisition Corp., a wholly-owned subsidiary of ADM ("ADMAC"), pursuant
to which, among other things, (i) ADMAC will be merged with and into MMC
with the result that MMC becomes a wholly owned subsidiary of ADM (the
"Merger"), and (ii) each outstanding share of common stock, $1.00 par
value per share, of MMC ("MMC Common Stock") will be converted into a
number of shares of ADM Common Stock, without par value, as determined
pursuant to the exchange ratio set forth in the Merger Agreement. A copy
of the Merger Agreement is attached as EXHIBIT A to the accompanying
Proxy Statement/ Prospectus.
2. To consider and vote upon a proposal to approve, for tax purposes,
payments to members of MMC's senior management under certain existing
compensatory arrangements upon a change of control of MMC, provided
certain other conditions are fulfilled (collectively, the
"Change-of-Control Arrangements"). The purposes of the shareholder
approval are (i) to permit MMC to report the full amount of the payments
under the Change-of-Control Arrangements as deductions for income tax
purposes and (ii) to make it so that the members of MMC's senior
management receiving such payments should not be required to pay excise
taxes on any portion of the payments. Shareholder approval for the
payments under the Change-of-Control Arrangements is not a condition to
either the consummation of the Merger or the payment by MMC of all
amounts due under the Change-of-Control Arrangements, since MMC is
contractually obligated to make such payments. If consummated, the Merger
would constitute a change of control of MMC. The Change-of-Control
Arrangements include change-of-control agreements, termination
agreements, agreements entered into pursuant to the MMC Restricted Stock
Unit Plan, the MMC Restricted Stock Unit Plan for Outside Directors and
certain retirement benefits.
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on November 3, 1997
as the record date for the determination of the holders of MMC Common Stock
entitled to notice of, and to vote at, the meeting and adjournments or
postponements thereof. The affirmative vote of the holders of two-thirds of the
outstanding shares of MMC Common Stock entitled to vote at the meeting is
required to approve and adopt the Merger Agreement and the Merger. Approval of
the Change-of-Control Arrangements requires the affirmative vote of the holders
of more than three-fourths of the outstanding shares of MMC Common Stock
entitled to vote at the meeting.
Certain principal shareholders of MMC, who as of November 3, 1997
beneficially owned in the aggregate approximately 52.4% of the outstanding MMC
Common Stock, have agreed to vote in favor of the Merger and the Merger
Agreement. If certain statutory conditions are met, MMC shareholders will be
entitled to demand dissenters' appraisal rights under Illinois law.
Information regarding the Merger and Merger Agreement, the Change-of-Control
Arrangements and related matters is contained in the accompanying Proxy
Statement/Prospectus and the exhibits thereto, which is incorporated by
reference herein and forms a part of this Notice.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IT IS IMPORTANT
THAT YOUR INTERESTS BE REPRESENTED AT THE MEETING.
THE BOARD OF DIRECTORS OF MMC HAS DETERMINED THAT THE TERMS OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND THAT THE APPROVAL OF THE
CHANGE-OF-CONTROL ARRANGEMENTS ARE IN THE BEST INTERESTS OF MMC AND THE MMC
SHAREHOLDERS. ACCORDINGLY, THE MMC BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE APPROVAL AND ADOPTION OF THE MERGER AND THE MERGER AGREEMENT AND
APPROVAL OF THE CHANGE-OF-CONTROL ARRANGEMENTS.
By Order of the Board of Directors
Betty R. Schappaugh
SECRETARY
November 6, 1997
PLEASE DO NOT SEND ANY SHARE CERTIFICATES AT THIS TIME
PROXY STATEMENT/PROSPECTUS
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PROXY STATEMENT OF MOORMAN MANUFACTURING COMPANY
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 8, 1997
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PROSPECTUS OF ARCHER-DANIELS-MIDLAND COMPANY
SHARES OF COMMON STOCK
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This Proxy Statement/Prospectus is being furnished to the shareholders of
Moorman Manufacturing Company, an Illinois corporation ("MMC"), in connection
with the solicitation of proxies by MMC's Board of Directors for use at the
Special Meeting of Shareholders (the "Special Meeting") to be held at 10:00
a.m., local time, on Monday, December 8, 1997, at the Blessing Conference
Center, 28th and Chestnut Streets, Quincy, Illinois and at any adjournments or
postponements thereof.
At the Special Meeting, MMC's shareholders will be asked to consider and
vote upon a proposal to approve and adopt the Agreement and Plan of Merger,
dated as of September 12, 1997 (the "Merger Agreement"), among MMC,
Archer-Daniels-Midland Company, a Delaware corporation ("ADM"), and ADM
Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of ADM
("ADMAC"), under which ADMAC will be merged with and into MMC (the "Merger") and
the separate corporate existence of ADMAC will cease. Thereafter, MMC will
continue its operations as a wholly-owned subsidiary of ADM. A copy of the
Merger Agreement is attached to this Proxy Statement/Prospectus as EXHIBIT A and
is incorporated herein by reference.
Upon consummation of the Merger, each outstanding share of Common Stock,
$1.00 par value per share, of MMC ("MMC Common Stock") at the Effective Time (as
defined below) will be converted, without any action on the part of the holders
thereof, into the right to receive a number of shares (rounded to the nearest
whole share) of common stock, without par value, of ADM ("ADM Common Stock")
determined by an exchange ratio (the "Exchange Ratio"), which is calculated by
dividing $5,400 (the "Base Value") by the average of the per share closing sale
prices of ADM Common Stock on the New York Stock Exchange, Inc. ("NYSE")
Composite Tape for the 20 trading days immediately prior to the third trading
day before the Closing Date (the "Average Price"). The "Closing Date" is the
third business day after the date when all conditions precedent to the Merger
have been satisfied or waived. The final condition precedent to the Merger is
expected to be the vote of MMC's shareholders at the Special Meeting.
The Merger Agreement provides for an adjustment to the Exchange Ratio if the
shareholders' equity of MMC, determined under generally accepted accounting
principles as of the date 15 days before the Closing Date is less than $265
million. In that case, the Exchange Ratio will be recalculated by reducing the
Base Value by an amount equal to the quotient of (1) the difference between $265
million and the actual MMC shareholders' equity as of that date divided by (2)
54,770 (the number of shares of MMC Common Stock issued and outstanding);
provided, however, that the Base Value will not be lower than $5,126.13. See
"The Merger--General."
The consummation of the Merger is subject to obtaining the requisite
approval from MMC's shareholders, necessary regulatory approvals, and certain
other conditions, all as more fully described in this Proxy
Statement/Prospectus. See "General Information" and "The Merger--Conditions to
Consummation of the Merger."
MMC's shareholders will also be asked to consider and vote upon a proposal
to approve, for tax purposes, payments to members of MMC's senior management
under certain existing compensatory arrangements effective upon a change of
control of MMC, provided certain other conditions are fulfilled (collectively,
the "Change-of-Control Arrangements"). The purposes of the shareholder approval
are (i) to permit MMC to report the full amount of the payments under the
Change-of-Control Arrangements as deductions for income tax purposes and (ii) to
make it so that the members of MMC's senior
1
management receiving such payments should not be required to pay excise taxes on
any portion of the payments. Shareholder approval for the payments under the
Change-of-Control Arrangements is not a condition to either the consummation of
the Merger or the payment by MMC of all amounts due under the Change-of-Control
Arrangements, since MMC is contractually obligated to make such payments. If
consummated, the Merger would constitute a change of control of MMC. The
compensatory arrangements include change-of-control agreements, termination
agreements, agreements entered into pursuant to the MMC Restricted Stock Unit
Plan, the MMC Restricted Stock Unit Plan for Outside Directors and certain
retirement benefits.
THE BOARD OF DIRECTORS OF MMC HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND THE MERGER AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL TO APPROVE
AND ADOPT THE MERGER AGREEMENT AND THE MERGER AND FOR THE PROPOSAL TO APPROVE
THE CHANGE-OF-CONTROL ARRANGEMENTS.
This Proxy Statement/Prospectus is being mailed or delivered to MMC's
shareholders on or about November 6, 1997. This Proxy Statement/Prospectus also
constitutes the prospectus of ADM with respect to shares of ADM Common Stock to
be issued to the MMC shareholders in the Merger.
On September 11, 1997, the last trading day before the public announcement
of the Merger, the closing sale price per share of ADM Common Stock on the NYSE
Composite Tape was $22.625. On , 1997, the last trading day for which
closing sale prices were available at the time of the printing of this Proxy
Statement/Prospectus, the closing sale price per share of ADM Common Stock on
the NYSE Composite Tape was $ . See "Market Price and Dividend
Information." If the Average Price were equal to the closing sale price per
share of ADM Common Stock on , 1997, MMC shareholders who are to
receive shares of ADM Common Stock would be entitled to receive shares of ADM
Common Stock, having a market value of $ , in exchange for each share of
MMC Common Stock held by them (assuming MMC shareholders' equity, as of the date
15 days prior to the closing, is at least $265 million). The actual value of the
consideration and number of shares of ADM Common Stock to be issued in the
Merger may differ from the foregoing example, however, because the actual value
and number of shares will not be determined until the day of the Special Meeting
or such other date as is the third trading day before the Closing Date.
Certain capitalized terms usedRegistrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in this Proxy Statement/Prospectus are
defined under the caption "Glossary of Terms." THE SHARES OF ADM COMMON STOCK TO
BE ISSUED IN THE MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS NOVEMBER 6, 1997.
AVAILABLE INFORMATION
ADM is subject to the informational requirementsaccordance with Section 8(a) of the Securities Exchange
Act of 1934,1933 or until this Registration Statement shall become effective on such date as amended (the "Exchange Act")the Commission, acting pursuant to Section 8(a), may determine.
The information in this prospectus is not complete and in accordance therewith,
files reports, proxy statements,may change. We may not complete the exchange offer and other informationissue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 22, 2011
PROSPECTUS
ARCHER-DANIELS-MIDLAND COMPANY
Offer to Exchange
Up to $527,688,000 Principal Amount of
4.535% Debentures due 2042
for
a Like Principal Amount of
4.535% Debentures due 2042
that have been registered under the Securities Act of 1933
We are offering to exchange registered 4.535% Debentures due 2042 (the "SEC"“Exchange Debentures”) for our outstanding unregistered 4.535% Debentures due 2042 (the “Original Debentures”). These reports, proxy statements,The Exchange Debentures and other
information may be inspected and copied at the SEC's public reference facility
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at its Regional Offices located at Seven World Trade Center, Suite 1300, New
York, New York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of these materials can be obtained by mail fromOriginal Debentures are sometimes referred to in this prospectus together as the SEC's public
reference section at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Certain of these materials may also
be obtained via the SEC's Web site (http://www.sec.gov). In addition, reports,
proxy statements, and other information filed by ADM may be inspected and copied
at the offices“Debentures.” The terms of the NYSE, 20 Broad Street, New York, New York 10005.
2
This Proxy Statement/Prospectus constitutes a partExchange Debentures are substantially identical to the terms of a registration
statement on Form S-4 (the "Registration Statement") filed by ADM with the SECOriginal Debentures, except that the Exchange Debentures are registered under the Securities Act of 1933, as amended (the "Securities Act"“Securities Act”), and the transfer restrictions and registration rights and related additional interest provisions applicable to the Original Debentures do not apply to the Exchange Debentures. The Original Debentures may only be tendered in an amount equal to $1,000 in principal amount or in integral multiples of $1,000 in excess thereof. This offer (the “Exchange Offer”) is subject to certain customary conditions and will expire at 5:00 p.m., New York City time, on , 2012, unless we extend it (as such date and time may be extended, the “Expiration Date”). The Exchange Debentures will not trade on any established exchange.
Each broker-dealer that receives Exchange Debentures for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Debentures. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This Proxy
Statement/Prospectus omitsprospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Debentures received in exchange for Original Debentures where such Original Debentures were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the Expiration Date, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”
See “Risk Factors” beginning on page 7 for a discussion of certain risks that you should consider before participating in the Exchange Offer.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 20
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You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information provided in this prospectus is accurate as of any date other than the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Exchange Debentures.
i
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with the SEC. Our SEC filings are available over the internet at the SEC’s website at http://www.sec.gov and our website at www.adm.com. Information on our website does not constitute part of this prospectus. You may also read and copy any document that we file with the SEC at its public reference facility:
Public Reference Room
100 F Street NE
Washington, D.C. 20549
You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information on the operations of the public reference facility and copying charges. Our SEC filings are also available at the offices of the New York Stock Exchange. For further information on obtaining copies of our public filings at the New York Stock Exchange, you should call (212) 656-5060.
We “incorporate by reference” into this prospectus the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus. Some information contained in this prospectus updates the information incorporated by reference, and information that we file subsequently with the SEC will automatically update this prospectus. In other words, in the case of a conflict or inconsistency between information set forth in this prospectus and information incorporated by reference into this prospectus, you should rely on the information contained in the Registration Statement, anddocument that was filed later. We incorporate by reference is hereby made to the Registration
Statement for further information with respect to ADM and the ADM Common Stock
offered hereby. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and, in each instance, reference is made
to the copy of the document filed as an exhibit to the Registration Statement or
otherwise filed with the SEC. Each such statement is qualified in its entirety
by this reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS OF ADM BY REFERENCE
THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. ADM WILL PROVIDE WITHOUT
CHARGE TO EACH PERSON TO WHOM A COPY OF THIS PROXY STATEMENT/PROSPECTUS IS
DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR
ALL OF SUCH DOCUMENTS RELATING TO ADM (OTHER THAN EXHIBITS TO THE DOCUMENTS,
UNLESS THE EXHIBITS ARE SPECIFICALLY INCORPORATED THEREIN BY REFERENCE).
REQUESTS SHOULD BE DIRECTED TO ARCHER-DANIELS-MIDLAND COMPANY, 4666 FARIES
PARKWAY, DECATUR, ILLINOIS 62526, ATTN: SECRETARY, TELEPHONE (217) 424-5200. IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS PRIOR TO THE SPECIAL MEETING,
REQUESTS SHOULD BE MADE BY DECEMBER 1, 1997.
The following documents filed with the SEC by ADM (File No. 1-44) under the
Exchange Act are incorporated herein by reference:
(i) ADM'sour Annual Report on Form 10-K as amended by Form 10-K/A, for the year ended June 30, 19972011 (which incorporates by reference certain portions of ADM's 1997 Annual Report to Shareholders, including financial
statementsour definitive Notice and accompanying information, and certain portions of ADM's
definitive proxy statementProxy Statement for its 1997our Annual Meeting of Shareholders)Stockholders held on November 3, 2011); our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011; our Current Reports on Form 8-K filed on September 22, 2011, September 27, 2011, October 6, 2011, and (ii) Exchange Act registration statementsNovember 7, 2011; and reports that contain a
description of ADM's capital stock.
All documents filed by ADMany filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the dateinitial filing of the registration statement that contains this Proxy Statement/Prospectusprospectus and before the Special Meeting are deemedcompletion of the offering of the Exchange Debentures. Notwithstanding the foregoing, unless specifically stated otherwise, none of the information that we disclose under Items 2.02 and 7.01 of any Current Report on Form 8-K that we may from time to time furnish to the SEC will be incorporated by reference into, or otherwise included in, this Proxy
Statement/Prospectusprospectus.
You may request a copy of any filings referred to above, at no cost, excluding any exhibits to those filings unless the exhibit is specifically incorporated by reference in those filings, by writing or telephoning us at the following address and telephone number:
Investor Relations
Archer-Daniels-Midland Company
4666 Faries Parkway, Box 1470
Decatur, Illinois 62525
Telephone: 217-424-5200
In order to be made a part hereof fromobtain timely delivery, you must request the dateinformation no later than , 2012, which is five business days before the Expiration Date.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents that we incorporate by reference may contain forward-looking statements within the meaning of Section 27A of the filingSecurities Act and Section 21E of the Exchange Act. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from
ii
those documents. Any statement contained in a document incorporated hereinprojected, expressed, or implied by reference will be deemed to be modifiedsuch forward-looking statements. In some cases, you can identify forward-looking statements by our use of words such as “may,” “will,” “should,” “anticipates,” “believes,” “expects,” “plans,” “future,” “intends,” “could,” “estimate,” “predict,” “potential,” or superseded for“contingent,” the purposes hereof to
the extent that a statement contained herein (or in any subsequently filed
document that also is incorporated herein by reference) modifies or supersedes
that statement. Any statement so modified or superseded is not deemed to
constitute a part hereof except as so modified or superseded.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ADM, MMC, OR ANY OTHER
PERSON. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER IN THE
JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
SALE MADE HEREUNDER, UNDER ANY CIRCUMSTANCES, CREATES ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF ADM OR MMC AFTER THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED OR INCORPORATED HEREIN BY REFERENCE IS CORRECT AS OF
ANY TIME AFTER ITS DATE.
3
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION..................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 3
GLOSSARY OF TERMS......................................................... 6
SUMMARY................................................................... 8
General................................................................. 8
The Parties to the Merger............................................... 8
The Special Meeting..................................................... 8
Required Vote........................................................... 9
Recommendation of the MMC Board and Reasons for the Merger.............. 9
Fairness Opinion with Respect to the Merger............................. 10
The Merger.............................................................. 10
Dissenters' Rights...................................................... 12
Certain Federal Income Tax Consequences................................. 12
Comparative Rights of MMC Shareholders Before and After the Merger...... 12
Share Price and Dividend Data........................................... 12
Selected Historical Financial Data...................................... 13
GENERAL INFORMATION....................................................... 16
The Special Meeting..................................................... 16
Vote Required at Special Meeting........................................ 16
Solicitation of Proxies................................................. 17
Other Matters........................................................... 17
ITEM 1. THE MERGER....................................................... 18
BACKGROUND OF THE MERGER.................................................. 18
RECOMMENDATION OF THE BOARD OF DIRECTORS AND REASONS FOR THE MERGER....... 19
OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED............. 21
General................................................................. 21
Materials and Information Considered with Respect to the Merger......... 22
Analysis of Selected Comparable Publicly Traded Companies............... 23
Comparable Transaction Analysis......................................... 23
Discounted Cash Flow Analysis........................................... 23
Breakup Analysis........................................................ 24
ADM Common Stock Trading History........................................ 24
Comparison of ADM to Selected Comparable Publicly Traded Companies...... 24
Limitations on Opinion.................................................. 24
Fees Payable to Merrill Lynch........................................... 24
THE MERGER................................................................ 24
General................................................................. 25
Effective Time and Effect of the Merger................................. 25
Exchange of Shares...................................................... 25
Employee Benefit Plans.................................................. 26
Conditions to Consummation of the Merger................................ 26
Representations, Warranties and Covenants............................... 27
Amendment, Termination and Waiver....................................... 27
Expenses................................................................ 28
Stock Exchange Listing.................................................. 28
Certain Legal Matters................................................... 28
Conduct of Business Prior to the Merger................................. 28
No Solicitation of Acquisition Transactions............................. 29
4
PAGE
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Indemnification and Insurance........................................... 32
Interests of Certain Persons in the Merger.............................. 32
Certain Federal Income Tax Consequences................................. 36
Business and Management After the Merger................................ 37
Accounting Treatment.................................................... 37
Resale of Shares by MMC Affiliates...................................... 37
Dissenters' Rights...................................................... 37
CERTAIN FORWARD-LOOKING INFORMATION....................................... 38
BUSINESS OF MMC........................................................... 38
General................................................................. 38
MMC Common Stock Ownership.............................................. 38
Management's Discussion and Analysis of Financial Condition and Results
of Operations.......................................................... 41
SHARE PRICE AND DIVIDEND INFORMATION FOR ADM COMMON STOCK AND MMC COMMON
STOCK................................................................... 42
COMPARATIVE RIGHTS OF SHAREHOLDERS OF MMC AND ADM......................... 44
General................................................................. 44
Dissenters' or Appraisal Rights......................................... 44
Vote on Certain Fundamental Issues...................................... 44
Cumulative Voting....................................................... 45
Special Meetings of the Shareholders.................................... 45
Shareholder Action by Written Consent................................... 45
Amendment of Certificate or Articles of Incorporation................... 45
Anti-Takeover Provisions................................................ 45
Limitations on Liability and Indemnification of Directors............... 46
ITEM 2. CHANGE-OF-CONTROL ARRANGEMENTS................................... 46
LEGAL MATTERS............................................................. 47
EXPERTS................................................................... 47
INDEPENDENT ACCOUNTANTS................................................... 47
MMC FINANCIAL INFORMATION................................................. F-1
EXHIBIT A--Agreement and Plan of Merger................................... A-1
EXHIBIT B--Opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................................ B-1
EXHIBIT C--Sections 11.65 and 11.70 of the Illinois Business Corporation
Act..................................................................... C-1
5
GLOSSARY OF TERMS
THE FOLLOWING TERMS HAVE THE ASSOCIATED MEANINGS WHEN USED IN THIS PROXY
STATEMENT/PROSPECTUS (INCLUDING THE SUMMARY).
"ACQUISITION PROPOSAL" means an offer, from a party other than ADM or ADMAC,
to acquire MMC in a merger, acquisition, consolidation,negative of these terms or other similar transaction involving any purchase of assetsexpressions. The Company’s actual results could differ materially from those discussed or capital stock of MMCimplied herein. Factors that could cause or its
subsidiaries.
"ADM" means Archer-Daniels-Midland Company, a Delaware corporation.
"ADMAC" means ADM Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of ADM.
"ADM BOARD" means the Board of Directors of ADM.
"ADM BYLAWS" means the Bylaws of ADM.
"ADM CERTIFICATE" means the Certificate of Incorporation of ADM.
"ADM COMMON STOCK" means the common stock of ADM, without par value.
"ADM 10-K" means ADM'scontribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K as amended by Form
10-K/A, for the fiscal year ended June 30, 1997 (which incorporates2011. Among these risks are legislative acts; changes in the prices of food, feed, and other commodities, including gasoline; and macroeconomic conditions in various parts of the world. To the extent permitted under applicable law, the Company assumes no obligation to update any forward-looking statements as a result of new information or future events.
iii
This summary highlights selected information from this prospectus and is therefore qualified in its entirety by the more detailed information appearing elsewhere, or incorporated by reference, certain portions of ADM's 1997 Annual Reportin this prospectus. It may not contain all the information that is important to Shareholders, including
financial statementsyou. We urge you to read carefully this entire prospectus and accompanying information, and certain portions of ADM's
definitive proxy statement for its 1997 Annual Meeting of Shareholders).
"ANTITRUST DIVISION" means Antitrust Divisionthe other documents to which it refers to understand fully the terms of the DepartmentExchange Debentures and the Exchange Offer. References in this prospectus to “ADM,” the “Company,” “we,” “us, “our” and “ours” refer to Archer-Daniels-Midland Company.
For more than a century, the people of Justice.
"ASI" means Agri Sales, Inc., one ofArcher-Daniels-Midland Company have transformed crops into products that serve vital needs. Today, 30,000 ADM employees around the three business units of MMC.
"AVERAGE PRICE" meansglobe convert oilseeds, corn, wheat and cocoa into products for food, animal feed, chemical and energy uses. With more than 265 processing plants, 400 crop procurement facilities, and the average ofworld’s premier crop transportation network, ADM helps connect the per share closing sale prices of
ADM Common Stock on the NYSE for the 20 trading days immediately preceding the
third trading day priorharvest to the Closing Date.
"BASE VALUE" means $5,400, unless adjusted under the Merger Agreement to an
amount not lesshome in more than $5,126.13.
"CHANGE-OF-CONTROL ARRANGEMENTS" means certain compensatory arrangements
including change-of-control agreements, termination agreements, agreements
entered into pursuant to the MMC Restricted Stock Unit Plan, the MMC Restricted
Stock Unit Plan for Outside Directors and certain retirement benefits, under
which members of MMC's senior management would receive certain benefits upon a
change of control of MMC, provided certain other conditions are fulfilled.
"CLOSING DATE" means the third business day after the date on which all
conditions precedent to the Merger have been satisfied or waived.
"CODE" means the Internal Revenue Code of 1986, as amended.
"DELAWARE LAW" means the Delaware General Corporation Law.
"EFFECTIVE TIME" means the later to occur of the filing of a properly
executed Certificate of Merger with the Delaware Secretary of State and the
issuance of a Certificate of Merger by the Illinois Secretary of State.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE AGENT" means Harris Trust and Savings Bank, ADM's stock transfer
agent.
"EXCHANGE RATIO" means the number of shares of ADM Common Stock into which
each share of MMC Common Stock will be converted in the Merger, calculated under
the formula set forth on the cover page of this Proxy Statement/Prospectus.
"FTC" means the Federal Trade Commission.
6
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"IRS" means the Internal Revenue Service.
"ILLINOIS LAW" means the Illinois Business Corporation Act.
"MERGER" means the merger of ADMAC with and into MMC, whereby MMC, as the
surviving corporation, will become a wholly-owned subsidiary of ADM, as
contemplated by the Merger Agreement.
"MERGER AGREEMENT" means the Agreement and Plan of Merger among ADM, ADMAC,
and MMC, dated as of September 12, 1997, a copy of which is attached hereto as
Exhibit A.
"MERRILL LYNCH" means Merrill Lynch, Pierce, Fenner & Smith Incorporated,
MMC's financial adviser with respect to a business combination with a third
party, such as the Merger.
"MMC" means Moorman Manufacturing Company, an Illinois corporation.
"MMC ARTICLES" means the Articles of Incorporation of MMC.
"MMC BOARD" means the Board of Directors of MMC.
"MMC BYLAWS" means the Bylaws of MMC.
"MMC COMMON STOCK" means the common stock, $1.00 par value per share, of
MMC.
"MMI" means MoorMan's, Inc., one of the three business units of MMC.
"NYSE" means the New York Stock Exchange, Inc.
"QUINCY SOYBEAN" means Quincy Soybean Co., one of the three business units
of MMC.
"REGISTRATION STATEMENT" means the registration statement on Form S-4,
together with all amendments and exhibits, of which this Proxy
Statement/Prospectus is a part.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SPECIAL MEETING" means the special meeting of MMC shareholders to be held
on December 8, 1997.
"TAX COUNSEL" means Winston & Strawn, special tax counsel to MMC.
7
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS. CAPITALIZED TERMS USED IN THIS SUMMARY ARE DEFINED UNDER
THE CAPTION "GLOSSARY OF TERMS" AND ELSEWHERE IN THIS PROXY
STATEMENT/PROSPECTUS. REFERENCE IS MADE TO THE MORE DETAILED INFORMATION
CONTAINED ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS, THE EXHIBITS HERETO, AND
THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. A COPY OF THE MERGER AGREEMENT
IS ATTACHED AS EXHIBIT A TO THIS PROXY STATEMENT/ PROSPECTUS AND REFERENCE IS
MADE THERETO FOR A COMPLETE DESCRIPTION OF THE TERMS OF THE MERGER. ALL
INFORMATION CONCERNING ADM INCLUDED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS HAS BEEN FURNISHED BY ADM, AND ALL INFORMATION CONCERNING
MMC INCLUDED OR INCORPORATED HEREIN BY REFERENCE HAS BEEN FURNISHED BY MMC. EACH
SHAREHOLDER SHOULD READ CAREFULLY THIS PROXY STATEMENT/ PROSPECTUS AND THE
EXHIBITS HERETO IN ITS ENTIRETY.
GENERAL
This Proxy Statement/Prospectus relates to the proposed Merger of ADMAC with
and into MMC under the Merger Agreement. Following the Merger, MMC, as the
surviving corporation will continue its operations as a wholly-owned subsidiary
of ADM. See "The Merger." This Proxy Statement/Prospectus also relates to the
approval, for tax purposes, of certain payments pursuant to the
Change-of-Control Arrangements. See "Approval of Change-of-Control
Arrangements."
THE PARTIES TO THE MERGER
ADM. ADM is a major processor of agricultural products for the food and
feed industries. It is one of the largest oil seed and vegetable oil processors,
corn refiners, fuel alcohol producers, and wheat millers in the United States.
ADM was160 countries.
We were incorporated in Delaware in 1923 as the successor to a business formed in 1902. ADM'sOur executive offices are located at 4666 Faries Parkway, Box 1470, Decatur, Illinois 62526, and its62525. Our telephone number is (217) 424-5200. References hereinWe maintain an Internet website at http://www.adm.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider information contained on our website as part of this prospectus.
Summary of the Exchange Offer
Background | On October 7, 2011, we completed private offers to exchange certain of our outstanding debt securities for $527,688,000 aggregate principal amount of the Original Debentures and cash. In connection with the private offers to exchange, we entered into a registration rights agreement (the “Registration Rights Agreement”) in which we agreed, among other things, to conduct an exchange offer for the Original Debentures. |
The Exchange Offer | We are offering to exchange our Exchange Debentures, which have been registered under the Securities Act, for a like principal amount of our outstanding unregistered Original Debentures. Original Debentures may only be tendered in an amount equal to $1,000 in principal amount or in integral multiples of $1,000 in excess thereof. See “The Exchange Offer—Terms of the Exchange.” |
Resale of Exchange Notes | Based upon the position the staff of the SEC has taken in previous no-action letters, we believe that Exchange Debentures issued pursuant to the Exchange Offer in exchange for Original Debentures may be offered for resale, resold and otherwise transferred by you without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that you will acknowledge that: |
you are acquiring the Exchange Debentures in the ordinary course of your business;
you have not participated in, do not intend to ADM relateparticipate in, and have no arrangement or understanding with any person to Archer-Daniels-Midland Company, its subsidiariesparticipate in a distribution of the Exchange Debentures; and their
predecessors unless otherwise noted
you are not our “affiliate” as defined under Rule 405 of the Securities Act.
| We do not intend to apply for listing of the Exchange Debentures on any securities exchange or to seek approval for quotation through an automated quotation system. Accordingly, there can be no assurance that an active market will develop upon completion of the Exchange Offer or, if developed, that such market will be sustained or as to the liquidity of any market. |
| Each broker-dealer that receives Exchange Debentures for its own account in exchange for Original Debentures, where such Original Debentures were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Debentures during the 180 days after the expiration of this Exchange Offer. See “Plan of Distribution.” |
Consequences of Not Exchanging Your Original Debentures | Original Debentures that are not tendered in the Exchange Offer or are not accepted for exchange will continue to bear legends restricting their transfer. You will not be able to offer or sell such Original Debentures unless: |
you are able to rely on an exemption from the requirements of the Securities Act; or indicated by
the context. ForOriginal Debentures are registered under the Securities Act.
| After the Exchange Offer is completed, we will no longer have an obligation to register the Original Debentures, except under limited circumstances. To the extent that Original Debentures are tendered and accepted in the Exchange Offer, the trading market for any remaining Original Debentures will be adversely affected. See “Risk Factors—If you fail to exchange your Original Debentures, they will continue to be restricted securities and might become less liquid.” |
Expiration Date | The Exchange Offer will expire at 5:00 p.m., New York City time, on , 2012, unless we extend the Exchange Offer. See “The Exchange Offer—Expiration Date; Extensions; Amendments.” |
Issuance of Exchange Debentures | We will issue Exchange Debentures in exchange for Original Debentures tendered and accepted in the Exchange Offer promptly following the Expiration Date. See “The Exchange Offer—Terms of the Exchange.” |
Certain Conditions to theExchange Offer | The Exchange Offer is subject to certain customary conditions, which we may amend or waive. The Exchange Offer is not conditioned upon any minimum principal amount of outstanding Original Debentures being tendered. See “The Exchange Offer—Conditions to the Exchange Offer.” |
Special Procedures forBeneficial Holders | If you beneficially own Original Debentures that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender in the Exchange Offer, you should contact the registered holder promptly and instruct such person to tender on your behalf. If you wish to tender in the Exchange Offer on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your Original Debentures, either arrange to have the Original Debentures registered in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take a considerable amount of time. See “The Exchange Offer—Procedures for Tendering.” |
Withdrawal Rights | You may withdraw your tender of Original Debentures at any time before the Exchange Offer expires. See “The Exchange Offer—Withdrawal of Tenders.” |
Taxation | An exchange pursuant to the Exchange Offer generally will not be a taxable event for U.S. federal income tax purposes. See “Material United States Federal Income Tax Consequences.” |
Use of Proceeds | We will not receive any proceeds from the exchange or the issuance of Exchange Debentures in connection with the Exchange Offer. |
Exchange Agent | The Bank of New York Mellon is serving as Exchange Agent in connection with the Exchange Offer. |
Summary of the Exchange Debentures
Other than the restrictions on transfer and provisions related to registration rights and special interest, the Exchange Debentures will have the same financial terms and covenants as the Original Debentures. See “Description of the Exchange Debentures” for more complete information about the Exchange Debentures.
Issuer | Archer-Daniels-Midland Company. |
Maturity Date | March 26, 2042. |
Interest | The Exchange Debentures will bear interest at the rate of 4.535%. Interest on the Exchange Debentures will accrue from the last interest payment date on which interest was paid on the Original Debentures surrendered in exchange therefor or, if no interest has been paid on the Original Debentures, from September 26, 2011. Interest will be payable semi-annually, in arrears, on March 26 and September 26 of each year, beginning on March 26, 2012. |
| No interest will be paid on either the Exchange Debentures or the Original Debentures at the time of the exchange. The holders of Original Debentures that are accepted for exchange will not receive accrued but unpaid interest on such Original Debentures at the time of the exchange. Rather, that interest will be payable on the Exchange Debentures delivered in exchange for the Original Debentures on the first interest payment date after the Expiration Date of the Exchange Offer. |
Ranking | The Exchange Debentures will be senior unsecured obligations of our Company and will rank equally with all of our other unsecured and unsubordinated indebtedness. |
Optional Redemption | We may redeem the Exchange Debentures at any time and from time to time at our option, in whole or in part, at a redemption price equal to the greater of: |
100% of the principal amount of the Exchange Debentures to be redeemed; and
the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of interest accrued to the redemption date) on the Exchange Debentures being redeemed from the redemption date to the maturity date discounted to the date of the redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Rate (as defined below under “Description of the Exchange Debentures—Optional Redemption”) plus 20 basis points.
| We will also pay the accrued and unpaid interest on the Exchange Debentures to the redemption date. |
Repurchase at the Option of HoldersUpon a Change of Control Triggering Event | If we experience a change of control triggering event, we will be required, unless we have exercised our right to redeem the Exchange |
Debentures, to offer to purchase the Exchange Debentures at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest. See “Description of the Exchange Debentures—Change of Control Offer.” |
Form and Denomination | The Exchange Debentures will be issued in fully registered, global form. The Exchange Debentures will be represented by one or more global debentures, deposited with the Trustee referred to below as custodian for The Depository Trust Company (“DTC”) and registered in the name of Cede & Co., DTC’s nominee. Beneficial interests in the global debentures will be shown on, and any transfers will be effected only through, records maintained by DTC and its participants, and any such interest may not be exchanged for definitive registered debentures, except in limited circumstances. Interests in the global debentures will be issued in minimum denominations of $1,000 and integral multiples of $1,000. See “Book-Entry, Delivery and Form.” |
Covenants | The Indenture governing the Exchange Debentures contains a limitation on our ability to incur or guarantee indebtedness that is secured by a mortgage on any of our principal properties in certain circumstances. The Indenture also limits our ability to conduct certain sale and leaseback transactions with respect to our principal properties. See “Description of the Exchange Debentures—Covenants Contained in the Indenture.” |
Events of Default | For a discussion of events that will permit acceleration of the payment of the principal of and accrued interest on the Exchange Debentures, see “Description of the Exchange Debentures—Events of Default.” |
Additional Issuances | We may, from time to time, without notice to or the consent of the holders of the Exchange Debentures, create and issue additional debt securities ranking pari passu in all respects with the Exchange Debentures and having the same terms as to status, redemption or otherwise as the Exchange Debentures (except for the payment of interest accruing prior to the issue date of such additional debt securities, or except for the first payment of interest following the issue date of such additional debt securities) so that such additional debt securities may be consolidated and form a single series of debt securities with the Exchange Debentures. |
| Any such additional debt securities, along with the Original Debentures, will vote and act together as a single class with the Exchange Debentures under the Indenture. |
Listing | We do not intend to list the Exchange Debentures on any securities exchange. |
Governing Law | The Exchange Debentures and the Indenture will be governed by, and construed in accordance with, the laws of the State of New York. |
Trustee | The Bank of New York Mellon. |
You should consider carefully the following risks relating to the Exchange Offer and the Exchange Debentures and the risk factors described in Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2011, together with the other information included or incorporated by reference in this prospectus, before tendering your Original Debentures in the Exchange Offer. The following is not intended as, and should not be construed as, an exhaustive list of relevant risk factors. There may be other risks that a holder of Original Debentures should consider that are relevant to its own particular circumstances or generally.
If you fail to exchange your Original Debentures, they will continue to be restricted securities and might become less liquid.
Original Debentures that you do not tender or that we do not accept will, following the Exchange Offer, continue to be restricted securities, and you may not offer to sell them except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities law. We will issue Exchange Debentures in exchange for the Original Debentures pursuant to the Exchange Offer only following the satisfaction of the procedures and conditions set forth in “The Exchange Offer—Procedures for Tendering.” These procedures and conditions include timely receipt by the Exchange Agent of such Original Debentures (or a confirmation of book-entry transfer) and of a properly completed and duly executed letter of transmittal (or an agent’s message from DTC).
Because we anticipate that most holders of Original Debentures will elect to exchange their Original Debentures, we expect that the liquidity of the market for any Original Debentures remaining after the completion of the Exchange Offer will be substantially limited. Any Original Debentures tendered and exchanged in the Exchange Offer will reduce the aggregate principal amount of the Original Debentures outstanding. Following the Exchange Offer, if you do not tender Original Debentures you generally will not have any further registration rights, and your Original Debentures will continue to be subject to certain transfer restrictions. Accordingly, the liquidity of the market for the Original Debentures could be adversely affected.
The consummation of the Exchange Offer may not occur.
We are not obligated to complete the Exchange Offer. The Exchange Offer is subject to the satisfaction of certain conditions, and subject to applicable law, we may extend, amend or terminate the Exchange Offer at any time before expiration and may, in our sole discretion, waive any of the conditions to the Exchange Offer. Even if the Exchange Offer is completed, it may not be completed on the schedule described in this prospectus. Accordingly, you may have to wait longer than expected to receive the Exchange Debentures issuable pursuant to the Exchange Offer, during which time you will not be able to effect transfers of your Original Debentures tendered in the Exchange Offer.
If an active trading market does not develop for the Exchange Debentures, you may be unable to sell your Exchange Debentures or to sell your Exchange Debentures at a price that you deem sufficient.
The Exchange Debentures are new issues of securities for which there currently is no established trading market. We do not intend to list the Exchange Debentures on a national securities exchange. No assurance can be given that a market for the Exchange Debentures will develop or continue, as to the liquidity of any market that does develop, or as to your ability to sell any Exchange Debentures you may own or the price at which you may be able to sell your Exchange Debentures.
This Exchange Offer is intended to satisfy our obligations under the Registration Rights Agreement entered into in connection with the issuance of the Original Debentures. We will not receive any cash proceeds from the issuance of the Exchange Debentures in the Exchange Offer. In consideration for issuing the Exchange Debentures as contemplated by this prospectus, we will receive Original Debentures in like principal amount. The Original Debentures surrendered and exchanged for the Exchange Debentures will be retired and canceled and cannot be reissued.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to fixed charges for each of the periods indicated.
| Fiscal Year Ended June 30, | Three Months Ended September 30, 2011 | |||||||||||
| 2007 | 2008 | 2009 | 2010 | 2011 | ||||||||
Ratio of earnings to fixed charges | 6.54x | 4.54x | 4.84x | 4.78x | 5.55x | 5.33x | ||||||
The ratio of earnings to fixed charges is calculated as follows:
(earnings) | ||||
(fixed charges) |
For purposes of calculating the ratios, earnings consist of:
pre-tax income from continuing operations before adjustment for noncontrolling interests in income from consolidated subsidiaries or income or loss from equity investees;
fixed charges;
amortization of capitalized interest;
distributed income of equity investees; and
our share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges;
minus capitalized interest;
minus preference security dividend requirements of consolidated subsidiaries; and
minus the noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges.
For purposes of calculating the ratios, fixed charges consist of:
interest expensed and capitalized;
amortized premiums, discounts and capitalized expenses related to indebtedness;
an estimate of the interest portion of rental expense on operating leases; and
preference security dividend requirements of consolidated subsidiaries.
Purpose of the Exchange Offer
In connection with the issuance of the Original Debentures, we entered into a Registration Rights Agreement with dealer managers, under which we agreed to file and to use our reasonable best efforts to have declared effective an exchange offer registration statement under the Securities Act and to consummate an exchange offer.
We are making the Exchange Offer in reliance on the position of the SEC as set forth in certain no-action letters. However, we have not sought our own no-action letter. Based upon these interpretations by the SEC, we believe that a holder of Exchange Debentures who exchanges Original Debentures for Exchange Debentures in the Exchange Offer generally may offer the Exchange Debentures for resale, sell the Exchange Debentures and otherwise transfer the Exchange Debentures without further registration under the Securities Act and without delivery of a prospectus that satisfies the requirements of Section 10 of the Securities Act. This does not apply, however, to a holder who is our “affiliate” within the meaning of Rule 405 of the Securities Act. We also believe that a holder may offer, sell or transfer the Exchange Debentures only if the holder acknowledges that the holder is acquiring the Exchange Debentures in the ordinary course of its business and operationsis not participating, does not intend to participate and has no arrangement or understanding with any person to participate in a distribution of ADM, referencethe Exchange Debentures.
Any holder of the Original Debentures using the Exchange Offer to participate in a distribution of Exchange Debentures cannot rely on the no-action letters referred to above. Any broker-dealer who holds Original Debentures acquired for its own account as a result of market-making activities or other trading activities and who receives Exchange Debentures in exchange for such Original Debentures pursuant to the Exchange Offer may be a statutory underwriter and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Debentures. See “Plan of Distribution.”
Each broker-dealer that receives Exchange Debentures for its own account in exchange for Original Debentures, where such Original Debentures were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Debentures. See “Plan of Distribution.”
Except as described above, this prospectus may not be used for an offer to resell or transfer the Exchange Debentures.
The Exchange Offer is not being made to, nor will we accept tenders for exchange from, holders of Original Debentures in any jurisdiction in which the ADM 10-K, incorporated hereinExchange Offer or the acceptance of it would not be in compliance with the securities or blue sky laws of such jurisdiction.
Terms of the Exchange
Upon the terms and subject to the conditions of the Exchange Offer, we will accept any and all Original Debentures validly tendered at or prior to 5:00 p.m., New York time, on the Expiration Date for the Exchange Offer. Promptly after the Expiration Date, we will issue an aggregate principal amount of up to $527,688,000 of Exchange Debentures for a like principal amount of outstanding Original Debentures tendered and accepted in connection with the Exchange Offer. The Exchange Debentures issued in connection with the Exchange Offer will be delivered promptly after the Expiration Date. Holders may tender some or all of their Original Debentures in connection with the Exchange Offer, but only in principal amounts of $1,000 or in integral multiples of $1,000 in excess thereof.
The terms of the Exchange Debentures will be identical in all material respects to the terms of the Original Debentures, except that the Exchange Debentures will have been registered under the Securities Act and will be issued free from any covenant regarding registration, including the payment of additional interest upon a failure
to file or have declared effective an exchange offer registration statement or to complete the Exchange Offer by reference.certain dates. The Exchange Debentures will evidence the same debt as the Original Debentures and will be issued under the same Indenture and be entitled to the same benefits under that Indenture as the Original Debentures being exchanged. As of the date of this prospectus, $527,688,000 in aggregate principal amount of the Original Debentures are outstanding.
In connection with the issuance of the Original Debentures, we arranged for the Original Debentures issued to qualified institutional buyers and those issued in reliance on Regulation S under the Securities Act to be issued and transferable in book-entry form through the facilities of DTC, acting as depositary. Except as described under “Book-Entry, Delivery and Form,” Exchange Debentures will be issued in the form of one or more global debentures registered in the name of DTC or its nominee and each beneficial owner’s interest therein will be transferable in book-entry form through DTC. See "Incorporation“Book-Entry, Delivery and Form.”
Holders of Certain
DocumentsOriginal Debentures do not have any appraisal or dissenters’ rights in connection with the Exchange Offer. Original Debentures that are not tendered for exchange or are tendered but not accepted in connection with the Exchange Offer will remain outstanding and be entitled to the benefits of the Indenture, but certain registration and other rights under the Registration Rights Agreement will terminate and holders of the Original Debentures will generally not be entitled to any registration rights under the Registration Rights Agreement. See “—Consequences of Failures to Properly Tender Original Debentures in the Exchange Offer.”
We shall be considered to have accepted validly tendered Original Debentures if and when we have given written notice to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders for the purposes of receiving the Exchange Debentures from us.
If any tendered Original Debentures are not accepted for exchange because of an invalid tender, the occurrence of certain other events described in this prospectus or otherwise, we will return the Original Debentures, without expense, to the tendering holder promptly after the Expiration Date for the Exchange Offer.
Holders who tender Original Debentures will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes on exchange of Original Debentures in connection with the Exchange Offer. We will pay all charges and expenses, other than certain applicable taxes described below, in connection with the exchange offer. See “—Fees and Expenses.”
Expiration Date; Extensions; Amendments
The Expiration Date for the exchange offer is 5:00 p.m., New York City time, on , 2012, unless extended by Reference."
MMC. MMCus in our sole discretion, in which case the term “Expiration Date” shall mean the latest date and time to which the exchange offer is extended.
We reserve the right, in our sole discretion:
to delay accepting any Original Debentures, to extend the Exchange Offer or to terminate the Exchange Offer if, in our reasonable judgment, any of the conditions described below shall not have been satisfied, by giving written notice of the delay, extension or termination to the Exchange Agent; or
to amend the terms of the Exchange Offer in any manner.
If we amend the Exchange Offer in a manner that we consider material, we will disclose such amendment by means of a prospectus supplement, and we will extend the Exchange Offer for a period of five to ten business days, depending on the significance of the amendment, if the Exchange Offer would otherwise have expired during such five- to ten-business-day period.
If we determine to extend, amend or terminate the Exchange Offer, we will publicly announce this determination by making a timely release through an appropriate news agency.
If we delay accepting any Original Debentures or terminate the Exchange Offer, we promptly will return any Original Debentures deposited pursuant to the Exchange Offer as required by Rule 14e-1(c) under the Exchange Act of 1934, as amended (the “Exchange Act”).
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any extension of the Exchange Offer, we will not be required to accept for exchange, or to exchange any Exchange Debentures for, any Original Debentures and we may terminate the Exchange Offer or, at our option, modify, extend or otherwise amend the Exchange Offer, if any of the following conditions exist on or prior to the Expiration Date:
an action or event shall have occurred, been threatened, or may occur or an action shall have been taken, and a statute, rule, regulation, judgment, order, stay, decree or injunction shall have been issued, promulgated, enacted, entered, enforced or deemed to be applicable to the Exchange Offer or the exchange of Original Debentures for Exchange Debentures under the Exchange Offer by or before any court or governmental regulatory or administrative agency, authority, instrumentality or tribunal, including, without limitation, taxing authorities, that either:
| (a) | challenges the making of the Exchange Offer or the exchange of Original Debentures for Exchange Debentures under the Exchange Offer or might, directly or indirectly, be expected to prohibit, prevent, restrict or delay consummation of, or might otherwise adversely affect in any manner, the Exchange Offer or the exchange of Original Debentures for Exchange Debentures under the Exchange Offer; or |
| (b) | in our reasonable judgment, could materially adversely affect our (or our subsidiaries’) business, condition (financial or otherwise), income, operations, properties, assets, liabilities or prospects or impair the contemplated benefits to us of the Exchange Offer or the exchange of Original Debentures for Exchange Debentures under the Exchange Offer; |
there shall have occurred (a) any general suspension of or limitation on trading in securities in the United States securities or financial markets, whether or not mandatory, (b) any material adverse change in the prices of the Original Debentures that are the subject of the Exchange Offer, (c) a material impairment in the general trading market for debt securities, (d) a declaration of a banking moratorium or any suspension of payments in respect of banks by federal or state authorities in the United States, whether or not mandatory, (e) a material escalation or commencement of a war, armed hostilities, a terrorist act or other national or international calamity directly or indirectly relating to the United States, if the effect of any such event, in the Company’s reasonable judgment makes it impracticable or inadvisable to proceed with the Exchange Offer, (f) any limitation, whether or not mandatory, by any governmental authority on, or other event in the Company’s reasonable judgment, having a reasonable likelihood of affecting, the extension of credit by banks or other lending institutions in the United States, (g) any material adverse change in the securities or financial markets in the United States generally or (h) in the case of any of the foregoing existing at the time of the commencement of the Exchange Offer, a material acceleration or worsening thereof; and
the Trustee with respect to the Indenture for the Original Debentures that are the subject of the Exchange Offer and the Exchange Debentures to be issued in the Exchange Offer shall have been directed by any holders of Original Debentures to object in any respect to, or take any action that could, in our reasonable judgment, adversely affect the consummation of the Exchange Offer or the exchange of Original Debentures for Exchange Debentures under the Exchange Offer, or the Trustee shall have taken any action that challenges the validity or effectiveness of the procedures used by us in making the Exchange Offer or the exchange of Original Debentures for Exchange Debentures under the Exchange Offer.
The foregoing conditions are for our sole benefit and may be waived by us, in whole or in part, in our absolute discretion. Any determination made by us concerning an event, development or circumstance described or referred to above will be conclusive and binding.
If any of the foregoing conditions are not satisfied, we may, at any time on or prior to the Expiration Date:
terminate the Exchange Offer and promptly return all tendered Original Debentures to the respective tendering holders;
modify, extend or otherwise amend the Exchange Offer and retain all tendered Original Debentures until the Expiration Date, as extended, subject, however, to the withdrawal rights of holders; or
waive the unsatisfied conditions with respect to the Exchange Offer and accept all Original Debentures tendered and not previously validly withdrawn.
In addition, subject to applicable law, we may in our absolute discretion terminate the Exchange Offer for any other reason or for no reason.
Effect of Tender
Any tender by a holder, and our subsequent acceptance of that tender, of Original Debentures will constitute a binding agreement between that holder and us upon the terms and subject to the conditions of the Exchange Offer described in this prospectus and in the letter of transmittal. The participation in the Exchange Offer by a tendering holder of Original Debentures will constitute the agreement by that holder to deliver good and marketable title to the tendered Original Debentures, free and clear of any and all liens, restrictions, charges, pledges, security interests, encumbrances or rights of any kind of third parties.
Procedures for Tendering
If you wish to participate in the Exchange Offer and your Original Debentures are held by a custodial entity such as a bank, broker, dealer, trust company or other nominee, you must instruct that custodial entity to tender your Original Debentures on your behalf pursuant to the procedures of that custodial entity. Please ensure you contact your custodial entity as soon as possible to give them sufficient time to meet your requested deadline.
To participate in the Exchange Offer, you must either:
complete, sign and date a letter of transmittal, or a facsimile thereof, in accordance with the instructions in the letter of transmittal, including guaranteeing the signatures to the letter of transmittal, if required, and mail or otherwise deliver the letter of transmittal or a facsimile thereof, together with the certificates representing your Original Debentures specified in the letter of transmittal, to the Exchange Agent at the address listed in the letter of transmittal, for receipt on or prior to the Expiration Date; or
comply with the Automated Tender Offer Program (“ATOP”) procedures for book-entry transfer described below on or prior to the Expiration Date.
The Exchange Agent and DTC have confirmed that the Exchange Offer is eligible for ATOP with respect to book-entry debentures held through DTC. The letter of transmittal, or a facsimile thereof, with any required signature guarantees, or, in the case of book-entry transfer, an agent’s message in lieu of the letter of transmittal, and any other required documents, must be transmitted to and received by the Exchange Agent on or prior to the Expiration Date at its address set forth below under the caption “Exchange Agent.” Original Debentures will not be deemed to have been tendered until the letter of transmittal and signature guarantees, if any, or agent’s message, is received by the Exchange Agent. We have not provided guaranteed delivery procedures in conjunction with the Exchange Offer or under this prospectus.
The tender by a holder of Original Debentures will constitute an agreement between us and the holder in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal.
The method of delivery of Original Debentures, the letter of transmittal and all other required documents to the Exchange Agent is at the election and risk of the holders. Instead of delivery by mail, we recommend that
holders use an overnight or hand-delivery service, properly insured. In all cases, sufficient time should be allowed to assure delivery to and receipt by the Exchange Agent on or prior to the Expiration Date. Do not send the letter of transmittal or any Original Debentures to anyone other than the Exchange Agent.
If you are tendering your Original Debentures in exchange for Exchange Debentures and anticipate delivering your letter of transmittal and other documents other than through DTC, we urge you to contact promptly a bank, broker or other intermediary that has the capability to hold debentures custodially through DTC to arrange for receipt of any Original Debentures to be delivered pursuant to the Exchange Offer and to obtain the information necessary to provide the required DTC participant with account information in the letter of transmittal.
If you are a beneficial owner that holds Original Debentures through Euroclear (as defined herein) or Clearstream (as defined herein) and wish to tender your Original Debentures, you must instruct Euroclear or Clearstream, as the case may be, to block the account in respect of the tendered Original Debentures in accordance with the procedures established by Euroclear or Clearstream. You are encouraged to contact Euroclear and Clearstream directly to ascertain their procedure for tendering Original Debentures.
Book-Entry Delivery Procedures for Tendering Original Debentures Held with DTC
If you wish to tender Original Debentures held on your behalf by a participant with DTC, you must:
inform the participant of your interest in tendering your Original Debentures pursuant to the Exchange Offer; and
instruct the participant to tender all Original Debentures you wish to be tendered in the Exchange Offer into the Exchange Agent’s account at DTC on or prior to the Expiration Date.
Any financial institution that is a participant in DTC, including Euroclear and Clearstream, must tender Original Debentures by effecting a book-entry transfer of Original Debentures to be tendered in the Exchange Offer into the account of the Exchange Agent at DTC by electronically transmitting its acceptance of the Exchange Offer through the ATOP procedures for transfer. DTC will then verify the acceptance, execute a book-entry delivery to the Exchange Agent’s account at DTC and send an agent’s message to the Exchange Agent. An “agent’s message” is a message, transmitted by DTC to, and received by, the Exchange Agent and forming part of a book-entry confirmation, which states that DTC has received an express acknowledgement from an organization that participates in DTC (a “participant”) tendering Original Debentures that the participant has received and agrees to be bound by the terms of the letter of transmittal and that we may enforce the agreement against the participant. A letter of transmittal need not accompany tenders effected through ATOP.
Proper Execution and Delivery of the Letter of Transmittal
Signatures on a letter of transmittal or notice of withdrawal described under “—Withdrawal of Tenders,” as the case may be, must be guaranteed by an eligible guarantor institution unless the Original Debentures tendered pursuant thereto are tendered (i) by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal or (ii) for the account of an eligible guarantor institution. An “eligible guarantor institution” is one of the following firms or other entities identified in Rule 17Ad-15 under the Exchange Act (as the terms are used in Rule 17Ad-15):
a bank;
a broker, dealer, municipal securities dealer, municipal securities broker, government securities dealer or government securities broker;
a credit union;
a national securities exchange, registered securities association or clearing agency; or
a savings association.
If signatures on a letter of transmittal or notice of withdrawal are required to be guaranteed, that guarantee must be made by an eligible guarantor institution.
If the letter of transmittal is signed by the holders of Original Debentures tendered thereby, the signatures must correspond with the names as written on the face of the Original Debentures or on the DTC security position listing without any change whatsoever. If any of the Original Debentures tendered thereby are held by two or more holders, each holder must sign the letter of transmittal. If any of the Original Debentures tendered thereby are registered in different names on different Original Debentures, it will be necessary to complete, sign and submit as many separate letters of transmittal, and any accompanying documents, as there are different registrations of certificates.
If Original Debentures that are not tendered for exchange pursuant to the Exchange Offer are to be returned to a person other than the tendering holder, certificates for those Original Debentures must be endorsed or accompanied by an appropriate instrument of transfer, signed exactly as the name of the registered owner appears on the certificates, with the signatures on the certificates or instruments of transfer guaranteed by an eligible guarantor institution.
If the letter of transmittal is signed by a person other than the holder of any Original Debentures listed in the letter of transmittal, those Original Debentures must be properly endorsed or accompanied by a properly completed bond power, signed by the holder exactly as the holder’s name appears on those Original Debentures. If the letter of transmittal or any Original Debentures, bond powers or other instruments of transfer are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing, and, unless waived by us, evidence satisfactory to us of their authority to so act must be submitted with the letter of transmittal.
No alternative, conditional, irregular or contingent tenders will be accepted. By executing the letter of transmittal, or facsimile thereof, the tendering holders of Original Debentures waive any right to receive any notice of the acceptance for exchange of their Original Debentures. Tendering holders should indicate in the applicable box in the letter of transmittal the name and address to which payments and/or substitute certificates evidencing Original Debentures for amounts not tendered or not exchanged are to be issued or sent, if different from the name and address of the person signing the letter of transmittal. If those instructions are not given, Original Debentures not tendered or exchanged will be returned to the tendering holder.
All questions as to the validity, form, eligibility, including time of receipt, and acceptance and withdrawal of tendered Original Debentures will be determined by us in our absolute discretion, which determination will be final and binding. We reserve the absolute right to reject any and all tendered Original Debentures determined by us not to be in proper form or not to be tendered properly or any tendered Original Debentures our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive, in our absolute discretion, any defects, irregularities or conditions of tender as to particular Original Debentures, whether or not waived in the case of other Original Debentures. Our interpretation of the terms and conditions of the Exchange Offer, including the terms and instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Original Debentures must be cured within the time we determine. Although we intend to notify holders of defects or irregularities with respect to tenders of Original Debentures, neither we, the Exchange Agent nor any other person will be under any duty to give that notification or shall incur any liability for failure to give that notification. Tenders of Original Debentures will not be deemed to have been made until any defects or irregularities therein have been cured or waived.
Any holder whose Original Debentures have been mutilated, lost, stolen or destroyed will be responsible for obtaining replacement securities or for arranging for indemnification with the Trustee of the Original Debentures. Holders may contact the Exchange Agent for assistance with these matters.
In addition, we reserve the right, as set forth above under “—Conditions to the Exchange Offer,” to terminate the Exchange Offer. By tendering, each holder represents and acknowledges to us, among other things, that:
it has full power and authority to tender, sell, assign and transfer the Original Debentures it is tendering and that we will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by us;
the Exchange Debentures acquired in connection with the Exchange Offer are being obtained in the ordinary course of business of the person receiving the Exchange Debentures;
at the time of commencement of the Exchange Offer it had no arrangement or understanding with any person to participate in a distribution of such Exchange Debentures;
it is not an “affiliate”(as defined in Rule 405 under the Securities Act) of the Company, or if it is an agricultural processing companyaffiliate, such holder will comply with threethe registration and prospectus delivery requirements of the Securities Act to the extent applicable;
if the holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Debentures; and
if the holder is a broker-dealer, that it is not engaged in, and does not intend to engage in, a distribution of the Exchange Debentures, and that it will receive Exchange Debentures for its own account in exchange for Original Debentures that were acquired by such broker-dealer as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Debentures. See “Plan of Distribution.”
Withdrawal of Tenders
Tenders of Original Debentures in the Exchange Offer may be validly withdrawn at any time prior to the Expiration Date.
For a withdrawal of a tender to be effective, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent prior to the Expiration Date at its address set forth below under the caption “Exchange Agent.” The withdrawal notice must:
| (1) | specify the name of the tendering holder of Original Debentures; |
| (2) | bear a description of the Original Debentures to be withdrawn; |
| (3) | specify, in the case of Original Debentures tendered by delivery of certificates for those Original Debentures, the certificate numbers shown on the particular certificates evidencing those Original Debentures; |
| (4) | specify the aggregate principal amount represented by those Original Debentures; |
| (5) | specify, in the case of Original Debentures tendered by delivery of certificates for those Original Debentures, the name of the registered holder, if different from that of the tendering holder, or specify, in the case of Original Debentures tendered by book-entry transfer, the name and number of the account at DTC to be credited with the withdrawn Original Debentures; and |
| (6) | be signed by the holder of those Original Debentures in the same manner as the original signature on the letter of transmittal, including any required signature guarantees, or be accompanied by evidence satisfactory to us that the person withdrawing the tender has succeeded to the beneficial ownership of those Original Debentures. |
The signature on any notice of withdrawal must be guaranteed by an eligible guarantor institution, unless the Original Debentures have been tendered for the account of an eligible guarantor institution.
Withdrawal of tenders of Original Debentures may not be rescinded, and any Original Debentures validly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Exchange Offer. Validly withdrawn Original Debentures may, however, be re-tendered by again following one of the procedures described in “—Procedures for Tendering” on or prior to the Expiration Date.
Exchange Agent
The Bank of New York Mellon has been appointed as Exchange Agent in connection with the Exchange Offer. Questions and requests for assistance with respect to the procedures for tendering or withdrawing tenders of Original Debentures, as well as requests for additional copies of this prospectus or of the letter of transmittal, should be directed to the Exchange Agent as follows:
The Bank of New York Mellon, as Exchange Agent
c/o The Bank of New York Mellon Corporation
Corporate Trust Operations - Reorganization Unit
101 Barclay Street, Floor 7 East
New York, NY 10286
Attention: David Mauer
Telephone: 212-815-3687
Facsimile: 212-298-1915
Fees and Expenses
We will not make any payment to brokers, dealers or others soliciting acceptances of the Exchange Offer. We will pay certain other expenses to be incurred in connection with the Exchange Offer, including the fees and expenses of the Exchange Agent and certain accountant and legal fees.
Holders who tender their Original Debentures for exchange will not be obligated to pay transfer taxes. If, however:
Exchange Debentures are to be delivered to, or issued in the name of, any person other than the registered holder of the Original Debentures tendered;
tendered Original Debentures are registered in the name of any person other than the person signing the letter of transmittal; or
a transfer tax is imposed for any reason other than the exchange of Original Debentures in connection with the Exchange Offer;
then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption from them is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to the tendering holder.
Consequences of Failures to Properly Tender Original Debentures in the Exchange Offer
Issuance of the Exchange Debentures in exchange for the Original Debentures under the Exchange Offer will be made only after timely receipt by the Exchange Agent of a properly completed and duly executed letter of transmittal (or an agent’s message from DTC) and the certificate(s) representing such Original Debentures (or confirmation of book-entry transfer), and all other required documents. Therefore, holders of the Original Debentures desiring to tender such Original Debentures in exchange for Exchange Debentures should allow sufficient time to ensure timely delivery. We are under no duty to give notification of defects or irregularities of tenders of Original Debentures for exchange. Original Debentures that are not tendered or that are tendered but not accepted by us will, following completion of the Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof under the Securities Act, and, upon completion of the Exchange Offer, certain registration rights under the Registration Rights Agreement will terminate.
In the event the Exchange Offer is completed, we generally will not be required to register the remaining Original Debentures, subject to limited exceptions. Remaining Original Debentures will continue to be subject to the following restrictions on transfer:
the remaining Original Debentures may be resold only if registered pursuant to the Securities Act, if any exemption from registration is available, or if neither such registration nor such exemption is required by law; and
the remaining Original Debentures will bear a legend restricting transfer in the absence of registration or an exemption.
We do not currently anticipate that we will register the remaining Original Debentures under the Securities Act. To the extent that Original Debentures are tendered and accepted in connection with the Exchange Offer, any trading market for remaining Original Debentures could be adversely affected. See “Risk Factors—If you fail to exchange your Original Debentures, they will continue to be restricted securities and might become less liquid.”
DESCRIPTION OF THE EXCHANGE DEBENTURES
The Original Debentures were and the Exchange Debentures will be issued under an indenture (the “Indenture”) dated as of September 20, 2006, between us and The Bank of New York Mellon (as successor to JPMorgan Chase Bank, N.A.), as trustee (the “Trustee”). Any Original Debentures that remain outstanding after completion of the Exchange Offer, together with the Exchange Debentures issued in the Exchange Offer, will be treated as a single series of securities under the Indenture.
The following summary of certain provisions of the Indenture and the Exchange Debentures does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture and the Exchange Debentures, including the definitions therein of certain terms. Whenever particular provisions of or terms defined in the Indenture are referred to, such provisions and defined terms are incorporated by reference as part of the statement made.
General
The Exchange Debentures will be our senior unsecured obligations and will rank equal in right of payment to our other senior unsecured obligations from time to time outstanding. The Exchange Debentures will be effectively subordinated to all liabilities of our subsidiaries, including trade payables. Since we conduct many of our operations through our subsidiaries, our right to participate in any distribution of the assets of a subsidiary when it winds up its business units:
MoorMan's, Inc.,is subject to the prior claims of the creditors of the subsidiary. This means that your right as a holder of our Exchange Debentures will also be subject to the prior claims of these creditors if a subsidiary liquidates or reorganizes or otherwise winds up its livestock feed business; Quincy Soybean Co., its integrated
soybean processingbusiness. Unless we are considered a creditor of the subsidiary, your claims will be recognized behind these creditors.
The Indenture does not limit the amount of notes, debentures or other evidences of indebtedness that we may issue under the Indenture and vegetable oil refining business;provides that notes, debentures or other evidences of indebtedness may be issued from time to time in one or more series. We may, from time to time, without notice to or the consent of the holders of the Exchange Debentures, create and Agri Sales, Inc.,
its dry edible bean business. MMC has its originsissue additional debentures ranking pari passu in 1885 when Thomas Robinson
Moorman began mixing, packagingall respects with the Exchange Debentures and deliveringhaving the same terms as to status, redemption or otherwise as such series of Exchange Debentures (except for the payment of interest accruing prior to the issue date of such additional debentures, or except for the first payment of interest following the issue date of such additional debentures) so that such additional debentures may be consolidated and form a hog tonic from his Kentucky
farm. In 1900 twosingle series of T.R. Moorman's sons, E.V.debt securities with the Exchange Debentures. Any such additional debentures will vote and C.A. Moorman, expandedact together as a single class with the businessExchange Debentures under the Indenture, along with the Original Debentures.
The Exchange Debentures will mature on March 26, 2042.
The Exchange Debentures will be issued only in denominations of $1,000 and later movedintegral multiples of $1,000 in excess thereof.
Principal and interest will be payable, and the Exchange Debentures will be transferable or exchangeable, at the office or offices or agency maintained by us for these purposes. Payment of interest on the Exchange Debentures may be made at our option by check mailed to Quincy, Illinois. MMC was incorporatedthe registered holders.
No service charge will be made for any transfer or exchange of the Exchange Debentures, but we may require payment of a sum sufficient to cover any tax or other governmental charge payable in 1912. connection with a transfer or exchange.
As used herein,in this prospectus, a business day means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in the term MMC refersCity of New York.
Interest
The Exchange Debentures will bear interest at a rate of 4.535% per annum. We will pay interest semi-annually in arrears on March 26 and September 26 of each year, each of which we refer to MMCas an interest payment date, beginning on March 26, 2012. We will make each interest payment to the holders of record on the immediately preceding March 11 and its subsidiaries, unlessSeptember 11 (whether or not a business day), provided that the context
requires otherwise. The principal executive offices of MMC are located at 1000
North 30th Street, Quincy, Illinois, and its telephone number is (217) 222-7100.
See "Business of MMC."
THE SPECIAL MEETING
TIME, DATE AND PLACE. The Special Meetinginterest that we pay on the maturity date will be heldpayable to the person to whom the principal will be payable.
Interest on December 8, 1997,each Exchange Debenture will accrue from the last interest payment date on which interest was paid on the Original Debenture surrendered in exchange therefor or, if no interest has been paid on the Original Debenture, from September 26, 2011.
Interest payments for the Exchange Debentures shall be computed and paid on the basis of a 360-day year consisting of twelve 30-day months. In the event that any date on which interest is payable on the Exchange Debentures is not a business day, then payment of the interest payable on such date will be made on the next succeeding day that is a business day (and without any interest or other payment in respect of any such delay).
Optional Redemption
The Exchange Debentures will be redeemable, in whole at any time or in part from time to time, at our option at a redemption price equal to the greater of:
100% of the principal amount of the Exchange Debentures to be redeemed on that redemption date; and
the sum of the present values of the remaining scheduled payments of principal and interest on the Exchange Debentures being redeemed on that redemption date (not including any portion of such payments of interest accrued as of the date of redemption), discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Blessing Conference Center, 28thTreasury Rate (as defined below), plus 20 basis points,
plus, in each case, accrued and Chestnut Streets, Quincy, Illinois,
at 10:00 a.m., local time.
RECORD DATE, QUORUM, AND SHARES ENTITLED TO VOTE. Only shareholdersunpaid interest thereon to the date of recordredemption. Notwithstanding the foregoing, installments of MMC Common Stock atinterest on Exchange Debentures that are due and payable on interest payment dates falling on or prior to a redemption date will be payable on the interest payment date to the registered holders as of the close of business on November 3, 1997the relevant record date according to the Exchange Debentures and the Indenture.
“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term (as measured from the date of redemption) of the Exchange Debentures to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Exchange Debentures.
“Comparable Treasury Price” means, with respect to any redemption date, (1) if the Quotation Agent obtains four or more Reference Treasury Dealer Quotations, the average of such quotations, after excluding the highest and lowest of such quotations, or (2) if the Quotation Agent obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations, or (3) if only one Reference Treasury Dealer Quotation is received, such quotation.
“Quotation Agent” means any Reference Treasury Dealer appointed by us.
“Reference Treasury Dealer” means (1) each of Barclays Capital Inc., BNP Paribas Securities Corp., Deutsche Bank Securities Inc., and HSBC Securities (USA) Inc. (or their respective affiliates that are Primary Treasury Dealers) and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), we will substitute therefor another Primary Treasury Dealer, and (2) any other Primary Treasury Dealer selected by us.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding such redemption date.
“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each registered holder of the Exchange Debentures to be redeemed by us or by the Trustee on our behalf. Once notice of redemption is mailed, the Exchange Debentures called for redemption will become due and payable on the redemption date and at the applicable redemption price, plus accrued and unpaid interest to, but excluding, the redemption date.
Unless we default in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the Exchange Debentures or portions thereof called for redemption. On or before the redemption date, we will deposit with a paying agent (or the Trustee) money sufficient to pay the redemption price of and accrued interest on the Exchange Debentures to be redeemed on that date. If less than all of the Exchange Debentures are to be redeemed, the Exchange Debentures to be redeemed shall be selected by lot by DTC, in the case of Exchange Debentures represented by a global security, or by the Trustee by a method the Trustee deems to be fair and appropriate, in the case of Exchange Debentures that are not represented by a global security.
Sinking Fund
The Exchange Debentures will not be entitled to any sinking fund.
Change of Control Offer
If a Change of Control Triggering Event (as defined below) occurs, we will be required to make an offer (the “Change of Control Offer”) to each holder of the Exchange Debentures to repurchase all or any part (equal to $1,000 or an integral multiple of $1,000 in excess thereof) of that holder’s Exchange Debentures on the terms set forth in the Exchange Debentures. In the Change of Control Offer, we will be required to offer payment in cash equal to 101% of the aggregate principal amount of Exchange Debentures repurchased, plus accrued and unpaid interest, if any, on the Exchange Debentures repurchased to the date of repurchase (the “Change of Control Payment”). Within 30 days following any Change of Control Triggering Event or, at our option, prior to any Change of Control (as defined below), but after public announcement of the transaction that constitutes or may constitute the Change of Control, a notice will be mailed to holders of the Exchange Debentures describing the transaction that constitutes or may constitute the Change of Control Triggering Event and offering to repurchase the Exchange Debentures on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”). The notice will, if mailed prior to the date of consummation of the Change of Control, state that the offer to purchase is conditioned on the Change of Control Triggering Event occurring on or prior to the Change of Control Payment Date.
On the Change of Control Payment Date, we will, to the extent lawful:
accept for payment all Exchange Debentures or portions of Exchange Debentures properly tendered pursuant to the Change of Control Offer;
deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Exchange Debentures or portions of Exchange Debentures properly tendered; and
deliver or cause to be delivered to the Trustee the Exchange Debentures properly accepted together with an officers’ certificate stating the aggregate principal amount of Exchange Debentures or portions of Exchange Debentures being repurchased and that all conditions precedent provided for in the Indenture to the Change of Control Offer and to the repurchase by us of Exchange Debentures pursuant to the Change of Control Offer have been complied with.
We will not be required to make a Change of Control Offer upon the occurrence of a Change of Control Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by us and the third party repurchases all Exchange Debentures properly tendered and not withdrawn under its offer. In addition, we will not repurchase any Exchange Debentures if there has occurred and is continuing on the Change of Control Payment Date an event of default under the Indenture, other than a default in the payment of the Change of Control Payment upon a Change of Control Triggering Event.
We will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Exchange Debentures as a result of a Change of Control Triggering Event. To the extent that the provisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Exchange Debentures, we will comply with those securities laws and regulations and will not be deemed to have breached our obligations under the Change of Control Offer provisions of the Exchange Debentures by virtue of any such conflict.
For purposes of the Change of Control Offer provisions of the Exchange Debentures, the following terms will be applicable:
“Change of Control” means the occurrence of any of the following:
the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) (other than our Company or one of our subsidiaries) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of our Voting Stock or other Voting Stock into which our Voting Stock is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares;
the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or more series of related transactions, of all or substantially all of our assets and the assets of our subsidiaries, taken as a whole, to one or more “persons” (as that term is defined in the Indenture) (other than our Company or one of our subsidiaries); or
the first day on which a majority of the members of our Board of Directors are not Continuing Directors.
Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control if (1) we become a direct or indirect wholly owned subsidiary of a holding company and (2) either (A) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of our Voting Stock immediately prior to that transaction or (B) immediately following that transaction no person (other than a holding company satisfying the requirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company.
“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Event.
“Continuing Directors” means, as of any date of determination, any member of our Board of Directors who (1) was a member of such Board of Directors on the date the Exchange Debentures were issued or (2) was
nominated for election, elected or appointed to such Board of Directors with the approval of a majority of the continuing directors who were members of such Board of Directors at the time of such nomination, election or appointment (either by a specific vote or by approval of our proxy statement in which such member was named as a nominee for election as a director, without objection to such nomination).
“Fitch” means Fitch Ratings.
“Investment Grade Rating” means a rating equal to or higher than BBB- (or the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, and the equivalent investment grade credit rating from any additional rating agency or rating agencies selected by us.
“Moody’s” means Moody’s Investors Service Inc.
“Rating Agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if any of Fitch, Moody’s or S&P ceases to rate the Exchange Debentures or fails to make a rating of the Exchange Debentures publicly available for reasons outside of our control, a “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act selected by us (as certified by a resolution of our Board of Directors) as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be.
“Rating Event” means the rating on the Exchange Debentures is lowered by each of the Rating Agencies and the Exchange Debentures are rated below an Investment Grade Rating by each of the Rating Agencies on any day within the 60-day period (which 60-day period will be extended so long as the rating of the Exchange Debentures is under publicly announced consideration for a possible downgrade by any of the rating agencies) after the earlier of (1) the occurrence of a Change of Control and (2) public notice of andthe occurrence of a Change of Control or our intention to voteeffect a Change of Control; provided, however, that a Rating Event otherwise arising by virtue of a particular reduction in rating will not be deemed to have occurred in respect of a particular Change of Control (and thus will not be deemed a Rating Event for purposes of the definition of Change of Control Triggering Event) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at our request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control has occurred at the Special Meeting. Attime of the closeRating Event). If any Rating Agency is not providing a rating of businessthe Exchange Debentures on any day during the relevant period for any reason and we have not selected a replacement Rating Agency pursuant to the terms of the Exchange Debentures, the rating of such Rating Agency shall be deemed to be below an Investment Grade Rating on such day and such Rating Agency will be deemed to have lowered its rating of the Exchange Debentures during the relevant period.
“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.
“Voting Stock” means, with respect to any specified “person” (as that term is used in Section 13(d)(3) of the Exchange Act) as of any date, there were 54,770 outstanding sharesthe capital stock of MMC Common Stocksuch person that areis at the time entitled to vote generally in the election of the board of directors of such person.
Covenants Contained in the Indenture
The following definitions are used in this prospectus to describe certain covenants contained in the Indenture.
“Attributable Debt” means:
the balance sheet liability amount of capital leases as determined by generally accepted accounting principles, plus
the amount of future minimum operating lease payments required to be disclosed by generally accepted accounting principles, less any amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges, discounted using the methodology used to calculate the present value of operating lease payments in our most recent Annual Report to Stockholders reflecting that calculation.
The amount of Attributable Debt relating to an operating lease that can be terminated by the lessee with the payment of a penalty will be calculated based on the lesser of:
the aggregate amount of lease payments required to be made until the first date the lease can be terminated by the lessee plus the amount of the penalty, or
the aggregate amount of lease payments required to be made during the remaining term of the lease.
“Consolidated Net Tangible Assets” means the total amount of our assets, minus applicable reserves and other properly deductible items, minus
all current liabilities, excluding Funded Debt included by reason of being renewable or extendible, and
all goodwill, trade names, patents, unamortized debt discount and expense, and other similar intangibles to the extent not deducted as reserves and deductible items set forth above,
all as set forth on our most recent consolidated balance sheet.
“Funded Debt” means:
Indebtedness that matures more than 12 months after the time of the computation of the amount thereof or that is extendible or renewable to a time more than 12 months after the time of the computation of the amount thereof;
all guarantees of any such Indebtedness or of dividends, other than any guarantee in connection with the sale or discount by us or any Restricted Subsidiary of accounts receivable, trade acceptances and other paper arising in the ordinary course of business; and
all preferred stock of any Subsidiary, taken at the Special Meeting. Each sharegreater of MMC Common Stockits voluntary or involuntary liquidation price at the time of any calculation hereunder, but exclusive of accrued dividends, if any.
Funded Debt does not include any amount in respect of obligations under leases, or guarantees thereof, whether or not such obligations or guarantees would be included as liabilities on a consolidated balance sheet.
“Indebtedness” means, except as set forth in the next sentence:
all items of indebtedness or liability, except capital and surplus, which under generally accepted accounting principles would be included in total liabilities on the liability side of a balance sheet as of the date that indebtedness is entitledbeing determined; and
guarantees, endorsements (other than for purposes of collection) and other contingent obligations relating to, or to purchase or otherwise acquire, indebtedness of others, unless the amount is included in the preceding bullet point.
Indebtedness does not include any obligations or guarantees of obligations relating to lease rentals, even if the obligations or guarantees of obligations relating to lease rentals would be included as liabilities on the consolidated balance sheet of us and our Restricted Subsidiaries.
“Principal Domestic Manufacturing Property” means any building, structure or other facility, together with the land on which it is erected and fixtures that are part of such building, located in the United States that is used
by us or our Subsidiaries primarily for manufacturing, processing or warehousing, the gross book value of which exceeds 1% of our Consolidated Net Tangible Assets, other than any such building,
that is financed by obligations issued by a state, territory or possession of the United States, or any of their political subdivisions, the interest on which is excludable from gross income of the holders pursuant to Section 103(a)(1) of the Internal Revenue Code of 1986, or
that is not of material importance to the total business conducted by us and our Subsidiaries, taken as a whole.
A “Restricted Subsidiary” is any Subsidiary of ours, but does not include a Subsidiary (i) that does not transact any substantial portion of its business in the United States and does not regularly maintain any substantial portion of its fixed assets in the United States, or (ii) that is engaged primarily in financing our operations or the operations of our Subsidiaries, or both.
“Secured Funded Debt” means Funded Debt which is secured by a mortgage, lien or other similar encumbrance upon any of our assets or those of our Restricted Subsidiaries.
A “Subsidiary” is a corporation or other entity in which we, or one or more of our other Subsidiaries, directly or indirectly, own more than 50% of the outstanding voting equity interests.
“Wholly-owned Restricted Subsidiary” means any Restricted Subsidiary in which we and our other Wholly-owned Restricted Subsidiaries own all of the outstanding Funded Debt and capital stock (other than directors’ qualifying shares).
Restrictions on Secured Funded Debt
The Indenture limits the amount of Secured Funded Debt that we and our Restricted Subsidiaries may incur or otherwise create, including by guarantee. Neither we nor our Restricted Subsidiaries may incur or otherwise create any new Secured Funded Debt unless immediately after the incurrence or creation:
the sum of:
the aggregate principal amount of all of our outstanding Secured Funded Debt and that of our Restricted Subsidiaries (other than certain categories of Secured Funded Debt discussed below), plus
the aggregate amount of our Attributable Debt and that of our Restricted Subsidiaries relating to sale and leaseback transactions,
does not exceed 15% of our Consolidated Net Tangible Assets.
This limitation does not apply if the outstanding debt securities are secured equally and ratably with or prior to the new Secured Funded Debt.
The following categories of Secured Funded Debt will not be considered in determining whether we are in compliance with the covenant described in the first paragraph under “Restrictions on Secured Funded Debt”:
Secured Funded Debt of a Restricted Subsidiary owing to us or to one vote.
of our Wholly-owned Restricted Subsidiaries;
Secured Funded Debt resulting from a mortgage, lien or other similar encumbrance in favor of the U.S. government or any state or any instrumentality thereof to secure certain payments;
Secured Funded Debt resulting from a mortgage, lien or other similar encumbrance on property, shares of stock or Indebtedness of any company existing at the time that the company becomes one of our Subsidiaries;
Secured Funded Debt resulting from a mortgage, lien or other similar encumbrance on property, shares of stock or Indebtedness which (1) exists at the time that the property, shares of stock or Indebtedness is acquired by us or one of our Restricted Subsidiaries, including acquisitions by merger or consolidation, (2) secures the payment of any part of the purchase price of or construction cost for the property, shares of stock or Indebtedness or (3) secures any Indebtedness incurred prior to, at the time of, or within 120 days after, the acquisition of the property, shares of stock or Indebtedness or the completion of any construction of the property for the purpose of financing all or a part of the purchase price or construction cost of the property, shares of stock or Indebtedness, provided that, in all cases, we continue to comply with the covenant relating to mergers and consolidations discussed under the heading “—Restrictions on Mergers and Sales of Assets” below;
Secured Funded Debt resulting from a mortgage, lien or other similar encumbrance in connection with the issuance of revenue bonds on which the interest is exempt from federal income tax under the Internal Revenue Code; and
any extension, renewal or refunding of (1) any Secured Funded Debt permitted under the first paragraph under “—Restrictions on Secured Funded Debt” or (2) any Secured Funded Debt outstanding as of the date of the Indenture.
Restrictions on Sale and Leaseback Transactions
Under the Indenture, neither we nor any Restricted Subsidiary may enter into any sale and leaseback transaction involving a Principal Domestic Manufacturing Property, except a sale by a Restricted Subsidiary to us or another Restricted Subsidiary or a lease not exceeding three years, by the end of which we intend to discontinue use of the property, and except for any transaction with a local or state authority that provides financial or tax benefits, unless:
the net proceeds of the sale are at least equal to the fair market value of the property; and
within 120 days of the transfer, or two years if we hold the net proceeds of the sale in cash or cash equivalents, we purchase and retire debt securities and/or repay Funded Debt and/or make expenditures for the expansion, construction or acquisition of a Principal Domestic Manufacturing Property at least equal to the net proceeds of the sale.
In addition, the restriction does not apply if the aggregate principal amount of the fair market value of the property transferred in a sale and leaseback transaction and all Secured Funded Debt does not exceed 15% of our Consolidated Net Tangible Assets.
Restrictions on Mergers and Sales of Assets
The presence, eitherIndenture generally permits a consolidation or merger between us and another entity. It also permits the sale or transfer by us of all or substantially all of our property and assets. These transactions are permitted so long as:
the resulting or acquiring entity, if other than us, is organized and existing under the laws of a United States jurisdiction and assumes all of our responsibilities and liabilities under the Indenture, including the payment of all amounts due on the debt securities and performance of the covenants in personthe Indenture;
immediately after the transaction, and giving effect to the transaction, no event of default under the Indenture exists;
steps have been taken to secure the debt securities equally and ratably with all indebtedness secured by a mortgage, lien or by properly executed proxy,other similar encumbrance if as a result of such transaction, our properties or assets or Restricted Subsidiaries’ properties or assets would become subject to such mortgage, lien or other similar encumbrance not permitted pursuant to the provisions discussed above under “—Restrictions on Secured Funded Debt” without equally and ratably securing the debt securities; and
we have delivered to the Trustee an officers’ certificate and an opinion of counsel, each stating that the transaction and, if a supplemental indenture is required in connection with the transaction, the supplemental indenture comply with the Indenture and that all conditions precedent to the transaction contained in the indenture have been satisfied.
If we consolidate or merge with or into any other entity or sell or lease all or substantially all of our assets according to the terms and conditions of the Indenture, the resulting or acquiring entity will be substituted for us in the Indenture with the same effect as if it had been an original party to the Indenture. As a result, such successor entity may exercise our rights and powers under the Indenture, in our name and, except in the case of a lease, we will be released from all our liabilities and obligations under the Indenture and under the debt securities and coupons.
Notwithstanding the foregoing provisions, we may transfer all of our property and assets to another corporation if, immediately after giving effect to the transfer, such corporation is our Wholly-owned Restricted Subsidiary and we would be permitted to become liable for an additional amount of Secured Funded Debt.
Modification and Waiver
Under the Indenture, certain of our rights and obligations and certain of the rights of the holders of the debt securities may be modified or amended with the consent of the holders of a majority of the total principal amount of the outstanding sharesdebt securities of MMC Common Stock entitledall series of debt securities affected by the modification or amendment, acting together as a class. However, the following modifications and amendments will not be effective against any holder without its consent:
a change in the stated maturity date of any payment of principal or interest;
a reduction in the principal amount of, or premium or interest on, any debt security or any change in the interest rate or method of calculating the interest rate applicable to voteany debt security;
a change in the premium payable upon redemption of any debt security;
a reduction in the amount of principal of an original issue discount debt security due and payable upon acceleration of the maturity of such debt security;
a change in place of payment where, or the currency in which, any payment on the debt securities is payable;
an impairment of a holder’s right to sue us for the enforcement of payments due on the debt securities; or
a reduction in the percentage of outstanding debt securities of any series required to consent to a modification or amendment of the Indenture or required to consent to a waiver of compliance with certain provisions of the Indenture or certain defaults under the Indenture.
Under the Indenture, the holders of at the Special Meeting is necessary to constitute a quorum at the Special Meeting.
8
If a quorum is not present at the Special Meeting, the shareholders present,
by vote ofleast a majority of the votes cast by shareholders entitled to vote
thereon, may adjourn the Special Meeting, and at any such adjourned meeting at
which a quorum is present any business may be transacted that might have been
transacted at the Special Meeting as originally held and proxies will be voted
thereat as directed.
PROXIES AND REVOCATION OF PROXIES. The enclosed proxy card permits each
shareholder to specify that shares be voted "FOR" or "AGAINST" (or "ABSTAIN"
from) the approval and adoption of the Merger Agreement and the Merger and the
approval, for tax purposes, of certain payments made under the Change-of-Control
ARRANGEMENTS. If properly signed and returned, and not revoked, a proxy
will be voted in accordance with its instructions. Where a signed proxy card is
returned, but no instructions are specified, the shares will be voted FOR
approval and adoption of the Merger Agreement and the Merger and FOR the
approval of payments under the Change-of-Control Arrangements.
Each shareholder may revoke a previously granted proxy at any time before it
is exercised by filing with MMC's Secretary a revoking instrument or a duly
executed proxy bearing a later date. The powers of the proxy holders will be
suspended if the person executing the proxy attends the Special Meeting in
person and so requests. Attendance at the Special Meeting will not, in itself,
constitute revocation of a previously granted proxy.
PURPOSES OF SPECIAL MEETING. At the Special Meeting, shareholders of MMC
will be asked to consider and vote on proposals (i) to approve and adopt the
Merger Agreement and the Merger, (ii) to approve, for tax purposes, certain
payments under the Change-of-Control Arrangements, and (iii) for such other
matters as may be properly brought before the meeting.
CERTAIN VOTING INFORMATION. As of November 3, 1997, MMC's directors and
executive officers, as a group, beneficially owned 179 shares (or approximately
0.3%)total principal amount of the outstanding MMC Common Stock entitleddebt securities of any series of debt securities may waive compliance by us with certain restrictive provisions of the Indenture, on behalf of all holders of all series of debt securities to votewhich such restrictive provision applies.
Under the Indenture, the holders of at least a majority of the Special
Meeting. Certain significant shareholders, who astotal principal amount of November 3, 1997,
beneficially ownedthe outstanding debt securities may, on behalf of all holders of such series of debt securities, waive any past default under the Indenture, except:
a default in the aggregate 28,711 outstanding shares (or approximately
52.4%) of MMC Common Stock entitled to vote at the Special Meeting, have
executed voting agreements with ADM by which they have agreed to vote their
shares of MMC Common Stock "FOR" approval and adoptionpayment of the Merger Agreement
and the Merger. All directors and executive officersprincipal of, MMC have indicated
orallyor any premium or interest on, any debt securities of that they will vote all outstanding shares of MMC Common Stock
beneficially owned by them "FOR" approval and adoptionseries; or
a default under any provision of the Merger Agreement
andIndenture which itself cannot be modified or amended without the Merger.
OTHER MATTERS. Representatives of Deloitte & Touche LLP, MMC's independent
auditors, are expected to be present at the Special Meeting. See "Independent
Accountants."
REQUIRED VOTE
The affirmative voteconsent of the holders of two-thirdseach outstanding debt security of that series.
Events of Default
“Event of Default,” when used in the Indenture with respect to any series of debt securities, means any of the following:
failure to pay interest on any debt security of that series for 30 days after the payment is due;
failure to pay the principal of, or any premium on, any debt security of that series when due;
failure to deposit any sinking fund payment on debt securities of that series when due;
failure to perform any other covenant in the Indenture that applies to debt securities of that series for 90 days after we have received written notice of the failure to perform in the manner specified in the Indenture;
default in respect of any Indebtedness for money borrowed by us or any consolidated Subsidiary, or under any mortgage, indenture or instrument under which such Indebtedness is issued or secured, including a default with respect to debt securities of any other series, which default results in the acceleration of Indebtedness with an aggregate outstanding principal amount in excess of $50,000,000, unless the acceleration is rescinded, or such debt is paid or waived within 10 days after we have received written notice of the default in the manner specified in the Indenture;
certain events in bankruptcy, insolvency or reorganization; or
any other Event of Default that may be specified for the debt securities of that series when that series is created.
If an Event of Default for any series of debt securities occurs and continues, the Trustee or the holders of at least 25% in aggregate principal amount of the outstanding shares
of MMC Common Stock is required to approve and adopt the Merger Agreement and
the Merger. The affirmative votedebt securities of the holdersseries may declare the entire principal of more than three-fourths ofall the outstanding shares of MMC Common Stock is required to approve, for tax
purposes, certain payments under the Change-of-Control Arrangements. Each share
of MMC Common Stock is entitled to one vote at the Special Meeting. See "General
Information--Vote Required at Special Meeting."
RECOMMENDATION OF THE MMC BOARD AND REASONS FOR THE MERGER
The Board of Directors of MMC has unanimously approved the Merger Agreement
and the transactions contemplated thereby and recommends that MMC shareholders
vote "FOR" approval and adoption of the Merger Agreement and the Merger. The
recommendation of the MMC Board is based upon its belief that the terms of the
Merger Agreement are fair to, and in the best interests of, MMC and its
shareholders and that the Merger will result in benefits to MMC's shareholders.
The MMC Board believes that the Merger offers the shareholders of MMC the
opportunity to receive thedebt securities of a publicly held
9
company that have liquidity in contrast to MMC Common Stock; an increase in the
value of their investment over the book value of MMC Common Stock; to
participate in the combined company, which is expected to have a greater
potential for profits and growth and future increases in shareholder value than
MMC could have alone; to take advantage of opportunities for growth and
diversification that are more readily available to ADM than to MMC on a
stand-alone basis; and to maximize the compatible operating philosophies of the
two companies and the synergies and potential operating efficiencies that could
result from the Merger. See "Background of the Merger" and "Recommendation of
the Board of Directors and Reasons for the Merger." In considering the
recommendation of the MMC Board with respect to the Merger, shareholders should
be aware that certain directors and officers of MMC have interests in the Merger
that are different from the interests of other MMC shareholders. See "The
Merger--Interests of Certain Persons in the Merger."
FAIRNESS OPINION WITH RESPECT TO THE MERGER
In its role as financial adviser to MMC, Merrill Lynch was asked by MMC to
render an opinion to the MMC Board as to whether the Exchange Ratio was fair to
the holders of MMC Common Stock, from a financial point of view, under the
Merger Agreement. On September 3, 1997 representatives of Merrill Lynch verbally
advised the MMC Board that, as of such date, the Exchange Ratio was fair to the
shareholders of MMC from a financial point of view. A written opinion, dated as
of September 3, 1997, was delivered to the MMC Board. See "Opinion of Merrill
Lynch, Pierce, Fenner & Smith Incorporated." A COPY OF THE MERRILL LYNCH
OPINION, DATED AS OF SEPTEMBER 3, 1997, IS ATTACHED AS EXHIBIT B TO THIS PROXY
STATEMENT/PROSPECTUS. THE SHAREHOLDERS OF MMC ARE URGED TO READ THE OPINION IN
ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED, THE ASSUMPTIONS MADE,
MATTERS CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN
BY MERRILL LYNCH IN CONNECTION THEREWITH. See "The Merger--Opinion of Merrill
Lynch, Pierce, Fenner & Smith Incorporated."
THE MERGER
CONVERSION OF SHARES. At the Effective Time, each outstanding share of MMC
Common Stock will be converted into the right to receive a number of shares of
ADM Common Stock, determined in accordance with the Exchange Ratio. See "The
Merger--General." The stockholders of ADM will continue to hold their shares of
capital stock of ADM without any change in the number, designation, terms, or
rights. For a summary of various differences between the rights of holders of
MMC Common Stock and the rights of holders of ADM Common Stock, see "Comparative
Rights of Shareholders of MMC and ADM."
The actual number of shares of ADM Common Stock that will be issued to the
shareholders of MMC in the Merger will be determined based upon the Base Value
and the Average Price of ADM Common Stock. The Base Value may be lower than
$5,400 if the shareholders' equity of MMC, determined under generally accepted
accounting principles, as of the date 15 days prior to the Closing Date, is less
than $265 million; provided, however, the Base Value will not be less than
$5,126.13. See "The Merger-- General."
EFFECTIVE TIME OF THE MERGER. Subject to the terms and conditions of the
Merger Agreement, the Merger is expected to become effective on December 11,
1997. See "The Merger--Effective Time and Effect of the Merger." If the Merger
has not become effective on or before February 28, 1998, the Merger Agreement
provides that either party may terminate the Merger Agreement. See "The
Merger--Amendment, Termination, and Waiver."
CONDITIONS TO THE MERGER. The obligations of ADM and MMC to effect the
Merger are subject to certain conditions, including, among other things, that
certain regulatory approvals have been obtained and that the Merger Agreement
and the Merger has been approved and adopted by the MMC shareholders with no
more than ten percent of MMC's shareholders demanding statutory dissenters'
rights. See "The Merger--Conditions to Consummation of the Merger" for a
discussion of conditions to the Merger. Any of the conditions to the obligation
of ADM or MMC to consummate the Merger may be waived or
10
modified by the party that is entitled to the benefits thereof. Neither ADM nor
MMC has any present intention to waive or modify any condition that it deems
material. Obtaining the affirmative vote of more than three-fourths of the
outstanding shares of MMC Common Stock for approval, for tax purposes, of
payments under the Change-of-Control Arrangements is not a condition to the
Merger.
MMC EMPLOYEE BENEFIT PLANS. Under the Merger Agreement, ADM has agreed to
assume, in accordance with their respective terms, certain of MMC's benefit
plans, programs, and arrangements. See "The Merger--Employee Benefit Plans."
AMENDMENT, TERMINATION, AND WAIVER. The Merger Agreement may be amended at
any time, provided that, after the Merger Agreement has been approved and
adopted by MMC's shareholders, it may not be amended to alter the number of
shares of ADM Common Stockseries to be exchanged for each share of MMC Common Stock or
in any other way that would have a material adverse effect on the rights of
MMC's shareholders, without their further approval. Under certain conditions,
the Merger Agreement may be terminated prior to the Effective Time, whether
before or after approval by the MMC shareholders. The conditions under which the
Merger Agreement may be terminated include termination by mutual consent of the
Boards of Directors of ADMdue and MMC; termination by either party if the Merger
has not been consummated on or before February 28, 1998; termination by either
party upon the failure of MMC to receive the requisite shareholder approval at
the Special Meeting, or adjournments thereof; termination by either party upon
the failure to meet any condition to the terminating party's obligation to
consummate the Merger that has not been waived or cured within the prescribed
cure period; and termination by either party if a final unappealable order to
prevent the Merger or an award of substantial damages is entered. The Merger
Agreement may also be terminated by either ADM or MMC if the recommendation of
the MMC Board in support of the Merger is withdrawn or modified in a manner
detrimental to ADM. See "The Merger--Conditions to Consummation of the Merger"
and "The Merger-- Amendment, Termination, and Waiver."
SOLICITATION OF THIRD-PARTY OFFERS. In the Merger Agreement, MMC has agreed
not to initiate, solicit, negotiate or encourage proposals or offers, or provide
any confidential information relating to any acquisition of all or any
substantial portion of the business or properties of MMC. MMC is permitted to
supply information to third parties and engage in discussions or negotiations
with third parties relating to such an acquisition transaction, or modify or
withdraw its recommendation of the Merger, after reasonable notice to ADM, if
the MMC Board, after consultation with Merrill Lynch, determines in good faith
that the third party's Acquisition Proposal is bona fide and superior to that
offered in the Merger; if the MMC Board determines in good faith, upon the
advice of counsel, that such action is necessary for the MMC Board to comply
with its fiduciary duties to its shareholders under Illinois Law; and if the MMC
Board receives an executed confidentiality agreement from the third party. If
these conditions are met with respect to a third-party offer, the Merger
Agreement provides that ADM has the right to match the offer andpayable immediately, except that, if the MMC
Board determines that this matching proposalEvent of Default is at least equal tocaused by certain events in bankruptcy, insolvency or reorganization, the third-party offer, then the MMC Board must accept ADM's offer. See "The
Merger--No Solicitationentire principal of Acquisition Transactions."
REGULATORY APPROVALS. Consummationall of the Merger is conditioned upon, among
other things, the expiration or early terminationdebt securities of the relevant waiting period
underseries will become due and payable immediately without any act on the HSR Act. On , 1997, the parties were informed by the FTC that
they had received early terminationpart of the relevant waiting period under the HSR
Act with respect to the Merger. See "The Merger-- Certain Legal Matters."
SURRENDER OF SHARE CERTIFICATES. After the Effective Time, each MMC
shareholder will be entitled to receive, upon surrender of certificates
previously representing shares of MMC Common Stock, certificates representing
the number of full shares of ADM Common Stock to which the shareholder is
entitled under the Merger Agreement. See "The Merger--General" and "The
Merger--Exchange of Shares." SHAREHOLDERS OF MMC SHOULD NOT SURRENDER THEIR
STOCK CERTIFICATES UNTIL THEY RECEIVE TRANSMITTAL MATERIALS, WHICH WILL BE
MAILED IMMEDIATELY AFTER THE EFFECTIVE TIME.
11
ACCOUNTING TREATMENT. The Merger will be accounted for under the purchase
method of accounting.
BUSINESS AND MANAGEMENT AFTER THE MERGER. After the Effective Time, the
directors of MMC as the surviving corporation will be Charles T. Bayless, John
D. McNamara, and Douglas J. Schmalz, and its officers will be John D. McNamara,
President; David J. Smith, Vice President and Secretary; Scott A. Roberts,
Assistant Secretary; and Charles P. Archer, Treasurer. All such new officers and
directors are currently officers of ADM. ADM intends to operate MMC in a manner
substantially consistent with its current operations. ADM will carefully review
the operations of MMC in an attempt to identify opportunities for expense
reduction through the use of shared resources with ADM. See "RecommendationTrustee or holders of the Board of Directors and Reasons for the Merger" and "The Merger--Business and
Management After the Merger." After the Effective Time, the principal executive
offices of MMC will continue to be at 1000 North 30th Street, Quincy, Illinois
62301.
DISSENTERS' RIGHTSdebt securities. If certain statutory conditions are met, an MMC shareholder will be entitled
to demand appraisal of his or her shares of MMC Common Stock in accordance with
Illinois Law. A shareholder who wishes to exercise such rights must deliver to
MMC before the Special Meeting a written demand for payment for his or her
shares of MMC Common Stock and must not vote in favor of the Merger at the
Special Meeting. Consummation of the Merger is conditioned, however, on no more
than ten percent of MMC's shareholders demanding such rights. See "Dissenters'
Rights."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to be a tax-free reorganization under Section 368(a)
of the Code such that no gain or loss would be recognized by the holders of MMC
Common Stock to the extent they receive ADM Common Stock in exchange for their
MMC Common Stock in the Merger. It is a condition to MMC's obligation to
consummate the Merger that it receive a tax opinion from Winston & Strawn,
special tax counsel to MMC, dated as of the Closing Date, to the effect that the
Merger qualifies as a reorganization under Section 368(a) of the Code. If the
Merger does not qualify as a reorganization, the exchange of shares in the
Merger would be taxable. See "The Merger--Certain Federal Income Tax
Consequences."
COMPARATIVE RIGHTS OF MMC SHAREHOLDERS BEFORE AND AFTER THE MERGER
The rights of the shareholders of MMC are currently governed by Illinois Law
and MMC's Articles and Bylaws. At the Effective Time, MMC shareholders will
become stockholders of ADM and their rights as ADM stockholders will then be
governed by Delaware Law and ADM's Certificate and Bylaws. There are various
differences between the rights of MMC shareholders and the rights of holders of
ADM Common Stock. See "Comparative Rights of Shareholders of MMC and ADM."
SHARE PRICE AND DIVIDEND DATA
Shares of ADM Common Stock are listed and principally traded on the NYSE.
There has been no public trading market for MMC Common Stock. However, certain
appraisals have been made periodically by an independent appraisal firm for the
purpose of valuing shares of MMC Common Stock held by
12
the MMC Employees' Profit Sharing Plan as discussed below. The following table
sets forth for the calendar periods indicated the high and low sale prices of
ADM Common Stock and the cash dividends paid per share:
ADM COMMON STOCK
---------------------------------
HIGH LOW DIVIDEND
--------- --------- -----------
1995.......................................................... $ 18.13 $ 13.00 $ .112
1996.......................................................... 22.00 14.88 .184
1997
First Quarter............................................... 21.88 16.50 .048
Second Quarter.............................................. 22.88 16.25 .048
Third Quarter............................................... 24.63 20.31 .048
With respect to MMC Common Stock, MMC paid dividends totaling $250 in each
of fiscal 1996 and fiscal 1997. No dividends were paid for the first quarter of
fiscal 1998. The value of the MMC Common Stock, appraised quarterly by an
independent appraisal firm for the purpose of valuing shares of MMC Common Stock
held by the MMC Employees' Profit Sharing Plan, ranged from $5,500 to $5,000 in
fiscal 1996 and $5,000 to $4,000 in fiscal 1997. For the first quarter of fiscal
1998 the appraised value was $4,000. After the conclusion of that quarter, the
appraised value of $4,300 was issued. These valuations were not prepared with
the intent that they serve as an estimate of the price that would be realized
through a sale of MMC to a third party and do not represent necessarily the
price paid for or received in the purchase or sale of shares of MMC Common Stock
during the corresponding periods. The appraisals were prepared solely to assist
the Administrative Committee of the MMC Employees' Profit Sharing Plan in
fulfilling its responsibilities to value the shares of MMC Common Stock held by
the plan.
On September 11, 1997, the last trading day before the public announcement
of the Merger, the closing sale price per share of ADM Common Stock as reported
on the NYSE Composite Tape was $22.625. On , 1997, the last trading day for
which closing sale prices were available at the time of the printing of this
Proxy Statement/Prospectus, the closing sale price per share of ADM Common Stock
as reported on the NYSE Composite Tape was $ . If the Average Price were
equal to the closing sale price per share of ADM Common Stock on , 1997,
shareholders of MMC who are to receive shares of ADM Common Stock would be
entitled to receive shares of ADM Common Stock, having a market value of
$ , in exchange for each share of MMC Common Stock held by them (assuming
MMC shareholders' equity as of 15 days prior to the Closing Date is at least
$265 million). The aggregate number of shares of ADM Common Stock to be received
by each shareholder of MMC will be rounded to the nearest whole number of
shares. See "The Merger--General" for a discussion of the determination of the
actual Average Price and Exchange Ratio.
Listing on the NYSE of the shares of ADM Common Stock issuable in connection
with the Merger is a condition to its consummation.
SELECTED HISTORICAL FINANCIAL DATA
The following tables set forth selected historical financial data of ADM and
MMC for the periods presented. The selected historical financial data of ADM as
of and for each of the five years in the period ended June 30, 1997 shown below
have been derived from the consolidated financial statements of ADM. The
selected historical financial data of MMC as of and for each of the five years
ended March 29, 1997, and for the first fiscal quarter ended June 28, 1997,
compared with the same period in fiscal 1997, shown below have been derived from
the consolidated financial statements of MMC provided by management. These
historical data are not necessarily indicative of results to be expected after
the Merger is consummated and should be read in conjunction with the information
set forth under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the ADM 10-K and the separate
consolidated financial statements of ADM and the notes thereto incorporated
herein by reference and the information with respect to MMC set forth in this
Proxy
13
Statement/Prospectus under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the separate consolidated
financial statements of MMC and the notes thereto attached to this Proxy
Statement/Prospectus.
ADM
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------------
1997 1996 1995 1994 1993
-------------- -------------- -------------- -------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net sales and other operating
income......................... $ 13,853,262 $ 13,239,839 $ 12,555,403 $ 11,158,479 $ 9,578,370
Net earnings.................... 377,309 695,912 795,915 484,069 567,527
Net earnings per common share... .66 1.20 1.34 .80 .91
Total assets.................... 11,354,367 10,449,869 9,756,887 8,746,853 8,404,111
Long-term debt.................. 2,344,949 2,002,979 2,070,095 2,021,417 2,039,143
Cash dividends per common
share.......................... .19 .16 .08 .05 .05
Net earnings for 1997 includes a charge of $.31 per share for fines and
litigation settlements arising out of the United States Department of Justice
investigation of the Company's lysine and citric acid products as well as
resolution of a securities suit brought by shareholders.
Net earnings for 1993 includes a credit of $68 million or $.11 per share and
a charge of $35 million or $.06 per share for the cumulative effects of changes
in accounting for income taxes and postretirement benefits, respectively.
MMC
YEAR ENDED
-----------------------------------------------------------------------------------
MARCH 29, 1997 MARCH 30, 1996 MARCH 25, 1995 MARCH 26, 1994 MARCH 27, 1993
--------------- --------------- --------------- --------------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net Sales.......................... $ 1,157,859 $ 973,465 $ 904,321 $ 810,319 $ 820,047
Net Income from Continuing
Operations (1).................... 6,780 20,930 13,088 14,824 32,772
Net Income (Loss) from Discontinued
Operations........................ 93 (1,550) (55) 0 0
Cumulative Effect of Accounting
Change In Retiree Health and Life
Insurance, net of tax............. 0 0 0 (31,853) 0
Net Income (Loss) (1).............. 6,873 19,380 13,033 (17,029) 32,772
Net Income from Continuing
Operations Per Share.............. 122 360 211 238 526
Net Income (Loss) Per Share........ 124 334 210 (273) 526
Total Assets....................... 573,465 544,962 486,513 494,805 440,144
Long-Term Liabilities.............. 91,148 85,810 72,237 57,076 17,539
Cash Dividends Per Share........... 250 250 250 250 250
- --------------------------
(1) The following nonrecurring items are included in Net Income from Continuing
Operations: Gains from Benefit Plans Curtailment and Plan Changes
(pre-tax)--1997, $13,626; 1996, $17,080; Facility Closures and Restructuring
(pre-tax)--1996, ($1,873); 1995, ($4,942); 1994, ($6,607); 1993 Flood Loss
and Subsequent Insurance Recovery--1995, $1,103; 1994, ($2,035).
14
MOORMAN MANUFACTURING COMPANY
SUPPLEMENTARY FINANCIAL INFORMATION
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FY 1998 FY 1997 FY 1996
----------- ----------------------------------------------------------------- -----------
1ST QTR. 1ST QTR. 2ND QTR. 3RD QTR. 4TH QTR. TOTAL 1ST QTR.
----------- ----------- ----------- ----------- ----------- ------------- -----------
Net Sales......................... $ 252,215 $ 245,968 $ 281,661 $ 324,441 $ 305,789 $ 1,157,859 $ 205,857
Gross Profit...................... 25,687 25,787 24,456 37,965 35,006 123,214 34,279
Net Income (Loss) From Continuing
Operations....................... (2,292) (1,152) (1,440) 6,812 2,560 6,780 2,523
Net Income (Loss)................. (2,292) (1,154) (1,440) 6,812 2,655 6,873 2,242
Net Income (Loss) From Continuing
Operations Per Share............. (41.85) (20.40) (25.97) 122.25 46.50 122.37 41.56
Net Income (Loss) Per Share....... (41.85) (20.44) (25.98) 122.25 48.21 124.05 36.93
Cash Dividends Per
Share............................ 0 25 25 80 120 250 25
Book Value Per Share.............. $ 4,976 $ 5,018
2ND QTR. 3RD QTR. 4TH QTR TOTAL
----------- ----------- ----------- -----------
Net Sales......................... $ 216,806 $ 264,237 $ 286,565 $ 973,465
Gross Profit...................... 27,935 39,196 33,853 135,263
Net Income (Loss) From Continuing
Operations....................... 155 4,202 14,050 20,930
Net Income (Loss)................. (904) 3,940 14,102 19,380
Net Income (Loss) From Continuing
Operations Per Share............. 3.72 72.26 242.78 360.32
Net Income (Loss) Per Share....... (14.31) 67.55 243.46 333.64
Cash Dividends Per
Share............................ 25 80 120 250
Book Value Per Share.............. $ 5,134
15
GENERAL INFORMATION
THE SPECIAL MEETING
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies by the MMC Board for use at the Special Meeting to be
held on December 8, 1997, and at any adjournments or postponements of that
meeting. This Proxy Statement/Prospectus also constitutes the Prospectus of ADM
with respect to the shares of ADM Common Stock to be issued in connection with
the Merger.
The Special Meeting has been called for the purpose of considering and
voting upon a proposal to approve and adopt the Merger Agreement and the Merger,
whereby ADMAC will be merged with and into MMC, with MMC continuing its
operations as a wholly-owned subsidiary of ADM. The Merger will be accomplished
under the Merger Agreement by a statutory merger of ADMAC with and into MMC in
which all the outstanding shares of MMC Common Stock will be converted into the
right to receive shares of ADM Common Stock. The stockholders of ADM will
continue to hold their shares of ADM Common Stock without any change in number,
designation, terms, or rights. Under the Merger Agreement, holders of MMC Common
Stock will become stockholders of ADM and will receive a number of shares of ADM
Common Stock (rounded to the nearest whole share) for each outstanding share of
MMC Common Stock determined pursuant to the Average Price and the Exchange
Ratio. See "The Merger-- General" and "The Merger--Exchange of Shares."
MMC's shareholders are also being asked to consider and vote upon a proposal
to approve, for tax purposes, payments to members of MMC's senior management
under the Change-of-Control Arrangements. The purposes of the shareholder
approval are (i) to permit MMC to report the full amount of the payments under
the Change-of-Control Arrangements as deductions for income tax purposes and
(ii) to make it so that members of MMC's senior management receiving such
payments should not be required to pay excise taxes on any portion of the
payments. Shareholder approval for the payments under the Change-of-Control
Arrangements is not a condition to either the consummation of the Merger or the
payment by MMC of all such amounts due under the Change-of-Control Arrangements,
since MMC is contractually obligated to make such payments. If consummated, the
Merger would constitute a change of control of MMC. The Change-of-Control
Arrangements include employment agreements, change-of-control agreements,
termination agreements, agreements entered into pursuant to the MMC Restricted
Stock Unit Plan, the MMC Restricted Stock Unit Plan for Outside Directors and
certain retirement benefits.
In addition to the foregoing proposals, MMC's shareholders may consider such
other matters as may be properly brought before the Special Meeting.
VOTE REQUIRED AT SPECIAL MEETING
Approval and adoption of the Merger Agreement and the Merger requires the
affirmative vote of two-thirds of the outstanding shares of MMC Common Stock
entitled to vote thereon. Holders of MMC Common Stock who dissent from the
approval and adoption of the Merger Agreement and the Merger may demand
appraisal rights under Illinois Law if certain procedural criteria are met. See
"Dissenters' Rights." Approval of the Change-of-Control Arrangements requires
the affirmative vote of the holders of three-fourths of the outstanding shares
of MMC Common Stock entitled to vote thereon.
The MMC Board has fixed the close of business on November 3, 1997 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Special Meeting or any and all adjournments or postponements
thereof. At that date, there were 54,770 outstanding shares of MMC Common Stock
entitled to vote at the Special Meeting and the record holders on that date will
be entitled to one vote for each share held by them.
On November 3, 1997 MMC's directors and executive officers, as a group,
beneficially owned 179 shares (or approximately 0.3%) of the outstanding shares
of MMC Common Stock on that date. The MMC Employee's Profit Sharing Plan and CMF
Foundation beneficially own in the aggregate 28,711 shares (or approximately
52.4%) of the outstanding MMC Common Stock entitled to vote at the Special
16
Meeting. The MMC Employee's Profit Sharing Plan and CMF Foundation have executed
voting agreements with ADM by which such MMC shareholders have agreed to vote
their shares of MMC Common Stock "FOR" approval and adoption of the Merger
Agreement and the Merger. All directors and executive officers of MMC have
indicated orally that they will vote all outstanding shares of MMC Common Stock
beneficially owned by them "FOR" approval and adoption of the Merger Agreement
and the Merger.
The presence at the Special Meeting in person or by proxy ofdeclaration occurs, the holders of a majority of the shares of MMC Common Stock outstanding on November 3, 1997 is
required to constitute a quorum. At that date, there were 54,770 outstanding
shares of MMC Common Stock. For these purposes, shares of MMC Common Stock that
are present or represented by proxy and entitled to vote at the Special Meeting
will be counted for quorum purposes regardless of whether the holderaggregate principal amount of the shares or proxy failsoutstanding debt securities of that series can, subject to vote on a matter or votes "ABSTAIN" ("abstentions"). A
brokerconditions, rescind the declaration.
The Indenture requires us to file an officers’ certificate with discretionary authority failingthe Trustee each year that states, to exercise its discretionary
authority to vote shares with respect to a matter, but exercising its
discretionary authority to vote on at least one other matter ("broker
non-votes"), will be counted as present for quorum purposes but will not be
counted as present and entitled to vote on a matter, for voting purposes. Only
shares of MMC Common Stock voted for the approval of a matter, excluding
abstentions and broker non-votes, will be counted as voting for approval in
determining whether a matter is approved by the shareholders of MMC. As a
consequence, abstentions and broker non-votes will have the same effect as votes
against approvalknowledge of the Merger.
If a quorum is not present at the Special Meeting, the shareholders present,
by vote of a majority of the votes cast by shareholders entitled to vote
thereon, may adjourn the Special Meeting, and at any such adjourned meeting at
which a quorum is present any business may be transacted that might have been
transacted at the Special Meeting as originally called and proxies will be voted
thereat as directed.
SOLICITATION OF PROXIES
Directors,certifying officers, and employees of MMC may solicit proxies from
shareholders by personal contact, special letter, telephone, or facsimile
transmission. MMC will bear the expenses of solicitation on its behalf.
Directors, officers, and other employees of MMC will not be specially
compensated for the solicitation of proxies. Brokerage houses and other
custodians, nominees, and fiduciaries will be requested to forward soliciting
materials to the beneficial owners of MMC Common Stock owned of record by such
organizations, and MMC may pay the reasonable expenses incurred in forwarding
these materials.
A proxy relating to the Special Meeting may be revoked by the shareholder at
any time before it is exercised; however, mere attendance at the Special Meeting
will not itself have the effect of revoking the proxy. An MMC shareholder may
revoke a proxy before it is voted by executing and filing a subsequently dated
proxy with MMC, by sending written notice of revocation received by MMC not
later than the close of business on December 1, 1997, or by the holder of record
voting in person at the Special Meeting.
A proxy in the form accompanying this Proxy Statement/Prospectus, when
properly executed and returned, will be voted in accordance with the
instructions contained therein. A properly executed proxy on which no instruction has been indicated will be voted for approval and adoption of the
Merger Agreement and the Merger and for the approval of certain paymentsdefaults exist under
the Change-of-Control Arrangements.
OTHER MATTERS
At the date of this Proxy Statement/Prospectus, the MMC Board does not know
of any business to be presented at the Special Meeting other than as set forth
in the notice accompanying this Proxy Statement/Prospectus. If any other matters
properly come before the Special Meeting, it is intended that the shares
represented by proxies will be voted with respect to those matters in accordance
with the judgment of the persons authorized to vote those proxies.
17
ITEM 1. THE MERGER
BACKGROUND OF THE MERGER
The terms and conditions of the Merger Agreement were determined through
arm's-length negotiations between the senior managements and Boards of Directors
of MMC and ADM. In determining the form of the transaction and calculation of
the consideration, numerous factors were reviewed by the senior managements and
Boards of Directors of MMC and ADM. See "Recommendations of the Boards of
Directors and Reasons for the Merger." The following is a brief discussion of
those negotiations and certain related events.
Historically, the MMC Board has not sought or invited proposals from third
parties to acquire MMC although business combinations have been discussed among
the MMC Board and with third parties from time to time. The MMC Board has
followed a long-term strategic objective of internal and external growth and
diversification of MMC as a private, independent company. Since fiscal 1996, the
MMC Board has appointed annually a Strategic Initiative Review Committee, which
has reviewed from time to time and reported to the entire MMC Board on issues
related to long-term strategic planning. The current members of the committee
are Thomas L. Shade (Chairman), William D. George, Jr., J. Douglas Gray and
Robert J. Ireland. As part of its strategy, MMC continuously evaluates and
maintains a variety of contacts with members of its industry for potential
business combinations, joint ventures and acquisitions and dispositions of
businesses and business units.
In early July 1997, an agent of ADM contacted Thomas M. McKenna, President,
Chief Executive Officer and a director of MMC, to indicate that ADM may be
interested in a business combination with MMC. Mr. McKenna advised the ADM agent
of MMC's long-term strategy. As a result of this unsolicited contact and at the
request of ADM, representatives of ADM's top management met with Mr. McKenna and
Alfred L. Williams, Jr., Vice President of Finance, Chief Financial Officer, and
Treasurer of MMC, in mid-July to discuss ADM's interest in a business
combination with MMC.
On July 18, 1997, Mr. McKenna consulted with the members of the Strategic
Initiative Review Committee regarding his discussions with ADM concerning a
possible business combination. Representatives of ADM and MMC met on July 21,
1997, to discuss the general business terms of such a business combination.
During the MMC Board's Strategic Planning Retreat and meeting on July 23
through July 25, 1997, MMC's senior management reported first to the Strategic
Initiative Review Committee and later to the entire MMC Board concerning its
discussions with ADM and the proposed terms of a possible business combination.
Three investment banking firms, including Merrill Lynch, made presentations to
the MMC Board concerning the business of MMC and the strategic alternatives
available to it. After the investment bankers' presentations and an extensive
review of the proposed terms, the MMC Board affirmed management's authority to
proceed with the negotiations. Following the decision to proceed, the MMC Board
selected Merrill Lynch to act as MMC's financial adviser in connection with a
business combination with a third party, such as the Merger, subject to the
negotiation and execution of a satisfactory letter agreement concerning the
engagement.
MMC's management along with its legal advisers then negotiated the detailed
terms, provisions and conditions of the Merger Agreement and related agreements.
MMC's management reported again to the MMC Board during a special meeting on
August 22, 1997. Management and its legal and financial advisers reviewed the
proposed terms of the Merger Agreement, and the Board engaged in lengthy
discussions about the merits and terms of the Merger and authorized management
to continue to negotiate the Merger Agreement.
On August 28, 1997, MMC formally engaged Merrill Lynch to act as its
financial adviser in connection with a business combination with a third party,
such as the Merger, pursuant to a letter agreement of the same date. On
September 3, 1997, the MMC Board held a special meeting and received a detailed
18
report of the terms and provisions of the Merger Agreement and related
agreements as negotiated by MMC's management and legal advisers and Merrill
Lynch's oral presentation and written opinion, based upon and subject to the
matters referred to therein, that the Exchange Ratio was fair from a financial
point of view to MMC's shareholders. The MMC Board then determined that the terms of the Merger Agreement andIndenture. The Trustee may withhold notice to the transactions contemplated thereby were
fairholders of debt securities of any default, except defaults in the payment of principal, premium, interest or any sinking fund installment, if it considers the withholding of notice to andbe in the best interests of MMC and its shareholders, and
accordingly, eachthe holders. For purposes of this paragraph, “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default under the directors approved the Merger Agreement and the Merger
and resolved to recommend that MMC's shareholders vote for the approval and
adoption of the Merger Agreement and the Merger at a special meeting of MMC's
shareholders to be held for that purpose. See "Recommendation of the Board of
Directors and Reasons for the Merger."
On Friday, September 12, 1997, the Merger Agreement was executed, and later
that day the parties issued a joint press release announcing the proposed
Merger.
Certain directors and officers of MMC have interests in the Merger different
from the interests of other MMC shareholders. See "The Merger--Interests of
Certain Persons in the Merger."
RECOMMENDATION OF THE BOARD OF DIRECTORS
AND REASONS FOR THE MERGER
The MMC Board believes that the terms of the Merger are fair to, and in the
best interests of, MMC and its shareholders. ACCORDINGLY, THE MMC BOARD HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER AND UNANIMOUSLY
RECOMMENDS THAT HOLDERS OF MMC COMMON STOCK VOTE "FOR" APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT AND THE MERGER. The MMC Board has retained the right, under
certain circumstances, to withdraw, modify, or amend the foregoing
recommendation of the MMC Board. See "The Merger--No Solicitation of Acquisition
Transactions."
The MMC Board believes that the Merger will permit the shareholders of MMC
to participate in a financially stronger, better diversified, cost efficient,
and more competitive combined company through a tax-free reorganization, with
taxes incurred only upon the ultimate sale of the shares of ADM Common Stock to
be received in the Merger. See "The Merger--Federal Income Tax Consequences."
In deciding to pursue a strategic business combination transaction with ADM
instead of remaining independent, the MMC Board evaluated with MMC senior
management their plans for the conduct of MMC's businesses on a stand-alone
basis. The analysis included a review of the historical financial condition and
results of operations of MMC and its subsidiaries, the profitability of various
lines of business, the current competitive environment in the agricultural
products industry, the changes required to be implemented to achieve
satisfactory profitability, and the achievability of strategic goals.
At its meeting on August 22, 1997, the MMC Board reviewed in detail the
proposed terms of the Merger Agreement with senior management and its financial
and legal advisers. Merrill Lynch answered questions from the MMC Board
concerning Merrill Lynch's analysis of the financial terms of the Merger.
On September 3, 1997, the MMC Board again discussed the proposed terms of
the Merger Agreement with senior management and its financial and legal
advisers. Merrill Lynch then delivered its opinion to the effect that the
Exchange Ratio in the Merger is fair to the shareholders of MMC from a financial
point of view (see "Opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated"). After deliberatingIndenture with respect to the Merger anddebt securities of the other
transactions contemplated by the Merger Agreement, considering, among other
things, the matters discussed herein and the opinion and presentation of Merrill
Lynch, the MMC Board unanimously determined the Merger to be advisable andapplicable series.
Other than its duties in the best interestscase of MMC and its shareholders and approvedan Event of Default, the Merger Agreement
and the transactions contemplated thereby.
19
In reaching its decisionTrustee is not obligated to approve and adopt the Merger Agreement on
September 3, 1997, the MMC Board consulted with MMC senior management and its
financial and legal advisers and considered many factors, including, but not
limited to, those listed above and the following:
(i) historical information on both a line of business and company-wide
basis regarding the financial condition, capital levels, asset quality, cash
flow, operations, earnings, businesses and prospects of MMC;
(ii) the fact that the MMC shareholders will exchange their shares of
MMC Common Stock for a security that is publicly traded and thus more
liquid;
(iii) the financial analyses and other information with respect to MMC
presented by MMC management, the Strategic Initiative Review Committee,
Merrill Lynch and others, as well as the MMC Board's own knowledge of MMC
and its businesses;
(iv) the current economic and competitive operating environment and the
opportunities for growth and diversification that are more readily available
to ADM than to MMC on a stand-alone basis;
(v) the potential effect on shareholder value of MMC continuing as an
independent entity compared to the effectexercise any of its combining with ADM in lightrights or powers under the Indenture at the request, order or direction of any holders of debt securities, unless the holders offer the Trustee reasonable indemnification. If reasonable indemnification is provided, then, subject to other rights of the factors summarized hereinTrustee, the holders of a majority in aggregate principal amount of the outstanding debt securities of any series may, with respect to the financial conditiondebt securities of that series, direct the time, method and prospects of MMC in the current economic environment (including risks
arising in connection with general industry conditions, general economic
conditions and general financial market conditions);
(vi) the opportunityplace of:
conducting any proceeding for MMC shareholders to participate in the combined
company in the Merger, which was expected to have a greater potential for
profits and growth and future increase in shareholder value than MMC could
have alone;
(vii) the presentations made by Merrill Lynch and the opinion of Merrill
Lynch, dated September 3, 1997, that the Exchange Ratio in the Merger is
fair, from a financial point of view,any remedy available to the holdersTrustee; or
exercising any trust or power conferred upon the Trustee.
The holder of MMC Common Stock
(see "Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated");
(viii) the strategic fit of the MMC and ADM businesses, the compatible
operating philosophies of the two companies and the synergies and potential
operating efficiencies discussed above that could result from ADM acquiring
MMC;
(ix) the MMC Board's review with its legal and financial advisers of the
provisions of the Merger Agreement, including the provisions in the Merger
Agreement that would permit the MMC Board, in the exercise of its fiduciary
duties, to supply information to, and to cooperate and negotiate a superior
Acquisition Proposal with, third parties following the execution of the
Merger Agreement, and to withdraw or modify its recommendation in favor of
the Merger (see "The Merger--No Solicitation of Acquisition Proposals");
(x) the expectation that the Merger would be tax free for federal income
tax purposes to MMC and its shareholders;
(xi) the various differences between the rights and preferences of the
holders of shares of MMC Common Stock and the holders of ADM Common Stock,
as discussed below under "Comparative Rights of Shareholders of MMC and
ADM";
(xii) the fact that the Merger is conditioned upon approval by the
holders of two-thirds of the outstanding shares of MMC Common Stock;
(xiii) the interests of certain officers and directors of MMC in the
Merger, including the matters described below under "The Merger--Interests
of Certain Persons in the Merger," and the fact that such officers and
directors have interests in the Merger that are different from the interests
of other MMC shareholders; and
20
(xiv) the fact that the Merger offers an attractive opportunity for the
MMC shareholders to receive a premium over the book value of MMC Common
Stock.
The foregoing discussion of the information and factors considered by the
MMC Board is not intended to be exhaustive, but is believed to include all of
the material factors considered by the MMC Board in connection with its
evaluation of the Merger. In view of the wide variety of factors considered and
the complexity of such matters, the MMC Board did not attempt to quantify, rank
or otherwise assign relative weights to the specific factors it considered in
reaching its decision. In addition, the MMC Board did not undertake to make any
specific determination as to whether any particular factor (or any aspectdebt security of any particular factor) was favorable or unfavorableseries will have the right to its ultimate determination
but, rather, conducted a wide ranging discussion of the factors described above,
including asking questions of MMC's management and its legal and financial
advisers, following which the MMC Board reached a general consensus that the
Merger was in the best interests of MMC and its shareholders. Individual members
of the MMC Board may have felt differently about, and may have given different
weight to, different factors.
On balance, however, the discussions among the members of the MMC Board
evidenced the general view that the factors enumerated above were regarded as
supporting the MMC Board's determination to approve the Merger and the Merger
Agreement.
THE BOARD OF DIRECTORS OF MMC HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND THE MERGER AS BEING IN THE BEST INTERESTS OF SHAREHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND THE MERGER.
OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
GENERAL
Merrill Lynch has rendered a written opinion dated September 3, 1997 to the
MMC Board that the Exchange Ratio in the Merger is fair, from a financial point
of view, to the holders of the MMC Common Stock. THE FULL TEXT OF MERRILL
LYNCH'S OPINION IS ATTACHED HERETO AS EXHIBIT B. THE SHAREHOLDERS OF MMC ARE
URGED TO READ THE OPINION IN ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES
FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED, AND QUALIFICATIONS AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, BY MERRILL LYNCH IN CONNECTION THEREWITH.
THE OPINION OF MERRILL LYNCH IS ADDRESSED TO THE MMC BOARD AND DOES NOT ADDRESS
THE MERITS OF THE UNDERLYING DECISION BY MMC TO ENGAGE IN THE MERGER AND DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY MMC SHAREHOLDER AS TO HOW SUCH
SHAREHOLDER SHOULD VOTE ON THE PROPOSED MERGER OR AS TO ANY OTHER ACTION SUCH
SHAREHOLDER SHOULD TAKE IN CONNECTION WITH THE PROPOSED MERGER.
Merrill Lynch is a globally recognized investment banking firm and, as part
of its investment banking business, is continually engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
underwritings, distributions of securities and similar activities. Merrill Lynch
was selected by the MMC Board on the basis of its qualifications, reputation and
experience.
Merrill Lynch was engaged by the MMC Board as an independent contractor to
provide general financial advisory servicesbegin any proceeding with respect to the Merger. Merrill
Lynch was not authorized by MMCIndenture or for any remedy only if:
the MMC Board to solicit, nor did it solicit,
third-party indicationsholder has previously given the Trustee written notice of interest for the acquisitiona continuing Event of all or any part of
MMC. Except for the foregoing, no limitations were placed on Merrill Lynch by
MMCDefault with respect to the investigationdebt securities of that series;
the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made or the procedures followed by Merrill
Lynch in preparing and rendering its opinion.
Merrill Lynch did not express any opinion as to what value the ADM Common
Stock will have when it is issued in the Merger or asa written request to the price Trustee to begin such proceeding;
the ADM
Common Stock will trade atholder has offered to the Trustee reasonable indemnification;
the trustee has not started such proceeding within 60 days after receiving the announcementrequest; and
the Trustee has not received directions inconsistent with such request from the holders of a majority in aggregate principal amount of the proposed Merger or
after consummation of the Merger.
21
The opinion of Merrill Lynch is necessarily based on information available,
and financial, stock market, economic and other conditions and circumstances as
they existed and could be evaluated, as of the date of the opinion. Although
subsequent developments may affect the opinion, Merrill Lynch does not have any
obligation to update, revise or reaffirm the opinion.
Merrill Lynch will receive a fee from MMC for its services. See "--Fees
Payable to Merrill Lynch" below. In addition, MMC has agreed to indemnify
Merrill Lynch for certain liabilities arising out of its engagement. Merrill
Lynch has advised MMC that, in the ordinary course of its securities business,
it may actively tradeoutstanding debt or equity securities of ADM for its own account and
the accounts of its customers. Accordingly, Merrill Lynch from time-to-time may
hold a long or short position in ADM securities.
MATERIALS AND INFORMATION CONSIDERED WITH RESPECT TO THE MERGER
In connection with its opinion, Merrill Lynch, among other things: (i)
reviewed MMC's audited financial information for the five fiscal years ended
March 29, 1997 and MMC's unaudited financial information for the four-month
periods ending August 2, 1997 and 1996; (ii) reviewed ADM's Annual Reports to
Shareholders, Forms 10-K and related financial information for the five fiscal
years ended June 30, 1996 and ADM's Forms 10-Q and the related unaudited
financial information for the quarterly periods ending September 30, 1996;
December 31, 1996; and March 31, 1997; (iii) reviewed certain information,
including financial forecasts, relating to the business, earnings, cash flow,
assets, and prospects of MMC, furnished to Merrill Lynch by MMC; (iv) conducted
discussions with members of senior management of MMC concerning its respective
businesses and prospects; (v) reviewed the market prices and valuation multiples
for ADM Common Stock and compared them withthat series during those of certain publicly traded
companies that Merrill Lynch deemed relevant; (vi) reviewed the results of
operations of MMC and ADM and compared them with those of certain companies
which Merrill Lynch deemed to be relevant; (vii) compared the proposed financial
terms of the transactions contemplated by the Merger Agreement with the
financial terms of certain other mergers and acquisitions which Merrill Lynch
deemed to be relevant; (viii) reviewed a draft dated August 27, 1997 of the
Merger Agreement; and (ix) reviewed such other financial studies and analyses
and performed such other investigations and took into account such other matters
as Merrill Lynch deemed necessary.
In preparing its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to it,
discussed with or reviewed by or for it, or publicly available and did not
assume any responsibility for independently verifying such information or
undertake an independent evaluation or appraisal of any of the assets or
liabilities of ADM. In addition, Merrill Lynch did not assume any responsibility
to conduct any physical inspection of the properties or facilities of ADM. With
respect to the financial forecast information furnished to or discussed with
Merrill Lynch by MMC, Merrill Lynch assumed that it had been reasonably prepared
and reflected the best currently available estimates and judgment of the
managements of MMC as to the expected future financial performance of MMC. While
Merrill Lynch did not receive any financial forecasts from, or relating to ADM,
Merrill Lynch has conducted discussions with management of ADM limited to the
possible existence of undisclosed conditions that may affect the market prices
at which ADM Common Stock has traded recently and such management's views as to
the accuracy and reasonableness of estimates and reports with respect to the
future financial and operating performance of ADM published by analysts. Merrill
Lynch's opinion is predicated on the Merger qualifying as a tax-free
reorganization for U.S. federal income tax purposes and assumes that the final
form of the Merger Agreement is substantially similar to the last draft reviewed
by it.
Set forth below is a brief summary setting forth the material analyses
presented by Merrill Lynch to the MMC Board in connection with its written
opinion as to the fairness, from a financial point of view, of the Exchange
Ratio on the date the MMC Board approved the Merger Agreement. Unless otherwise
specified, all ratios and other financial information described below are based
on financial data as of or for the 12 months ended August 2, 1997.
22
ANALYSIS OF SELECTED COMPARABLE PUBLICLY TRADED COMPANIES
Merrill Lynch compared certain financial and operating information and
ratios for MMC with the corresponding financial and operating information for
the following eleven publicly traded companies (the "Public Comparables") that
Merrill Lynch deemed to be reasonably comparable to MMC for purposes of this
analysis. The Public Comparables were American Rice, Inc.;
Archer-Daniels-Midland Company; ConAgra, Inc.; CPC International Inc.; DEKALB
Genetics Corporation; ERLY Industries Inc.; High Plains Corporation; Imperial
Holly Corporation; Midwest Grain Products, Inc.; Pioneer Hi-Bred International,
Inc.; and Riviana Foods Inc.
Merrill Lynch analyzed, among other things, the market price per share of
common stock of each Public Comparable as of August 26, 1997 and market
capitalization (defined to be the market value of the common stock plus
preferred equity at liquidation value, total debt and minority interests less
cash and marketable securities) as a multiple of average earnings before
interest, taxes, depreciation and amortization ("EBITDA") for the last three
fiscal years. Applying a range of multiples (which were derived from the Public
Comparable information analyzed by Merrill Lynch) of 9.0x to 11.0x to MMC's
three-year average EBITDA, Merrill Lynch calculated the implied equity value of
a share of MMC Common Stock to range between $2,940 and $3,796.
COMPARABLE TRANSACTION ANALYSIS
Merrill Lynch reviewed certain publicly available information relating to
the following six transactions involving the acquisition of companies involved
in the agriculture business: Eridania Beghin-Say S.A.'s acquisition of American
Maize Products Co.; ADM's acquisition of Acatos & Hutcheson PLC; American Maize
Products Co.'s acquisition of American Fructose Corp.; Zapata Corp.'s sale to an
investor group; Tate & Lyle PLC's acquisition of Staley Continental; and
Imperial Sugar Co.'s acquisition of Holly Sugar Corporation (collectively, the
"Comparable Transactions"). For each such transaction, Merrill Lynch reviewed
the transaction value as a multiple of latest twelve months ("LTM") EBITDA of
the target company. Applying a range of multiples (which were derived from the
Comparable Transactions information analyzed by Merrill Lynch) of 4.2x to 9.6x
to MMC's three-year average EBITDA, Merrill Lynch calculated the implied equity
value per share of MMC Common Stock to range between $886 and $3,197.
No company or transaction used in the above analyses as a comparison is
identical to MMC, ADM or the contemplated transaction. Accordingly, an analysis
of the results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors which could affect the value of the companies to
which they are being compared. Mathematical analysis is not, in itself, a
meaningful method of using comparable company data.
DISCOUNTED CASH FLOW ANALYSIS
Merrill Lynch performed a discounted cash flow analysis of MMC based upon
estimates of projected financial performance prepared by MMC's management for
the years 1998 to 2001, and estimated by Merrill Lynch for 2002. Utilizing these
projections, Merrill Lynch calculated a range of present values for MMC based
upon the discounted net present value of the sum of (i) the projected stream of
after-tax unlevered free cash flows of MMC (defined as operating cash flow
available after working capital, capital spending and tax requirements) to the
year 2002 and (ii) the projected terminal value of MMC at that year based upon a
range of multiples of MMC's projected EBITDA in such year. Applying a discount
rate of 13.0% and multiples of terminal EBITDA ranging from 4.5x to 6.5x,
Merrill Lynch calculated the implied equity value per share of MMC Common Stock
to range between $3,036 and $4,053 per share.
23
BREAKUP ANALYSIS
Merrill Lynch also analyzed the implied equity value of MMC on a breakup
analysis basis, as if the three businesses, Agri Sales, Inc., Quincy Soybean
Co., and MoorMan's, Inc., were each sold separately. Each of the three companies
was separately valued using the three valuation techniques discussed above:
analysis of selected publicly traded comparable companies, comparable
transactions analysis, and discounted cash flow analysis. An important
consideration to be noted in this analysis is that MMC has approximately $12
million of corporate overhead expenses for the year ending March 1997. MMC's
management estimated that each of the three businesses could possibly be
operated with only $1 million of corporate overhead expenses if owned by certain
strategic buyers. Therefore, for the purpose of this analysis only $1 million of
corporate overhead expenses were allocated to each of the three businesses, for
a total of $3 million. Using this analysis Merrill Lynch calculated the implied
equity value per share of MMC Common Stock to range between $1,740 and $6,034.
It is important to note, however, that the sale of any of the three businesses
could produce a taxable event for MMC, thus leaving less consideration to be
distributed to the MMC shareholders.
ADM COMMON STOCK TRADING HISTORY
Merrill Lynch also reviewed the performance of the closing per share market
price and trading volume of ADM Common Stock for the period August 26, 1994 to
August 26, 1997. The analysis indicated that, for the latest year, the market
price per share of ADM Common Stock ranged from $16.42 to $22.67 and that for
the latest three years, the market price per share of ADM ranged from $13.61 to
$22.67.
COMPARISON OF ADM TO SELECTED COMPARABLE PUBLICLY TRADED COMPANIES
Merrill Lynch compared certain financial and operating information and
ratios for ADM with the corresponding financial and operating information for
the following ten Public Comparables that Merrill Lynch deemed to be reasonably
comparable to ADM for purpose of this analysis. The Public Comparables were
American Rice, Inc.; ConAgra, Inc.; CPC International Inc.; DEKALB Genetics
Corporation; ERLY Industries Inc.; High Plains Corporation; Imperial Holly
Corporation; Midwest Grain Products, Inc.; Pioneer Hi-Bred International, Inc.;
and Riviana Foods Inc. Earnings estimates for the Public Comparables were based
on IBES and First Call data. IBES and First Call are on-line data services that
monitor and publish a compilation of earnings estimates produced by selected
research analysts on certain public companies.
Merrill Lynch analyzed, among other things, the market price per share of
common stock of each Public Comparable and ADM as of August 26, 1997 as a
multiple of LTM earnings per share ("EPS"), and 1997 and 1998 projected EPS, and
market capitalization (defined to be the market value of the common stock plus
preferred equity at liquidation value, total debt and minority interests less
cash and marketable securities) as a multiple of EBITDA and earnings before
interest and taxes ("EBIT"). Merrill Lynch compared ADM's multiples to the
multiples of the Public Comparables and determined that ADM's multiples were
reasonable in comparison to the multiples of the Public Comparables.
LIMITATIONS ON OPINION
The information above summarizes the material analyses prepared by Merrill
Lynch in connection with its opinion. This summary does not purport to be a
complete description of the analyses performed by Merrill Lynch in connection
with the rendering of its fairness opinion. The preparation of a fairness
opinion is not necessarily susceptible to partial analysis or summary
description. Merrill Lynch believes that its analyses and the summary set forth
above must be considered as a whole and that selecting portions of its analyses,
without considering all analyses, or selecting part or all of the above summary,
without considering all factors and analyses, would create an incomplete view of
the process underlying the analyses set forth in the Merrill Lynch presentation
and opinion. The range in calculations resulting from any particular analysis
described above should not be taken to be Merrill Lynch's view of the actual
24
value of MMC, which may be significantly more or less favorable than as set
forth therein. The fact that any specific analysis has been referred to in the
summary above is not meant to indicate that such analysis was given more weight
than any other analyses.
In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business and economic conditions, and
other matters, many of which are beyond the control of MMC or ADM. These
analyses were prepared solely as part of Merrill Lynch's analysis of the
fairness of the Exchange Ratio in the Merger, from a financial point of view, to
the shareholders of MMC and were provided to the MMC Board in connection with
the delivery of Merrill Lynch's opinion. Because any estimates contained in the
analyses performed by Merrill Lynch are inherently subject to uncertainty, the
opinion of Merrill Lynch clearly sets forth the assumptions Merrill Lynch relied
upon in making the estimates. The analyses do not purport to be appraisals or to
reflect the prices at which a company might actually be sold or the prices at
which any securities may be traded in the future.
As described above, Merrill Lynch's opinion and presentation to the MMC
Board is just one of the many factors taken into consideration by the MMC Board.
FEES PAYABLE TO MERRILL LYNCH
MMC's engagement of Merrill Lynch provides for a fee of $50,000 payable upon
execution of the Merrill Lynch engagement letter and an additional fee of
$250,000 payable upon delivery of its opinion to the MMC Board. An additional
fee of $50,000 is payable if Merrill Lynch is called upon to perform additional
analyses with respect to the Merger. Merrill Lynch has delivered an invoice to
MMC for $300,000 in connection with its delivery of the fairness opinion. If
Merrill Lynch is requested to perform and completes additional analysis relative
to an offer from ADM, but does not advise or participate in the negotiation of
the offer, Merrill Lynch will be entitled to an additional fee of $50,000. If
the Merger is not consummated with ADM pursuant to the Merger Agreement and
Merrill Lynch is asked to assist MMC in identifying purchasers or in analyzing,
structuring, negotiating and effecting proposed business combinations, and if
within the period of Merrill Lynch's engagement under the agreement or within
one year thereafter (a) a business combination is consummated with the purchaser
(i) that Merrill Lynch identified, (ii) as to which Merrill Lynch advised MMC or
(iii) with which MMC or Merrill Lynch had discussions regarding a business
combination, or (b) MMC enters into an agreement with any such purchaser that
subsequently results in a business combination, Merrill Lynch will be entitled
to an additional fee of an amount equal to one percent of the aggregate purchase
price in such business combination in cash upon consummation of such business
combination. 60 days.
However, if the purchaser is ADM, which already had discussions
with MMC prior to the date of the letter agreement, the additional fee would be
in an amount equal to 0.65 percent of the aggregate price paid in such business
combination. Any fees previously paid to Merrill Lynch for the preparation of
the fairness opinion and any subsequent work would be deducted from any fee to
which Merrill Lynch becomes entitled pursuant to its involvement. MMC has also
agreed to reimburse Merrill Lynch for its reasonable out-of-pocket expenses,
including reasonable attorneys' fees and disbursements, and to indemnify Merrill
Lynch against certain liabilities, including certain liabilities under the
federal securities laws.
Merrill Lynch has been engaged from time-to-time to underwrite debt and
equity securities of ADM and to provide other financial services to ADM. All
such relationships with ADM have been in the ordinary course of business of
Merrill Lynch, and fees paid in connection therewith were negotiated on an
arm's-length basis.
THE MERGER
SET FORTH BELOW IS A SUMMARY OF THE MATERIAL TERMS OF THE MERGER AGREEMENT,
A COMPLETE COPY OF WHICH IS ATTACHED AS EXHIBIT A TO THIS PROXY
STATEMENT/PROSPECTUS. ALL SHAREHOLDERS ARE URGED TO READ THE MERGER AGREEMENT IN
ITS ENTIRETY.
25
GENERAL
Under the terms of the Merger Agreement, upon consummation of the Merger,
each share of MMC Common Stock outstanding at the Effective Time will be
converted, without any action on the part of the holder thereof, into the right
to receive a number (equal to the Exchange Ratio) of shares of ADM Common Stock,
rounded to the nearest whole share. The Exchange Ratio is calculated by dividing
the Base Value ($5,400) by the Average Price. The Closing is expected to occur
three days after the vote of MMC's shareholders at the Special Meeting.
The Merger Agreement provides for adjustments to the Exchange Ratio if the
shareholders' equity of MMC, calculated under generally accepted accounting
principles, on the date 15 days before the Closing Date is less than $265
million. In that case, the Exchange Ratio will be recalculated by reducing the
Base Value by an amount equal to the quotient of (1) the difference between $265
million and the actual MMC shareholders' equity on that date divided by (2)
54,770 (the number of outstanding shares of MMC Common Stock); provided,
however, that the Base Value will not be lower than $5,126.13.
EFFECTIVE TIME AND EFFECT OF THE MERGER
If the Merger Agreement and the Merger are approved and adopted by the
requisite vote of the MMC shareholders and all other conditions to the
obligations of the parties to consummate the Merger are satisfied or waived, the
Merger will become effective upon the appropriate filing of a Certificate of
Merger with the Delaware Secretary of State and the issuance of a Certificate of
Merger by the Illinois Secretary of State. The Effective Time is expected to
occur on December 11, 1997.
At the Effective Time, ADMAC will be merged with and into MMC, with no
change in MMC's powers and obligations. The separate corporate existence of
ADMAC will terminate upon consummation of the Merger, and MMC, as the surviving
corporation, will continue as a wholly-owned subsidiary of ADM. Under the Merger
Agreement each then-outstanding share of MMC Common Stock will be converted
automatically into a number of shares of ADM Common Stock equal to the Exchange
Ratio. Thereafter, holders of certificates formerly representing outstanding
shares of MMC Common Stock at the Effective Time will be entitled to surrender
these certificates to Harris Trust and Savings Bank, ADM's stock transfer agent,
which will act as the exchange agent for purposes of exchanging these
certificates for certificates representing shares of ADM Common Stock. The
Exchange Ratio is subject to appropriate adjustment to reflect the effect of any
stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into ADM Common Stock or MMC Common
Stock), exchange of shares, reclassification, reorganization, recapitalization,
or other similar change with respect to the ADM Common Stock or the MMC Common
Stock prior to the Effective Time.
EXCHANGE OF SHARES
Each record holder at the Effective Time of a certificate or certificates
previously representing shares of outstanding MMC Common Stock will be entitled,
upon the surrender of the certificate or certificates to the Exchange Agent,
promptly to receive in exchange therefor a certificate or certificates
representing the number of whole shares of ADM Common Stock into which the
shares of MMC Common Stock previously represented by the certificate or
certificates so surrendered have been converted pursuant to the Merger
Agreement. After the Effective Time, until surrendered, each certificate
previously representing shares of MMC Common Stock will be deemed for all
corporate purposes, other than payment of dividends, to evidence the ownership
of the number of whole shares of ADM Common Stock into which the shares of MMC
Common Stock have been converted. Until any such certificate has been
surrendered, the holder of that certificateany debt security will not be entitledhave an absolute right to receive payment of principal of, and any dividendspremium and interest on, the debt security when due and to institute suit to enforce this payment.
Defeasance
The Indenture includes provisions allowing defeasance of the debt securities of any series. In order to defease a series of debt securities, we would deposit with the Trustee or another trustee money or U.S. Government Obligations sufficient to make all payments on those shares of ADM Common Stock payable to the
holder thereof after the Effective Time. Upon the surrender ofdebt securities. If we make a certificate
previously representing shares of MMC Common Stock, the holder thereof will
receive a certificate representing the number of whole shares of ADM Common
Stock to which the holder is entitled and the amount of any dividends or other
distributions that were payable to holders of record of ADM Common Stock on or
after the Effective Timedefeasance deposit with respect to those sharesa series of ADM Common Stock,
26
without interest. Any dividends payable debt securities, we may elect either:
to holdersbe discharged from all of recordour obligations on that series of ADM Common Stock
asdebt securities, except for our obligations to register transfers and exchanges; to replace temporary or mutilated, destroyed, lost or stolen debt securities; to maintain an office or agency in respect of any record date priorthe debt securities and to hold moneys for payment in trust; or
to be released from our restrictions described above relating to mergers and sales of assets, Secured Funded Debt and sale and leaseback transactions.
To establish the trust, we must deliver to the Effective Time will not be payable to holders
of certificates previously representing MMC Common Stock.
Detailed instructions and transmittal materials will be mailed to MMC
shareholders immediately after the Effective Time as to the method of exchanging
certificates formerly representing shares of MMC Common Stock for certificates
representing shares of ADM Common Stock. HOLDERS OF CERTIFICATES REPRESENTING
SHARES OF MMC COMMON STOCK SHOULD NOT SURRENDER THEIR CERTIFICATES FOR EXCHANGE
UNTIL THEY RECEIVE THE APPROPRIATE TRANSMITTAL MATERIALS.
The shareholders of ADM will continue to hold their shares of capital stock
of ADM without any change in number, designation, terms or rights.
EMPLOYEE BENEFIT PLANS
Under the Merger Agreement, ADM has agreed to honor all benefits accrued
under any employee benefit plan, policy or agreement of MMC in accordance with
respective terms of such plans and to the extent required by law and,
specifically, to continue to provide benefits in accordance with the terms of
the MMC Retired Employees' Medical Plan or a plan with benefits substantially
similar to those provided to similarly situated persons under ADM's relevant
plan for retired employees. ADM has agreed to provide all employees of MMC who
remain employees after the Merger, credit for all service with MMC for
eligibility and for vesting purposes for all employee benefits of ADM and shall
offer such employees participation in all employee benefits of ADM offered to
similarly situated employees of ADM. To the extent any such ADM benefit plans
provide medical or dental welfare benefits, such benefit plans shall waive any
pre-existing condition exclusions and waiting periods for plan participation
unless the MMC employee was subject to one or more pre-existing condition
exclusions in the comparable MMC plan and shall provide that any expenses
incurred on or before the Merger shall be taken into account under the benefit
plans of ADM for purpose of satisfying applicable deductible, co-insurance and
maximum out-of-pocket provisions. Furthermore, for a period of nine months after
the Merger, ADM shall make a severance payment (in accordance with the policy
maintained by MMC prior to the Merger) to any MMC employee who is terminated
without cause by ADM within such nine-month period. In connection with the
Merger, ADM has made no commitments with respect to the continued employment of
any employee of ADM or MMC.
CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of each of ADM and MMC to consummate the Merger are subject
to (i) the requisite approval of the shareholders of MMC with respect to the
Merger Agreement and the Merger, (ii) the expiration or termination of the
waiting period applicable to the consummation of the Merger under the HSR Act
(the HSR Act waiting period terminated on , 1997), (iii) the absence
of any judicial order preventing or making illegal the consummation of the
Merger, (iv) the effectiveness of the Registration Statement (of which this
Proxy Statement/Prospectus constitutes a part) and all requisite post-effective
amendments thereto and the absence of any stop-orders suspending the
effectiveness thereof or proceedings initiated or, to the knowledge of the
parties, threatened by the SEC for such purpose, (v) the listing (subject to
official notice of issuance) on the NYSE of the shares of ADM Common Stock
issuable in the Merger, (vi) the receipt of all consents, authorizations, orders
and approvals of any governmental authority or other regulatory body (without
material conditions) that are required in connection with the consummation of
the Merger and related transactions, the failure of which to obtain would
prevent the consummation of the Merger or would reasonably be expected to result
in a material adverse change in the financial condition, results of operations
or businesses of MMC on a consolidated basis after the Effective Time, and (vii)
ADM shall have received all state securities or blue sky permits and other
authorizations necessary to issue the shares of ADM Common Stock in exchange for
the shares of MMC Common Stock and to consummate the Merger.
27
Additional conditions to ADM's obligation to consummate the Merger include
(i) the accuracy in all material respects, as of the date of the Merger
Agreement and the Closing Date, of the representations and warranties of MMC and
the compliance with and performance of, in all material respects, all of the
terms, covenants and conditions of the Merger Agreement to be complied with and
performed by MMC prior to the consummation of the Merger, (ii) the receipt ofTrustee an opinion of Schmiedeskamp, Robertson, Neu & Mitchell,our counsel to MMC, (iii)that the
receipt of all material authorizations, consents, waivers, and approvals from
parties to contracts or other arrangements to which MMC is a party that are
necessary in connection with the consummation of the Merger and related
transactions, (iv) the demand of statutory dissenters' rights by holders of no
more than ten percentthat series of the outstanding MMC Common Stock, and (v) the receipt
from MMC's Chief Financial Officer of a certificate stating that MMC's
shareholders' equity as of the date 15 days prior to the Closing Date is in
excess of $250 million.
Additional conditions to MMC's obligations to consummate the Merger include
(i) the accuracy in all material respects, as of the date of the Merger
Agreement and the Closing Date, of the representations and warranties of ADM and
the compliance with and performance of, in all material respects, all of the
terms, covenants and conditions of the Merger Agreement to be complied with and
performed by ADM prior to the consummation of the Merger, (ii) on the Closing
Date, the fairness opinion from Merrill Lynch shalldebt securities will not have been withdrawn,
modifiedrecognize income, gain or amended, (iii) the receipt of an opinion of David J. Smith, General
Counsel of ADM, (iv) the receipt of a tax opinion of Winston & Strawn, special
counsel to MMC, in form and substance reasonably satisfactory to the MMC Board,
to the effect that the Merger will be treatedloss for federal income tax purposes as a tax-free reorganization under Section 368(a)result of the Code,defeasance and (v)will be subject to federal income tax on the receipt
of all material authorizations, consents, waivers,same amount, in the same manner and approvals from parties to
contracts or other arrangements to which MMC is a party that are necessary in
connection withat the consummation ofsame times as would have been the Merger and related transactions.
Undercase if the Merger Agreement, ADM has no obligation to consummate the Merger
if any condition to its obligation to consummate the Merger isdefeasance had not satisfied on
or prior to the Closing Date and MMC has no obligation to consummate the Merger
if any condition to its obligation to consummate the Merger is not satisfied on
or prior to the Closing Date. Any of the conditions to the obligation of ADM or
MMC to consummate the Merger may be waived or modified by the party that is, or
whose shareholders are, entitled to the benefits thereof. See "The
Merger--Amendment, Terms and Waiver." Neither ADM nor MMC has any present
intention to waive or modify any condition that it deems material. Obtaining the
affirmative vote of more than three-fourths of the outstanding shares of MMC
Common Stock to approve, for tax purposes, certain payments under the
Change-of-Control Arrangements is not a condition to consummation of the Merger.
Reference is made to Article VII of the Merger Agreement for a complete
statement of the conditions precedent to theoccurred.
The term “U.S. Government Obligations” means direct obligations of the respective
partiesUnited States of America backed by the full faith and credit of the United States.
Information Concerning the Trustee
The Bank of New York Mellon is the trustee under the Indenture. From time to consummate the Merger.
REPRESENTATIONS, WARRANTIES AND COVENANTS
In the Merger Agreement, ADMtime, we maintain deposit accounts and MMC have made various representations,
warranties, covenants and agreements, relating to, amongconduct other things, their
respective businesses and financial condition, the accuracy of various filingsbanking transactions with the SEC, the satisfaction of certain legal requirements for the Merger and
the absence of certain material litigation. The representations and warranties
of each of the parties to the Merger Agreement expire upon consummation of the
Merger.
AMENDMENT, TERMINATION AND WAIVER
The terms of the Merger Agreement may be amended or supplemented at any time
by written agreement of ADM, ADMAC and MMC, but after the Merger Agreement has
been approved and adopted by the shareholders of MMC, it may not be amended to
alter the number of shares of ADM Common Stock to be exchanged for each share of
MMC Common Stock or in any other way that would have a
28
material adverse affect on the rights of MMC's shareholders, without the further
approval of such shareholders. Any provision of the Merger Agreement may be
waived at any time by the party that is, or whose shareholders are, entitled to
the benefits thereof.
29
Notwithstanding prior approval of the Merger Agreement and the Merger by the
shareholders of MMC, the Merger Agreement may be terminated and the Merger and
other transactions contemplated by it may be abandoned at any time prior to the
Effective Time (i) by the mutual written consent of ADM and MMC, (ii) by either
ADM or MMC, if the Merger has not been consummated on or before February 28,
1998, (iii) by either ADM or MMC, if the Merger Agreement and the Merger has
been submitted to a vote of the shareholders of MMC at the Special Meeting, or
any adjournments thereof, and was not approved by the requisite vote, (iv) by
either ADM or MMC, if a condition to the terminating party's obligation to
consummate the Merger cannot be met on the Closing Date and is not waived or
cured within the prescribed time period, (v) by either ADM or MMC, if a final
unappealable order to restrain, enjoin or otherwise prevent, the consummation of
the Merger Agreement or the transactions contemplated in connection therewith,
has been entered by a court of competent jurisdiction; (vi) by either ADM or MMC
upon a material breach by the other party of any of its representations or
warranties or covenants or agreements set forth in the Merger Agreement, which
breach is not cured within the prescribed time period, (vii) by ADM, if ADM
determines prior to the Closing Date that it is reasonably possible that the
manufacture, sale and shipment by MMC of products, including soybean meal,
containing dioxin has had or will have a material adverse effect on MMC, or
(viii) by either ADM or MMC, if the MMC Board withdraws or modifies its
recommendation that shareholders approve the Merger.
EXPENSES
All costs and expenses incurred in connection with the Merger Agreement and
the transactions contemplated thereby will be paid by the party incurring the
costs and expenses.
STOCK EXCHANGE LISTING
ADM Common Stock is listed on the NYSE, and it is a condition to
consummation of the Merger that the additional shares of ADM Common Stock
issuable in the Merger have been approved for listing on the NYSE, subject to
official notice of issuance.
CERTAIN LEGAL MATTERS
Certain acquisition transactions such as the Merger are reviewed by the
Antitrust Division of the Department of Justice or the Federal Trade Commission
to determine whether they comply with applicable antitrust laws. Under the
provisions of the HSR Act, the Merger may not be consummated until certain
information has been furnished to the Antitrust Division and the FTC and certain
waiting period requirements of the HSR Act have been satisfied. ADM and MMC
filed information with the Antitrust Division and the FTC under the HSR Act on
September 19, 1997, and the waiting period under the HSR Act terminated on
, 1997.
Consummation of the Merger is conditioned upon, among other things, the
absence of any judicial, governmental, regulatory or administrative order
preventing or making illegal the consummation of the Merger. In addition,
consummation of the Merger is conditioned upon receipt of all consents,
authorizations, orders and approvals of any governmental authority or other
regulatory body (without material conditions) that are required in connection
with the consummation of the Merger and related transactions, the failure of
which to obtain would prevent the consummation of the Merger or would reasonably
be expected to result in a material adverse change in the financial condition,
results of operations or businesses of either MMC on a consolidated basis or ADM
on a consolidated basis. The parties believe that the remaining required
regulatory approvals are likely to be secured without the imposition of any
conditions that would be materially burdensome. See "The Merger--Conditions to
Consummation of the Merger."
CONDUCT OF BUSINESS PRIOR TO THE MERGER
The Merger Agreement provides that, prior to the Effective Time, MMC will
conduct its business onlyTrustee in the ordinary course of business and consistent with
prior practice, and generally providesbusiness. The Bank of New York Mellon also serves as trustee for certain 30
restrictions with respect to MMC on, amongof our other things, the issuance or other
disposition, encumbrance or repurchase of capital stock of MMC or its
subsidiaries, certain sales of assets of MMC or its subsidiaries, the
declaration or payment of dividends on MMC Common Stock, the amendment of the
corporate charters or bylaws of MMC or its subsidiaries, the acquisition of
substantial assets, the incurrence of certain indebtedness and the issuance ofsenior unsecured debt securities, the making of certain capital expenditures, the granting of
certain employee benefits or the adoption or amendment of employee benefit
plans, or certain actions relating to the entering into, amendment in any
material respect of, or termination or waiver of any material right under,
certain contracts or arrangements material to MMC.
The Merger Agreement further provides that, during the period in which the
Average Price is calculated until the Effective Time, ADM will conduct its
business only in, and will not take any material action except in, the ordinary
course of business and consistent with past practices, and generally provides
for certain restrictions with respect to ADM on, among other things, the
issuance or other disposition, encumbrance or repurchase of capital stock,
certain sales of assets of ADM or its subsidiaries, certain acquisitions of
substantial assets, the incurrence of indebtedness and the issuance of debt
securities, the making of certain capital expenditures, the amendment of the ADM
Certificate or Bylaws or those of any of its subsidiaries, the declaration or
payment of dividends (except for ADM's regular quarterly cash dividend on its
outstanding Common Stock), or certain actions relating to the entering into,
amendment in any material respect of, or termination or waiver of any material
right under, certain contracts and arrangements material to ADM.
NO SOLICITATION OF ACQUISITION TRANSACTIONS
Under the Merger Agreement, MMC has agreed that it will not, directly or
indirectly, through any director, officer, employee, agent or representative,
solicit, initiate or intentionally encourage submission of any inquiries,
proposals or offers from any person or entity (other than ADM) relating to any
merger, consolidation, share exchange, purchase or other acquisition of all or
(other than in the ordinary course of business) any substantial portion of the
assets of or any substantial equity interest in MMC or its subsidiaries or any
business combination with MMC or its subsidiaries or participate in any
discussions or negotiations regarding, or furnish to any other person any
information with respect to, MMC or its subsidiaries or afford access to the
properties, books or records of MMC for the purposes of, or cooperate with, or
assist or participate in, facilitate or encourage, any effort or attempt by any
other person to seek or effect an Acquisition Proposal. MMC may furnish
information relating to MMC or its subsidiaries or afford access to the
properties, books or records of MMC to, or enter into discussions or
negotiations with, a third party interested in an Acquisition Proposal if (i)
the MMC Board, after consultation with its financial adviser, determines in good
faith such party's proposal is bona fide and superior to the Merger, (ii) upon
advice of counsel, the MMC Board determines in good faith that such action is
necessary for the MMC Board to comply with its fiduciary duties to MMC's
shareholders under Illinois Law, and (iii) the third party has signed and
delivered to MMC a confidentiality agreement. Following receipt of such a bona
fide offer, MMC has agreed to promptly notify ADM of any inquiry or proposal
made with respect to an Acquisition Proposal. Upon this notice, ADM will have
the right to submit a counter offer to the MMC Board. If the MMC Board
determines that ADM's counter offer is at least equal to the third-party offer,
then MMC will be required to accept ADM's counter offer.
If the MMC Board determines that the ADM counter-proposal does not equal or
exceed the third party offer, then the MMC Board shall provide ADM notice of any
deficiencies in the ADM counter-proposal and ADM shall have an opportunity to
submit a modified proposal. The MMC Board shall then be obligated to accept the
modified ADM proposal or provide written notice to ADM of any continuing
deficiencies. ADM shall then have the opportunity to modify further its
proposal. If ADM elects not to modify its proposal to match the third party
offer within such time periods, then MMC will be free to accept and proceed with
the third party offer. If ADM elects not to match the terms of the third party
offer and the third party offer is modified in any material respect, then ADM's
rights to submit counter-proposals under the Merger Agreement shall apply anew.
31
INDEMNIFICATIONobligations.
BOOK-ENTRY, DELIVERY AND INSURANCE
ADM has agreed that from and after the Effective Time the indemnification
obligations of MMC set forth in the MMC Articles and Bylaws and the
organizational documents of any of its subsidiaries, as in effect on the date of
the Merger Agreement, as to any matter arising out of any action or omission of
any person described in those indemnification provisions before the Effective
Time (including any claim based upon or arising out of the Merger, this Proxy
Statement/Prospectus or any of the transactions contemplated by the Merger
Agreement) will continue, and those persons will be entitled to the full
benefits of such provisions as if the provisions continued in full force and
effect after the Effective Time. ADM further agrees to become directly liable
for such obligations and liabilities with respect to indemnification and
reimbursement of such persons to the extent of the difference between MMC's
shareholders' equity as of the date any such claim arises after the Closing Date
and the shareholders' equity of MMC on the Closing Date. In addition, ADM has
agreed to provide directors' and officers' liability insurance coverage for the
benefit of MMC's present or former directors and officers on substantially the
same terms as that provided MMC's directors and officers currently for a period
of six years after the Closing Date. See "The Merger--Interests of Certain
Persons in the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the MMC Board's recommendation of the Merger, MMC
shareholders should be aware that certain directors and officers of MMC have
interests in the Merger different from the interests of other MMC shareholders.
The MMC Board was informed of the interests described herein prior to approving
the Merger Agreement and the Merger.
MMC has maintained in recent years various compensatory arrangements with
members of MMC's senior management, under which such persons would receive
payments and other benefits upon a change of control of MMC, provided certain
other conditions are fulfilled. These Change-of-Control Arrangements include
change-of-control agreements, termination agreements, agreements entered into
pursuant to the MMC Restricted Stock Unit Plan (the "Unit Plan"), the MMC
Restricted Stock Unit Plan for Outside Directors (the "Directors Plan") and
certain retirement benefits. If consummated, the Merger would constitute a
change of control of MMC under some of these arrangements. The following
discussion describes the Change-of-Control Arrangements between MMC and its
executive officers and directors and includes reasonable estimates of the
amounts that may become payable to such executive officers and directors. MMC
has also maintained similar arrangements with certain officers who are not
executive officers. The terms and conditions of those other arrangements are
substantially similar to those described below. ADM has made no commitment with
respect to the continued employment of any executive officer or other employee.
CHANGE-OF-CONTROL AGREEMENTS; TERMINATION AGREEMENTS. In the best interests
of MMC and its shareholders, to attract and retain highly qualified individuals
for MMC's management team and to assure that MMC would have the continued
dedication of its management team notwithstanding the possibility, threat or
occurrence of a change of control, MMC has maintained change-of-control
agreements (the "Change-of-Control Agreements") and/or termination agreements
(the "Termination Agreements") with certain officers. These officers are
entitled to receive the same type of benefit under one but not both such
agreements, as described below.
Presently, Change-of-Control Agreements are in effect for the following
executive officers: Thomas M. McKenna, Alfred L. Williams, Michael L. Foster,
Larry H. Horn, Terry W. Lunt, Alvin L. Melliere and Wendell R. Schwarz. Each
Change-of-Control Agreement is substantially in the same form and provides that
in the event of a change of control of MMC, if either the executive's employment
is terminated other than for "cause" or the executive terminates his or her
employment for "good reason," certain benefits will be paid.
Specifically, MMC will provide (i) payment of a sum equal to the executive's
base salary for a certain month period (set forth below), (ii) payment of an
amount of cash equal to a certain multiple (set forth below) of the average
incentive earned over the prior three-year period, (iii) immediate vesting of
all
32
previously unvested cash awards and stock incentives, subject to the Unit Plan
and the MMC Long-Term Incentive Plan, (iv) provision to the executive and his
eligible dependents of medical, disability, dental and life insurance coverage
(to the extent such coverage is in effect immediately prior to the change of
control), for a certain month period (set forth below), (v) immediate granting
to the executive of a certain number of months (set forth below) of service and
age credit for determining benefit amounts and benefit entitlement and any early
retirement reductions with respect to all applicable MMC retirement plan
benefits, and in addition, no early retirement reductions will be imposed on the
retirement benefits if the executive's age at termination equals or exceeds 55,
and (vi) reimbursement to the executive of reasonable costs incurred by the
executive for out-placement services in the 24-month period following
termination of the executive's employment in connection with a change of
control.
The periods for which benefits would be payable pursuant to clauses (i),
(iv) and (v) above are as follows: Mr. McKenna, 36 months; Messrs. Foster, Horn
and Schwarz, 24 months; and Messrs. Lunt, Melliere and Williams, 12 months. The
multiples of the annual incentive of the executives pursuant to clause (ii)
above are as follows: Mr. McKenna, three; Messrs. Foster and Horn, two; Messrs.
Lunt, Melliere and Williams, one. Mr. Schwarz's Change-of-Control Agreement
provides that he would receive a fixed cash award in lieu of a multiple of his
annual incentive bonus. (The Termination Agreements for Mr. McKenna and Mr.
Williams provide the same types of benefits as those described in clauses (i)
and (ii) of the Change-of-Control Agreements. The effect of this overlap is
discussed below).
The cash payments set forth above shall be made in a lump sum unless the
executive elects to have all payments made in accordance with MMC's regular
salary and benefit payment practices. If an executive becomes entitled to
receive the foregoing benefits upon a change of control and termination, the
executive has agreed for a period of 12 months following termination of the
executive's employment not to compete with MMC.
Each Change-of-Control Agreement defines "good reason" and "cause" with
respect to termination of an executive's employment. Among other circumstances,
"good reason" is defined as the removal of the executive from the position he
held immediately prior to the change of control, the assignment to the executive
without his express consent of duties that the executive reasonably considers to
be inconsistent with those performed by the executive immediately prior to the
change of control or a substantial alteration in the nature or status of the
executive's responsibilities, a failure by MMC to pay the executive his annual
base salary, a reduction by MMC in the executive's annual base salary as in
effect on the date of the Change-of-Control Agreement or as the same may be
increased from time to time, MMC requiring the executive to be based at other
than MMC's principal place of business immediately prior to the change of
control, or any material reduction by MMC of the benefits enjoyed by the
executive under any of MMC's executive benefit plans.
"Cause" is defined in the Change-of-Control Agreements (and the Termination
Agreements) to include, among other circumstances, the willful and continued
failure of the executive to substantially perform his duties with MMC, the
willful and continued engaging by the executive in conduct that is demonstrably
and materially injurious to MMC, the willful breach of his fiduciary duty to
MMC, or commission by the executive of a felony, fraud, misappropriation or
embezzlement or a significant act of dishonesty or deceit in the performance of
his duties.
Each Change-of-Control Agreement was amended as of August 1, 1997, to
clarify the original intent that, to the extent a benefit provided under the
Change-of-Control Agreement is the same kind of benefit provided by any other
plan or agreement, such as a Termination Agreement, the executive will receive
the greater of the two benefits, but not both benefits.
MMC entered into Termination Agreements with Mr. McKenna and Mr. Williams
that provide that the executive should be entitled to receive certain benefits
if the executive is terminated under certain circumstances. The Termination
Agreements are substantially similar and provide that in the event that the
employment of the executive is terminated without just cause, the executive
shall be entitled to receive benefits under the following terms and conditions:
(i) the executive shall continue to receive his base salary for a period of 24
months plus his incentive bonus based on the immediate past two years
33
average; (ii) if the executive is terminated prior to fulfilling two years of
service with MMC, the incentive bonus will be based on the past year, or
annualized, if the executive has not completed a full year of employment; and
(iii) all such benefits shall be subject to statutory deductions.
Under the Change-of-Control Agreements or the Termination Agreements, if a
change of control and a termination of employment occur, Mr. McKenna and Mr.
Williams would be entitled to receive the greater of each type of benefit
specified under both agreements. Specifically, Mr. McKenna would receive, among
other benefits, 36 months of his base salary and three times his average
incentive earned over the prior three-year period. Mr. Williams would receive,
among other benefits, 24 months of his base salary and two times his annualized
incentive earned to date.
Under the Change-of-Control Agreements or Termination Agreements (under
whichever the individual benefits would be greater), if a change of control and
a termination of employment had taken place on October 1, 1997, Messrs. McKenna,
Williams, Foster, Horn, Lunt, Melliere and Schwarz would have been entitled to
receive benefits estimated, before taxes, at approximately $1,756,000, $880,000,
$484,000, $514,000, $146,000, $204,000, and $1,049,000, respectively. The
foregoing amounts do not reflect the benefits payable under the Unit Plan and
certain retirement benefits, which, while addressed in the Change-of-Control
Agreements, are discussed below. Furthermore, the actual payments made under the
Change-of-Control Agreements and Termination Agreements will be determined at
the time of the change of control and termination using the actual dates
thereof.
Due to a provision in the Change-of-Control Agreements that, for calculation
purposes, takes into account the tax consequences to the executives of Sections
280G and 4999 of the Code (as discussed below), the payment set forth above for
Mr. Foster has been reduced by approximately $35,000. If MMC's shareholders
approve the proposal described under Item 2 of this Proxy Statement/Prospectus
with respect to the tax consequences of Sections 280G and 4999 of the Code on
payments under the Change-of-Control Arrangements, such approval will have the
effect, among others, of restoring the foregoing amount to Mr. Foster's payment
under his Change-of-Control Agreement.
UNIT PLAN. MMC maintains the Unit Plan by which MMC has granted to certain
officers of MMC and its subsidiaries units equal to an amount of the fair market
value of the MMC Common Stock based on the annual share valuation prepared for
the MMC Employees' Profit Sharing Plan or the sale price in the event of a
change of control. During the course of their employment, MMC has granted such
units to, and entered into Restricted Stock Unit Agreements with, certain
officers including the following executive officers: Messrs. McKenna, Williams,
Foster, Horn, Lunt and Melliere (the "Unit Agreements") .
The executive is entitled to receive an amount equal to the fair market
value of one unit multiplied by the number of units granted to such executive
reduced by the amount of any federal, state or local tax withholding after
either the earlier of a change of control with respect to MMC or February 16,
1999, if the executive is still employed by MMC on such date. For purposes of
the plan, fair market value of a unit means the value of MMC Common Stock based
on the share valuation prepared for the MMC Employees' Profit Sharing Plan for
such year. Amounts paid with respect to such units shall be determined based on
the sale price of the MMC Common Stock in connection with the change of control.
If an executive's employment is terminated by resignation, by MMC for cause
or by MMC without cause prior to February 16, 1999, no award shall be paid with
respect to outstanding units, except in the case of a change of controlFORM
Except as set forth above.below, the Exchange Debentures will be represented by one or more permanent global Exchange Debentures in definitive, fully registered form without interest coupons. Each global Exchange Debenture will be deposited with the Trustee and registered in the name of Cede &Co., as nominee of DTC. Each beneficial interest in a global Exchange Debenture is referred to as a “Book-Entry Interest.” Book-Entry Interests will be issued in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof. The Merger constitutes a changeExchange Debentures will be issued promptly following the expiration of controlthe Exchange Offer only in exchange for the Original Debentures accepted in the Exchange Offer.
General
Book-Entry Interests will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by DTC, Euroclear Bank S.A./N.V., as operator of the Euroclear System (“Euroclear”), and Clearstream Banking, societe anonyme, Luxembourg (“Clearstream”) and their participants. The laws of some jurisdictions, including certain states of the United States, may require that certain purchasers of securities take physical delivery of such securities in definitive form. The foregoing limitations may impair your ability to own, transfer or pledge Book-Entry Interests. In addition, while the Exchange Debentures are in global form, holders of Book-Entry Interests will not be considered the owners or “holders” of Exchange Debentures for any purpose.
So long as the Exchange Debentures are held in global form, DTC will be considered the sole owner or holder of the Exchange Debentures represented by that global debenture for all purposes under the Unit PlanIndenture and Exchange Debentures. In addition, participants must rely on the Base Value determined in accordance with the Merger Agreement would be the
value used to determine the executive officers' benefits under the Unit Plan. In
the caseprocedures of death, disability, or retirement, the units become redeemable by the
executive or his beneficiary,DTC, Euroclear and Clearstream, as the case may be, and indirect participants must rely on a pro rata basisthe procedures of DTC, Euroclear, Clearstream and the participants through which they own Book-Entry Interests to transfer their interests or to exercise any rights of holders under the Indenture.
Neither ADM nor the Trustee will have any responsibility or be liable for any aspect of the period prior to February 16, 1999, that the executive was employed.
Pursuantrecords relating to the Unit Agreements,Book-Entry Interests.
Payments on Global Debentures
Payments of any amounts owing in respect of the executive officers haveglobal Exchange Debentures (including principal, premium, if any, and interest) will be made by ADM to DTC or its nominee, which will distribute such payments to participants in accordance with their procedures.
ADM expects that DTC, Euroclear or Clearstream, as applicable (or their respective nominees), upon receipt of any payment of principal of or any premium or interest in respect of a global Exchange Debenture, will immediately credit, on its book-entry registration and transfer system, accounts of participants with payments in amounts proportionate to their respective Book-Entry Interests in the following
number of units which become a right to receive certain cash amounts as
explained above: Mr. McKenna, 460 units; Mr. Williams, 200 units; Mr. Foster,
115 units; Mr. Horn, 115 units; Mr. Lunt, 47 units; and Mr. Melliere, 47 units.
If the Merger had occurred on October 1, 1997, and assuming the Base Value is
$5,400,
34
Messrs. McKenna, Williams, Foster, Horn, Lunt and Melliere would have been
entitled to receive under these agreements, before taxes, approximately
$2,484,000, $1,080,000, $621,000, $621,000, $254,000 and $254,000, respectively.
DIRECTORS PLAN. MMC maintains the Directors Plan by which MMC grants
annually to each non-employee director units equal to anprincipal amount of the fair
market valueglobal Excahnge Debentures, as shown on the records of DTC, Euroclear or Clearstream, as applicable (or their respective nominees).
ADM also expects that payments by participants to owners of Book-Entry Interests held through those participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in “street name,” and will be the responsibility of those participants.
ADM and the Trustee will treat the registered holder of the MMC Common Stock based onglobal Exchange Debentures as the annual share valuation
preparedowner thereof for the MMC Employees' Profit Sharing Planpurpose of receiving payments and for all other purposes. Consequently, none of ADM, the Trustee or any agent of ADM or the sale priceTrustee has or will have any responsibility or liability for:
any aspect of the records of DTC, Euroclear, Clearstream or any participant or indirect participant relating to or payments made on account of a Book-Entry Interest or for maintaining, supervising or reviewing the records of DTC, Euroclear, Clearstream or any participant or indirect participant relating to or payments made on account of a Book-Entry Interest; or
any other acts or omissions of DTC, Euroclear, Clearstream or any participant or indirect participant.
Action by Owners of Book-Entry Interests
ADM expects that DTC will take any action permitted to be taken by a holder of Exchange Debentures only at the direction of one or more participants to whose account or accounts the Book-Entry Interests in the eventglobal Exchange Debentures are credited and only in respect of a changethe portion of control. The Directors Plan incorporates the definitionaggregate principal amount of "change of control"Exchange Debentures as to which such participant or participants has or have given that is containeddirection. DTC will not exercise any discretion in the Change-of-Control Agreements
(described above). Atgranting of consents, waivers or the time each non-employee directortaking of any other action in respect of the global Exchange Debentures. However, if there is an Event of Default under the Exchange Debentures, DTC (or its nominee), will exchange the global Exchange Debenture for definitive Exchange Debentures in registered form, which it will distribute to its participants. See “—Definitive Registered Debentures.”
Transfers
Transfers between participants in DTC will be effected in accordance with DTC rules and will be settled in immediately available funds. If a holder requires physical delivery of definitive registered debentures for any reason, including to sell debentures to persons in states which require physical delivery of such securities or to pledge such securities, such holder must transfer its interest in the global debentures in accordance with the normal procedures of DTC and in accordance with the procedures set forth in the Indenture.
Definitive Registered Debentures
The global Exchange Debentures representing the Book-Entry Interests are exchangeable for definitive registered debentures, of like tenor and of an equal aggregate principal amount, only if:
DTC notifies ADM that it is no longer willing or able to act as a depositary for such global debentures or ceases to be a non-employee directorclearing agency registered under the Exchange Act, and ADM has not appointed a successor depositary within 90 days of MMC, hethat notice or shebecoming aware that DTC is no longer so registered;
an Event of Default has occurred and is continuing, and DTC requests the issuance of certificated debentures; or
subject to DTC’s procedures, ADM determines not to have the debentures represented by a global debenture.
Any global Exchange Debenture representing Book-Entry Interests that is exchangeable pursuant to the preceding sentence will be exchangeable in whole for definitive registered debentures, of like tenor and of an equal aggregate principal amount, in denominations of $1,000 and integral multiples of $1,000 in excess thereof. Upon the exchange of a global debenture for definitive registered debentures, that global debenture will be canceled by the Trustee and the definitive registered debentures will be registered in the names and in the authorized denominations as DTC, pursuant to instructions from its participants, any indirect participants or otherwise, instructs the Trustee. The Trustee will deliver those Exchange Debentures in definitive registered form to the persons in whose names those Exchange Debentures are registered and will recognize those persons as the holders of those Exchange Debentures.
Except as provided above, owners of Book-Entry Interests will not be entitled to receive an amount
equalphysical delivery of Exchange Debentures in definitive form and will not be considered the holders of those Exchange Debentures for any purpose under the Indenture, and no global debenture representing Book-Entry Interests will be exchangeable, except for another global debenture of like denomination and tenor to such valuebe registered in the name of one unit multiplied byDTC (or its nominee). Accordingly, each person owning a Book-Entry Interest must rely on the aggregate numberprocedures of units
granted to each such non-employee director. Presently,DTC, Euroclear and Clearstream, as applicable (and their respective nominees) and, if that person is not a participant, on the non-employee
directors are William D. George, J. Douglas Gray, Robert J. Ireland and Thomas
L. Shade. Three units have been granted to eachprocedures of the foregoing directors in
eachparticipant through which that person owns its interest, to exercise any rights of 1996 and 1997. If as of October 1, 1997,a holder under that global debenture or the Merger had occurred and the
non-employee directors ceased serving as directors, and assuming the Base Value
is $5,400, Messrs. George, Gray, Ireland and Shade each would have been entitled
to receive under the Directors Plan, before taxes, approximately $32,400.
RETIREMENT BENEFITS. MMC maintains the MMC Supplementary Retirement Benefit
Plan and the MMC Select Employee Retirement Benefit Plan.Indenture. The plans are unfunded
and maintained to provide retirement benefits to certain members of MMC's
management.
With respect to participants who are currently employed by MMC, the planIndenture provides that in the eventDTC, as a participant's employment is involuntarily
terminated priorholder, may
appoint agents and otherwise authorize participants to age 65 followinggive or take any request, demand, authorization, direction, notice, consent, waiver or other action that a change of control, such participantholder is entitled to give or take under the Indenture. ADM understands that under existing industry practices, if ADM requests any action of holders or an owner of a lump-sum payment equalBook-Entry Interest desires to give or take any action a holder is entitled to give or take under the Indenture, DTC (or its nominee), would authorize the participants owning the relevant Book-Entry Interests to give or take that action, and those participants would authorize beneficial owners owning through those participants to give or take that action or would otherwise act upon the instructions of beneficial owners owning through them.
Information Concerning DTC, Euroclear and Clearstream
ADM understands as follows with respect to DTC, Euroclear and Clearstream:
DTC
DTC is a limited purpose trust company organized under the laws of the State of New York, a “banking organization” within the meaning of New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “Clearing Agency” registered pursuant to the actuarial equivalentprovisions of Section 17A of the Exchange Act. DTC was created to hold securities of its participants (“DTC Participants”) and to facilitate the clearance and settlement of securities transactions among DTC Participants through electronic book-entry changes in accounts of DTC Participants and certain other organizations, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom (or their representatives) own interests in DTC. Indirect access to DTC’s book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (“indirect participants”).
Because DTC can only act on behalf of DTC Participants, who in turn act on behalf of indirect participants and certain banks, the ability of an owner of a beneficial interest to pledge such interest to persons or entities that are not DTC Participants or otherwise take actions in respect of such participant's monthly benefit, calculatedinterest may be limited by the lack of a definitive certificate for that interest. The laws of some states require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interests to such persons may be limited.
Euroclear
Euroclear advises that it was created in 1968 to hold securities for participants of Euroclear (“Euroclear Participants”) and to clear and settle transactions between Euroclear Participants and between Euroclear Participants and participants of certain other securities intermediaries through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Euroclear provides various other services, including safekeeping, administration, clearance and settlement, securities lending and borrowing, and related services, and interfaces with domestic markets in several countries. Euroclear is operated by Euroclear Bank S.A./N.V. (the “Euroclear Operator”), under contract with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the “Cooperative”). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for Euroclear on behalf of Euroclear Participants.
Euroclear Participants include investment banks, securities brokers and dealers, banks, central banks, supranationals, custodians, investment managers, corporations, trust companies and certain other organizations, and may include the Dealer Managers. Indirect access to Euroclear is also available to other firms that clear
through or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly. The Euroclear Operator was launched on December 31, 2000, and replaced Morgan Guaranty Trust Company of New York as the operator of and banker to the Euroclear system. Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System, and applicable Belgian law (collectively, the “Terms and Conditions”). The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis, without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear Participants, and has no record of or relationship with persons holding through Euroclear Participants. Distributions with respect to Exchange Debentures held beneficially through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the plan, after
grantingTerms and Conditions, to the participant three yearsextent received by the U.S. Depositary for Euroclear.
Clearstream
Clearstream holds securities for its participating organizations (“Clearstream Participants”) and facilitates the clearance and settlement of additional agesecurities transactions between Clearstream Participants through electronic book-entry changes in accounts of Clearstream Participants, thereby eliminating the need for physical movement of certificates. Clearstream provides to Clearstream Participants, among other things, services for safekeeping, administration, clearance and service credits undersettlement of internationally traded securities and securities lending and borrowing. Clearstream interfaces with domestic markets in several countries.
Clearstream is registered as a bank in Luxembourg, and as such is subject to regulation by the Select Employee Retirement Plan. AsCommission de Surveillance du Secteur Financier, and the Banque Centrale du Luxembourg, which supervise and oversee the activities of October 1, 1997,Luxembourg banks. Clearstream Participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations, and may include the Dealer Managers. Indirect access to Clearstream is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream Participant either directly or indirectly. Clearstream has established an electronic bridge with the Euroclear Operator in Brussels to facilitate settlement of trades between Clearstream and the Euroclear Operator. Distributions with respect to Exchange Debentures held beneficially through Clearstream will be credited to cash accounts of Clearstream Participants in accordance with its rules and procedures, to the extent received by the U.S. Depositary for Clearstream.
Clearance and Settlement Procedures
Transfers between DTC Participants will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds. Secondary market trading between Clearstream Participants and/or Euroclear Participants will be effected in the ordinary way, in accordance with the applicable rules and operating procedures of Clearstream and Euroclear, and will be settled using the procedures applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly through DTC Participants, on the one hand, and directly or indirectly through Clearstream Participants or Euroclear Participants, on the other, will be effected in DTC in accordance with the DTC rules on behalf of the relevant European international clearing system by its U.S. Depositary; however, such cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in such system, in accordance with its rules and procedures and within its established deadlines (European time). The relevant European international clearing system will, if the employmenttransaction meets its settlement requirements, deliver instructions to its U.S. Depositary to take action to effect final settlement on its behalf by delivering or receiving Exchange Debentures
in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream Participants and Euroclear Participants may not deliver instructions directly to their respective U.S. Depositaries.
Because of each executive officer participating under the plan had been involuntarily
terminated prior to such executive officer reaching age 65 and following a
changetime-zone differences, credits of control, such executive officers would be entitled under the plans to
receive, before taxes, approximately the following: Mr. McKenna, $1,463,000; Mr.
Foster, $84,000; Mr. Horn, $9,800; and Mr. Melliere, $186,000.
SECTIONS 280G AND 4999 OF THE CODE. Some portion of the amounts payable
under the Change-of-Control Arrangements (to the extent such payments are
payableBook-Entry Interests received in Clearstream or Euroclear as a result of the Merger)a transaction with a DTC Participant will be subjectmade during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions in such Exchange Debentures settled during such processing will be reported to Sections 280G and 4999the relevant Euroclear Participants or Clearstream Participants on such business day. Cash received in Clearstream or Euroclear as a result of sales of Exchange Debentures by or through a Clearstream Participant or a Euroclear Participant to a DTC Participant will be received on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the Code, which impose a 20 percent excise tax on the recipient of "excess
parachute payments," as definedbusiness day following settlement in the Code,DTC. Although DTC, Clearstream and deny a tax deduction for such
excess parachute payments, to the company making them. In some cases, the
Change-of-Control Arrangements are subject to adjustment by MMC to reflect the
impact of Sections 280G and 4999. See "Item 2. Change-of-Control Arrangements."
In addition to seeking approval for the Merger Agreement and the Merger, MMC
is also asking its shareholders to approve, for tax purposes, certain payments
under the Change-of-Control Arrangements to support the position that, under the
Code, such amounts will be fully tax deductible to MMC and such executives will
not pay excise taxes on such amounts. See "Item 2. Change-of-Control
Arrangements."
As of the Effective Time, MMC as the surviving corporation will continue to
be obligated under the Change-of-Control Arrangements.
INDEMNIFICATION; INSURANCE. ADM hasEuroclear have agreed that from and after the Effective
Time the indemnification obligations of MMC set forth in MMC's articles of
incorporation and bylaws and the organizational documents of all of its
subsidiaries as in effect on the date of the Merger Agreement will continue as
to any matter arising out of any action or omission of any person described in
those indemnification provisions before the Effective Time. Furthermore, ADM has
agreed to provide directors' and officers' liability insurance coverage for the
benefit of MMC's present and former directors and officers. See "The
Merger--Indemnification and Insurance."
35
In addition to the foregoing benefits, each directorprocedures in order to facilitate transfers of Exchange Debentures among DTC Participants, Clearstream Participants and Euroclear Participants, they are under no obligation to perform or officer of MMC who
is a participant in MMC's employee benefit plans willcontinue to perform such procedures and such procedures may be entitled to the
benefits described under the caption "The Merger-- Employee Benefit Plans."
Except for the arrangements specifically set forth in this Proxy
Statement/Prospectus and the Merger Agreement, ADM has made no commitments with
respect to the retention of ADM or MMC employees or entities after the Merger.
CERTAINdiscontinued at any time.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
CONSIDERATIONS
The following discussion summarizes theis a summary of certain material United States federal income tax consequences that are expectedof the Exchange Offer to result to the shareholdersholders of MMC from the
Merger. This discussionOriginal Debentures, but is not a complete analysis of all potential tax effects. The summary below is based upon current provisionsthe Internal Revenue Code of 1986, as amended (the “Code”), regulations of the Code, Treasury Regulations promulgated thereunder ("Regulations"), currentDepartment, administrative rulings judicial decisions and other applicable authorities in effect aspronouncements of the date hereof,Internal Revenue Service and judicial decisions, all of which are subject to change, possibly with retroactive effect. No ruling from the Internal Revenue Services ("IRS") has been sought
with respect to the Merger or the other transactions contemplated by this Proxy
Statement/Prospectus, and there can be no assurance that the IRS or a court will
not challenge the conclusions reached below. Furthermore, legislative, judicial
or administrative changes may occur, perhaps with retroactive effect, which
could affect the accuracy of the statements and conclusions set forth herein as
well as the tax consequences to the MMC shareholders.
The discussion contained hereinThis summary does not address all aspects of the U.S. federal income taxationtax consequences that may be relevantapplicable to particular MMC shareholdersholders, including dealers in light of
their personal investment or tax circumstances, or to certain types of holders
who may be subject to special treatment under the federal income tax laws
(including, without limitation,securities, financial institutions, broker-dealers,
insurance companies foreign persons,and tax-exempt organizations, holders of stock
or options who received such property for compensatory purposes, and holders who
hold the MMC Common Stock as part of a straddle, hedge or conversion
transaction).organizations. In addition, this discussion is limitedsummary does not consider the effect of any foreign, state, local, gift, estate or other tax laws that may be applicable to persons who hold the
MMC Common Stock and who will hold the ADM Common Stocka particular holder. This summary applies only to a holder that holds such Original Debentures as "capital assets"
(generally, property held for investment)a capital asset within the meaning of Code section
1221. Furthermore, thisSection 1221 of the Code.
An exchange of Original Debentures for Exchange Debentures pursuant to the Exchange Offer will not be treated as a taxable exchange or other taxable event for U.S. federal income tax purposes. Accordingly, there will be no U.S. federal income tax consequences to holders who exchange their Original Debentures for Exchange Debentures in connection with the Exchange Offer and any such holder will have the same adjusted tax basis and holding period in the Exchange Debentures as it had in the Original Debentures immediately before the exchange.
The foregoing discussion of certain U.S. federal income tax considerations does not address state, localconsider the facts and foreigncircumstances of any particular holder’s situation or status. Accordingly, each holder of Original Debentures considering this Exchange Offer should consult its own tax advisor regarding the tax consequences nor does it consider any federal taxes other than income taxes.
ALL HOLDERS OF MMC COMMON STOCK SHOULD CONSULT WITH THEIR OWN TAX ADVISERS
AS TO THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM
OF THE MERGER, INCLUDING THE EFFECT OF ANY CHANGE IN LAW THAT MAY OCCUR.
The Merger is intended to be a tax-free reorganization under Section 368(a)
of the Code soExchange Offer to it, including those under state, foreign and other tax laws.
Each broker-dealer that no gain or loss would be recognized by the holders of MMC
Common Stockreceives Exchange Debentures for its own account pursuant to the extent they receive ADM Common StockExchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Debentures. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Debentures received in exchange for their
MMC Common StockOriginal Debentures where such Original Debentures were acquired as a result of market-making activities or other trading activities. ADM has agreed that, for a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, during this period, all dealers effecting transactions in the Merger. It isExchange Debentures may be required to deliver a condition to MMC's obligation to
consummate the Merger that itprospectus.
The Company will not receive a tax opinionany proceeds from Winston & Strawn,
special tax counsel to MMC ("Tax Counsel"), dated asany sale of the Closing DateExchange Debentures by broker-dealers. Exchange Debentures received by broker-dealers for their own account pursuant to the effect that the Merger qualifies as a reorganization under Section 368(a) of the
Code. If the Merger does not qualify as a reorganization, the exchange of sharesExchange Offer may be sold from time to time in one or more transactions in the Merger wouldover-the-counter market, in negotiated transactions, through the writing of options on the Exchange Debentures or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be taxable.
Ifmade directly to purchasers or to or through brokers or dealers who may receive compensation in the Merger does qualify as a reorganization, then, subjectform of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Debentures. Any broker-dealer that resells Exchange Debentures that were received by it for its own account pursuant to the conditionsExchange Offer and limitations describedany broker or dealer that participates in the tax opinion, (i) the Merger will
qualify as a reorganizationdistribution of such Exchange Debentures may be deemed to be an “underwriter” within the meaning of Code sections 368(a)(1)(A)the Securities Act and 368(a)(2)(E); (ii)any profit on any such resale of Exchange Debentures and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the MMC shareholdersSecurities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not recognize gain or loss for
federal income tax purposesbe deemed to the extent they receive only the ADM Common Stock
in exchange for their MMC Common Stock; and (iii) such exchanging MMC
shareholders' basis in the ADM Common Stock will equal their basis in the MMC
Common Stock exchanged therefor and the shareholders' holding period in the ADM
Common Stock to be received in the Merger will include the period for which the
shareholders held their MMC Common Stock exchanged therefor if the MMC Common
Stock was held as a capital asset. The tax opinion will be made subject to
certain assumptions, conditions, and limitations, including but not limited to
certain representations to be made by MMC, ADM, ADMAC, and their respective
affiliated groups (withinadmit that it is an “underwriter” within the meaning of Code section 1504)the Securities Act.
For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this prospectus and certain
shareholders.
36
Tax Counsel's opinion is based onany amendment or supplement to this prospectus to any broker-dealer that requests such documents in the Code and Regulations in effect atletter of transmittal. The Company has agreed to pay all expenses incident to the timeExchange Offer (including the opinion is rendered, current administrative interpretations and
positionsexpenses of the IRS, and existing court decisions. No assurance can be given
that future legislation, Regulations, and administrative and judicial
interpretations will not affect the conclusions reached in Tax Counsel's
opinion. Furthermore, an opinion ofone counsel is not binding onfor the IRS or a
court; thus, no assurance may be made that a court or the IRS will agree with
Tax Counsel's opinion.
All holders of the MMC Common Stock who receive ADM Common StockDebentures) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the Debentures (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.
Certain legal matters in connection with the Mergeroffering of the Exchange Debentures will be required to attach a statement to their federal income tax
returnspassed upon for the Company by Faegre & Benson LLP, Minneapolis, Minnesota.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The consolidated financial statements of Archer Daniels Midland Company incorporated by reference in Archer Daniels Midland Company’s Annual Report (Form 10-K) for the year ofended June 30, 2011 (including the Merger which describes the facts of the Merger,
including the holder's basis in the MMC Common Stock exchanged,schedule appearing therein), and the numbereffectiveness of sharesArcher Daniels Midland Company’s internal control over financial reporting as of ADM Common Stock received in exchange for that Common Stock. The
holders should also keepJune 30, 2011, have been audited by Ernst & Young LLP, independent registered public accounting firm, as part of their permanent records information
necessary to establish their basis in and holding period for the ADM Common
Stock received in the Merger.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH ABOVE ARE INCLUDED HEREIN FOR
GENERAL INFORMATION ONLY. EACH MMC SHAREHOLDER SHOULD CONSULT A TAX ADVISER AS
TO THE PARTICULAR CONSEQUENCES OF THE MERGER THAT MAY APPLY TO SUCH SHAREHOLDER,
INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX LAWS, AND POSSIBLE
CHANGES IN FEDERAL INCOME TAX LAW.
BUSINESS AND MANAGEMENT AFTER THE MERGER
ADM intends to operate MMC in a manner substantially consistent with its
current operations. ADM will carefully review the operations of MMC in an
attempt to identify opportunities for expense reduction through the use of
shared resources with ADM.
The current directors and executive officers of ADM will continueset forth in their present capacities after consummationreports thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of the Merger. It is anticipated such firm as experts in accounting and auditing.
ARCHER-DANIELS-MIDLAND COMPANY
Offer to Exchange
Up to $527,688,000 Principal Amount of
4.535% Debentures due 2042
for
a Like Principal Amount of
4.535% Debentures due 2042
that after the consummation of the Merger, Charles T. Bayless, John D. McNamara, and
Douglas J. Schmalz, will serve as MMC's directors, and John D. McNamara,
President; David J. Smith, Vice President and Secretary; Scott A. Roberts,
Assistant Secretary; and Charles P. Archer, Treasurer will serve as its
officers.All of the new officers and directors of MMC after consummation of the
Merger arecurrently officers of ADM.
ACCOUNTING TREATMENT
The Merger will be accounted for under the purchase method of accounting.
RESALE OF SHARES BY MMC AFFILIATES
The shares of ADM Common Stock to be received in the Merger will be freely
transferable, except for shares of ADM Common Stock received by persons who are
deemed to be "affiliates," as defined in the ruleshave been registered under the Securities Act of MMC immediately prior to the Effective Time (or of ADM after the Effective
Time). Shares of ADM Common Stock received in the Merger by persons who are such
affiliates may be sold by them only in accordance with the provisions of Rules
144 and 145 under the Securities Act (which impose certain limitations on the
volume and manner of sales by such affiliates)1933
PROSPECTUS
, or pursuant to an effective
registration statement under the Securities Act, or in transactions exempt from
registration thereunder.
DISSENTERS' RIGHTS
The rights of MMC shareholders who choose to dissent from the Merger are
governed by the provisions of Illinois Law. An excerpt of Illinois Law (Sections
11.65 and 11.70) governing dissenters' rights is attached hereto as Exhibit C.
37
Under Section 11.70 of Illinois Law, a shareholder may assert dissenters'
rights only if the shareholder delivers to MMC prior to the vote taken with
respect to the Merger at the Special Meeting a written demand for payment for
his or her shares of MMC Common Stock if the Merger is consummated and the
shareholder does not vote in favor of the Merger.
Within ten days after the Effective Time, or 30 days after the shareholder
delivers to MMC the written demand for payment, whichever is later, MMC will
send each shareholder who has delivered a written demand for payment a statement
setting forth the opinion of MMC as to the estimated value of the shares of MMC
Common Stock, MMC's balance sheet as of the most recently completed fiscal year
ending not earlier than 16 months prior to delivery of the statement, together
with the statement of income for that year and the latest available interim
financial statements, and a commitment to pay the estimated value for the shares
of MMC Common Stock of the dissenting shareholder upon transmittal to MMC of the
certificate(s), or other evidence of ownership, with respect to such shares of
MMC Common Stock.
If the dissenting shareholder does not agree with the opinion of MMC as to
the estimated value of the shares, the shareholder, within 30 days after the
delivery of the statement of value, must notify MMC in writing of his or her
estimate of value and demand payment for the difference between the
shareholder's estimate of value and the amount of the payment by MMC. If, within
60 days from delivery to MMC of the shareholder notification of estimate of
value of the shares, MMC and the dissenting shareholder have not agreed in
writing upon the value of the shares of MMC Common Stock, MMC must either pay
the difference in value demanded or file a petition in the circuit court of
Adams County, Illinois, requesting the court to determine the fair value of the
shares. MMC must make all dissenters, whether or not residents of Illinois,
whose demands remain unsettled parties to such proceeding and all parties will
be served with a copy of the petition. Failure of MMC to commence an action will
not limit or affect the right of dissenting shareholders to otherwise commence
an action as permitted by law. In an appraisal proceeding, the court may appoint
one or more persons as appraisers to receive evidence and recommend decision on
the question of fair value.
Each dissenter made a party to an appraisal proceeding is entitled to
judgment for the amount, if any, by which the court finds that the fair value of
the shares exceeds the amount paid by MMC. The judgment will include an
allowance for interest at such rate as the court may find to be fair and
equitable from the Effective Time to the date of payment.
The court, in an appraisal proceeding, will determine all costs of the
proceeding, including the reasonable compensation and expenses of the
appraisers, if any, but will exclude the fees and expenses of counsel and
experts for any party. If the fair value of the shares as determined by the
court materially exceeds the amount offered by MMC, or if no offer was made,
then all or any part of such expenses may be assessed against MMC. If the amount
by which any dissenter estimated the value of the shares materially exceeds the
value as determined by the court, then all or any part of the costs may be
assessed against the dissenter.
THE FOREGOING SUMMARY IS20
PART II
INFORMATION NOT A COMPLETE STATEMENT OF THE PROVISIONS OF
ILLINOIS LAW RELATING TO THE RIGHTS OF DISSENTING SHAREHOLDERS OF MMC, AND IS
QUALIFIEDREQUIRED IN ITS ENTIRETY BY REFERENCE TO THE EXCERPTS FROM THE ILLINOIS LAW
INCLUDED HEREIN AS EXHIBIT C.
CERTAIN FORWARD-LOOKING INFORMATION
This Proxy Statement/Prospectus contains certain forward-looking
information. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking information to encourage companies to provide
prospective information about their companies without fear of litigation so long
as such information is identified as forward-looking and is accompanied by
meaningful cautionary statements identifying important factors that could cause
actual results to differ materially from those projected in the information. ADM
and MMC identify the following important factors which could cause ADM's and
MMC's actual results to differ materially from any results that might be
projected, forecast, estimated or budgeted by ADM or MMC in forward-looking
information. All of such factors are difficult to predict and many are beyond
the control of ADM and MMC. Accordingly, while ADM and MMC believe
38
that the assumptions underlying the forward-looking information are reasonable,
there can be no assurances that such assumptions will approximate actual
experience. These important factors include: (i) general economic conditions,
changes in interest rates and the performance of stock markets, each of which
may impact the profitability of the combined company; (ii) regulatory
developments affecting agricultural institutions generally; (iii) industry
consolidation and increased competition; (iv) the combined company's ability to
control costs and realize estimated cost savings; and (v) the integration of ADM
and MMC's products, sales and operations in a timely and cost effective manner.
Shareholders are also directed to consider other risks and uncertainties
discussed in the ADM 10-K and other documents filed by ADM with the SEC. ADM and
MMC each disclaim any obligation to update forward-looking information.
BUSINESS OF MMC
GENERAL
MMC is an agribusiness company with three wholly owned operating business
units: MoorMan's, Inc. ("MMI"), a livestock feed manufacturer headquartered in
Quincy, Illinois; Quincy Soybean Co. ("Quincy Soybean"), an integrated soybean
processing and vegetable oil refining business with headquarters in Quincy; and
Agri Sales, Inc. ("ASI"), an originator and processor of dry edible beans and
bean seed with headquarters in Saginaw, Michigan. MMC employs approximately
2,700 people in 35 states.
MMC began in 1885 as a manufacturer and marketer of livestock feed products
and was incorporated in 1912. MMC acquired Quincy Soybean in 1961 and ASI in
1994. Several additional dry edible bean business acquisitions followed the
initial ASI purchase.
MMI manufactures and markets livestock feed products and provides on-site
services to livestock producers in the U.S., primarily swine, beef and dairy
producers. Nine manufacturing plants are located in Strategic Market Areas, and
MMI's direct sales force, the largest in the U.S., is located in 35 states. In
addition to its research-proven products, MMI's direct sales force provides
advisory services for improving livestock production and producer profitability.
Research and development laboratories and research farms develop new products
and processes for livestock producers.
Quincy Soybean operates plants in Quincy, Illinois, and Helena, Arkansas.
These facilities extract vegetable oil from soybeans, refine soybean oil,
manufacture lecithin from soybean gum and produce soybean meal, over 70 percent
of which is exported through the Gulf of Mexico to destinations around the
world.
The vegetable oil refinery at the Quincy location is a joint venture
partnership with the C.F. Sauer Company of Richmond, Virginia. The Quincy
facility also refines other vegetable oils and packages finished vegetable oil
products. Quincy Soybean's processing facilities are supported by a wholly owned
country elevator system located in Arkansas, Illinois, Kentucky and Missouri.
ASI is one of the largest originators, processors and marketers of pinto,
navy and black beans in the world. ASI operates over 50 dry edible bean and
grain elevators, which are located in all the major dry edible bean growing
areas in the U.S. In addition, ASI is the largest originator and marketer of dry
edible bean seed in the U.S. with locations in Wyoming, Idaho and California.
Its seed facilities are dispersed over these western states to help manage
disease and climatic conditions.
MMC COMMON STOCK OWNERSHIP
As of November 3, 1997, there were 100,000 authorized shares of MMC Common
Stock, of which 54,770 shares were issued and outstanding. There were
approximately 295 holders of MMC Common
39
Stock as of such date. The following table sets forth, as of such date, the
number of shares and percentage held by each director, executive officer,
directors and executive officers as a group, and each beneficial owner of more
than 5 percent of the total outstanding shares of MMC Common Stock.
PROSPECTUS
| Item 20. | Indemnification of Directors and |
Under Delaware Law, stockholders of corporations being acquired pursuant to
a merger have the right to serve upon the corporation a written demand for
appraisal of their shares when the stockholders receive any form of
consideration for their shares other than (i) shares of the surviving
corporation, (ii) shares of any other corporation listed on a national
securities exchange or held of record by more than 2,000 stockholders, (iii)
cash in lieu of fractional shares, or (iv) any combination thereof. Stockholders
who perfect their appraisal rights are entitled to receive cash from the
corporation equal to the value of their shares as established by judicial
appraisal. Corporations may enlarge these statutory rights by including in their
certificate of incorporation a provision allowing the appraisal rights in any
merger in which the corporation is a constituent corporation. The ADM
Certificate does not contain any provision enlarging such appraisal rights.
VOTE ON CERTAIN FUNDAMENTAL ISSUES
Illinois Law requires that a plan of merger, consolidation, exchange, sale
of all or substantially all of a corporation's assets other than in the ordinary
course, or dissolution be approved by at least two-thirds of the outstanding
shares entitled to vote thereon. Except with respect to certain unsolicited
business combinations and business combinations with interested shareholders,
the MMC Articles and Bylaws do not alter this general rule.
Delaware Law and the ADM Certificate require that any merger, consolidation,
sale of all or substantially all of the assets, or dissolution of a corporation
be approved by the affirmative vote of the holders of a majority of the
outstanding shares of the corporation entitled to vote thereon.
44
CUMULATIVE VOTING
Illinois Law and the MMC Bylaws provide that in all elections for directors,
every shareholder shall have the right to vote the number of shares owned by him
or her for as many persons as there are directors to be elected, or to cumulate
said shares, and give one candidate as many votes as the number of directors
multiplied by the number of his or her shares shall equal, or to distribute such
votes in any proportion among any number of candidates.
Delaware Law provides that the certificate of incorporation of any
corporation may grant stockholders the right to cumulate their votes. The ADM
Certificate does not provide stockholders the right to cumulate votes in the
election of directors. Therefore, stockholders holding a majority of ADM voting
stock will be able to elect all of ADM's directors.
SPECIAL MEETINGS OF THE SHAREHOLDERS
Illinois Law provides that special meetings of the shareholders may be
called by the president, the board of directors or the holders of not less than
one-fifth of all the outstanding shares entitled to vote on the matter for which
the meeting is called. Under the ADM Bylaws, special meetings of the
stockholders of ADM may be held upon the call of the Board of Directors, or the
Executive Committee, if one is selected, or of the President, and shall be
called by the President or the Secretary at the request in writing of
stockholders owning a majority of the capital stock of ADM entitled to vote at
the meeting.
SHAREHOLDER ACTION BY WRITTEN CONSENT
The MMC Articles do not permit actions to be taken by the shareholders
without a meeting. Written consents by the shareholders are not allowed.
Under Delaware Law, ADM may take any action that may be taken or is required
to be taken at any annual or special meeting of stockholders, without a meeting,
prior notice and a vote, if a consent in writing, setting forth the action so
taken, is signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted.
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION
Illinois Law and the MMC Articles generally allow the corporation to amend
its articles of incorporation if the board of directors of the corporation
adopts a resolution approving such amendment, and the holders of at least
two-thirds of the outstanding shares entitled to vote in respect thereof vote in
favor of the amendment. In addition, the MMC Articles require the approval of 80
percent of the outstanding shares of the corporation to amend, alter or repeal,
or adopt any provision inconsistent with certain provisions of the MMC Articles.
Under Delaware Law amendments to the ADM Certificate must be approved,
unless a greater affirmative vote is required under the ADM Certificate, by the
holders of a majority of all outstanding shares entitled to vote on an
amendment, including a majority of all outstanding shares of each class or
series if the rights of the holders of such securities would be adversely
affected by the amendment.
ANTI-TAKEOVER PROVISIONS
The MMC Articles contain certain provisions designed to prevent unsolicited
takeovers of the corporation. Specifically, such provisions require the approval
of outstanding shares representing at least 80 percent of the voting power of
the corporation to approve certain business combinations that have not been
recommended by the board of directors.
In addition, pursuant to Illinois Law and the MMC Articles, the corporation
is prohibited from engaging in certain business combinations with any interested
shareholder for a period of three years following the date on which such
shareholder became an interested shareholder, unless (i) the board of
45
directors of the corporation approved the business combination or the
transaction in which such shareholder became an interested shareholder, (ii)
upon the consummation of the transaction in which the shareholder became an
interested shareholder, such shareholder owned at least 85 percent of the
outstanding voting shares of the corporation (excluding shares held by certain
persons), or (iii) the business combination is approved by the board of
directors and authorized at a meeting of the shareholders by the affirmative
vote of at least 66-2/3 percent of the outstanding voting shares which are not
owned by the interested shareholder.
Delaware has also enacted statutory provisions that limit certain business
combinations of Delaware corporations with interested stockholders. Under
Delaware Law, an interested stockholder (a stockholder whose beneficial
ownership in the corporation is at least 15 percent of the outstanding voting
securities) is precluded from entering into certain business combinations with
the corporation for a period of three years following the date on which the
stockholder became an interested stockholder unless, among other exceptions,
prior to that date the board of directors approves either the business
combination or the transaction that resulted in the stockholder becoming an
interested stockholder. Delaware Law provides that the business combination
provisions have no effect if (i) the tender offer or other transaction by which
the stockholder became an interested stockholder results in the stockholder
beneficially owning at least 85 percent of the voting securities of the
corporation (exclusive of shares owned by directors who are also officers and
shares owned by certain employee stock option plans) or (ii) the business
combination is approved by the board of directors and two-thirds of the shares
held by stockholders other than the interested stockholder. ADM has not
opted-out of this Delaware anti-takeover law.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF DIRECTORS
The ADM Certificate provides that no director will be liable to ADM or its
stockholders for monetary damages for breach of fiduciary duty by the director
as a director, except that this provision does not eliminate or limit the
liability of the director to the extent provided by applicable law, (i) for any
breach of the duty of loyalty of the director to ADM or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) for any unlawful action under Section 174
of Delaware Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
In general, under Delaware Law the indemnification provided for therein is
not deemed to be exclusive of any nonstatutory indemnification rights provided
to directors, officers and employees under any by-law, agreement or vote of
stockholders or disinterested directors. The ADM Bylaws and the MMC Certificate
provide for the indemnification of directors, officers, agents and employees, to
the fullest extent permitted by Delaware Law against liability arising by reason
of the fact that such individual was a director, officer, agent or employee of
ADM or MMC, as the case may be.
Generally, Illinois Law provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any proceedingan action (other than an action by or in the right of the corporation) by reason of the fact that such person ishis or her service as a director, officer, employee or agent of the corporation, ifor his or her service, at the corporation’s request, as a director, officer, employee or agent of another corporation or other enterprise, against expenses (including attorneys’ fees) that are actually and reasonably incurred by him or her (“Expenses”), and judgments, fines and amounts paid in settlement that are actually and reasonably incurred by him or her, in connection with the defense or settlement of such personaction, provided that he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposeopposed to the corporation’s best interests, of the
corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her actions wereconduct was unlawful. The MMC Bylaws provide
Although Delaware law permits a corporation to indemnify any person referred to above against Expenses in connection with the defense or settlement of an action by or in the right of the corporation, provided that he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best interests, if such person has been judged liable to the corporation, indemnification is only permitted to the extent that the corporation will indemnify those persons set forth in Illinois Law toCourt of Chancery (or the fullest extent it is permitted to indemnify such persons.
ITEM 2. CHANGE-OF-CONTROL ARRANGEMENTS
Under certain circumstances, Sections 280G and 4999 of the Code impose
certain penalties with respect to compensation that is paid contingent upon a
change in control. The penalties are assessed if the payments are deemed
"Parachute Payments." A payment is considered a Parachute Payment if it is equal
to or greater than three times the employee's "base amount." The "base amount"
is an average of
46
the employee's annual W-2 compensation for the prior five years (or such shorter
period if the employee has been employed with the company less than five years).
If a payment is deemed a Parachute Payment, two penalties may be imposed:
(i) the recipient employee pays an excise tax of 20 percent of the
amount of the Parachute Payment in excess of the base amount (the "Excess
Parachute Payment"); and
(ii) the company cannot deduct for income tax purposes the amount of the
Excess Parachute Payment.
If consummated, the Merger would constitute a change of control of MMC as
defined under the Change-of-Control Arrangements, entitling the applicable
employee to certain benefits, provided certain conditions are fulfilled. See
"The Merger--Interest of Certain Persons in the Merger." Certain of the benefits
due or that may become due under the Change-of-Control Arrangements as a result
of the Merger would constitute Parachute Payments as defined in Code Section
280G(b). Therefore, an estimated $2,759,000 of the amounts payable to Mr.
McKenna and an estimated $571,000 of the amounts payable to Mr. Schwarz would
constitute Excess Parachute Payments under Code Section 280G. Due to the
classification of such amounts as Excess Parachute Payments, no deduction would
be allowed to MMC for such amounts, and each applicable employee would be
subject to a 20 percent excise tax upon receipt of such amounts under Code
Section 4999(a). The 20 percent excise tax on such amounts under Code Section
4999(a) would result in a tax of $552,000 for Mr. McKenna and $114,000 for Mr.
Schwarz. In addition, MMC would be denied a deduction in the amount of
approximately $3,330,000 as a result of the classification of such payments as
Excess Parachute Payments. Final calculations of the foregoing amounts will be
determined by independent auditors using the actual dates of the change of
control and termination of employment.
The Change-of-Control Agreements take into account, for calculation
purposes, the tax consequences to the executives of Sections 280G and 4999 of
the Code. As a result, the payment for Mr. Foster under such agreement has been
reduced by approximately $35,000. The application of this provision to the other
executives has not resulted in any reductions.
Under Code Section 280(G)(b), the payments under the Change-of-Control
Arrangements should not be deemed Parachute Payments if they are approved by a
separate vote of more than 75 percent (or three-fourths) of the MMC Common Stock
entitled to vote thereon. If MMC's shareholders approve the proposal described
under this Item 2, MMC (as a wholly owned subsidiary of ADM) should be permitted
to report the full amount of payments under the Change-of-Control Arrangements
as deductions for income tax purposes and the executives receiving such payments
should not be required to pay excise taxes on any portion of the payments. In
addition, such approval would have the effect of restoring approximately $35,000
to Mr. Foster, under his Change-of-Control Agreement. However, since the payment
of the Parachute Payments is not contingent on such shareholder approval, the
IRS could assert the position that the Excess Parachute Payments are
non-deductible by MMC and impose the 20 percent excise tax on the recipients of
such amounts. MMC and the recipients believe the Code supports their position
and would vigorously contest such an assertion by the IRS.
Shareholder approval of the payments under the Change-of-Control is not a
condition to either the consummation of the Merger or the payment of the amounts
due under Change-of-Control Arrangements, including, the amounts which
constitute Parachute Payments, since MMC is contractually obligated to make such
payments.
THE BOARD OF DIRECTORS OF MMC RECOMMENDS THAT YOU VOTE FOR THE APPROVAL, FOR
TAX PURPOSES, OF CERTAIN PAYMENTS UNDER THE CHANGE-OF-CONTROL ARRANGEMENTS.
47
LEGAL MATTERS
The validity of the shares of ADM Common Stock to be issued in the Merger
will be passed upon for ADM by Faegre & Benson LLP, Minneapolis, Minnesota.
Certain tax consequences of the Merger will be passed upon for MMC by Winston &
Strawn, Chicago, Illinois.
EXPERTS
The consolidated financial statements of ADM as of June 30, 1997 and 1996
and for each of the three years in the period ended June 30, 1997, incorporated
in this Proxy Statement/Prospectus by reference from the ADM 10-K for the year
ended June 30, 1997, have been audited by Ernst & Young LLP, independent
auditors, as stated in their reports, which are incorporated herein by reference
and have been so incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
The consolidated financial statements of MMC and its subsidiaries as of
March 29, 1997, and March 30, 1996, and for the years then ended included in
this Proxy Statement/Prospectus have been audited by Deloitte & Touche LLP as
stated in its report appearing herein. The consolidated statements of income,
stockholders' equity and of cash flows of MMC and its subsidiaries as of March
25, 1995, included in this Proxy Statement/Prospectus have been audited by Price
Waterhouse LLP as stated in its report appearing herein. The financial
statements of C&T Quincy, L.L.C. (a joint venture of MMC accounted for on the
equity method) as of March 31, 1997, and 1996 and for each of the three years in
the period ended March 31, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon appearing elsewhere
herein. The balance sheet and statements of income, partners' capital and of
cash flows of ContiQuincy Export Company (a joint venture of MMC accounted for
on the equity method) for the year ended March 31, 1995, have been audited by
Arthur Andersen LLP, as stated in its report included herein. The statements of
income, members' equity, and cash flows of Associated Feed Blenders, L.L.C. (a
joint venture of MMC accounted for on the equity method) for the year ended
March 25, 1995, have been audited by McGladrey & Pullen LLP, as stated in its
report included herein. The statements of income, stockholders' equity and of
cash flows of Agri Sales, Inc. (consolidated with those of MMC) for the year
ended March 31, 1995, have also been audited by McGladrey & Pullen LLP as stated
in its report included herein. Such financial statements of MMC and its
consolidated subsidiaries (with joint ventures accounted for by the equity
method) are included herein in reliance upon the respective reports of such
firms given upon their authority as experts in accounting and auditing. All of
the foregoing firms are independent auditors.
INDEPENDENT ACCOUNTANTS
Representatives of Deloitte & Touche LLP are expected to be present at the
Special Meeting and will have the opportunity to make a statement, if they
desire to do so, and will be available to respond to appropriate questions.
48
INDEX TO FINANCIAL STATEMENTS
MOORMAN MANUFACTURING COMPANY
Reports of Independent Auditors...................................................... F-2
Consolidated Statements of Income for the Years Ended March 29, 1997, March 30, 1996
and March 25, 1995.................................................................. F-9
Consolidated Balance Sheets at March 29, 1997 and March 30, 1996..................... F-10
Consolidated Statement of Stockholder's Equity for the Years Ended March 29, 1997,
March 30, 1996 and March 25, 1995................................................... F-12
Consolidated Statement of Cash Flows for the Years Ended March 29, 1997, March 30,
1996 and March 25, 1995............................................................. F-13
Notes to Consolidated Financial Statements........................................... F-14
Condensed Consolidated Statements of Operations for the Three-Month Periods Ended
June 28, 1997 and June 29, 1996 (unaudited)......................................... F-24
Condensed Consolidated Balance Sheets at June 28, 1997 and June 29, 1996
(unaudited)......................................................................... F-25
Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended
June 28, 1997 and June 29, 1996 (unaudited)......................................... F-26
Notes to Condensed Consolidated Financial Statements (unaudited)..................... F-27
F-1
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Moorman Manufacturing Company and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Moorman
Manufacturing Company and Subsidiaries (the "Company") as of March 29, 1997 and
March 30, 1996, and the related consolidated statements of income, stockholders'
equity, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits. We did not audit
the financial statements of C&T Quincy, L.L.C. The Company's investment in this
joint venture is accounted for by the equity method. The Company's equity of
$16.4 million and $17.1 million in the net assets at March 29, 1997 and March
30, 1996, respectively, and of $.7 million and $3 million in the net losses for
the years then ended of this joint venture is included in the accompanying
consolidated financial statements. The financial statements of this joint
venture were audited by other auditors whose report has been furnished to us,
and our opinion, insofar as it relates to the amounts included for this joint
venture, is based solely on the report of such other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based upon our audits and the report of other auditors, such
consolidated financial statements present fairly, in all material respects, the
financial position of the Company at March 29, 1997 and March 30, 1996, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
St. Louis, Missouri
May 12, 1997
(September 12, 1997 as to Note 14)
F-2
REPORT OF INDEPENDENT ACCOUNTANTS
May 16, 1995
To the Board of Directors
Moorman Manufacturing Company
and Subsidiaries
In our opinion, the accompanying consolidated statements of income, retained
earnings and of cash flows present fairly, in all material respects, the results
of operations and cash flows of Moorman Manufacturing Company and Subsidiaries
for the year ended March 25, 1995 in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We did not audit the financial
statements of C. & T./Quincy Foods Inc., Conti-Quincy Export Company and
Associated Feed Blenders, L.L.C., joint venturescourt in which the Company had
aggregate investment interestsaction was brought) determines that, despite the adjudication of $22,497,314 at March 25, 1995, including
related aggregate losses of $3,943,057liability, such person is entitled to indemnity for such Expenses as the year then ended. In addition, we
did not audit the financial statements of Agri Sales, Inc., a wholly owned
subsidiary of the Company, with assets of $61,765,996 at March 25, 1995 and
related revenues of $31,059,436 for the year then ended. Those statements were
audited by other auditors whose reports thereon have been furnished to us, and
our opinion expressed herein, insofar as it relates to the amounts included for
C. & T./Quincy Foods, Inc., Conti-Quincy Export Company, Associated Feed
Blenders, L.L.C. and Agri Sales, Inc., is based solely on the reports of the
other auditors. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principals used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above. We have not audited the consolidated financial statements of Moorman
Manufacturing Company and Subsidiaries as of or for any period subsequent to
March 25, 1995.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Chicago, Illinois
F-3
REPORT OF INDEPENDENT AUDITORS
Members
C. & T. Quincy, L.L.C.
We have audited the balance sheets of C. & T. Quincy, L.L.C. as of March 31,
1996 and 1995, and the related statements of operations, changes in members'
capital, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted accounting
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of C. & T. Quincy, L.L.C. at
March 31, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
St. Louis, Missouri
April 26, 1996
F-4
REPORT OF INDEPENDENT AUDITORS
Members
C. & T. Quincy, L.L.C.
We have audited the balance sheets of C. & T. Quincy, L.L.C. as of March 31,
1997 and 1996, and the related statements of operations, changes in members'
capital, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted accounting
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of C. & T. Quincy, L.L.C. at
March 31, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
St. Louis, Missouri
April 29, 1997
F-5
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
ContiQuincy Export Company:
We have audited the balance sheet of ContiQuincy Export Company (a New York
general partnership) as of March 31, 1995, and the related statements of income,
partners' capital and cash flows for the year then ended (not included herein).
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted accounting
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ContiQuincy Export Company
as of March 31, 1995, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
May 9, 1995
F-6
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Agri Sales, Inc.
Saginaw, Michigan
We have audited the statements of income, retained earnings (deficit), and
cash flows of Agri Sales, Inc., a wholly-owned subsidiary of Moorman
Manufacturing Company for the period from November 14, 1994, to March 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Agri
Sales, Inc. for the period from November 15, 1994, to March 31, 1995, in
conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen LLP
Cedar Rapids, Iowa
April 28, 1995
F-7
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Associated Feed Blenders, L.L.C.
Quincy, Illinois
We have audited the statements of income, members' equity, and cash flows of
Associated Feed Blenders, L.L.C., 70% owned by Moorman Manufacturing Company,
for the period from August 8, 1994, date of inception, to March 25, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Associated
Feed Blenders, L.L.C. for the period from August 8, 1994, date of inception, to
March 25, 1995, in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen LLP
Cedar Rapids, Iowa
April 18, 1995
F-8
MOORMAN MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED MARCH 29, 1997, MARCH 30, 1996 AND MARCH 25, 1995
(AMOUNTS IN THOUSANDS)
1997 1996 1995
------------- ----------- -----------
NET SALES................................................................ $ 1,157,859 $ 973,465 $ 904,321
COST OF SALES............................................................ 1,048,707 851,954 765,063
GROSS PROFIT ON SALES.................................................... 109,152 121,511 139,258
SELLING, GENERAL AND ADMINISTRATIVE...................................... 113,286 115,486 118,622
OPERATING (LOSS) MARGIN.................................................. (4,134) 6,025 20,636
GAIN FROM BENEFIT PLAN CURTAILMENTS AND PLAN CHANGES..................... 13,626 17,080 --
RESTRUCTURING AND CLOSURE CHARGES........................................ -- (1,873) (4,942)
OPERATING INCOME......................................................... 9,492 21,232 15,694
OTHER INCOME (EXPENSE):
Interest income........................................................ 5,484 8,528 7,629
Interest expense....................................................... (7,296) (5,327) (1,867)
Equity in earning (losses) of joint ventures - net..................... 272 (2,139) (3,061)
Other - net............................................................ 2,214 2,571 (253)
------------- ----------- -----------
Total................................................................ 674 3,633 2,448
------------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES.................... 10,166 24,865 18,142
PROVISION FOR INCOME TAXES............................................... 3,386 3,935 5,054
------------- ----------- -----------
NET INCOME FROM CONTINUING OPERATIONS.................................... 6,780 20,930 13,088
GAIN (LOSS) FROM DISCONTINUED OPERATIONS -
Net of income tax (expense) benefit of $(61), $931 and $35,
respectively.......................................................... 93 (1,550) (55)
------------- ----------- -----------
NET INCOME............................................................... $ 6,873 $ 19,380 $ 13,033
------------- ----------- -----------
------------- ----------- -----------
See notes to consolidated financial statements
F-9
MOORMAN MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 29, 1997, MARCH 30, 1996
(AMOUNTS IN THOUSANDS)
ASSETS
1997 1996
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents............................................................. $ 20,240 $ 4,151
Short-term investments................................................................ 2,895 38,238
Margin deposits....................................................................... 15,043 11,655
Accounts and notes receivable--less allowance for doubtful accounts of $2,624 and
$1,596, respectively................................................................. 71,523 74,676
Inventories........................................................................... 236,626 214,093
Prepaid income taxes.................................................................. 7,197 10,540
Prepaid expenses...................................................................... 1,560 1,030
Deferred income tax benefits.......................................................... 11,620 9,852
----------- -----------
Total current assets.............................................................. 366,704 364,235
----------- -----------
NONCURRENT ASSETS:
Notes receivable...................................................................... 5,524 3,541
Property, plant and equipment--net.................................................... 135,023 104,914
Investments in joint ventures......................................................... 21,226 20,530
Long-term investments................................................................. 10,128 35,055
Deferred income tax benefits.......................................................... 567
Goodwill and other intangible assets--less accumulated amortization of $1,544 and
$567, respectively................................................................... 31,579 13,812
Other assets.......................................................................... 3,281 2,308
----------- -----------
Total noncurrent assets........................................................... 206,761 180,727
----------- -----------
TOTAL................................................................................... $ 573,465 $ 544,962
----------- -----------
----------- -----------
(continued)
See notes to consolidated financial statements
F-10
MOORMAN MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 29, 1997, MARCH 30, 1996
(AMOUNTS IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996
----------- -----------
CURRENT LIABILITIES:
Accounts payable...................................................................... $ 60,264 $ 42,850
Borrowings under short-term line of credit agreements................................. 106,971 87,461
Current portion of long-term debt..................................................... 4,354 3,535
Dividends payable..................................................................... 6,572 6,820
Customer deposits..................................................................... 4,843 5,323
Accrued compensation.................................................................. 9,245 7,815
Other accrued expenses................................................................ 13,021 11,176
Income taxes payable.................................................................. 884 1,200
Taxes other than income............................................................... 1,336 1,237
----------- -----------
Total current liabilities........................................................... 207,490 167,417
----------- -----------
NONCURRENT LIABILITIES
Long-term debt........................................................................ 53,695 41,141
Accrued pension and other postretirement benefits..................................... 29,038 44,312
Deferred income taxes................................................................. 6,550
Other liabilities..................................................................... 1,865 357
----------- -----------
Total noncurrent liabilities........................................................ 91,148 85,810
----------- -----------
Total liabilities................................................................... 298,638 253,227
----------- -----------
CONTINGENCIES (Notes 12 and 14)
STOCKHOLDERS' EQUITY
Common stock, $1 par value, authorized, 100,000 shares; issued and outstanding, 70,000
shares............................................................................... 70 70
Retained earnings..................................................................... 315,934 322,802
Less: treasury stock (15,230 and 13,177 shares, respectively) at cost................. (41,177) (31,137)
----------- -----------
Total stockholders' equity.......................................................... 274,827 291,735
----------- -----------
TOTAL................................................................................... $ 573,465 $ 544,962
----------- -----------
----------- -----------
F-11
MOORMAN MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEAR ENDED MARCH 29, 1997, MARCH 30, 1996 AND MARCH 25, 1995
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996 1995
---------------------- ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- ----------- --------- -----------
COMMON STOCK - Par value $1.00 per share
(100,000 shares authorized).............. 70,000 $ 70 70,000 $ 70 70,000 $ 70
--------- --------- ---------
--------- --------- ---------
RETAINED EARNINGS:
Balance, beginning of year............... 322,802 317,675 320,135
Net income............................... 6,873 19,380 13,033
Dividends declared....................... (13,741) (14,253) (15,493)
----------- ----------- -----------
Balance, end of year................... 315,934 322,802 317,675
TREASURY STOCK:
Balance, beginning of year............... 13,177 (31,137) 8,171 (4,024) 7,653 (1,435)
Purchase of shares....................... 2,053 (10,040) 5,006 (27,113) 518 (2,589)
--------- ----------- --------- ----------- --------- -----------
Balance, end of year................... 15,230 (41,177) 13,177 (31,137) 8,171 (4,024)
--------- --------- ---------
--------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY................. $ 274,827 $ 291,735 $ 313,721
----------- ----------- -----------
----------- ----------- -----------
F-12
MOORMAN MANUFACTURING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 29, 1997, MARCH 30, 1996 AND MARCH 25, 1995
(AMOUNTS IN THOUSANDS)
1997 1996 1995
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income..................................................................... $ 6,873 $ 19,380 $ 13,033
Adjustments needed to reconcile to cash flows from operating activities:
Depreciation and amortization................................................ 16,780 16,553 14,485
Provision for losses on accounts and notes receivable - net.................. 1,028 1,102 2,223
Provision for deferred income taxes.......................................... 4,849 7,776 (1,700)
Gains on sales of property, plant and equipment.............................. (859) (1,108) 3,623
Equity in (earnings) losses of joint ventures................................ (272) 2,139 3,061
Gains from benefit plan curtailment and plan changes......................... (13,626) (17,080)
Other noncash charges........................................................ 158
Loss on sale of assets of discontinued operations, net of tax benefit........ 1,205
Changes in assets and liabilities (net of effects of acquired businesses):
Accounts and notes receivable.............................................. 13,187 (8,923) 9,439
Inventories................................................................ (1,533) (55,157) 55,454
Margin deposits............................................................ (3,388) (9,361) 215
Other assets............................................................... 4,745 (6,069) 2,924
Accounts payable........................................................... 5,315 1,495 (8,924)
Customer deposits.......................................................... (6,666) 2,304 795
Other liabilities.......................................................... (3,563) (8,837) (1,207)
--------- --------- ---------
Net cash provided by (used in) operating activities...................... 22,870 (54,423) 93,421
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of assets of discontinued operations....................... -- 2,705 1,138
Purchases of investments....................................................... (100,213) (173,967) (166,866)
Sales of investments........................................................... 159,847 199,965 189,176
Proceeds from sales of property, plant and equipment........................... 3,706 4,152
Capital expenditures........................................................... (30,940) (21,980) (16,635)
Loans made..................................................................... (25,755) (9,549) (4,649)
Loan repayments received....................................................... 21,512 6,912 4,714
Investments in joint ventures.................................................. (1,100) (401) (4,864)
Distributions from joint ventures.............................................. 676 1,536
Business acquisitions - net of cash acquired................................... (16,755) (19,293) (24,437)
--------- --------- ---------
Net cash provided by (used in) investing activities.......................... 10,978 (9,920) (22,423)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings............................................. 20,000 30,522 11,957
Reductions of long-term debt................................................... (13,238) (6,907) (136)
Net (payments) borrowings under line-of-credit agreements...................... (491) 53,699 (41,233)
Purchases of treasury stock.................................................... (10,040) (27,113) (2,589)
Dividends paid................................................................. (13,990) (14,852) (15,558)
--------- --------- ---------
Net cash provided by (used in) financing activities.......................... (17,759) 35,349 (47,559)
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............................. 16,089 (28,994) 23,439
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..................................... 4,151 33,145 9,706
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR........................................... $ 20,240 $ 4,151 $ 33,145
--------- --------- ---------
--------- --------- ---------
See notes to consolidated financial statements.
F-13
MOORMAN MANUFACTURING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 29, 1997, MARCH 30, 1996 AND MARCH 25, 1995
(DOLLAR AMOUNTS IN MILLIONS)
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
ORGANIZATION - Moorman Manufacturing Company and its subsidiaries (the
"Company") process and blend agricultural commodities.court deems proper. The Company owns and
operates facilities that:
- Manufacture livestock feed
- Crush and market soybeans and related meal and oil; and
- Store, process and grade edible beans. The Company sells a broad range of
products to a diverse base of international and domestic customers.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of Moorman Manufacturing Company and its subsidiaries, all of
which are wholly-owned. All significant intercompany transactions and
balances have been eliminated. Investments in joint ventures are accounted
for under the equity method. During 1997, 1996, 1995, the Company entered
into various transactions to purchase stock or certain assets of other
businesses (see Note 9). These transactions were accounted for as purchases.
Accordingly, the costs of the acquisitions were allocated to the assets
acquired and liabilities assumed based on their estimated fair values at the
dates of the acquisitions. The results of operations of the acquired
businesses since their dates of acquisition are included in the accompanying
consolidated financial statements.
FISCAL YEAR-END - The Company's fiscal year ends on the last Saturday in
March. There were fifty-two weeks in fiscal years 1997 and 1995 and
fifty-three weeks in fiscal year 1996.
RECLASSIFICATIONS - Certain prior year amounts have been reclassified to
conform with the current year presentation.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
FAIR VALUE OF FINANCIAL INSTRUMENT - The carrying amounts of investment
securities, accounts and notes receivable and payable and long-term debt
approximate their fair values, as determined based upon quoted market prices
where available or current market rates for instruments with similar terms
and maturities.
CONCENTRATIONS OF CREDIT RISK - The Company sells on credit to a diverse
customer base. Credit limits, ongoing credit evaluation and account
monitoring procedures are utilized to minimize the risk of loss. The Company
does not anticipate any losses from concentration of credit in excess of
provisions currently recorded.
REVENUE RECOGNITION - Revenue is recognized at the date of shipment or
delivery based upon the terms of individual sales agreements.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash, time
deposits, money market investments and all short-term investments with
original maturities of three months or less.
INVESTMENTS - The Company has the intent and ability to hold its investment
securities to maturity and, accordingly, accounts for these securities using
the amortized cost method.
MARGIN DEPOSITS - Margin deposits represent cash held at commodity brokers as
collateral on certain transactions.
F-14
INVENTORIES - Agricultural commodities are generally stated at market. Open
commodity forward and futures contracts are also stated at market, reduced by
applicable provisions for commitment and performance risk. The Company
generally hedges its commodities transactions to minimize risk due to market
fluctuations. Inventories related to livestock feed operations are stated at
the lower of average cost or market and inventories of edible beans are
stated at the lower of cost, determined by the first-in, first-out method, or
market.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at
cost less accumulated depreciation. Depreciation is computed using primarily
the straight-line method over the estimated useful lives (3 years to 39
years) of the related assets. The Company capitalizes internal use computer
software costs including external purchases of software, consulting and other
professional fees incurred for services provided by third parties, and
payroll-related costs for employee time spent directly on software projects.
GOODWILL AND OTHER INTANGIBLE ASSETS - The excess of the purchase price over
the fair value of net assets of businesses acquired is amortized on a
straight-line basis principally over forty years. The Company periodically
reviews goodwill and other intangible assets to assess recoverability.
Impairments are recognized in operations if the expected future operating
cash flows (undiscounted and without interest charges) derived from such
intangible assets are less than carrying values.
INCOME TAXES - Deferred income taxes are determined using an asset and
liability approach that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recognized in the Company's financial statements or tax returns.
2. INVESTMENTS
Short-term and long term investments consist of the following:
1997 1996
--------- ---------
Short-term investments:
State and local government securities................................... $ 2.6 $ 25.8
Treasury bills.......................................................... 0.3 10.4
Commercial paper........................................................ 2.0
--------- ---------
Total short-term investments.......................................... $ 2.9 $ 38.2
--------- ---------
--------- ---------
Long-term investments (maturing through 2001):
State and local government securities................................... $ 6.3 $ 31.2
Other................................................................... 3.8 3.9
--------- ---------
Total long-term investments........................................... $ 10.1 $ 35.1
--------- ---------
--------- ---------
The market value of the investment portfolio approximates carrying value at
March 29, 1997 and March 20, 1996.
During 1997 and 1996, securities with carrying values totaling $35.1 and
$65.9, respectively, were sold prior to maturity for a new (loss) gain of
$(.2) and $.3, respectively. These securities were liquidated to finance
unanticipated cash needs primarily related to business acquisitions and
treasury stock purchases. Cost of securities for calculating realized gains
and losses is determined using the specific identification basis.
F-15
3. INVENTORIES
Inventories consist of the following:
1997 1996
--------- ---------
Finished products.................................................... $ 144.0 $ 86.9
Raw materials........................................................ 68.6 104.0
Livestock............................................................ 19.3 14.3
Other................................................................ 4.7 8.9
--------- ---------
Total.............................................................. $ 236.6 $ 214.1
--------- ---------
--------- ---------
4. PROPERTY, PLANT AND EQUIPMENT
Major classifications of property, plant and equipment are as follows:
1997 1996
--------- ---------
Land................................................................ $ 8.3 $ 8.1
Buildings and improvements.......................................... 71.3 64.8
Machinery and equipment............................................. 192.8 170.0
Vehicles............................................................ 16.9 17.3
Purchased software and system development costs..................... 9.9
Other............................................................... 10.4 10.1
Held for disposal................................................... 0.8
--------- ---------
Total............................................................. 309.6 271.1
Accumulated depreciation............................................ (178.5) (170.2)
Construction in progress............................................ 3.9 4.0
Net property, plant and equipment................................. $ 135.0 $ 104.9
--------- ---------
--------- ---------
5. INCOME TAXES
The components of the provision (benefit) for taxes on income from
continuing operations are:
1997 1996 1995
--------- --------- ---------
Current:
Federal.......................................................... $ (1.6) $ (3.5) $ 5.3
State............................................................ (0.3) (0.4) 1.4
--------- --------- ---------
(1.9) (3.9) 6.7
--------- --------- ---------
Deferred:
Federal.......................................................... 5.0 7.0 (1.8)
State............................................................ 0.3 0.8 0.1
--------- --------- ---------
5.3 7.8 (1.7)
--------- --------- ---------
Total.......................................................... $ 3.4 $ 3.9 $ 5.0
--------- --------- ---------
--------- --------- ---------
F-16
Significant components of the Company's deferred tax assets and liabilities
are:
1997 1996
--------- ---------
Deferred tax assets:
Postretirement benefits................................................... $ 12.7 $ 18.3
Non-deductible reserves................................................... 6.9 4.2
Other..................................................................... 5.8 5.4
--------- ---------
25.4 27.9
--------- ---------
Deferred tax liabilities:
Depreciation.............................................................. 19.6 16.1
Other..................................................................... 0.7 1.4
--------- ---------
20.3 17.5
--------- ---------
Net deferred tax assets................................................... $ 5.1 $ 10.4
--------- ---------
--------- ---------
The Company believes it is more likely than not to realize the deferred tax
assets and, accordingly, no valuation allowance has been provided.
The difference between the U.S. Federal statutory rate and the Company's
effective tax rate is reconciled below:
1997 1996 1995
--------- --------- ---------
U.S. Federal tax rate........................................... 35.0% 35.0% 35.0%
State income tax, net of federal income tax benefit............. 1.9 1.2 5.1
Foreign sales corporation benefit............................... (2.8) (3.8) (6.8)
Tax exempt interest............................................. (4.8) (4.1) (8.1)
Research and experimentation credits............................ (11.0)
Other........................................................... 4.0 (1.5) 2.6
--------- --------- ---------
Effective tax rate.............................................. 33.3% 15.8% 27.8%
--------- --------- ---------
--------- --------- ---------
6. EMPLOYEE RETIREMENT BENEFITS
RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS - The Company has various
defined benefit and contribution plans covering virtually all of its
employees. The Company's policy is to annually fund at least the minimum
amount required under the Employee Retirement Income Security Act of 1974
(ERISA). The estimated cost of retiree health care and life insurance benefit
payments is accrued during the employee's active service life.
PENSION BENEFITS - Effective December 31, 1995, a defined benefit pension
plan sponsored by the Company covering substantially all employees was
amended to freeze existing benefits, cease
F-17
further benefit accruals and fully vest each participant. After December 31,
1995, no new participants will enter the plan. This curtailment resulted in a
pre-tax gain of $6.8 in 1996. The actuarial present value of accumulated plan
benefits and net assets available for benefits for all plans is:
1997 1996
--------- ---------
Actuarial present value of benefit obligations:
Vested.................................................................... $ 87.4 $ 90.4
Nonvested................................................................. -- --
Accumulated benefit obligation 87.4 90.4
Effect of increases in future compensation levels........................... 2.3 2.1
Projected benefit obligation................................................ 89.7 92.5
Plan assets at fair value, principally invested in an unallocated group
annuity contract.......................................................... 85.6 88.6
Deficit of plan assets under the projected benefit obligation........... (4.1) (3.9)
Unrecognized net transition asset (1.7) (1.9)
Unrecognized loss from experience........................................... 5.3 5.1
Unrecognized prior service cost............................................. 0.9 1.0
Minimum pension liability adjustment........................................ (0.7) (1.5)
Accrued pension liability................................................... $ (0.3) $ (1.2)
Net periodic pension expense is comprised of:
1997 1996 1995
--------- --------- ---------
Service cost for benefits earned........................... $ 0.3 $ 2.2 $ 2.8
Interest costs on the projected benefit obligation......... 6.7 6.7 6.4
Actual return on plan assets............................... (5.3) (11.6) (6.9)
Net amortizations and deferral............................. (1.6) 4.9 0.5
--------- --------- ---------
Net pension expense (excluding curtailment gain in 1996)... $ 0.1 $ 2.2 $ 2.8
--------- --------- ---------
--------- --------- ---------
Actuarial assumptions used to calculate the net pension expense are as
follows:
1997 1996 1995
----------------- --------- ---------
Discount rate............................................. 7.5% 8.0% 8.0%
Expected return on assets................................. 8.0% 8.0% 8.0%
Expected increase in compensation levels.................. Not applicable 5.5% 5.5%
For certain plans, the Company recorded a minimum pension liability in 1997
and 1996 of $.7 and $1.5, respectively, representing the excess of the
accumulated benefit obligations over plan assets and accrued pension costs
for those plans. Corresponding amounts are included in intangible assets.
PROFIT SHARING - Substantially all employees are eligible to participate in
the Company's profit sharing plan after approximately one year of service.
The Company makes contributions to the profit sharing plan in accordance with
the provisions of the plan. The profit sharing plan expense totaled $1.4,
$1.2 and $3.9 for the years ended 1997, 1996 and 1995, respectively.
The profit sharing plan was amended effective January 1, 1995 to permit
employees to elect income deferrals prescribed in Internal Revenue Code
401(k). The Company provides matching contributions at a rate of $.25 per
dollar on the participant's elective deferrals up to 6% of the participant's
earnings. Company matching contributions to this plan were $.6 and $.1 in
1997 and 1996, respectively. No elective deferrals or employer matches were
made in 1995.
OTHER POST-RETIREMENT BENEFITS - The Company also provides certain health
care and life insurance benefits for retired employees. Effective January 1,
1996, the Company initiated a change to be phased-in over a three-year period
after which retirees will pay the full cost of the health care and life
F-18
insurance benefits. This plan change significantly reduced the Company's
obligations under the plan and resulted in a negative prior service cost
being established as of December 31, 1995. This negative prior service cost
is being amortized over the three-year period during which the plan change is
phased in. Additionally, the plan was amended to allow only employees
eligible for retirement prior to January 1, 1996 to participate. This
curtailment resulted in a pre-tax gain of $10.3 in 1996. The Company retains
the right to make further changes or terminate these benefits.
Other postretirement benefit cost is comprised of:
1997 1996 1995
--------- --------- ---------
Interest cost...................................................... $ 0.3 $ 3.1 $ 3.8
Service cost....................................................... 0.6 0.9
Amortization of negative prior service cost........................ (13.4) (3.6)
Net amortization and deferrals..................................... (0.2) (0.3)
--------- --------- ---------
Net periodic postretirement benefit cost (excluding curtailment
gain in 1996).................................................... $ (13.3) $ 0.1 $ 4.4
--------- --------- ---------
--------- --------- ---------
The accrued postretirement benefit liability includes the following
components:
1997 1996
--------- ---------
Actuarial present value of postretirement benefit obligations:
Retirees.................................................................... $ 3.0 $ 5.2
Fully eligible active plan participants..................................... 0.3 0.4
Other active plan participants.............................................. 0.3 0.4
--------- ---------
Accumulated postretirement benefit obligation............................... 3.6 6.0
Unrecognized prior service cost............................................. 23.6 37.1
Unrecognized net gain....................................................... 0.7 --
--------- ---------
Accrued postretirement liability............................................ 27.9 43.1
Less current portion........................................................ 1.8 3.8
--------- ---------
Noncurrent liability........................................................ $ 26.1 $ 39.3
--------- ---------
--------- ---------
The accumulated postretirement benefit obligation was based on discount rates
for 1997 and 1996 of 7.5%. The health care cost trend rate used was 9.5% and
11.6% for 1997 and 1996, respectively, decreasing each year through 2003 to
an ultimate rate of 6 percent. A one-percent increase in the assumed health
care cost trend rate would not have had a material effect on the accumulated
benefit obligation or postretirement benefit expense for 1997 for 1996.
F-19
7. LONG-TERM DEBT AND CREDIT ARRANGEMENTS
Long-term consists of:
1997 1996
--------- ---------
7.5% installment notes to former shareholders of Agri Sales, Inc. Interest
payable quarterly. Principal repayment in five annual installments through
2001....................................................................... $ 9.6 $ 12.0
8.0% installment notes to former shareholders of Wm. Mueller & Sons, Inc.
Interest payable quarterly. Principal repayment in five annual installments
through 2001............................................................... 3.6 4.8
7.0% installment notes to former shareholders of Gormley & Company.Interest
payable quarterly. Principal repayment in six annual installments through
2002....................................................................... 15.6
7.125% installment notes to former shareholders of Wruble Elevator, Inc.
Interest payable quarterly. Principal repayment in six annual installments
through 2002............................................................... 2.2
Long-term debt supported by revolving credit agreements with banks.......... 27.0 27.0
Other long-term debt........................................................ 0.1 0.8
--------- ---------
Total..................................................................... 58.1 44.6
Less current portion........................................................ (4.4) (3.5)
--------- ---------
Long-term debt.............................................................. $ 53.7 $ 41.1
--------- ---------
--------- ---------
At March 31, 1997 and 1996, Quincy Soybean Co. a wholly-owned consolidated
subsidiary, and its wholly-owned subsidiary Quincy Soybean Co. of Arkansas
had agreements with various banks for unsecured lines of credit totaling
approximately $175.0 and $140.0, respectively. Except for $85.0 which is
committed through February 18, 2002, these bank lines are generally
uncommitted. At March 31, 1997 and 1996, $63.4 and $59.8, respectively, was
outstanding under these agreements, including $20.0 of long-term debt.
In January 1996, Quincy Soybean Company entered into a five-year interest
rate exchange agreement, commonly called an interest rate swap, to fix the
LIBOR rate at 5.43% on the $20.0 of long-term debt borrowed under the
five-year bank revolving credit agreement. The Company may borrow under the
credit agreement at LIBOR plus .22% to .30%. The Company terminated this
agreement during April 1997 and received a cash payment of $.9. This amount
will be recognized as a reduction of interest expense over the remaining term
of the related debt instrument.
F-20
At March 31, 1997 and 1996, Agri Sales, Inc., a wholly-owned consolidated
subsidiary, had agreements with a bank for lines of credit totaling $90.0
and $65.0, respectively, which are guaranteed by Moorman Manufacturing
Company. A total of $65.0 under these lines of credit is committed through
December 22, 2000. The additional $25.0 in 1997 is uncommitted and expires
in June 1997. At March 31, 1997 and 1996 long-term debt of $7.0 is borrowed
under these agreements at a rate of 5.95%. In addition, short-term
borrowings outstanding under the line of credit agreements total $63.5 and
$47.7 at March 31, 1997 and 1996, respectively.
The Company and its subsidiaries generally may borrow short-term under its
lines of credit at a rate approximating LIBOR plus .25%. Certain of the
credit agreements require satisfaction of certain financial covenants by the
Company and its subsidiaries, the most restrictive of which are minimum net
worth requirements.
8. JOINT VENTURES
The Company is a participant in several joint venture arrangements.
ContiQuincyBunge, LLC operates as an exporter of soybean meal and related
products. C&T Quincy, L.L.C. refines and packages vegetable oils. Associated
Feed Blenders, L.L.C. grinds and blends livestock feeds and related
products. P.G. Lecithin markets lecithin and related products. C&T Quincy
Foods of Portland holds property and storage facilities. The Company sells
materials and products to certain of these joint ventures, at prevailing
market prices, and has also provided unconditional guarantees for its
pro-rata share of working capital financing arrangements of certain of the
joint ventures. The following table summarizes information related to those
joint venture arrangements with significant related party transactions or
balances.
CONTIQUINCYBUNGE, LLC C&T QUINCY, L.L.C.
----------------------- -------------------
TYPE AND PERCENT OWNERSHIP 33% MEMBER SHARE 50% MEMBER SHARE
Investments in joint ventures:
1997......................................... $ 1.4 $ 16.4
1996......................................... $ 0.8 $ 17.1
Equity in earnings (losses) of joint ventures:
1997......................................... $ 0.6 $ (0.7)
1996......................................... $ 0.3 $ (3.0)
1995......................................... $ 0.8 $ (4.5)
Receivables from joint ventures:
1997......................................... $ -- $ 1.0
1996......................................... $ 0.4 $ 6.8
Payables to joint ventures:
1997......................................... $ 0.2 $ --
1996......................................... $ 0.4 $ --
Sales to joint ventures:
1997......................................... $ 336.0 $ 107.2
1996......................................... $ 223.1 $ 106.0
1995......................................... $ 253.8 $ 111.0
Pro-Rata share of outstanding debt of Joint
Ventures guaranteed at March 31, 1997......... $ 21.0 $ 23.3
Maximum authorized guarantee of joint venture
obligations at March 31, 1997................. $ 25.0 $ 25.0
F-21
The following table presents summarized financial information of
ContiQuincyBunge, LLC and C&T Quincy, L.L.C. as of and for the year ended
March 31, 1997:
CONTIQUINCYBUNGE,
LLC C&T QUINCY, L.L.C.
-------------------- -------------------
Current assets................................... $ 75.8 $ 43.9
Total assets..................................... $ 75.8 $ 83.7
Current liabilities.............................. $ 71.3 $ 51.0
Total liabilities................................ $ 71.3 $ 51.0
Sales............................................ $ 815.9 $ 202.5
Net income (loss)................................ $ 1.8 $ (1.5)
9. BUSINESS ACQUISITIONS
During 1997 and 1996, the Company acquired the outstanding common stock or
certain net assets of several processors of edible beans through its Agri
Sales, Inc. subsidiary which was acquired during 1995. The consolidated
operations of the Company include the operations of the acquirees from their
acquisition dates. Prior year financial statements have not been restated
because of the insignificance of the related amounts. Information concerning
these acquisitions is as follows:
TOTAL ACQUISITION
ACQUIRED DATE OF ACQUISITION COSTS GOODWILL
- ------------------------------------------- ------------------- ----------------- -----------
Agri Sales, Inc. November 1994 $ 24.4 $ 9.1
Wm. Mueller & Son, Inc. April 1995 7.5 4.6
Sacramento Valley Milling February 1996 11.7 --
Auburn Bean & Grain September 1996 4.0 --
Gormley & Company, Inc., Snake River Bean September 1996 20.9 16.1
and Red River Bean
Wruble Elevator, Inc. January 1997 3.6 1.1
As described in Note 7, the Company issued installment notes to former
shareholders of certain of these acquired businesses in connection with
these acquisitions.
10. RESTRUCTURING AND CLOSURE CHARGES
Restructuring and closure charges in 1996 of $1.9 relate primarily to a
management decision to reduce headcount within the Corporate office,
outsource the Company's dairy research operations, and write down current
software being utilized by the business that will be replaced by new
technology. All charges were paid by the end of March 31, 1997.
Restructuring and closure charges in 1995 of $4.9 relate primarily to a
management decision to outsource its information processing systems. The
initial charge to outsource the Company's information systems was $2.3.
Additionally, the Company incurred $1.1 in costs to design new order
fulfillment processes. The remainder of the $4.9 charge related to severance
payments to a select group of manufacturing employees and costs to dispose
of facilities no longer used.
11. DISCONTINUED OPERATIONS
The Company completed a transaction on November 20, 1995 in which it sold
substantially all the assets of the wholly-owned subsidiary, Quincy Design &
Manufacturing, Inc. ("QDM"). The selling price of $2.7 was received in cash.
The consolidated financial statements for 1995 have been restated to reflect
the operation of QDM as discontinued operations.
F-22
QDM operated as a manufacturer of livestock equipment including feeders,
gates and penning facilities used for livestock in confinement. The Company
also performed other custom metal fabrication. Assets sold include land,
building, equipment and inventory. The earnings (losses) recorded consist of
the following:
1997 1996 1995
--------- --------- ---------
(Loss) from sale of assets........................................... $ -- $ (1.9) $ --
Earnings (losses) from operations.................................... 0.2 (0.6) 0.1
--------- --------- ---
Earnings (losses) before income tax benefit.......................... 0.2 (2.5) 0.1
(0.1) 0.9
--------- --------- ---
Income (loss) from discontinued operations........................... $ 0.1 $ (1.6) $ 0.1
--------- --------- ---
12. LITIGATION AND OTHER MATTERS
The Company is involved in various legal and environmental matters,
incidental to the conduct of its business. While the ultimate results of
these matters presently cannot be determined, management, based on
consultation with counsel, does not expect that the resolution of such
matters will have a material adverse effect on the Company's results of
operations or financial position.
13. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Supplemental cash flow information is as follows:
1997 1996 1995
--------- --------- ---------
CASH PAID FOR:
Interest............................................................ $ 7.3 $ 3.2 $ 1.9
Income taxes........................................................ $ 6.4 $ 9.3 $ 2.7
CASH RECEIVED FOR:
Interest............................................................ $ 5.4 $ 8.5 $ 6.7
Income taxes........................................................ $ 11.3 $ -- $ --
14. SUBSEQUENT EVENTS
Subsequent to year-end, management became aware of thefts by employees and
third parties at its Helena, Arkansas soybean processing facility. Although
the investigation is still continuing, management believes these thefts
occurred over approximately a 2 1/2 year period and involve approximately
$2.3. The impact of these thefts on the Company's financial statements
reduced gross margins from those that would have otherwise been reflected
during the periods of the theft. Management has notified the Company's
fidelity insurance carrier of the occurrence and the related claim is
pending. On September 12, 1997, the Company entered into an agreement and
plan of merger with Archer-Daniels-Midland Company (ADM) whereby each share
of MMC common stock issued and outstanding as of the effective date of the
merger shall be converted into the right to receive ADM shares at a number
based upon a specified conversion ratio. In connection with this
transaction, the Company will recognize expenses of approximately $4 related
to the immediate vesting of grants under a restricted stock unit plan with
officers and directors as specified by the change of control provisions of
that plan. In addition, the Company has change-of-control agreements with
certain officers which provide that in the event of a change-of-control of
MMC, if either MMC terminates the executive's employment other than for
cause or if the executive terminates his or her employment for "good
reason," certain benefits will be paid.
* * * * * *
F-23
MOORMAN MANUFACTURING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
--------------------
JUNE 28, JUNE 29,
1997 1996
--------- ---------
(IN THOUSANDS,
EXCEPT SHARE AND PER
SHARE AMOUNTS)
Net Sales.................................................................................. 252,215 245,968
Cost of Sales.............................................................................. 229,480 223,009
--------- ---------
Gross Profit............................................................................... 22,735 22,959
Selling, General & Administrative Expenses................................................. 24,326 24,991
--------- ---------
Loss from Operations....................................................................... (1,591) (2,032)
Other Income (Expense)..................................................................... (2,040) (647)
--------- ---------
Loss Before Income Taxes................................................................... (3,631) 2,679)
Income Taxes............................................................................... (1,339) (1,527)
--------- ---------
Net Loss from Continuing Operations........................................................ (2,292) (1,152)
Discontinued Operations.................................................................... 0 (2)
--------- ---------
Net Loss................................................................................... (2,292) (1,154)
--------- ---------
--------- ---------
See notes to condensed consolidated financial statements.
F-24
MOORMAN MANUFACTURING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
THREE MONTHS ENDED
------------------------
JUNE 28, JUNE 29,
1997 1996
----------- -----------
(IN THOUSANDS)
ASSETS
Current Assets
Cash & cash equivalents.................................................................. 14,323 8,761
Short-term investments................................................................... 2,110 22,926
Margin deposits.......................................................................... (272) 7,194
Receivables.............................................................................. 66,909 65,038
Inventories.............................................................................. 172,095 162,574
Prepaid Income taxes..................................................................... 9,768 9,623
Prepaid expenses......................................................................... 1,795 1,602
Deferred income tax benefits............................................................. 9,308 8,600
----------- -----------
Total Current Assets..................................................................... 276,036 286,318
Noncurrent assets
Notes receivable......................................................................... 7,727 3,638
Investment in joint ventures............................................................. 20,307 20,426
Long-term investments.................................................................... 8,171 39,208
Deferred income tax benefits............................................................. 0 498
Goodwill and other intangible assets..................................................... 31,274 13,686
Other assets............................................................................. 3,205 2,282
----------- -----------
70,684 79,636
Property, Plant & Equipment
Land..................................................................................... 6,339 8,140
Buildings................................................................................ 71,042 65,342
Machinery & equipment.................................................................... 205,575 188,192
Construction in progress................................................................. 19,369 10,115
Other.................................................................................... 10,302 10,887
Less allowance for depreciation.......................................................... (180,634) (173,647)
----------- -----------
Net Property, Plant & Equipment.......................................................... 133,993 109,009
TOTAL ASSETS............................................................................... 480,713 474,963
----------- -----------
----------- -----------
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable......................................................................... 39,784 33,160
Short-term debt.......................................................................... 44,807 39,158
Current maturities of long-term debt..................................................... 3,984 3,625
Dividends payable........................................................................ 0 1,408
Customer deposits........................................................................ 7,543 13,863
Accrued compensation..................................................................... 7,039 8,388
Other accrued expenses................................................................... 13,244 10,587
Taxes other than income.................................................................. 1,371 1,349
----------- -----------
Total Current Liabilities................................................................ 117,772 109,538
Noncurrent Liabilities
Long-term debt........................................................................... 53,200 37,415
Accrued pension & postretirement benefits................................................ 25,338 41,144
Deferred income taxes.................................................................... 6,540 0
Other liabilities........................................................................ 5,328 366
----------- -----------
Total noncurrent liabilities............................................................. 90,404 78,925
Total Liabilities........................................................................ 208,176 188,483
Stockholders' Equity
Common stock............................................................................. 70 70
Retained earnings........................................................................ 313,644 320,242
Less:treasury stock...................................................................... (41,177) (33,812)
----------- -----------
Total Stockholders' Equity............................................................... 272,537 286,500
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY................................................... 480,713 474,963
----------- -----------
----------- -----------
See notes to condensed consolidated financial statements.
F-25
MOORMAN MANUFACTURING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
------------------------
JUNE 28, JUNE 29,
1997 1996
----------- -----------
(IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss).................................................................... (2,292) (1,154)
Adjustments needed to reconcile to cash flows from operating activities:
Depreciation & amortization........................................................ 4,220 3,723
Provision for losses on accounts and notes receivable - net........................ 463 278
Provision for deferred income taxes................................................ 2,304 1,324
(Gain)/Loss on sales of property, plant and equipment.............................. 836 (29)
Equity in losses of joint ventures................................................. 244 104
Gains from benefit plan changes.................................................... (3,339) (3,335)
Changes in assets and liabilities:
Accounts and notes receivable.................................................... 4,452 8,749
Inventories...................................................................... 64,530 51,519
Margin deposits.................................................................. 15,316 4,460
Other assets..................................................................... (2,729) (4,702)
Accounts payable................................................................. (20,478) (9,738)
Customer Deposits................................................................ 2,701 8,539
Other liabilities................................................................ 264 2,186
----------- -----------
Net cash provided by operating activities............................................ 66,492 61,924
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments............................................................. (8,000) (12,137)
Sales of investments................................................................. 10,680 23,366
Proceeds from sale of property, plant and equipment.................................. 2,510 36
Capital expenditures................................................................. (6,168) (7,760)
Loans made........................................................................... (10,801) (1,631)
Loan repayments received............................................................. 8,295 2,245
Investments in joint ventures........................................................ (75) 0
Distributions from joint ventures.................................................... 750 0
----------- -----------
Net cash provided by (used in) investing activities.................................. (2,809) 4,121
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments) under line-of-credit agreements....................................... (62,164) (48,304)
Reduction of long-term debt.......................................................... (864) (3,636)
Purchase of treasury stock........................................................... 0 (2,675)
Dividends paid....................................................................... (6,572) (6,820)
----------- -----------
Net cash used in financing activities................................................ (69,600) (61,435)
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS:.................................... (5,917) 4,610
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD........................................... 20,240 4,151
----------- -----------
CASH & CASH EQUIVALENTS, END OF PERIOD................................................. 14,323 8,761
----------- -----------
----------- -----------
See notes to consolidated financial statements.
F-26
MOORMAN MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
QUARTERS ENDED JUNE 28, 1997 AND JUNE 29, 1996 (AMOUNTS IN THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form S-4 and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the quarters ended June 28, 1997 are not
necessarily indicative of the results that may be expected for the fiscal
year ending March 28, 1998. For further information, refer to the
consolidated financial statements of the Company and footnotes thereto for
the year ended March 29, 1997 included in this Registration Statement.
2. INVENTORIES
Inventories consist of the following:
1997 1996
----------- -----------
Finished products................................................... $ 97,479 $ 64,741
Raw materials....................................................... 54,357 78,945
Livestock........................................................... 15,228 13,462
Other............................................................... 5,031 5,426
----------- -----------
Total............................................................. $ 172,095 $ 162,574
----------- -----------
----------- -----------
3. OTHER INCOME (EXPENSE)
Other income (expense) consists of the following:
1997 1996
--------- ---------
Interest income......................................................... $ 929 $ 1,334
Interest expense........................................................ (2,123) (1,998)
Gain (loss) on sale of assets........................................... (839) 28
Other................................................................... (7) (11)
--------- ---------
Total................................................................. $ (2,040) $ (647)
--------- ---------
--------- ---------
F-27
EXHIBIT A
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
MOORMAN MANUFACTURING COMPANY,
ADM ACQUISITION CORP.
AND
ARCHER-DANIELS-MIDLAND COMPANY
DATED AS OF SEPTEMBER 12, 1997
---------------------------------------------
TABLE OF CONTENTS
ARTICLE I THE MERGER................................................................ A-1
1.1 The Merger..................................................................... A-1
1.2 Effective Time of the Merger................................................... A-1
1.3 Articles of Incorporation and Bylaws........................................... A-2
1.4 Directors and Officers......................................................... A-2
1.5 Tax Treatment.................................................................. A-2
ARTICLE II CONVERSION OF SHARES..................................................... A-2
2.1 Exchange Ratio................................................................. A-2
2.2 Exchange of Shares............................................................. A-2
2.3 Dividends; Transfer Taxes...................................................... A-3
2.4 No Fractional Securities....................................................... A-3
2.5 Closing of Transfer Books...................................................... A-3
2.6 Closing........................................................................ A-4
2.7 Supplementary Action........................................................... A-4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ADM AND ADMAC......................... A-5
3.1 Organization................................................................... A-5
3.2 Capitalization................................................................. A-5
3.3 Authority Relative to this Agreement........................................... A-6
3.4 Consents and Approvals; No Violations.......................................... A-6
3.5 Reports and Financial Statements............................................... A-7
3.6 Absence of Certain Changes or Events........................................... A-7
3.7 Information in Registration Statement.......................................... A-7
3.8 Litigation..................................................................... A-7
3.9 Employee Benefit Plans......................................................... A-7
3.10 Taxes......................................................................... A-8
3.11 Compliance With Applicable Law................................................ A-8
3.12 Section 203 of the DGCL Not Applicable........................................ A-8
3.13 Ownership of MMC Shares....................................................... A-8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MMC.................................... A-9
4.1 Organization................................................................... A-9
4.2 Capitalization................................................................. A-9
4.3 Authority Relative to this Agreement........................................... A-9
4.4 Consents and Approvals; No Violations.......................................... A-10
4.5 Financial Statements........................................................... A-10
4.6 Absence of Undisclosed Liabilities............................................. A-10
4.7 Absence of Certain Changes or Events........................................... A-11
4.8 Information in Registration Statement.......................................... A-11
4.9 Litigation..................................................................... A-11
4.10 Employee Benefit Plans........................................................ A-11
4.11 Taxes......................................................................... A-12
4.12 Compliance With Applicable Law................................................ A-12
4.13 Labor Matters................................................................. A-12
4.14 Title to Assets............................................................... A-12
4.15 Intellectual Property......................................................... A-13
4.16 Contract, Leases and Agreements............................................... A-13
4.17 Environmental Matters......................................................... A-15
4.18 Insurance..................................................................... A-16
4.19 Books and Records............................................................. A-16
4.20 Employees..................................................................... A-16
4.21 Section 5/11.75 of the IBCA Not Applicable.................................... A-16
i
TABLE OF CONTENTS
4.22 Ownership of ADM Shares....................................................... A-16
4.23 Corporate Records............................................................. A-16
4.24 Opinion of Financial Advisor.................................................. A-17
4.25 No Existing Discussions....................................................... A-17
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER.................................... A-18
5.1 Conduct of Business by MMC and ADM Pending the Merger.......................... A-18
5.2 Compensation Plans............................................................. A-19
5.3 Current Information............................................................ A-19
5.4 Legal Conditions to Merger..................................................... A-19
5.5 Voting Agreements.............................................................. A-19
5.6 Affiliates..................................................................... A-20
5.7 Advice of Changes; Government Filings.......................................... A-20
ARTICLE VI ADDITIONAL AGREEMENTS.................................................... A-20
6.1 Access and Information......................................................... A-20
6.2 Registration Statement......................................................... A-20
6.3 Proxy Statement; Shareholder Approval.......................................... A-20
6.4 NYSE........................................................................... A-21
6.5 Antitrust Laws................................................................. A-21
6.6 Public Announcements........................................................... A-21
6.7 Expenses....................................................................... A-21
6.8 Certain Benefits............................................................... A-21
6.9 Standstill Agreement........................................................... A-22
6.10 Acquisition of MMC Common Stock............................................... A-23
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER................................ A-23
7.1 Conditions to Each Party's Obligation to Effect the Merger..................... A-23
7.2 Conditions to Obligations of MMC to Effect the Merger.......................... A-24
7.3 Conditions to Obligations of ADM and ADMAC to Effect the Merger................ A-24
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER...................................... A-26
8.1 Termination.................................................................... A-26
8.2 Effect of Termination.......................................................... A-27
8.3 Amendment...................................................................... A-27
8.4 Indemnification................................................................ A-27
8.5 Waiver......................................................................... A-28
ARTICLE IX GENERAL PROVISIONS....................................................... A-28
9.1 Non-Survival of Representations, Warranties and Agreements..................... A-28
9.2 Brokers........................................................................ A-28
9.3 Notices........................................................................ A-28
9.4 Descriptive Headings........................................................... A-29
9.5 Entire Agreement............................................................... A-29
9.6 Specific Performance........................................................... A-29
9.7 Assignment..................................................................... A-29
9.8 Governing Law.................................................................. A-29
9.9 Parties in Interest............................................................ A-29
9.10 Counterparts.................................................................. A-29
9.11 Validity...................................................................... A-29
9.12 Jurisdiction and Venue........................................................ A-29
9.13 Investigation................................................................. A-29
9.14 Consents...................................................................... A-30
9.15 Knowledge..................................................................... A-30
ii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of September 12,
1997, by and among Moorman Manufacturing Company, an Illinois corporation
("MMC"), Archer-Daniels-Midland Company, a Delaware corporation ("ADM"), and ADM
Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of ADM
("ADMAC");
RECITALS
WHEREAS, the Board of Directors of ADM, ADMAC and MMC each have determined
that it is in the best interests of their respective companies and shareholders
to combine their respective businesses in a merger transaction to be effected as
set forth in this Agreement; and
WHEREAS, ADM, ADMAC and MMC desire to effect the merger and the other
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, at
the "Effective Time" (as defined in Section 1.2 hereof), MMC and ADMAC shall
consummate a merger (the "Merger") in which (i) ADMAC shall be merged with and
into MMC and the separate corporate existence of ADMAC shall thereupon cease,
(ii) MMC shall be the surviving corporation in the Merger and shall continue to
be governed by the lawsGeneral Corporation Law of the State of Illinois, and (iii)Delaware also provides for mandatory indemnification of any director, officer, employee or agent against Expenses to the separate
corporate existence of MMC with all its rights, privileges, immunities, powers,
and franchises shall continue unaffectedextent such person has been successful in any proceeding covered by the Merger. MMC is sometimes
referred to in this Agreement as the "Surviving Corporation". The Merger shall
have the effects set forth in this Agreement andstatute. In addition, the General Corporation Law of the State of Delaware ("DGCL") andpermits (i) Delaware corporations to include a provision in their certificates of incorporation limiting or eliminating the Business Corporation Act of the State of
Illinois ("IBCA").
1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective upon
the later to occur of (a) the filingpersonal liability of a properly executed Certificatedirector to a corporation or its stockholders, under certain circumstances, for monetary damages or breach of Merger withfiduciary duty as a director and (ii) the Secretarygeneral authorization of State of the State of Delaware in accordance with
the DGCL, and (b) the filing of properly executed Articles of Merger filed with,
and the issuanceadvancement of a Certificate of Mergerdirector’s or officer’s litigation expenses, including by the Secretary of State of the
State of Illinois in accordance with the IBCA, each of which filings shall be
made substantially simultaneously with the other and as soon as practicable
after the closing of the transactions contemplated by this Agreement in
accordance with Section 2.6 hereof. When used in this Agreement, the term
"Effective Time" shall mean the later of the date and time at which the
Certificate of Merger is filed with the Secretary of State of the State of
Delaware and the Certificate of Merger is issued by the Secretary of State of
the State of Illinois.
1.3 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of Incorporation
and Bylaws of the Surviving Corporation shall be amended and restated as of the
Effective Time to conform substantially to the Certificate of Incorporation and
Bylaws of ADMAC, except that the name of the Surviving Corporation shall remain
"Moorman Manufacturing Company."
1.4 DIRECTORS AND OFFICERS. The directors of the Surviving Corporation at
the Effective Time shall be the directors of ADMAC immediately prior to the
Effective Time, until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Articles of Incorporation and Bylaws. The
officers of the Surviving Corporation at the Effective Time shall be the
officers of ADMAC immediately prior to the Effective Time, until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation, or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
A-1
1.5 TAX TREATMENT. For federal income tax purposes, it is intended that
the Merger shall constitute a reorganization within the meaning of Section 368
of the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement and Plan of Merger shall constitute a "plan of reorganization" for
purposes of Section 368 of the Code.
ARTICLE II
CONVERSION OF SHARES
2.1 EXCHANGE RATIO. At the Effective Time, by virtue of the Merger and
without any action on the part of the holder thereof:
(a) Each share (each an "MMC Share") of common stock, par value $1.00
per share, of MMC ("MMC Common Stock"), issued and outstanding immediately
prior to the Effective Time (other than (i) shares of MMC Common Stock held
by shareholders who properly demand dissenters' rights in accordance with
Section 11.70 of the IBCA and (ii) shares of MMC Common Stock held of record
by ADM or ADMAC or any other direct or indirect subsidiary of ADM or by MMC)
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be canceled, extinguished and converted into the right to
receive a number of shares (each an "ADM Share") of common stock, without
par value, of ADM ("ADM Common Stock") (rounded to the nearest share) in an
amount equal to the quotient (the "Exchange Ratio") obtained by dividing (x)
$5,400 (the "Base Value") by (y) an amount equal to the average (the
"Average Price") of the closing prices of ADM Common Stock as reported on
the New York Stock Exchange Composite Tape on each of the 20 trading days
immediately preceding the third trading day prior to the Closing Date (the
"Pricing Period"); provided, however, that the Exchange Ratio shall be
adjusted in the event that the shareholders' equity of MMC on the Closing
Date is less than $265 million by reducing the Base Value by an amount equal
to the (A) difference between $265 million and the actual "Shareholders'
Equity" (as hereinafter defined) of MMC as of the date 15 days prior to the
Closing Date (as set forth in the certificate provided for in Section
7.3(d)) divided (B) by 54,770. In no event will the Base Value be less than
$5,126.13. All such shares of MMC Common Stock shall no longer be deemed
outstanding, shall be canceled and retired and shall cease to exist. Each
holdermeans of a certificate representing any such MMC Common Stock shall
thereafter ceasemandatory charter or by-law provision to have any rights with respect to such MMC Common Stock,
other than the right to receive a number of ADM Shares according to the
Exchange Ratio based on the number of shares of MMC Shares previously
evidenced by such certificate upon the surrender of such certificate as
provided herein. Each share of MMC Common Stock then held in treasury of MMC
shall be canceled and retired, and no payment shall be made with respect
thereto. For purposes of this Agreement, "Shareholders' Equity" shall mean
the shareholders' equity of MMC or the Surviving Corporation, as the case
may be, determined in accordance with generally accepted accounting
principles, consistently applied.
(b) Each share of common stock, without par value, of ADMAC issued and
outstanding or held in the treasury immediately prior to the Effective Time
shall be canceled and extinguished and converted into one share of common
stock of the Surviving Corporation.
2.2 EXCHANGE OF SHARES.
(a) Prior to the Effective Time, ADM, ADMAC and MMC shall select and
enter into an agreement (in form and substance reasonably satisfactory to
MMC, ADM and ADMAC) with a bank or trust company to act as exchange agent
hereunder (the "Exchange Agent"). Immediately after the Effective Time, ADM
and the Surviving Corporation shall make available, and each holder of MMC
Shares will be entitled to receive, upon surrender to the Exchange Agent of
one or more certificates representing such MMC Shares for cancellation,
certificates representing the number of ADM Shares into which such MMC
Shares are converted in the Merger. The ADM Shares into which the MMC Shares
shall be converted in the Merger shall be deemed to have been issued at the
Effective Time.
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(b) All of the certificates representing ADM Common Stock shall, upon
delivery at Closing, be duly authorized, validly issued and outstanding,
fully-paid, non-assessable, listed for trading on the New York Stock
Exchange ("NYSE") and registered under the Securities Act of 1933, as
amended (the "Securities Act").
(c) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding MMC Shares (the "MMC Certificates") whose MMC Shares were
converted into ADM Shares pursuant to Section 2.1, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the MMC Certificates shall pass, only upon delivery of
the MMC Certificates to the Exchange Agent, and which shall be in negotiable
form with signatures guaranteed by a national banking institution and have
such other provisions as ADM and the Surviving Corporation may reasonably
specify) and (ii) instructions for use in effecting the surrender of the MMC
Certificates in exchange for certificates representing ADM Shares. Upon
surrender of a duly executed MMC Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, the holder of such
MMC Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole ADM Shares which such holder
has the right to receive in respect of the MMC Certificates surrendered
pursuant to the provisions of this Article II.
(d) In the event that any MMC Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen or destroyed, ADM and the
Surviving Corporation will issue or cause to be issued in exchange for such
lost, stolen or destroyed certificate the number of ADM Shares into which
such MMC Shares are converted in the Merger in accordance with this Article
II. When authorizing such issuance in exchange therefor, ADM and the
Surviving Corporation may, in their discretion and as a condition precedent
to the issuance thereof, require the owner of such lost, stolen or destroyed
certificate to give ADM and the Surviving Corporation a bond in such sum as
they may direct as indemnity, or such other form of indemnity as they shall
direct, against any claim that may be made against ADM and the Surviving
Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
2.3 DIVIDENDS; TRANSFER TAXES. No dividends that are declared on ADM
Shares will be paid to persons entitled to receive certificates representing ADM
Shares until such persons surrender their MMC Certificates. Upon such surrender,
there shall be paid to the person in whose name the certificates representing
such ADM Shares shall be issued, any dividends which shall have become payable
with respect to such ADM Shares between the Effective Time and the time of such
surrender. In no event shall the person entitled to receive such dividends be
entitled to receive interest on such dividends. If any certificates for any ADM
Shares are to be issued in a name other than that in which the MMC Certificates
surrendered in exchange therefor are registered, it shall be a condition of such
exchange that the person requesting such exchange shall pay to the Exchange
Agent any transfer or other taxes required by reason of the issuance of
certificates for such ADM Shares in a name other than that of the registered
holder of the certificate surrendered, or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of MMC Shares for any ADM Shares or dividends
thereon delivered to a public official pursuant to applicable escheat laws.
2.4 NO FRACTIONAL SECURITIES. No certificates or scrip representing
fractional ADM Shares shall be issued upon the surrender for exchange of MMC
Certificates pursuant to this Article II and no dividend, stock split-up or
other change in the capital structure of ADM shall relate to any fractional
security, and such fractional interests shall not entitle the owner thereof to
vote or to any rights of a security holder. No cash or other consideration shall
be paid to any holder of MMC shareseffect, in lieu of any fractional securities.
2.5 CLOSING OF TRANSFER BOOKS. Atrequiring the Effective Time, the stock transfer
books of MMC shall be closed and no transfer of MMC Shares shall thereafter be
made. If, after the Effective Time, MMC Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for
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certificates representing ADM Shares in accordance with the terms hereof. At and
after the Effective Time, the holders of MMC Shares to be exchanged for ADM
Shares pursuant to this Agreement shall cease to have any rights as shareholders
of MMC, except for the right to surrender such stock certificates in exchange
for ADM Shares as provided hereunder.
2.6 CLOSING. Subject to Section 8.1 hereof, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Schmiedeskamp, Robertson, Neu & Mitchell, 525 Jersey Street,
Quincy, Illinois, at 9:00 a.m., local time, on the third business day after the
later of (a) the date on which MMC's shareholders' meeting, referred to in
Section 6.3 hereof, shall have occurred, or (b) the day on which all of the
conditions set forth in Article VII hereof are satisfied or waived, or at such
other date, time and place as ADM and MMC shall agree (the "Closing Date").
2.7 SUPPLEMENTARY ACTION. If at any time after the Effective Time, any
further assignments or assurances in law or any other documents or actions are
necessary or desirable to vest or to perfect or confirm of record in the
Surviving Corporation the title to any property or rights of MMC or ADMAC or
otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered on
behalf of MMC and ADMAC, in the name of and on behalf of MMC and ADMAC, to
execute and deliver any and all documents and to take all actions necessary or
proper to vest or to perfect or confirm title to such property or rights in the
Surviving Corporation, and otherwise to carry out the purposes and provisions of
this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ADM AND ADMAC
As used in this Agreement, (i) the word "subsidiary" when used with respect
to any party means any corporation or other organization, whether incorporated
or unincorporated, of which such party or any other subsidiaryauthorization of such party is
a general partner or of which at least a majority of the securities or other
interests havingadvancement by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporations or other organizations is directly or indirectly owned or
controlled by such party and/or by any one or more of its subsidiaries, and (ii)
the term "Material Adverse Effect" means, with respect to MMC and ADM, as the
case may be, any change or effect that individually or when taken together with
all such changes or effects that have occurred prior to the date of
determination of the occurrence of the Material Adverse Effect, has or is
reasonably likely to have a material adverse effect on the business, assets,
liabilities (contingent or otherwise), revenues, expenses, capital or financial
condition of such party and its subsidiaries, taken as a whole, or in the
ability of such party to perform its obligations hereunder.
Except as otherwise set forth on the ADM Schedule of Exceptions dated the
date hereof (the "ADM Schedules") which shall be organized by reference to
specific sections hereof as indicated below and which shall be deemed to include
any information specifically incorporated into any of the ADM Schedules, ADM
and, where indicated, ADMAC represent and warrant to MMC as follows:
3.1 ORGANIZATION. ADM is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
requisite corporate power to carry on its business as it is now being conducted
or presently proposed to be conducted. ADM is duly qualified as a foreign
corporation to do business and is in good standing (to the extent the concept of
good standing exists) in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified will not
have a Material Adverse Effect. Each subsidiary of ADM which is incorporated is
a corporation duly organized, validly existing and in good standing (to the
extent the concept of good standing exists) under the laws of its jurisdiction
of incorporation or organization, has the corporate power to carry on its
business as it is now being conducted and is duly qualified to do business and
is in good standing (to the extent the concept of good standing exists) in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so duly organized, validly existing and in good standing, to
have such corporate power or to be so qualified will not have a Material Adverse
Effect. ADM and ADMAC have delivered to MMC or its counsel complete and correct
copies of their respective Certificates of Incorporation and Bylaws which are in
full force and effect on the date hereof.
3.2 CAPITALIZATION. The authorized capital stock of ADM consists of
800,000,000 shares of ADM Common Stock, without par value, and 500,000 shares of
preferred stock, without par value ("ADM Preferred Stock"). As of the date
hereof (and without giving effect to the five percent stock dividend having a
record date of August 18, 1997 and payable on September 15, 1997), 530,825,801
shares of ADM Common Stock were issued and outstanding, options to acquire
3,878,755 shares of ADM Common Stock ("ADM Stock Options") were outstanding
under all stock option plans of ADM ("ADM Stock Option Plans"), and no shares of
ADM Preferred Stock or warrants to acquire ADM Common Stock were issued and
outstanding. All of the issued and outstanding shares of ADM Common Stock are
validly issued, fully paid and nonassessable and free of preemptive rights or
similar rights created by statute, the Certificate of Incorporation or Bylaws of
ADM or any agreement to which ADM or any of its subsidiaries is a party or by
which it is bound. Except as set forth above and pursuant to ADM's employee
benefit plans and as otherwise provided in this Agreement, there are not as of
the date of this Agreement any shares of capital stock of ADM issued or
outstanding or any options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating ADM to issue, transfer
or sell any shares of its capital stock. As of the date hereof, no bonds,
debentures, notes or other indebtedness having the right to vote (or convertible
into or exercisable for securities having the right to
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vote) on any matters on which shareholders may vote ("Voting Debt") of ADM are
issued and outstanding. All outstanding shares of the capital stock of ADM's
subsidiaries have been duly authorized, validly issued and fully paid, and are
non-assessable and such shares owned by ADM or one of its subsidiaries are free
and clear of any liens, security interest, pledges, agreements, claims, charges,
or encumbrances of any nature whatsoever. There are no voting trusts or other
agreements or understandings to which ADM is a party with respect to the voting
of the capital stock of ADM or any of its subsidiaries. None of ADM or its
subsidiaries is required to redeem, repurchase or otherwise acquire shares of
capital stock of ADM, or any of its subsidiaries, respectively, as a result of
the transactions contemplated by this Agreement. None of the shares of ADM
Common Stock has been issued in violation of any preemptive or other rights of
ADM's shareholders.
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. ADM and ADMAC have all requisite
corporate power and authority to enter into this Agreement and to carry out
their respective obligations hereunder. The execution and delivery of this
Agreement by ADM and ADMAC and the consummation by ADM and ADMAC of the
transactions contemplated hereby have been duly authorized by the Boards of
Directors of ADM and ADMAC and by ADM as sole shareholder of ADMAC and no other
corporate proceedings on the part of ADM and ADMAC are necessary to approve this
Agreement or the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by ADM and ADMAC and constitutes the valid
and binding agreement of ADM and ADMAC, enforceable against ADM and ADMAC in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditor's rights and to general
equity principles.
3.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for (i) the filing of the pre-merger notification report
under applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing of a
Form S-4 Registration Statement (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") in accordance with the
Securities Act, including the MMC proxy statement (the "MMC Proxy
Statement"), (iii) such consents, approvals, orders, authorization,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the laws of any foreign country, and
(iv) the filing and recordation of a Certificate of Merger as required by
the DGCL and Articles of Merger as required by the IBCA, no filing with, and
no permit, authorization, consent or approval of, any public or governmental
body or authority is necessary for the consummation by ADM or ADMAC of the
transactions contemplated by this Agreement.
(b) Neither the execution and delivery of this Agreement by ADM or
ADMAC, nor the consummation by ADM or ADMAC of the transactions contemplated
hereby, nor compliance by ADM or ADMAC with any of the provisions hereof,
will (i) conflict with or result in any breach of the Certificate of
Incorporation or Bylaws of ADM or any of its subsidiaries, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or give rise to the creation of any
lien, charge, security interest or encumbrance upon the respective
properties or assets of ADM or any of its subsidiaries under, any of the
terms, conditions or provisions of any material note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which ADM or any of its subsidiaries is a party or by which any of them or
any of their properties or assets may be bound or affected or (iii) violate
any permit, concession, franchise, license, judgment, order, writ,
injunction, decree, statute, law, ordinance, rule or regulation applicable
to ADM, any of its subsidiaries or any of their properties or assets and
which is material to the business or operations of ADM.
(c) Except as set forth in the ADM Schedules, no consent or approval is
required by or with respect to ADM or any of its subsidiaries in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement under any
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terms, conditions, or provisions of any material note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which ADM or any of its subsidiaries is a party or by which any of them or
any of their properties or assets may be bound or affected.
3.5 REPORTS AND FINANCIAL STATEMENTS. ADM has filed all reports required
to be filed with the SEC pursuant to the Exchange Act since July 1, 1996,
including, without limitation, an Annual Report on Form 10-K for the fiscal year
ended June 30, 1996 (collectively, the "ADM SEC Reports"), and has furnished to
MMC true and complete copies of all such ADM SEC Reports (including any
amendments thereto), and will promptly deliver to MMC any ADM SEC Reports
(including any amendments thereto) filed between the date hereof and the
Effective Time. None of such ADM SEC Reports, as of their respective filing
dates (as amended through the date hereof), contained or with respect to ADM SEC
Reports filed after the date hereof, will contain any untrue statement of a
material fact or omitted or will omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements included in the ADM SEC Reports, presented fairly the
consolidated financial position of ADM and its subsidiaries as of the respective
dates thereof, and the results of operations and cash flow of ADM and its
subsidiaries for the respective periods or as of the respective dates set forth
therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1997, neither
ADM nor any of its subsidiaries has: (a) taken any of the actions set forth in
Sections 5.1(b), 5.1(c) or 5.1(e) hereof; (b) incurred any material liability,
except in the ordinary course of its business, consistent with past practices;
(c) suffered any material adverse change, or any event involving a prospective
material adverse change, in the business, assets, financial condition or results
of operations of ADM or any of its subsidiaries; or (d) except as permitted by
Section 5.1 hereof, conducted its business and operations other than in the
ordinary course of business and consistent with past practices.
3.7 INFORMATION IN REGISTRATION STATEMENT. None of the information to be
supplied by ADM and ADMAC to be included in the Registration Statement, or
amendments thereto, will contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
3.8 LITIGATION. Except to the extent that individually and in the
aggregate they would not reasonably be expected to have a Material Adverse
Effect on ADM or as disclosed in the ADM SEC Reports or Schedule 3.8: (i) there
is no action, suit, judicial or administrative proceeding, arbitration or
investigation pending or, to the knowledge of ADM, threatened against or
involving ADM or any of its subsidiaries, or any of their respective properties
or rights, before any court, arbitrator, or administrative or governmental body;
(ii) there is no judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against ADM or any of its subsidiaries; and (iii) ADM and its
subsidiaries are not in violation of any term of any judgments, decrees,
injunctions or orders outstanding against them.
3.9 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.9 contains a complete and accurate list of each employee
benefit plan (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), that is maintained by ADM or any of its ERISA
Affiliates or with respect to which ADM or any of its ERISA Affiliates has
any liability for payments, benefits or claims (all of the foregoing, the
"ADM Plans").
(b) Each of the ADM Plans that is subject to ERISA is in substantial
compliance with ERISA; each of the ADM Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified; and no
event has occurred, and to the knowledge of ADM, there exists no condition
or set of circumstances, in connection with which ADM or any ERISA Affiliate
of ADM is subject to liability (except liability for claims and funding
obligations payable in the ordinary course) under ERISA, the Code or any
other applicable law.
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(c) All required contributions or other amounts payable by ADM or its
ERISA Affiliates as of the Effective Time with respect to each ADM Plan in
respect of current or prior plan years have been or will be (prior to the
Effective Time) either paid or accrued on the financial statements of ADM.
There are no pending, or, to the knowledge of ADM, threatened or anticipated
claims (other than routine claims for benefits) by or on behalf of or
against any of the ADM Plans or any trusts related thereto.
(d) For purposes of this Agreement, "ERISA Affiliate" means, with
respect to any person, any trade or business, whether or not incorporated,
which, together with such person, would constitute a "controlled group of
corporations", a group of trades or businesses under "common control", or an
"affiliated service group" within the meaning of Section 414(b), (c), (m),
or (o) of the Code.
3.10 TAXES. For the purposes of this section and Section 4.11, the term
"tax" shall include all taxes, charges, withholdings, fees, levies, penalties,
additions, interest or other assessments imposed by any United States federal,
state or local authority or any other taxing authority on ADM or MMC or any of
their respective "Tax Affiliates" (as hereinafter defined) as to their
respective income, profit, franchise, gross receipts, payroll, sales,
employment, worker's compensation, use, property, withholding, excise,
occupancy, environmental and other taxes, duties or assessments of any nature,
whatsoever. ADM has filed or caused to be filed timely all material federal,
state, local and foreign tax returns required to be filed by each of it, any
partnership or joint venture in which it holds a majority interest or for which
it is responsible for filing tax returns, and any member of its consolidated,
combined, unitary or similar group (each such member a "Tax Affiliate"). Such
returns, reports and other information are accurate and complete in all material
respects. ADM has paid or caused to be paid or has made adequate provision or
set up an adequate accrual or reserve for the payment of, all taxes shown to be
due in respect of the periods for which returns are due, and has established (or
will establish at least quarterly) an adequate accrual or reserve for the
payment of all taxes payable in respect of the period subsequent to the last of
said periods required to be so accrued or reserved. Neither ADM nor any of its
Tax Affiliates has any material liability for taxes in excess of the amount so
paid or accruals or reserves so established. Neither ADM nor any of its Tax
Affiliates is delinquent in the payment of any material amount of tax in excess
of the amount reserved or provided therefor, and no deficiencies for any tax,
assessment or governmental charge in excess of the amount reserved or provided
therefor have been claimed or assessed. ADM's federal and state income tax
returns for all years ending on or prior to December 31, 1987 have been audited
(and such audits have been completed) or are no longer subject to audit by
reason of the applicable statute of limitations.
3.11 COMPLIANCE WITH APPLICABLE LAW. ADM and each of its subsidiaries
holds all licenses, franchises, permits, variances, exemptions, orders,
approvals and authorizations necessary for the lawful conduct of its business
under and pursuant to, and the business of each of ADM and its subsidiaries is
not being conducted in violation of, any provision of any federal, state, local
or foreign statute, law, ordinance, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit or license or other governmental
authorization or approval applicable to ADM or any of its subsidiaries except to
the extent that the failure to hold any such licenses, franchises, permits or
authorizations, or any such violation, would not, individually or in the
aggregate, be material to the business of ADM.
3.12 SECTION 203 OF THE DGCL NOT APPLICABLE. The provisions of Section 203
of the DGCL will not, prior to the termination of this Agreement, assuming the
accuracy of the representations contained in Section 4.22 (without giving effect
to the knowledge qualification thereof), apply to this Agreement, the Merger or
the transactions contemplated hereby.
3.13 OWNERSHIP OF MMC SHARES. As of the date hereof, neither ADM nor, to
its knowledge, any of its affiliates or associates (as such terms are defined
under the Exchange Act), (i) beneficially owns, directly or indirectly, or (ii)
is a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, MMC Shares, which in
the aggregate, represent ten percent or more of the outstanding MMC Shares.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MMC
Except as otherwise set forth on the MMC Schedule of Exceptions dated the
date hereof (the "MMC Schedules") which shall be organized by reference to
specific sections hereof as indicated below and which shall be deemed to include
any information specifically incorporated into any of the MMC Schedules, MMC
represents and warrants to ADM and ADMAC as follows:
4.1 ORGANIZATION. MMC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Illinois and has the
requisite corporate power to carry on its business as it is now being conducted
or presently proposed to be conducted. MMC is duly qualified as a foreign
corporation to do business and is in good standing (to the extent the concept of
good standing exists) in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary except where the failure to be so qualified will not
have a Material Adverse Effect. Each subsidiary of MMC is a corporation duly
organized, validly existing and in good standing (to the extent the concept of
good standing exists) under the laws of its jurisdiction of incorporation or
organization, has the corporate power to carry on its business as it is now
being conducted and is duly qualified to do business and is in good standing (to
the extent the concept of good standing exists) in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
duly organized, validly existing and in good standing, to have such corporate
power or to be so qualified will not have a Material Adverse Effect. MMC has
delivered to ADM, ADMAC or their counsel complete and correct copies of its, and
each of its subsidiary's, Articles of Incorporation and Bylaws or other
organizational documents. Each of the Articles of Incorporation, Bylaws and
other organizational documents so delivered are in full force and effect on the
date hereof.
4.2 CAPITALIZATION. The authorized capital stock of MMC consists of
100,000 shares of MMC Common Stock, par value $1.00 per share. As of the date
hereof, 54,770 shares of MMC Common Stock were issued and outstanding. All of
the issued and outstanding shares of MMC Common Stock have been duly authorized
and are validly issued, fully-paid, non-assessable and free of preemptive rights
or similar rights created by statute, the Articles of Incorporation or Bylaws of
MMC or any agreement to which MMC or any of its subsidiaries is a party or by
which it is bound. Except as set forth above, there are not now, and at the
Effective Time there will not be, any shares of capital stock of MMC issued or
outstanding or any options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating MMC to issue, transfer
or sell any shares of its capital stock. As of the date hereof, no Voting Debt
of MMC was issued or outstanding, nor will there be any issued or outstanding at
the Effective Time. Except as provided in this Agreement, after the Effective
Time, MMC will have no obligation to issue, transfer or sell any shares of its
capital stock pursuant to any employee benefit plan or otherwise. All
outstanding shares of the capital stock of MMC's subsidiaries have been duly
authorized, validly issued and fully paid, and are non-assessable and are owned
by MMC or one of its subsidiaries free and clear of any liens, security
interests, pledges, agreements, claims, charges, or encumbrances of any nature
whatsoever. There are no voting trusts or other agreements or understandings to
which MMC is a party with respect to the voting of the capital stock of MMC or
any of its subsidiaries. None of MMC or its subsidiaries is required to redeem,
repurchase or otherwise acquire shares of capital stock of MMC, or any of its
subsidiaries, respectively, as a result of the transactions contemplated by this
Agreement. None of the shares of MMC Common Stock have been issued in violation
of any preemptive or other rights of MMC's shareholders.
4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. MMC has all requisite corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by MMC and
the consummation by MMC of the transactions contemplated hereby have been duly
authorized by MMC's Board of Directors and, except for the approval of the
holders of at least two-thirds of the outstanding shares of MMC Common Stock, no
other corporate proceedings on the part of MMC are necessary to approve this
Agreement or the transactions contemplated hereby. This
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Agreement has been duly and validly executed and delivered by MMC and
constitutes a valid and binding agreement of MMC, enforceable against MMC in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditor's rights and to general
equity principles.
4.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for (i) the filing of the pre-merger notification report
under applicable requirements of the HSR Act, (ii) the filing of the
Registration Statement with the SEC in accordance with the Securities Act,
including the MMC Proxy Statement, (iii) such consents, approvals, orders,
authorization, registrations, declarations and filings as may be required
under applicable federal and state securities laws and the laws of any
foreign country, and (iv) the filing and recordation of a Certificate of
Merger as required by the DGCL and Articles of Merger as required by the
IBCA, no filing with, and no permit, authorization, consent or approval of,
any public or governmental body or authority is necessary for the
consummation by MMC of the transactions contemplated by this Agreement.
(b) Neither the execution and delivery of this Agreement by MMC, nor the
consummation by MMC of the transactions contemplated hereby, nor compliance
by MMC with any of the provisions hereof, will (i) conflict with or result
in any breach of any provisions of the Articles of Incorporation or Bylaws
of MMC or any of its subsidiaries, (ii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a
default under (or give rise to a material change in the terms of or any
right of termination, cancellation or acceleration) under, or give rise to
creation of any lien, charge, security interest or encumbrance upon, any of
the respective properties or assets of MMC or any of its subsidiaries under,
any of the terms, conditions or provisions of any material note, bond,
mortgage, indenture, deed of trust, license, contract, agreement or other
instrument or obligation to which MMC or any of its subsidiaries is a party
or by which any of them or any of their properties or assets may be bound or
affected or (iii) violate any permit, concession, franchise, license,
judgment, order, writ, injunction, decree, statute, law, ordinance, rule or
regulation of any court or government authority applicable to MMC, any of
its subsidiaries or any of their properties or assets and which is material
to the business or operations of MMC.
(c) No consent or approval is required by or with respect to MMC or any
of its subsidiaries in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated by this
Agreement under any terms, conditions, or provisions of any material note,
bond, mortgage, indenture, license, contract, agreement or other instrument
or obligation to which MMC or any of its subsidiaries is a party or by which
any of them or any of their properties or assets may be bound or affected.
4.5 FINANCIAL STATEMENTS. The consolidated audited financial statements of
MMC for the period ended March 29, 1997 and the unaudited financial statements
for MMC for the period ended June 28, 1997 (collectively, the "Financial
Statements") have been provided to ADM and in all material respects, present
fairly the consolidated financial position of MMC and its subsidiaries as of the
respective dates thereof, and the results of operations and the cash flow of MMC
and its subsidiaries for the respective periods or as of the respective dates
set forth therein, all in conformity with generally accepted accounting
principles consistently applied during the periods involved, except as otherwise
noted therein and subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments and any other adjustments described
therein and the absence of footnotes thereto.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the
Financial Statements, neither MMC nor any of its subsidiaries have any material
liabilities or obligations of any nature (whether accrued, absolute, fixed,
contingent, liquidated or unliquidated or otherwise and whether due or to become
due and whether or not required by generally accepted accounting principles to
set forth in financial statements) except for current liabilities which were
incurred since the date of the Financial Statements in the ordinary course of
business and consistent with past practice.
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4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 28, 1997, neither MMC
nor any of its subsidiaries has: (a) taken any of the actions set forth in
Sections 5.1(b), 5.1(c) or 5.1(e) hereof; (b) incurred any material liability,
except in the ordinary course of its business, consistent with past practices;
(c) suffered any material adverse change, or any event involving a prospective
material adverse change, in the business, assets, financial condition or results
of operations of MMC or any of its subsidiaries; (d) changed its accounting
principles, practices or methods; (e) suffered any material damage, destruction
or loss (whether or not covered by insurance) with respect to any material
property of MMC or any of its subsidiaries; or (f) except as permitted by
Section 5.1 hereof, conducted its business and operations other than in the
ordinary course of business and consistent with past practices.
4.8 INFORMATION IN REGISTRATION STATEMENT. None of the information to be
supplied by MMC to be included in the Registration Statement, or amendments
thereto, will contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading.
4.9 LITIGATION. There is no material action, suit, judicial or
administrative proceeding, arbitration or investigation pending or, to the best
knowledge of MMC, threatened against or involving MMC and any of its
subsidiaries, or any of their respective properties or rights, before any court,
arbitrator, or administrative or governmental body; (ii) there is no material
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against MMC and any of its subsidiaries; and (iii) MMC and its subsidiaries are
not in violation of any term of any judgments, decrees, injunctions or orders
outstanding against them. Schedule 4.9 contains a description of all actions,
suits, proceedings, arbitrations, investigations, judgments, decrees,
injunctions or orders pending, or to the knowledge of MMC, threatened against
MMC or any of its subsidiaries, or any of their respective properties or rights
except where, based upon MMC's reasonable belief after consultation with
counsel, the potential exposure relating to any such matter does not exceed
$50,000.
4.10 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.10 contains a complete and accurate list of each employee
benefit plan (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of ERISA), policy or agreement that is maintained,
or is or was, within the past five years, contributed to by MMC or any of
its ERISA Affiliates or pursuant to which MMC or its ERISA Affiliates have
any liability for payments, benefits or claims (all of the foregoing, the
"MMC Plans"). A copy of each MMC Plan as currently in effect and, if
applicable, the most recent Annual Report, Actuarial Report, Valuation,
Summary Plan Description, Trust Agreement and any Determination Letter
issued by the IRS with respect thereto shall be delivered to ADM or its
counsel. Except as set forth in Schedule 4.10, neither MMC nor any ERISA
Affiliate of MMC has maintained or contributed to any plan subject to Title
IV of ERISA or Section 412 of the Code (including any "multi-employer plan,"
as defined in Section 3(37) of ERISA) during the six calendar years
preceding the date of this Agreement.
(b) Each of the MMC Plans that is subject to ERISA is in substantial
compliance with ERISA; each of the MMC Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code has received a favorable
determination letter from the I.R.S.; and no event has occurred, and to the
knowledge of MMC , there exists no condition or set of circumstances, in
connection with which MMC or any ERISA Affiliate of MMC is subject to
material liability (except liability for claims and funding obligations
payable in the ordinary course) under ERISA, the Code or any other
applicable law.
(c) All required contributions or other amounts payable by MMC or its
ERISA Affiliates as of the Effective Time with respect to each MMC Plan in
respect of current or prior plan years have been or will be (prior to the
Effective Time) either paid or accrued on the financial statements of MMC.
There are no pending, or, to the best knowledge of MMC, threatened or
anticipated claims (other than routine claims for benefits) by or on behalf
of or against any of the MMC Plans or any trusts related thereto.
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4.11 TAXES. MMC has filed or caused to be filed timely all material
federal, state, local and foreign tax returns required to be filed by each of it
and its Tax Affiliates. Such returns, reports and other information are accurate
and complete in all material respects. MMC has paid or caused to be paid or has
made adequate provision or set up an adequate accrual or reserve for the payment
of, all taxes shown to be due in respect of the periods for which returns are
due, and has established (or will establish at least quarterly) an adequate
accrual or reserve for the payment of all taxes payable in respect of the period
subsequent to the last of said periods required to be so accrued or reserved.
Neither MMC nor any of its Tax Affiliates has any material liability for taxes
in excess of the amount so paid or accruals or reserves so established. Neither
MMC nor any of its Tax Affiliates is delinquent in the payment of any material
amount of tax in excess of the amount reserved or provided therefor, and no
deficiencies for any tax, assessment or governmental charge in excess of the
amount reserved or provided therefor have been claimed or assessed. No waiver or
extension of time to assess any taxes has been given or requested and remains in
effect on the date hereof. There are no tax sharing agreements or similar
contracts or arrangements to which MMC or any of its subsidiaries is a party.
MMC's federal and state income tax returns for all years ending on or prior to
March 30, 1991, have been audited (and such audits have been completed) or are
no longer subject to audit by reason of the applicable statute of limitations.
All years ended subsequent to such date have never been audited by the Internal
Revenue Service or comparable state agencies.
4.12 COMPLIANCE WITH APPLICABLE LAW. MMC and each of its subsidiaries
holds all licenses, franchises, permits, variances, exemptions, orders,
approvals and authorizations necessary for the lawful conduct of its business
under and pursuant to, and the business of each of MMC and its subsidiaries is
not being conducted in violation of, any provision of any federal, state, local
or foreign statute, law, ordinance, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit or license or other governmental
authorization or approval applicable to MMC or any of its subsidiaries, except
to the extent that the failure to hold any such licenses, franchises, permits or
authorizations, or any such violation, would not, individually or in the
aggregate, be material to the business of MMC.
4.13 LABOR MATTERS. Except for that certain collective bargaining
agreement between Agri Sales, Inc., a wholly owned subsidiary of MMC, and the
United Steelworkers of America, Local 15298, neither MMC nor any of its
subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is MMC or any of its subsidiaries the subject of any material
proceeding asserting that MMC or any of its subsidiaries has committed an unfair
labor practice or is seeking to compel MMC or any of its subsidiaries to bargain
with any labor union or labor organization, nor is there any strike or other
general labor dispute involving MMC pending or, to the knowledge of MMC or any
of its subsidiaries, threatened.
4.14 TITLE TO ASSETS.
(a) MMC and its subsidiaries have good, valid and marketable title to
all of their respective material assets, and a valid leasehold interest in
all material leased real and personal property leased by them, including,
without limitation, the property and assets reflected in the Financial
Statements or acquired after the date thereof, in each case free and clear
of all liens, encumbrances or restrictions except (i) as set forth in the
Financial Statements, (ii) statutory liens, and (iii) for such defects in
title and liens, encumbrances or restrictions which individually or in the
aggregate are not material in amount and would not materially impair the use
or marketability of such assets.
(b) Schedule 4.14(b) contains a complete and accurate list of all
leases, copies of which have been previously provided to ADM pursuant to
which MMC or any of its subsidiaries lease real or personal property and
which require rental payments during any year of the existing lease term in
excess of $50,000 or with a remaining term of more than five years or which
are otherwise material to the business of MMC or any of its subsidiaries. To
the knowledge of MMC, each of the leases listed on Schedule 4.14(b) is in
full force and effect, is valid and enforceable in accordance with its
terms,
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and none of the parties thereto is in breach of or default under any such
lease in any material respect. To the knowledge of MMC, the lessee under
each such lease enjoys peaceful and undisturbed possession thereunder.
(c) The assets owned by MMC or its subsidiaries and the property
referred to in Section 4.14(b) above constitute, including the Intellectual
Property (as defined in Section 4.15 of this Agreement) all the property and
assets (real, personal, mixed, tangible and intangible) used by MMC and its
subsidiaries in their respective businesses. Such property and assets will
enable ADM and the Surviving Corporation to carry on after the Effective
Time the business operations of MMC and its subsidiaries as presently
conducted.
4.15 INTELLECTUAL PROPERTY.
(a) MMC owns or has valid binding, enforceable and adequate rights to
use all patents, trademarks, trade names, service marks, service names,
copyrights or other proprietary intellectual property rights, applications
therefor, registrations thereof and licenses or other rights in respect
thereof ("Intellectual Property") that are necessary to conduct the business
of MMC and its subsidiaries as presently conducted. Schedule 4.15 lists (i)
all trademarks, registered copyrights, trade names, and service marks, which
MMC considers to be material to its business and included in the
Intellectual Property, including the jurisdictions in which each such
Intellectual Property has been issued or registered or in which any such
application for such issuance and registration has been filed, (ii) all
material licenses, sublicenses, and other agreements to which MMC is a party
and pursuant to which any person is authorized to use any Intellectual
Property, and (iii) all material licenses, sublicenses, and other agreements
to which MMC is a party and pursuant to which MMC is authorized to use any
third party patents, trademarks, or copyrights, including software ("Third
Party Intellectual Property") that is material to its business.
(b) MMC is not, nor will it be as a result of the execution and delivery
of this Agreement, or the performance of its obligations under this
Agreement, in breach in any material respect of any license, sublicense, or
other agreements relating to the Intellectual Property or Third Party
Intellectual Property.
(c) To MMC's knowledge, all material patents, registered trademarks,
service marks, and copyrights held by MMC are valid and subsisting. Except
as set forth on Schedule 4.15, MMC (i) has not been sued in any suit,
action, or proceeding which involves a claim of infringement of any patents,
trademarks, service marks, or copyrights, or violation of any trade secret
or other proprietary right of any third party, and (ii) has no knowledge
that the conduct of its business as presently conducted infringes any
patent, trademark, service mark, copyright, trade secret, or other
proprietary right of any third party. Neither MMC nor its subsidiaries has
received any written notice or, to the knowledge of MMC, any other notice,
from any other person or any other source pertaining to or challenging the
right of MMC or its subsidiaries to use any Intellectual Property or any
trade secrets, proprietary information, inventions, know-how, processes and
procedures owned or used by or licensed to MMC or its subsidiaries. To the
knowledge of MMC, none of MMC's or its subsidiaries' employees is in
violation of any term of any employment contract, patent disclosure
agreement, confidentiality agreement or any other contract or agreement
relating to the relationship of any such employee with it or any other
party.
4.16 CONTRACT, LEASES AND AGREEMENTS.
(a) Schedule 4.16(a) contains a complete and accurate list of all
written contracts, and an accurate and complete written summary of all oral
contracts, to which MMC or any of its subsidiaries are a party or by which
any of their respective assets are bound as of the date of this Agreement
other than contracts with a term of less than one year or involving a
payment to or by MMC or its subsidiaries of less than $100,000. True and
complete copies of all written contracts listed on Schedule 4.16(a) have
been or will be delivered to ADM prior to the Closing for examination. To
the
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knowledge of MMC, each of the listed contracts is in full force and effect,
is valid and enforceable in accordance with its terms and none of the
parties thereto is in breach of or default in any material respect under any
such contracts.
(b) Except as set forth on Schedule 4.16(b), which Schedule sets forth
by subsection the disclosures called for by this Section 4.16(b), neither
MMC nor any of its subsidiaries are a party to or bound by any contract:
(i) evidencing indebtedness for borrowed money in excess of $100,000
or pursuant to which MMC or any of its subsidiaries have guaranteed
(including guarantees by way of acting as surety, co-signer, endorser,
co-maker, indemnitor or otherwise) for any obligation in excess of
$100,000 of any other person;
(ii) prohibiting or limiting the ability of MMC or any of its
subsidiaries (A) to engage in any line of business, (B) to compete with
any person or (C) to disclose any confidential information in the
possession of MMC or any of its subsidiaries (and not otherwise generally
available to the public) that could reasonably be expected to have
commercial value to MMC or any of its subsidiaries;
(iii) with any director, officer, employee, agent, consultant,
advisor or representative for employment or for consulting, independent
contracting or similar services or containing any severance or
termination pay obligations other than such contracts which may be
terminated upon no more than 30 days notice by, and in any case without
penalty or cost to, MMC or any of its subsidiaries, or which involve a
payment by MMC or any of its subsidiaries in excess of $75,000 per annum
or $250,000 over the remaining term thereof;
(iv) with any person directly or indirectly controlling, controlled
by or under common control with MMC other than transactions between or
among MMC and its subsidiaries in the ordinary course of business;
(v) pursuant to which it is obligated to indemnify any person,
including, without limitation, any contract to indemnify any other entity
or any director,officer or employee thereof;
(vi) granting a lien upon any property or asset;
(vii) pursuant to which it purchases materials, supplies or equipment
and which calls for future payments in excess of $100,000 in any year and
is not terminable by MMC or any of its subsidiaries upon no less than 60
days' notice to the other party and in any case without penalty or cost
to MMC or any of its subsidiaries;
(viii) which is (A) a joint venture or marketing contract or (B)
pursuant to which MMC or any of its subsidiaries acts or is obligated to
act as the representative of any other person;
(ix) obligating MMC or any of its subsidiaries to pay to any person
any money as a result of the execution and delivery of this Agreement or
the consummation of the transaction contemplated hereby;
(x) granting to any person a right to purchase any material assets or
obligating MMC or any of its subsidiaries to obtain the consent of any
person to the Merger or to the transfer or assignment by MMC or any of
its subsidiaries of any material assets or contracts;
(xi) providing for the acquisition or disposition after the date of
this Agreement of any business or any assets or granting any person a
right of first refusal or first offer with respect to the disposition of
any assets;
(xii) providing for a power of attorney on behalf of MMC or any of
its subsidiaries;
(xiii) not entered into in the ordinary course of business; or
(xiv) which is otherwise material to the business of MMC or any of
its subsidiaries.
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To the knowledge of MMC, each contract set forth on Schedule 4.16(b) is in
full force and effect in accordance with its terms as of the date hereof.
(c) Neither MMC nor any of its subsidiaries are, and to the knowledge of
MMC, no other party thereto is, in material breach or material violation of
or in material default under any contract listed on Schedule 4.16, and to
the knowledge of MMC, there is no basis for any claim of any such breach,
violation or default in the performance of any term of, and no event has
occurred which, with the passage of time or action by a third party, could
reasonably be likely to result in a default under any such contract.
4.17 ENVIRONMENTAL MATTERS.
(a) To the knowledge of MMC (i) no real property owned or operated by
MMC or any of its subsidiaries is contaminated with any Hazardous Substances
in such form or quantities so as to create any liability on the part of MMC
or ADM under any Environmental Law; (ii) no real property formerly owned or
operated by MMC or any of its subsidiaries was contaminated with any
Hazardous Substances in such form or quantities so as to create any
liability on the part of MMC or ADM under any Environmental Law; (iii)
neither MMC nor any of its subsidiaries are subject to liability for any
off-site disposal or contamination; (iv) neither MMC nor any of its
subsidiaries have received any claims or notices alleging liability under
any Environmental Law; and (v) MMC and its subsidiaries have provided ADM
with copies of all correspondence with regulatory agencies for any current
or pending environmental regulatory noncompliance and/or enforcement action
or dealing with the release of a Hazardous Substance or constituting notice
under any Environmental Law along with copies of all environmental reports
obtained by MMC and its subsidiaries since January 1, 1994.
(b) "ENVIRONMENTAL LAW" means the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA), the Resource Conservation and
Recovery Act (RCRA), the Clean Water Act (CWA), the Clean Air Act (CAA), the
Toxic Substances Control Act (TSCA), the Oil Pollution Prevention Act
(OPPA), and any other federal, state or local statute, regulation or order
relating to Hazardous Substances or the protection of the environment.
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, hazardous waste or
mixture thereof, that is regulated under CERCLA, RCRA, CWA, CAA, TSCA, and
OPPA including petroleum products, as regulated under RCRA and OPPA, friable
asbestos containing material, as regulated under OSHA, and polychlorinated
biphenyls as regulated under TSCA. "RCRA HAZARDOUS WASTE" means a hazardous
waste, as that term is defined in and pursuant to the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq.
(c) To the knowledge of MMC, no property that MMC or any of its
subsidiaries has ever owned or operated has ever been used in connection
with the business of manufacturing, storing or transporting Hazardous
Substances, with the exception of prepackaged agricultural chemicals present
solely for sale to the public. MMC does not and did not manage RCRA
Hazardous Waste subject to the requirements set forth in 40 CFR Parts 264
and 265.
(d) To the knowledge of MMC, there are not any underground or
aboveground storage tanks on any property that MMC or its subsidiaries
currently own or operate that are not in accordance with the applicable
requirements set forth under any Environmental Law. To the knowledge of MMC,
there have been no underground storage tanks on property owned or operated
by MMC and its subsidiaries that were not removed, retired, abandoned or
replaced in accordance with the applicable requirements set forth under
Environmental Law.
(e) To the knowledge of MMC, no property that MMC or any of its
subsidiaries has ever owned or operated has ever been listed on the National
Priorities List, the Comprehensive Environmental Response, Compensation and
Liability Information System or any equivalent state or local information
system.
(f) To the knowledge of MMC, there are not any current or past
environmental requests, notices, demands or regulatory noncompliance and/or
enforcement actions at any property owned
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or operated by MMC or its subsidiaries, nor is there litigation pending that
alleges violations or noncompliance with any Environmental Law. To the
knowledge of MMC, no such matter is anticipated, impending or threatened.
(g) MMC and each of its subsidiaries operates, and at all times has
operated, its business in all material respects in accordance with all
applicable Environmental Laws, and all material licenses, permits and other
authorizations required pursuant to any Environmental Law and necessary for
the lawful operation of the business of MMC and its subsidiaries are in
MMC's or the appropriate subsidiary's possession and are in full force and
effect. To MMC's knowledge, there is no threat that any such permit, license
or other authorization will be withdrawn, terminated, limited or materially
changed.
(h) For purposes of this Section 4.17, "knowledge" of MMC shall mean the
knowledge of (i) the officers and directors of MMC and its subsidiaries and
(ii) the persons identified in Schedule 4.17 hereto.
4.18 INSURANCE. Schedule 4.18 contains a complete and accurate list of all
policies of fire, liability, workers' compensation, directors' and officers'
liability and other forms of insurance owned or held by, or the premiums for
which are paid by, MMC or any of its subsidiaries. All such policies are and
will at all times up to the Effective Time be, in full force and effect and no
notice of cancellation or termination has been received with respect to any such
policy. Neither MMC nor any of its subsidiaries have been refused any insurance
or had its coverage limited within the past four years. Neither MMC nor any of
its subsidiaries have any life insurance policies in respect of any shareholder,
director, officer, or employee of MMC or any of its subsidiaries, owned by, or
the premiums for which are paid by, MMC or any of its subsidiaries.
4.19 BOOKS AND RECORDS. The books and records of MMC and its subsidiaries
(a) are kept in all material aspects complete and correct and (b) reflect all
material financial transactions of MMC and its subsidiaries, in each case as
complete entries in such books and records.
4.20 EMPLOYEES. Schedule 4.20 contains a complete and accurate list of all
employees of MMC and its subsidiaries, together with their titles and rates of
total annual aggregate compensation as of the date of this Agreement.
4.21 SECTION 5/11.75 OF THE IBCA NOT APPLICABLE. The provisions of Section
5/11.75 of the IBCA will not, prior to the termination of this Agreement,
assuming the accuracy of the representations contained in Section 3.13 (without
giving effect to the knowledge qualification thereof), apply to this Agreement,
the Merger or the transactions contemplated hereby.
4.22 OWNERSHIP OF ADM SHARES. As of the date hereof, neither MMC nor, to
its knowledge, any of its affiliates or associates (as such terms are defined
under the Exchange Act), (a) beneficially owns, directly or indirectly, or (b)
is a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, ADM Shares, which in
the aggregate, represent ten percent or more of the outstanding ADM Shares.
4.23 CORPORATE RECORDS. The minute books of MMC, which have been made
available to ADM or its representatives, fully and accurately show in all
material respects all corporate action taken by MMC's Board of Directors, all
committees of MMC's Board of Directors and MMC's shareholders (including,
without limitation, actions taken by written consent without a meeting) and
contain true and complete copies or originals of the Articles of Incorporation
(and all amendments thereto) of MMC, the Bylaws (as amended) of MMC and the
minutes of all meetings or consent actions of MMC's Board of Directors,
committees of MMC's Board of Directors and MMC's shareholders. As of the date of
this Agreement, no resolutions material to MMC or bylaws of MMC have been
passed, enacted, consented to or adopted by MMC's Board of Directors, committees
of MMC's Board of Directors or MMC's shareholders except as set forth in such
minute books.
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4.24 OPINION OF FINANCIAL ADVISOR. Prior to the date hereof, MMC has
received the opinion of Merrill Lynch to the effect that the Exchange Ratio, as
subject to adjustment in accordance with Section 2.1(a), is fair to the holders
of MMC Shares.
4.25 NO EXISTING DISCUSSIONS. On the date hereof, MMC is not engaged,
directly or indirectly, in any discussions or negotiations with any other party
with respect to an Acquisition Proposal (as defined below).
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 CONDUCT OF BUSINESS BY MMC AND ADM PENDING THE MERGER. Except as set
forth on Schedule 5.1 and except as consented to in writing by the other party
after the date hereof, during the period from the date of this Agreement and
continuing until the Effective Time relative to MMC and from the first day of
the Pricing Period until the Effective Time relative to ADM:
(a) The respective businesses of MMC and its subsidiaries and ADM and
its subsidiaries shall be conducted only in the ordinary course of business
and consistent with past practices, including, without limitation, methods
of accounting.
(b) Neither MMC or any of its subsidiaries nor ADM or any of its
subsidiaries shall (i) sell or pledge or agree to sell or pledge any stock
owned by it in any of its subsidiaries; (ii) amend its Certificate or
Articles of Incorporation or Bylaws; or (iii) split, combine or reclassify
any shares of its outstanding capital stock or declare, set aside or pay any
dividend or other distribution payable in cash, stock or property in respect
of its capital stock (except for ADM's regular quarterly cash dividend on
its outstanding Common Stock), or directly or indirectly redeem, purchase or
otherwise acquire any shares of its capital stock or other securities or
shares of the capital stock or other securities of any of its subsidiaries.
(c) Neither MMC or any of its subsidiaries nor ADM or any of its
subsidiaries shall (i) authorize for issuance, issue, sell, pledge, dispose
of, encumber, deliver or agree or commit to issue, sell, pledge, dispose of,
encumber or deliver any additional shares of, or rights of any kind to
acquire any shares of, its capital stock of any class or securities
exchangeable into shares of stock of any class or any Voting Debt (whether
through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise), except for unissued shares
of ADM Common Stock reserved for issuance upon the exercise of the stock
options, stock purchase plans, employee benefit plans, or warrants described
in Sections 3.2 or 4.2; (ii) acquire, dispose of, transfer, lease, license,
mortgage, pledge or encumber any fixed or other substantial assets other
than in the ordinary course of business and consistent with past practices;
(iii) incur, assume or prepay any material indebtedness, liability or
obligation or any other material liabilities or issue any debt securities
other than in the ordinary course of business and consistent with past
practices; (iv) assume, guarantee, endorse or otherwise, become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person (other than a wholly owned subsidiary) in a
material amount other than in the ordinary course of business and consistent
with past practices; (v) make any material loans, advances or capital
contributions to, or investments in, any other person, other than to
wholly-owned subsidiaries, other than in the ordinary course of business and
consistent with past practices; or (vi) fail to maintain adequate insurance
consistent with past practices for their businesses and properties.
(d) Each of MMC and ADM shall use its best efforts to preserve intact
the business organization of MMC and its subsidiaries on the one hand and
ADM and its subsidiaries on the other hand, to keep available the services
of their present officers and key employees, and to preserve the goodwill of
those having business relationships with their respective subsidiaries;
provided, however, that no breach of this representation shall be deemed to
have occurred if a failure to comply with this Section 5.1(d) occurs as a
result of any matter arising out of the transactions contemplated by this
Agreement, or any Acquisition Proposals (as defined below) made to MMC by
any third party or the public announcement thereof.
(e) Neither MMC, ADM nor any of their respective subsidiaries shall
knowingly take or allow to be taken or fail to take any action which act or
omission would jeopardize qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
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(f) MMC, ADM and each of their respective subsidiaries shall use all
reasonable efforts to take or omit to take any action or agree, in writing
or otherwise, to take or omit to take any action which would make any
representation or warranty of MMC, ADM or ADMAC, as applicable, herein true
and correct in all material respects.
5.2 COMPENSATION PLANS. Except as set forth in Schedule 5.2, during the
period from the date of this Agreement and continuing until the Effective Time,
MMC agrees as to itself and its subsidiaries that it will not, without the prior
written consent of ADM and ADMAC (except as otherwise required by applicable law
or pursuant to existing contractual arrangements) (a) enter into, adopt or amend
any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment, severance or other employee benefit plan,
agreement, trust, plan, fund or other arrangement between MMC and one or more of
its officers, directors or employees, in each case so as to materially increase
benefits thereunder (collectively, "Compensation Plans"), (b) grant or become
obligated to grant any material increase in the compensation or fringe benefits
of directors, officers or employees (including any such increase pursuant to any
Compensation Plan) or any increase in the compensation payable or to become
payable to any director or officer, except, with respect to employees other than
officers, for increases in compensation in the ordinary course of business
consistent with past practice, or enter into any contract, commitment or
arrangement to do any of the foregoing, except for normal increases and
non-stock benefit changes in the ordinary course of business consistent with
past practice, or (c) enter into or renew any contract, agreement, commitment or
arrangement providing for the payment to any director, officer or employee of
compensation or benefits contingent, or the terms of which are materially
altered in favor of such individual, upon the occurrence of any of the
transactions contemplated by this Agreement, except for contracts renewed in the
ordinary course of business.
5.3 CURRENT INFORMATION. From the date of this Agreement to the Effective
Time, MMC will cause one or more of its designated representatives to confer on
a regular and frequent basis (not less frequently than semimonthly) with
representatives of ADM and to report the general status of MMC's and its
subsidiaries ongoing operations and to deliver to ADM (not less frequently than
monthly) unaudited consolidated balance sheets and related consolidated
statements of income, changes in shareholders equity and cash flow for the
period since the last such report. MMC will promptly notify ADM of any material
change in the normal course of business or in its subsidiaries' properties.
5.4 LEGAL CONDITIONS TO MERGER. Each of MMC (subject to Section 6.9), ADM
and ADMAC shall, and shall cause its subsidiaries to, use all reasonable efforts
(a) to take, or cause to be taken, all actions necessary to comply promptly with
all legal requirements which may be imposed on such party or its subsidiaries
with respect to the Merger and to consummate the transactions contemplated by
this Agreement, subject to the appropriate vote or consent of shareholders and
(b) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any governmental
entity and or any other public or private third party which is required to be
obtained or made by such party or any of its subsidiaries in connection with the
Merger and the transactions contemplated by this Agreement; provided, however,
that a party shall not be obligated to take any action pursuant to the foregoing
if the taking of such action or such compliance or the obtaining of such
consent, authorization, order, approval or exemption would, in such party's
reasonable opinion, be materially burdensome to such party and its subsidiaries
taken as a whole. Each of MMC, ADM and ADMAC will promptly cooperate with and
furnish information to the other in connection with any such burden suffered by,
or requirement imposed upon, any of them or any of their subsidiaries in
connection with the foregoing.
5.5 VOTING AGREEMENTS. MMC shall use its best efforts to obtain from the
MMC Employees' Profit Sharing Trust and the CFM Foundation an agreement
substantially in the form of Exhibit 5.5 hereto (collectively, the "Voting
Agreements"), whereby each such person agrees to vote all shares of MMC Common
Stock for which they have voting power in favor of the Merger in any shareholder
vote to obtain approval to proceed with the Merger.
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5.6 AFFILIATES. At least 30 days prior to the meeting of the shareholders
of MMC, MMC shall deliver to ADM and ADMAC a letter identifying all persons who
are, at the time this Agreement is submitted for approval to the shareholders of
MMC, "affiliates" of MMC for purposes of Rule 145 under the Securities Act. MMC
shall use all reasonable efforts to cause each person named as "affiliates" to
deliver to ADM and ADMAC no later than 15 days prior to the meeting of the
shareholders of MMC a written "affiliates" agreement, in customary form,
restricting the disposition by such person of the ADM Shares to be received by
such person in the Merger to dispositions permitted by Rule 145. MMC
Certificates surrendered for exchange by any person constituting an "affiliate"
of MMC within the meaning of Rule 145 under the Securities Act shall not be
exchanged by the Exchange Agent for ADM Shares pursuant to Section 2.2 until ADM
and ADMAC have received such agreement described in the preceding sentence.
5.7 ADVICE OF CHANGES; GOVERNMENT FILINGS. Each party shall confer on a
regular and frequent basis with the other, report on operational matters and
promptly advise the other orally and in writing of any change or event having,
or which, insofar as can reasonably be foreseen, could have, a Material Adverse
Effect on such party or which would cause or constitute a material breach of any
of the representations, warranties or covenants of such party contained herein.
ADM shall use all reasonable efforts to file all reports required to be filed
with the SEC between the date of this Agreement and the Effective Time and shall
deliver to MMC copies of all such reports promptly after the same are filed.
Except where prohibited by applicable statutes and regulations, each party shall
promptly provide the other (or its counsel) with copies of all other filings
made by such party with any state or federal government entity in connection
with this Agreement or the transactions contemplated hereby.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 ACCESS AND INFORMATION.
(a) MMC and its subsidiaries shall afford to ADM and its financial
advisors, legal counsel, accountants, consultants and other representatives
access during normal business hours throughout the period from the date
hereof to the Effective Time to all of its books, records, properties,
facilities, personnel commitments and records (including but not limited to
tax returns) and, during such period, each MMC and ADM and their respective
subsidiaries shall furnish promptly to the other all information concerning
its business, properties and personnel as such other party may reasonably
request for purposes of the transactions contemplated by this Agreement. No
investigation pursuant to this Section 6.1 shall affect any representations
or warranties made herein or the conditions to the obligations of the
respective parties to consummate the Merger.
(b) All information furnished by MMC to ADM and ADMAC or furnished by
ADM or ADMAC to MMC pursuant hereto shall be treated as the sole property of
the party furnishing the information until consummation of the Merger
contemplated hereby. The parties will hold any such information which is
nonpublic in confidence to the extent required by, and in accordance with
the Confidentiality Agreement dated as of July 21, 1997, between MMC and ADM
(the "Confidentiality Agreement") and the confidentiality provisions
contained in such Confidentiality Agreement shall survive the termination of
this Agreement.
6.2 REGISTRATION STATEMENT. As promptly as practicable, ADM shall prepare
and file with the SEC the Registration Statement and use its best efforts to
have the Registration Statement declared effective. ADM shall also use its best
efforts to take any action required to be taken under state securities or blue
sky laws in connection with the issuance of the ADM Shares pursuant hereto. MMC
shall furnish ADM with all information concerning MMC and its shareholders and
shall take such other action as ADM may reasonably request in connection with
such Registration Statement and issuance of ADM Shares.
6.3 PROXY STATEMENT; SHAREHOLDER APPROVAL. MMC, acting through its Board
of Directors, shall, in accordance with applicable law and its Articles of
Incorporation and Bylaws:
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(a) promptly and duly call, give notice of, convene and hold as soon as
practicable following the date upon which the Registration Statement becomes
effective a meeting of its shareholders for the purpose of voting to approve
and adopt this Agreement and shall, subject to Section 6.9 hereof, use its
best efforts to obtain such shareholders' approval; and
(b) subject to Section 6.9 hereof, recommend approval and adoption of
this Agreement by the shareholders of MMC and include such recommendations
in communications delivered by MMC to MMC's shareholders for the purpose of
soliciting proxies or as otherwise required by law, and take all lawful
action to solicit such approvals.
6.4 NYSE. ADM shall take such action to apply for listing of the ADM
Shares to be issued pursuant to the Merger on the NYSE, if necessary, and shall
use its best efforts to obtain prior to the Effective Time approval for the
listing of the ADM Shares subject to official notice of issuance.
6.5 ANTITRUST LAWS. As promptly as practicable, MMC, ADM and ADMAC shall
make all filings and submissions under the HSR Act as may be required to be made
in connection with this Agreement and the transactions contemplated hereby.
Subject to Section 6.1 hereof, MMC will furnish to ADM and ADMAC, and ADM and
ADMAC will furnish to MMC, such information and assistance as the other may
reasonably request in connection with the preparation of any such filings or
submissions. Subject to Section 6.1 hereof, MMC will provide to ADM's and
ADMAC's counsel, as reasonably requested, and ADM and ADMAC will provide to
MMC's designated outside counsel, as reasonably requested, copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between such party or any of its representatives and any
governmental agency or authority or members of their respective staffs with
respect to this Agreement and the transactions contemplated hereby.
6.6 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, ADM,
ADMAC and MMC agree that they will each obtain the approval of the other parties
prior to issuing any press release and that they will use their best efforts to
consult with the other parties before otherwise making any public statement or
responding to any press inquiry with respect to this Agreement or the
transactions contemplated hereby, except as may be required by law, any
governmental agency or the rules of the NYSE.
6.7 EXPENSES. In the event the Merger is not consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
6.8 CERTAIN BENEFITS.
(a) From and after the Effective Time, ADM and the Surviving Corporation
shall (i) honor, in accordance with the respective terms of the MMC Plans
and to the extent required by ERISA, all benefits accrued at the Effective
Time under the MMC Plans and (ii) continue to provide benefits in accordance
with the terms of the MMC Retired Employees Medical Plan or a plan with
benefits substantially similar to those provided to similarly situated
persons under ADM's relevant plan for retired employees. ADM and the
Surviving Corporation shall grant to all employees of MMC or its
subsidiaries who remain employees of the Surviving Corporation or its
subsidiaries at the Effective Time ("MMC Employees"), from and after the
Effective Time, credit for all service with MMC and its subsidiaries,
affiliates and predecessors prior to the Effective Time for eligibility and
vesting purposes for all employee benefits of ADM and the Surviving
Corporation, and shall offer the MMC Employees participation in all employee
benefits of ADM and the Surviving Corporation offered to similarly situated
employees of ADM and the Surviving Corporation. To the extent any such
benefit plans provide medical or dental welfare benefits after the Effective
Time, such benefit plans shall waive any preexisting condition exclusions
and waiting periods for plan participation unless the MMC Employee was
subject to one or more preexisting condition exclusions in the comparable
MMC Plan (but credit shall be given to such employee for his preexisting
condition exclusion and waiting period time credited under the comparable
MMC plan), and shall provide that any expenses incurred on or before the
Effective Time shall be taken into account under the benefit plans of ADM
and the Surviving Corporation for purposes of satisfying applicable
deductible, coinsurance and
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maximum out-of-pocket provisions. Further, for a period of nine months from
and after the Effective Time, ADM and the Surviving Corporation shall make a
severance payment in accordance with the policy detailed in Schedule 6.8 to
any MMC Employee who is terminated without cause by ADM or the Surviving
Corporation within such nine-month period.
(b) Except as provided in the next sentence, ADM, ADMAC and MMC intend
that the obligations and rights created hereunder (including, without
limitation, any rights or obligations created by Section 6.8(a)) are only
for the benefit of ADM, ADMAC and MMC. This Agreement shall not be construed
to create any rights or benefits for any third party beneficiaries except as
referenced in Section 9.9, and except that the parties to the agreements and
arrangements listed on Schedule 6.8 shall be entitled to enforce such
agreements against ADM and the Surviving Corporation.
6.9 STANDSTILL AGREEMENT.
(a) Neither MMC, its subsidiaries or any of their respective officers
and directors shall, and they shall each direct and use its best efforts to
cause their employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant) not to (i)
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of, or which reasonably could be expected to lead
to, any proposal or offer (including, without limitation, any proposal or
offer to its shareholders or stockholders, as the case may be) with respect
to a merger, acquisition, consolidation or similar transaction involving, or
any purchase of any assets or capital stock of MMC or any of its
subsidiaries (any such proposal or offering being hereinafter referred to as
an "Acquisition Proposal") or (ii) engage in any negotiations or discussions
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal. MMC 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 and will take the
necessary steps to inform the individuals or entities referred to in the
first sentence hereof of the obligations undertaken in this Section 6.9.
(b) Notwithstanding the provisions of Section 6.9(a), nothing contained
in this Section 6.9 shall prohibit the Board of Directors of MMC from (i)
furnishing information to, or entering into discussions or negotiations
with, any person or entity that makes an unsolicited written, bona fide
proposal, to acquire MMC and/or its subsidiaries pursuant to a merger,
consolidation, share exchange, business combination, tender or exchange
offer or other similar transaction and in respect of which such person or
entity has the necessary funds or commitments therefor if, and only to the
extent that (A) the Board of Directors of MMC, after consultation with and
based upon the advice of independent legal counsel (who may be MMC's
regularly engaged independent legal counsel), determines in good faith that
such action is necessary for the Board of Directors of MMC to comply with
its fiduciary duties to stockholders under applicable law, (B) the Board of
Directors of MMC, after consultation with MMC's financial advisor,
determines in good faith that such Acquisition Proposal is bona fide and is
superior to the shareholders of MMC than the Merger, and (C) prior to taking
such action, MMC (x) provides reasonable notice to ADM to the effect that it
is taking such action and (y) receives from such person or entity an
executed confidentiality agreement in reasonably customary form (an
Acquisition Proposal meeting each of the foregoing requirements is herein
referred to as a "Superior Proposal"); or (ii) failing to make or
withdrawing or modifying its recommendation referred to in Section 6.3(b)
hereof if there exists an Acquisition Proposal and the Board of Directors of
MMC determines that it is a Superior Proposal in accordance with Section
6.9(b)(i) hereof.
(c) If the Board of Directors of MMC determines to take any action
pursuant to Section 6.9(b)(ii) hereof, then prior to taking such action, MMC
shall give written notice to ADM specifying the pricing, terms, conditions
and all material provisions of the Superior Proposal, providing to ADM a
copy of the third-party's offer with such notice. ADM shall then have five
business days after receipt of such notice to submit to the Board of
Directors of MMC its counter proposal (the "ADM
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Proposal"). The Board of Directors of MMC shall then have five business days
to evaluate the ADM Proposal and to notify ADM as to whether it equals or
exceeds the Superior Proposal. If the Superior Proposal includes securities
or other non-cash consideration, the ADM Proposal shall be deemed to be
equivalent if ADM provides its own securities or other non-cash
consideration of reasonably equivalent economic value. If the Board of
Directors of MMC determines in its reasonable judgment that the ADM Proposal
is at least equal to the Superior Proposal, then the Board of Directors of
MMC will immediately accept the ADM Proposal, foregoing the Superior
Proposal, and proceed with the terms of this Agreement, as modified by the
ADM Proposal. If the Board of Directors of MMC determines in its reasonable
judgment that the ADM Proposal does not equal or exceed the Superior
Proposal, then the Board of Directors of MMC shall provide to ADM notice of
any deficiencies in the ADM Proposal and ADM shall have three business days
to submit to the Board of Directors of MMC a modified proposal. The Board of
Directors of MMC shall then be obligated to accept the ADM Proposal, as
modified, or provide written notice to ADM of any continuing deficiencies.
ADM shall then have another three business days to further modify its
proposal. If ADM elects not to modify its proposal to match the Superior
Proposal within such time periods, then MMC will be free to take any action
contemplated by Section 6.9(b)(ii) hereof. If ADM elects not to match the
terms of the Superior Proposal and the Superior Proposal is modified in any
material respect from the proposal detailed in the initial notice to ADM
prior to the closing of the transactions contemplated thereby, then ADM's
rights under this Section 6.9 shall apply anew.
6.10 ACQUISITION OF MMC COMMON STOCK. From the date hereof until the
earlier to occur of (i) the Effective Time and (ii) termination of this
Agreement pursuant to Article VII hereof, ADM and ADMAC agree not to acquire, or
attempt to acquire, directly or indirectly any beneficial interest (including,
without limitation, any voting rights) in any shares of MMC Common Stock except
as contemplated by this Agreement.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Closing Date of the following conditions,
any one of which may be waived by MMC, ADM and ADMAC:
(a) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(b) The Registration Statement shall have become effective in accordance
with the provisions of the Securities Act and shall not be the subject of
any stop order or proceedings seeking a stop order.
(c) The NYSE shall have approved the listing of the ADM Shares to be
issued in the Merger.
(d) This Agreement and the transactions contemplated hereby shall have
been approved and adopted by the requisite vote of the shareholders of MMC
in accordance with applicable law and any applicable provisions of its
Articles of Incorporation and Bylaws.
(e) No preliminary or permanent injunction or other order by any
federal, state or foreign court of competent jurisdiction which prohibits
the consummation of the Merger shall have been issued and remain in effect;
provided, however, that prior to invoking this condition, each party shall
use all commercially reasonable efforts to have any such decree, ruling or
order lifted or vacated Other than the filing of the Certificate of Merger
with the Secretary of State of Delaware and the filing of the Articles of
Merger with and the issuance of a Certificate of Merger by the Secretary of
State of Illinois, all authorizations, consents, orders or approvals of, or
declarations or filings with, and all expirations of waiting periods imposed
by, any governmental entity (all of the foregoing, "Consents") that may
reasonably be deemed necessary so that the consummation of the Merger and
the transactions
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contemplated hereby will be in compliance with applicable laws, other than
Consents the failure to obtain which would not have a Material Adverse
Effect on the Surviving Corporation and its subsidiaries, taken as a whole,
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") and all such
Requisite Regulatory Approvals shall be in full force and effect.
(f) ADM shall have received all state securities or blue sky permits
and other authorizations necessary to issue the ADM Shares in exchange for
shares of MMC Common Stock and to consummate the Merger.
7.2 CONDITIONS TO OBLIGATIONS OF MMC TO EFFECT THE MERGER. The obligation
of MMC to effect the Merger shall be further subject to the satisfaction at or
prior to the Closing Date of the following additional conditions, which may be
waived by MMC:
(a) ADM and ADMAC shall have performed and complied in all material
respects with the agreements and obligations under this Agreement required
to be performed and complied with by them at or prior to the Closing Date
and the representations and warranties of ADM and ADMAC contained in this
Agreement shall be true and correct as of the date hereof and shall be true
and correct in all material respects at and as of the Closing Date as if
made at and as of such time, and MMC shall have received a certificate of
the President and Chief Financial Officer of ADM as to the satisfaction of
this condition. The parties acknowledge and agree that certain of the
representations and warranties of ADM and ADMAC contained in this Agreement
are by their terms limited by a materiality standard contained therein and
that, in those cases, the condition contained in this Section 7.2(a) is not
intended to be further limited by the standard "in all material respects"
referred to herein.
(b) MMC shall have received an opinion of Winston & Strawn, special
counsel to MMC, dated as of the Closing Date, substantially to the effect
that, on the basis of facts, representations, and assumptions set forth in
such opinion which are consistent with the state of facts existing at the
Effective Time, the merger will be treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code and
that ADMAC and MMC will each be a party to the reorganization within the
meaning of Section 368(b) of the Code.
(c) MMC shall have received an opinion of counsel to ADM and ADMAC dated
as of the Closing Date substantially in the form of Exhibit 7.2(c) hereto.
(d) On the Closing Date, the fairness opinion from Merrill Lynch
delivered at the execution of this Agreement pursuant to Section 4.24 shall
not have been withdrawn, modified or amended.
(e) ADM and ADMAC shall have obtained the consent or approval of each
person whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument, except
those for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a Material Adverse Effect on MMC or
ADM or a material adverse effect upon the consummation of the transactions
contemplated hereby.
7.3 CONDITIONS TO OBLIGATIONS OF ADM AND ADMAC TO EFFECT THE MERGER. The
obligations of ADM and ADMAC to the Merger shall be further subject to the
satisfaction at or prior to the Closing Date of the following additional
conditions, which may be waived by ADM and ADMAC:
(a) MMC shall have performed and complied in all material respects with
the agreements and obligations under this Agreement required to be performed
and complied with by it at or prior to the Closing Date and the
representations and warranties of MMC contained in this Agreement shall be
true and correct as of the date hereof and shall be true and correct in all
material respects at and as of the Closing Date as if made at and as of such
time, and ADM shall have received a certificate of the President and Chief
Financial Officer of MMC as to the satisfaction of this condition. The
parties
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acknowledge and agree that certain of the representations and warranties of
MMC contained in this Agreement are by their terms limited by a materiality
standard contained therein and that, in those cases, the condition contained
in this Section 7.3(a) is not intended to be further limited by the standard
"in all material respects" referred to herein.
(b) MMC shall have obtained the consent or approval of each person whose
consent or approval shall be required in order to permit the succession by
the Surviving Corporation pursuant to the Merger to any obligation, right or
interest of MMC or any subsidiary under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument, except
those for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a Material Adverse Effect on the
Surviving Corporation and its subsidiaries, taken as a whole, or upon the
consummation of the transactions contemplated hereby.
(c) ADM and ADMAC shall have received an opinion of counsel to MMC dated
the Closing Date substantially in the form of Exhibit 7.3(c) hereto.
(d) ADM shall have received a certificate of the Chief Financial Officer
of MMC, dated the Closing Date, showing that the Shareholders' Equity of MMC
as of the date 15 days prior to the Closing Date is in excess of $250
million, along with reasonable supporting documentation for such
calculation.
(e) The holders of not more than 10% of the total of the issued and
outstanding shares of MMC Common Stock, shall have taken such action prior
to or at the time of the MMC shareholders' vote as is necessary as of that
time to entitle them to the statutory dissenters' rights referred to in
Section 2.1(a) hereof.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated and the Merger
contemplated hereby abandoned at any time prior to the Effective Time:
(a) By the mutual written consent of ADM and MMC;
(b) By either ADM or MMC if (i) any of the conditions to their
respective obligations specified in Article VII hereof has not been
satisfied or waived onor before February 28, 1998, or (ii) the Merger shall
not have been consummated on or before February 28, 1998; provided, however,
that the right to terminate this Agreement under this Section 8.1(b) shall
not be available to a party whose failure to fulfill any obligations under
this Agreement has been the cause of, or resulted in, the failure of any of
the conditions specified in Article VII that are required to have been
satisfied prior to the Merger;
(c) By MMC, upon a material breach by ADM or ADMAC of any representation
or warranty or any covenant or agreement set forth in this Agreement, which
breach is not curable or, if curable, is not cured within the earlier to
occur of 20 days after written notice of such breach is given by MMC to ADM
or the Closing;
(d) By ADM, upon a material breach by MMC of any representation or
warranty or any covenant or agreement set forth in this Agreement, which
breach is not curable or, if curable, is not cured within the earlier to
occur of 20 days after written notice of such breach is given by ADM and
ADMAC to MMC or the Closing;
(e) By either ADM or MMC, if any court of competent jurisdiction in the
United States or other federal or state governmental body shall have issued
an order, decree or ruling or take any other action restraining, enjoining
or otherwise prohibiting the Merger and such order, decree, ruling or any
other action shall have become final and non-appealable; provided, however,
that the right to terminate this Agreement under this Section 8.1(e) shall
not be available to a party who has not complied with its obligations under
Section 5.4 hereof;
(f) By ADM or MMC, upon written notice to the other party, if (i) MMC
fails to make or withdraws or modifies its recommendation referred to in
Section 6.3(b) hereof in accordance with the provisions of Section 6.9(b)
and 6.9(c) hereof or (ii) any approval of the shareholders of MMC 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
shareholders or at any adjournment thereof;
(g) By ADM, upon written notice to MMC, if within 45 days after the date
of this Agreement, ADM shall not have received the executed Voting
Agreements;
(h) By ADM, upon written notice to MMC, if prior to the Closing Date,
ADM shall have determined, in its sole discretion acting in a commercial
reasonable manner, that it is "reasonably possible" that the possible
manufacture, sale and shipment by MMC or any of its subsidiaries of
products, including soybean meal, containing dioxin has had or will have a
Material Adverse Effect on MMC and its subsidiaries, taken as a whole. For
purposes of this Section 8(h), "reasonably possible" shall mean that the
chance of the specified future event or events occurring is more than
remote;
(i) By ADM, upon written notice to MMC, if, prior to the 14th day after
receipt by ADM of such additional due diligence documents, materials and
information relative to MMC, if any, as shall be reasonably requested in
writing by ADM after performance of its initial due diligence review (to be
completed no later than 30 days after the date of this Agreement), ADM shall
have discovered during the course of its due diligence investigation of MMC
and its subsidiaries any conditions, facts or circumstances relative to MMC
or any of its subsidiaries which had not been disclosed in this Agreement or
in the MMC Schedules and which, in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect on MMC and its subsidiaries, taken
as a whole; provided; however, that failure to (i) provide such notice or
request such additional due diligence documents, materials
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or information during the initial 30-day review period or (ii) provide such
notice within such additional 14-day period shall be deemed a waiver of
ADM's right to terminate this Agreement pursuant to this Section 8.1(i).
Notwithstanding the foregoing, if MMC does not provide to ADM in a
commercially reasonable manner all due diligence documents, materials and
information relating to MMC as ADM shall reasonably request in writing
during the initial 30-day review period, then such period shall be extended
until such time as ADM has received all such documents, materials and
information; or
(j) By MMC, upon written notice to ADM, if, prior to the 14th day after
receipt by MMC of such additional due diligence documents, materials and
information relating to ADM, if any, as shall be reasonably requested in
writing by MMC after performance of its initial due diligence review (to be
completed no later than 30 days after the date of this Agreement), MMC shall
have discovered during the course of its due diligence investigation of ADM
and its subsidiaries any conditions, facts or circumstances relative to ADM
or any of its subsidiaries which had not been disclosed in this Agreement,
in the ADM SEC Reports or in the ADM Schedules and which, in the aggregate,
has had or is reasonably likely to have a Material Adverse Effect on ADM and
its subsidiaries, taken as a whole; provided, however, that failure to (i)
provide such notice or request such additional due diligence documents,
materials or information during the initial 30-day review period or (ii)
provide such notice within such additional 14-day period shall be deemed a
waiver of MMC's right to terminate this Agreement pursuant to this Section
8.1(j). Notwithstanding the foregoing, if ADM does not provide to MMC in a
commercially reasonable manner all due diligence documents, materials and
information relating to ADM as MMC shall reasonably request in writing
during the initial 30-day review period, then such period shall be extended
until such time as MMC has received all such documents, materials and
information.
8.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
as provided above, this Agreement shall forthwith become of no further effect
and there shall be no liability or obligation on the part of ADM, ADMAC or MMC
or their respective officers or directors (except as set forth in Sections 6.1
and 6.9 hereof which shall survive the termination). Nothing contained in this
Section 8.2 shall relieve any party from liability for breach of this Agreement
that results in termination of this Agreement. Upon request therefor, each party
will redeliver all documents, work papers and other material of any other party
relating to the transactions contemplated hereby, whether obtained before or
after the execution hereof, to the party furnishing same.
8.3 AMENDMENT. This Agreement may be amended by action taken by ADM, ADMAC
and MMC at any time before or after approval hereof by the shareholders of MMC,
but, after any such approval, no amendment shall be made which alters the number
of ADM Shares to be exchanged for each MMC Share or which in any way has a
material adverse effect on the rights of such shareholders, without the further
approval of such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.4 INDEMNIFICATION. All rights to indemnification and/or reimbursement
existing in favor of any present or former director, officer or employee of MMC
or any of its subsidiaries (an "Indemnified Party") as provided in (a) MMC's
Articles of Incorporation Bylaws, or (b) the articles of incorporation, bylaws
or similar organizational documents of any of its subsidiaries or (c) such
related contracts as are listed on Schedule 8.4, each as in effect on the date
hereof, shall survive the Merger with respect to matters occurring at or prior
to the Effective Time. ADM agrees that pursuant to the terms of the Merger such
obligations and liabilities with respect to indemnification and reimbursement of
the Indemnified Parties shall become obligations and liabilities of the
Surviving Corporation and its successors. ADM further agrees to maintain
coverage under MMC's director and officer insurance policies currently in force
or under substantially similar policies for a period of six years after the
Closing Date. ADM further agrees to become directly liable for such obligations
and liabilities with respect to indemnification and reimbursement of the
Indemnified Parties to the extent of the difference between the Surviving
Corporation's Shareholders' Equity as of the date of any such related claim and
the Shareholders' Equity of MMC on the Closing Date.
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8.5 WAIVER. Except as set forth in Sections 8.1(i) and 8.1(j) hereof, at
any time prior to the Effective Time, the parties hereto may (a) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. Such waiver shall not operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations and warranties made herein by the parties hereto shall not
survive the Effective Time. This Section 9.1 shall not limit any covenant or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time or the termination of the Agreement.
9.2 BROKERS. Except as set forth on Schedule 9.2, each party hereto
represents and warrants to the other parties that no broker, finder or financial
advisor is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of such party.
9.3 NOTICES. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by telex or telecopy or mailed by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to ADM, to:
Archer-Daniels-Midland Company
4666 Faries Parkway
Decatur, Illinois 62526
Attention: Chief Executive Officer
Facsimile: (217) 424-4266
with a copy to:
Archer-Daniels-Midland Company
4666 Faries Parkway
Decatur, Illinois 62526
Attention: General Counsel
Facsimile: (217) 424-6196
(b) If to ADMAC, to:
ADM Acquisition Corp.
4666 Faries Parkway
Decatur, Illinois 62526
Attention: Chief Executive Officer
Facsimile: (217) 424-4266
with a copy to:
ADM Acquisition Corp.
4666 Faries Parkway
Decatur, Illinois 62526
Attention: General Counsel
Facsimile: (217) 424-6196
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(c) If to MMC, to:
Moorman Manufacturing Company
1000 North 30th Street
P.O. Box C1
Quincy, Illinois 62305
Attention: Chief Executive Officer
Facsimile: (217) 223-8653
with a copy to:
Schmiedeskamp, Robertson, Neu & Mitchell
525 Jersey, P.O. Box 1069
Quincy, Illinois 62306
Attention: Delmer R. Mitchell, Esq.
Facsimile: (217) 223-1005
9.4 DESCRIPTIVE HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.5 ENTIRE AGREEMENT. This Agreement (including the Schedules and other
documents and instruments referred to herein) and the Confidentiality Agreement
constitute the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them, with
respect to the subject matter hereof. Section 6.9 hereof shall supersede Section
18 of the Confidentiality Agreement.
9.6 SPECIFIC PERFORMANCE. The transactions contemplated by this Agreement
are unique. Accordingly, each of the parties acknowledges and agrees that, in
addition to all other remedies to which it may be entitled, each of the parties
hereto is entitled to a decree of specific performance, provided such party is
not in material default hereunder.
9.7 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
9.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois without giving effect to the
provisions thereof relating to conflicts of law.
9.9 PARTIES IN INTEREST. Except for Sections 6.6 and 6.9 hereof, nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any rights, benefit or remedies of any nature whatsoever.
9.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
9.11 VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not effect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
9.12 JURISDICTION AND VENUE. Each party hereto hereby agrees that any
proceeding relating to this Agreement and the Merger shall be brought in a state
court of Illinois. Each party hereto hereby consents to personal jurisdiction in
any such action brought in any such Illinois court, consents to service of
process by registered mail made upon such party and such party's agent and
waives any objection to venue in any such Illinois court or any claim that such
Illinois court is an inconvenient form.
9.13 INVESTIGATION. The respective representations and warranties of ADM,
ADMAC and MMC contained herein or in the certificates or other documents
delivered prior to the Closing shall not be deemed waived or otherwise affected
by any investigation made by any party hereto.
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9.14 CONSENTS. For purposes of any provision of this Agreement requiring,
permitting or providing for the consent of ADM, ADMAC or MMC, the written
consent of the Chief Executive Officer of ADM, ADMAC or MMC, as the case may be,
shall be sufficient to constitute such consent.
9.15 KNOWLEDGE. Wherever the representations and warranties of the parties
contained herein are qualified by the "knowledge" of such party or the "best
knowledge" of such party, such knowledge shall be limited to that of the
officers and directors of such party and its subsidiaries.
IN WITNESS WHEREOF, each of ADM, ADMAC and MMC has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
ARCHER-DANIELS-MIDLAND COMPANY
By /s/ DAVID J. SMITH
------------------------------------------
Its VICE PRESIDENT
------------------------------------------
ADM ACQUISITION CORP.
By /s/ DAVID J. SMITH
------------------------------------------
Its VICE PRESIDENT
------------------------------------------
MOORMAN MANUFACTURING COMPANY
By /s/ THOMAS M. MCKENNA
------------------------------------------
Its PRESIDENT & CHIEF EXECUTIVE OFFICER
------------------------------------------
A-30
EXHIBIT B
SEPTEMBER 3, 1997
Board of Directors
Moorman Manufacturing Company
1000 North 30th Street
Quincy, Illinois 62305-7100
Gentlemen:
Moorman Manufacturing Company (the "Company"), Archer-Daniels-Midland
Company (the "Acquiror") and ADM Acquisition Corp., a wholly owned subsidiary of
the Acquiror (the "Acquisition Sub"), propose to enter into an agreement (the
"Agreement") pursuant to which the Company will be merged with the Acquisition
Sub in a transaction (the "Merger") in which each outstanding share of the
Company's common stock, par value $1.00 per share (the "Shares"), will be
converted into the right to receive a number of shares of the common stock, no
par value, of the Acquiror (the "Acquiror Shares") in an amount equal to the
quotient (the "Exchange Ratio") obtained by dividing (x) $5,400.00 (the "Base
Value") by (y) an amount equal to the average of the closing prices of the
Acquiror Shares as reported on the New York Stock Exchange Composite Tape on
each of the 20 trading days immediately preceding the third trading day prior to
the Closing Date (as defined in the Agreement). In the event that the
Shareholders' Equity (as defined in the Agreement) of the Company on the Closing
Date is less than $265 million, the Base Value shall be reduced by an amount
equal to (A) the difference between $265 million and the actual Shareholders'
Equity of the Company on the Closing Date divided by (B) 54,770; provided,
however, that in no event will the Base Value be less than $5,126.13. The Merger
is expected to be considered by the shareholders of the Company at a special
shareholders' meeting and consummated on or shortly after the receipt of
shareholder and all regulatory approvals.
You have asked us whether, in our opinion, the Exchange Ratio is fair to the
holders of Shares from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's audited financial information for the five fiscal
years ended March 29, 1997 and the Company's unaudited financial information
for the four month periods ending August 2, 1997 and 1996;
(2) Reviewed the Acquiror's Annual Reports, Forms 10-K and related financial
information for the five fiscal years ended June 30, 1996 and the Acquiror's
Forms 10-Q and the related unaudited financial information for the quarterly
periods ending September 30, 1996, December 31, 1996 and March 31, 1997;
(3) Reviewed certain information, including financial forecasts, relating to the
business, earnings, cash flow, assets and prospects of the Company,
furnished to us by the Company;
(4) Conducted discussions with members of senior management of the Company
concerning its respective businesses and prospects;
(5) Reviewed the market prices and valuation multiples for the Acquiror Shares
and compared them with those of certain publicly traded companies that we
deemed relevant;
(6) Reviewed the results of operations of the Company and the Acquiror and
compared them with those of certain companies which we deemed to be
relevant;
(7) Compared the proposed financial terms of the transactions contemplated by
the Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;
(8) Reviewed a draft dated August 27, 1997 of the Agreement; and
(9) Reviewed such other financial studies and analyses and performed such other
investigations and took into account such other matters as we deemed
necessary.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, and we
have not assumed any responsibility for independently verifying such information
or undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Company or the Acquiror. In addition, we have not assumed any
obligation to conduct any physical inspection of the properties or facilities of
the Company or the Acquiror. With respect to the financial forecast information
furnished to or discussed with us by the Company, we have assumed that they have
been reasonably prepared and reflect the best currently available estimates and
judgment of the Company's management as to the expected future financial
performance of the Company. While we have not received any financial forecasts
from or relating to the Acquiror, we have conducted discussions with management
of the Acquiror limited to the possible existence of undisclosed conditions that
may affect the market prices at which the Acquiror Shares have recently traded
and such management's views as to the accuracy and reasonableness of estimates
and reports with respect to the future financial and operating performance of
the Acquiror published by analysts. Our opinion is predicated on the Merger
qualifying as a tax-free reorganization for U.S. federal income tax purposes.
Our opinion is necessarily based on economic, market and other conditions as
in effect on, and the information made available to us as of, the date hereof.
We have assumed that in the course of obtaining the necessary regulatory or
other consents or approvals (contractual or otherwise) for the Merger, no
restrictions, including any divestiture requirements or amendments or
modifications, will be imposed that will have a material adverse effect on the
contemplated benefits of the Merger.
In connection with the preparation of this opinion, we have not been
authorized by the Company or the Board of Directors to solicit, nor have we
solicited, third-party indications of interest for the acquisition of all or any
part of the Company.
We have been retained by the Board of Directors of the Company as an
independent contractor to act as financial advisor to the Company with respect
to the Merger and will receive a fee for our services. In addition, the Company
has agreed to indemnify us for certain liabilities arising out of our
engagement. We have in the past provided investment banking and other services
to the Acquiror and may continue to do so and have received, and may receive,
fees for the rendering of such services. In addition, in the ordinary course of
our securities business, we may actively trade debt and/or equity securities of
the Acquiror for our own account and the accounts of our customers, and we
therefore may, from time to time, hold a long or short position in such
securities.
This opinion is for the use and benefit of the Board of Directors of the
Company. Our opinion does not address the merits of the underlying decision by
the Company to engage in the Merger and does not constitute a recommendation to
any shareholder as to how such shareholder should vote or as to any other action
such shareholder should take in connection with the proposed Merger.
We are not expressing any opinion herein as to the prices at which the
Acquiror Shares will trade following the announcement or consummation of the
Merger.
On the basis of, and subject to the foregoing, we are of the opinion that
the Exchange Ratio is fair to the holders of Shares from a financial point of
view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
B-2
EXHIBIT C
ILLINOIS COMPILED STATUTES ANNOTATED
CHAPTER 805. BUSINESS ORGANIZATIONS
CORPORATIONS
ACT 5. BUSINESS CORPORATION ACT OF 1983
ARTICLE 11. MERGER AND CONSOLIDATION--DISSENTERS' RIGHTS
5/11.65. RIGHT TO DISSENT
Section 11.65. Right to dissent.
(a) A shareholder of a corporation is entitled to dissent from, and obtain
payment for his or her shares in the event of any of the following corporate
actions:
(1) consummation of a plan of merger or consolidation or a plan of share
exchange to which the corporation is a party if (i) shareholder
authorization is required for the merger or consolidation or the share
exchange by Section 11.20 or the articles of incorporation or (ii) the
corporation is a subsidiary that is merged with its parent or another
subsidiary under Section 11.30;
(2) consummation of a sale, lease or exchange of all, or substantially
all, of the property and assets of the corporation other than in the usual
and regular course of business;
(3) an amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) alters or abolishes a preferential right of such shares;
(ii) alters or abolishes a right in respect of redemption, including
a provision respecting a sinking fund for the redemption or repurchase,
of such shares;
(iii) in the case of a corporation incorporated prior to January 1,
1982, limits or eliminates cumulative voting rights with respect to such
shares; or
(4) any other corporate action taken pursuant to a shareholder vote if
the articles of incorporation, by-laws, or a resolution of the board of directors provide that shareholders are entitled to dissent and obtain
payment for their shares in accordance with the procedures set forth in
Section 11.70 or as may be otherwise provided in the articles, by-laws or
resolution.
(b) A shareholder entitled to dissent and obtain payment for his or her
shares under this Section may not challenge the corporate action creating his or
her entitlement unless the action is fraudulent with respect to the shareholder
or the corporation or constitutes a breach of a fiduciary duty owned to the
shareholder.
(c) A record owner of shares may assert dissenters' rights as to fewer than
all the shares recorded in such person's name only if such person dissents with
respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
the record owner asserts dissenters' rights. The rights of a partial dissenter
are determined as if the shares as to which dissent is made and the other shares
were recorded in the names of different shareholders. A beneficial owner of
shares who is not the record owner may assert dissenters' rights as to shares
held on such person's behalf only if the beneficial owner submits to the
corporation the record owner's written consent to the dissent before or at the
same time the beneficial owner asserts dissenters' rights.
5/11.70. PROCEDURE TO DISSENT
Section 11.70. Procedure to Dissent.
(a) If the corporate action giving rise to the right to dissent is to be
approved at a meeting of shareholders, the notice of meeting shall inform the
shareholders of their right to dissent and the procedure to dissent. If, prior
to the meeting, the corporation furnishes to the shareholders material
information with respect to the transaction that will objectively enable a
shareholder to vote on the transaction and to determine whether or not to
exercise dissenters' rights, a shareholder may assert
dissenters' rights only if the shareholder delivers to the corporation before
the vote is taken a written demand for payment for his or her shares if the
proposed action is consummated, and the shareholder does not vote in favor of
the proposed action.
(b) If the corporate action giving rise to the right to dissent is not to
be approved at a meeting of shareholders, the notice to shareholders describing
the action taken under Section 11.30 or Section 7.10 shall inform the
shareholders of their right to dissent and the procedure to dissent. If, prior
to or concurrently with the notice, the corporation furnishes to the
shareholders material information with respect to the transaction that will
objectively enable a shareholder to determine whether or not to exercise
dissenters' rights, a shareholder may assert dissenter's rights only if he or
she delivers to the corporation within 30 days from the date of mailing the
notice a written demand for payment for his or her shares.
(c) Within 10 days after the date on which the corporate action giving rise
to the right to dissent is effective or 30 days after the shareholder delivers
to the corporation the written demand for payment, whichever is later, the
corporation shall send each shareholder who has delivered a written demand for
payment a statement setting forth the opinion of the corporation as to the
estimated fair value of the shares, the corporation's latest balance sheet as of
the end of a fiscal year ending not earlier than 16 months before the delivery
of the statement, together with the statement of income for that year and the
latest available interim financial statements, and either a commitment to pay
for the shares of the dissenting shareholder at the estimated fair value thereof
upon transmittal to the corporation of the certificate or certificates, or other
evidence of ownership, with respect to the shares, or instructions to the
dissenting shareholder to sell his or her shares within 10 days after delivery
of the corporation's statement to the shareholder. The corporation may instruct
the shareholder to sell only if there is a public market for the shares at which
the shares may be readily sold. If the shareholder does not sell within that 10
day period after being so instructed by the corporation, for purposes of this
Section the shareholder shall be deemed to have sold his or her shares at the
average closing price of the shares, if listed on a national exchange, or the
average of the bid and asked price with respect to the shares quoted by a
principal market maker, if not listed on a national exchange, during that 10 day
period.
(d) A shareholder who makes written demand for payment under this Section
retains all other rights of a shareholder until those rights are canceled or
modified by the consummation of the proposed corporate action. Upon consummation
of that action, the corporation shall pay to each dissenter who transmits to the
corporation the certificate or other evidence of ownership of the shares the
amount the corporation estimates to be the fair value of the shares, plus
accrued interest accompanied by a written explanation of how the interest was
calculated.
(e) If the shareholder does not agree with the opinion of the corporation
as to the estimated fair value of the shares or the amount of interest due, the
shareholder, within 30 days from the delivery of the corporation's statement of
value, shall notify the corporation in writing of the shareholder's estimated
fair value and amount of interest due and demand payment for the difference
between the shareholder's estimate of fair value and interest due and the amount
of the payment by the corporation or the proceeds of sale by the shareholder,
whichever is applicable because of the procedure for which the corporation opted
pursuant to subsection (c).
(f) If, within 60 days from delivery to the corporation of the shareholder
notification of estimate of fair value of the shares and interest due, the
corporation and the dissenting shareholder have not agreed in writing upon the
fair value of the shares and interest due, the corporation shall either pay the
difference in value demanded by the shareholder, with interest, or file a
petition in the circuit court of the county in which either the registered
office or the principal office of the corporation is located, requesting the
court to determine the fair value of the shares and interest due. The
corporation shall make all dissenters, whether or not residents of this State,
whose demands remain unsettled parties to the proceeding as an action against
their shares and all parties shall be served with a copy of the petition.
Nonresidents may
C-2
be served by registered or certified mail or by publication as provided by law.
Failure of the corporation to commence an action pursuant to this Section shall
not limit or affect the right of the dissenting shareholders to otherwise
commence an action as permitted by law.
(g) The jurisdiction of the court in which the proceeding is commenced
under subsection (f) by a corporation is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the power described
in the order appointing them, or in any amendment to it.
(h) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds that the fair value of his or
her shares, plus interest, exceeds the amount paid by the corporation or the
proceeds of sale by the shareholder, whichever amount is applicable.
(i) The court, in a proceeding commenced under subsection (f), shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of the appraisers, if any, appointed by the court under subsection (g),
but shall exclude the fees and expenses of counsel and experts for the
respective parties. If the fair value of the shares as determined by the court
materially exceeds the amount which the corporation estimated to be the fair
value of the shares or if no estimate was made in accordance with subsection
(c), then all or any part of the costs may be assessed against the corporation.
If the amount which any dissenter estimated to be the fair value of the shares
materially exceeds the fair value of the shares as determined by the court, then
all or any part of the costs may be assessed against that dissenter. The court
may also assess the fees and expenses of counsel and experts for the respective
parties, in amounts the court finds equitable, as follows:
(1) Against the corporation and in favor of any or all dissenters if the
court finds that the corporation did not substantially comply with the
requirements of subsections (a), (b), (c), (d), or (f).
(2) Against either the corporation or a dissenter and in favor of any
other party if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this Section.
If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and that the fees for
those services should not be assessed against the corporation, the court may
award to that counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who are benefitted. Except as otherwise provided in this Section,
the practice, procedure, judgment and costs shall be governed by the Code of
Civil Procedure.
(j) As used in this Section:
(1) "Fair value", with respect to dissenter's shares, means the value of
the shares immediately before the consummation of the corporate action to
which the dissenter objects excluding any appreciation or depreciation in
anticipation of the corporate action, unless exclusion would be inequitable.
(2) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances.
C-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Section 145 ofspecific cases. In addition, the General Corporation Law of the State of Delaware provides that indemnification and advancement of expenses provided by the statute shall not be deemed exclusive of any other rights to which provides forthose seeking indemnification or advancement of directors and officers in
certain circumstances.
expenses may be entitled under any bylaw, agreement or otherwise.
Article Fourteenth of the Registrant's Certificate of Incorporation of the registrant and Article XVI of itsthe Bylaws of the undersigned registrant each provide for the broad indemnification of the Registrant'sdirectors and officers and directorsof the registrant and limit the personal monetary liability of directors of the Registrant's directorsregistrant to the fullest extent permitted by current Delaware Law.law. The Registrantregistrant has also entered into indemnification contracts with certain of its directors and officers andofficers. The registrant also maintains insurance coverage relating to certain liabilities of its directors and officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
| Item 21. | Exhibits and Financial Statement Schedules |
The following Exhibitsexhibits to this registration statement are filed as part oflisted on the Exhibit Index to this Registration Statement:
| Item 22. | Undertakings |
The undersigned Registrantregistrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement registration statement:
(i) toTo include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, 1933;
(ii) toTo reflect in the prospectus any facts or events arising after the effective date of the Registration Statementregistration statement (or the most recent post-effective amendment thereof) which, individually or in the
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aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Statement, and Fee” table in the effective registration statement;
(iii) toTo include any material information with respect to the plan of distribution not previously disclosed in the Registration Statementregistration statement or any material change to such information in the Registration Statement
PROVIDED, HOWEVER, that clauses (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
registration statement;
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDEbona fide offering thereof.
thereof;
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that,offering;
(4) That, for purposesthe purpose of determining any liability under the Securities Act of 1933 to any purchaser, each filing of the
Registrant's annual reportprospectus filed pursuant to Section 13(a)Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or Section 15(d)other than prospectuses filed in reliance on Rule 430A of the
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this Registration Statementchapter), shall be deemed to be a newpart of and included in the registration statement relatingas of the date it is first used after effectiveness.Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to the securities offered
herein, and the offeringa purchaser with a time of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: thatcontract of sale prior to such first use, supersede or modify any public reofferingstatement that was made in the registration statement or prospectus that was part of the securities registered hereunder through useregistration statement or made in any such document immediately prior to such date of a
prospectus which is a partfirst use;
(5) That, for the purpose of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Itemsdetermining liability of the applicable form.
The undersigned Registrant undertakes that every prospectus: (i) that is
filed pursuant to the immediately preceding paragraph, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to this Registration Statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liabilityregistrant under the Securities Act of 1933 eachto any purchaser in the initial distribution of the securities: the undersigned registrant undertakes that in a primary offering of securities of the registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such post-effective
amendment shall be deemed topurchaser by means of any of the following communications, the registrant will be a new registration statementseller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the securities offered herein, andoffering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of suchthe undersigned Registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities atprovided by or on behalf of the undersigned registrant; and
(iv) Any other communication that time
shall be deemedis an offer in the offering made by the undersigned registrant to be the initial bona fide offering thereof.purchaser.
(6) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrantregistrant pursuant to the foregoing provisions, or otherwise, the Registrantregistrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrantregistrant of expenses incurred or paid by
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a director, officer or controlling person of the Registrantregistrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrantregistrant will, unless
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Securities Act of 1933 and will be governed by the final adjudication of such issue.
(7) The undersigned Registrantregistrant hereby undertakes to respond to requestsrequest for information that is incorporated by reference into the Prospectusprospectus pursuant to ItemsItem 4, 10(b), 11, or 13 of this Form,form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of this Registration Statementthe registration statement through the date of responding to the request.
The undersigned Registrant hereby undertakes to
(8) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in this Registration Statementthe registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrantregistrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Decatur, State of Illinois, on the 15th day of October, 1997.
December 22, 2011.
| ARCHER-DANIELS-MIDLAND COMPANY | ||
By: | /s/ David J. | |
David J. Smith, | ||
Executive Vice President, Secretary and General Counsel | ||
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed on the 15th day of October, 1997,December22, 2011 by the following persons in the capacities indicated:
* | Chairman of the Board of Directors, Chief | |
| Patricia A. | Executive Officer, President and (Principal Executive | |
/s/ Ray G. | Senior Vice President and Chief Financial Officer | |
| Ray G. Young | (Principal Financial Officer) | |
/s/ John Stott | Vice President and Controller | |
| John Stott | (Principal Accounting Officer) | |
* | Director | |
| George W. Buckley | ||
* | Director | |
| Mollie Hale Carter | ||
* | Director | |
| Terrell K. Crews | ||
* | Director | |
| Pierre Dufour | ||
* | Director | |
| Donald E. Felsinger | ||
* | Director | |
| Antonio Maciel Neto | ||
* | Director | |
| Patrick J. | ||
* | Director | |
| Thomas F. O’Neill | ||
* | Director | |
| Kelvin R. | ||
| * | David J. Smith, by signing his name hereto, does hereby sign this document on behalf of each of the |
/s/ David J. Smith |
| David J. Smith, Attorney-in-fact |
EXHIBIT INDEX TO EXHIBITS
Exhibit | ||
| 3.1 | Composite Certificate of Incorporation, as amended (incorporated by reference as Exhibit (3) to ADM’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001) | |
| 3.2 | Bylaws, as amended (incorporated by reference to Exhibit 3.2 to ADM’s Current Report on Form 8-K filed on August 12, 2009) | |
| 4.1 | Indenture dated September 20, 2006, between the Company and | |
| 4.2 | Registration Rights Agreement, dated as of September | |
| 4.3 | Form of Rule 144A Global Debenture for ADM’s 4.535% Debentures due 2042 (incorporated by reference to Exhibit 4.1 to ADM’s Current Report on Form 8-K filed on September 27, 2011) | |
| 4.4 | Form of Regulation S Global Debenture for ADM’s 4.535% Debentures due 2042 (incorporated by reference to Exhibit 4.2 to ADM’s Current Report on Form 8-K filed on September 27, 2011) | |
| 4.5* | Form of Registered Global Debenture for ADM’s 4.535% Debentures due 2042 | |
| 5* | Opinion of Faegre & Benson LLP | |
| 12* | Statements regarding computation of ratio of earnings to fixed charges | |
| 21 | List of Subsidiaries (incorporated by reference to Exhibit 21.1 of ADM’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011). | |
| 23.1* | Consent of Ernst & Young LLP | |
| 23.2* | Consent of Faegre & Benson LLP (contained in Exhibit 5) | |
| 24* | Powers of Attorney | |
| 25* | Statement of Eligibility on Form T-1 of The Bank of New York Mellon, to act as trustee under the | |
| 99* | Form of Letter of Transmittal | |