<PAGE> 1
Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarter Ended December 31, 1994
-----------------
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
----------- ------------
Commission File Number: 1-7488
-----------
First Mississippi Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Mississippi 64-0354930
- --------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 North Street, Jackson, MS 39202-3095
- ----------------------------------- -------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's Telephone Number, including Area Code: 601/948-7550
------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ ------
Class Outstanding at January 31, 1995
-------------------------- -------------------------------
Common Stock, $1 Par Value 20,379,358
<PAGE> 2
Part I. Financial Information
Item 1. Financial Statements
First Mississippi Corporation
Consolidated Balance Sheets (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Dec. 31 June 30
1994 1994
-------- --------
<S> <C> <C>
Assets:
Current assets
Cash and short-term investments $ 28,807 4,952
Accounts receivable 60,641 58,840
Inventories:
Finished products 25,949 25,334
Work in process 20,252 19,828
Raw materials and supplies 25,104 22,041
Product exchange agreements 1,237 933
-------- -------
Total inventories 72,542 68,136
-------- -------
Prepaid expenses and other current assets 14,624 6,907
Total current assets 176,614 138,835
-------- -------
Investments and other assets 36,117 36,850
Property, plant and equipment 411,286 391,931
Less: accumulated depreciation,
depletion and amortization 203,690 190,040
-------- -------
207,596 201,891
-------- -------
$420,327 377,576
======== =======
Liabilities and Stockholders' Equity:
Current liabilities
Current instalments of long-term debt $ 1,299 1,433
Deferred revenue 12,649 1,477
Accounts payable 45,338 41,291
Accrued expenses and other current
liabilities 16,907 15,760
-------- -------
Total current liabilities 76,193 59,961
-------- -------
Long-term debt 97,699 104,287
Other long-term liabilities 14,543 12,491
Deferred taxes 18,114 13,922
Minority interests 9,069 9,228
Stockholders' equity:
Common stock 20,338 20,086
Additional paid-in capital 5,469 3,378
Retained earnings 178,902 154,223
-------- -------
Total stockholders' equity 204,709 177,687
-------- -------
$420,327 377,576
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
First Mississippi Corporation
Consolidated Statements of Operations (Unaudited)
(In Thousands of Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
Dec. 31 Dec. 31
-------------- --------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Sales $143,957 115,920 300,851 229,260
Loss on investments (19) (147) (19) (225)
Interest and other income 565 1,114 815 2,112
-------- ------- ------- -------
144,503 116,887 301,647 231,147
-------- ------- ------- -------
Costs and expenses:
Cost of sales 107,717 95,925 222,598 191,431
General, selling and
administrative expenses 11,918 10,511 23,880 21,230
Other operating expenses 2,357 2,036 5,756 4,425
Interest expense 2,083 2,610 4,348 5,440
-------- ------- ------- -------
124,075 111,082 256,582 222,526
-------- ------- ------- -------
Earnings before income taxes 20,428 5,805 45,065 8,621
Income tax expense 7,960 2,150 17,560 3,800
Minority interests 326 (339) 197 (555)
Equity in net earnings (loss) of
equity investees 148 (248) 263 (396)
-------- ------- ------- -------
Earnings from operations $ 12,942 3,068 27,965 3,870
Cumulative effect of change in
accounting principle - - - 4,200
-------- ------- ------- -------
Net earnings $ 12,942 3,068 27,965 8,070
======== ======= ======= =======
Earnings per common share:
Operating $ 0.63 0.15 1.36 0.19
Cumulative effect of change in
accounting principle - - - 0.21
-------- ------- ------- -------
Earnings per common share $ 0.63 0.15 1.36 0.40
======== ======= ======= =======
Average shares outstanding 20,626 20,096 20,509 20,054
Cash dividend declared
per share $ 0.088 0.075 0.163 0.150
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
First Mississippi Corporation
Consolidated Statements of Cash Flows (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
6 Months Ended
Dec. 31
-------------------
1994 1993
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 27,965 8,070
Adjustments to reconcile earnings to
net cash provided by (used in) operating activities:
Depreciation, depletion and amortization 18,692 19,558
Deferred taxes and other items 17,245 (1,267)
Change in current assets and liabilities net
of effects of dispositions (6,965) (28,560)
-------- -------
Net cash provided by (used in) operating activities 56,937 (2,199)
-------- -------
Cash flows from investing activities:
Proceeds from sale of subsidiary - 4,965
Capital expenditures (23,236) (11,962)
Deferred stripping costs (222) (2,828)
Proceeds from sale of property, plant and equipment 26 268
Proceeds from disposition of investments and
other assets - 7,594
Acquisition of investments and other assets (343) (838)
-------- -------
Net cash used in investing activities (23,775) (2,801)
-------- -------
Cash flows from financing activities:
Net borrowings of notes payable to banks - 3,025
Principal repayments of long-term debt (6,074) (6,064)
Dividends (4,794) (2,998)
Proceeds from issuance of long-term debt 151 4,241
Repayment of gold loan - (4,454)
Proceeds from issuance of common stock 1,410 107
-------- -------
Net cash used in financing activities (9,307) (6,143)
-------- -------
Net increase (decrease) in cash and cash equivalents 23,855 (11,143)
Cash and cash equivalents at beginning of period 4,952 15,878
-------- -------
Cash and cash equivalents at end of period $ 28,807 4,735
======== =======
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest, net of amounts capitalized $ 4,984 5,581
======== =======
Income taxes, net $ 5,662 9,707
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
First Mississippi Corporation
Industry Segment Information (Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
Dec. 31 Dec. 31
-----------------------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales
Chemicals $ 50,810 34,860 100,319 74,474
Fertilizer 48,467 36,050 107,018 69,905
Gold 17,832 24,495 39,772 45,331
Combustion, Thermal Plasma
and Other 26,848 20,515 53,742 39,550
-------- -------- -------- --------
Total $143,957 115,920 300,851 229,260
======== ======== ======== ========
Operating profit(loss)
before income taxes
Chemicals $ 10,092 7,129 20,678 14,422
Fertilizer 18,363 2,138 37,084 4,444
Gold (2,384) 3,358 (949) 3,354
Combustion, Thermal Plasma
and Other (1,971) (2,273) (3,797) (4,624)
-------- -------- -------- --------
24,100 10,352 53,016 17,596
Unallocated corporate expenses (1,896) (1,904) (4,033) (3,621)
Interest income(expense), net (1,718) (2,505) (3,890) (5,278)
Other income(expense), net (58) (138) (28) (76)
-------- ----------------- --------
Total $ 20,428 5,805 45,065 8,621
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
First Mississippi Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited. In Thousands of Dollars)
NOTE 1 - GENERAL
The financial statements included herein are unaudited and have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting and Securities and Exchange Commission regulations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of management, the financial statements reflect all adjustments (of a
normal and recurring nature) which are necessary to present fairly the
financial position, results of operations and cash flows for the interim
periods. These financial statements should be read in conjunction with the
Annual Report of the Company and Form 10-K for the year ended June 30, 1994.
NOTE 2 - COMMITMENTS AND CONTINGENT LIABILITIES
At December 31, 1994, the Company had hedge commitments under spot
deferred sales contracts for the delivery of gold as follows:
<TABLE>
<CAPTION>
Average Price
Delivery Dates per ounce Ounces
-------------- ------------- ------
<S> <C> <C>
1/1/95-6/30/95 $392 107,400
7/1/95-6/30/96 $398 123,000
</TABLE>
Based on the market price of gold at December 31, 1994, the net
unrealized loss on these contracts is $279.
Also at December 31, 1994, The Company had entered hedge contracts
representing approximately 40% of anticipated purchases of natural gas related
to fertilizer operations as follows:
<TABLE>
<CAPTION>
Delivery Dates Average Price per BTU MMBTU
-------------- --------------------- -----
<S> <C> <C>
1/1/95-6/30/95 $2.21 510
</TABLE>
The net unrealized loss on these natural gas contracts at December 31,
1994, is $2,572.
6
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Six months ended December 31, 1994 compared
to the six months ended December 31, 1993
Consolidated Results
Earnings for the six months ended December 31, 1994 were $28.0 million
versus $8.1 million for the prior year. Prior year earnings included a $4.2
million benefit from an accounting change related to deferred income taxes.
The higher earnings were primarily due to improved segment operating results.
Net interest expense declined for the current year due to lower average debt
and higher interest income from increased short-term investments. Equity
affiliate results were up reflecting improvement at Melamine Chemicals due to
higher sales prices and lower production costs.
Segment Operations
Segment operating results and sales were up 201% and 31%,
respectively, over the prior year, with improvement in all operations except
gold.
Fertilizer pretax operating profits for the six months were up $32.6
million over the same period prior year due to higher ammonia and urea prices
and lower natural gas costs. Sales for the current year were up 53% as a 71%
increase in average ammonia and urea prices and a 25% increase in urea volume
offset a 13% decrease in ammonia volume. Prices were up due to tight supplies
and good demand for both industrial and agricultural use. Ammonia volume
decreased due to less brokerage tonnage available under contract and lower
production from AMPRO due to a five-day plant outage in July and a planned
maintenance shut-down in November. Urea volume was up due to lower production
prior year caused by a 26-day planned maintenance shut-down at Triad. Average
natural gas prices declined 11% from the same period prior year. Gas cost for
the current and prior year includes $2.6 million in losses and $0.9 million in
gains, respectively, from hedging transactions. At December 31, 1994, the
Company had futures contracts for approximately 40% of anticipate purchases of
natural gas to June 1995 at an average price of $2.21 per MMBTU.
Chemicals pretax operating results increased 43% over the prior year,
as intermediate and specialty chemicals sales increased 33% and 36%,
respectively. Intermediate sales increased on a 23% increase in volume,
primarily nitrobenzene, and 8% increase in average unit price. Specialty
chemicals sales increased primarily due to higher volume of specialty chemicals
for agriculture and performance chemicals for the semiconductor industry.
Year-to-date contribution from specialties including performance chemicals
increased 28% and represented 57% of total chemicals contribution versus 55%
last year.
7
<PAGE> 8
Gold pretax operating results for the current six months was a loss of
$0.9 million versus a profit of $3.4 million last year. The decrease in results
was primarily due to lower ore grades. The following table highlights sales
and production information:
<TABLE>
<CAPTION>
Six Months Ended
------------------
12/31/94 12/31/93
-------- --------
<S> <C> <C>
Ounces sold 103,306 117,263
Average Realized Price/oz. $385 387
Average Market Price/oz. $385 374
Ounces Produced:
Mill 93,407 101,991
Heap Leach 9,899 15,323
Cash Cost/oz.:
Mill $315 291
Heap Leach $247 179
Combined $308 276
Total Cost /oz.:
Mill $371 356
Heap Leach $261 189
Combined $360 334
</TABLE>
Gold sales declined 12% primarily due to decreased production caused
by lower ore grade. The ore grade declined 6% to 0.178 ounces per ton
primarily due to the milling of lower grade stockpiled ore during the second
quarter to maintain mill feed rates as open pit mining was limited by
underground construction activity in the mine area. Pit mining has now resumed
at normal levels.
Conversion of the Getchell Main Underground to drift-and-fill mining
was completed during the quarter. Contract mine development was also completed
and the Company has assumed responsibility for all underground operations. As
reported last quarter, the change in mining method, dictated by rock conditions
and irregular ore geometry, will result in underground production of
approximately 1,000 tons per day rather than the 2,000 tons per day initially
planned. Underground production is currently averaging approximately 400 tons
per day grading in excess of 0.300 ounces per ton with 1,000 tons per day
output expected by the beginning of the fourth quarter. Higher underground
production, combined with the return of the open pit to normal rates, should
improve mill feed grades.
Mill throughput is planned to continue at or above the 3,000 ton per
day design capacity using a blend of underground, open pit and stockpiled lower
grade ores with final open pit ores milled by the end of the first quarter of
fiscal 1996.
Combustion, thermal plasma and other pretax operating losses decreased
18% from the prior year on improvement in thermal plasma systems, combustion
and steel operations. Sales were up 36% for the year, due primarily to
increased steel and combustion sales. Steel sales reflect a 12% increase in
volume and 10% increase in unit price.
8
<PAGE> 9
Results of Operations
Three months ended December 31, 1994 compared
to the three months ended December 31, 1993
Consolidated Results
Earnings for the three months ended December 31, 1994, were $12.9
million versus $3.1 million for the prior year. The higher earnings were due
to improved segment operating results. Net interest expense declined versus
the same quarter prior year due to lower average debt and higher interest
income from increased short-term investments. Equity affiliate results were up
reflecting improvement at Melamine Chemicals.
Segment Operations
Segment operating results and sales were up 252% and 24%,
respectively, over the same quarter prior year, with improvement in all
operations except gold.
Fertilizer pretax operating profits were up $16.2 million due to
higher ammonia and urea prices and lower natural gas costs. Sales for the
quarter were up 34% as a 72% increase in average ammonia and urea prices offset
a 22% decrease in ammonia volume. Ammonia volume decreased due to less
brokerage tonnage available under contract and lower production from AMPRO due
a planned maintenance shut-down. Average gas price declined 10% from the same
period prior year. Gas cost for the current and prior year includes $0.7
million in losses and $0.3 million in gains, respectively, from hedging
transactions.
Chemicals pretax operating results increased 42% over the prior year,
as intermediate and specialty chemicals sales increased 56% and 34%,
respectively. Intermediate sales increased on a 40% increase in volume,
primarily nitrobenzene, and 12% increase in average unit price. Specialty
chemicals sales increased primarily due to higher volume.
Gold pretax operating results were a loss of $2.4 million versus a
$3.4 million profit prior year primarily due to lower ore grades. The
following table highlights sales and production information:
<TABLE>
<CAPTION>
Three Months Ended
-------------------
12/31/94 12/31/93
--------- --------
<S> <C> <C>
Ounces sold 46,462 62,862
Average Realized Price/oz. $384 390
Average Market Price/oz. $384 377
Ounces Produced:
Mill 41,885 54,971
Heap Leach 4,577 7,942
Cash Cost/oz.:
Mill $365 272
Heap Leach $254 196
Combined $354 262
Total Cost /oz.:
Mill $427 334
Heap Leach $270 205
Combined $412 318
</TABLE>
9
<PAGE> 10
Gold sales declined 27% due to decreased production caused by lower
ore grade. The ore grade declined 34% to 0.146 ounces per ton due to the
milling of lower grade stockpiled ore to maintain mill feed rates as open pit
mining was limited by underground construction activity in the mine area.
Combustion, thermal plasma and other pretax operating losses decreased
13% (and sales increased 31%) from the same period prior year primarily due to
improvement in steel and combustion operations. Steel sales increased 15%
reflecting 9% and 6% higher volume and average unit prices, respectively.
Capital Resources and Liquidity
Cash flow from operations was $56.9 million for the current year,
driven by increased earnings and $10.3 million in fertilizer product
prepayments, generating a $23.9 million increase in cash and cash equivalents.
Capital expenditures were up $11.3 million due to the gold operations'
underground mine development. Environmental capital expenditures to date were
$1.9 million, versus $4.9 million projected for the full year. During the
second quarter, the Company increased its quarterly cash dividend 17% to $0.875
cents per share. As of December 31, 1994, total debt as a percentage of total
debt and equity was 33% versus 37% at prior year end.
10
<PAGE> 11
Part II. Other Information
Item 1. Legal Proceedings
A description of pending litigation with Thunderbird Energy,
Inc. and Samuel Francis against First Mississippi Corporation
was reported on the Company's Form 10-Q for the quarter ended
September 30, 1994.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders on November 11, 1994, the
Company stockholders, pursuant to proxies solicited under Regulation
14A, elected one director for a term to expire in 1996, and four
directors for terms to expire in 1997, or until their successors are
elected and qualify. The following votes were cast:
<TABLE>
<CAPTION>
Director:
--------
<S> <C> <C>
James E. Fligg 16,206,524 shares voted for
------------
(Term expires 1996) 958,608 shares withheld
------------
N/A shares broker nonvotes
------------
Richard P. Anderson 16,207,742 shares voted for
------------
957,390 shares withheld
------------
N/A shares broker nonvotes
------------
William A. Percy, II 16,207,672 shares voted for
------------
957,460 shares withheld
------------
N/A shares broker nonvotes
------------
Maurice T. Reed, Jr. 16,207,711 shares voted for
------------
957,421 shares withheld
------------
N/A shares broker nonvotes
------------
R. Gerald Turner 16,206,693 shares voted for
------------
958,439 shares withheld
------------
N/A shares broker nonvotes
------------
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 4 - The Statement of Resolution establishing the
Company's 1994-1 Series Stock.
Exhibit 27 - Financial Data Schedules
(b) Reports on Form 8-K.
No reports on Form 8-K were filed for the quarter
ending December 31, 1994.
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST MISSISSIPPI CORPORATION
2/10/95 /s/ J. Kelley Williams
- --------------- -------------------------------------
Date J. Kelley Williams
Chairman and Chief Executive Officer
2/10/95 /s/ R. Michael Summerford
- -------------- -------------------------------------
Date R. Michael Summerford
Vice President and Chief Financial Officer
12
<PAGE> 13
EXHIBIT INDEX
EXHIBITS
4 - The Statement of Resolution establishing the Company's 1994-1
Series Stock.
27 - Financial Data Schedules
<PAGE> 1
Statement of Resolution
The Chairman advised the Board of the necessity of a
resolution authorizing a series of convertible preferred stock to be issued at
the time of conversion of the 1994-1 Series Convertible Subordinated Debentures
under the 1988 Long-Term Incentive Plan. Upon motion duly made, seconded and
unanimously passed, the following resolution was passed:
WHEREAS, the Articles of Incorporation, as amended,
of this Corporation authorize the issuance of up to 20,000,000
shares of preferred stock issuable from time to time in one or
more series; and
WHEREAS, the Board of Directors of this Corporation
is authorized in its Articles of Incorporation to determine
the form, class, series and amounts in which such preferred
stock shall be issued; the price or prices (not less than par)
at which such stock shall be sold; the dividend, conversion
rates, conversion prices, par value, voting privileges,
redemption prices, maturity dates, and any other terms and
conditions relative to the issuance of such preferred stock;
and
WHEREAS, the only preferred stock previously
authorized for issuance by the Board of Directors consists of
136,500 shares of 1984-A Series Convertible Preferred Stock,
109,700 shares of 1985-A Series Convertible Preferred Stock,
1,000,000 shares of Series X Junior Participating Preferred
Stock, 195,000 shares of 1986-A Series Convertible Preferred
Stock, 42,600 shares of 1982-A Series Convertible Preferred
Stock, 195,200 shares of 1982-B Series Convertible Preferred
Stock, 33,200 shares of 1982-C Series Convertible Preferred
Stock, 14,500 shares of 1982-D Series Convertible Preferred
Stock, 51,000 shares of 1983-A Series Convertible Preferred
Stock, 5,000 shares of 1984-B Series Convertible Preferred
Stock, 97,000 shares of 1987-A Series Convertible Preferred
Stock, 156,000 shares of 1988-A Series Convertible Preferred
Stock, 11,000 shares of 1988-1 Series Convertible Preferred
Stock, 103,000 shares of 1989-A Series Convertible Preferred
Stock, 45,000 shares of 1989-1 Series Convertible Preferred
Stock, 11,000 shares of the 1989-2 Series Convertible
Preferred Stock, 138,000 shares of the 1990-1 Series
Convertible Preferred Stock, 11,000 shares of the 1990-2
Series Convertible Preferred Stock, 155,000 shares of the
1991-1 Series Convertible Preferred Stock, 11,000 shares of
the 1991-2 Series Convertible Preferred Stock, 11,000 shares
of the 1992-1 Series Convertible Preferred Stock and pursuant
to its authority, the Board of Directors desires to establish
an additional series of preferred stock known as the "1994-1
Series Convertible Preferred Stock" to be available for
issuance solely upon conversion of the Corporation's 1994-1
Series Convertible Subordinated Debentures related to those
certain debenture options automatically granted November 14,
1994, and further desires to determine and fix the rights,
preferences and other terms and conditions
1
<PAGE> 2
relating to such series and the number of shares constituting
such series;
NOW, THEREFORE, BE IT RESOLVED, that the Board of
Directors hereby establishes a series of preferred stock of
the Corporation to be designated 1994-1 Series Convertible
Preferred Stock, which shall be available for issuance solely
upon conversion of the Corporation's 1994-1 Series Convertible
Subordinated Debentures, which, in turn, will be available for
issuance in accordance with and upon exercise of certain
options, all of which shall be granted on the same date
pursuant to the Corporation's 1988 Long-Term Incentive Plan,
entitling the holders thereof to purchase such series of
debentures (such date being referred to as the "Original Grant
Date");
BE IT FURTHER RESOLVED, that the 1994-1 Series
Convertible Preferred Stock shall consist of 1,000 shares;
BE IT FURTHER RESOLVED, that the rights, preferences
and other terms and conditions of the 1994-1 Series
Convertible Preferred Stock shall be as follows:
1. PAR VALUE. The par value for the 1994-1 Series
Convertible Preferred Stock shall be $1.00 per share.
2. DIVIDENDS. The holders of record of 1994-1 Series
Convertible Preferred Stock shall be entitled to receive, out
of funds legally available therefor, cash dividends at the
rate of $.05 per share per quarter. All dividends payable
hereunder shall be payable quarterly or otherwise as the Board
of Directors may from time to time determine when and as
declared by the Board of Directors. The right to such
dividends on 1994-1 Series Convertible Preferred Stock shall
not be cumulative and no right shall accrue to the holders of
such shares by reason of the fact that dividends on such
shares are not declared in any prior year. The holders of
1994-1 Series Convertible Preferred Stock shall be entitled to
no other cash dividends in excess of the dividends at said
rate.
3. REDEMPTION. The 1994-1 Series Convertible Preferred
Stock may be redeemed, in whole or in part, at the option of
the Corporation by vote of its Board of Directors, at any time
or from time to time, at a redemption price per share equal to
the "Purchase Price," as defined below, plus an amount equal
to all dividends declared but unpaid at the dated fixed for
redemption, and such price, plus such dividends, is
hereinafter referred to as the "Redemption Price." The
Purchase Price per share shall be the market value, as
determined by the Board of Directors, of one share of the
Corporation's Common Stock on the Original Grant Date.
2
<PAGE> 3
In case of the redemption of only a part of the outstanding
1994-1 Series Convertible Preferred Stock, this Corporation
shall designate by lot the shares to be redeemed or shall
effect such redemption pro rata.
Not more than 60 days, but at least 20 days prior to the date
fixed for redemption, a written notice shall be mailed to each
holder of record of 1994-1 Series Convertible Preferred Stock
whose shares are to be redeemed, by certified mail with
postage prepaid, addressed to each such holder at his address
as shown on the records of the Corporation (a) notifying each
holder of the election of the Corporation to redeem such
shares, (b) stating the date fixed for redemption thereof, (c)
setting forth the Redemption Price, and (d) stating the place
at which each such holder may obtain payment of the Redemption
Price upon surrender of his share certificates.
On or after the date fixed in such notice of redemption, each
holder of 1994-1 Series Convertible Preferred Stock to be
redeemed shall present and surrender his certificate or
certificates representing such stock to this Corporation at a
place designated in such notice and thereupon the Redemption
Price of such shares shall be paid to or on the order of the
person whose name appears on such certificate or certificates
as the owner thereof and each surrendered certificate shall be
canceled. In case less than all of the shares represented by
any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares. From and after the
date fixed in any such notice as the date of redemption,
unless default is made in the payment of the Redemption Price,
all rights of the holders thereof as shareholders of the
Corporation, except the right to receive the Redemption Price,
shall cease and determine, and such shares shall not there-
after be transferred on the books of the Corporation, and such
stock shall not be deemed to be outstanding for any purpose
whatsoever.
The Corporation may at its option at any time after such
notice of redemption has been given, deposit a sum sufficient
to redeem, on the date fixed for redemption, the shares of
1994-1 Series Convertible Preferred Stock called for
redemption and not yet redeemed with a bank or trust company
in Mississippi, as a trust fund for the benefit of the
respective holders of the shares designated for redemption,
and such deposit, from and after the date fixed for
redemption, shall constitute full payment of the Redemption
Price of the shares to the holders thereof and shall be
conclusive evidence that no default shall be made in the
payment of the Redemption Price as to such shares.
Shares of the 1994-1 Series Convertible Preferred Stock
redeemed by the Corporation shall not thereafter be disposed
of as shares of such Series, but upon
3
<PAGE> 4
acceptance by the Secretary of State of Mississippi for filing
of a statement of cancellation relating to the redeemed
shares, such shares shall become authorized and unissued
shares of Preferred Stock which may be designated as shares of
any other series.
4. LIQUIDATION PREFERENCE. In the event of any
voluntary or involuntary dissolution, liquidation or winding
up of the Corporation, the holders of shares of 1994-1 Series
Convertible Preferred Stock outstanding shall be entitled to
receive, or to have deposited in trust for them as provided in
Section 3 here-of, out of assets of the Corporation, before
any distribution of any assets shall be made to the holders of
Common Stock or other shares junior to the 1994-1 Series
Convertible Preferred Stock as to distribution of assets, an
amount which shall be equal to the Purchase Price, as defined
above, for such shares plus declared but unpaid dividends
thereon. After the holders of 1994-1 Series Convertible
Preferred Stock shall have received such amount, they shall
not participate in any remaining assets and surplus funds of
the Corporation.
If the amounts which each of the holders of the shares of the
1994-1 Series Convertible Preferred Stock, and any other
series of Preferred Stock of the Corporation ranking equally
as to distribution of assets with the shares of 1994-1 Series
Convertible Preferred Stock, are entitled to receive in such
events are not paid, or deposited in trust, in full, the
shares of 1994-1 Series Convertible Preferred Stock and of
such other series shall share ratably in any distribution of
assets in accordance with the amounts which would be payable
on such distribution if all amounts to which the holders of
the 1994-1 Series Convertible Preferred Stock and of each such
series are entitled were paid, or deposited in trust, in full.
Neither the merger of the Corporation with or into any other
Corporation nor the sale of all or substantially all of its
assets shall be deemed a dissolution, liquidation or winding
up of the Corporation within the meaning of this Section.
5. CONVERSION RIGHTS. The holders of shares of 1994-1
Series Convertible Preferred Stock shall have conversion
rights as follows:
(a) The shares of 1994-1 Series Convertible
Preferred Stock shall be convertible, at the option of the
respective holders thereto, at the office of the Corporation
into fully paid and nonassessable shares of Common Stock of
the Corporation, as follows:
(i) The number of shares of Common Stock
into which a share of 1994-1 Series Convertible Preferred
Stock is to be converted shall be determined by multiplying
one share times the "Conversion
4
<PAGE> 5
Multiplier," as described below. On the "Original Grant
Date," as defined above, the Conversion Multiplier shall be
one, and unless and until the Conversion Multiplier is
adjusted as provided below, each share of 1994-1 Series
Convertible Preferred Stock shall be convertible into one
share of Common Stock.
(ii) If the Corporation shall at any time
after the Original Grant Date effect a subdivision of the
outstanding Common Stock, the Conversion Multiplier then in
effect immediately before such subdivision shall be
proportionately increased, and conversely, if the Corporation
shall at any time after the Original Grant Date combine the
outstanding shares of Common Stock, the Conversion Multiplier
then in effect immediately before such combination shall be
proportionately decreased. Any adjustment hereunder shall
become effective at the close of business on the date the
subdivision or combination becomes effective.
(iii) If the Corporation shall at any time
after the Original Grant Date make or issue, without payment
of consideration, a dividend or other distribution payable in
additional shares of Common Stock, the Conversion Multiplier
then in effect shall be increased as of the close of business
on the record date for the determination of holders entitled
thereto or the date on which the stock transfer books of the
Corporation are closed with respect thereto, or, if no such
record date has been fixed and the stock transfer books are
not so closed, the date of such making or issuance, by
multiplying the Conversion Multiplier then in effect by a
fraction:
(A) the numerator of which shall be
the total number of shares of Common Stock issued and
outstanding immediately prior to such date, plus the number of
shares of Common Stock issuable in payment of such dividend or
distribution; and
(B) the denominator of which shall
be the total number of shares of Common Stock issued and
outstanding immediately prior to such date;
Provided, however, that if such record date shall have been
fixed or if the stock transfer books are so closed and such
dividend is not fully paid or if such distribution is not
fully made on the date therefor, the Conversion Multiplier
shall be recomputed accordingly as of the close of business on
such date of alteration.
(iv) If the Corporation shall at any time
after the Original Grant Date make or issue, without payment
of consideration, a dividend or other distribution payable to
holders of Common Stock in securities or other assets of the
Corporation (other than cash or shares of Common Stock),
provisions shall be made so
5
<PAGE> 6
that the holders of the 1994-1 Series Convertible Preferred
Stock shall receive upon the conversion thereof in addition to
the number of shares of Common Stock receivable thereupon, the
amount of securities or other assets of the Corporation that
they would have received had their 1994-1 Series Convertible
Preferred Stock been converted into Common Stock on the date
of such event and had they thereafter, during the period from
the date of such event to and including the conversion date,
retained such securities or other assets receivable by them as
aforesaid during such period, giving application to all
adjustments called for during such period under this Section 5
with respect to the rights of the holders of the 1994-1 Series
Convertible Preferred Stock.
(v) In case of any capital
reorganization or any reclassification of the capital stock of
the Corporation or in case of the consolidation or merger of
the Corporation with or into another corporation or the
conveyance of all or substantially all of the assets of the
Corporation to another corporation, each share of 1994-1
Series Convertible Preferred Stock shall thereafter be
convertible into the number of shares of stock or other
securities or property to which a holder of the number of
shares of Common Stock of the Corporation deliverable upon
conversion of such shares of 1994-1 Series Convertible
Preferred Stock would have been entitled upon such
reorganization, reclassification, consolidation, merger or
conveyance; and in any such case, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be
made in the application of the provisions herein set forth
with respect to the rights and interests thereafter of the
holders of the shares of 1994-1 Series Convertible Preferred
Stock, to the end that the provisions set forth herein shall
thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter
deliverable upon the conversion of the shares of 1994-1 Series
Convertible Preferred Stock.
(vi) In each case of an adjustment of the
Conversion Multiplier or the number of shares of Common Stock
or other securities issuable upon conversion of the 1994-1
Series Convertible Preferred Stock, the Corporation shall
compute such adjustment in accordance herewith and prepare a
certificate showing such adjustment, and shall, upon request,
provide a copy of such certificate to each registered holder
of the 1994-1 Series Convertible Preferred Stock. The
certificate shall set forth such adjustment, showing in detail
the facts upon which such adjustment is based, including a
statement of (A) the Conversion Multiplier at the time in
effect for the 1994-1 Series Convertible Preferred Stock, and
(B) the number, type and amount, if any, of other property
that at the time would be received upon
6
<PAGE> 7
conversion of the 1994-1 Series Convertible Preferred Stock.
(b) Before any holder of 1994-1 Series
Convertible Preferred Stock shall be entitled to convert the
same into shares of Common Stock, he shall surrender the
certificate or certificates therefor, duly endorsed, at the
office of the Corporation and shall give written notice to the
Corporation that he elects to convert the same and shall state
in writing therein the name or names in which he wishes the
certificate or certificates for shares of Common Stock to be
issued. If the holder fails to specify the name in which
certificates are to be issued, they shall be issued in his
name. The Corporation, as soon as practicable thereafter,
shall issue and deliver at such office to such holder of
1994-1 Series Convertible Preferred Stock, or to his nominee
or nominees, certificates for the number of full shares of
Common Stock to which he shall be entitled as aforesaid,
together with cash in lieu of any fraction of a share as
hereinafter provided. Such conversion shall be deemed to have
been made as of the date of such surrender of the shares of
1994-1 Series Convertible Preferred Stock to be converted (or,
in the event of a proposed redemption and if the Corporation
so allows, on the date of receipt of satisfactory notice of
conversion if certificates of 1994-1 Series Convertible
Preferred Stock so converted are thereafter delivered to the
Corporation within 30 days), and the person or persons
entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on
said date.
(c) In case:
(i) the Corporation shall take a record
of the holders of shares of its Common Stock for the purpose
of entitling them to receive a dividend, or any other
distribution, other than ordinary cash dividends; or
(ii) the Corporation shall take a record
of the holders of shares of its Common Stock for the purpose
of entitling them to subscribe for or purchase any shares of
stock of any class or to receive any other rights; or
(iii) of any capital reorganization of the
Corporation, reclassification of the capital stock of the
Corporation (other than a subdivision or combination of its
outstanding shares of Common Stock), consolidation or merger
of the Corporation with or into another corporation, or
conveyance of all or substantially all of the assets of the
Corporation into another corporation; or
7
<PAGE> 8
(iv) of the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation,
then the Corporation shall cause to be mailed to the holders
of record of 1994-1 Series Convertible Preferred Stock or any
security convertible into 1994-1 Series Convertible Preferred
Stock at their last addresses as they shall appear on the
records of the Corporation, at least 20 days (or 10 days in
any case specified in clauses (1) and (2) above) prior to the
applicable record date hereinafter specified, a notice stating
(1) the date on which a record is to be taken for the purpose
of such dividend or distribution of rights, or, if a record is
not to be taken, the date as of which the holders of Common
Stock of record would be entitled to such dividend or
distribution of rights, or (2) the date on which such capital
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that the
holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other
assets deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or
winding up.
(d) The Corporation will at all times reserve and
keep available out of its authorized Common Stock and/or
shares of its Common Stock then owned or held by or for the
account of the Corporation, solely for the purpose of delivery
upon conversion of 1994-1 Series Convertible Preferred Stock,
such number of shares of Common Stock as shall then be
deliverable upon the conversion of all outstanding or
potentially issuable 1994-1 Series Convertible Preferred
Stock. All shares of Common Stock which shall be so
deliverable shall be duly and validly issued and fully paid
and nonassessable.
(e) If any shares of Common Stock required to be
reserved for purposes of conversion of 1994-1 Series
Convertible Preferred Stock require registration with or
approval of any governmental authority under any federal or
state law, or listing upon any national securities exchange,
before such shares may be issued upon conversion, the
Corporation will in good faith and as expeditiously as
possible endeavor to cause such shares to be duly registered,
approved or listed, as the case may be.
(f) The Corporation will pay any and all issue
and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of shares of
1994-1 Series Convertible Preferred Stock pursuant hereto.
The Corporation shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in
the
8
<PAGE> 9
issue and delivery of shares of Common Stock in a name other
than that in which the shares of 1994-1 Series Convertible
Preferred Stock so converted were registered, and no such
issue or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount
of any such tax, or has established, to the satisfaction of
the Corporation, that such tax has been paid.
(g) No fractional shares of Common Stock shall be
issued upon the conversion of shares of 1994-1 Series
Convertible Preferred Stock. If any fractional interest in a
share of Common Stock would, except for the provisions of the
Subsection, be deliverable upon the conversion of any shares
of 1994-1 Series Convertible Preferred Stock, the Corporation
shall, in lieu of delivering the fractional share therefor,
adjust such fractional interest by payment to the holder of
such surrendered shares of 1994-1 Series Convertible Preferred
Stock of an amount in cash equal (computed to the nearest
cent) to the current market value of such fractional interest,
as determined in good faith by the Board of Directors of the
Corporation.
6. VOTING RIGHTS. Except as provided by law or as
provided above, the holders of 1994-1 Series Convertible
Preferred Stock shall not be entitled to notice of
stockholders' meetings or to vote upon the election of
directors or upon any other matter.
9
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<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
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0
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