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FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1996 COMMISSION FILE NUMBER 1-7488
FIRST MISSISSIPPI CORPORATION
(Exact name of Registrant as specified in its charter)
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MISSISSIPPI 64-0354930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 NORTH STREET, P.O. BOX 1249 39215-1249
JACKSON, MISSISSIPPI (Zip code)
(Address of principal executive offices)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (601) 948-7550
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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COMMON STOCK, PAR VALUE $1 NEW YORK STOCK EXCHANGE
PHILADELPHIA STOCK EXCHANGE
COMMON STOCK, PURCHASE RIGHTS CHICAGO STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
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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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
Aggregate market value of the voting stock held by non-affiliates of the
Registrant, September 9, 1996. $518,543,400
Common stock outstanding September 9, 1996. 20,614,491
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PART I
ITEM 1. BUSINESS
First Mississippi Corporation (the "Company") was incorporated in
Mississippi in 1957. The principal activities of the Company at June 30, 1996,
involve the production of chemicals for industry and agriculture, and related
products and services.
In fiscal 1993, the Company sold its oil and gas operations. These
operations were conducted primarily through First Energy Corporation of Houston,
Texas. Also in 1993, the Company adopted plans for discontinuing its coal
operations which were conducted through Pyramid Mining, Inc. ("PMI") based in
Owensboro, Kentucky. The disposition of PMI was completed in fiscal 1994.
In fiscal 1996, the Company discontinued its gold operations through the
spinoff of its then 81% interest in Getchell Gold Corporation ("Getchell"),
formerly FirstMiss Gold Inc. Also in 1996, the Company adopted a plan to close
its aluminum dross processing operations at Millwood, West Virginia, which were
conducted through Plasma Processing Corporation.
At June 30, 1996, the Company had 1,205 employees, which includes employees
of the parent company, all wholly owned subsidiaries and proportionate shares of
all employees at other subsidiaries and joint ventures, depending on ownership
interest.
Recent Development
ON AUGUST 27, 1996, THE COMPANY ENTERED INTO A DEFINITIVE MERGER AGREEMENT
WITH MISSISSIPPI CHEMICAL CORPORATION ("MISSISSIPPI CHEMICAL"), UNDER WHICH
MISSISSIPPI CHEMICAL WILL ACQUIRE ALL THE FERTILIZER INTERESTS OF THE COMPANY.
THE TRANSACTION WILL OCCUR IN TWO STEPS: FIRST, THE SPINOFF TO SHAREHOLDERS OF
THE COMPANY'S CHEMICALS AND RELATED BUSINESSES IN THE FORM OF A NEW PUBLICLY
TRADED COMPANY; AND SECOND, THE MERGER OF THE COMPANY'S REMAINING FERTILIZER
OPERATIONS WITH A SUBSIDIARY OF MISSISSIPPI CHEMICAL. THE SPINOFF AND THE MERGER
ARE INTENDED TO BE TAX FREE. THE TRANSACTION IS SUBJECT TO, AMONG OTHER THINGS,
APPROVAL BY THE STOCKHOLDERS OF BOTH THE COMPANY AND MISSISSIPPI CHEMICAL AND
CUSTOMARY REGULATORY APPROVALS. IT IS EXPECTED THAT THE TRANSACTION WILL BE
CONSUMMATED BY DECEMBER 31, 1996.
The following contains further discussion of the Company's business and
properties as grouped under Chemicals, Fertilizer and Combustion, Thermal Plasma
and Other and should be read in conjunction with Notes 2, 5 and 13 to the
Consolidated Financial Statements and the "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
CHEMICALS
The Company's chemicals business is operated principally through three
subsidiaries: First Chemical Corporation ("FCC"); Quality Chemicals, Inc.
("Quality Chemicals"); and EKC Technology, Inc. ("EKC").
Production Facilities and Businesses
FCC, with production facilities located in Pascagoula, Mississippi,
operates facilities for the continuous production of aniline, nitrobenzene,
nitrotoluenes and toluidines, plus related storage, rail, truck, and barge
distribution facilities and quality control laboratories. The plant also
includes research laboratories, a pilot plant and multi-purpose batch facilities
for the development and production of specialty chemicals. FCC utilizes
state-of-the-art technology for nitration and proprietary processes for
continuous hydrogenation and N-alkylation. The Pascagoula facilities' total
nitrated aromatic production capacity is approximately 516 million pounds per
year. Actual fiscal 1996 production was 429 million pounds, approximately 83% of
average annual capacity.
FCC is among the largest merchant marketers of aniline in the United
States, and its Pascagoula complex is one of the largest aniline production
facilities in the United States. Aniline's primary end use is in
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rigid polyurethane foam, an insulation material that is widely used in
residential and commercial construction. Aniline is also used in the manufacture
of impact-resistant plastic that is used as a replacement for metal in
automobile parts such as bumpers where flexibility and impact resistance are
important. Aniline's other primary applications are in the production of an
antioxidizing (anti-cracking) agent used in the manufacture of synthetic rubber
and in a widely used herbicide for corn and soybeans. Most of FCC's aniline
production is sold under contracts containing price-adjustment mechanisms that
substantially protect FCC from fluctuations in the prices of raw materials.
FCC recently entered into a long-term agreement with Bayer Corporation
("Bayer") to build, own and operate a world scale nitrobenzene and aniline
facility at Bayer's Baytown, Texas, chemical complex. The facility will be an
integral part of Bayer's MDI (methylene diphenyl diisocyanate) manufacturing
operations. Completion of Phase I of the facility is scheduled for early 1998. A
large majority of FCC's current aniline production is sold to Bayer under a
long-term contract. It is intended that this contract will terminate if a
potential Phase II of the new facility is completed. The estimated cost of Phase
I is in excess of $50.0 million. The cost of Phase II is estimated to be
considerably less.
Quality Chemicals' production facilities, located in Tyrone, Pennsylvania,
and Dayton, Ohio, include equipment for multi-step batch processing to custom
produce complex fine chemicals used by chemical, agricultural and pharmaceutical
companies. Following capacity additions and plant modifications to the Tyrone
facility in fiscal 1996, annual production capacity is now between 4.5 million
and 6.0 million pounds, depending on the products being produced and the type of
custom processing required. Fiscal 1996 production was approximately 4.5 million
pounds. Annual production capacity for the Dayton facility is between
approximately 1.5 million and 2.0 million pounds, depending on the products
being produced and the type of custom processing required. Fiscal 1996
production was approximately 1.1 million pounds.
EKC production facilities are located in Hayward, California and East
Kilbride, Scotland, United Kingdom ("U.K."), with marketing, technical and
administrative support located at both locations. Additional marketing and
technical support was added in Tokyo, Japan, during fiscal 1996. EKC
manufactures and sells electronic performance chemicals into the semiconductor
and related industries. These products include organic photoresist removers and
cleaning solutions which remove dry-etch residue during the manufacture of
semiconductors. Facilities include mixing vessels, cleanroom packaging
facilities, advanced quality control analytical laboratories and product
applications laboratories. A research and development laboratory was added in
California during 1996 to provide additional facilities for EKC's expanded
research staff. The California operation includes bulk storage facilities. In
Scotland, additional bulk storage facilities will be added by the end of fiscal
1997. The California facility is currently utilizing 65% of production
capability on a two-shift, five-day basis. This is unchanged from the prior year
with incremental increases in current year production accommodated through
improvements in cycle time. The Scotland facility is currently utilizing 40% of
production capability on a one-shift, five-day basis.
Research and Development
The Company conducts research and development to improve existing products
and to produce new specialty chemicals. Approximately $4.5 million, $5.3 million
and $4.3 million was spent on research and development in fiscal 1996, 1995 and
1994, respectively. Research facilities include laboratories, pilot plant and
semi-works for process research and development with gram to multi-pound sample
production capabilities. FCC also sponsors applied research at leading
universities in the United States and maintains a radiation curing applications
laboratory in Pascagoula to evaluate new products and provide customer technical
support. These closely directed programs have led to the development and
introduction of proprietary technology in fine chemicals and in the FirstCure(R)
line of performance polymer products. EKC conducts research and development
internally to improve existing products and to identify and develop new
chemistries. EKC also sponsors applied research at two leading universities in
the U.K. These closely directed programs led to the development of advanced
chemistries to meet the semiconductor industry's state of the art requirements.
In addition, EKC has entered into joint development agreements with a major
semiconductor manufacturer and an industry consortium to develop advanced
products to meet future semiconductor manufacturing technology.
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Raw Materials
Benzene and toluene, two of FCC's principal raw materials, are readily
available commodity by-products of oil refining. Like most commodities, the
prices of benzene and toluene are subject to fluctuation. The price of toluene,
an octane-enhancing additive for unleaded gasoline, is directly affected by the
demand for and price of unleaded gasoline. Benzene prices are affected by the
demand for a variety of products, principally including styrene and phenolic
resins. However, FCC is protected from fluctuations in raw material prices in
the contracts under which most of its aniline production is sold. The remainder
of its production is sold under short-term contracts or purchase orders at
prices that generally reflect its actual raw material cost.
Other significant FCC raw materials include ammonia, natural gas and
ethanol. FCC purchases ammonia and ethanol at market prices. FCC purchases
natural gas in the spot market for use in making the hydrogen necessary for its
manufacturing processes. This gas is transported into the Pascagoula plant
through an interstate pipeline. Prices paid by the Company for natural gas are
affected by the degree of interruptibility of the gas supply.
Quality Chemicals' primary raw materials include hydrogen, peroxide,
o-aminophenol, o-nitrophenol, formaldehyde, butaldehyde and natural gas. Quality
Chemicals obtains its raw materials from a number of different sources. The
Company does not believe that any one source of raw materials is material to
Quality Chemicals' business.
EKC's primary raw materials include hydroxylamine, DGA and NMP. With the
exception of hydroxylamine, raw materials are generally available in adequate
quantities from several suppliers, subject to market variation in price.
Hydroxylamine is currently available from one supplier, located in Japan. Two
major manufacturers have announced plans to construct facilities capable of
manufacturing aqueous hydroxylamine with production anticipated to begin within
the next three years.
Marketing and Sales
Chemicals are marketed globally. Approximately 9% of FCC's sales are
exports. FCC's products are sold in drums and in bulk as intermediates into the
construction, transportation, semiconductor, agricultural chemical,
pharmaceutical, pigment, photographic, specialty polymer and U.V. curing
markets. Exported product is shipped in ocean-going tankers in iso-containers or
drums to European, Japanese and South American markets. Domestic shipments are
by barge, rail or tank trucks. As discussed above, a significant amount of FCC's
sales are to a single customer under a long-term contract. See "Production
Facilities and Businesses."
Quality Chemicals' specialty chemical products are sold in drums into
pharmaceutical, electronic chemical, agricultural chemical and specialty polymer
markets. A significant amount of Quality Chemicals' sales are to three customers
under long-term contracts.
EKC's California facility services the semi-conductor industry in North
America and the Pacific Rim, and the U.K. facility services the European
community. Approximately 47% of EKC sales are international. Chemicals are
distributed in gallon, liter, returnable drum and tote bin containers.
Competitive Conditions
FCC is one of five major United States producers of aniline, with
approximately 18% of domestic capacity and an estimated 5% of world capacity.
FCC is the only United States producer of nitrotoluenes, with an estimated 10%
of world capacity. Major competitors are large chemical companies. Competition
is based on price, service, quality, marketing and research and development
support capabilities.
Based on market share, Quality Chemicals is among the top 10 custom
chemical manufacturing companies in the United States. Major competitors are
both smaller and larger companies. Competition is based on service, quality,
manufacturing expertise in chemistries and processes, and research and
development capabilities.
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EKC is one of the world's largest producers of post-metal cleaning
solutions, with an estimated 28% of the world market representing 34% in North
America, 40% in Europe and 20% in the Pacific Rim. Although there are
approximately 12 companies participating in this market worldwide, only EKC and
three others specialize in developing proprietary post-metal cleaning solutions
for the semiconductor and related industries. Competition is based on price,
service, product performance, quality and product development capabilities. EKC
is in negotiations with respect to an agreement whereby it would license its
HDATM technology to a major competitor.
Seasonality of Business
Generally, chemical sales are not seasonal and working capital requirements
do not vary significantly from period to period.
FERTILIZER
Production Facilities
The Company produces and sells anhydrous ammonia ("ammonia") and urea. Two
production facilities are located in Donaldsonville, Louisiana, and are owned by
Triad Chemical ("Triad"), an unincorporated 50% joint venture, and by AMPRO
Fertilizer, Inc. ("AMPRO"), a wholly owned subsidiary. The 50/50 joint venturers
of Triad participate equally in management and each markets one-half of
production. Each joint venturer shares equal responsibility for all obligations
of Triad. Marketing and administration are conducted by FirstMiss Fertilizer,
Inc., a wholly owned subsidiary located in Jackson, Mississippi.
Triad facilities include a Kellogg process ammonia plant with annual
production design capacity of 420,000 tons and a urea plant with annual
production design capacity of 520,000 tons. Actual fiscal 1996 production was
approximately 464,000 tons of ammonia and approximately 557,000 tons of urea.
Ammonia production exceeded production design capacity due to above average
on-stream operating rate. Triad's facilities include storage for 30,000 tons of
ammonia and 40,000 tons of urea. The Donaldsonville production complex, in which
both Triad and AMPRO are located, includes facilities for rail shipments,
transmission via pipeline, bulk and tank truck loading, and direct loading of
barges and ocean-going vessels on the Mississippi River for transportation to
domestic and export markets.
AMPRO facilities include a Kellogg process ammonia plant with annual
production design capacity of 446,000 tons and storage for 30,000 tons. Actual
fiscal 1996 production was approximately 491,000 tons. Fiscal 1996 production
exceeded design capacity primarily due to above average on-stream operating
rates. In August 1995, AMPRO began an expansion project that is expected to be
completed in mid-December 1996. This project is expected to lower natural gas
consumption by 0.6 MMBtus per ton and increase ammonia production at the plant
by approximately 125,000 tons annually.
Transportation and storage capabilities were enhanced during fiscal 1996.
In July 1995, the Company invested in ammonia barges for river and inland
waterway shipments. These eleven barges are operated as the Arcadian/FMF Limited
Liability Company (LLC). The Company owns a 50% interest in this LLC through a
wholly owned subsidiary, FMF Barge, Inc. In April 1996, the Company acquired a
50% interest in an anhydrous ammonia terminal and related facilities in
Pasadena, Texas. This terminal consists of two 20,000 ton anhydrous ammonia
storage tanks. These facilities are operated as FirstMiss Fertilizer Limited
Partnership (LP). Two wholly owned subsidiaries own a 50% interest in this LP in
partnership with two wholly-owned subsidiaries of Arcadian Corporation. These
facilities will strengthen the Company's ability to distribute product to
industrial customers in the Texas Gulf Coast area.
Raw Materials
Natural gas is the raw material in ammonia production. Ammonia and carbon
dioxide are the raw materials in urea production. A reliable supply of natural
gas at competitive prices and in sufficient quantities is currently available to
the Company. Both Triad and AMPRO purchase natural gas from several pipelines at
market price on short-term contracts. Approximately 69% of the ammonia produced
by Triad in fiscal 1996
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was used as a raw material in the production of urea. Carbon dioxide needed for
Triad's urea plant production is supplied by Triad's ammonia plant, with a
back-up supply available from AMPRO's ammonia plant.
Forward Purchases
To secure fixed prices for a portion of its natural gas requirements, the
Company periodically contracts for the future delivery of natural gas on the New
York Mercantile Exchange ("NYMEX") up to 18 months forward. NYMEX contracts are
closed prior to expiration so that natural gas is not delivered. Increases or
decreases in the market value of the NYMEX contracts generally offset increases
and decreases in the spot market. At June 30, 1996, the Company had no open
futures contracts. The Company's accounting treatment for futures contracts is
outlined in Notes 1 and 11 to the Consolidated Financial Statements.
Marketing and Sales
The Company sells ammonia and urea for agricultural and industrial uses in
domestic and international markets. Domestic agricultural customers are
primarily large national accounts with extensive dealer and retail distribution
operations, cooperatives and other fertilizer producers, who operate as
wholesalers. The Company's domestic industrial customers use ammonia and urea as
raw materials in their production operations, which include adhesives,
pharmaceuticals, fibers, resins, plastics and explosives. Approximately 8% of
fiscal 1996 sales volume was attributed to international markets. Captive
production accounted for 74% of sales with the balance representing brokerage
transactions that involved the purchase and resale of products produced by
others.
Ammonia and urea are commodities subject to wide fluctuations in price.
Because prices are subject to a variety of factors beyond the Company's control,
there can be no assurance that the higher prices experienced in fiscal 1996 and
1995, resulting from tight supplies and increased demand, will continue.
Competitive Conditions
Competitive factors include distribution, price, availability, service and
quality. Ammonia and urea are essentially undifferentiated commodities, both
physically and chemically. The Company believes it is among the most efficient
U. S. producers with ideal geographic location for competitively priced
feedstock and distribution. Competitors include many large domestic and foreign
producers.
Seasonality and Cyclicality of Business
Fertilizer sales vary seasonally based upon geographic location, agronomic
considerations and weather. Domestic demand typically peaks in the spring, drops
off in the summer, increases in the fall and drops again in the winter. Prices
fluctuate with seasonal and longer cyclical variations due to industry supply
and demand balances. Cash and working capital requirements generally correlate
with the seasonality of the business.
COMBUSTION, THERMAL PLASMA AND OTHER
Combustion, Thermal Plasma and Other principally includes the development
and marketing of proprietary equipment and systems for industrial applications
and manufacturing processes. These include design and manufacture of low
emission burners, flares and incinerators; thermal plasma equipment and
processes; and production of steel ingots and billets. Raw materials and
components for these operations are available from numerous vendors. The
businesses are not considered materially seasonal. Working capital requirements
rose during fiscal 1996 due to expansion of Combustion operations into new
markets. Firm backlog orders at June 30, 1996, and 1995, amounted to $39.3
million and $34.8 million, respectively. The backlog orders at June 30, 1996,
are expected to be filled during fiscal 1997.
Combustion Equipment and Services. Callidus Technologies Inc. ("CTI"), a
wholly owned subsidiary headquartered in Tulsa, Oklahoma, was organized in
fiscal 1990. CTI's principal products and services are custom designed and
fabricated gas/liquid incinerators, flares, solid waste systems, vapor recovery
units, burners and predictive emissions monitoring and process optimization
software services. CTI also provides
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engineering and consulting services for environmental and combustion
applications. CTI leases office space in Tulsa and owns a manufacturing and test
facility in Beggs, Oklahoma, and has offices in Belgium, England, Italy, France,
Germany and Japan.
CTI markets worldwide to refining, petrochemical, chemical, wood products
and other industries requiring disposal of gas, liquid and solid wastes.
Marketing is primarily through a combination of manufacturers' representatives
and company personnel. The market is well established but growing through
advancements of existing technology, driven primarily by increasingly strict
environmental regulations both in the United States and abroad. Competition is
based on a wide variety of factors, with the most prominent being price,
technological innovation and delivery schedule. CTI competes with the John Zink
Company, which has a significant market share of the burner, flare and vapor
recovery markets. Numerous competitors exist in the gas and liquids incineration
market. Primary competition in the solids waste systems market comes from
alternative technologies. CTI offers predictive emissions monitoring and process
optimization software services utilizing products licensed by CTI's customers.
CTI is affected by a variety of factors beyond its control, including
governmental control of environmental standards and compliance deadlines,
competitor pricing strategies and changing technology, any of which could impact
CTI's operating results.
Thermal Plasma. Plasma Energy Corporation ("PEC"), a wholly owned
subsidiary, is the leading international supplier of plasma heating systems and
related processes to the metals and waste industries. PEC, a technology-based
engineering company, develops, manufactures, sells and services these systems
for use in steel manufacturing, specialty metals refinement and various
environmental waste recycling processes, including municipal solid waste ("MSW")
ash vitrification. PEC owns a testing facility used for system integration,
system and process development and customer training. A separate administrative
office is leased. Both facilities are located in Raleigh, North Carolina.
Thermal plasma heating systems convert electrical energy into high
temperature thermal energy using an ionized gas or "plasma." These high
temperatures are produced instantly with no combustion or combustion
by-products. A thermal plasma heating system typically consists of a torch,
power supply, cooling system and control panel. The torch usually operates
within a furnace or heating vessel, in which it can be inserted or retracted
according to operational requirements. PEC holds more than 20 patents in 10
countries, including several in steel, vacuum melting and waste applications.
PEC markets industrial-scale commercial systems for controlling temperature
in steel making and waste treatment and reduction. Marketing is performed
directly by PEC. International sales are supported by qualified overseas
representatives. Plasma heating systems are sold in both the domestic and
international markets. PEC has two principal domestic competitors and four
foreign competitors. Price competition is intense and competitors' pricing
strategies may impact PEC's operating results.
Steel. The Company operates a steel melting and production facility through
its wholly owned subsidiary FirstMiss Steel, Inc. ("FMS") in Hollsopple,
Pennsylvania. The Company is actively seeking a buyer for FMS. The approximately
400,000 square-foot facility is located about 100 miles east of Pittsburgh.
Following upgrades to one of FMS's two electric arc furnaces in January 1995,
annual capacity of the operation now includes 150,000 tons of carbon, alloy and
specialty grade, bottom-poured ingots and 50,000 tons of high-grade steel
billets through the caster. In 1996, the second electric arc furnace was removed
and a NOD converter was added. The NOD converter, combined with the newly
upgraded electric arc furnace and the existing VOD units, form the "Triplex"
process for producing stainless steel. This new process will increase stainless
steel capacity. Horizontally cast billets are produced for sale to the specialty
remelt and reroll markets. Production during fiscal 1996 totaled 110,000 tons
consisting primarily of cast ingots and value-added products. The value-added
product line was introduced in fiscal 1992 and includes specialty stainless and
tool steel ingots or billets, which are converted into forged billets, bars and
plate by outside processors. FirstMiss Alloys was formed during fiscal 1993 to
produce small quantities of cobalt, nickel, copper and iron-based alloys in bars
and wire produced from two small horizontal continuous casters, small
bottom-poured forging ingots and remelt sand ingots. Raw materials consist of
steel scrap and various alloys, of which there is an adequate supply in the
North American market.
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Carbon and alloy steel ingots are sold directly to the forging industry,
ring rollers, extruders, and integrated steel producers. FMS competes primarily
with three other steel companies in this market and, within the group, ranks
second in total steel production capacity. Specialty steel products are
primarily sold to steel service centers and forgers. FirstMiss Alloy products
are sold as feedstock directly to forgers, extruders and investment casters.
There are numerous competitors, both domestic and foreign, that compete with FMS
in the specialty steel and ferrous and non-ferrous metals markets. Competitive
factors include price, quality and service. Carbon ingots and billets are
commodities and are extremely price competitive.
Aluminum Recovery. Plasma Processing Corporation ("PPC") was formed during
fiscal 1990 to commercialize patented technology developed by PEC and Alcan
International Limited ("Alcan") of Canada for the recovery of aluminum from
dross using thermal plasma technology. PPC completed construction of a dross
processing plant located in Millwood, West Virginia, in June 1991 utilizing the
technology. The plant also produced a co-product that can be utilized in
refractory industries. In June 1995, dross processing operations were curtailed
to concentrate on the development of the co-product markets. In May 1996, due in
part to historical and projected near-term losses, PPC announced the shutdown of
the facility and permanent exit from the dross processing business. Operations
will continue, however, at its joint venture ("Newminco") formed in August 1995
which manufactures lightweight aggregate materials based on technology licensed
by PPC.
The Company has entered a letter of intent with Philip Environmental Inc.
("Philip") providing for the sale to Philip of all PPC's aluminum processing
business including the Millwood Plant, all by-product technology and PPC's 50%
interest in Newminco. Further, in the event the other Newminco joint venturer
acquires Philip's 50% interest in Newminco, Philip would pay the Company an
amount equal to 10% of the net proceeds resulting therefrom.
OTHER OPERATIONS
The Company owns 50% of Power Sources, Inc. ("PSI") of Charlotte, North
Carolina, which burns wood residue and other biomass in industrial boilers to
create steam energy. The steam is sold under long-term contracts to industrial
users. PSI operates seven plants located in North Carolina, South Carolina,
Tennessee and Mississippi.
Environmental
Company operations are subject to a wide variety of environmental laws and
regulations governing emissions to the air, discharges to water sources, and the
handling, storage, treatment and disposal of waste materials, as well as other
laws and regulations concerning health and safety conditions. The Company holds
a number of environmental permits and licenses regulating air emissions, water
discharges and hazardous waste disposal and, to the best of its knowledge, is in
material compliance with such requirements at all locations. The Company makes
capital and other expenditures in a continuing effort to comply with
environmental laws and regulations, or changing interpretations of existing laws
and regulations. Environmental capital expenditures for fiscal 1996 were $1.9
million. Projected environmental capital expenditures for fiscal 1997 and 1998
are $5.5 million and $2.3 million, respectively. While these expenditures are
necessary to comply with environmental laws and regulations, they may also
reduce operating expenses and improve efficiencies.
The Company has received notices from the EPA or a similar state agency
that it has been deemed a potentially responsible party ("PRP") under Superfund
or a comparable state statute at several sites and, thus, may be liable for a
share of the associated remediation cost. The Company contributed $183,000
toward cleanup of one of these sites during fiscal 1996. It is difficult to
estimate the Company's ultimate liability in these matters due to several
uncertainties such as, but not limited to, the method and extent of remediation,
the percentage of material attributable to the Company at the site relative to
that attributable to other parties, and the financial capabilities of the other
PRPs. Based on currently available information, however, the Company does not
believe that its future liability at these sites will be material to its
financial condition or cash flow.
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The current owner of a fertilizer manufacturing facility, previously
operated under lease by a subsidiary of the Company, has performed a feasibility
study and a remediation action plan for that site, subject to regulatory
approval. A previous owner takes the position that the Company has some
financial responsibility for the closure activities. The Company denies
liability in this matter.
At June 30, 1996, the Company was guarantor of $17.1 million in reclamation
bonds related to discontinued coal operations. Replacement bonds have been
submitted to the appropriate state authorities. The bonds guaranteed by the
Company should be released by the end of December 1996.
ITEM 2. PROPERTIES
A description of properties and the segments to which they relate is
included in the Business discussion located on pages 2 through 9 of this Form
10-K. The Company believes that its properties are suitable and adequate for the
purposes for which they are used.
ITEM 3. LEGAL PROCEEDINGS
On July 15, 1986, the first of 17 lawsuits was filed in the Twenty-First
Judicial District Court, Livingston Parish, Louisiana, against approximately 90
defendants, including Triad Chemical. The plaintiffs' multi-billion dollar
claims are based on alleged personal injuries and property damage as a result of
exposure to hazardous waste allegedly contributed by the defendants to the
Combustion Inc. site, which was operated as a waste and used oil reclamation and
reprocessing facility in Livingston Parish. The pending litigation was
consolidated into a class action and removed to federal district court for the
Middle District of Louisiana. Despite assertions by certain third parties that
Triad sent waste to the Combustion site, Triad's records do not reflect that any
waste was sent to the site. During fiscal 1995, Triad and a majority of the
other defendants negotiated a settlement that would resolve the class action
plaintiffs' claims. Under the settlement, which was approved by the court in
fiscal 1996, Triad paid $600,000.
Additionally, the Company has pending several claims incurred in the normal
course of business which, in the opinion of management and legal counsel, can be
disposed of without material effect on the Company's financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No items were submitted to a vote of security holders of the Company during
the fourth quarter of fiscal 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the New York, Philadelphia, Chicago
and Pacific Stock Exchanges under "FRM." The high and low recorded prices of the
Company's common stock and cash dividends declared during fiscal years 1996 and
1995 are presented in the table below. There were approximately 5,477
stockholders of record as of September 9, 1996.
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1996 1995
------------------------------ ------------------------------
DIVIDEND DIVIDEND
HIGH LOW RATE HIGH LOW RATE
------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
1st Quarter.................. $40.13 $31.75 $.10 $20.63 $14.25 $.075
*2nd Quarter.................. 41.38 20.25 .10 25.00 19.50 .0875
*3rd Quarter.................. 27.25 20.25 .10 26.88 22.50 .0875
*4th Quarter.................. 25.25 21.00 .10 34.13 20.75 .10
For the Year................. 41.38 20.25 .40 34.13 14.25 .35
</TABLE>
- ---------------
* Stock price reflects second quarter 1996 spinoff of Getchell Gold Corporation.
9
<PAGE> 10
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
------------------------------------------------------------------------------
1996 % 1995 % 1994 % 1993 % 1992 %
-------- --- ------- --- ------- --- ------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers:
Chemicals........................... $227,837 38 209,472 36 161,045 39 143,497 41 130,331 35
Fertilizer.......................... 224,390 37 239,549 42 163,984 39 141,642 40 184,108 49
Combustion, Thermal Plasma
and Other........................ 142,710 24 122,249 21 88,046 21 66,028 18 55,755 15
-------- --- ------- --- ------- --- ------- --- ------- ---
Total sales................. 594,937 99 571,270 99 413,075 99 351,167 99 370,194 99
Other revenues.............. 5,784 1 5,295 1 3,330 1 2,774 1 2,302 1
-------- --- ------- --- ------- --- ------- --- ------- ---
Total revenues.............. $600,721 100 576,565 100 416,405 100 353,941 100 372,496 100
======== === ======= === ======= === ======= === ======= ===
Operating profit (loss) before income
taxes, investee earnings (loss) and
cumulative effect of change in
accounting principle:
Chemicals........................... $ 44,058 55 40,019 33 30,295 72 24,434 96 15,333 45
Fertilizer.......................... 65,838 82 86,292 72 24,760 59 13,218 52 24,196 71
Combustion, Thermal Plasma
and Other........................ (29,612) (37) (6,203) (5) (12,763) (31) (12,187) (48) (5,656) (16)
-------- --- ------- --- ------- --- ------- --- ------- ---
80,284 100 120,108 100 42,292 100 25,465 100 33,873 100
=== === === === ===
Unallocated corporate expenses........ (15,015) (10,661) (8,435) (7,069) (7,461)
Interest expense, net................. (4,563) (5,256) (8,139) (10,907) (7,065)
Other income (expense), net........... (140) 7 (149) (28) 1,416
-------- ------- ------- ------- -------
60,566 104,198 25,569 7,461 20,763
Income taxes.......................... 23,550 40,425 11,250 2,909 7,822
Equity in net earnings (loss) of
equity investees.................... 1,033 934 (306) (431) 66
-------- ------- ------- ------- -------
Earnings from continuing operations... 38,049 64,707 14,013 4,121 13,007
Earnings (loss) from discontinued
operations, net of taxes............ (1,083) (6,913) 5,000 (4,349) (8,780)
Loss from disposal of businesses, net
of taxes............................ (1,746) -- -- (23,141) --
Cumulative effect of change in
accounting principle................ -- -- 2,850 -- --
-------- ------- ------- ------- -------
Net earnings (loss)......... $ 35,220 57,794 21,863 (23,369) 4,227
======== ======= ======= ======= =======
Earnings (loss) per common share:
Continuing operations............... $ 1.81 3.14 0.70 0.20 0.66
Discontinued operations............. (0.13) (0.34) 0.25 (1.37) (0.44)
Cumulative effect of change in
accounting principle............. -- -- 0.14 -- --
-------- ------- ------- ------- -------
Total earnings (loss) per common
share............................... $ 1.68 2.80 1.09 (1.17) 0.22
======== ======= ======= ======= =======
Net working capital................... $ 86,918 110,107 78,874 50,121 59,865
Long-term debt........................ $ 79,909 84,394 104,275 113,519 144,280
Total assets.......................... $437,308 444,717 369,397 364,136 441,995
Stockholders' equity.................. $230,267 232,996 177,687 160,774 188,378
Dividend payout rate.................. 24 13 28 * 136
Return on average equity -- continuing
operations.......................... 16 32 8 2 7
Return on sales -- continuing
operations.......................... 6 11 3 1 4
Long-term debt/equity ratio........... 0.35 0.36 0.59 0.71 0.77
Current ratio......................... 1.92 2.33 2.52 1.82 2.20
Dividends per share................... $ 0.40 0.35 0.30 0.30 0.30
Book value per share.................. $ 11.17 11.40 8.85 8.05 9.50
</TABLE>
- ---------------
* Computation not applicable due to loss
10
<PAGE> 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
1996 VERSUS 1995
CONSOLIDATED RESULTS
Income from continuing operations for 1996 was $38.0 million, down $26.7
million from the prior year due to an $18.3 million ($11.7 million after tax)
provision for the shutdown of aluminum dross operations, lower gross margins and
increased general, selling and administrative expenses. Gross margins declined
$15.9 million despite a 4% increase in sales, primarily due to a decrease in
Fertilizer average unit margins on lower anhydrous ammonia prices and higher
natural gas cost. General, selling and administrative expenses were up $10.7
million due to higher corporate expenses and growth in Combustion operations.
SEGMENT OPERATIONS
Chemicals operating profits were up 10% to a record $44.1 million on a 9%
increase in sales primarily due to higher aniline and electronic chemicals
volumes. Aniline sales volume increased 13% due to increased production
following capacity additions in the prior year. Demand for aniline remains
strong due to its use in the production of methylene diphenyl diisocyanate
("MDI"), which is a key component in the production of polyurethane foams and
elastomers. In July 1996, the Company entered into an agreement with Bayer
Corporation to build, own and operate a world scale nitrobenzene and aniline
facility, which will be an integral part of Bayer's U.S. MDI manufacturing
operations. Startup for the facility is scheduled to be completed in 1998 with
initial aniline production capacity of approximately 250 million pounds per
year. In electronic chemicals, sales volume increased 26% driven by an 82%
increase in the hydroxylamine-based (HDA(TM)) products volume.
Fertilizer operating profits were down 24% to $65.8 million on lower
average sales prices and higher natural gas cost. Average fertilizer sales
prices declined 11% on 18% lower anhydrous ammonia prices, more than offsetting
a 16% increase in urea prices. Total sales volume remained about the same at 1.2
million tons with captive production accounting for about 74% of total volume,
up from 70% in the prior year. The higher production was primarily due to
scheduled maintenance in the prior year. The average price of natural gas
purchased at spot prices and consumed in production increased 36%; however,
hedging gains of $1.1 million in the current year, versus hedging losses of $5.9
million in the prior year, reduced the overall average gas cost increase to 17%.
At June 30, 1996, the Company had no open forward purchase contracts for natural
gas. A capacity expansion under way at AMPRO is ahead of schedule and expected
to be completed in December 1996. This project will increase AMPRO annual
production capacity by approximately 125,000 tons.
Losses from Combustion, Thermal Plasma and Other operations were up $23.4
million from the prior year, primarily due to the $18.3 million charge related
to the shutdown of the Company's single aluminum dross processing plant, of
which $12.3 million represents the write-down of the plant to its estimated
disposition value (See Note 5 to the Consolidated Financial Statements). In
addition, results in Combustion operations were down, despite a 34% increase in
sales, as gross margin declined $1.1 million due to cost overruns in several
large projects and general, selling and administrative expenses.
Unallocated corporate expenses were up $4.4 million over the prior year,
primarily due to the spinoff of Getchell Gold Corporation ("Getchell"), formerly
FirstMiss Gold Inc., and expenses for business development and environmental
compliance. Included in fiscal 1996 and 1995 are $2.5 million and $3.1 million,
respectively, of compensation expenses tied to appreciation of stock and
debenture options. These payments are not available for options granted on or
after August 22, 1995. Net interest expense for the year was down 13% from the
prior year due to increased interest income.
1995 VERSUS 1994
CONSOLIDATED RESULTS
Income from continuing operations for 1995 increased $50.7 million over
1994, on higher Fertilizer and Chemicals earnings and improved performance from
Combustion, Thermal Plasma and Other operations.
11
<PAGE> 12
Sales were up 38% and gross margin increased to 29% of sales from 20% prior
year. Fertilizer operations accounted for the largest share of the increased
sales and gross margin, driven primarily by higher anhydrous ammonia prices.
Equity income was up $1.2 million as results at Melamine Chemicals, Inc.
improved due to higher revenues and increased margins.
SEGMENT OPERATIONS
Chemicals sales and pretax operating results for 1995 were up 30% and 32%,
respectively, over 1994 on strong demand for electronic chemicals, custom
manufacturing services and intermediates. Intermediate sales, which accounted
for 46% of sales, increased on 20% higher volume, primarily nitrobenzene, and a
6% improvement in average unit price. Nitrobenzene volume was up due to a
multi-year contract entered into in late 1994 that will fully utilize
nitrobenzene capacity through 1999. Custom manufacturing services and electronic
chemicals sales for semiconductor production increased, primarily due to higher
volume.
Fertilizer operating profits for 1995 were up $61.5 million over 1994 to a
record $86.3 million due to higher prices, primarily ammonia, and lower
production cost. Sales increased 46% on a 57% increase in average price, which
offset lower volume. Ammonia prices averaged $210 per ton for 1995 versus $130
per ton for 1994, and urea prices averaged $163 per ton for 1995 versus $126 per
ton for 1994. Volume declined on lower brokerage sales. The ammonia
supply/demand balance remained tight through fiscal 1995. Agricultural demand
was strong in 1995, driven by high grain prices and low world inventories.
Industrial demand for production of fibers, plastics, and resins was also
strong. Urea prices increased on higher ammonia prices and strong offshore
demand. Production cost for ammonia and urea declined, primarily due to lower
prices for natural gas, which decreased 12% below 1994. Included in natural gas
cost for 1995 is $5.9 million in net futures contracts losses versus net gains
of $0.7 million in 1994.
Combustion, Thermal Plasma and Other results for 1995 improved 51% over
1994 as operating losses declined to $6.2 million from $12.8 million on
increased revenues and margins. In addition, 1994 results included $1.5 million
in costs for a successful Combustion patent defense and an accident at FirstMiss
Steel. Revenue increased 39%, primarily due to increased Combustion sales and
higher prices for steel. All businesses were profitable except for aluminum
recovery operations, where losses were up on increased costs for product and
market development.
Unallocated corporate expenses for 1995 were up over 1994 due to $3.1
million in compensation expenses tied to appreciation of stock and debenture
options. Expenses for 1994 included $1.3 million in additional interest related
to deferred compensation. Net interest expense for 1995 was down versus 1994 on
lower average debt and $1.2 million in additional interest income from increased
short-term investments.
DISCONTINUED OPERATIONS
On October 20, 1995, the Company completed the spinoff of its 81% owned
subsidiary, Getchell, to shareholders. Included in discontinued operations for
fiscal 1996 is $1.1 million in after tax losses, net of minority interest,
related to operations of Getchell for the period prior to the distribution.
Results for 1995 were a net loss of $6.9 million versus a net profit of $5.0
million in 1994. Loss on disposal of businesses for the current year reflects
estimated additional costs of $1.7 million after tax related to operations
discontinued in prior years.
FORWARD PURCHASES
In Fertilizer operations, natural gas is the key raw material in the
manufacturing of anhydrous ammonia. Natural gas is typically purchased for
delivery at market prices under short-term contracts. To secure fixed prices for
part of its natural gas requirements, the Company periodically contracts for the
future purchase of natural gas on the New York Mercantile Exchange ("NYMEX").
Increases or decreases in the fair market value of the NYMEX contracts generally
offset changes in spot market prices. These activities have been designated
hedging of anticipated raw material purchases and are accounted for as such.
During 1996, the
12
<PAGE> 13
Company hedged approximately 13% its purchases of natural gas for fiscal 1996.
At June 30, 1996, the Company had no open contracts.
ENVIRONMENTAL MATTERS
Company operations are subject to a wide variety of constantly changing
environmental laws and regulations governing emissions to the air, discharges to
water sources, and the handling, storage, treatment and disposal of waste
materials, as well as other laws and regulations concerning health and safety
conditions, for which it must incur certain costs. Capital expenditures for
environmental protection were $1.9 million for 1996 and are projected to be
approximately $5.5 million and $2.3 million for 1997 and 1998, respectively.
Expenses related to the operation and maintenance of environmental facilities
and the disposal of hazardous and nonhazardous waste were approximately $3.5
million, $3.0 million and $2.7 million in 1996, 1995 and 1994, respectively. In
addition, the Company accrues for anticipated costs associated with
investigatory and remediation efforts relating to the environment. At June 30,
1996, the Company's accrued liability for these matters totaled $1.5 million.
At June 30, 1996, the Company was guarantor of $17.1 million in reclamation
bonds related to its disposed coal operations. Replacement bonds have been
submitted to the appropriate state authorities. The bonds guaranteed by the
Company should be released by the end of December 1996.
CAPITAL RESOURCES AND LIQUIDITY
Cash and short-term investments declined $35.2 million from June 30, 1995,
primarily due to increased investing activities and lower cash flow from
operations. Investing activities included higher capital expenditures, primarily
to increase Chemicals and Fertilizer production capacities, and investments in
new Fertilizer joint ventures to increase storage and barge transportation
capabilities. The note collection represented proceeds received from Getchell
following its spinoff in October 1995. Additional uses of cash included $5.5
million for the purchase of 235,900 shares of First Mississippi common stock,
which represented approximately 28% of the $20.0 million repurchase
authorization announced in May 1995. Cash provided by continuing operations
declined $37.4 million from the prior year primarily due to lower earnings and
increases in working capital in Chemicals and Combustion operations. At June 30,
1996, total debt had declined $5.0 million from the prior year-end. However,
total debt as a percentage of total debt and equity only declined from 30% to
29% due to the $31.3 million reduction in equity related to the distribution of
Getchell common stock.
Capital expenditures are projected to increase to approximately $110.0
million in 1997, primarily due to construction of the new aniline facility (See
"1996 Versus 1995 -- Segment Operations"). Sources of cash to fund these capital
additions, as well as further stock repurchases, include $5.3 million cash on
hand, cash flow from operations and $44.2 million of unutilized credit under the
Company's committed bank credit agreement. Additional proceeds could come from
new or expanded credit facilities or the successful disposition of the Company's
steel operations.
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," for fiscal years beginning after December
15, 1995. The provisions of Statement No. 121 require the Company to review its
long-lived assets for impairment on an exception basis whenever events or
changes in circumstances indicate that the carrying amount of the assets may not
be recoverable through future cash flows. Any loss will be recognized in the
income statement and certain disclosures regarding the impairment are to be made
in the financial statements. The Company is evaluating the provisions of
Statement No. 121 and does not anticipate a material effect on its financial
position.
In October 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation," for fiscal years beginning after December 15, 1995.
Statement No. 123 allows companies to recognize compensation expense for grants
of stock, stock options and other equity instruments to employees based upon
fair value or permits them to continue to apply the existing accounting rules
contained in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB No. 25"). Companies choosing to
13
<PAGE> 14
continue on APB No. 25 are required to disclose pro forma net income and
earnings per share data based on fair value. The Company anticipates continuing
to account for stock-based compensation in accordance with APB No. 25 and,
therefore, the adoption of Statement No. 123 would not have an impact on the
Company's financial position or results of operations.
SUBSEQUENT EVENT
On August 27, 1996, the Company entered into a definitive merger agreement
with Mississippi Chemical, under which Mississippi Chemical will acquire all the
fertilizer interests of the Company. The transaction will occur in two steps:
first, the spinoff to the Company's shareholders of the Company's chemicals and
related businesses in the form of a new publicly traded company; and second, the
merger of the Company's fertilizer operations with a subsidiary of Mississippi
Chemical. The spinoff and the merger are intended to be tax free. In the merger,
Company stockholders will receive, subject to some adjustment, approximately 6.9
million shares of Mississippi Chemical stock, or 0.335 shares of Mississippi
Chemical stock for each share of Company stock. At closing the Company's debt
will be refinanced and increased to approximately $150.0 million. The debt will
become Mississippi Chemical's in the merger. An estimated loss of approximately
$6.0 million will be incurred in the refinancing. After this refinancing and the
payment of certain expenses, cash on hand, currently estimated at approximately
$50.0 million, will be transferred to the spun-off chemical company, which will
be essentially debt free when spun off. The transaction is subject to, among
other things, approval by the stockholders of both the Company and Mississippi
Chemical and customary regulatory approvals. It is expected that the transaction
will be consummated by December 31, 1996.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item are set forth on pages F-1
through F-23.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------- --- -------------------------------------------
<S> <C> <C>
Daniel P. Anderson............................... 44 Vice President, Health, Safety and
Environmental Affairs
Robert B. Barker................................. 51 President, Quality Chemicals, Inc.
W. P. Bartlett................................... 58 President, Callidus Technologies Inc.
J. Steve Chustz.................................. 48 General Counsel
Paul Jerry Coder................................. 54 President, EKC Technology, Inc.
Charles R. Gibson................................ 59 President, FirstMiss Fertilizer, Inc.
Samir A. Hakooz.................................. 49 President, Plasma Energy Corporation
James L. McArthur................................ 53 Secretary and Manager, Investor Relations
Terry L. Moore................................... 47 President, Plasma Processing Corporation
George M. Simmons................................ 53 President, First Chemical Corporation
R. Michael Summerford............................ 48 Vice President and Chief Financial Officer
Thomas G. Tepas.................................. 49 President and Chief Operating Officer
J. Kelley Williams............................... 62 Chairman of the Board and Chief Executive
Officer
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------- --- -------------------------------------------
<S> <C> <C>
Frank D. Winter.................................. 55 President and Chief Executive Officer,
FirstMiss Steel, Inc.
Richard P. Anderson.............................. 67 Director
Paul A. Becker................................... 57 Director
James W. Crook................................... 66 Director
James E. Fligg................................... 60 Director
Robert P. Guyton................................. 59 Director
Charles P. Moreton............................... 69 Director
Paul W. Murrill.................................. 62 Director
William A. Percy, II............................. 56 Director
Leland R. Speed.................................. 64 Director
R. Gerald Turner................................. 50 Director
Michael J. Ferris................................ 51 Nominee at the 1996 Annual Meeting
Dan F. Smith..................................... 50 Nominee at the 1996 Annual Meeting
</TABLE>
Daniel P. Anderson. Mr. Anderson, 44, is Vice President, Health, Safety and
Environmental Affairs of the Company and has been since July 1995. From 1990 to
1995, he was Vice President, Environmental Affairs, of First Chemical
Corporation.
Robert B. Barker. Mr. Barker, 51, is President of Quality Chemicals, Inc.,
and has been since 1990.
W. P. Bartlett. Mr. Bartlett, 58, is President of Callidus Technologies
Inc. and has been since 1989. From 1983 to 1989 he was President of Penteco
Corporation.
J. Steve Chustz. Mr. Chustz, 48, is General Counsel of the Company and has
been since 1993, and was Interim General Counsel from May 1993 through November
1993. From 1987 to May 1993, he was Associate General Counsel of the Company.
Paul Jerry Coder. Mr. Coder, 54, is President of EKC Technology, Inc. and
has been since December 1992. From June 1992 to December 1992, he was Vice
President, Market Research, of EKC Technology, Inc. He was Vice President of KCI
Chemicals, Inc. from June 1987 to February 1992.
Charles R. Gibson. Mr. Gibson, 59, is President of FirstMiss Fertilizer,
Inc. and has been since 1989. From 1985 to 1989 he was a Vice President of the
Company.
Samir A. Hakooz. Mr. Hakooz, 49, is President of Plasma Energy Corporation
and has been since 1991. From July 1990 to 1991, he was Executive Vice President
and General Manager of Plasma Energy Corporation and was Vice President of
Marketing from April 1990 to July 1990.
James L. McArthur. Mr. McArthur, 53, is Secretary and Manager, Investor
Relations, of the Company. He was elected Secretary in 1993 and has been
Manager, Investor Relations since 1988.
Terry L. Moore. Mr. Moore, 47, is President of Plasma Processing
Corporation and has been since 1990. From 1985 to 1990 he was Vice President of
Marketing of Plasma Energy Corporation.
George M. Simmons. Mr. Simmons, 53, is President of First Chemical
Corporation and has been since July 1995. From 1985 to June 30, 1995 he was Vice
President, Marketing, of First Chemical Corporation.
R. Michael Summerford. Mr. Summerford, 48, is Vice President and Chief
Financial Officer of the Company and has been since 1988. From 1983 to 1988, he
was a Vice President of the Company.
Thomas G. Tepas. Mr. Tepas, 49, is President and Chief Operating Officer of
the Company and has been since August 1995. He held various senior management
positions with Hercules, Inc., including Senior Vice President from 1994 to
August 1995, Group Vice President and President of the Food and Functional
Products Division from 1992 to 1994 and President of the Flavor and Food
Ingredients Division from 1991 to 1992.
15
<PAGE> 16
J. Kelley Williams. Mr. Williams, 62, has been the Chairman of the Board
and Chief Executive Officer of the Company since 1988 and has been a Director of
the Company since 1971. From 1988 until August 1995, he was President, Chief
Executive Officer and Chairman of the Board. He was President and Chief
Executive Officer from 1971 until 1988. He is a Director of Deposit Guaranty
Corporation and Deposit Guaranty National Bank, Jackson, Mississippi, and
Chairman of the Board of Getchell Gold Corporation (formerly FirstMiss Gold
Inc.), Englewood, Colorado. He is Chairman of the Board of Callidus Technologies
Inc., FirstMiss Fertilizer, Inc., FirstMiss Steel, Inc., First Chemical
Corporation, Plasma Energy Corporation, Plasma Processing Corporation and Power
Sources, Inc. (50% owned), all subsidiaries of the Company.
Frank D. Winter. Mr. Winter, 55, is President and Chief Executive Officer
of FirstMiss Steel, Inc., and has been since 1992. From 1991 to 1992, he was a
self-employed consultant to FirstMiss Steel, Inc. Mr. Winter was President of
Atlas Specialty Steels from 1987 to 1991.
Richard P. Anderson. Mr. Anderson, 67, has been the President and Chief
Executive Officer of The Andersons, Inc., an agribusiness company in Maumee,
Ohio, since 1981, and has been a Director of the Company since 1987. He is a
Director of Centerior Energy Corporation, an electric utility company in
Cleveland, Ohio, and N-Viro International Corporation, a waste recycling company
in Toledo, Ohio. He is also a Director of Plasma Processing Corporation, a
subsidiary of the Company. He is a member of the Committee on Director Affairs
and Chairman of the Compensation & Human Resources Committee.
Paul A. Becker. Mr. Becker, 57, is a Managing Director of Mitchell Hutchins
Asset Management, Inc., an investment management company in New York City and
wholly owned by Paine Webber Group, Inc., and has been a Director of the Company
since 1985. He has been employed by Paine Webber Group, Inc. since 1978.
Mitchell Hutchins served as an investment manager for First Mississippi's
pension plan until August 1996. Mr. Becker is a member of the Audit Committee.
James W. Crook. Mr. Crook, 66, is Chairman of the Board of Melamine
Chemicals, Inc. ("MCI"), which manufactures melamine in Donaldsonville,
Louisiana, and has been since 1987. He has been a Director of the Company since
1971. The Company owns approximately 23% of the common stock of MCI. MCI obtains
all of its raw materials (urea) from Triad Chemical, a joint-venture between the
Company and Mississippi Chemical Corporation. During fiscal 1996, the Company
was paid approximately $11.6 million by MCI for urea. Mr. Crook is a retired
Vice President of First Mississippi, a position he held from 1965 to June 1985.
Mr. Crook is also a member of the Triad Chemical Management Committee and a
Director of FirstMiss Fertilizer, Inc. and FirstMiss Steel, Inc., subsidiaries
of the Company. He is a member of the Committee on Director Affairs and the
First Mississippi Corporation Foundation Advisory Committee.
James E. Fligg. Mr. Fligg, 60, has been a Senior Executive Vice President,
Strategic Planning and International Business Development, Amoco Corporation,
based in Chicago, Illinois, since October 1995 and has been a Director of the
Company since 1994. From July 1993 until October 1995, he was Executive Vice
President, Chemicals Sector, Amoco Corporation. He was President of Amoco
Chemical Company, an international chemical manufacturing and marketing
subsidiary of Amoco Corporation based in Chicago, Illinois, from July 1991 until
October 1995. He was a director of Amoco Chemical from 1984 until October 1995.
He was Executive Vice President, International Operations and Polymer Products,
from 1989 to July 1991. During fiscal 1996, two of the Company's subsidiaries
purchased a total of approximately $12.1 million in products from Amoco Chemical
Company or one of its affiliates. He is a member of the Compensation & Human
Resources Committee.
Robert P. Guyton. Mr. Guyton, 59, is Chairman and Chief Executive Officer
of Smart Choice Holdings, Inc., an owner and operator of automobile dealerships
and finance companies, a position he has held since July 1996. He was Vice
President and Financial Consultant for Raymond James & Associates, Inc., an
asset management and investment banking company in Atlanta, Georgia, a position
he held from August 1993 to July 1996, and has been a Director of the Company
since 1969. He was self-employed as a management consultant from June 1991 to
July 1993. He was Chairman and Chief Executive Officer of Bank South
Corporation, Atlanta, Georgia, from 1990 to 1991. He served as President and
Chief Executive Officer of Bank South Corporation from 1981 to 1990. He is a
member of the Board of Directors of Piccadilly
16
<PAGE> 17
Cafeterias, Inc., a restaurant chain, Baton Rouge, Louisiana. Mr. Guyton is a
Director of Power Sources, Inc., a 50% owned subsidiary of the Company. He is
Chairman of the Audit Committee.
Charles P. Moreton. Mr. Moreton, 69, has been a private investor, primarily
in the oil and gas business, since 1991 and has been a Director of the Company
since 1984. He was Chairman of the Board of Commet Resources, Inc., a natural
gas transmission and marketing company in Houston, Texas, from 1986 until its
dissolution in July 1991. He was a Director of Tanglewood Bancshares, Inc.,
Houston, Texas, until August 1, 1995. He is a Director of Plasma Processing
Corporation, a subsidiary of the Company. He is a member of the Audit Committee.
Paul W. Murrill. Dr. Murrill, 62, is a professional engineer and has been a
Director of the Company since 1969. He is Chairman of the Board of Directors of
Piccadilly Cafeterias, Inc., a restaurant chain, Baton Rouge, Louisiana. He has
been a director of Entergy Corporation since 1994, when it purchased Gulf States
Utilities Company, an electric and gas utility company in Beaumont, Texas, of
which Dr. Murrill was a director. Until March 1990, Dr. Murrill was also a
Special Advisor to the Chairman of the Board of Gulf States. Dr. Murrill had
also previously served as Chairman of the Board and Chief Executive Officer of
that company. He is a Director of ZYGO, a high precision instrument company,
Middlefield, Connecticut; Howell Corporation, a diversified energy company,
Houston, Texas; and Tidewater, Inc., an oil service company, New Orleans,
Louisiana. He is a director of FirstMiss Fertilizer, Inc., a subsidiary of the
Company. He is a member of the Audit Committee.
William A. Percy, II. Mr. Percy, 56, has been a partner of Trail Lake
Enterprises, a cotton and soybean farming operation in Arcola, Mississippi,
since 1986 and has been a Director of the Company since 1988. Since September
1992, he has been the Chairman of the Board of Staple Cotton Cooperative
Association in Greenwood, Mississippi. Until July 1, 1994, he was a Director of
Mississippi Chemical, which manufactures and sells fertilizer. First Mississippi
and Mississippi Chemical are engaged in a joint-venture, Triad Chemical, in
Donaldsonville, Louisiana. Mr. Percy is also President and Chief Executive
Officer of Greenville Compress Co., Greenville, Mississippi. He was a Director
of the Sunburst Bank of Mississippi, Grenada, Mississippi, until it was
purchased by Union Planters Bank in July 1995. He is also a Director of Callidus
Technologies Inc., FirstMiss Fertilizer, Inc., and Plasma Energy Corporation,
subsidiaries of the Company. He is a member of the Compensation & Human
Resources Committee and the First Mississippi Corporation Foundation Advisory
Committee.
Leland R. Speed. Mr. Speed, 64, is Chief Executive Officer and Chairman of
the Board of Parkway Properties, Inc. (formerly The Parkway Company), and
Chairman, Chief Executive Officer and Trustee of EastGroup Properties, real
estate investment companies, both of Jackson, Mississippi. He has been a
Director of the Company since 1965. He is Chairman and Director of Delta
Industries, Inc., a construction materials manufacturer and a Director of Farm
Fish, Inc. and Mississippi Valley Gas Company, all of Jackson, Mississippi. He
was Trustee and President of Eastover Corporation from 1977 through December
1994; President and Director of Congress Street Properties from 1984 through
November 1994; and President and Director of LNH REIT, INC. from 1991 through
May 1996. He was also President, Chief Executive Officer and Director of
Rockwood National Corporation, a real estate developer, from 1983 through June
1994. He was a Trustee of First Continental Investors REIT, Houston, Texas from
1983 through May 1994. He is also a Director of First Chemical Corporation, a
subsidiary of the Company. He is a member of the Committee on Director Affairs
and the First Mississippi Corporation Foundation Advisory Committee.
R. Gerald Turner. Dr. Turner, 50, is the President of Southern Methodist
University in Dallas, Texas, a position he assumed in June 1995, and has been a
Director of the Company since 1987. He was the Chancellor of the University of
Mississippi in Oxford, Mississippi, from 1984 through June 1995. He has been a
director of River Oaks Furniture, Inc., a furniture manufacturer based in
Fulton, Mississippi, since 1994, a Director of JC Penney Co., Inc., a retailer,
since 1995, and a Director of Mobile Telecommunications Technologies Corp., a
provider of nationwide paging and voice messaging services, since July 1996. Dr.
Turner is also a Director of Callidus Technologies Inc., a subsidiary of the
Company. He is Chairman of the Committee on Director Affairs and a member of the
First Mississippi Corporation Foundation Advisory Committee.
17
<PAGE> 18
Michael J. Ferris. Mr. Ferris, 51, is Executive Vice President, Chemicals
Group, of Vulcan Materials Company, a chemical manufacturer located in
Birmingham, Alabama. Vulcan serves principally the chemical, paper and water
treatment industries. Prior to becoming Executive Vice President of Vulcan in
1996, Mr. Ferris served in various positions at Vulcan Chemicals, a division of
Vulcan Materials Company, since 1974, including President and Executive Vice
President.
Dan F. Smith. Mr. Smith, 50, is President and Chief Operating Officer of
Lyondell Petrochemical Company of Houston, Texas, a position he has held since
August 1994. Lyondell manufactures and sells petrochemicals and refinery
products. From May 1993 until August 1994, he was Executive Vice President and
Chief Operating Officer of Lyondell. He was Vice President, Corporate Planning,
of Atlantic Richfield Company, Los Angeles, California, from October 1991 to May
1993. From July 1991 to October 1991, he was Executive Vice President and Chief
Financial Office of Lyondell. During fiscal 1996, a subsidiary of the Company
sold a total of approximately $308,000 in products to Lyondell Petrochemical
Company and its affiliates.
The COMMITTEE ON DIRECTOR AFFAIRS is composed of four (4) non-employee
Directors and is responsible for nominating new Board of Directors ("Board")
members, appointing members to Board Committees, assessing Board performance and
recommending Board compensation for action by the Board. The Chairman of this
committee also chairs executive sessions of the outside members of the Board.
The Committee on Director Affairs considers suggestions for Director nominations
from all sources. The Committee on Director Affairs met three (3) times during
fiscal 1996. Current members of the committee are Mr. Anderson, Mr. Crook, Mr.
Speed and Dr. Turner.
The AUDIT COMMITTEE is composed of four (4) non-employee Directors with
broad latitude for inquiry into all operations of the Company. Its primary
responsibilities include making a recommendation to the Board on the selection
of independent auditors, reviewing audit reports prepared by independent
auditors, internal auditors, insurance auditors and other consultants engaged by
the Company to examine specific areas of corporate operations, and examining the
adequacy of compliance with various governmental regulations and corporate
policies and procedures. The Audit Committee met four (4) times during fiscal
1996. Current members of the committee are Mr. Becker, Mr. Guyton, Mr. Moreton
and Dr. Murrill.
The COMPENSATION & HUMAN RESOURCES COMMITTEE is composed of three (3) non-
employee Directors and is charged with the responsibility of recommending to the
Board a program of overall compensation for the Company and its subsidiaries,
including Executive Officers and other Key Employees. These responsibilities
include administration of the Company's Long-Term Incentive Plans. The
Compensation & Human Resources Committee met five (5) times during fiscal 1996.
Current members of the committee are Mr. Anderson, Mr. Fligg and Mr. Percy.
Section 16(a) Reporting Delinquencies. Section 16(a) of the Securities
Exchange Act of 1934 requires Officers and Directors of the Company and persons
who own more than ten percent (10%) of a registered class of the Company's
equity securities to file reports of ownership and changes in their ownership
with the Securities and Exchange Commission and The New York Stock Exchange. The
Company monitors compliance and acts as the Compliance Officer for such filings
of its Officers and Directors and prepares and files reports for such persons
based on information supplied by them. Based solely on its review of such
information, the Company believes that for fiscal 1996, its Officers and
Directors were in compliance with all applicable filing requirements, except
that due to an administrative oversight, a report on Form 5 (Annual Statement of
Beneficial Ownership of Securities) was inadvertently filed late regarding two
transactions by Mr. Tepas in the Company's 401(k) Plan.
18
<PAGE> 19
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION(1) OPTIONS(2) COMPENSATION(3)
POSITION YEAR ($) ($) ($) (#) ($)
- ----------------------------- ---- ------- ------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Kelley Williams(4) 1996 475,000 324,400 1,886,548(5) 60,000 29,545(8)(9)(10)
Chairman & Chief 1995 450,000 360,000 127,697(5) 0 22,050
Executive Officer 1994 330,000 200,000 (6) 35,000 52,975
Thomas G. Tepas 1996 187,500 135,000 (6) 48,272* 48,921(9)(10)(11)
President & Chief
Operating Officer
Charles R. Gibson 1996 194,500 95,000 142,044(5) 14,007* 30,876(8)(9)(10)
President, FirstMiss 1995 181,113 86,100 401,783(5) 17,200 26,132
Fertilizer, Inc. 1994 168,916 82,800 35,393(5) 15,000 23,816
R. Michael Summerford 1996 196,271 95,500 858,782(5) 16,422* 12,100(8)(9)(10)
Vice President and 1995 191,725 86,900 212,965(5) 21,300 11,701
Chief Financial Officer 1994 182,458 73,400 (6) 25,000 11,357
George M. Simmons 1996 163,227 81,600 71,239(5)(7) 2,300 13,313(8)(9)(10)
President, First Chemical 1995 127,342 35,400 (6) 10,829
Corporation 1994 120,731 32,000 151,598(5)(7) 6,192
</TABLE>
- ---------------
* During fiscal 1996, the effective exercise price and number of underlying
securities for all stock options outstanding at the time of the Gold
Distribution were adjusted to reflect the distribution value of the
Getchell shares. Mr. Tepas', Mr. Gibson's and Mr. Summerford's option
awards so effected have been restated to reflect this adjustment. See
"Security Ownership of Certain Beneficial Owners and Management."
(1) Other Annual Compensation includes payouts under Performance Option
arrangements, direct cash payments related to tax reimbursements related to
long-term incentives, tax planning and tax return preparation services, and
imputed income and tax reimbursements resulting from the personal use of
Company automobiles and country clubs. Tax reimbursement payments represent
payments to eligible employees of thirty-seven percent (37%) of the
Company's federal income tax deduction resulting from the exercise of
Convertible Subordinated Debenture Options, Non-Qualified Stock Options
("NQSOs"), Incentive Stock Options and Performance Options. These payments
are not applicable for options granted since August 22, 1995.
(2) NQSOs were granted to Officers and certain key employees of the Company in
1996, 1995 and 1994. The options for 1996 were awarded under the 1995
Long-Term Incentive Plan. Options for 1995 and 1994 were granted under the
1988 Long-Term Incentive Plan, under which no further grants will be made.
No shares of Common Stock of the Company are available for the grant of
awards under the 1980 Long-Term Incentive Plan. The share amounts for a
particular fiscal year under this column reflect only the shares underlying
options which were granted during the respective fiscal year (that is,
shares underlying options granted subsequent to fiscal year-end but based
on performance in the prior fiscal year are included in the share amounts
for the subsequent year during which the related options were actually
granted).
(3) All Other Compensation is comprised of Company contributions related to the
Company's 401(k) Plan, including amounts provided by the Company's Benefits
Restoration Plan ("BRP"), executive life insurance, relocation expenses and
the above market portion of interest earned under the Deferred Income Plan
(Plan A). The BRP permits participants in the 401(k) Plan to make
contributions, and the Company to match the same, in amounts permitted by
the 401(k) Plan but which would otherwise be in excess of those permitted
by certain Internal Revenue Code limitations.
(4) Mr. Williams' base salary was reduced twenty-five percent (25%) at his
request from June 1, 1993 to July 1, 1994, in consideration of losses due
to restructuring in fiscal 1993.
(5) Tax reimbursement payments in fiscal 1996 to Mr. Williams, Mr. Gibson, Mr.
Summerford and Mr. Simmons were $1,856,591, $122,905, $844,060 and $16,304,
respectively. Tax reimbursement payments in fiscal 1995 to Mr. Williams,
Mr. Gibson and Mr. Summerford were $78,625, $386,803 and $196,493,
respectively. Tax reimbursement payments in fiscal 1994 to Mr. Gibson and
Mr. Simmons were $23,171 and $38,150, respectively.
19
<PAGE> 20
(6) Aggregate perquisites and other personal benefits were less than $50,000 or
ten percent (10%) of the total annual salary and bonus reported for the
named Executive Officer and thus are excluded from the table.
(7) Includes payments received by Mr. Simmons on exercise of Performance
Options of $44,064 in 1996 and $103,107 in 1994.
(8) Above market interest earned under the Deferred Income Plan in fiscal 1996
was $0, $19,805, $2,850 and $5,172 for Mr. Williams, Mr. Gibson, Mr.
Summerford and Mr. Simmons, respectively. Mr. Williams voluntarily reduced
the interest rate on his deferrals effective January 1, 1994 to one hundred
twenty percent (120%) of the applicable annual federal long-term rate as
specified in the Internal Revenue Code. See "Directors Compensation."
(9) Company contributions to the 401(k) Plan in fiscal 1996 were $6,000,
$1,200, $6,000, $6,000 and $6,000 for Mr. Williams, Mr. Tepas, Mr. Gibson,
Mr. Summerford and Mr. Simmons. Accruals to the 401(k) related BRP were
$13,000, $3,100, $1,780, $1,800 and $529 for Mr. Williams, Mr. Tepas, Mr.
Gibson, Mr. Summerford and Mr. Simmons, respectively.
(10) The Executive life insurance program was changed effective November 1,
1995, to provide cash subsidies to participants based on age-based premium
cost replacing a program under which the Company provided the insurance and
paid the premiums directly. Direct insurance payments in fiscal 1996 were
$1,425, $283, $585, $590 and $490 for Mr. Williams, Mr. Tepas, Mr. Gibson,
Mr. Summerford and Mr. Simmons, respectively. Cash subsidies in fiscal 1996
were $9,120, $1,080, $2,706, $860 and $1,122 for Mr. Williams, Mr. Tepas,
Mr. Gibson, Mr. Summerford and Mr. Simmons, respectively.
(11) Relocation expenses paid by the Company during 1996 on behalf of Mr. Tepas
were $43,258.
OPTION GRANTS IN LAST FISCAL YEAR 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS
---------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR TEN- YEAR
UNDERLYING GRANTED TO ALL EXERCISE OPTION TERM ($)(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
- --------------------------------- ---------- -------------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
J. Kelley Williams............... 60,000 23.4% 23.13 11/10/05 872,591 2,211,318
Thomas G. Tepas.................. 23,800 9.3% 23.13 11/10/05 346,128 877,156
24,472 9.5% 20.38 08/22/05 313,661 794,879
Charles R. Gibson................ 14,007 5.5% 20.38 08/22/05 179,530 454,964
R. Michael Summerford............ 16,422 6.4% 20.38 08/22/05 210,483 533,406
George M. Simmons................ 2,300 0.9% 23.13 11/10/05 33,449 84,767
</TABLE>
- ---------------
(1) The share amounts under this column do not include 60,000, 21,300, 14,100,
16,900 and 5,100 shares underlying options which were granted on August 27,
1996 to Mr. Williams, Mr. Tepas, Mr. Gibson, Mr. Summerford and Mr. Simmons,
respectively.
(2) The dollar amounts under these columns represent the potential realizable
value of each grant, assuming that the market value of the Company's Common
Stock appreciates from the date of grant to the expiration of the option at
annualized rates of 5% and 10%. These assumed rates of appreciation have
been specified by the Securities and Exchange Commission for illustrative
purposes only and are not intended to forecast future financial performance
or possible future appreciation in the price of First Mississippi stock.
20
<PAGE> 21
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
AGGREGATE VALUE OF
NUMBER OF SECURITIES UNEXERCISED, IN-THE-MONEY
NUMBER OF UNDERLYING UNEXERCISED OPTIONS AT 6/30/96($)
SHARES OPTIONS AT 6/30/96 ----------------------------
ACQUIRED ON VALUE ---------------------------- EXERCISABLE UNEXERCISABLE
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE (1) (2)
- ----------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Kelley Williams................. 175,000 5,017,813 317,600 0 3,370,975 N/A
Thomas G. Tepas.................... -- -- 48,272 0 45,752 N/A
Charles R. Gibson.................. 17,200 332,175 14,007 0 26,187 N/A
R. Michael Summerford.............. 93,300 2,281,244 16,422 0 30,702 N/A
George M. Simmons.................. -- -- 18,400 0 204,788 N/A
</TABLE>
- ---------------
(1) Value was computed as the difference between the individual option price and
the per share closing price of First Mississippi Common Stock on June 30,
1996, as reported on the consolidated transaction system for New York Stock
Exchange issues. Only options with fair market values in excess of the
exercise price are reflected in this column.
(2) No value is shown because there were no unexercisable options at fiscal year
end.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
PERFORMANCE OR OTHER
PERIOD UNTIL
NUMBER OF MATURATION OR ESTIMATED
NAME SHARES/UNITS PAYOUT FUTURE PAYOUTS
- ------------------------------------------- ------------ -------------------- --------------
<S> <C> <C> <C>
George M. Simmons.......................... 9,600 (2) (3)
</TABLE>
- ---------------
(1) In fiscal 1996, the Company adopted a Performance Option Plan for First
Chemical Corporation providing for awards payable only in cash based on
appreciation in value of units, such appreciated value being based on the
subsidiary's pre-tax operating profit and the price earnings multiples of a
peer group of publicly held companies. Options shown in this table
represent performance units granted under this plan on August 22, 1995.
This table does not include 6,700 performance units granted August 27,
1996.
(2) Performance units granted August 22, 1995 are exercisable no earlier than
six (6) months from date of grant and until ten (10) years from grant. The
units are valued on a quarterly basis and may be exercised by the
participant within fifteen (15) business days from the date of valuation.
(3) The performance options granted on August 22, 1995, have a base price of
$20.30 and may be exercised as noted above. Estimated future value will be
based on the appreciated value of the options on the exercise date and
cannot be reasonably estimated at this time. However, if unit values
appreciated at annual rates of 5% and 10%, the potential realizable value
at the end of their ten (10)-year term would be $122,559 and $310,589,
respectively.
21
<PAGE> 22
OTHER COMPENSATION
In 1970, the stockholders authorized the noncontributory retirement plan
for the employees of First Mississippi. Employees become one hundred percent
(100%) vested after five (5) years of employment. The plan provides for normal
retirement at age sixty-five (65) with actuarially adjusted provisions for early
and postponed retirement dates. Retirement benefits are based on years of
service and average compensation (wages and salary) of the five (5) highest
consecutive years during employment. The benefits listed in the table below are
not subject to any reduction for social security or other offset amounts.
The following table shows the estimated annual retirement benefit payable
to participating employees including Executive Officers based on earnings and
years of service classifications as indicated.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS FOR YEARS OF CREDITED
AVERAGE ANNUAL COMPENSATION SERVICE
(5 HIGHEST -----------------------------------------------
CONSECUTIVE YEARS) 10 YEARS 20 YEARS 30 YEARS 40 YEARS
- --------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000................................ $ 17,712 $ 35,424 $ 53,136 $ 70,848
150,000................................ 26,712 53,424 80,136 106,848
200,000................................ 35,712 71,424 107,136 142,848
300,000................................ 53,712 107,424 161,136 214,848
400,000................................ 71,712 143,424 215,136 286,848
450,000................................ 80,712 161,424 242,136 322,848
500,000................................ 89,712 179,424 269,136 358,848
</TABLE>
The table includes amounts that exceed limitations allowed under Section
415 of the Code. The Company's BRP provides that if a retired employee's
benefits calculated under the retirement plan exceed the maximum allowed under
the Code, the Company will supplement such employee's benefits to the extent
such benefit is in excess of the limitation.
Years of service for the Executive Officers listed in the Summary
Compensation Table are: J. Kelley Williams, thirty (30) years; Thomas G. Tepas,
one (1) year; Charles R. Gibson, twenty-six (26) years; R. Michael Summerford,
eighteen (18) years; and George M. Simmons, eleven (11) years.
Termination Agreements. During fiscal 1996, the Board approved and the
Company entered into Termination Agreements (the "Termination Agreements") with
the Executive Officers of the Company, including Mr. Williams, Mr. Tepas, Mr.
Gibson, Mr. Summerford and Mr. Simmons. The Termination Agreements are
contingent upon a Change of Control, as defined in the Termination Agreements,
and provide for three-year terms which are automatically extended unless the
Company determines not to renew or there is a Change of Control of the Company
during any three-year term. Each officer, other than the Chief Executive
Officer, would be paid upon termination of employment for reasons other than
cause, death or disability or upon resignation for good reason, subsequent to a
Change of Control during the term of the Termination Agreement, three (3) times
the sum of the five-year average of his annual base salary and bonus. The
Company's Chief Executive Officer is entitled to the same termination benefit as
described above for all other Executive Officers, except for the fact that the
Chief Executive Officer may resign for any reason, as opposed to "good reason,"
within thirty-six (36) months of a Change of Control and still be entitled to
the termination benefit. Upon termination, the individual would have the option,
unless he notifies the Company otherwise, to receive a cash payment equal to the
cash value of all his NQSOs, Debenture Options and Debentures, whether then
exercisable or not. Following termination, the Company will pay amounts
previously due to individuals for early stock disposition of grants issued in
1994 and earlier under the Company's tax sharing plan. No individual would
receive payments in the event of death, disability or termination for cause. In
addition, the Termination Agreements provide for an additional payment to be
made by the Company to the Chief Executive Officer if any of the severance
payments provided for by the Termination Agreements or any other payments made
pursuant to a Change of Control of the Company (the "Total Payments") become
subject to an additional tax ("Excise Tax") imposed by Section 4999 of the Code,
such that the net of all of the payments received by the Officer after the
imposition of the Excise Tax on the Total Payments and any federal income tax on
the additional payment shall be equal to the Total Payments.
22
<PAGE> 23
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Chief Executive Officer serves as a member ex-officio of the
Compensation & Human Resources Committee, but may not serve as Chairman or vote
or participate in or be present for Committee decisions regarding his own
compensation. He does not make recommendations about nor participate in
decisions regarding any aspect of his compensation.
In addition, Mr. Crook, who retired from First Mississippi as Vice
President in 1985, is Chairman of Melamine Chemicals ("MCI"), and Mr.
Summerford, an Executive Officer of First Mississippi, is a director of MCI.
DIRECTOR COMPENSATION
Directors who are not employees are compensated for their services with a
retainer of $16,000 per year. In addition, non-employee Directors receive fees
for attendance at duly called Board and committee meetings. Effective May 22,
1996, the fees paid are $1,000 per day for attendance at duly called Board and
committee meetings or a fee of $500 for half-day committee meetings except for
committee chairmen, who receive a fee of $1,250 per day for meetings and $625
for half-day meetings. Prior to this date, non-employee Directors' fees were
$900 per day for attendance at duly called Board meetings or a fee of $450 for
half-day committee meetings except for committee chairmen, who received a fee of
$1,200 per day for meetings and $600 for half-day meetings. This increase was
recommended by the Committee on Director Affairs to align board compensation
with peer companies. Travel expenses to and from meetings are reimbursed to all
Directors. No fees are paid for informal meetings. Attendance at meetings held
by telephone conference call are paid at the half-day rate. Directors performing
special services at the request of the Chief Executive Officer are paid a per
diem of $1,000 per day, except for committee chairmen, who are paid a per diem
of $1,250 per day.
Under the Company's 1988 Long-Term Incentive Plan, non-employee Directors
were automatically awarded for five (5) years, debenture options to purchase
Convertible Subordinated Debentures. Debenture options may be exercised any time
within ten (10) years after the date of grant to purchase Convertible
Subordinated Debentures. Each debenture may be converted six (6) months after
the date of grant of the applicable option into Convertible Preferred Stock at a
conversion price equal to the fair market value of First Mississippi Common
Stock on the date the debenture options were granted. Each share of Convertible
Preferred Stock is, in turn, immediately convertible into one (1) share of First
Mississippi Common Stock. There will be no further awards under this plan.
Under the Company's 1995 Long-Term Incentive Plan (the "1995 Plan"), each
non-employee Director will be eligible annually for a nonqualified stock option
grant. The number of shares subject to each such option shall be determined by
Company performance as measured by the Company's return on equity calculated as
the average two (2) year total net income divided by the average two (2) year
stockholder equity and measured as a rolling average of the two immediately
preceding fiscal years. However, no awards shall be awarded in the event of an
average return of less than 10% and in the event of an average return of 20% or
more, no more than 1,500 options may be granted to any non-employee Director in
any given year. The exercise price for each such option is the fair market value
of First Mississippi Common Stock as of the date of the grant of the option.
Each option vests six months after the date of grant and terminates on the tenth
anniversary of the date of grant. Accordingly, each non-employee Director
received options to purchase 1,500 shares of First Mississippi Common Stock in
November 1995 and will receive options to purchase an additional 1,500 shares
following the 1996 annual meeting.
Also under the 1995 Plan, non-employee Directors may make an irrevocable
election to receive share units in exchange for deferring all or some portion of
their annual retainer at a per share unit exchange price that is eighty-five
percent (85%) of the fair market value of First Mississippi Common Stock
determined as of the first day of the year during which all or a portion of the
deferred retainer was to be paid. Dividends earned pursuant to the share units
are reinvested in the form of additional share units.
In fiscal 1986, the Company established a Deferred Income Plan for
Directors, Officers and Key Employees ("Plan A") which superseded the previous
deferred income arrangement and pursuant to which
23
<PAGE> 24
deferral opportunities in any given year, up to a maximum of three (3) years,
were offered at the discretion of the Board. Amounts deferred under Plan A earn
interest at a prescribed rate which, as originally established, was twenty
percent (20%), compounded annually, subject to reduction as described below. The
Company is owner and beneficiary of life insurance policies covering most of the
participants in Plan A. The benefits associated with these policies are expected
to cover the Company's financial obligations incurred in connection with Plan A,
including the interest accrued on the amounts deferred thereunder in excess of
market rates, resulting in no net cost to the Company over the life of the plan.
Plan A provides that the interest rate may be reduced prospectively and, if
necessary, may be adjusted retroactively, due to severe economic changes
including, but not limited to, changes in tax law. However, no retroactive
changes in the rate of a return may occur unless such economic changes are
material, adverse and retroactive in nature. Further, in no event shall the
interest rate on amounts deferred under Plan A be reduced to a level lower than
the ten (10)-year Treasury Note Rate. Effective January 1, 1994, the Director
participants in Plan A still serving on the Board voluntarily reduced the
applicable interest rate to one hundred twenty percent (120%) of the applicable
annual federal long-term rate as specified in the Internal Revenue Code. At the
same time, the Board closed Plan A for any new participants or deferral
opportunities, subject to the existing rights and obligations thereunder. The
interest rate for the first six months of fiscal year 1994 for all Directors
remained at twenty percent (20%). In fiscal year 1989, the Company established a
successor Deferred Compensation Plan for Outside Directors ("Plan B") to insure
continuation of deferral opportunities for Directors. Plan B was amended
effective January 1, 1994, to change the interest rate prospectively to one
hundred twenty percent (120%) of the applicable annual federal long-term rate as
specified in the Internal Revenue Code. Amounts deferred under Plan B prior to
January 1, 1994 earned interest based on the Chase Manhattan Bank, N.A. Prime
Rate, less one percent (1%). The deferrals under both Plan A and Plan B are held
by the Company until retirement, resignation or other termination of services.
Director J. Kelley Williams participates only in Plan A (See Note 8 under
Summary Compensation Table).
The Company furnishes Directors with $100,000 accidental death and
dismemberment and $250,000 of business travel accident insurance. The Company
also has a Retirement Plan for its non-employee Directors under which all such
Directors who have served at least one (1) three-year term will, under certain
conditions, receive an annual retirement benefit equal to their annual retainer
at retirement for each year of service, not to exceed fifteen (15) years. The
amount of the retainer to be received after retirement shall be fixed at the
time of retirement. The plan also provides for a lump sum payment to a Director
under certain conditions in the event of a change of control and to his
beneficiary upon his death.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Gold Distribution. On October 20, 1995, the Company distributed to its
shareholders the shares of Getchell Gold Corporation ("Getchell"), formerly
FirstMiss Gold, Inc., held by First Mississippi (the "Gold Distribution").
Following the Gold Distribution, in accordance with the provisions of the
Long-Term Incentive Plans of the Company, the number of shares of Common Stock
underlying outstanding debentures, debenture options and NQSOs, as well as the
effective exercise prices relating thereto, were adjusted to reflect the
distribution value of the Getchell shares. This adjustment increased the number
of shares underlying the awards outstanding at the time of the Gold Distribution
and reduced the respective exercise prices by a factor of 1.61.
24
<PAGE> 25
The Directors and Officers of the Company beneficially own as of August 27,
1996, Convertible Subordinated Debentures Options, Convertible Preferred Stock,
NQSOs and Common Stock of the Company as follows:
<TABLE>
<CAPTION>
TOTAL COMMON
COMMON STOCK STOCK PERCENT
BENEFICIALLY PERCENT OF COMMON BENEFICIALLY OF
DIRECTOR/OFFICER OWNED (1) CLASS STOCK OWNED(2) CLASS
- -------------------------------- ------------ ---------- --------- ------------ -------
<S> <C> <C> <C> <C> <C>
Richard P. Anderson............. 9,450(3)
NQSO.......................... 1,500 10,950 *
Paul A. Becker.................. 10,000
1988-1 Series................. 1,610 20%
1989-2 Series................. 1,610 20%
1990-2 Series................. 1,610 20%
1991-2 Series................. 1,610 20%
1992-1 Series................. 1,610 20%
NQSO.......................... 1,500
------------
9,550 19,550 *
James W. Crook.................. 119,187(4)
NQSO.......................... 1,500 120,687 *
James E. Fligg.................. 500
1994-1 Series................. 1,610 100%
NQSO.......................... 1,500
------------
3,110 3,610 *
Robert P. Guyton................ 23,000
NQSO.......................... 1,500 24,500 *
Charles P. Moreton.............. 13,250
NQSO.......................... 1,500 14,750 *
Paul W. Murrill................. 7,900(5)
1988-1 Series................. 1,610 20%
1989-2 Series................. 1,610 20%
1990-2 Series................. 1,610 20%
1991-2 Series................. 1,610 20%
1992-1 Series................. 1,610 20%
NQSO.......................... 1,500
------------
9,550 17,450 *
William A. Percy, II............ 36,275(6)
1988-1 Series................. 1,610 20%
1989-2 Series................. 1,610 20%
1990-2 Series................. 1,610 20%
1991-2 Series................. 1,610 20%
1992-1 Series................. 1,610 20%
NQSO.......................... 1,500
------------
9,550 45,825 *
</TABLE>
25
<PAGE> 26
<TABLE>
<CAPTION>
TOTAL COMMON
COMMON STOCK STOCK PERCENT
BENEFICIALLY PERCENT OF COMMON BENEFICIALLY OF
DIRECTOR/OFFICER OWNED (1) CLASS STOCK OWNED(2) CLASS
- -------------------------------- ------------ ---------- --------- ------------ -------
<S> <C> <C> <C> <C> <C>
Leland R. Speed................. 12,720
1988-1 Series................. 1,610 20%
1989-2 Series................. 1,610 20%
1990-2 Series................. 1,610 20%
1991-2 Series................. 1,610 20%
1992-1 Series................. 1,610 20%
NQSO.......................... 1,500
------------
9,550 22,270 *
R. Gerald Turner................ 7,900(7)
NQSO.......................... 1,500 9,400 *
J. Kelley Williams.............. 870,465(8)
1987-A Series................. 40,250 78%
1988-A Series................. 72,450 63%
1989-1 Series................. 72,450 100%
1990-1 Series................. 72,450 98%
NQSO.......................... 60,000
------------
317,600 1,188,065 5.6%
Charles R. Gibson............... 13,917(9)
NQSO.......................... 14,007 27,924 *
George M. Simmons............... 241
1988-A Series**............... 6,440 6%
1989-A Series................. 1,610 6%
NQSO.......................... 10,350
------------
18,400 18,641 *
R. Michael Summerford........... 70,546
NQSO.......................... 16,422 86,968 *
Thomas G . Tepas................ 1,500(10)
NQSO.......................... 48,272 49,772 *
All Directors and Executive
Officers as a Group (24
Persons)(11).................. 1,229,691
1987-A Series................. 48,300 94%
1988-A Series**............... 86,940 75%
1988-1 Series................. 6,440 80%
1989-A Series................. 4,025 15%
1989-1 Series................. 72,450 100%
1989-2 Series................. 6,440 80%
1990-1 Series................. 72,450 85%
1990-2 Series................. 6,440 80%
1991-1 Series................. 4,830 75%
1991-2 Series................. 6,440 80%
1992-1 Series................. 6,440 80%
1994-1 Series................. 1,610 100%
NQSO.......................... 222,960
------------
545,765 1,775,456 8.4%
</TABLE>
26
<PAGE> 27
<TABLE>
<CAPTION>
TOTAL COMMON
COMMON STOCK STOCK PERCENT
BENEFICIALLY PERCENT OF COMMON BENEFICIALLY OF
DIRECTOR/OFFICER OWNED (1) CLASS STOCK OWNED(2) CLASS
- -------------------------------- ------------ ---------- --------- ------------ -------
<S> <C> <C> <C> <C> <C>
5% Beneficial Holder: Goldman
Sachs Group, L.P.(12)......... 1,771,091 8.5%
Goldman Sachs & Co.
85 Broad Street
New York, NY 10004
</TABLE>
- ---------------
* Represents less than one percent (1%) of class.
** Represents 6,440 shares of Common Stock underlying Convertible Subordinated
Debentures that have already been purchased through the exercise of
Debenture Options.
(1) Numbers represent shares of Common Stock of the Company underlying the
Convertible Subordinated Debentures and NQSOs beneficially owned by the
Directors and Officers. The Debentures are immediately convertible into the
specified number of shares of Convertible Preferred Stock of the same
series and then immediately convertible into the specified number of shares
of Common Stock of the Company. NQSOs are exercisable no earlier than six
(6) months from date of grant into shares of Common Stock of the Company
and presently all are exercisable.
(2) In connection with the Shareholder Rights Plan adopted by the Company on
February 27, 1996, which replaced an expiring plan, preferred stock
purchase rights were distributed to stockholders and are deemed to be
attached to the outstanding shares of Common Stock of the Company,
including the outstanding shares of Common Stock reported above as being
owned by Directors and Officers. Under certain conditions, each right may
be exercised to purchase one one-hundredth (1/100) of a share of a new
series of preferred stock, at an exercise price of $100 (subject to
adjustment). The rights, which do not have voting rights, expire in 2006
and may be redeemed by the Company at a price of $.01 per right prior to a
specified period of time after the occurrence of certain events. In certain
events, each right (except certain rights beneficially owned by 10% or more
owners, which rights are voided) will entitle its holder to purchase shares
of Common Stock with a value of twice the then current exercise price.
(3) Shares voting and investment power of 3,700 shares with Mrs. Anderson.
(4) Included are 700 shares owned by Mrs. Crook of which Mr. Crook has no
voting and investment power and disclaims beneficial ownership.
(5) Included are 775 shares owned by Mrs. Murrill of which Dr. Murrill has no
voting and investment power and disclaims beneficial ownership.
(6) Included are 31,500 shares of which Mr. Percy has sole voting and
investment power as President of Greenville Compress Company and of which
he disclaims beneficial ownership.
(7) Shares voting and investment power of 7,800 shares with Mrs. Turner.
(8) Included are 171,518 shares of which Mr. Williams shares voting and
investment power, and 4,327 shares for which he has no voting and
investment power and disclaims beneficial ownership. Excluded are 61,750
shares held in the Jean P. Williams Revocable Trust, of which Mr. Williams
has no voting and investment power and disclaims beneficial ownership.
(9) Shares voting and investment power of 2,375 shares with Mrs. Gibson.
(10) Shares voting and investment power with Mrs. Tepas.
(11) Except for 2,000 shares, 200 shares, 2,000 shares and 100 shares for which
Mr. Daniel Anderson, Mr. Barker, Mr. Moore and Mr. Chustz, respectively,
have shared voting and investment power, and except for 12 shares owned by
Mr. McArthur's wife, of which he has no voting and investment power and
disclaims beneficial ownership, and except as otherwise indicated in these
notes, the shares
27
<PAGE> 28
beneficially owned by the persons indicated in the table above represent
sole voting and investment power.
(12) Based on Form 13G filed by the Investor with the Securities and Exchange
Commission. Included 1,762,991 shares as to shared voting power and 8,100
shares with no voting power.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion includes certain relationships and related
transactions which occurred during the Company's fiscal year ended June 30,
1996.
Gold Distribution. Until October 20, 1995, First Mississippi owned
14,750,000 shares of Common Stock of Getchell (approximately 81% of the
outstanding Common Stock). On that date, the Company distributed all of the
stock it owned in Getchell to its own shareholders. During fiscal 1996, Messrs.
Moreton, Summerford and Williams, who currently serve as a Director, Vice
President and Chief Financial Officer, and Chairman and Chief Executive Officer,
respectively, of First Mississippi, served as members of the board of Getchell,
with Mr. Williams serving as Chairman. In June 1996, Mr. Moreton resigned from
the Getchell Board. At August 31, 1996, Mr. Williams beneficially owned 613,165
shares of common stock of Getchell, or approximately 2.4% of the total number of
shares outstanding.
Debt Owed by Getchell. Prior to the spinoff, First Mississippi provided to
Getchell capital and operating advances from time to time. Effective the date of
the spinoff, the debt was $52.5 million and the Company and Getchell entered
into a new long-term loan agreement (the "Loan Agreement") which provided that
the total outstanding amount would be due in September 2000, that Getchell would
repay $15.0 million to the Company from the proceeds of a public common stock
offering prior to April 1996, that interest would accrue at a rate not exceeding
the London Interbank Offered Rate plus one percent, and that the interest would
not be paid in cash, but rather would be capitalized to the note. In November
1995, Getchell reduced the debt by $15.0 million, from proceeds of a common
stock offering. The debt was further reduced by the settlement of the Tax
Sharing Agreement (described below). At June 30, 1996, the total aggregate debt
owed by Getchell pursuant to the Loan Agreement was $24.7 million.
Tax Sharing Agreement. In October 1987, the Company and Getchell entered
into a Tax Sharing Agreement for the period during which Getchell was a member
of the affiliated group of corporations of which First Mississippi is the common
parent (the "Affiliated Group"). Under the agreement, Getchell accrued income
taxes (payable to the Company) as if Getchell and its subsidiaries were, since
the inception of the agreement on October 28, 1987, a separate affiliated group
of corporations filing consolidated income tax returns. In determining the
amount of such payments, Getchell was potentially bound by tax elections,
conventions, treatments or methods utilized by the Company in filing its
consolidated income tax returns. The Tax Sharing Agreement also provided for
payments in respect of net operating losses and certain other tax benefits by
the Company to Getchell or, under some circumstances, by Getchell to the
Company, in taxable years in which Getchell was no longer a member of the
Affiliated Group. Effective with the spinoff on October 20, 1995, the Tax
Sharing Agreement was terminated. In settlement of the Agreement, $13.9 million
was used to reduce the debt owed by Getchell to the Company.
Tax Ruling Agreement. The Company obtained a letter ruling from the
Internal Revenue Service in April 1995 providing for the tax-free distribution
to its shareholders of its shares of Getchell's Common Stock. In September 1995,
The Company and Getchell entered into the Tax Ruling Agreement which sets forth
certain covenants and agreements of Getchell relevant to maintaining the
tax-free nature of the distribution of the common stock.
The Tax Ruling Agreement provides that Getchell will complete an
underwritten public equity of common stock generating aggregate proceeds of at
least $50.0 million prior to April 1996. In late 1995, Getchell satisfied this
requirement by issuing common stock to the public which generated net proceeds
of approximately $137.5 million. The Tax Ruling Agreement also required Getchell
to repay at least $15.0 million of debt owed to the Company from the net
proceeds of the common equity issue, which repayment occurred in November 1995.
28
<PAGE> 29
The Tax Ruling Agreement provides also that Getchell will not, prior to one
year from the date of the spinoff, enter into any agreement to merge or
consolidate with or into any other corporation, to liquidate, to sell or
transfer all or substantially all of its assets, to redeem or repurchase any of
its capital stock (except for the redemption of the stock of one or more
Getchell employees upon his or her termination) or to issue additional shares of
its capital stock (except in connection with the public offering of common stock
described above, or issuances pursuant to Getchell's employee benefit or
compensation plans), unless it first obtains an opinion of counsel or a
supplemental ruling from the I.R.S. that such action does not interfere with the
Tax Ruling.
In the event Getchell takes such actions or solicits or assists any person
or group to commence a tender offer, if such person or group would acquire
ownership of 20% or more of Getchell's outstanding Common Stock without an
opinion or a supplemental I.R.S. ruling, Getchell agreed under the Tax Ruling
Agreement to indemnify and hold the Company and certain affiliated corporations
harmless against any and all federal, state and local taxes, interest penalties
and additions thereto imposed upon or incurred by such corporations as a result
of such action's effect on the tax free nature of the spinoff.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS AND SCHEDULES
(a)(1) The Financial Statements which are filed with this Form 10-K are set
forth in the Index to Financial Statements at page F-1, which immediately
precedes such financial statements.
(a)(2) No additional schedules are required under the applicable instructions or
are inapplicable and have therefore been omitted.
(a)(3) EXHIBITS
<TABLE>
<S> <C>
3(a) -- Restated and Amended Charter of Incorporation of the Company, as amended August
22, 1996.
3(b) -- Bylaws of the Company, as amended August 27, 1996.
4(a) -- Articles IV, VIII, IX and X of the Company's Charter of Incorporation and the
Statements of Resolution establishing the Company's 1982-A, 1982-B, 1982-C,
1982-D, 1983-A, 1984-A, 1984-B, 1985-A, 1986-A, 1987-A, 1988-A, 1988-1, 1989-A,
1989-1, 1989-2, 1990-1, 1990-2, 1991-1, 1991-2, 1992-1 and 1994-1 Series
Convertible Preferred Stock and the Company's Series X Junior Participating
Preferred Stock are included in Exhibit 3(a).
4(b) -- Articles II, V and VI of the Company's Bylaws are included in Exhibit 3(b).
4(c) -- First Mississippi Corporation 401(K) Thrift Plan, as amended and restated on
February 13, 1986, was filed as Exhibit 4.3 to post-effective amendment No. 2
to the Company's Registration Statement on Form S-8 (Registration No. 2-93585)
and is incorporated by reference.
4(d) -- First Amendment to the First Mississippi Corporation 401(K) Thrift Plan, as
previously amended and restated, dated May 22, 1987, was filed on May 29, 1987,
as Exhibit 4.4 to post-effective Amendment No. 3 to the Company's Registration
Statement on Form S-8 (Registration No. 2-93585) and is incorporated by
reference.
4(e) -- Second Amendment to the First Mississippi Corporation 401(K) Thrift Plan, as
previously amended and restated, dated September 22, 1988, was filed as Exhibit
4(e) to the Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1988, and is incorporated by reference.
4(f) -- Third Amendment to the First Mississippi Corporation 401(K) Thrift Plan, as
previously amended and restated, dated November 14, 1991, was filed as Exhibit
4(b) to Item 7 to the Company's Form 8-K dated November 14, 1991, and is
incorporated by reference.
</TABLE>
29
<PAGE> 30
<TABLE>
<S> <C>
4(g) -- Fourth Amendment to the First Mississippi Corporation 401(K) Thrift Plan, as
previously amended and restated, dated May 12, 1992, was filed as Exhibit 4(g)
to the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1993, and is incorporated by reference.
4(h) -- The First Mississippi Corporation 401(K) Savings Plan, as amended and restated,
effective July 1, 1989, was filed as Exhibit 4 to the Company's Form 8-K dated
June 13, 1994, and is incorporated by reference.
4(i) -- Amended and Restated Rights Agreement between the Company and Ameritrust
Company National Association, whose name has now been changed to KeyCorp
Shareholder Services, Inc., was filed as an Exhibit to Item 7 to the Company's
Form 8-K dated February 28, 1989, and is incorporated by reference.
4(j) -- Rights Agreement between the Company and Society National Bank, whose name has
now been changed to KeyCorp Shareholder Services, Inc., dated February 27,
1996, was filed as Exhibit 4.1 to Item 7 to the Company's Form 8-K dated April
12, 1996.
4(k) -- Loan Agreement between the Company and FirstMiss Gold Inc., dated February 1,
1995, was filed as Exhibit 4(m) to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1995, and is incorporated by reference.
4(l) -- Senior Note Purchase Agreement (composite conformed copy with substantially all
exhibits conformed as executed), dated as of June 1, 1992, between the Company
and Connecticut General Life Insurance Company, United Companies Life Insurance
Company, Principal Mutual Life Insurance Company, John Hancock Mutual Life
Insurance Company, The Ohio National Life Insurance Company, The Union Central
Life Insurance Company, The Manhattan Life Insurance Company and Modern Woodmen
of America, was filed as Exhibit 4(y) to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1992, and is incorporated by reference.
4(m) -- Credit Agreement, dated as of February 9, 1993, between the Company, the Banks
party thereto and The Chase Manhattan Bank (National Association), as Agent,
was filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1992, and is incorporated by reference.
4(n) -- Amendment, dated as of August 1, 1993, to the Credit Agreement between the
Company, the Banks party thereto and The Chase Manhattan Bank (National
Association), as Agent, was filed as Exhibit 4(s) to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1993, and is
incorporated by reference.
4(o) -- Extension of commitment termination date, dated as of December 30, 1993, in
accordance with the provisions of Section 2.04 of the Credit Agreement dated as
of February 9, 1993, between the Company, the Banks party thereto and The Chase
Manhattan Bank (National Association), as Agent, was filed as Exhibit 4(u) to
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1994, and is incorporated by reference.
4(p) -- Extension of commitment termination date, dated as of December 30, 1994 and
January 9, 1995, in accordance with the provisions of Section 2.04 of the
Credit Agreement dated as of February 9, 1993, between the Company, the Banks
party thereto and The Chase Manhattan Bank (National Association), as Agent,
was filed as Exhibit 4(w) to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1995, and is incorporated by reference.
4(q) -- Waiver and Amendment, dated as of April 1, 1996, to the Credit Agreement
between the Company, the Banks party thereto and The Chase Manhattan Bank
(National Association), as Agent, was filed as Exhibit 4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, and is
incorporated herein by reference.
10(a)* -- Termination Agreement, dated July 1, 1989, between the Company and its Chief
Executive Officer, was filed as Exhibit 10(b) to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1990, and is incorporated by
reference.
</TABLE>
30
<PAGE> 31
<TABLE>
<S> <C>
10(b)* -- Form of Termination Agreement, dated July 1, 1989, between the Company and each
of the following executive officers of the Company: William P. Bartlett, C. R.
Gibson, R. Michael Summerford and O.E. Wall (Company's Termination Agreement
with each such officer contains terms identical to those contained in the form
of Agreement filed), was filed as Exhibit 10(c) to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1990, and is incorporated by
reference.
10(c)* -- Termination Agreement, dated May 29, 1996 and effective June 1, 1996, between
the Company and its Chief Executive Officer.
10(d)* -- Form of Termination Agreement, dated May 29, 1996 and effective June 1, 1996,
between the Company and each of the following executive officers of the
Company: Daniel P. Anderson, Robert P. Barker, William P. Bartlett, J. Steven
Chustz, Paul J. Coder, Charles R. Gibson, Samir A. Hakooz, Terry L. Moore,
George M. Simmons, R. Michael Summerford and Thomas G. Tepas (Company's
Termination Agreement with each such officer contains terms identical to those
contained in the form of Agreement filed).
10(e)* -- First Mississippi Corporation 1980 Long-Term Incentive Plan, as amended, was
filed as Exhibit 10(a) to Item 7 of the Company's Form 8-K dated November 14,
1991, and is incorporated by reference.
10(f)* -- First Mississippi Corporation 1988 Long-Term Incentive Plan, as amended, was
filed as Exhibit 10(b) to Item 7 of the Company's Form 8-K dated November 14,
1991, and is incorporated by reference.
10(g)* -- First Mississippi Corporation 1995 Long-Term Incentive Plan was filed as
Appendix A to the Definitive Proxy Statement for the Annual Meeting of
Stockholders of the Corporation held on November 10, 1995.
10(h)* -- 1991 Restatement of the First Mississippi Corporation Directors' Retirement
Plan, as revised and restated on May 14, 1991, was filed as Exhibit 10(f) to
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1991, and is incorporated by reference.
10(i)* -- First Mississippi Corporation 1989 Deferred Compensation Plan for Outside
Directors, as amended on September 12, 1994, was filed as Exhibit 10(g) to the
Annual Report on Form 10-K for the fiscal year ended June 30, 1995, and is
incorporated by reference.
10(j) -- Form of Indemnification Agreement between the Company and the following
Directors or Officers of the Company (Company's Indemnification Agreements with
each such individual contains substantially identical provisions to those
contained in the form): Richard P. Anderson, Paul A. Becker, James W. Crook,
James E. Fligg, Charles R. Gibson, Robert P. Guyton, Charles P. Moreton, Paul
W. Murrill, William A. Percy, II, Maurice T. Reed, Jr., Frank G. Smith, Leland
R. Speed, R. Gerald Turner, J. Kelley Williams, R. Michael Summerford, O. E.
Wall, Charles M. McAuley, J. Steve Chustz, James L. McArthur, Danny P. Anderson
and Thomas G. Tepas was filed as Exhibit 10(t) to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1988, and is incorporated by
reference.
10(k)* -- FirstMiss Gold Inc. Amended and Restated Long-Term Incentive Plan was filed as
Exhibit 10(i) to the Annual Report on Form 10-K for FirstMiss Gold Inc. for the
fiscal year ended June 30, 1993, and is incorporated by reference.
10(l) -- Purchase and Sale Agreement between the Company, First Energy Corporation, FRM,
Inc., FEC Marketing, Inc. and JN Exploration & Production Limited Partnership,
dated June 16, 1993, relating to the sale of the Company's oil and gas reserves
and related assets, was filed as Exhibit 10(n) to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1993, and is incorporated by
reference.
10(m) -- Joint Venture Agreement between INDRESCO Inc., d/b/a Harbison-Walker
Refractories, a division of INDRESCO Inc., and Plasma Processing Corporation
dated as of August 23, 1995, was filed as Exhibit 10(n) to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1995 and is incorporated
by reference.
</TABLE>
31
<PAGE> 32
<TABLE>
<S> <C>
10(n) -- Agreement and Plan of Merger and Reorganization dated as of August 27, 1996 by
and among Mississippi Chemical Corporation, Miss Sub, Inc, and First
Mississippi Corporation.
21 -- List of the subsidiaries of the Company.
23 -- Auditor's Consent regarding incorporation of reports into Registration
Statement Nos. 2-93584, 2-93585, 2-74337, 2-54048, 33-512, 33-9106, 33-17483,
33-24413, 33-24414, 33-26895, 33-31343, 33-33135, 33-37084, 33-39137, 33-43586,
33-43600, 33-45344, 33-56026, 33-57799 and 33-64239.
27 -- Financial Data Schedule.
</TABLE>
- ---------------
* Indicates management contract or compensatory plan or arrangement.
Certain debt instruments have not been filed. The Company agrees to furnish
a copy of such agreement(s) to the Commission upon request.
(b) Reports on Form 8-K filed during the fourth quarter include the April 12,
1996, filing related to the dividend distribution of stock rights, based on
common shares held, to purchase junior participating preferred stock of the
Company and the June 4, 1996, filing regarding the Board's authorization of
a plan to close the Company's aluminum dross processing operations.
(c) Please see (a)(3) above.
The exhibits filed with the Commission are not included in the printed copy
of the Form 10-K. A copy of the exhibits will be provided upon payment of a
reasonable fee, to be specified at the time a request is made.
(d) Please see (a)(2) above.
32
<PAGE> 33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Date: September 23, 1996 By: /s/ J. KELLEY WILLIAMS
-----------------------------------
J. Kelley Williams
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------- -------------------
<C> <S> <C>
/s/ J. KELLEY WILLIAMS Chairman of the Board of September 23, 1996
- --------------------------------------------- Directors, Chief
J. Kelley Williams Executive Officer
(Principal Executive
Officer) and Director
/s/ THOMAS G. TEPAS President and Chief September 23, 1996
- --------------------------------------------- Operating Officer
Thomas G. Tepas
/s/ R. MICHAEL SUMMERFORD Vice President and Chief September 23, 1996
- --------------------------------------------- Financial Officer
R. Michael Summerford (Principal Financial
Officer)
/s/ TROY B. BROWNING Controller (Principal September 23, 1996
- --------------------------------------------- Accounting Officer)
Troy B. Browning
/s/ RICHARD P. ANDERSON Director September 23, 1996
- ---------------------------------------------
Richard P. Anderson
/s/ PAUL A. BECKER Director September 23, 1996
- ---------------------------------------------
Paul A. Becker
/s/ JAMES W. CROOK Director September 23, 1996
- ---------------------------------------------
James W. Crook
/s/ JAMES E. FLIGG Director September 23, 1996
- ---------------------------------------------
James E. Fligg
/s/ ROBERT P. GUYTON Director September 23, 1996
- ---------------------------------------------
Robert P. Guyton
/s/ CHARLES P. MORETON Director September 23, 1996
- ---------------------------------------------
Charles P. Moreton
/s/ PAUL W. MURRILL Director September 23, 1996
- ---------------------------------------------
Paul W. Murrill
/s/ WILLIAM A. PERCY, II Director September 23, 1996
- ---------------------------------------------
William A. Percy, II
/s/ LELAND R. SPEED Director September 23, 1996
- ---------------------------------------------
Leland R. Speed
/s/ R. GERALD TURNER Director September 23, 1996
- ---------------------------------------------
R. Gerald Turner
</TABLE>
33
<PAGE> 34
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditor's Report.......................................................... F-2
Consolidated Balance Sheets as of June 30, 1996 and 1995.............................. F-3
Consolidated Statements of Operations for the years ended June 30, 1996, 1995 and
1994................................................................................ F-4
Consolidated Statements of Stockholders' Equity for the years ended June 30, 1996,
1995
and 1994............................................................................ F-5
Consolidated Statements of Cash Flows for the years ended June 30, 1996, 1995 and
1994................................................................................ F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 35
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
First Mississippi Corporation:
We have audited the consolidated financial statements of First Mississippi
Corporation and subsidiaries as listed in the accompanying index. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
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 provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of First
Mississippi Corporation and subsidiaries as of June 30, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
three-year period ended June 30, 1996, in conformity with generally accepted
accounting principles.
As discussed in notes 1 and 7, the Company changed its method of accounting
for income taxes as of July 1, 1993 to adopt the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
KPMG Peat Marwick LLP
Jackson, Mississippi
September 6, 1996
F-2
<PAGE> 36
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30
--------------------
1996 1995
-------- -------
(IN THOUSANDS OF
DOLLARS)
<S> <C> <C>
Current assets:
Cash and cash equivalents....................................................... $ 5,303 40,523
Receivables:
Trade, less allowance for doubtful accounts of $1,013 in 1996 and $1,029 in
1995......................................................................... 76,500 65,623
Equity investees (note 3)..................................................... 2,915 1,917
Other (note 7)................................................................ 9,159 4,105
-------- -------
Total receivables........................................................ 88,574 71,645
-------- -------
Inventories:
Finished products............................................................. 25,822 24,850
Work in process............................................................... 28,494 19,051
Raw materials and supplies.................................................... 22,047 20,544
-------- -------
Total inventories........................................................ 76,363 64,445
-------- -------
Prepaid expenses and other current assets (note 7).............................. 10,864 9,228
Net current assets of discontinued operations (note 2).......................... -- 6,894
-------- -------
Total current assets..................................................... 181,104 192,735
-------- -------
Investments and other assets:
Investments in equity investees (note 3)........................................ 37,480 21,502
Other investments (note 3)...................................................... 27,496 3,931
Intangible and other assets, at cost less applicable amortization (note 4)...... 11,404 13,396
-------- -------
Total investments and other assets....................................... 76,380 38,829
-------- -------
Property, plant and equipment, at cost less accumulated depreciation and
amortization (notes 5 and 6).................................................... 179,824 145,464
Noncurrent assets of discontinued operations (note 2)............................. -- 67,689
-------- -------
$437,308 444,717
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (note 6)................................. $ 14,534 15,076
Deferred revenue................................................................ 2,097 2,048
Accounts payable:
Trade (including book overdrafts of $10,446 in 1996 and $9,334 in 1995)....... 45,286 41,983
Equity investees (note 3)..................................................... 5,343 3,593
-------- -------
Total accounts payable................................................... 50,629 45,576
-------- -------
Accrued expenses and other current liabilities.................................. 26,244 19,928
Net current liabilities of discontinued operations (note 2)..................... 682 --
-------- -------
Total current liabilities................................................ 94,186 82,628
-------- -------
Long-term debt, excluding current installments (note 6)........................... 79,909 84,394
Other long-term liabilities....................................................... 13,864 12,289
Long-term liabilities and minority interest of discontinued operations (note 2)... -- 9,033
Deferred income taxes (note 7).................................................... 19,082 23,377
Stockholders' equity (notes 6, 8 and 9):
Serial preferred stock. Authorized 20,000,000 shares; none issued............... -- --
Common stock of $1 par value. Authorized 100,000,000 shares; outstanding
20,614,491 shares in 1996 and 20,438,208 shares in 1995....................... 20,614 20,438
Additional paid-in capital...................................................... 14,234 7,656
Retained earnings............................................................... 195,419 204,902
-------- -------
Total stockholders' equity............................................... 230,267 232,996
-------- -------
Commitments and contingent liabilities (notes 7, 8, 10 and 11).................... $437,308 444,717
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 37
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
------------------------------
1996 1995 1994
-------- ------- -------
(IN THOUSANDS OF DOLLARS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues:
Sales (note 13).............................................. $594,937 571,270 413,075
Interest and other income, net (note 12)..................... 5,784 5,295 3,330
-------- ------- -------
600,721 576,565 416,405
-------- ------- -------
Costs and expenses:
Cost of sales................................................ 444,521 404,936 331,017
General, selling and administrative expenses................. 61,206 50,524 44,297
Other operating expenses..................................... 6,901 7,347 5,459
Provision for plant shut-down (note 5)....................... 18,256 -- --
Interest expense (note 6).................................... 9,271 9,560 10,063
-------- ------- -------
540,155 472,367 390,836
-------- ------- -------
Earnings from continuing operations before income taxes,
investee earnings (loss) and cumulative effect of change in
accounting principle......................................... 60,566 104,198 25,569
Income taxes (note 7).......................................... 23,550 40,425 11,250
Equity in net earnings (loss) of equity investees (note 3)..... 1,033 934 (306)
-------- ------- -------
Earnings from continuing operations before cumulative effect of
change in accounting principle............................... 38,049 64,707 14,013
Earnings (loss) from discontinued operations, net of taxes
(note 2)..................................................... (1,083) (6,913) 5,000
Loss on disposal of business, net of taxes (note 2)............ (1,746) -- --
Cumulative effect of change in accounting principle (note 7)... -- -- 2,850
-------- ------- -------
Net earnings......................................... $ 35,220 57,794 21,863
======== ======= =======
Earnings (loss) per common share (note 9):
Continuing operations........................................ $ 1.81 3.14 .70
Discontinued operations...................................... (.13) (.34) .25
Cumulative effect of change in accounting principle.......... -- -- .14
-------- ------- -------
Total earnings per common share...................... $ 1.68 2.80 1.09
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 38
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, 1996, 1995 AND 1994
-----------------------------------------------
COMMON STOCK ADDITIONAL
--------------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
---------- ------- ---------- --------
(IN THOUSANDS OF DOLLARS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Balance, June 30, 1993.............................. 19,980,440 $19,980 2,424 138,370
Net earnings........................................ -- -- -- 21,863
Dividends declared -- $.30 per share................ -- -- -- (6,010)
Common stock issued:
Employee stock options............................ 39,350 39 351 --
Convertible debentures............................ 66,300 67 561 --
Income tax benefit on exercise of stock options and
convertible debentures............................ -- -- 42 --
---------- ------- ------ -------
Balance, June 30, 1994.............................. 20,086,090 20,086 3,378 154,223
Net earnings........................................ -- -- -- 57,794
Dividends declared -- $.35 per share................ -- -- -- (7,115)
Common stock issued:
Employee stock options............................ 86,218 86 555 --
Convertible debentures............................ 265,900 266 2,917 --
Income tax benefit on exercise of stock options and
convertible debentures............................ -- -- 806 --
---------- ------- ------ -------
Balance, June 30, 1995.............................. 20,438,208 20,438 7,656 204,902
Net earnings........................................ -- -- -- 35,220
Dividends declared -- $.40 per share................ -- -- -- (8,161)
Distribution of common stock of Getchell Gold
Corp.............................................. -- -- -- (31,277)
Common stock issued:
Employee stock options............................ 111,483 111 878 --
Convertible debentures............................ 300,700 301 2,880 --
Purchase and retirement of common shares............ (235,900) (236) -- (5,265)
Income tax benefit on exercise of stock options and
convertible debentures............................ -- -- 2,820 --
---------- ------- ------ -------
Balance, June 30, 1996.............................. 20,614,491 $20,614 14,234 195,419
========== ======= ====== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 39
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
------------------------------
1996 1995 1994
-------- ------- -------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings.................................................. $ 35,220 57,794 21,863
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization.............................. 20,955 20,087 18,314
Provision for plant shut-down.............................. 18,256 -- --
Provision for losses on receivables........................ 728 196 550
Deferred income taxes, net of effect of accounting change
in 1994.................................................. (3,350) 6,750 10,270
(Gain) loss on property, plant and equipment............... (642) 133 11
(Gain) loss on disposition of investments and other
assets................................................... (50) 19 286
Undistributed (earnings) loss of affiliates, net of
taxes.................................................... (1,033) (934) 306
Changes in current assets and liabilities, net of effects
of dispositions:
Receivables.............................................. (13,100) (15,453) 469
Inventories.............................................. (13,870) (9,063) (10,439)
Prepaid expenses......................................... (2,582) (2,463) (1,593)
Accounts payable......................................... 3,737 9,231 (2,704)
Accrued expenses and other current liabilities........... 434 8,770 (4,447)
Deferred revenue........................................... 1,642 3,316 (2,852)
Other, net................................................. (1,140) 117 17
Net (earnings) loss from discontinued operations........... 2,829 6,913 (5,000)
-------- -------- --------
Net cash provided by continuing operations................. 48,034 85,413 25,051
Net cash provided by (used in) discontinued operations..... (3,264) 20,958 912
-------- -------- --------
Net cash provided by operating activities............. 44,770 106,371 25,963
-------- -------- --------
Cash flows from investing activities:
Capital expenditures.......................................... (63,837) (28,025) (20,104)
Investment in equity investees, net........................... (14,630) -- 1
Acquisition of investments and other assets................... (177) (1,688) (1,027)
Collection of note receivable................................. 15,000 -- --
Proceeds from sale of property, plant and equipment........... 741 307 175
Proceeds from disposition of investments and other assets..... 630 -- 7,594
Proceeds from sale of subsidiaries............................ -- -- 8,462
-------- -------- --------
Net cash used in investing activities of continuing
operations................................................. (62,273) (29,406) (4,899)
Net cash used in investing activities of discontinued
operations................................................. (3,176) (26,999) (15,818)
-------- -------- --------
Net cash used in investing activities................. (65,449) (56,405) (20,717)
-------- -------- --------
Cash flows from financing activities:
Principal repayments of long-term debt........................ (15,550) (6,512) (11,100)
Dividends (note 9)............................................ (8,161) (8,622) (6,010)
Purchase of common stock...................................... (5,491) -- --
Proceeds from long-term borrowings............................ 11,000 151 1,706
Proceeds from issuance of common stock........................ 3,661 2,567 944
-------- -------- --------
Net cash used in financing activities................. (14,541) (12,416) (14,460)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents............ (35,220) 37,550 (9,214)
Cash and cash equivalents at beginning of year.................. 40,523 2,973 12,187
-------- -------- --------
Cash and cash equivalents at end of year........................ $ 5,303 40,523 2,973
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized....................... $ 9,635 9,572 10,182
======== ======== ========
Income taxes, net.......................................... $ 23,603 20,680 15,581
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 40
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996, 1995 AND 1994
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
First Mississippi Corporation ("the Company") produces chemicals for
industry and agriculture, and related products and services which are marketed
globally. Further descriptions of the Company's products and the relative
significance of its operations are included in this annual report in the
industry segment information data in note 13 to the financial statements.
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.
Principles of Consolidation
The consolidated financial statements include the accounts of the company
and its subsidiaries. Intercompany balances and transactions have been
eliminated in consolidation. Investments in joint ventures, partnerships and
other equity investments are accounted for by the equity method.
Recognition of Revenue
Revenues generally are recorded when title and risk of ownership pass,
except for long-term construction type contracts, which are accounted for under
the percentage of completion method.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out and weighted average methods for purchased
inventories of finished product, and using the average cost method with respect
to all other inventories.
Depreciation and Amortization
Depreciation of plant and equipment and depreciable investments is based on
cost and the estimated useful lives (3-45 years, with the majority being plant
assets with 11-year lives) of the separate units of property. The straight-line
and accelerated methods are primarily used in determining the amount of
depreciation charged to expense. Goodwill of businesses acquired is amortized
generally over 20 years using the straight-line method. Other intangibles are
amortized over their estimated useful lives (5-17 years) using the straight-line
method.
Loan costs are amortized over the terms of related loans using the interest
method.
Income Taxes
Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," which requires the
recognition of deferred tax liabilities and assets for differences between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
F-7
<PAGE> 41
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Pension Plans
Pension cost is determined using the "projected unit credit" actuarial
method for reporting purposes. The Company's funding policy is to contribute
annually at amounts not less than the minimum requirements of the Employee
Retirement Income Security Act of 1974.
Stock Options
All stock options are nonqualified or incentive options and require no
charges against income upon grant or exercise. The tax benefit the Company
receives from dispositions that result in ordinary income to option recipients
is reflected in stockholders' equity.
Cash and Cash Equivalents
The Company considers all short-term investments with original maturities
of three months or less to be cash equivalents.
Investments
Realized gains and losses on investments are determined on the basis of
specific costs and are included in gain (loss) on investments, net. Equity
investments are carried at fair value in accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities, ("SFAS No. 115"). Fair value is based on year end market
prices as quoted by the appropriate security exchange. Any significant
unrealized holding gains and losses for available-for-sale securities are
excluded from earnings and reported as a net amount in a separate component of
stockholders' equity until realized. The effect of applying SFAS No. 115 is not
material.
Forward Purchases
The fertilizer segment periodically purchases contracts for the future
delivery of natural gas, its principal raw material, on the New York Mercantile
Exchange ("NYMEX"). Gains and losses on these contracts are treated as inventory
adjustments and recognized in income when finished product is sold. Unrealized
gains and losses are deferred and reflected in the balance sheets.
Contingencies
Estimates of loss contingencies, including environmental liability costs
for remediation, are charged to expense when it is probable an asset has been
impaired or a liability incurred and the amount can be reasonably estimated. If
a potentially material loss contingency is reasonably possible, or probable, but
cannot be estimated, then the nature of the contingency and an estimated range
of possible loss, if determinable and material, are disclosed.
Reclassifications
Certain consolidated financial statement amounts for 1995 and 1994 have
been reclassified for consistent presentation.
2. DISCONTINUED OPERATIONS
On October 20, 1995, the Company distributed to its shareholders its entire
ownership of Getchell Gold Corporation ("Getchell"), formerly known as FirstMiss
Gold Inc. The June 30, 1996 consolidated balance sheet includes a $31,277
reduction of retained earnings in connection with the distribution of Getchell.
Each
F-8
<PAGE> 42
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
First Mississippi shareholder received approximately seven-tenths of a common
share of Getchell for each share of First Mississippi owned.
The net assets and liabilities of the discontinued operations (primarily
Getchell) have been segregated in the consolidated financial statements. The
following is the composition of those net assets and liabilities at June 30,
1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Receivables...................................................... $ -- 1,856
Inventories...................................................... -- 9,554
Prepaid expenses and other current assets........................ 2,651 3,166
Accounts payable................................................. (38) (6,522)
Accrued expenses and other current liabilities................... (3,295) (1,160)
-------- -------
Net current assets (liabilities) of discontinued operations...... $ (682) 6,894
======== =======
Noncurrent assets of discontinued operations..................... $ -- 67,689
======== =======
Long-term liabilities and minority interest of discontinued
operations..................................................... $ -- 9,033
======== =======
</TABLE>
The statements of operations have been reclassified to separate
discontinued and continued operations. Revenues and net earnings (losses) of the
discontinued operations for the years ended June 30, 1996, 1995 and 1994 were as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
Revenues............................................... $17,961 71,617 95,300
======== ======== ========
Earnings (loss) before income taxes.................... (2,118) (17,929) 5,599
Income tax (expense) benefit........................... 750 7,550 (900)
Minority interest...................................... 285 3,466 (1,049)
Cumulative effect of change in accounting principle.... -- -- 1,350
-------
-
-------- --------
Earnings (loss) from discontinued operations, net...... $(1,083) (6,913) 5,000
======== ======== ========
</TABLE>
A pretax loss of $2,700 was recorded in 1996 related to previously
discontinued businesses and is included in loss on disposal of business, net of
applicable income tax benefit of $954, in the accompanying consolidated
financial statements.
3. INVESTMENTS
Investments in affiliated companies accounted for by the equity method were
$37,480 and $21,502, respectively, at June 30, 1996 and 1995. Equity earnings
(losses), net of taxes, were $1,033, $934 and $(306), respectively, for years
ended June 30, 1996, 1995 and 1994.
F-9
<PAGE> 43
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a summary of financial information related to affiliated
companies:
<TABLE>
<CAPTION>
JUNE 30
--------------------
1996 1995
------- ------
<S> <C> <C>
Current assets.................................................. $44,181 36,557
Noncurrent assets............................................... 82,567 48,680
Current liabilities............................................. 15,347 13,301
Noncurrent liabilities.......................................... 17,897 11,854
------- ------
Net equity...................................................... $93,504 60,082
======= ======
</TABLE>
During fiscal year 1996 the Company obtained a 50% interest in both
Arcadian/FirstMiss Fertilizer LLC, an ammonia barge transport company, and
FirstMiss Fertilizer, LP, an ammonia storage terminal facility.
The Company has a 50% ownership interest in Power Sources, Inc. which burns
wood residue and other biomass to create steam for industrial users.
The Company also has a 50% ownership interest in Triad Chemical, an
unincorporated joint venture. The Company is entitled to purchase, at cost of
production, one-half of all anhydrous ammonia and urea produced by the Triad
plant. Purchases were $33,892 in 1996, $28,726 in 1995 and $33,563 in 1994.
The Company sells raw materials to and purchases production by-products
from Melamine Chemicals, Inc. ("MCI"), a 23.4% owned investment. Sales were
$16,861 in 1996, $12,525 in 1995 and $8,747 in 1994. Purchases were $5,235 in
1996, $5,305 in 1995 and $2,490 in 1994. The MCI investment had a quoted market
value of approximately $11,634 and $11,475, with carrying amounts of $8,153 and
$7,508, at June 30, 1996 and 1995, respectively.
Cash advances to Getchell for the period from July 1, 1995 to October 20,
1995, the spinoff date, were $8,850. At the date of the spinoff, the Company
received a promissory note in the amount of $52,507 from Getchell in settlement
of all prior cash advances. The note bears interest at a rate based on the
London Interbank Offered Rate (6.625% at June 30, 1996). Interest and principal
are due in September, 2000. Subsequent to the spinoff date, the note principal
amount was reduced by a cash repayment of $15,000 and an offset of $13,939
representing settlement of tax attributes utilized by the Company during the
time Getchell was included in the Company's consolidated income tax returns. The
aggregate unpaid principal amount of the note, including accrued interest, of
$24,733 at June 30, 1996 is included in other investments.
4. INTANGIBLE AND OTHER ASSETS
The major classes of intangible and other assets are summarized below:
<TABLE>
<CAPTION>
JUNE 30
------------------
1996 1995
------- ------
<S> <C> <C>
Goodwill.......................................................... $16,868 16,868
Other............................................................. 10,134 9,873
------- ------
27,002 26,741
Less accumulated amortization..................................... 15,598 13,345
------- ------
$11,404 13,396
======= ======
</TABLE>
The net carrying amount of goodwill at June 30, 1996 and 1995 was $9,778
and $10,872, respectively, and is all related to the chemicals segment.
F-10
<PAGE> 44
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Amortization expense related to the above amounted to $1,959 in 1996,
$2,699 in 1995 and $2,640 in 1994.
5. PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
JUNE 30
--------------------
1996 1995
-------- -------
<S> <C> <C>
Assets owned:
Land and land improvements.................................... $ 7,082 5,676
Buildings..................................................... 11,879 6,759
Plant facilities and equipment................................ 200,162 180,944
Other facilities and equipment................................ 80,808 72,140
Construction in progress...................................... 37,916 7,231
-------- -------
Total assets owned.................................... 337,847 272,750
-------- -------
Assets leased:
Land and land improvements.................................... 509 509
Buildings..................................................... 216 216
Other facilities and equipment................................ 8,958 8,958
-------- -------
Total capital leases.................................. 9,683 9,683
-------- -------
Total property, plant and equipment................... 347,530 282,433
Less accumulated depreciation and amortization.................. 167,706 136,969
-------- -------
Net property, plant and equipment............................. $179,824 145,464
======== =======
</TABLE>
Depreciation and amortization expense related to the above, amounted to
$18,996 in 1996, $17,388 in 1995 and $15,674 in 1994.
Interest capitalized amounted to $186 in 1996, $135 in 1995 and $396 in
1994.
On May 21, 1996, the Board of Directors of the Company authorized a plan to
close its aluminum dross processing facility at Millwood, West Virginia, which
was operated by its wholly owned subsidiary Plasma Processing Corporation,
("PPC"). This facility, completed in June 1991, was built to process aluminum
dross using patented thermal plasma technology. The decision to close the
Millwood facility, which operated at a loss since inception, was based in part
on projections that indicated operations were unlikely to be profitable in the
near future. The plan assumes the plant will operate for a portion of the first
quarter of fiscal 1997 to fulfill contractual obligations, then cease operations
and be held for disposition. As a result of this plan, the Company incurred a
pretax charge of $18,256 ($11,706 after tax) during the fourth quarter of fiscal
1996. The charge included write-downs of $12,271 for property, plant and
equipment, $570 for spare parts, $350 for inventory and $5,065 in accruals for
other estimated costs to be incurred related to the closure. Excluding the above
charge, operating losses for PPC were approximately $9,000, $8,400 and $5,700 in
1996, 1995 and 1994, respectively.
F-11
<PAGE> 45
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. LONG-TERM DEBT
A summary of long-term debt follows:
<TABLE>
<CAPTION>
JUNE 30
------------------
1996 1995
------- ------
<S> <C> <C>
Unsecured:
9.42% senior notes payable to institutional investors, due in
annual installments of $13,286 through June 2002............. $79,714 93,000
Notes payable under revolving credit facility, due February
1998......................................................... 11,000 --
Other notes..................................................... 1,100 3,078
Secured:
Capital lease obligations, with interest rates at 4.0%, due in
monthly installments through May 2000........................ 2,360 2,703
Other notes..................................................... 269 289
------- ------
94,443 99,470
Less current installments of long-term debt....................... 14,534 15,076
------- ------
Long-term debt, excluding current installments.......... $79,909 84,394
======= ======
</TABLE>
Under loan agreements in effect at June 30, 1996, there were no
compensating balance requirements. The above obligations mature in various
amounts through 2002, including approximately, $14,534 in 1997, $24,915 in 1998,
$14,199 in 1999, $14,144 in 2000 and $13,367 in 2001.
The Company has a bank revolving credit facility totaling $65,000 which is
committed until February 1998. Borrowings under the facility are priced at a
rate based on either the London Interbank Offered Rate, or the prime rate,
contingent on the Company's debt-to-equity ratio. A commitment fee ranging from
.225 to .375 of 1% per annum is charged on the daily average unused commitment
under the revolving credit facility and is also based on the debt-to-equity
ratio. Commitment fees for the years ended June 30, 1996, 1995 and 1994 totaled
$183, $216 and $189, respectively.
The senior notes and bank credit agreements contain various restrictions
related to working capital, funded debt, net worth, fixed charges coverage,
distributions, repurchases of stock and dispositions of assets. At June 30, 1996
and 1995, the Company was in compliance with these covenants.
At June 30, 1996, the fair value of the 9.42% senior notes payable to
institutional investors approximates carrying value due to penalties and fees
which are due in the event of prepayment. The recorded amounts for all other
long-term debt of the Company approximate fair values as well.
Total interest costs incurred for the years ended June 30, 1996, 1995 and
1994 were $9,457, $9,695 and $10,459, respectively.
F-12
<PAGE> 46
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. INCOME TAXES
The cumulative effect of the change in accounting for income taxes of
continuing operations described in note 1 resulted in a benefit of $2,850 and
was reported as a cumulative effect of a change in accounting principle in the
June 30, 1994 consolidated financial statements.
Total income tax expense (benefit) for the years ended June 30, 1996, 1995
and 1994 was allocated as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
-----------------------------
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Continuing operations................................... $23,550 40,425 11,250
Discontinued operations................................. (1,704) (7,550) 900
Stockholders' equity, for compensation expense for tax
purposes in excess of amounts recognized for financial
reporting purposes.................................... (2,820) (806) (42)
------- ------ ------
$19,026 32,069 12,108
======= ====== ======
</TABLE>
Income tax expense (benefit) differs from the statutory federal rate of 35%
applied to earnings from continuing operations before income taxes, minority
interests and investee earnings (loss) for the years ended June 30, 1996, 1995
and 1994 as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
-----------------------------
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Computed "expected" tax expense......................... $21,198 36,469 8,949
State income taxes, net of federal income tax benefit... 2,090 2,228 1,013
(Increase) decrease in state net operating loss
benefit............................................... (1,442) 1,812 (449)
Loss from operations of foreign subsidiaries............ -- 444 423
Amortization of goodwill................................ 411 392 423
Exempt earnings of Foreign Sales Corporation............ (212) (265) (147)
Increase in net cash surrender value of life
insurance............................................. (324) (254) (232)
Tax provision adjustments for pending Internal Revenue
Service matters....................................... 150 1,275 --
Adjustment to deferred tax assets and liabilities for
enacted change in tax law and rates................... -- -- 502
Increase (decrease) in valuation allowance.............. 1,317 (1,812) 449
Other, net.............................................. 362 136 319
------- ------ ------
Actual tax expense -- continuing operations... $23,550 40,425 11,250
======= ====== ======
</TABLE>
F-13
<PAGE> 47
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Components of income tax expense (credit) are as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
-----------------------------
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Current:
Federal............................................... $24,868 30,179 (597)
State................................................. 2,390 3,386 1,782
Foreign............................................... (358) 110 (205)
------- ------ ------
26,900 33,675 980
------- ------ ------
Deferred:
Federal............................................... (3,984) 6,879 12,449
State................................................. 634 (111) (2,179)
Foreign............................................... -- (18) --
------- ------ ------
(3,350) 6,750 10,270
------- ------ ------
Total:
Federal............................................... $20,884 37,058 11,852
State................................................. 3,024 3,275 (397)
Foreign............................................... (358) 92 (205)
------- ------ ------
$23,550 40,425 11,250
======= ====== ======
</TABLE>
The significant components of deferred income tax expense attributable to
income from continuing operations for the years ended June 30, 1996, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
--------------------------
1996 1995 1994
------- ----- ------
<S> <C> <C> <C>
Deferred tax expense from changes in temporary differences
and the valuation allowance.............................. $(3,350) 6,750 9,768
Adjustment to deferred tax assets and liabilities for
enacted change in tax law and rates...................... -- -- 502
------- ----- ------
$(3,350) 6,750 10,270
======= ===== ======
</TABLE>
F-14
<PAGE> 48
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and the deferred tax liabilities at June 30,
1996 and 1995, are as follows:
<TABLE>
<CAPTION>
JUNE 30
--------------------
1996 1995
-------- -------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful
accounts................................................... $ 448 243
Deferred compensation......................................... 3,178 2,778
Incentive compensation accrual................................ 667 882
Inventory costs............................................... 1,121 617
State net operating loss carryforward......................... 2,687 1,364
Alternative minimum tax credit carryforward................... -- 5,383
Accrued vacation costs........................................ 647 577
Accrued pension costs......................................... 925 791
Other, net.................................................... 4,528 3,785
-------- -------
Total gross deferred tax assets....................... 14,201 16,420
Less: valuation allowance............................. (2,579) (1,262)
-------- -------
Net deferred tax assets............................... 11,622 15,158
-------- -------
Deferred tax liabilities:
Plant and equipment, principally due to differences in
depreciation............................................... (13,036) (20,864)
Investment in affiliated companies, principally due to
undistributed earnings..................................... (12,946) (12,946)
State income taxes............................................ (2,205) (1,263)
-------- -------
Total gross deferred tax liabilities.................. (28,187) (35,073)
-------- -------
Net deferred tax liability............................ $(16,565) (19,915)
======== =======
</TABLE>
The net deferred tax liability at June 30, 1996 and 1995, consists of a
long-term deferred tax liability of $19,082 and $23,377, respectively, and a
current deferred tax asset of $2,517 and $3,462, respectively. The current
deferred tax asset is included in prepaid expenses and other current assets in
the consolidated balance sheets.
The valuation allowance is related to certain state net operating losses,
which the Company believes are less than likely to be recognized. The decrease
in the valuation allowance for the year ended June 30, 1995 is attributable to a
reduction in state net operating loss carryforwards for states where the Company
is no longer required to file income tax returns. Subsequently recognized tax
benefits relating to the allowance for deferred tax assets will be reported in
the consolidated statements of operations.
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion, or all, of the deferred
tax assets will not be realized. The ultimate realization of deferred tax assets
is dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, recoverable taxes paid,
projected taxable income and tax planning strategies in making this assessment.
Based on the reversal of existing deferred tax liabilities and projections for
future taxable income over the periods which the deferred tax assets are
deductible, management believes it is more likely than not the Company will
realize the benefit of these deductible differences, net of the existing
valuation allowance at June 30, 1996.
Refundable income taxes of $6,020 and $3,236 at June 30, 1996 and 1995,
respectively, are included in other current receivables in the accompanying
consolidated financial statements.
F-15
<PAGE> 49
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's federal income tax returns have been examined through June
30, 1992, and all years prior to June 30, 1989 are closed. Federal income tax
returns for the years ended June 30, 1993 and 1994 are currently under
examination. Issues relating to the years ended June 30, 1989 through June 30,
1992 are being contested through various stages of administrative appeal. In
addition, the Company has various state income tax returns in the process of
examination or administrative appeal. Management believes that adequate
provision has been made for any adjustments which might be assessed for open
years through June 30, 1996.
Prior to the spinoff, the Company filed a consolidated federal income tax
return which included Getchell. In accordance with a Tax Sharing Agreement dated
October 1, 1987 between the Company and Getchell, Getchell recomputed its income
tax provision each year on a separate return basis and paid to the Company
amounts approximating the federal income taxes Getchell would have paid if
Getchell filed an independent consolidated return. The Tax Sharing Agreement
also applied to certain state and franchise tax returns which the Company filed
on a combined or consolidated basis. Based on the June 30, 1995 income tax
returns, Getchell had approximately $19,472 of unused tax assets which the
Company was required to reimburse under the terms of the Tax Sharing Agreement.
Prior to the distribution of Getchell to Company shareholders, the Company and
Getchell negotiated a settlement of $13,939 in cancellation of the Tax Sharing
Agreement.
8. EMPLOYEE BENEFIT AND INCENTIVE PLANS
The Company has a noncontributory defined benefit pension plan covering
substantially all full-time permanent employees. The benefits are based on years
of service and participants' compensation during the last five years of
employment.
Net annual pension expense for this plan for the years ended June 30, 1996,
1995 and 1994, included the following components:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
---------------------------
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Service cost.............................................. $ 2,055 1,987 1,876
Interest cost............................................. 1,807 1,697 1,503
Actual return on plan assets.............................. (3,317) (4,478) (481)
Net amortization and deferral............................. 854 2,358 (1,697)
------- ------ ------
Net annual pension expense................................ $ 1,399 1,564 1,201
======= ====== ======
</TABLE>
The assumptions used in calculating the expense for 1996, 1995 and 1994
included a discount rate of 7.75%, a rate of increase in compensation levels of
4%, 4% and 4.5%, respectively, and a 9% expected long-term rate of return on
assets. Net annual pension expense included above and allocated to discontinued
operations was $180, $385 and $343 for 1996, 1995 and 1994, respectively. Plan
assets are invested primarily in equity securities and U.S. government and
corporate bonds.
F-16
<PAGE> 50
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the funded status of the plan at June 30,
1996 and 1995:
<TABLE>
<CAPTION>
JUNE 30
------------------
1996 1995
------- ------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligations...................................... $19,300 15,974
======= ======
Accumulated benefit obligations................................. $22,401 18,453
======= ======
Projected benefit obligation...................................... $30,838 25,048
Plan assets at fair value......................................... 27,947 25,257
------- ------
Plan assets in excess of (less than) projected benefit
obligation...................................................... (2,891) 209
Unrecognized net gain from past experience........................ (730) (3,030)
Unrecognized prior service cost................................... 1,077 1,159
Unrecognized transition credit, net............................... (2,634) (2,947)
------- ------
Pension liability....................................... $(5,178) (4,609)
======= ======
</TABLE>
The Company also has a nonqualified supplemental pension plan. This plan
provides for incremental pension payments from the Company's funds to restore
those pension benefits earned, but reduced due to income tax regulations. The
total accrual at June 30, 1996 and 1995, relating to this unfunded plan was
$1,177 and $933, respectively. Net annual pension expense for this plan was $245
in 1996, $187 in 1995 and $82 in 1994; including expenses allocated to
discontinued operations for those years of $29, $6 and $0, respectively.
The Company has a contributory 401(k) savings plan and an employee stock
ownership plan, both of which cover substantially all eligible employees who
have completed six months of service. Total expense under the plans amounted to
approximately $1,568 in 1996, $1,396 in 1995 and $1,195 in 1994. These plans and
the pension plan invest in the Company's stock. The total number of shares held
by the plans at June 30, 1996 and 1995, was approximately 357,000 and 337,000,
respectively.
F-17
<PAGE> 51
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Directors, officers and certain key employees of the Company participate in
the long-term incentive plans (the Plans) under which the Company has reserved
shares of common stock for issuance. Awards under the Plans include stock
options, options to purchase debentures convertible into preferred stock and
then convertible into common stock of the Company, stock appreciation rights,
performance units, restricted stock, supplemental cash and such other forms as
the Board of Directors may direct. Options under all plans are granted at the
market price of the shares on the date of the grants. As of June 30, 1996,
858,150 shares remained available for granting. Additional information follows:
<TABLE>
<CAPTION>
STOCK OPTIONS DEBENTURE OPTIONS
-------------------------- --------------------------
AVERAGE AVERAGE
NUMBER OPTION PRICE NUMBER OPTION PRICE
OF SHARES PER SHARE OF SHARES PER SHARE
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Balance, June 30, 1993........................ 163,750 $10.86 863,000 $12.49
Options granted............................. 113,000 9.41 -- --
Options exercised........................... (39,350) 9.90 (177,800) 12.71
Options forfeited........................... (45,800) 12.98 (58,000) 13.73
--------- ------------ --------- ------------
Balance, June 30, 1994........................ 191,600 9.69 627,200 12.31
Options granted............................. 63,600 15.06 1,000 21.31
Options exercised........................... (102,400) 9.77 (172,200) 12.04
--------- ------------ --------- ------------
Balance, June 30, 1995........................ 152,800 11.87 456,000 12.43
Options granted before spinoff.............. 93,600 32.81 -- --
Options exercised before spinoff............ (123,400) 11.47 (247,200) 10.80
Option conversion adjustment*............... 75,034 -- 127,368 --
Options granted after spinoff............... 123,200 23.21 -- --
Options exercised after spinoff............. (483) 9.36 -- --
Options forfeited........................... (550) 23.13 -- --
--------- ------------ --------- ------------
Balance, June 30, 1996........................ 320,201 $19.71 336,168 $ 8.92
======== ======== ======== ========
Exercisable, June 30, 1996.................... 320,201 336,168
======== ========
</TABLE>
- ---------------
* The number of shares of common stock underlying outstanding debentures,
debenture options and nonqualifying stock options, as well as stock option
prices, were adjusted to reflect the distribution value (note 2) of the
Getchell shares. This adjustment increased the number of shares underlying
the outstanding awards and reduced the exercise prices by a factor of 1.61.
9. STOCKHOLDERS' EQUITY
Earnings per share calculations are based on the weighted average number of
common shares and common share equivalents outstanding during each year,
20,980,439 in 1996, 20,632,383 in 1995 and 20,126,093 in 1994.
In connection with the Shareholder Rights Plan adopted by the Company on
February 27, 1996, preferred stock purchase rights were distributed to
stockholders and are deemed to be attached to the outstanding shares of common
stock of the Company. Under certain conditions, each right may be exercised to
purchase one one-hundredth ( 1/100) of a share of a new series of preferred
stock, at an exercise price of $100 (subject to adjustment). The rights, which
do not have voting rights, expire in 2006 and may be redeemed by the Company at
a price of $0.01 per right prior to a specified period of time after the
occurrence of certain events. In certain events, each right (except certain
rights beneficially owned by 10% or more owners, which rights are voided) will
entitle its holder to purchase shares of common stock with a value of twice the
then current exercise price.
F-18
<PAGE> 52
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company elected to accelerate dividend payments beginning in fiscal
year 1995. As a result, five dividend payments were made versus the usual four
during that particular year.
10. COMMITMENTS AND CONTINGENT LIABILITIES
The Company has entered into various capital and operating leases for
transportation equipment (primarily railroad tank cars), chemical and fertilizer
pipelines and storage facilities, office buildings and land and other
miscellaneous items of equipment.
The following is a schedule by years of future minimum rental payments for
all capital leases and those operating leases with initial or remaining
noncancelable terms in excess of one year, as of June 30, 1996:
<TABLE>
<CAPTION>
YEARS ENDING OPERATING CAPITAL
JUNE 30 LEASES LEASES
------------------------------------------------- --------- -------
<S> <C> <C>
1997............................................. $ 1,845 641
1998............................................. 1,659 641
1999............................................. 1,108 641
2000............................................. 736 632
2001............................................. 531 --
Later years...................................... 517 --
------ ------
Total minimum payments required.................. $ 6,396 2,555
======
Less imputed interest............................ 195
------
$ 2,360
======
</TABLE>
Provisions applicable to certain transportation equipment leases provide
for mileage credits computed on the basis of usage. No recognition has been
given to the effect of such credits in the amounts presented above.
Rental expense, including short-term rentals (net of mileage credits and
short-term subleases of approximately $282 in 1996, $302 in 1995 and $258 in
1994), was approximately $4,634 in 1996, $5,087 in 1995 and $4,770 in 1994. In
most cases, management expects that, in the normal course of business, leases
will be renewed or replaced by other leases.
The Company's fertilizer segment has entered into an agreement to purchase
anhydrous ammonia. The purchase price under this contract is based on a market
price formula. Take-or-pay obligations under this purchase commitment are based
on a specific component of the seller's cost of production. Estimated take-or-
pay obligations based on current market conditions are approximately $6,649 at
June 30, 1996. Total purchases under this agreement were $17,860 in 1996,
$24,542 in 1995 and $13,989 in 1994. The present value of take-or-pay
obligations at June 30, 1996 was $6,283.
Company operations are subject to a wide variety of environmental laws and
regulations governing emissions to the air, discharges to water sources, and the
handling, storage, treatment and disposal of waste materials, as well as other
laws and regulations concerning health and safety conditions. The Company
accrues for anticipated costs associated with investigatory and remediation
efforts relating to the environment. At June 30, 1996 the Company's accrued
liability for these matters totaled $1,500.
At June 30, 1996, the Company provided financial guarantees related to
discontinued coal and gold operations of $17,100 and $12,000, respectively. The
$12,000 guarantee related to gold operations was canceled in August 1996.
The Company has pending several claims incurred in the normal course of
business which, in the opinion of management and legal counsel, can be disposed
of without material effect on the accompanying consolidated financial
statements.
F-19
<PAGE> 53
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. FORWARD PURCHASES
The key raw material in the manufacturing of anhydrous ammonia is natural
gas, which is typically purchased for delivery at market prices under short-term
contracts. To secure fixed prices for part of its natural gas requirements, the
Company periodically contracts for the future purchase of natural gas on the
NYMEX. Increases or decreases in the fair market value of the NYMEX contracts
generally offset changes in spot market prices. These activities have been
designated as hedging activities and are accounted for as such. At June 30,
1996, the Company had no natural gas future purchase contracts in place. At June
30, 1995, the net unrealized losses from these contracts was $363.
12. INTEREST AND OTHER INCOME
Interest and other income (expense) items are as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
--------------------------
1996 1995 1994
------ ----- -----
<S> <C> <C> <C>
Interest income............................................ $4,707 4,306 1,924
Royalty, license, rental and fee income (expense).......... 496 (31) 1,540
Gain (loss) on disposition of noncurrent assets............ 708 242 (292)
Other...................................................... (127) 778 158
------ ----- -----
$5,784 5,295 3,330
====== ===== =====
</TABLE>
13. INDUSTRY SEGMENT INFORMATION
As of June 30, 1996, the Company operated principally in the following
industry segments: Chemicals, Fertilizer and Combustion, Thermal Plasma and
Other. Operations in the chemicals segment include production and sale of
specialty chemicals and organic chemical intermediates, and research and
development for new products and production processes for specialty chemicals.
Operations in the fertilizer segment involve the sale of produced and purchased
urea and anhydrous ammonia. The combustion, thermal plasma and other segment
develops, markets and utilizes proprietary combustion and thermal plasma
equipment and services for environmental applications and manufacturing. At June
30, 1996, the classification Combustion, Thermal Plasma and Other, includes the
operations of Plasma Energy, Callidus Technologies, Plasma Processing, and
FirstMiss Steel.
The chemicals segment had unaffiliated major customer sales of $61,773,
$68,066 and $42,512 in 1996, 1995 and 1994, respectively.
The following is a breakdown by industry segment of the Company's
consolidated financial statements at June 30, 1996, 1995 and 1994, and for each
of the years then ended:
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Chemicals.......................................... $227,837 209,472 161,045
Fertilizer......................................... 224,390 239,549 163,984
Combustion, Thermal Plasma and Other............... 142,710 122,249 88,046
Transfers between business segments:
Fertilizer......................................... 11,280 10,570 9,007
Combustion, Thermal Plasma and Other............... 812 -- --
Intercompany eliminations.......................... (12,092) (10,570) (9,007)
-------- ------- -------
Total...................................... $594,937 571,270 413,075
======== ======= =======
</TABLE>
F-20
<PAGE> 54
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Operating profit (loss) before income taxes, investee
earnings (loss) and cumulative effect of change in
accounting principle:
Chemicals.......................................... $ 44,058 40,019 30,295
Fertilizer......................................... 65,838 86,292 24,760
Combustion, Thermal Plasma and Other............... (29,612) (6,203) (12,763)
-------- ------- -------
80,284 120,108 42,292
Unallocated corporate expenses....................... (15,015) (10,661) (8,435)
Interest expense, net................................ (4,563) (5,256) (8,139)
Other income (expense), net.......................... (140) 7 (149)
-------- ------- -------
Total...................................... $ 60,566 104,198 25,569
======== ======= =======
Depreciation and amortization:
Chemicals.......................................... $ 12,888 11,577 10,723
Fertilizer......................................... 2,745 2,763 2,552
Combustion, Thermal Plasma and Other............... 4,898 5,298 4,570
Corporate.......................................... 424 449 469
-------- ------- -------
Total...................................... $ 20,955 20,087 18,314
======== ======= =======
Identifiable assets:
Chemicals.......................................... $178,381 150,199 132,739
Fertilizer......................................... 96,341 49,195 44,794
Combustion, Thermal Plasma and Other............... 104,723 104,726 86,043
-------- ------- -------
379,445 304,120 263,576
Corporate assets and investments..................... 57,863 66,014 30,099
Discontinued operations.............................. -- 74,583 75,722
-------- ------- -------
Total...................................... $437,308 444,717 369,397
======== ======= =======
Capital expenditures:
Chemicals.......................................... $ 30,032 19,460 11,735
Fertilizer......................................... 27,928 1,865 329
Combustion, Thermal Plasma and Other............... 5,417 6,384 7,357
Corporate.......................................... 460 316 683
-------- ------- -------
Total...................................... $ 63,837 28,025 20,104
======== ======= =======
Export sales to unaffiliated customers:
North, Central, and South America.................. $ 8,331 9,301 5,134
Europe and Asia.................................... 55,703 36,828 23,790
Africa and Australia............................... 837 189 8,194
-------- ------- -------
Total...................................... $ 64,871 46,318 37,118
======== ======= =======
</TABLE>
Total segment research and development expenses were $6,278 in 1996, $7,227
in 1995 and $5,401 in 1994. Certain corporate expenses, primarily those related
to the overall management of the Company, were not allocated to the operating
segments.
Identifiable assets by industry segment are those assets used in the
Company's operations in each industry and include investments in joint ventures
and partnerships. Corporate assets and investments are principally cash and
short-term investments, nontrade receivables and certain other investments.
F-21
<PAGE> 55
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company performs ongoing credit evaluations of its customers and
generally does not require collateral on trade receivables. The Company believes
that consolidated trade receivables are well diversified, thereby reducing
potential credit risk, and that adequate allowances are maintained for any
uncollectible trade receivables.
The Company has revenue-producing operations in foreign countries. These
operations and related foreign currency translation adjustments are not
material.
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data follow:
<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------------------------- YEAR ENDED
SEPTEMBER 30 DECEMBER 31 MARCH 31 JUNE 30 JUNE 30
------------ ----------- -------- ------- ----------
<S> <C> <C> <C> <C> <C>
1996:
Sales.................................... $142,230 142,339 156,792 153,576 594,937
========== ========= ======= ======= ========
Gross profit............................. $ 39,603 40,600 35,752 34,461 150,416
========== ========= ======= ======= ========
Net earnings (loss) from continuing
operations............................ $ 13,563 15,158 11,618 (2,290) 38,049
========== ========= ======= ======= ========
Net earnings (loss)...................... $ 12,480 15,158 11,618 (4,036) 35,220
========== ========= ======= ======= ========
Earnings (loss) per share:
Continuing operations................. $ .64 .72 .56 (.11) 1.81
========== ========= ======= ======= ========
Net earnings (loss)................... $ .59 .72 .56 (.19) 1.68
========== ========= ======= ======= ========
1995:
Sales.................................... $134,954 126,125 157,825 152,366 571,270
========== ========= ======= ======= ========
Gross profit............................. $ 38,208 37,513 45,059 45,554 166,334
========== ========= ======= ======= ========
Net earnings from continuing
operations............................ $ 14,457 13,932 18,522 17,796 64,707
========== ========= ======= ======= ========
Net earnings............................. $ 15,023 12,942 19,654 10,175 57,794
========== ========= ======= ======= ========
Earnings per share:
Continuing operations................. $ .71 .68 .89 .86 3.14
========== ========= ======= ======= ========
Net earnings.......................... $ .74 .63 .95 .49 2.80
========== ========= ======= ======= ========
</TABLE>
The above quarterly earnings per share calculations are based on the
weighted average shares outstanding during each quarter whereas the annual
earnings per share calculations are based on the weighted average shares
outstanding during the year.
15. SUBSEQUENT EVENT
On August 27, 1996, the Company entered into a definitive merger agreement
with Mississippi Chemical Corporation ("MCC"), under which MCC will acquire all
the fertilizer interests of the Company. The transaction will occur in two
steps: first, the spinoff to the Company's shareholders of the Company's
chemicals and related businesses in the form of a new publicly traded company;
and second, the merger of the Company's fertilizer operations with a subsidiary
of MCC. The spinoff and the merger are intended to be tax free. In the merger,
the Company's stockholders will receive, subject to some adjustment,
approximately 6,900,000 shares of MCC stock, or 0.335 shares of MCC stock for
each share of the Company's stock. At closing the Company's debt will be
refinanced and increased to approximately $150,000. The debt will become MCC's
in the merger. An estimated loss of approximately $6,000 will be incurred in the
refinancing. After this refinancing and the payment of certain expenses, cash on
hand, currently estimated at approximately $50,000, will be transferred to the
spun-off chemical company, which will be essentially debt free when spun off.
The
F-22
<PAGE> 56
FIRST MISSISSIPPI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
transaction is subject to, among other things, approval by the stockholders of
both the Company and MCC and customary regulatory approvals. It is expected that
the transaction will be consummated by December 31, 1996.
Unaudited condensed pro forma financial information showing the estimated
impact of these transactions is as follows:
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL (UNAUDITED)
---------- -----------
<S> <C> <C>
June 30, 1996:
Current assets.............................................. $ 181,104 203,709
Investments and other assets................................ 76,380 52,447
Net property, plant and equipment........................... 179,824 139,647
-------- -------
$ 437,308 395,803
======== =======
Current liabilities......................................... $ 94,186 61,409
Long-term debt and other liabilities........................ 112,855 31,855
Equity...................................................... 230,267 302,539
-------- -------
$ 437,308 395,803
======== =======
Year ended June 30, 1996:
Revenues.................................................... $ 600,721 376,704
======== =======
Earnings from continuing operations......................... $ 38,049 1,978
======== =======
Earnings per common share from continuing operations........ $ 1.81 .09
======== =======
</TABLE>
16. VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
OTHER
BALANCE AT CHARGED TO ADDITIONS BALANCE
BEGINNING COSTS AND (DEDUCTIONS), AT END
OF YEAR EXPENSES NET OF YEAR
---------- ---------- ------------- -------
<S> <C> <C> <C> <C>
Year ended June 30, 1996:
Allowance for doubtful accounts....... $ 1,029 728 (744) 1,013
Allowance for restructuring costs..... $ 582 -- -- 582
Year ended June 30, 1995:
Allowance for doubtful accounts....... $ 721 196 112 1,029
Allowance for restructuring costs..... $ 2,460 -- (1,878) 582
Year ended June 30, 1994:
Allowance for doubtful accounts....... $ 4,565 561 (4,405) 721
Allowance for restructuring costs..... $ 21,535 -- (19,075) 2,460
</TABLE>
17. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company's financial instruments not discussed
in note 6 approximate their fair values.
F-23
<PAGE> 57
EXHIBITS
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<S> <C>
3(a) Restated and Amended Charter of Incorporation of the Company, as amended
August 22, 1996
3(b) Bylaws of the Company, as amended August 27, 1996
10(c) Termination Agreement, dated May 29, 1996 and effective June 1, 1996, between the
Company and its Chief Executive Officer
10(d) Form of Termination Agreement, dated May 29, 1996 and effective
June 1, 1996, between the Company and each of the following executive officers of
the Company: Daniel P. Anderson, Robert P. Barker, William P. Bartlett, J. Steven
Chustz, Paul J. Coder, Charles R. Gibson, Samir A. Hakooz, Terry L. Moore, George
M. Simmons, R. Michael Summerford and Thomas G. Tepas (Company's Termination
Agreement with each such officer contains terms identical to those contained in
the form of Agreement filed.)
10(n) Agreement and Plan of Merger and Reorganization dated as of
August 27, 1996 by and among Mississippi Chemical Corporation, Miss Sub, Inc, and
First Mississippi Corporation
21 List of the subsidiaries of the Registrant
23 Auditor's Consent regarding incorporation of reports into registration statement
Nos. 2-93584, 2-93585, 2-74337, 2-54048, 33-512, 33-9106, 33-17483, 33-24413,
33-24414, 33-26895, 33-31343, 33-33135, 33-37084, 33-39137, 33-43586, 33-43600,
33-45344, 33-56026, 33-57799 and 33-64239
27 Financial Data Schedule [For EDGAR filing only]
</TABLE>
(Note: The exhibits filed with the Commission are not included in this
copy of the Form 10-K. A copy of the exhibits will be provided upon
payment of a reasonable fee, to be specified at the time a request is
made.)
<PAGE> 1
EXHIBIT 3(a)
RESTATED
CHARTER OF INCORPORATION
OF
FIRST MISSISSIPPI CORPORATION
ARTICLE I.
The corporate title of this corporation is: FIRST MISSISSIPPI CORPORATION.
ARTICLE II.
The names and post office addresses of the incorporators are:
<TABLE>
<CAPTION>
NAME POST OFFICE ADDRESS
---- -------------------
<S> <C>
Owen Cooper Yazoo City, Mississippi
George W. Godwin Jackson, Mississippi
LeRoy P. Percy Greenville, Mississippi
Charles S. Whittington Greenwood, Mississippi
Luther W. Wade Greenwood, Mississippi
M. T. Reed Jackson, Mississippi
George D. Perry Dundee, Mississippi
Robert D. Morrow Brandon, Mississippi
Fred A. Anderson, Jr. Gloster, Mississippi
J. R. Smithson Kosciusko, Mississippi
S. Hudson Kyle Clarksdale, Mississippi
F. E. Allen Canton, Mississippi
Dwain G. Luce Mobile, Alabama
John C. Satterfield Jackson, Mississippi
William B. Dunwoody Yazoo City, Mississippi
Robert M. Hearin Jackson, Mississippi
E. W. Haining Vicksburg, Mississippi
N. S. Rogers Jackson, Mississippi
Edmund L. Brunini Vicksburg, Mississippi
William H. Mounger Jackson, Mississippi
L. G. Milam, Jr. Tupelo, Mississippi
</TABLE>
<PAGE> 2
ARTICLE III.
The domicile of the corporation is: Jackson, Hinds County, Mississippi.
ARTICLE IV.
The amount of authorized capital stock with particulars as to the class or
classes thereof, their privileges and restrictions, the number of shares for
each class, and the par value thereof are as follows: COMMON STOCK:
The total amount of the authorized capital stock of the corporation is one
hundred million (100,000,000) shares with a par value of ONE AND NO/100 DOLLARS
($1.00) per share.
The common stock of the corporation shall be issued in such amounts and
shall be sold at such price or prices, not less than par, as the Board of
Directors may from time to time and at any time determine.
Dividends upon common stock shall be payable as and when declared by the
Board of Directors in their discretion.
The voting privileges of the shares of common stock shall be: Each share
of common stock shall be entitled to one vote in the election of directors and
in all other matters upon which stockholders are entitled to vote. PREFERRED
STOCK:
The total amount of authorized preferred stock of the corporation is
twenty million (20,000,000) shares. The preferred stock of the corporation
shall be issued in such form, class, series or amounts and shall be sold at
such price or prices, not less than par, as the Board of Directors may from
time to time at any time determine.
Dividend, conversion rates, conversion prices, par value, voting
privileges, redemption prices, maturity dates, and any other terms and
conditions relative to the issuance of preferred stock will be determined by
the Board of Directors in their discretion.
Convertible Preferred Stock
The following terms and conditions govern certain series of convertible
preferred stock of the corporation set forth below:
<TABLE>
<CAPTION>
Designation of Each Series: Issuable Upon Conversion Of:
--------------------------- ----------------------------
<S> <C>
1982-A Series Convertible 1982-A Series Convertible
Preferred Stock Subordinated Debentures
1982-B Series Convertible 1982-B Series Convertible
Preferred Stock Subordinated Debentures
1982-C Series Convertible 1982-C Series Convertible
Preferred Stock Subordinated Debentures
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
1982-D Series Convertible 1982-D Series Convertible
Preferred Stock Subordinated Debentures
1983-A Series Convertible 1983-A Series Convertible
Preferred Stock Subordinated Debentures
1984-A Series Convertible 1984-A Series Convertible
Preferred Stock Subordinated Debentures
1984-B Series Convertible 1984-B Series Convertible
Preferred Stock Subordinated Debentures
1985-A Series Convertible 1985-A Series Convertible
Preferred Stock Subordinated Debentures
1986-A Series Convertible 1986-A Series Convertible
Preferred Stock Subordinated Debentures
1987-A Series Convertible 1987-A Series Convertible
Preferred Stock Subordinated Debentures
1988-A Series Convertible 1988-A Series Convertible
Preferred Stock Subordinated Debentures
1988-1 Series Convertible 1988-1 Series Convertible
Preferred Stock Subordinated Debentures
1989-A Series Convertible 1989-A Series Convertible
Preferred Stock Subordinated Debentures
1989-1 Series Convertible 1989-1 Series Convertible
Preferred Stock Subordinated Debentures
Designation of Each Series: Issuable Upon Conversion Of:
--------------------------- ----------------------------
1989-2 Series Convertible 1989-2 Series Convertible
Preferred Stock Subordinated Debentures
1990-1 Series Convertible 1990-1 Series Convertible
Preferred Stock Subordinated Debentures
1990-2 Series Convertible 1990-2 Series Convertible
Preferred Stock Subordinated Debentures
1991-1 Series Convertible 1991-1 Series Convertible
Preferred Stock Subordinated Debentures
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
1991-2 Series Convertible 1991-2 Series Convertible
Preferred Stock Subordinated Debentures
1992-1 Series Convertible 1992-1 Series Convertible
Preferred Stock Subordinated Debentures
</TABLE>
The above series of preferred stock of the corporation shall be
available for issuance solely upon conversion of applicable series of
convertible subordinated debentures, which, in turn, will be available for
issuance in accordance with and upon exercise of certain options, all of
which have been granted pursuant to the corporation's 1980 Long Term
Incentive Plan or 1988 Long-Term Incentive Plan, entitling the holders
thereof to purchase such series of debentures (the applicable date of
grant of the aforementioned options being referred to as the "Original
Grant Date"). Each series of convertible preferred stock shall consist of
the number of shares as follows:
<TABLE>
<CAPTION>
Series Number of Shares
------- ----------------
<S> <C>
1982-A Series Convertible 42,600
Preferred Stock
1982-B Series Convertible 195,200
Preferred Stock
1982-C Series Convertible 33,200
Preferred Stock
Series Number of Shares
------ ----------------
1982-D Series Convertible 14,500
Preferred Stock
1983-A Series Convertible 51,000
Preferred Stock
1984-A Series Convertible 136,500
Preferred Stock
1984-B Series Convertible 5,000
Preferred Stock
1985-A Series Convertible 109,700
Preferred Stock
1986-A Series Convertible 195,000
Preferred Stock
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
1987-A Series Convertible 97,000
Preferred Stock
1988-A Series Convertible 156,000
Preferred Stock
1988-1 Series Convertible 11,000
Preferred Stock
1989-A Series Convertible 103,000
Preferred Stock
1989-1 Series Convertible 45,000
Preferred Stock
1989-2 Series Convertible 11,000
Preferred Stock
1990-1 Series Convertible 138,000
Preferred Stock
1990-2 Series Convertible 11,000
Preferred Stock
1991-1 Series Convertible 155,000
Preferred Stock
1991-2 Series Convertible 11,000
Preferred Stock
Series Number of Shares
------ ----------------
1992-1 Series Convertible 11,000
Preferred Stock
</TABLE>
The rights, preferences and other terms and conditions of each series
of convertible preferred stock shall be as follows:
1. PAR VALUE. The par value for each series of convertible preferred
stock shall be $1.00 per share.
2. DIVIDENDS. The holders of record of shares of 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 shares of 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
<PAGE> 6
dividends on such shares are not declared in any prior year. The holders
of shares of series convertible preferred stock shall be entitled to no
other cash dividends in excess of the dividends at said rate.
3. REDEMPTION. Shares of each series of 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 date fixed
for redemption, and such price, plus such dividends, is herein-after
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.
In case of the redemption of only a part of any outstanding 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
each series of 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
the 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
<PAGE> 7
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 each series of 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 a series of convertible preferred stock redeemed by the
corporation shall not thereafter be disposed of as shares of such series,
but upon 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
any shares of any series of 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 series of 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 any series convertible preferred
Stock shall have received such
<PAGE> 8
amount, they shall not participate in any remaining assets and surplus
funds of the corporation.
If the amounts which the holders of any shares of a particular series of
convertible preferred stock, and any other series of preferred stock of
the corporation ranking equally thereto as to distribution of assets with
the such shares, are entitled to receive in such events are not paid, or
deposited in trust, in full, the shares of that particular series of
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
particular series of 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 series convertible
preferred stock shall have conversion rights as follows:
(a) Shares of any series of convertible preferred stock shall be
convertible, at the option of the respective holders thereof, 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
any series of convertible preferred stock is to be converted shall be
determined by multiplying one share times the "Conversion 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 any series of
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
<PAGE> 9
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 d istribution; 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 that the holders of any 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 shares of series convertible preferred stock been
converted into Common Stock on the
<PAGE> 10
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 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 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 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 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 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 each series of 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 shares of
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 each series of convertible preferred stock, and (B) the
number, type and amount, if any, of other property that at the time would
be received upon conversion of the series convertible preferred stock.
<PAGE> 11
(b) Before any holder of any shares of 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 shares of 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 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 the 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
<PAGE> 12
(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 series convertible preferred stock or any security
convertible into 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 shares of 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 shares of 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 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.
<PAGE> 13
(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 each series of convertible
preferred stock pursuant hereto. The corporation shall not, however,
be required to pay any tax which may be pay-able in respect of any
transfer involved in the issue and delivery of shares of Common Stock
in a name other than that in which the shares of 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 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 shares of 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 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 any 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.
Series X Junior Participating Preferred Stock
The following information, terms and conditions relate to the Series X
Junior Participating Stock:
Section 1. Designation and Amount. The shares of such series shall
have par value of $1.00 per share and shall be designated as "Series X Junior
Participating Preferred Stock" and the number of shares constituting such series
shall be 1,000,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series X Junior
<PAGE> 14
Participating Preferred Stock with respect to dividends, the holders of shares
of Series X Junior Participating Preferred Stock shall be entitled to receive,
when, as an if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash (1) on the
nineteenth business day after the first working day of the last month in each
quarter (based on a calendar year), except in the quarter in which the annual
meeting is held, in which case on the (2) nineteenth business day after the
last day of the quarter, in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date") after the first issuance of a share or
fraction of a share of Series X Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$6.00 or (b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value $1.00 per share, of the
Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series X
Junior Participating Preferred Stock. In the event the Corporation shall at any
time after May 12, 1986 (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series X Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series X Junior Participating Preferred Stock as provided in paragraph
(A) above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $6.00 per share on the Series X Junior Participating Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series X Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series X Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
<PAGE> 15
determination of holders of shares of Series X Junior Participating Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of
Series X Junior Participating Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall
be allocated prorata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series X Junior Participating Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series X
Junior Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series X Junior Participating Preferred
Stock shall entitle the holder thereof to one (1) vote on all matters submitted
to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series X Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series X Junior
Participating Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly dividend period on all
shares of Series X Junior Participating Preferred Stock then outstanding shall
have been declared and paid or set apart for payment. During each default
period, all holders of Preferred Stock (including holders of the Series X
Junior Participating Preferred Stock) with dividends in arrears in an amount
equal to six (6) quarterly dividends thereon, voting as a class, irrespective
of series, shall have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the
holders of Series X Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that neither such voting right nor the right
of the holders of any other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of Directors shall be exercised unless the
holders of ten percent (10%) in number of shares of Preferred Stock outstanding
shall be present in person or by proxy. The absence of a quorum of the holders
of Common Stock shall not affect the exercise by the holders of Preferred Stock
of such voting right. At any meeting at which the holders of Preferred Stock
shall exercise such voting right initially during an existing default period,
they shall have the
<PAGE> 16
right, voting as a class, to elect Directors to fill such vacancies, if any, in
the Board of Directors as may then exist up to two (2) Directors or, if such
right is exercised at an annual meeting, to elect two (2) Directors. If the
number which may be so elected at any special meeting does not amount to the
required number, the holders of the Preferred Stock shall have the right to
make such increase in the number of Directors as shall be necessary to permit
the election by them of the required number. After the holders of the Preferred
Stock shall have exercised their right to elect Directors in any default period
and during the continuance of such period, the number of Directors shall not be
increased or decreased except by vote of the holders of Preferred Stock as
herein provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series X Junior Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during
an existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or stockholders
owning in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding, irrespective of series, may request, the
calling of special meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice-President or the Secretary of
the Corporation. Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant to this paragraph (C)
(iii) shall be given to each holder of record of Preferred Stock by mailing a
copy of such notice to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time not earlier than 20
days and not later than 60 days after such order or request or in default of the
calling of such meeting within 60 days after such order or request, such meeting
may be called on similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Common Stock,
and other classes of stock of the Corporation if applicable, shall continue to
be entitled to elect the whole number of Directors until the holders of
Preferred Stock shall have exercised their right to elect two (2) Directors
voting as a class, after the exercise of which right (x) the Directors so
elected by the holders of Preferred Stock shall continue in office until their
successors shall have been elected by such holders or until the expiration of
the default period, and (y) any vacancy in the Board of Directors may (except
as provided in paragraph (C)(ii) of this Section 3) be filled by the holders of
the class of stock which elected the Director whose office shall become vacant.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of Preferred
Stock as a class shall terminate, and (z) the number of Directors shall be such
number as may be provided for in the certificate of incorporation or by-laws
irrespective of any increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being
<PAGE> 17
subject, however, to change thereafter in any manner provided by law of in the
certificate of incorporation or by-laws).
(D) Except as set forth herein, holders of Series X Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporation
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series X Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series X Junior Participating Preferred Stock outstanding shall have been paid
in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series X Junior Participating Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series X
Junior Participating Preferred Stock, except dividends paid ratably on the
Series X Junior Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series X Junior
Participating Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (either as
to dividends or upon dissolution, liquidation or winding up) to the Series X
Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any
shares of Series X Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series X Junior Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by publication
(as determined by the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation
<PAGE> 18
unless the Corporation could, under paragraph (A) of this Section 3, purchase
or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series X Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by resolution to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series X Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series X Junior Participating Preferred Stock
shall have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series X Liquidation Preference"). Following the payment of
the full amount of the Series X Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series X Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series X Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in subparagraph
C below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause
(ii), the "Adjustment Number"). Following the payment of the full amount of the
Series X Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series X Junior Participating Preferred Stock and Common
Stock, respectively, holders of Series X Junior Participating Preferred Stock
and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series X Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Series X Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series X Junior Participating Preferred
Stock shall be adjusted by
<PAGE> 19
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series X Junior
Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series X Junior Participating
Preferred Stock shall rank junior to all other series of the Corporation's
Preferred Stock, as to the payment of dividends and the distribution of assets,
unless the terms of any such series shall provide otherwise.
Section 10. Amendment. The Amended Articles of Incorporation
of the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series X Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority of the outstanding
shares of Series X Junior Participating Preferred Stock, voting separately as a
class.
Section 11. Fractional Shares. Series X Junior Participating
Preferred Stock, may be issued in fractions of a share which shall entitle the
holder, in proportion to such holders fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series X Junior Participating Preferred
Stock.
The following resolutions were adopted by the Board of
Directors at its meeting on May 12, 1986 regarding the Series X Junior
Participating Preferred Stock:
The form, terms and provisions of the Rights Agreement,
substantially as presented to this meeting with such modifications therein as
shall be approved by the Chairman of the Board, the President, any Vice
President or any other appropriate officer of the Company with the concurrence
of counsel be, and they hereby are, approved and adopted in all respects.
The Chairman of the Board, the President, or any Vice
President of this Company be, and each of them hereby is, authorized in the
name and on behalf of this Company to execute the Rights Agreement under the
corporate seal of the Company, attested by its Secretary or an Assistant
Secretary, with such modifications as the officer or officers executing the
same shall approve with the concurrence of counsel, such approval to be
conclusively evidenced by the execution and delivery of the same to the Rights
Agent thereunder.
Rights and certificates evidencing the Rights which shall be
substantially in the form set forth in the Rights Agreement with such
modifications therein as shall be approved by the Chairman of the Board, the
President, any Vice President or any other appropriate officer of the Company
with the concurrence of counsel (the "Rights Certificates") shall be issued and
delivered to the holders of Common Stock as contemplated by the terms of the
Rights Agreement.
<PAGE> 20
The Rights Certificates and the certificates evidencing Units
or shares of Series X Junior Participating Stock (the "Preferred Stock
Certificates") shall be signed by the Chairman of the Board, the President, or
any Vice President and the Secretary or an Assistant Secretary of this Company
under its corporate seal (which may be in the form of a facsimile of the seal
of the Company); provided that each such signature of the Chairman of the
Board, the President, a Vice President, the Secretary or an Assistant Secretary
may, but need not, be a facsimile signature imprinted or otherwise reproduced
on the Rights Certificates or the Preferred Stock Certificates, and that this
Company adopts for such purpose the facsimile signature of the present or any
future Chairman of the Board, President, Vice President, Secretary and
Assistant Secretary of this Company, notwithstanding the fact that at the time
the Rights Certificates of the Preferred Stock Certificates shall be
authenticated and delivered or disposed of such person shall have ceased to be
such officer.
The officers of this Company be, and they hereby are,
authorized to execute on behalf of the Company and under its corporate seal
(which may be in the form of a facsimile of the seal of the Company) new or
duplicate Rights Certificates and Preferred Stock Certificates issued to
replace lost, stolen, mutilated or destroyed Rights Certificates and Preferred
Stock Certificates, such Rights Certificates as may be required for exchange,
substitution or transfer as provided in the Rights Agreement in the manner and
form to be required in, or contemplated by, the Rights Agreement, and such
Preferred Stock Certificates as may be required for exchange, substitution or
transfer.
The Rights Certificates shall be manually countersigned by
the Rights Agent, and books for the registration and transfer of the Rights
Certificates shall be maintained in Jackson, Mississippi or Houston, Texas by
the Rights Agent.
The transfer agent and registrar of the shares of Series X
Junior Participating Preferred Stock of the Company, acting from time to time,
is hereby authorized and directed to issue, countersign and register
certificates for up to an aggregate of the full number of shares of Series X
Junior Participating Preferred Stock (in Units or otherwise) issuable upon
exercise of the Rights, upon requisition thereof by the Rights Agent, acting
from time to time, with further authority from the Company.
1,000,000 shares of Series X Junior Participating Preferred
Stock be, and they hereby are, initially reserved for issuance upon exercise of
the Rights, such number to be subject to adjustment from time to time in
accordance with the Rights Agreement.
Fractional shares of Series X Junior Participating Preferred
Stock (other than fractions which are integral multiples of one one-hundredth
of a share) may not be issued upon exercise of the Rights; and in lieu thereof
cash shall be paid in accordance with the Rights Agreement.
When the Company (i) receives for the issuance of a share of
Series X Junior Participating Preferred Stock (or Unit) pursuant to the Rights
Agreement the
<PAGE> 21
consideration for which such share (or Unit) is to be issued pursuant to the
Rights Agreement, and (ii) issues a share of Series X Junior Participating
Preferred Stock (or Unit) as provided in the Rights, such share (or Unit) will
be fully paid and nonassessable and the issuance of such share shall not be
subject to any preemptive or similar rights.
The officers of the Company be, and they hereby are,
authorized and directed to effect such changes to the accounts of the Company
as are appropriate in connection with the distribution and/or exercise of the
Rights.
First City National Bank of Houston (or such other entity
selected by the Chairman of the Board, the President or any Executive Vice
President of the Company) is hereby appointed Rights Agent under the Rights
Agreement for the Rights and is hereby appointed as Transfer Agent and
Registrar with respect to Series X Junior Participating Preferred Stock
issuable upon an exercise of the Rights, and that upon presentation to it of
Rights Certificates for exercise in accordance with the Rights Agreement, is
authorized, as Transfer Agent and Registrar for the Series X Junior
Participating Preferred Stock to issue originally, countersign, register and to
deliver the shares of Series X Junior Participating Preferred Stock (or Units)
issuable upon such exercise.
The Preferred Stock Certificates shall be countersigned by
the Transfer Agent either manually or by facsimile signatures and books for the
registration and transfer of the Preferred Stock Certificates shall be
maintained in Jackson, Mississippi and Houston, Texas by the Transfer Agent.
The officers of the Company be, and they hereby are,
authorized and directed in its name and on its behalf to file a registration
statement on Form 8-A (the "Form 8-A") in respect of the Rights under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and said
officers are authorized and empowered to file such amendments or supplements to
the Form 8-A as they in their discretion deem necessary or desirable in order
to effect the resignation of the Rights.
The Chairman of the Board, the President or any Vice
President of this Company be, and each of them hereby is, authorized and
directed, for and in the name and on behalf of this Company, to execute
personally or by attorney-in-fact and to cause to be filed with the Securities
and Exchange Commission a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), for the registration of the Rights (if
required by law) or the shares of Series X Junior Participating Preferred Stock
(or Units or, under certain circumstances provided for in the Rights Agreement,
other securities of the Company) issuable upon exercise of the Rights at such
time as they deem such registration to be necessary and appropriate, and
thereafter to execute personally or by attorney-in-fact and to cause to be
filed any amended registration statement or registration statements and amended
prospectus or prospectuses, or amendments or supplements to any of the
foregoing, and to cause said registration statement and any amendments thereto
to become effective in accordance with the Securities Act and the General Rules
and Regulations of the Securities and Exchange Commission thereunder.
<PAGE> 22
The General Counsel of this Company, is hereby appointed as
agent for service of this Company with respect to said registration
statement(s) with all the powers and functions specified in the General Rules
and Regulations of the Securities and Exchange Commission under the Securities
Act.
The officers of this Company be, and they hereby are,
authorized, jointly and severally, in the name and on behalf of this Company,
to take all such actions (including, without limitation, the preparation and
filing of one or more registration statements, or of amendments to existing
registration statements, relating to Common Stock to be issued pursuant to the
exercise of employee stock options or otherwise) and to execute all such
documents as they may deem necessary or appropriate in connection with the
issuance of the Rights and the shares of Series X Junior Participating
Preferred Stock (or Units or, under certain circumstances provided for in the
Rights Agreement, other securities of the Company) issuable upon exercise of
the Rights for compliance with the Securities Act and the Exchange Act.
The officers of this Company be, and they hereby are,
authorized, jointly and severally, in the name and on behalf of this Company,
to execute and file such application or applications, and amendments and
supplements thereto, pay any and all applicable listing fees, and take such
other action as may be necessary to list the Rights and, if deemed appropriate,
shares of Series X Junior Participating Preferred Stock (or Units) issuable
upon exercise of the Rights on the New York, Philadelphia, Midwest and Pacific
Stock Exchanges and on any other stock exchanges deemed appropriate by the
proper officers of this Company; and that the Chairman of the Board, the
President or any Vice President of this Company, or such other person as any of
them shall designate in writing, be and each hereby is, authorized to appear
before the Securities and Exchange Commission and the New York, Philadelphia,
Midwest and Pacific Stock Exchanges and any such other stock exchanges, and to
execute such papers and agreements as may be necessary to conform with the
requirements of the Securities and Exchange Commission and the New York,
Philadelphia, Midwest and Pacific Stock Exchanges and on any other stock
exchanges deemed appropriate by the proper officers of this Company; and that
the Chairman of the Board, the President or any Vice President of this Company,
or such other person as any of them shall designate in writing, be and each
hereby is, authorized to appear before the Securities and Exchange Commission
and the New York, Philadelphia, Midwest and Pacific Stock Exchanges and any
such other stock exchanges.
As long as the Rights are attached to the Common Stock as
provided in the Rights Agreement, one additional Right (as such number may be
adjusted pursuant to the provisions of the Rights Agreement) shall be deemed to
be delivered with each share of Common Stock issued or transferred by the
Company in the future, including but not limited to shares of Common Stock
issuable upon conversion of any series of convertible preferred stock or debt
instruments of this Company and shares of Common Stock issuable upon exercise
of options to purchase Common Stock granted by this Company.
The form of Indemnity Agreement required by the New York
Stock Exchange or
<PAGE> 23
any other stock exchange, indemnifying the New York Stock Exchange or any other
stock exchange and others against loss resulting from reliance on the facsimile
signatures of the officers of this Company on the Rights of shares of Series B
Junior Participating Preferred Stock (or Units) issuable upon exercise thereof
is hereby approved, and that the Chairman of the Board, the President or Vice
President of this Company be, and each hereby is, authorized to execute and
deliver such Indemnity Agreement.
It is desirable and in the best interests of this Company
that its securities be qualified or registered for sale in various
jurisdictions; that the Chairman of the Board, the President or any Vice
President and the Secretary or an Assistant Secretary of this Company be and
they hereby are, authorized to determine the jurisdictions in which appropriate
action shall be taken to qualify or register for sale all or such part of the
securities of this Company as said officers may deem advisable; that said
officers are hereby authorized to perform on behalf of this Company and all
such acts as they may deem necessary or advisable in order to comply with the
applicable laws of any such jurisdictions, and in connection therewith to
execute and file all requisite papers and documents, including, but not limited
to, applications, reports, surety bonds, irrevocable consents and appointments
of attorneys for service of process; and the execution by such officers of any
such paper of document or the doing by them of any act in connection with the
foregoing matters shall conclusively establish their authority therefor from
this Company and the approval and ratification by this Company of the papers
and documents so executed and the action so taken.
This Board of Directors hereby adopts the form of any
resolution required by any authority to be filed in connection with any
applications, consents to service, issuer's covenants or other documents if (1)
in the opinion of the officers of this Company executing the same, the adoption
of such resolutions is necessary or desirable, and (2) the Secretary or an
Assistant Secretary of this Company evidences such adoption by inserting in the
minutes of this meeting copies of such resolutions, which will thereupon be
deemed to be adopted by this Board of Directors with the same force and effect
as if presented at this meeting.
The officers of this Company be, and they hereby are,
authorized and directed, jointly and severally, for and in the name and on
behalf of this Company, to execute and deliver any and all certificates,
agreements and other documents, take any and all steps and do any and all
things which they may deem necessary or advisable in order to effectuate the
purposes of each and all of the foregoing resolutions.
Any actions taken by such officers on or prior to the date of
the foregoing resolutions adopted at this meeting that are within the authority
conferred hereby are hereby ratified, confirmed and approved as the act and
deed of this Company.
ARTICLE V.
The period of existence of the corporation shall be and is
ninety-nine (99) years.
<PAGE> 24
ARTICLE VI.
The purposes for which the corporation is created:
To purchase, subscribe for, or otherwise acquire and own,
hold, use, sell, assign, transfer, mortgage, pledge, exchange, or otherwise
dispose of real and personal property of every kind and description, including
shares of stock, bonds, debentures, notes, evidences of indebtedness and other
securities, contracts, or obligations of any corporation or corporations,
association or associations, domestic or foreign, and to pay therefor in whole
or in part in cash or by exchanging therefor stocks, bonds or other evidences
of indebtedness or securities of this or any other corporation, and while the
owner or holder of any such real or personal property, stocks, bonds,
debentures, notes, evidences of indebtedness or other securities, contracts or
obligations, to receive, collect and dispose of the interest, dividends and
income arising from such property, and to possess or exercise in respect
thereof, all the rights, powers and privileges of ownership, including all
voting powers on any stock so owned.
To manufacture, buy, sell, deal in and distribute chemicals,
including but not limited to sulphuric acid, phosphoric acid, phosphate rock,
phosphate deposits, potash, mixed fertilizer, anhydrous ammonia, nitric acid,
ammonium nitrate, chemical compounds of any kind and chemicals of every sort
and description, and in the ingredients thereof, and in all goods, wares, and
merchandise used in connection therewith, and in all by-products thereof.
To do any acts designed to protect, preserve, improve, or
enhance the value of any property at any time held or controlled by this
corporation or in which it at that time may be interested.
To purchase, acquire, lease, own and enjoy any and all such
other property, real and personal, as may be reasonably necessary for the
carrying on of the business of the corporation.
To develop and turn to account any land acquired or in which
the corporation is interested, and in particular by laying out and preparing
the same for building purposes, construction, altering, repairing, pulling
down, decorating, maintaining, furnishing, fitting up and improving buildings
and planting, paving, draining, letting on building leases or building
agreements, and by advancing money to and entering into contracts and
arrangements of all kinds with builders, tenants and others.
To acquire, own, use, develop, sell, exploit, and deal in
processes, inventions, patents, copyrights, trademarks, apparatus and machinery
of any and every kind.
To construct, erect, acquire, own, use, operate, lease, hire,
sell or dispose of plants, equipment, machinery, apparatus, and appliances of
any and every kind.
To contract or otherwise deal with or in any manner assist or
cooperate with any firm, corporation, or individual for the production,
development, disposition, marketing and utilization of by-products of any kind
or nature.
To engage in the business of distributing, transporting,
handling, storing and disposing of any type or kind of products by any means or
systems whatever.
To purchase, hold and reissue from time to time as it may see
fit, any shares of its own stock, using for such purpose any funds of the
corporation available
<PAGE> 25
therefor, including any part of its surplus (subject to the provisions of
Section 5328, Mississippi Code of 1942, as amended); but while the corporation
holds the same, it shall not be entitled to vote such stock or to receive any
dividends thereon.
To borrow or raise money, from time to time, and without
limit, and upon any terms, for any of the corporate purposes of the
corporation; to authorize the issue of bonds, notes, debentures, and other
obligations or evidences of indebtedness of the corporation for moneys so
borrowed; and to secure the payment of the same and of the interest thereon by
mortgage upon, or pledge, conveyance, or assignment in trust of, the whole or
any part of the property of the corporation, real, personal or in action, or
every description whatsoever, whether at the time owned or thereafter acquired.
To make loans to other corporations, associations, firms and
persons, when, in the opinion of the board of directors, such action would tend
to promote the business of this corporation.
To use its name and credit for the benefit of other
corporations, firms, associations, partnerships, trusts, companies or
individuals, in any way which may seem to the board of directors to be proper
or necessary in connection with the business of the corporation.
The rights and powers that may be exercised by this
corporation, in addition to the foregoing, are those conferred by Chapter 4,
Title 21, Code of Mississippi of 1942, and amendments thereto.
ARTICLE VII.
The number of shares of common capital stock to be subscribed
and paid for before the corporation begins business shall be one thousand
(1,000) shares of common stock of the par value of one thousand dollars
($1,000.00).
ARTICLE VIII.
The Board of Directors shall be divided into three groups
which shall be as nearly equal as may be possible. At each annual stockholders
meeting the successors of the group of directors whose terms expire in that
year shall be elected to hold office for a term of three years, so that the
term of office of one group of directors shall expire each year; provided,
however, that the term of office of the directors of each group shall continue
until the election and qualification of the successors to the directors of such
group. After the division of directors into groups, any additional directors
who may be elected as provided in the By-Laws shall be assigned to the various
groups so as to maintain the number in each group as nearly equal as possible.
ARTICLE IX
(A) Notwithstanding this provision of the Articles of
Incorporation, except as set forth in paragraph (B) of this Article, the
affirmative vote or consent of the holders of not less than four-fifths of the
outstanding shares of stock of this corporation (the "Corporation") entitled to
vote in elections of directors shall be required:
(1) to adopt any agreement for, or to approve, the
merger or consolidation of the Corporation or any
subsidiary (as hereinafter defined) with or into any
other person (as hereinafter defined),
<PAGE> 26
(2) to authorize any sale, transfer or exchange to any
other person of all or substantially all of the
assets of the Corporation or any subsidiary, or,
(3) to authorize the issuance or transfer by the
Corporation or any subsidiary of any voting
securities of the Corporation or any subsidiary in
exchange or payment for the securities or assets of
any other person, if such authorization is otherwise
required by law or by agreement between the
Corporation and any national securities exchange or
by any other agreement to which the Corporation or
any subsidiary is a party.
(B) The provisions of paragraph (A) of this Article shall not
apply, and the provisions of Mississippi law shall apply, to (1) any
transaction described therein if the Board of Directors by resolution shall
have approved by two-thirds vote of all directors a memorandum of understanding
with such other person setting forth the principal terms of such transaction
and such transaction is substantially consistent therewith; or (2) any
transaction described therein if such other person is a corporation of which a
majority of the outstanding shares of all classes of stock entitled to vote in
elections of directors is owned of record or beneficially by the Corporation or
its subsidiaries.
(C) The affirmative vote or consent of the holders of not
less than four-fifths of the outstanding shares of stock of the Corporation
entitled to vote in elections of directors shall be required for the adoption
of any plan for the dissolution of the Corporation if the Board of Directors
shall not have, by resolution adopted by two-thirds vote of all directors,
recommended to the stockholders the adoption of such plan for dissolution of
the Corporation. If the Board of Directors shall have so recommended to the
stockholders such plan for dissolution of the Corporation, the provisions of
Mississippi law shall apply.
(D) For the purposes of this Article,
(1) a "subsidiary" is any corporation more than 49
percent of the voting securities of which are owned,
directly or indirectly by the Corporation;
(2) a "person" is any individual, corporation, or other
entity.
(E) The Board of Directors shall have the power and duty to
determine, for purposes of this Article, on the basis of information known to
such Board, whether a proposed transaction is substantially consistent with any
memorandum of understanding of the character referred to in paragraph (B) of
this Article.
Any such determination shall be conclusive and binding for
all purposes of this Article.
ARTICLE X
Notwithstanding this provision of the Articles of
Incorporation and any provisions of the By-Laws of the Corporation, no
amendment to the Articles of Incorporation shall amend, modify, or repeal any
or all of the provisions of Article VIII, Article IX, or this Article X of the
Articles of Incorporation, unless so adopted by the affirmative vote or consent
of the holders of not less than four-fifths of the outstanding
<PAGE> 27
shares of stock of the Corporation entitled to vote in elections of directors;
provided, however, that in the event the Board of Directors of the Corporation
shall by resolution adopted by two-thirds of all directors recommend to the
stockholders the adoption of any such amendment, the stockholders of record
holding two-thirds of the outstanding shares of stock of the Corporation,
entitled to vote in elections of directors may amend, modify, or repeal Article
VIII, Article IX, and Article X.
WITNESS THE SIGNATURES of the Incorporators, this the 19th
day of March, 1957.
Owen Cooper John C. Satterfield
- -------------------------------- ------------------------------
George W. Godwin William B. Dunwoody
- -------------------------------- ------------------------------
LeRoy P. Percy Robert M. Hearin
- -------------------------------- ------------------------------
Charles S. Whittington E. W. Haining
- -------------------------------- ------------------------------
Luther W. Wade N. S. Rogers
- -------------------------------- ------------------------------
M. T. Reed Edmund L. Brunini
- -------------------------------- ------------------------------
George D. Perry William H. Mounger
- -------------------------------- ------------------------------
Robert D. Morrow L. G. Milam, Jr.
- -------------------------------- ------------------------------
Fred A. Anderson, Jr.
- -------------------------------- ------------------------------
J. R. Smithson
- -------------------------------- ------------------------------
S. Hudson Kyle
- -------------------------------- ------------------------------
F. E. Allen
- -------------------------------- ------------------------------
Dwain G. Luce
- -------------------------------- ------------------------------
<PAGE> 28
STATE OF MISSISSIPPI
COUNTY OF HINDS
This day personally appeared before me, the undersigned
authority in and for said county and state, Owen Cooper, George W. Godwin,
LeRoy P. Percy, Charles S. Whittington, Luther W. Wade, M. T. Reed, George D.
Perry, Robert D. Morrow, Fred A. Anderson, Jr., J. R. Smithson, S. Hudson Kyle,
F. E. Allen, Dwain G. Luce, John C. Satterfield, William B. Dunwoody, Robert M.
Hearin, E. W. Haining, N. S. Rogers, Edmund L. Brunini, Wm. H. Mounger and L.
G. Milam, Jr., incorporators or the corporation known as FIRST MISSISSIPPI
CORPORATION, who acknowledged that they signed and executed the above and
foregoing Articles of Incorporation as their act and deed on this the 19th day
of March, 1957.
Frank T. Williams
---------------------------------------------
NOTARY PUBLIC
The foregoing restatement of the Charter of Incorporation of First
Mississippi Corporation was authorized by the Board of Directors of First
Mississippi Corporation on February 9, 1993. This restatement does not include
any amendments to the Charter of Incorporation.
WITNESS MY SIGNATURE, this the ____ day of September, 1993.
---------------------------------------------
R. Michael Summerford
Vice-President, First Mississippi Corporation
<PAGE> 29
First Mississippi Corporation
1994-1 Series Convertible Preferred Stock
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
<PAGE> 30
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 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 11,000 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.
<PAGE> 31
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.
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.
<PAGE> 32
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 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.
<PAGE> 33
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
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
<PAGE> 34
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 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
<PAGE> 35
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 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
<PAGE> 36
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
(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
<PAGE> 37
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 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
<PAGE> 38
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 lawor 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.
<PAGE> 39
Article IV, Paragraph 5 describing the rights, preferences and other terms and
conditions of the convertible preferred stock is amended to read in its
entirety as follows:
5. CONVERSION RIGHTS. The holders of shares of series convertible
preferred stock shall have conversion rights as follows:
(a) Shares of any series of convertible preferred stock shall be
convertible, at the option of the respective holders thereof, 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 any series of convertible preferred stock is to be converted
shall be determined by multiplying one share times the
"Conversion 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 any series of
convertible preferred stock shall be convertible into one share
of Common Stock.
(ii) In the event of a reclassification, recapitalization,
merger, consolidation, reorganization, issuance of warrants,
rights or debentures, stock dividend, stock split or reverse
stock split, cash dividend, property dividend, including,
without limitation, a distribution of the stock of a subsidiary,
combination or exchange of shares, repurchase of shares, or any
other change in corporate structure which in the judgment of the
Board of Directors materially affects the value of the Common
Stock subsequent to the Original Grant Date, the Board of
Directors shall determine the appropriate adjustments, if any,
to the number of shares of Common Stock issuable upon conversion
of convertible preferred stock under the preceding subsection.
(b) Before any holder of any shares of 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
<PAGE> 40
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 shares of 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 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 the
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
(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 series convertible preferred stock or any security
convertible into series convertible preferred stock at their
<PAGE> 41
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 shares of 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 shares of
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 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 each series of
convertible preferred stock pursuant hereto. The corporation
shall not, however, be required to pay any tax which may be
pay-able in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in
which the
<PAGE> 42
shares of 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 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 shares of 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 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.
<PAGE> 1
EXHIBIT 3(b)
BYLAWS
OF
FIRST MISSISSIPPI CORPORATION
(With all Amendments through August 27, 1996)
ARTICLE I.
NAME AND OFFICES
1.1 The name of this corporation shall be FIRST MISSISSIPPI CORPORATION.
1.2 The principal or home office shall be in the City of Jackson, County
of Hinds, State of Mississippi.
1.3 The corporation may also have offices at such other places as the
board of directors may from time to time appoint or as the business of the
corporation may require.
ARTICLE II.
STOCKHOLDERS' MEETINGS
2.1 The place of all meetings of the stockholders shall be the principal
office of the corporation in the City of Jackson, County of Hinds, State of
Mississippi, or such other place within or without the State of Mississippi as
shall be determined from time to time by the board of directors, and the place
at which such meeting shall be held shall be stated in the call and notice of
the meeting.
2.2 The annual meeting of the stockholders of the corporation for the
election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting
shall be held each year upon such date as may be determined by the board of
directors. If the annual meeting of the stockholders is not held as herein
prescribed, or the election of directors shall not be had at such meeting or an
adjournment thereof, the election of directors may be held at any meeting
thereafter called pursuant to these bylaws.
2.3 The voting at all meetings of the stockholders may be viva voce, but
twenty five percent (25%) of the stockholders present in person and by proxy
may demand a
<PAGE> 2
stock vote whereupon such stock vote shall be taken. Persons voting proxies
certified to by the secretary or assistant secretary of the corporation may
vote the proxies as a whole. Persons voting proxies not certified by the
secretary or assistant secretary shall state the name for whom the proxy is
held and the number of shares voted by proxy.
2.4 Every stockholder shall have the right to vote in person or by proxy
the number of shares of stock owned by him for as many persons as there are
directors to be elected or to cumulate said shares so as to give one candidate
as many votes as the number of directors to be elected multiplied by the number
of his shares of stock shall equal or distribute them on the same principle
among as many candidates as he shall see fit. The persons receiving the most
votes from among the candidates shall be elected.
2.5 At any meeting of the stockholders, every stockholder having the
right to vote shall be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such stockholder and bearing a date not
more than eleven months prior to said meeting, unless said instrument provides
for a longer period. Each stockholder shall have one vote for each share of
stock having voting power, registered in his name on the books of the
corporation, and except where the transfer books of the corporation shall have
been closed or a date has been fixed as a record date for the determination of
its stockholders entitled to vote, no share of stock shall be voted at the
annual meeting of the stockholders which shall have been transferred on the
books of the corporation within twenty days next preceding such meeting. If
more than one proxy shall be presented from the same stockholder, the last one
executed shall govern. The date shown thereon shall be prima facie correct;
but if any is found by the board of directors or by the inspectors of election
or by a committee appointed by the board of directors to have been postdated,
the same shall be void. In case of any conflict the action of the board of
directors thereon shall govern.
2.6 A complete list of the stockholders entitled to vote at any
stockholders meeting, arranged in alphabetical order, and the number of voting
shares held by each, shall be prepared by the secretary, who shall have charge
of the stock ledger, and filed in the principal office of the corporation or in
the office where the meeting is to be held, beginning no later than two (2)
days after the notice of such meeting is given, and shall, during the usual
hours for business, and during the whole time of said meeting or any
adjournment thereof, be open to the examination of any stockholder, his agent
or attorney.
2.7 Special meetings of the stockholders may be called by the chairman of
the board of directors or by the chief executive officer, or by majority of the
board of directors and shall be called at any time by the chairman of the board
of directors, or the chief executive officer, or the president/chief operating
officer, or any vice president, or the secretary or the chief financial
officer, upon the written request of stockholders owning one-tenth (1/10) of
the outstanding stock of the corporation entitled to vote at such meeting. The
purpose or purposes for which a special meeting is called shall be stated in
the written or printed notice of the meeting.
2.8 Notice of the time and place of the annual meeting of stockholders
shall be given by mailing written or printed notice of the same at least ten
(10) days, and not more than
<PAGE> 3
sixty (60) days, prior to the meeting, and notice of the time and place of
special meetings shall be given by written or printed notice of the same at
least ten (10) days and not more than sixty (60) days prior to the meeting,
with postage prepaid, to each stockholder of record of the corporation entitled
to vote at such meeting, and addressed to the address appearing on the stock
transfer books of the corporation. The board of directors may fix in advance a
date, not exceeding seventy (70) days preceding the date of any meeting of
stockholders, as a record date for the determination of the stockholders
entitled to notice of and to vote at any such meeting. No notice need be given
of any adjourned meeting of the stockholders except as required by law.
2.9 A quorum at any annual or special meeting of stockholders shall
consist of stockholders representing, either in person or by proxy, a majority
of the outstanding capital stock of the corporation entitled to vote at such
meeting.
2.10 At each meeting of stockholders the board of directors or the
presiding officer shall have the right, at their sole option, to appoint one or
more inspectors of election. The inspectors shall receive all proxies and
ballots, determine all challenges and questions arising in connection with the
right to vote, and count and tabulate all votes, ballots or consents and
determine the result. If for any reason the board of directors or the
presiding officer fails to appoint at least one inspector, then in that event
the secretary of the corporation or any other corporate official designated by
the presiding officer shall be empowered with all of the responsibilities and
authority of the inspectors of election.
2.11 At the annual meeting of stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be specified in the
notice of meeting given by or at the direction of the board of directors,
otherwise properly brought before the meeting by or at the direction of the
board of directors or otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before the annual meeting by
a stockholder, including the nomination of a director, the stockholder must
have given timely notice thereof in writing to the secretary of the
corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the corporation not
more than five (5) business days after the giving of the notice of the date and
place of the meeting to the stockholders as required in Section 2.8 of these
bylaws. A stockholder's notice to the secretary shall inform as to each
matter the stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of the stockholder proposing such business, (iii) the class
and numbers of shares of the corporation which are beneficially owned by the
stockholder and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in the bylaws to the contrary, no business shall be
conducted at the annual meeting except in accordance with the procedures set
forth in this Section 2.11. The presiding officer of the annual meeting
shall, if the facts warrant, determine and declare at the meeting that business
was not properly brought before the meeting in accordance with the provisions
of this Section 2.11, and if he should so determine, he shall so declare to the
meeting, and any such business not properly before the meeting shall not be
transacted.
<PAGE> 4
ARTICLE III.
BOARD OF DIRECTORS
3.1 The management of the affairs, property, and business of the
corporation shall be vested in a board of directors, who shall be chosen as
hereinafter set forth and who shall hold office until their successors are
elected and qualify or until their earlier death, resignation or removal.
Directors shall be stockholders and a transfer by a director of all of his
stock in the corporation shall operate as a resignation of his office. In
addition to the powers and authorities by these bylaws and the charter of
incorporation expressly conferred upon it, the board of directors may exercise
all such powers of the corporation and do all such lawful acts and things as
are not by law or by the charter or by these bylaws required to be exercised or
done by the stockholders.
The board of directors will adopt corporate governance guidelines to set
forth policies and procedures to organize themselves and oversee operations of
the corporation. These guidelines shall be adopted, as well as amended or
modified, only by the affirmative vote of not less than two-thirds (2/3) of all
directors, except that the affirmative vote of not less than four-fifths (4/5)
of all directors shall be required to amend, modify, add to or delete from any
guideline which directly relates to a matter which, under these bylaws, would
require not less than a four-fifths (4/5) vote of the directors to amend,
modify, add to or delete therefrom.
3.2 The board of directors shall consist of twelve (12) persons;
provided, however, that beginning November 25, 1996, the board of directors
shall consist of thirteen persons, five (5) of whom shall be assigned to the
group of directors whose term of office expires in 1998, until such time as any
one of such group shall cease to be a member of the board of directors.
Thereafter, the board of directors shall consist of twelve (12) persons.
Directors who change employment or retire or become disabled will offer written
resignation as a result of such event to the Committee on Director Affairs (or
successor committee) which will make a recommendation with respect to continued
service to the board of directors for action. Each existing director on
August 22, 1995 who had completed less than nine (9) consecutive years of
service on the board of directors on that date will offer a written resignation
upon the completion of nine (9) consecutive years of service if under age 65 at
that time. In addition, all directors who were under age 65 on August 22, 1995
will offer a written resignation upon reaching age 65. Future directors will
offer resignations upon completion of nine (9) consecutive years of service
prior to age 65 and again upon reaching age 65. In each case, the Committee on
Director Affairs (or successor committee) will make a recommendation with
respect to continued service to the board of directors for action. Directors
will retire at age 70.
3.3 The first board of directors shall consist of three groups, the terms
of office thereof expiring as follows: The first group at the annual
stockholders' meeting in 1958; the second group at such meeting in 1959 and the
third group at such meeting in 1960. Thereafter, the directors of the
corporation shall be divided into three groups which shall be as nearly equal
as may be possible. At each annual stockholders' meeting held thereafter, the
successors of the group of directors whose terms expire in that year shall be
elected to hold office
<PAGE> 5
for a full term of three years (subject to retirement and resignation as
required by Section 3.2), so that the term of office of one group of directors
shall expire each year; provided, however, that the term of office of the
directors of each group shall continue until the election and qualification of
the successors to the directors of such group. After the division of directors
into groups, any additional directors who may be elected as herein provided
shall be assigned to the various groups so as to maintain the number in each
group as nearly equal as possible.
3.4 The board of directors shall by resolution entered on its minutes
determine and fix the authority and duties of officers and employees with
respect to the signing on behalf of the corporation of all checks, drafts,
deeds, leases, contracts, assignments, and other instruments, documents and
papers of every kind and character whatsoever.
3.5 All vacancies in the board of directors, whether caused by
resignation, death, increase in the number of directors, or otherwise, shall be
filled by election by the board of directors. If the term of the replacement
or new director extends beyond the next meeting of stockholders, then the
balance of the term beyond that stockholders' meeting is subject to
confirmation by a vote of the stockholders. Each such director elected shall
hold office until his successor is elected and qualifies.
3.6 Regular meetings of the board of directors may be held at the
principal office of the corporation or at such other place or places, within or
without the State of Mississippi, as the board of directors may from time to
time designate, and at such meetings any and all business of the corporation
may be transacted without the necessity of stating in the call the matters to
be considered.
If, in the opinion of the chairman of the board of directors or the
chief executive officer, there exists a reason to do so, the board of directors
or any committee of the board of directors may meet by a telephone conference
hookup (or similar electronic means in which all participants can hear each
other). All business presented and discussed at said telephone meeting shall
be set forth in the minutes of said meeting, and the minutes shall be mailed to
all directors as soon as possible following said meeting.
Any director who is unable to attend a board of directors or
committee meeting in person may participate by means of telephone hookup (or
similar electronic means in which all participants can hear each other) and
such participation shall constitute his presence in person at such meeting.
3.7 Special meetings of the board of directors may be called at any time
by the chairman of the board or chief executive officer or by two-thirds (2/3)
of the number of directors specified in Section 3.2, to be held at the
principal office of the corporation or at such other place within or without
the State of Mississippi, as may be designated in such call, and at such
meetings any and all business of the corporation may be transacted without the
necessity of stating in the call the matters to be considered. The provisions
of Section 3.6 regarding telephone conference hookup and telephone attendance
at regular meetings shall also apply to special meetings.
<PAGE> 6
3.8 Notice of all meetings of the board of directors shall be given in
writing to each director by not less than two (2) days service of the same by
delivery in person, by telegraph, teletype, or other form of wire or wireless
communication, or by not less than five (5) days service of the same by letter;
provided, however, if the chairman of the board or the chief executive officer
or two-thirds (2/3) of the number of directors specified in Section 3.2
determines that circumstances require the board of directors to meet on less
than two days' notice, then a meeting may be held on lesser (but in no event
less than eight hours') notice, if each director is notified of the time and
place of such meeting by at least one of the following means: (1) orally,
whether in person or by a telephone conversation in which the director
personally participates, or (2) in a writing actually received by such
director, which is delivered to him in person, by telegraph, teletype or other
form of wire or wireless communication, or private carrier. For the purpose of
the preceding sentence, a written notice is deemed to have been "actually
received" by a director if it is delivered to his designated address as it
appears in the books of the corporation during normal business hours at least
eight hours before the time for the meeting Provided, that by unanimous
consent of the directors executed before or after any such meeting, meetings at
any time or place may be held without notice.
3.9 A quorum at all meetings of the board of directors shall consist of a
majority of the whole board. Unless otherwise provided by law, by the charter
of incorporation or by these bylaws, the act of the majority of the directors
at a meeting at which a quorum is present shall be the act of the board of
directors, except for the following: (a) the affirmative vote of not less than
two-thirds (2/3) of all directors shall be required to approve any plan of
merger, consolidation or reorganization and to recommend to the stockholders
any merger, consolidation or reorganization of the corporation into or with any
other corporation, domestic or foreign, (b) the affirmative vote of not less
than two-thirds (2/3) of all directors shall be required to modify, add to or
delete from these bylaws, and (c) the affirmative vote of not less than
four-fifths (4/5) of all directors shall be required to amend, modify or delete
Section 3.2 or Section 3.3 of these bylaws.
3.10 Standing or temporary committees will be appointed from its own
number by the board of directors from time to time, and the board of directors
may from time to time invest such committees with such powers as it may see
fit, subject to such conditions or restrictions as may be prescribed by law or
by such board.
3.11 Directors shall be paid such compensation as shall be fixed by
resolution of the board of directors. In addition, a fixed per diem plus
expenses of attendance, if any, may be allowed for attendance at each regular
or special meeting of the board of directors or for attending committee
meetings or for performing special services at the request of the chief
executive officer. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor; however, the number of active employee directors will be
limited to one.
<PAGE> 7
ARTICLE IV.
OFFICERS
4.1 The officers of the corporation shall be a chairman of the board of
directors, a chief executive officer, a president/chief operating officer, such
vice presidents as may be designated by the board of directors, a secretary, a
chief financial officer, and a general counsel, each of whom shall be elected
by the affirmative vote of two-thirds (2/3) of all directors, and who shall
hold office at the pleasure of the board of directors for a term of one year
and thereafter until their successors are elected and qualify. The board of
directors may also choose such additional officers as they may deem desirable.
The chairman of the board must be a member of the board of directors. The
board of directors may combine any two offices in one person except the offices
of president/chief operating officer and secretary. Any officer may be removed
by the affirmative vote of two-thirds (2/3) of all directors.
4.2 The chairman of the board shall preside at all meetings of the
directors and stockholders, and shall be ex-officio member of all standing
committees of the board of directors, unless precluded by conflict of interest,
including but not limited to conflicts specified in corporate governance
guidelines as adopted by the board of directors; provided, however, that if the
chairman of the board also serves as the chief executive officer, he shall not
be a member of the Compensation and Human Resources Committee. He shall
perform all such other duties as are incident to his office or properly
required of him by the board of directors, or as specified in corporate
governance guidelines as adopted by the board of directors, including
scheduling and setting agendas for board meetings, serving as primary
representative of the board with the chief executive officer, and monitoring
and evaluating the chief executive officer's performance. If the chairman is
also the chief executive officer, he will discharge the duties and
responsibilities of that position in addition to those responsibilities of the
chairman, unless precluded by conflict of interest, including but not limited
to conflicts specified in corporate governance guidelines as adopted by the
board of directors.
4.3 The chief executive officer shall be the principal officer of the
corporation and shall have general supervision of the affairs of the
corporation. He shall be primarily responsible for implementing policies of
the board of directors and conducting the business of the corporation. He
shall make reports to the board of directors and stockholders, and shall
perform all such other duties as are incident to his office or are properly
required of him by the board of directors. The chief executive officer may
also serve as the chairman of the board of directors and/or president/chief
operating officer.
4.4 The president/chief operating officer shall have certain duties and
supervise specific affairs of the corporation as properly required of him by
the board of directors from time to time. He shall exercise the functions of
the chief executive officer in the absence or disability of the chief executive
officer, unless and until the board of directors designates another person to
assume such functions.
<PAGE> 8
4.5 The vice-presidents, which may include an executive vice-president,
shall have such powers and discharge such duties as may be assigned to them
from time to time by the board of directors.
4.6 The secretary shall issue notices for all meetings, except that the
notice for special meetings of directors called at the request of the required
two-thirds (2/3) members as provided in Section 3.7 may be issued by such
directors, shall keep minutes of all meetings, shall have charge of the seal
and the corporate books, and shall make such reports and perform such other
duties as are incident to his office, or are properly required of him by the
board of directors.
4.7 The chief financial officer shall have the custody of all monies and
securities of the corporation and shall keep regular books of account. Except
as may be otherwise provided by the board of directors under Section 6.2, he
shall disburse the funds of the corporation, or as may be ordered by the board
of directors, taking proper voucher for disbursement, and shall render to the
board of directors, from time to time as may be required of him, an account of
all transactions as chief financial officer and of the financial condition of
the corporation. He shall perform all duties incident to his office or which
are properly required of him by the board of directors.
4.8 The general counsel, subject to the supervision of the board of
directors, shall be responsible for all matters of legal import.
4.9 In the case of absence or inability or failure to act of any officer
of the corporation and of any person herein authorized to act in his place, the
board of directors may from time to time delegate the powers or duties of such
officer to any other officer, or any director or other person whom it may
select in either case by the affirmative vote of two-thirds (2/3) of all
directors.
4.10 Vacancies in any office arising from any cause may be filled by the
directors at any regular or special meetings by the affirmative vote of
two-thirds (2/3) of all directors.
4.11 The board of directors may appoint such other officers and agents as
it shall deem necessary or expedient, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board of directors.
4.12 The salaries of all officers and agents of the corporation shall be
fixed by the board of directors.
4.13 The board of directors may by resolution require any or all of the
officers to give bonds to the corporation with sufficient surety or sureties,
conditioned for the faithful performance of the duties of their respective
offices, and to comply with such other conditions as may from time to time be
required by the board of directors. The premiums and other cost of such bonds
may be paid by the corporation.
<PAGE> 9
ARTICLE V.
STOCK
5.1 Certificates of capital stock shall be issued in numerical order and
each stockholder shall be entitled to a certificate certifying to the number of
shares owned by him. Such certificates shall be executed by such officers or
agents (which may include a registrar and transfer agents) as the board of
directors may by resolution entered upon its minutes determine, and the board
may determine which, if any, of the signatures thereon may be facsimile.
5.2 In case any officer who has signed, or whose facsimile signature has
been used on, a certificate, has ceased to be an officer before the certificate
has been delivered, such certificates may, nevertheless, be adopted and issued
and delivered by the corporation as though the officer who signed such
certificate or certificates, or whose facsimile signature or signatures shall
have been used thereon, had not ceased to be such officer of the corporation.
5.3 Transfer of stock shall be made only upon the transfer books of the
corporation, kept at the office of the corporation or at the office of any
transfer agents or registrar and before a new certificate is issued, the old
certificate shall be surrendered for cancellation.
5.4 Registered stockholders only shall be entitled to be treated by the
corporation as the holders in fact of the stock standing in their respective
names, and the corporation shall not be bound to recognize any equitable or
other claim to or interest in any shares on the part of any other person,
whether or not it shall have express or other notice thereof.
5.5 In case of loss or destruction of any certificate of stock, another
may be issued in its place upon proof of such loss or destruction, and upon the
giving of a satisfactory bond of indemnity to the corporation in such sum as
the board of directors may provide.
5.6 The board of directors shall have power and authority to make all
rules and regulations as it may deem expedient concerning the issue, transfer,
conversion, and registration of certificates for share of the capital stock of
the corporation, not inconsistent with the laws of Mississippi, the charter of
the corporation and these bylaws.
5.7 The board of directors shall have power to close the stock transfer
books of the corporation for a period not exceeding seventy (70) days preceding
the date of any meeting of stockholders, or the date when any redemption or
purchase of capital stock shall go into effect, or for a period of not
exceeding seventy (70) days in connection with obtaining the consent of
stockholders for any purpose, provided, however, that in lieu of closing the
stock transfer books as aforesaid, the board of directors may fix in advance a
date, not exceeding seventy (70) days preceding the date of any meeting of
stockholders, or the date when any redemption or purchase of capital stock
shall go into effect, or a date in connection with obtaining such consent, as a
record date for the determination of the stockholders entitled to notice of and
to vote at any such meeting, and any adjournment thereof, or to exercise the
rights in respect of any such redemption or purchase of capital stock, or to
give such consent, and in such case such stockholders of record
<PAGE> 10
on the date so fixed shall be entitled to such notice of and to vote at such
meeting, and any adjournment thereof, or to exercise such rights, or to give
such consent, as the case may be, notwithstanding any transfer of stock on the
books of the corporation after any such record date fixed as aforesaid.
5.8 The common stock of the corporation shall be issued in such amounts
and shall be sold at such price or prices, not less than par, as the board of
directors may from time to time and at any time determine.
5.9 Dividends upon common stock shall be payable as and when declared by
the board of directors at its discretion.
ARTICLE VI.
MISCELLANEOUS
6.1 Any part of or all of the cash dividends payable upon any shares of
capital stock may be applied, in the discretion of the board of directors, to
the payment of any indebtedness of the holder of such stock to the corporation.
6.2 The monies of the corporation shall be deposited in the name of the
corporation in such bank or banks or trust company or trust companies as the
board of directors shall designate, and shall be drawn out only by check signed
by persons designated by resolution by the board of directors.
6.3 The fiscal year of the corporation shall be determined by the board
of directors.
6.4 With the notice of the annual meeting of the stockholders there shall
be mailed a general report of the business of the corporation and a report of
the general financial condition of the corporation and its property.
6.5 (a) Notwithstanding this Section of these bylaws, except as set
forth in paragraph (b) of this Section, the affirmative vote or consent of the
holders of not less than four-fifths of the outstanding shares of stock of the
corporation entitled to vote in elections of directors shall be required:
(1) to adopt any agreement for, or to approve, the merger or
consolidation of the corporation or any subsidiary (as
hereinafter defined) with or into any other person (as
hereinafter defined),
(2) to authorize any sale, transfer or exchange to any other
person of all or substantially all of the assets of the
corporation or any subsidiary, or
(3) to authorize the issuance or transfer by the
corporation or any subsidiary of any voting securities of
the corporation or any subsidiary in exchange or
<PAGE> 11
payment for the securities or assets of any other person,
if such authorization is otherwise required by law or by
agreement between the corporation and any national
securities exchange or by any other agreement to which
the corporation or any subsidiary is a party.
(b) The provisions of paragraph (a) of this Section shall not
apply, and the provisions of Mississippi law shall apply, to (1) any
transaction described therein if the board of directors by resolution shall
have approved by two-thirds vote of all directors a memorandum of understanding
with such other person setting forth the principal terms of such transaction
and such transaction is substantially consistent therewith; or (2) any
transaction described therein if such other person is a corporation of which a
majority of the outstanding shares of all classes of stock entitled to vote in
elections of directors is owned of record or beneficially by the corporation or
its subsidiaries.
(c) The affirmative vote or consent of the holders of not less than
four-fifths of the outstanding shares of stock of the corporation entitled to
vote in elections of directors shall be required for the adoption of any plan
for the dissolution of the corporation if the board of directors shall not
have, by resolution adopted by two-thirds vote of all directors, recommended to
the stockholders the adoption of such plan for dissolution of the corporation.
If the board of directors shall have so recommended to the stockholders such
plan for dissolution of the corporation, the provisions of Mississippi law
shall apply.
(d) For the purposes of this Section,
(1) a "subsidiary" is any corporation more than 49 percent of
the voting securities of which are owned, directly or
indirectly, by the corporation;
(2) a "person" is any individual, corporation, or other
entity.
(e) The board of directors shall have the power and duty to
determine, for purposes of this Section, on the basis of information known to
such board, whether a proposed transaction is substantially consistent with any
memorandum of understanding of the character referred to in paragraph (b) of
this Section.
Any such determination shall be conclusive and binding for all
purposes of this Section.
ARTICLE VII.
BOOKS AND RECORDS
7.1 The books, accounts and records of the corporation shall be kept at
the home office of the corporation except as the board of directors may from
time to time appoint. The board of directors shall determine whether and to
what extent the accounts and books of the corporation, or any of them, other
than the stock ledger, shall be open to the inspection of the stockholders, and
no stockholder shall have any right to inspect any account or book or document
of the corporation except as conferred by law or by resolution of the
stockholders or directors.
<PAGE> 12
ARTICLE VIII.
NOTICES
8.1 Unless otherwise provided in these bylaws, whenever the provisions of
the charter of incorporation or these bylaws require notice to be given to any
director, officer, or stockholder, such notice may be given in writing by
handing a copy thereof to such person or by depositing a copy thereof in a post
office or letter box in postpaid, sealed envelope, addressed to such director,
officer, or stockholder at his or her address as the same appears in the books
of the corporation, and the time when the same shall be mailed shall be deemed
to be the time of the giving of such notice. Any such notice may be contained
in any periodic publication of the corporation or any house organ thereof which
is mailed as provided in this Section.
8.2 A waiver of any notice in writing, signed by a stockholder, director,
or officer, whether before or after the time stated in said waiver for holding
a meeting, shall be deemed equivalent to a notice required to be given to any
director, officer or stockholder.
ARTICLE IX.
SEAL
9.1 The corporate seal of the corporation shall consist of two concentric
circles, between which shall be the name of the corporation and the year of its
incorporation and in the center shall be inscribed the word "Seal".
<PAGE> 1
EXHIBIT 10(c)
May 29, 1996
Mr. J. Kelley Williams
Chief Executive Officer/Chairman of the Board
First Mississippi Corporation
700 North Street
Jackson, MS 39202 PRIVILEGED AND CONFIDENTIAL
----------------------------
RE: Termination Agreement
Dear Kelley:
First Mississippi Corporation (the "Company") considers it essential to
the best interests of its stockholders to foster the continuous employment of
key management personnel. In this connection, the Board of Directors of the
Company (the "Board") recognizes that, as is the case with many publicly held
corporations and their subsidiaries, the possibility of a Change in Control may
exist and that such possibility, and the uncertainty and questions which it may
raise, may result in the departure or distraction of management personnel to
the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of the Company's
management to their assigned duties, without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change
in Control of the Company, although no such change is now contemplated.
In order to induce you to remain in the employ of the Company and in
consideration of your agreement set forth in Subsection 2(iii) hereto, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement ("Agreement") in the event your employment with the Company is
terminated subsequent to a "Change in Control" of the Company (as defined in
Section 2 hereof) under the circumstances described below. This letter,
however, does not otherwise change your employment arrangements and except for
the conditions contained therein pertaining to a Change in Control, your
continued employment continues to be subject to the will of the Board of the
Company.
1. Term of Agreement. This Agreement shall be deemed effective on June
1, 1996 and shall continue in effect through May 31, 1999 (the "Original Term");
provided, however, that commencing on June 1, 1999, the term of this Agreement
shall automatically be extended for one additional term of three (3) years
beyond May 31, 1999, unless not later than June 30 of that year, the
<PAGE> 2
2
Company shall have given notice that it does not wish to extend this Agreement.
Notwithstanding the above, if a Change in Control (as defined in Section 2
below) of the Company shall have occurred during the original or extended term
of this Agreement, this Agreement shall continue in effect for a period of
three (3) years beyond the month in which such Change in Control occurred;
provided that, if you qualify as a Bona Fide Executive ("Bona Fide Executive")
as that term is defined under the Fair Labor Standards Act (29 C.F.R. Section
1625.12), as may be amended, in no event shall this Agreement extend beyond the
end of the month in which you reach normal retirement age of 65 years.
2. Change in Control.
(i) No benefits shall be payable hereunder unless there shall have
been a Change in Control of the Company, as set forth below. For purposes
of the Agreement, a "Change in Control" of the Company shall be deemed to
have occurred if:
(A) any "person" (as defined in Section 3(a) (9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as modified and used in Sections 13 (d) and 14 (d) thereof), other
than (i) the Company or any of its subsidiaries, (ii) a trustee or
any fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company (a
"Person"), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing twenty percent (20%) or more of the
combined voting power of the Company's then outstanding securities;
or
(B) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board and any new
director (other than a director designated by a Person who has
entered into an agreement with the Company to effect a transaction
described in clause (A), (C) or (D) of this Subsection) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof; or
(C) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or be being
converted into voting securities of the surviving entity or any
parent thereof), in combination with the ownership of any trustee or
other fiduciary holding securities
<PAGE> 3
3
under an employee benefits plan of the Company, at least 80% of the
combined voting power of the voting securities of the Company or
such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar translation) in which no Person is or becomes
the beneficial owner (determined pursuant to Subsection A above) of
twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities; or
(D) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's
assets.
(ii) For purposes of this Agreement, a "Potential Change in Control"
of the Company shall be deemed to have occurred if:
(A) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control of the
Company;
(B) any person (including the Company) publicly announces an
intention take or to consider taking actions which if consummated
would constitute a Change in Control of the Company;
(C) any person, other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership
of stock of the Company, who is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing
nine and a half (9.5%) percent or more of the combined voting power
of the Company's then outstanding securities, increases his
beneficial ownership of such securities by five (5%) or more over
the amount theretofore owned by such person; or
(D) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control of the
Company has occurred.
(iii) You agree that, subject to the terms and conditions of this
Agreement, in the event of a Potential Change in Control of the Company,
you will remain in the employ of the Company until the earliest of (A) a
date which is six (6) months from the occurrence of such Potential Change
in Control of the Company, (B) the termination by you of your employment by
reason of Disability, as defined in Subsection 3(i), or (C) the occurrence
of a Change in Control of the Company.
(iv) Notwithstanding the foregoing, neither a "Change in Control"
nor a "Potential Change in Control" shall be deemed to have occurred by
virtue of the Company entering into any agreement with respect to, the
public announcement of, the approval by the Company's shareholders or
directors of, or the consummation of, any transaction or series of
integrated
<PAGE> 4
4
transactions (including any merger or other business combination
transaction entered into in connection with, or expressly conditioned upon
the occurrence of, a Spin-Off Transaction (as defined below) immediately
following which the recordholders of the common stock of the Company
immediately prior to such transaction or series of transactions continue to
have substantially the same proportionate ownership in an entity (the
"Spun-Off Entity") which owns all or substantially all of the assets of
either of the Company's Principal Businesses (as defined below) immediately
following such transaction or series of transactions (such transaction or
series of transactions, a "Spin-Off Transaction"); provided that such
Spin-Off Transaction (including any related merger or other business
combination transaction) has been approved by a vote of a majority of the
Company's Continuing Directors (as defined below) then in office. For
purposes of this Agreement (1) "Principal Businesses" shall mean either of
the Company's Chemical or Fertilizer businesses as described in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1995 and (2) "Continuing Director" shall mean any member of the Board of
Directors of the Company who is a member of the Board of Directors as of
the date of this Agreement and any person who subsequently becomes a member
of the Board of Directors, if such person's nomination for election or
election to the Board of Directors is recommended or approved by a majority
of the Continuing Directors.
3. Termination Following Change in Control. If any of the events
described in Subsection 2(i) hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits provided in
Subsection 4(iii) and (iv) hereof upon the subsequent termination of your
employment during the term of this Agreement unless such termination is (A)
because of your death or Disability as defined in Section 3(i), or (B) by the
Company for Cause, or upon your resignation within thirty-six (36) months of
the occurrence of such events as specified in Section 2.
(i) Disability. If, as a result of your incapacity due to physical
or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given
you shall not have returned to the full-time performance of your duties,
your employment may be terminated for "Disability".
(ii) Cause. Termination by the Company of your employment for
"Cause" shall mean termination upon (A) the willful and continued failure
by you to substantially perform your duties with the Company (other than
any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a
Notice of Termination after a written demand for substantial performance is
delivered to you by the Board, which demand specifically identifies the
manner in which the Board believes that you have not substantially
performed your duties, or (B) the willful engaging by you in conduct which
is demonstrably and materially injurious to the Company, monetarily or
otherwise. For purposes of this Subsection, an act, or failure to act,
shall be deemed "willful" if done, or omitted to be done, by you other than
in good faith and without reasonable belief that your action or omission
was in the best interest of the Company. Notwithstanding the foregoing,
you shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to you a copy of a resolution duly adopted
by
<PAGE> 5
5
the affirmative vote of a minimum of three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice to you and opportunity for you, together
with your counsel, to be heard before the Board), finding that in good faith
opinion of the Board you were guilty of conduct set forth above in clauses
(A) or (b) of the first sentence of this Subsection and specifying the
particulars thereof in detail.
(iii) Notice of Termination.Any purported termination of your
employment by the Company or by you shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section
6 hereof. For purposes of this Agreement, a " Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(iv) Date of Termination, Etc."Date of Termination" shall mean the
following: (A) if your employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that you shall not have
returned to the full-time performance of your duties during such thirty (30)
day period), and (B) if your employment is terminated pursuant to Subsection
(ii) above or for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the case of a termination
pursuant to Subsection (ii) above shall not be less than thirty (30) days
from the date such Notice of Termination is given); provided that if within
fifteen (15 days after any Notice of Termination is given, or if later,
prior to the Date of Termination (as determined without regard to this
provision), the party receiving such Notice of Termination notifies the
other parity that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue
to pay you your full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to base salary) and
continue your participation in all compensation, benefit and insurance plans
in which you were participating when the notice giving rise to the dispute
was given, until the dispute is finally resolved in accordance with this
Subsection. Amounts paid under this Subsection are in addition to all other
amounts due under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement.
4. Compensation Upon Termination or During Disability. Following a
Change in Control of the Company, as defined by Subsection 2(i), upon
termination of your employment or during a period of disability, you shall be
entitled to the following benefits.
<PAGE> 6
6
(i) During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to physical or mental
illness, you shall continue to receive your base salary at the rate in
effect at the commencement of any such period, together with all
compensation payable to you under the Company's annual bonus plan, the
First Mississippi Corporation 1980 Long-Term Incentive Plan, the First
Mississippi 1988 Long-Term Incentive Plan, the First Mississippi 1995
Long-Term Incentive Plan, or other plan during such period, until this
Agreement is terminated pursuant to Section 3(i) hereof. Thereafter your
benefits shall be determined under the Company's retirement, insurance and
other compensation programs then in effect in accordance with the terms of
such programs.
(ii) If your employment shall be terminated by the Company for
Cause or by you other than for Disability, or death, the Company shall pay
you your full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given, plus all other amounts
to which you are entitled under any compensation plan of the Company at the
time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(iii) If your employment by the Company shall be terminated (a) by
the Company other than for Cause or Disability, then you shall be entitled
to the benefits provided below:
(A) The Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are
entitled under any compensation plan of the Company, at the time such
payments are due, except as otherwise provided below.
(B) (1) In lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company shall pay
to you, subject to subsection 2 below, a lump sum severance payment
(together with the payments provided in Paragraphs C, E and F below
and any payment you may receive pursuant to Paragraph D below, the
"Severance Payments") equal to 3 times the sum of (i) your average
annual base salary for the five (5) full years preceding the year in
which the Date of Termination occurs averaged over said five (5) full
years, and (ii) either the average annual bonus earned by you with
respect to such five (5) year period, or the average annual bonus
earned by you with respect to such five (5) year period immediately
preceding the date of the Change in Control, whichever is higher
(taking the value of such bonuses into account whether paid in cash
or defined or converted into another form of compensation under any
Company plan).
(2) Notwithstanding subsection (B)(1) above, if you
will reach your normal retirement age of 65 years within 36 months
after the Date of Termination, then the lump sum severance payment
calculated in subsection (b)(1) above shall be reduced by multiplying
such payment bya fraction, the numerator of which shall equal one
plus the number of full calendar months
<PAGE> 7
7
between the Date of Termination and the date on which you attain the
age of 65, if you qualify as a Bona Fide Executive, and the
denominator of which shall equal 36.
(C) The Company shall continue to provide you with medical
insurance, life insurance and disability insurance in the amounts and
upon the terms and conditions present immediately prior to Notice of
Termination for a period of three years following the Date of
Termination. However, if during such three year period you (i)
become re-employed with another employer and you are eligible to
receive medical or other welfare benefits under another employer
provided plan, or (ii) you reach the normal retirement age of 65
years and do not qualify as a Bona Fide Executive, then the medical
and other welfare benefits described above shall no longer be
provided by the Company. In the event that the Company cannot,
despite its best efforts, provide such coverage under its benefit
plans, it shall arrange for equivalent coverage outside such plans.
(D) Notwithstanding any provision of the Company's Long-Term
Incentive Plans as amended from time to time, or any other
compensation arrangements then in effect, the Company shall pay to
you a lump sum amount equal to the sum of any incentive compensation
which has been allocated or awarded to you for a year or other
measuring period preceding the Date of Termination, but has not yet
been paid.
(E) Except for Incentive Stock Options ("ISOs") which are
hereby specifically excluded, in lieu of shares of common stock of
the Company ("Company Shares") issuable upon exercise of outstanding
options ("Options"), granted to you under the Company's Long-Term
Incentive Plans as amended from time to time, or any other plan then
in effect (which Options shall be canceled upon the making of the
payment referred to below), unless you notify the Company by giving
notice in accordance with Section 6 hereof within fifteen (15) days
after receipt of Notice of Termination that you do not wish such
payment, the Company shall pay to you not later then the fifth day
following the Date of Termination, an amount in cash equal to the
product of (i) the difference (to the extent that such difference is
a positive number) obtained by subtracting the per share exercise
price of each Option held by you whether or not then fully
exercisable from the higher of (A) the closing price of Company
Shares as reported on the New York Stock Exchange on the Date of
Termination, or (B) the highest per share price of Company Shares
actually paid in connection with any Change in Control of the
Company, and (ii) the number of Company Shares covered by each such
Option. In lieu of convertible debentures of the Company ("the
Debentures") issuable upon exercise of outstanding options
("Debenture Options") granted to you under the Company's Long-Term
Incentive Plans, as amended from time to time, or any other plan then
in effect (which Debenture Options shall be canceled upon the making
of the payment referred to below), unless you notify the Company by
giving notice in accordance with Section 6 hereof within fifteen (15)
days after receipt of Notice of Termination that you do not wish to
receive such payment, the Company will pay to you, not later than the
fifth
<PAGE> 8
8
(5th) day following the Date of Termination, an amount in cash equal
to the product of (i) the difference (to the extent that such
difference is a positive number) obtained by subtracting the per
share price at which the Debentures would be convertible into Company
Shares whether or not then fully exercisable from the higher of (A)
the closing price of Company Shares as reported on the New York Stock
Exchange on the Date of Termination, or (B) the highest per share
price for Company Shares actually paid in connection with any Change
in Control of the Company, and (ii) the number of Company Shares
issuable upon conversion of the Debentures covered by the Debenture
Options. In lieu of any conversion rights under any outstanding
Debentures issued upon the exercise of Debenture Options (which
Debentures shall be canceled upon the making of the payment referred
to below), unless you notify the Company by giving notice in
accordance with Section 6 hereof within fifteen (15) days after
receipt of Notice of Termination that you do not wish such payment,
the Company will pay to you an amount in cash equal to the product of
(i) the higher of (A) the closing price of Company Shares as reported
on the New York Stock Exchange on the Date of Termination or (B) the
highest per share price for Company Shares actually paid in
connection with any Change in Control of the Company, and (ii) the
number of Company Shares into which such Debentures are then
convertible. In lieu of any rights under any outstanding Performance
Shares or Performance Units (as each term is defined in the First
Mississippi Corporation 1995 Long-Term Incentive Plan) granted to you
by the Company, the Company shall, pursuant to the terms and
conditions of the First Mississippi Corporation 1995 Long-Term
Incentive Plan, pay to you in cash an amount equal to the value of
such Performance Shares or Performance Units.
(F) If on the Date of Termination, you are not 100% vested
under the Retirement Plan For Employees of First Mississippi
Corporation and the corresponding provisions of the First Mississippi
Corporation Benefits Restoration Plan (together the "Retirement
Plan"), the Company shall pay you a lump sum equal to the present
value of a straight life annuity benefit commencing at the earliest
date you could have elected to receive benefits under the Retirement
Plan (using the interest rate and the mortality table then in use
under the Retirement Plan) to provide the excess of:
(i) an aggregate benefit equal to the benefit that
would have been paid under the Retirement Plan if you were
100% vested under such Retirement Plan, over
(ii) the aggregate benefit actually payable under the
Retirement Plan.
In addition, if on the Date of Termination you are not 100%
vested under either the First Mississippi Corporation 401(k) Savings
Plan and the corresponding provisions of the First Mississippi
Corporation Benefits Restoration Plan (effective March 1, 1989),
<PAGE> 9
9
the Company shall pay you a lump sum equal to the current amount
forfeited under each such plan.
(G) The Company shall also pay to you all legal fees and
expenses incurred by you as a result of such termination (including
all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") to any payment or benefit provided hereunder).
(H) The payments provided for in paragraphs (A), (B), (D),
(E) and (F) above and in Paragraph (iv) below, shall be made not
later than the fifth (5th) day following the Date of Termination,
provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Company shall pay to
you on such day an estimate, as determined in good faith by the
Company, of the minimum amount of such payments and shall pay the
remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined, but in no event later than the thirtieth
(30th) day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan by
the Company to you payable on the fifth (5th) day after demand by
the Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(iv) In the event that you become entitled to the Severance
Payments or to any other payments or benefits received or to be received
by you in connection with a Change in Control of the Company or your
termination of employment (whether pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company,
(collectively with the Severance Payments, the "Total Payments"), and if
any of the Total Payments will be subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code, the Company shall pay to you at the
time specified in paragraph (H), above, an additional amount (the
"Gross-Up Payment") such that the net amount retained by you, after
deduction of any Excise Tax on the Total Payments and any income tax,
employment tax and Excise Tax upon the payment provided for by this
paragraph, shall be equal to the Total Payments. For purposes of
determining whether any of the Total Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (i) the Total Payments shall
be treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(2) shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to you such other payments or benefits
(in whole or in part) do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent reasonable compensation
for services actually rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the base amount within the meaning of Section
280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Total Payments which shall
<PAGE> 10
10
be treated as subject to the Excise Tax shall be equal to the lesser of (A)
the total amount of the Total Payments or (B) the amount of excess
parachute payments within the meaning of Section 280(b)(1) (after applying
clause (i), above), and (iii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of Sections
280(G)(d)(3) and (4) of the Code. For purposes of determining the amount
of the Gross-Up Payment, you shall be deemed to pay income taxes at the
highest marginal rate of income taxation in the calendar year in which the
Gross-Up Payment is to be made. In the event that the Excise Tax is
subsequently determined to be less than the amount taken into account
hereunder at the time of termination of your employment, you shall repay to
the Company at the time that the amount of such reduction in Excise Tax is
finally determined the portion of the Gross-Up Payment attributable to
such reduction (plus the portion of the Gross-Up Payment attributable to
the Excise Tax and income tax imposed on the Gross-Up Payment being repaid
by you if such repayment results in a reduction in Excise Tax and/or an
income tax deduction) plus interest on the amount of such repayment at the
rate provided in Section 127(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder
at the time of the termination of your employment (including by reason of
any payment the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest payable with
respect to such excess) at the time that the amount of such excess is
finally determined.
(v) Notwithstanding anything to the contrary in this Agreement,
amounts received under paragraph (iii) above shall be in lieu of any other
amount of severance relating to salary or bonus continuation to be
received by you upon termination of employment under any severance plan,
policy or arrangement of the Company.
(vi) You shall not be required to mitigate the amount of any
payment provided for in this Paragraph 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in
this Paragraph 4 be reduced by any compensation or benefits earned by you
as the result of employment by another employer (except as provided in
paragraph (iii)(C) above), by retirement benefits, by offset against any
amount claimed to be owed by you to the Company, or otherwise.
(vii) In addition to all other amounts payable to you under this
Paragraph 4, you shall be entitled to receive all benefits payable to you
under the 401(k) Savings Plan, and any other plan or agreement relating to
retirement benefits.
5. Successors; Binding Agreement.
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and /or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to obtain such
assumption and agreement
<PAGE> 11
11
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle you to compensation from the Company in the
same amount and on the same terms as you would be entitled to hereunder if
you terminated your employment for any reason following a Change in Control
of the Company, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the
Date of Termination. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die
while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to
your estate. Notwithstanding the foregoing, you and the Company hereby
agree that, upon the distribution (the "Distribution") of shares of common
stock of the Spun-Off Entity to stockholders of the Company in a Spin-Off
Transaction, the Spun-Off Entity shall assume all of the obligations and
succeed to all of the rights of the Company under this Agreement, the
Company shall be released of all of its obligations under this Agreement
and thereafter, as used in this Agreement, the term "Company" shall mean
the Spun-Off Entity and any successor to its business and/or assets which
assumes and agrees to perform this Agreement by operation of law or
otherwise. This Agreement shall terminate and be of no further force and
effect and you hereby agree to release the Company and the Spun-Off Entity
from any obligations hereunder upon the Distribution if, as of the
Distribution, you are not employed by the Spun-Off Entity or one of its
direct or indirect subsidiaries.
6. Notices. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Mississippi. All references to Sections
of the Exchange Act or the Code shall be deemed also
<PAGE> 12
12
to refer to any successor provisions to such Sections. Any payments provided
for hereunder shall be paid net of any applicable withholding required under
federal, state or local law. The obligations of the Company under Paragraph 4
shall survive the expiration of the term of this Agreement.
8. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same instrument.
If this letter sets forth our agreement on the subject matter hereof, please
sign and return the enclosed copy of this letter to Teresa Holland in the FMC
Human Resources department which will then constitute our agreement on this
subject.
Sincerely yours,
FIRST MISSISSIPPI CORPORATION
/s/ RICHARD P. ANDERSON
- ---------------------------------
Richard P. Anderson
Chairman, Compensation and Human Resources Committee
ACCEPTED AND AGREED TO on this, the 10th day of June, 1996.
/s/ J. KELLEY WILLIAMS
- ---------------------------------
J. Kelley Williams
<PAGE> 1
EXHIBIT 10(d)
May 29, 1996
Mr. [FULL_NAME]
[TITLE]
[COMPANY]
[STREET_ADDRESS]
[CITY], [STATE] [ZIP_CODE] PRIVILEGED AND CONFIDENTIAL
----------------------------
RE: Termination Agreement
Dear [FIRST_NAME]:
First Mississippi Corporation (the "Company") considers it essential to
the best interests of its stockholders to foster the continuous employment of
key management personnel. In this connection, the Board of Directors of the
Company (the "Board") recognizes that, as is the case with many publicly held
corporations and their subsidiaries, the possibility of a Change in Control may
exist and that such possibility, and the uncertainty and questions which it may
raise, may result in the departure or distraction of management personnel to
the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of the Company's
management to their assigned duties, without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change
in Control of the Company, although no such change is now contemplated.
In order to induce you to remain in the employ of the Company and in
consideration of your agreement set forth in Subsection 2(iii) hereto, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement ("Agreement") in the event your employment with the Company is
terminated subsequent to a "Change in Control" of the Company (as defined in
Section 2 hereof) under the circumstances described below. This letter,
however, does not otherwise change your employment arrangements and except for
the conditions contained therein pertaining to a Change in Control, your
continued employment continues to be subject to the will of the Board of the
Company.
1. Term of Agreement. This Agreement shall be deemed effective on
June 1, 1996 and shall continue in effect through May 31, 1999 (the "Original
Term"); provided,
<PAGE> 2
2
however, that commencing on June 1, 1999, the term of this Agreement shall
automatically be extended for one additional term of three (3) years beyond May
31, 1999, unless not later than June 30 of that year, the Company shall have
given notice that it does not wish to extend this Agreement. Notwithstanding
the above, if a Change in Control (as defined in Section 2 below) of the
Company shall have occurred during the original or extended term of this
Agreement, this Agreement shall continue in effect for a period of three (3)
years beyond the month in which such Change in Control occurred; provided that,
if you qualify as a Bona Fide Executive ("Bona Fide Executive") as that term is
defined under the Fair Labor Standards Act (29 C.F.R. Section 1625.12), as may
be amended, in no event shall this Agreement extend beyond the end of the month
in which you reach your normal retirement age of 65 years.
2. Change in Control.
(i) No benefits shall be payable hereunder unless there shall have
been a Change in Control of the Company, as set forth below. For
purposes of the Agreement, a "Change in Control" of the Company shall be
deemed to have occurred if:
(A) any "person" (as defined in Section 3(a) (9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as modified and used in Sections 13 (d) and 14 (d) thereof), other
than (i) the Company or any of its subsidiaries, (ii) a trustee or
any fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company (a
"Person"), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent (20%) or more
of the combined voting power of the Company's then outstanding
securities; or
(B) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board and any
new director (other than a director designated by a Person who has
entered into an agreement with the Company to effect a transaction
described in clause (A), (C) or (D) of this Subsection) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute a majority thereof; or
(C) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining
<PAGE> 3
3
outstanding or be being converted into voting securities of the
surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefits plan of the Company, at least 80% of the
combined voting power of the voting securities of the Company or
such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar translation) in which no Person is or becomes
the beneficial owner (determined pursuant to Subsection A above) of
twenty percent (20%) or more of the combined voting power of the
Company's then outstanding securities; or
(D) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the
Company's assets.
(ii) For purposes of this Agreement, a "Potential Change in
Control" of the Company shall be deemed to have occurred if:
(A) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control of the
Company;
(B) any person (including the Company) publicly announces an
intention take or to consider taking actions which if consummated
would constitute a Change in Control of the Company;
(C) any person, other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company, who is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing nine and a half (9.5%) percent or more of the combined
voting power of the Company's then outstanding securities,
increases his beneficial ownership of such securities by five (5%)
or more over the amount theretofore by such person; or
(D) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control of the
Company has occurred.
(iii) You agree that, subject to the terms and conditions of this
Agreement, in the event of a Potential Change in Control of the Company,
you will remain in the employ of the Company until the earliest of (A) a
date which is six (6) months from the occurrence of such Potential Change
in Control of the Company, (B) the termination by you of your employment
by reason of Disability, as defined in Subsection 3(i), or (C) the
occurrence of a Change in Control of the Company.
<PAGE> 4
4
(iv) Notwithstanding the foregoing, neither a "Change in Control"
nor a "Potential Change in Control" shall be deemed to have occurred by
virtue of the Company entering into any agreement with respect to, the
public announcement of, the approval by the Company's shareholders or
directors of, or the consummation of, any transaction or series of
integrated transactions (including any merger or other business
combination transaction entered into in connection with, or expressly
conditioned upon the occurrence of, a Spin-Off Transaction (as defined
below) immediately following which the recordholders of the common stock
of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate
ownership in an entity (the "Spun-Off Entity") which owns all or
substantially all of the assets of either of the Company's Principal
Businesses (as defined below) immediately following such transaction or
series of transactions (such transaction or series of transactions, a
"Spin-Off Transaction"); provided that such Spin-Off Transaction
(including any related merger or other business combination transaction)
has been approved by a vote of a majority of the Company's Continuing
Directors (as defined below) then in office. For purposes of this
Agreement (1) "Principal Businesses" shall mean either of the Company's
Chemical or Fertilizer businesses as described in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1995 and (2)
"Continuing Director" shall mean any member of the Board of Directors of
the Company who is a member of the Board of Directors as of the date of
this Agreement and any person who subsequently becomes a member of the
Board of Directors, if such person's nomination for election or election
to the Board of Directors is recommended or approved by a majority of the
Continuing Directors.
3. Termination Following Change in Control. If any of the events
described in Subsection 2(i) hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits provided in
Subsection 4(iii) hereof upon the subsequent termination of your employment
during the term of this Agreement unless such termination is (A) because of
your death or Disability as defined in Section 3(i), (B) by the Company for
Cause, or (C) by you other than for Good Reason.
(i) Disability. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive
months, and within thirty (30) days after written notice of termination
is given you shall not have returned to the full-time performance of your
duties, your employment may be terminated for "Disability".
(ii) Cause. Termination by the Company of your employment for
"Cause" shall mean termination upon (A) the willful and continued failure
by you to substantially perform your duties with the Company (other than
any such failure resulting from your incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a
Notice of Termination after a written demand for substantial performance
is delivered to you by the Board, which demand specifically identifies
the manner in which the Board believes that you have not substantially
performed your duties, or (B) the willful engaging by you in conduct
which is demonstrably and
<PAGE> 5
5
materially injurious to the Company, monetarily or otherwise. For
purposes of this Subsection, an act, or failure to act, shall be deemed
"willful" if done, or omitted to be done, by you other than in good faith
and without reasonable belief that your action or omission was in the
best interest of the Company. Notwithstanding the foregoing, you shall
not be deemed to have been terminated for Cause unless and until there
shall have been delivered to you a copy of a resolution duly adopted by
the affirmative vote of a minimum of three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice to you and opportunity for you,
together with your counsel, to be heard before the Board), finding that
in good faith opinion of the Board you were guilty of conduct set forth
above in clauses (A) or (b) of the first sentence of this Subsection and
specifying the particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean, without your express written consent, the occurrence
after a Change in Control of the Company of any of the following
circumstances unless, in the case of paragraphs (A), (D), (E), (F), (G),
or (H), such circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination, as defined in
Subsections 3(v) and 3(iv), respectively, given in respect thereof:
(A) the assignment to you of any duties inconsistent with your
status as a senior executive officer of the Company or a
substantial adverse alteration in the nature or status of your
responsibilities from those in effect immediately prior to the
Change in Control of the Company;
(B) a reduction by the Company in your annual base salary as
in effect on the date hereof or as the same may be increased from
time to time except for across-the-board salary reductions
similarly affecting all senior executives of the Company and all
senior executives of any person or entity which is then in control
of the Company;
(C) the relocation of the Company's principal executive
offices to outside the Jackson, Mississippi Metropolitan Area, or
the Company's requiring you to be based anywhere other than the
Company's principal executive offices except for required travel on
the Company's business to an extent substantially consistent with
your business travel obligations immediately prior to the change of
Control of the Company;
(D) the failure by the Company, without your consent, to pay
to you any portion of your current compensation except pursuant to
an across-the-board compensation deferral similarly affecting all
senior executives of the Company and all senior executives of any
person or entity which is then in control of the Company, or to pay
to you any portion of an installment of deferred compensation
<PAGE> 6
6
under any deferred compensation program of the Company, within
seven (7) days of the date such compensation is due;
(E) the failure by the Company to continue in effect any
compensation plan in which you participate immediately prior to the
Change in Control of the Company which is material to your total
compensation, including but not limited to the Company's 1980, 1988
or 1995 Long-Term Incentive Plan, as these plans are amended from
time to time (the "Long-Term Incentive Plans"), or any substitute
plans adopted prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue your participation therein (or in such
substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the
level of your participation relative to other participants, as
existed at the time of the Change in Control of the Company.
(F) the failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under any of
the Company's pension, life insurance, medical, health and
accident, or disability plans in which you were participating at
the time of the Change in Control of the Company, the taking of any
action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive you of any material fringe
benefit enjoyed by you at the time of the Change in Control of the
Company, or the failure by the Company to provide you with the
number of paid vacation days to which you are entitled on the basis
of years of service with the Company in accordance with the
Company's normal vacation policy in effect at the time of the
Change in Control of the Company;
(G) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof; or
(H) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (iv) below (and, if applicable, the
requirements of Subsection (ii) above); for purposes of this
Agreement, no such purported termination shall be effective.
Your right to terminate your employment pursuant to this Subsection
(iii) shall not be affected by your incapacity due to physical or
mental illness. Your continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
(iv) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written
Notice of Termination to
<PAGE> 7
7
the other party hereto in accordance with Section 7 hereof. For purposes
of this Agreement, a " Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(v) Date of Termination, Etc. "Date of Termination" shall mean
the following: (A) if your employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that you
shall not have returned to the full-time performance of your duties
during such thirty (30) day period), and (B) if your employment is
terminated pursuant to Subsection (ii) or (iii) above or for any other
reason (other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination pursuant to Subsection
(ii) above shall not be less than thirty (30) days from the date such
Notice of Termination is given); provided that if within fifteen (15 days
after any Notice of Termination is given, or if later, prior to the Date
of Termination (as determined without regard to this provision), the
party receiving such Notice of Termination notifies the other parity that
a dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding arbitration award,
or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected);
provided further that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute,
the Company will continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given (including, but not
limited to base salary) and continue your participation in all
compensation, benefit and insurance plans in which you were participating
when the notice giving rise to the dispute was given, until the dispute
is finally resolved in accordance with this Subsection. Amounts paid
under this Subsection are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
4. Compensation Upon Termination or During Disability.
Following a Change in Control of the Company, as defined by Subsection 2(i),
upon termination of your employment or during a period of disability, you shall
be entitled to the following benefits.
(i) During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to physical or
mental illness, you shall continue to receive your base salary at the
rate in effect at the commencement of any such period, together with all
compensation payable to you under the Company's annual bonus plan, the
First Mississippi Corporation 1980 Long-Term Incentive Plan, the First
Mississippi
<PAGE> 8
8
1988 Long-Term Incentive Plan, the First Mississippi 1995 Long-Term
Incentive Plan, or other plan during such period, until this Agreement is
terminated pursuant to Section 3(i) hereof. Thereafter your benefits
shall be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms of such
programs.
(ii) If youremployment shall be terminated by the Company for
Cause or by you other than for Good Reason, Disability, or death, the
Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which you are entitled under any
compensation plan of the Company at the time such payments are due, and
the Company shall have no further obligations to you under this
Agreement.
(iii) If your employment by the Company shall be terminated (a) by
the Company other than for Cause or Disability, or (b) by you for Good
Reason, then you shall be entitled to the benefits provided below:
(A) The Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are
entitled under any compensation plan of the Company, at the time
such payments are due, except as otherwise provided below.
(B) (1) In lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company shall
pay to you, subject to subsection 2 below, a lump sum severance
payment (together with the payments provided in Paragraphs C, E and
F below and any payment you may receive pursuant to Paragraph D
below, the "Severance Payments") equal to 3 times the sum of (i)
your average annual base salary for the five (5) full years
preceding the year in which the Date of Termination occurs averaged
over said five (5) full years, and (ii) either the average annual
bonus earned by you with respect to such five (5) year period, or
the average annual bonus earned by you with respect to such five
(5) year period immediately preceding the date of the Change in
Control, whichever is higher (taking the value of such bonuses into
account whether paid in cash or defined or converted into another
form of compensation under any Company plan).
(2) Notwithstanding subsection (B)(1) above, if you will reach
your normal retirement age of 65 years within 36 months after the
Date of Termination, then the lump sum severance payment calculated
in subsection (b)(1) above shall be reduced by multiplying such
payment by a fraction, the numerator of which shall equal one plus
the number of full calendar months between the Date of Termination
and the date on which you attain the age of 65, if you qualify as a
Bona Fide Executive, and the denominator of which shall equal 36.
<PAGE> 9
9
(C) The Company shall continue to provide you with medical
insurance, life insurance and disability insurance in the amounts
and upon the terms and conditions present immediately prior to
Notice of Termination for a period of three years following the
Date of termination. However, if during such three year period you
(i) become re-employed with another employer and you are eligible
to receive medical or other welfare benefits under another employer
provided plan, or (ii) you reach the normal retirement age of 65
years and do not qualify as a Bona Fide Executive, then the medical
and other welfare benefits described above shall no longer be
provided by the Company. In the event that the Company cannot,
despite its best efforts, provide such coverage under its benefit
plans, it shall arrange for equivalent coverage outside such plans.
(D) Notwithstanding any provision of the Company's Long-Term
Incentive Plans as amended from time to time, or any other
compensation arrangements then in effect, the Company shall pay to
you a lump sum amount equal to the sum of any incentive
compensation which has been allocated or awarded to you for a year
or other measuring period preceding the Date of Termination, but
has not yet been paid.
(E) Except for Incentive Stock Options ("ISOs") which are
hereby specifically excluded, in lieu of shares of common stock of
the Company ("Company Shares") issuable upon exercise of
outstanding options ("Options"), granted to you under the Company's
Long-Term Incentive Plans as amended from time to time, or any
other plan then in effect (which Options shall be canceled upon the
making of the payment referred to below), unless you notify the
Company by giving notice in accordance with Section 7 hereof within
fifteen (15) days after receipt of Notice of Termination that you
do not wish such payment, the Company shall pay to you not later
then the fifth day following the Date of Termination, an amount in
cash equal to the product of (i) the difference (to the extent that
such difference is a positive number) obtained by subtracting the
per share exercise price of each Option held by you whether or not
then fully exercisable from the higher of (A) the closing price of
Company Shares as reported on the New York Stock Exchange on the
Date of Termination, or (B) the highest per share price of Company
Shares actually paid in connection with any Change in Control of
the Company, and (ii) the number of Company Shares covered by each
such Option. In lieu of convertible debentures of the Company
("the Debentures") issuable upon exercise of outstanding options
("Debenture Options") granted to you under the Company's Long-Term
Incentive Plans, as amended from time to time, or any other plan
then in effect (which Debenture Options shall be canceled upon the
making of the payment referred to below), unless you notify the
Company by giving notice in accordance with Section 7 hereof within
fifteen (15) days after receipt of Notice of Termination that you
do not wish to receive such payment, the Company will pay to you,
not later than the fifth (5th) day following the Date of
Termination, an amount in cash equal to the product of (i) the
difference (to the extent that such difference is a positive
<PAGE> 10
10
number) obtained by subtracting the per share price at which the
Debentures would be convertible into Company Shares whether or not
then fully exercisable from the higher of (A) the closing price of
Company Shares as reported on the New York Stock Exchange on the
Date of Termination, or (B) the highest per share price for Company
Shares actually paid in connection with any Change in Control of
the Company, and (ii) the number of Company Shares issuable upon
conversion of the Debentures covered by the Debenture Options. In
lieu of any conversion rights under any outstanding Debentures
issued upon the exercise of Debenture Options (which Debentures
shall be canceled upon the making of the payment referred to
below), unless you notify the Company by giving notice in
accordance with Section 7 hereof within fifteen (15) days after
receipt of Notice of Termination that you do not wish such payment,
the Company will pay to you an amount in cash equal to the product
of (i) the higher of (A) the closing price of Company Shares as
reported on the New York Stock Exchange on the Date of Termination
or (B) the highest per share price for Company Shares actually paid
in connection with any Change in Control of the Company, and (ii)
the number of Company Shares into which such Debentures are then
convertible. In lieu of any rights under any outstanding
Performance Shares or Performance Units (as each term is defined in
the First Mississippi Corporation 1995 Long-Term Incentive Plan)
granted to you by the Company, the Company shall, pursuant to the
terms and conditions of the First Mississippi Corporation 1995
Long-Term Incentive Plan, pay to you in cash an amount equal to the
value of such Performance Shares or Performance Units.
(F) If on the Date of Termination, you are not 100% vested
under the Retirement Plan For Employees of First Mississippi
Corporation and the corresponding provisions of the First
Mississippi Corporation Benefits Restoration Plan (together the
"Retirement Plan"), the Company shall pay you a lump sum equal to
the present value of a straight life annuity benefit commencing at
the earliest date you could have elected to receive benefits under
the Retirement Plan (using the interest rate and the mortality
table then in use under the Retirement Plan) to provide the excess
of:
(i) an aggregate benefit equal to the benefit that would
have been paid under the Retirement Plan if you were 100%
vested under such Retirement Plan, over
(ii) the aggregate benefit actually payable under the
Retirement Plan.
In addition, if on the Date of Termination you are not 100%
vested under either the First Mississippi Corporation 401(k)
Savings Plan and the corresponding provisions of the First
Mississippi Corporation Benefits Restoration Plan (effective March
1, 1989), the Company shall pay you a lump sum equal to the
current amount forfeited under each such plan.
<PAGE> 11
11
(G) The Company shall also pay to you all legal fees and
expenses incurred by you as a result of such termination (including
all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code ") to any payment or benefit provided
hereunder).
(H) The payments provided for in paragraphs (A), (B), (D), (E)
and (F) above, shall be made not later than the fifth (5th) day
following the Date of Termination, provided, however, that if the
amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Company, of the minimum amount of
such payments and shall pay the remainder of such payments
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined, but in no event later than the thirtieth (30th) day
after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company
to you payable on the fifth (5th) day after demand by the Company
(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(iv) Notwithstanding anything to the contrary in this Agreement,
amounts received under paragraph (iii) above shall be in lieu of any
other amount of severance relating to salary or bonus continuation to be
received by you upon termination of employment under any severance plan,
policy or arrangement of the Company.
(v) You shall not be required to mitigate the amount of any
payment provided for in this Paragraph 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in
this Paragraph 4 be reduced by any compensation or benefits earned by you
as the result of employment by another employer (except as provided in
paragraph (iii)(C) above), by retirement benefits, by offset against any
amount claimed to be owed by you to the Company, or otherwise.
(vi) In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all benefits payable to you
under the 401(k) Savings Plan, and any other plan or agreement relating
to retirement benefits.
5. Parachute Payment Limitation.
(i) Notwithstanding anything in this Agreement to the contrary, if
any severance pay or benefits payable under this Agreement (without the
application of this Section 5), either alone or together with other
payments pursuant to any agreement, plan
<PAGE> 12
12
or arrangement with the Company (the "Total Payments"), would constitute
a "parachute payment" (as defined in Section 280G of the Code and
regulations thereunder), then the following shall occur:
(A) Tax counsel selected by the Company's independent auditors
and acceptable to you shall compute the net present value to you of
all the Total Payments after reduction for the excise taxes imposed
by Code Section 4999 and for any normal income taxes that would be
imposed on you if such Total Payments constituted your sole taxable
income.
(B) Said tax counsel shall next compute the maximum Total
Payments that can be provided without any such Total Payments being
characterized as "Excess Parachute Payments" (as defined in Section
280G of the Code) and reduce the result by the amount of any normal
income taxes that would be imposed on you if such reduced Total
Payments constituted you sole taxable income.
(ii) If the result derived in subsection (A) is greater than the
result derived in subsection (B) by more than $10,000, then the Company
shall pay you the full amount of the Total Payments without reduction.
If the result derived from subsection (A) is not greater than the result
derived in subsection (B) by more than $10,000, then the Company shall
pay you the maximum Total Payments possible without any such Total
Payments being characterized as Excess Parachute Payments. (The
determination of how such Total Payments will be reduced shall be made by
you in good faith after consultation with the Company).
6. Successors; Binding Agreement.
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain
such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as
you would be entitled to hereunder if you terminated your employment for
Good Reason following a Change in Control of the Company, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees,
<PAGE> 13
13
devisees and legatees. If you should die while any amount would still be
payable to you hereunder if you had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if
there is no such designee, to your estate. Notwithstanding the
foregoing, you and the Company hereby agree that, upon the distribution
(the "Distribution") of shares of common stock of the Spun-Off Entity to
stockholders of the Company in a Spin-Off Transaction, the Spun-Off
Entity shall assume all of the obligations and succeed to all of the
rights of the Company under this Agreement, the Company shall be released
of all of its obligations under this Agreement and thereafter, as used in
this Agreement, the term "Company" shall mean the Spun-Off Entity and any
successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law or otherwise. This Agreement
shall terminate and be of no further force and effect and you hereby
agree to release the Company and the Spun-Off Entity from any obligations
hereunder upon the Distribution if, as of the Distribution, you are not
employed by the Spun-Off Entity or one of its direct or indirect
subsidiaries.
7. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
8. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Mississippi. All references to Sections
of the Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such Sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law.
The obligations of the Company under Section 4 shall survive the expiration of
the term of this Agreement.
9. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
<PAGE> 14
14
10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same instrument.
If this letter sets forth our agreement on the subject matter hereof, please
sign and return the enclosed copy of this letter to Teresa Holland in the FMC
Human Resources department which will then constitute our agreement on this
subject.
Sincerely yours,
FIRST MISSISSIPPI CORPORATION
- ------------------------------
J. Kelley Williams
Chairman of the Board
ACCEPTED AND AGREED TO on this, the day of , 1996.
------ -------------------
- -------------------------------------
[FULL_NAME]
<PAGE> 1
EXHIBIT 10(n)
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
DATED AS OF AUGUST 27, 1996
BY AND AMONG
MISSISSIPPI CHEMICAL CORPORATION
MISS SUB, INC.
AND
FIRST MISSISSIPPI CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
THE MERGER
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5 Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.6 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.4 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.5 SEC Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.6 Information in Disclosure Documents and Registration Statements . . . . . . . . . . . . 9
Section 3.7 Retained Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.9 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.10 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.11 No Violation of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.14 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.15 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.16 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.17 State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
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<TABLE>
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Section 3.18 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.19 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.20 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.4 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.5 SEC Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.6 Information in Disclosure Documents and Registration Statements . . . . . . . . . . . . 19
Section 4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.9 No Violation of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.10 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.11 Interim Operations of Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.12 Unwanted Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.13 Purchases of Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.14 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.15 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V
COVENANTS PENDING THE EFFECTIVE TIME
Section 5.1 Covenants of the Company with Respect to the Retained Business . . . . . . . . . . . . . 21
Section 5.2 Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.3 Covenants of Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.2 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.3 Stockholders Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.4 Legal Conditions to Distribution and Merger . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.5 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.6 Company Severance Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.7 Employee Matters; Company Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.8 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<TABLE>
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Section 6.9 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.10 No Solicitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.11 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.12 Tax-Free Nature of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.13 Audited Closing Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.14 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.15 AMPRO Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.16 Comfort Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . 33
Section 7.2 Conditions of Obligations of Parent and Sub . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.3 Conditions of Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.3 Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.5 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IX
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 38
Section 9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.5 Entire Agreement; No ThirdParty Beneficiaries . . . . . . . . . . . . . . . . . . . . . 40
Section 9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.7 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.8 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.10 AttorneyClient Privilege; Work Product . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.11 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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ANNEXES AND EXHIBITS
Annex I Distribution Agreement
Exhibit A Retained Business Financial Statements
iv
<PAGE> 6
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of August
27, 1996, by and among Mississippi Chemical Corporation, a Mississippi
corporation ("Parent"), Miss Sub, Inc., a Mississippi corporation and a wholly
owned subsidiary of Parent ("Sub"), and First Mississippi Corporation, a
Mississippi corporation (the "Company").
WHEREAS, Parent desires to acquire the Company's fertilizer business
but does not wish to acquire the other businesses conducted or to be conducted
by the Company;
WHEREAS, the Board of Directors of the Company has approved a plan of
distribution embodied in the form of a draft agreement attached hereto as Annex
I, as may be amended pursuant to the provisions of Section 6.11 hereof (the
"Distribution Agreement"), which will be entered into prior to the Effective
Time (as defined in Section 1.2) pursuant to which all of the Company's assets,
other than those used primarily in the Retained Business (as defined in Section
3.7), will be contributed to a wholly owned subsidiary of the Company ("Newco")
(such contributions, together with all mergers, other intercompany transfers of
assets, and other actions described in Article IV of the Distribution
Agreement, the "Transfer") and shares of capital stock of Newco will be
distributed (the "Distribution") on a pro rata basis to the stockholders of the
Company as provided in the Distribution Agreement in order to divest the
Company of the businesses and operations that Parent is unwilling to acquire;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have determined that, following the Distribution, the merger of Sub
with and into the Company (the "Merger") with the Company surviving as a wholly
owned subsidiary of Parent would be advantageous and beneficial to their
respective corporations and stockholders; and
WHEREAS, for federal income tax purposes, it is intended that (i) the
Distribution shall qualify as a taxfree distribution under Section 355 of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) the Merger
shall qualify as a reorganization under Section 368(a) of the Code, and this
Agreement is intended to be and is adopted as a plan of reorganization.
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
Section 1.1 THE MERGER. Upon the terms and subject to the
conditions hereof and the Mississippi Business Corporation Act (the "MBCA"), at
the Effective Time, the Company and Sub shall consummate the Merger pursuant to
which (i) Sub shall be merged with and into the Company, (ii) the separate
corporate existence of Sub shall thereupon cease, (iii) the Company
1
<PAGE> 7
shall be the surviving corporation in the Merger (the "Surviving Corporation")
and shall continue to be governed by the laws of the State of Mississippi and
(iv) the corporate existence of the Company with its properties, rights,
privileges, powers and franchises shall continue unaffected by the Merger.
Section 1.2 EFFECTIVE TIME OF THE MERGER. Upon the terms and
subject to the conditions hereof, articles of merger (the "Articles of Merger")
shall be duly prepared, executed and acknowledged by the Company and thereafter
delivered to the Secretary of State of the State of Mississippi, for filing, as
provided in the MBCA, as soon as practicable on or after the Closing Date (as
defined in Section 1.3). The Merger shall become effective immediately
following the Distribution, upon the filing of the Articles of Merger with the
Secretary of State of the State of Mississippi or at such time thereafter as is
provided in the Articles of Merger (the "Effective Time").
Section 1.3 CLOSING. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
the conditions set forth in Article VII hereof, at the offices of the Company,
700 North Street, Jackson, Mississippi 39202- 3095, unless another date or
place is agreed to in writing by the parties hereto. The date and time at
which the Closing occurs is referred to herein as the "Closing Date."
Section 1.4 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the MBCA. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 1.5 ARTICLES OF INCORPORATION AND BYLAWS.
(a) The Articles of Incorporation of Sub in effect at the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until amended in accordance with the MBCA.
(b) The bylaws of Sub in effect at the Effective Time
shall be the bylaws of the Surviving Corporation until amended in accordance
with the MBCA.
Section 1.6 DIRECTORS. The directors of Sub at the Effective
Time shall be the initial directors of the Surviving Corporation, each to hold
office from the Effective Time in accordance with the Articles of Incorporation
and bylaws of the Surviving Corporation and until his or her successor is duly
elected and qualified.
Section 1.7 OFFICERS. The officers of Sub at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
from the Effective Time in accordance with the Articles of Incorporation and
bylaws of the Surviving Corporation and until his or her successor is duly
appointed and qualified.
2
<PAGE> 8
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any shares of Common Stock, par value $1.00 per share, of the Company (the
"Company Common Stock") or Parent, as the holder of the capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding
share of the capital stock of Sub shall be converted into and become one fully
paid and nonassessable share of Common Stock, par value $1.00 per share, of the
Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED
STOCK. All shares of Company Common Stock that are owned by the Company and
any shares of Company Common Stock owned by Parent, Sub or any other
whollyowned Subsidiary (as hereinafter defined) of Parent shall be cancelled
and retired and shall cease to exist and no stock of Parent or other
consideration shall be delivered in exchange therefor. As used in this
Agreement, the word "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
(excluding partnerships the general partnership interests of which held by such
party and any Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (ii) securities or other interests having by
their terms a majority of the outstanding voting power with respect to such
corporation or other organization are directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.
(c) EXCHANGE RATIO FOR COMPANY COMMON STOCK. Subject to
Section 2.2(e), each issued and outstanding share of Company Common Stock
(other than shares to be cancelled in accordance with Section 2.1(b) and
Dissenting Shares, as defined in Section 2.3) shall be converted into the right
to receive the Merger Consideration Per Share in fully paid and nonassessable
shares of Common Stock, par value $0.01 per share, of Parent ("Parent Common
Stock"). The "Merger Consideration Per Share" shall mean 6,904,762 shares of
Parent Common Stock divided by the number of shares of Company Common Stock
outstanding at the Effective Time as certified to Parent by the Company's
transfer agent and registrar (the "Effective Time Outstanding Shares"), rounded
to the nearest one ten-thousandth of a share; PROVIDED, HOWEVER, if the average
of the Daily Prices, as derived from THE WALL STREET JOURNAL, for the ten (10)
trading days immediately preceding the trading day prior to the Effective Time
(such number rounded to the nearest one one- hundredth of a cent, the "Average
Parent Price"), is more than $25.00, then the Merger Consideration Per Share
shall be the greater of (i) 6,393,298 shares of Parent Common Stock divided by
the Effective Time Outstanding Shares and (ii) the number (rounded to the
nearest one ten-thousandth of a share) of Parent Common Shares determined by
dividing (A) the product of (x) 6,904,762 multiplied by (y) a fraction, the
numerator of which is $25.00
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and the denominator of which is the Average Parent Price, by (B) the Effective
Time Outstanding Shares. The term "Daily Price" shall mean for each trading
day the average of the opening price, high price, low price and closing price
for the Parent Common Stock. At the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have any rights with
respect thereto, except the right to receive the shares of Parent Common Stock
and any cash in lieu of fractional shares of Parent Common Stock to be issued
or paid in consideration therefor upon the surrender of such certificate in
accordance with Section 2.2, without interest.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time, Parent
shall deposit with KeyCorp Shareholder Services, Inc. or such other bank or
trust company designated by the Company (and reasonably acceptable to Parent)
(the "Exchange Agent"), for the benefit of the holders of shares of Company
Common Stock, for exchange in accordance with this Article II through the
Exchange Agent, certificates representing the shares of Parent Common Stock
issuable pursuant to Section 2.1 in exchange for outstanding shares of Company
Common Stock, together with cash to be paid in lieu of fractional shares (such
shares of Parent Common Stock, together with any dividends or distributions
with respect thereto contemplated by Section 2.2(c) and cash in lieu of
fractional shares, being hereinafter referred to as the "Exchange Fund").
(b) EXCHANGE PROCEDURES. As soon as practicable after
the Effective Time, the Surviving Corporation shall cause the Exchange Agent to
mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates") whose shares were converted pursuant
to Section 2.1 into the right to receive shares of Parent Common Stock (i) a
letter of transmittal (which shall be in such form and have such provisions as
Parent and the Company may reasonably specify) and (ii) instructions for
surrendering the Certificates in exchange for certificates representing shares
of Parent Common Stock. Upon surrender of a Certificate for cancellation to
the Exchange Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock
which such holder has the right to receive pursuant to the provisions of this
Article II and the Certificate so surrendered shall forthwith be cancelled. In
the event of a transfer of ownership of Company Common Stock which is not
registered in the transfer records of the Company, a certificate representing
the proper number of shares of Parent Common Stock may be issued to a
transferee if the Certificate representing such Company Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender a certificate
representing shares of Parent Common Stock and cash in lieu of any fractional
shares of Parent Common Stock as contemplated by this Section 2.2.
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(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to
the shares of Parent Common Stock which such holder is entitled to receive upon
the surrender thereof in accordance with this Section 2.2, and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant to
Section 2.2(e) until the holder of record of such Certificate shall so
surrender such Certificate. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of any fractional share of
Parent Common Stock to which such holder is entitled pursuant to Section 2.2(e)
and the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to surrender payable with respect
to such whole shares of Parent Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK.
All shares of Parent Common Stock issued upon the surrender for exchange of
shares of Company Common Stock in accordance with the terms hereof (including
any cash paid pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
Company Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be cancelled and exchanged as
provided in this Article II.
(e) NO FRACTIONAL SHARES. No certificate or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a stockholder of
Parent. In lieu of any such fractional shares, each holder of Company Common
Stock who would otherwise have been entitled to a fraction of a share of Parent
Common Stock upon surrender of Certificates for exchange will be entitled to
receive a cash payment in lieu of such fractional share in an amount equal to
such fraction multiplied by the Average Parent Price.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed to the stockholders of the Company
for six months after the Effective Time shall be delivered to Parent, upon
demand, and any stockholders of the Company who have not theretofore complied
with this Article II shall thereafter look only to Parent for payment of their
claim for Parent Common Stock, any cash in lieu of fractional shares of Parent
Common Stock and any dividends or distributions with respect to Parent Common
Stock.
(g) NO LIABILITY. Neither Parent nor the Company shall
be liable to any holder of shares of Company Common Stock or Parent Common
Stock, as the case may be, for such shares (or dividends or distributions with
respect thereto) or cash for payment in lieu of fractional
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shares delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Section 2.3 DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of the Company Common Stock which immediately
prior to the Effective Time are held by stockholders who have properly
exercised and perfected appraisal rights under Section 79413.02 of the MBCA
(the "Dissenting Shares") shall not be converted into the right to receive
shares of Parent Common Stock as provided in Section 2.1 hereof, but the
holders of Dissenting Shares shall be entitled to receive such consideration
from the Surviving Corporation as shall be determined pursuant to Section
79413.02 of the MBCA; provided, however, that, if any such holder shall have
failed to perfect or shall withdraw or lose his right to appraisal and payment
under the MBCA, such holder's shares of Company Common Stock shall thereupon be
deemed to have been converted as of the Effective Time into the right to
receive shares of Parent Common Stock, without any interest thereon, as
provided in Section 2.1 and such shares shall no longer be Dissenting Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 3.1 ORGANIZATION. As used in this Agreement, any
reference to the Company and its Subsidiaries means the Company and each of its
Subsidiaries; any reference to Newco and its Subsidiaries means Newco at the
time of the Distribution and those entities that at or immediately prior to the
Distribution will be direct or indirect Subsidiaries of or merged with or
liquidated into Newco; and references to Subsidiaries of Newco mean those
entities that at or immediately prior to the Distribution will be direct or
indirect Subsidiaries of or merged with or liquidated into Newco. As used in
this Agreement, any reference to any event, change or effect having a material
adverse effect on or with respect to an entity (or group of entities taken as a
whole) means that such event, change or effect is materially adverse to the
business, properties, assets, results of operations or financial condition of
such entity (or, if with respect thereto, of such group of entities taken as a
whole). Each of the Company and its Subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or
to have such power and authority would not have a material adverse effect on
the Retained Business taken as a whole. The Company and each of its
Subsidiaries are duly qualified or licensed to do business and in good standing
in each jurisdiction in which the property owned, leased or operated by them or
the nature of the business conducted by them makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed
and in good standing would not in the aggregate have a material adverse effect
on the Retained Business taken as a whole or on the ability of the Company and
its Subsidiaries to consummate the transactions contemplated hereby. True,
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accurate and complete copies of the Company's Charter of Incorporation and
bylaws, including all amendments thereto, have heretofore been delivered to
Parent.
Section 3.2 CAPITALIZATION. The authorized capital stock of the
Company consists of: (i) 100,000,000 shares of Company Common Stock of which,
as of August 26, 1996, 20,614,491 shares were issued and outstanding, and (ii)
20,000,000 shares of preferred stock (the "Company Preferred Stock"), of which,
as of the date hereof, no shares are issued or outstanding. 250,000 shares of
Company Preferred Stock are designated Series X Junior Participating Preferred
Stock (the "Company Series X Preferred Stock") and are reserved for issuance in
accordance with the Rights Agreement, dated as of February 27, 1996 (the
"Rights Agreement"), by and between the Company and Society National Bank, as
Rights Agent (the "Company Rights Agent"), pursuant to which the Company has
issued rights (the "Company Rights") to purchase shares of Company Series X
Preferred Stock and 249,167 shares of Company Preferred Stock (with the
designations set forth in Section 3.2 of the disclosure schedule delivered by
the Company to Parent on the date hereof (the "Company Disclosure Schedule"))
are reserved for issuance pursuant to the terms of debentures convertible into
Company Preferred Stock (the "Company Convertible Debentures") and debenture
options. As of the date hereof, 926,759 shares of Company Common Stock were
reserved for issuance upon exercise of outstanding stock options and debenture
options (which debenture options are exercisable for Company Convertible
Debentures which are convertible into Company Preferred Stock which is then
convertible into Company Common Stock) and upon conversion of Company
Convertible Debentures pursuant to the Company's 1980 LongTerm Incentive Plan
(the "1980 Plan"), 1988 LongTerm Incentive Plan (the "1988 Plan") and 1995
LongTerm Incentive Plan (the "1995 Plan" and, together with the 1980 Plan and
the 1988 Plan, the "Company Stock Plans"). All the outstanding shares of the
Company's capital stock are, and all shares which may be issued pursuant to
Company Stock Plans will be, when issued in accordance with the terms thereof,
duly authorized, validly issued, fully paid and nonassessable and free of any
preemptive rights in respect thereof. Except as set forth above or in Section
3.2 of the Company Disclosure Schedule, as of the date hereof, there are no
existing options, warrants, calls, subscriptions or other rights or other
agreements, commitments, understandings or restrictions of any character
binding on the Company or any of its Subsidiaries with respect to the issued or
unissued capital stock of the Company or any of its Subsidiaries. Except as
set forth in Section 3.2 of the Company Disclosure Schedule, there are no
outstanding contractual obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries.
Section 3.3 AUTHORITY. The Company has the requisite corporate
power and authority to execute and deliver this Agreement and the Distribution
Agreement and to consummate the transactions contemplated hereby and thereby
other than, with respect to the Merger, the approval and adoption of this
Agreement by the affirmative vote of the holders of at least a majority of the
outstanding shares of Company Common Stock and, with respect to the
Distribution, the declaration of the Distribution by the Company's Board of
Directors. The execution, delivery and performance of this Agreement and the
Distribution Agreement by the Company and the consummation by the Company of
the Distribution and the Merger and of the other transactions contemplated
hereby and thereby have been duly authorized by the Company's Board of
Directors, and no other corporate proceedings on the part of the Company are
necessary
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to authorize this Agreement or the Distribution Agreement or for the Company to
consummate the transactions so contemplated hereby or thereby other than, with
respect to the Merger, the approval and adoption of this Agreement by the
affirmative vote of the holders of at least a majority of the outstanding
shares of Company Common Stock and, with respect to the Distribution,
declaration of the Distribution by the Company's Board of Directors. This
Agreement has been duly executed and delivered by the Company and, assuming
this Agreement constitutes a valid and binding obligation of Parent and Sub,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms. Prior to the Distribution, the
Distribution Agreement will be duly executed and delivered by each of the
Company and Newco and upon such execution and delivery will constitute a valid
and binding obligation of each of the Company and Newco, enforceable against
each of them in accordance with its terms.
Section 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except (a) as
set forth in Section 3.4 of the Company Disclosure Schedule, (b) for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Securities Act of 1933, as amended (the
"Securities Act"), the New York Stock Exchange (the "NYSE"), the National
Association of Securities Dealers, Inc., the HartScottRodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), filings under state
securities or "blue sky" laws and the filing with the Secretary of State of the
State of Mississippi of the Articles of Merger and articles of merger with
respect to the merger of FirstMiss Fertilizer, Inc. into the Company and (c) as
may be necessary as a result of any facts or circumstances relating solely to
Parent or any of its Subsidiaries, none of the execution, delivery or
performance of this Agreement or the Distribution Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby or
thereby and compliance by the Company with any of the provisions hereof or
thereof will (i) conflict with or result in any breach of any provisions of the
charters or bylaws of the Company or of any of its Subsidiaries, (ii) require
any filing by the Company or any of its Subsidiaries with, or any permit,
authorization, consent or approval to be obtained by the Company or any of its
Subsidiaries of, any court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency (a
"Governmental Entity"), (iii) 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, amendment, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument, obligation
or commitment to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound
("Contracts") or (iv) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company or any of its Subsidiaries,
except, in the case of clause (ii), (iii) or (iv), for failures to file or
obtain, violations, breaches or defaults which would not have a material
adverse effect on the Retained Business taken as a whole or the ability of the
Company to consummate the transactions contemplated hereby.
Section 3.5 SEC REPORTS AND FINANCIAL STATEMENTS. The Company
has timely filed with the Securities and Exchange Commission (the "SEC"), and
has heretofore made available to
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Parent true and complete copies of, all periodic reports required to be filed
by it since July 1, 1995 under the Exchange Act (as such documents have been
amended since the time of their filing, together with all such periodic reports
to be filed from the date hereof to the Effective Time, collectively, the
"Company SEC Documents"). Except with respect to information concerning the
Triad Chemical Joint Venture ("Triad"), as to which the Company makes no
representation or warranty for the purposes of this Section 3.5, the Company
SEC Documents, including without limitation any financial statements or
schedules included therein, at the time filed, (a) did not or will not, as the
case may be, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (b) complied or will comply, as the case may be, in all
material respects with the applicable requirements of the Exchange Act. Except
with respect to information concerning Triad, as to which the Company makes no
representation or warranty for purposes of this Section 3.5, the consolidated
financial statements of the Company included in the Company SEC Documents
(including the notes and schedules thereto, the "Company Financial Statements")
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10Q of the SEC) and fairly present
in all material respects (subject, in the case of the unaudited financial
statements, to normal audit adjustments) the consolidated financial position of
the Company and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.
Section 3.6 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION
STATEMENTS. Except with respect to information concerning Triad, as to which
the Company makes no representation or warranty for purposes of this Section
3.6, none of the information supplied or to be supplied by the Company or its
representatives for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of shares of Parent Common Stock in the Merger
(the "S-4") will, at the time such registration statement becomes effective
under the Securities Act and at the Effective Time, contain any untrue
statement of a material fact or omit to state any 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 and (ii) the joint
proxy statement relating to the meetings of each of the Company's and Parent's
stockholders to be held in connection with the Merger (the "Proxy Statement")
will, at the date mailed to the Company's and Parent's stockholders and at the
time of each of the meetings of the Company's and Parent's stockholders to be
held in connection with the Merger, 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. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by Parent or Sub for inclusion in the Proxy
Statement, with respect to information concerning Parent or any of its
Subsidiaries
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incorporated by reference in the Proxy Statement or with respect to information
concerning Triad.
Section 3.7 RETAINED BUSINESS.
(a) Attached hereto as Exhibit A is an unaudited pro
forma consolidated balance sheet of the Retained Business of the Company and
its Subsidiaries at June 30, 1996 (including certain explanatory notes thereto,
the "Retained Business Balance Sheet") and an unaudited pro forma consolidated
statement of operations for the Retained Business of the Company and its
Subsidiaries for the year ended June 30, 1996 (including certain explanatory
notes thereto, the "Retained Business Income Statement" and, together with the
Retained Business Balance Sheet, the "Retained Business Financial Statements").
The "Retained Business" means and includes the assets, liabilities, capital
stock and partnership interests reflected on the Retained Business Balance
Sheet, as such assets and liabilities may have changed since the date of the
Retained Business Balance Sheet, but in any event shall include all of the
Company's direct and indirect right, title and interest (including minority
interests) in the assets used primarily in, and all of the Company's
liabilities and obligations (accrued, absolute, contingent, undisclosed or
otherwise) which are primarily related to or have arisen or will arise from,
the production, distribution, sale and storage of ammonia and urea and purchase
and resale of ammonia and urea (except for those assets and liabilities
identified in Section 3.7 of the Company Disclosure Schedule under the headings
"Excluded Assets" and "Excluded Liabilities," which shall not be included in
the Retained Business and which are referred to herein as the "Excluded Assets"
and "Excluded Liabilities"). The Retained Business shall include the following
entities: FirstMiss Fertilizer, Inc.; AMPRO Fertilizer, Inc.; FMF Barge, Inc.;
FMF, Inc. ("FMF"); a 50% interest in Arcadian/FirstMiss Fertilizer LLC; a 50%
interest in Triad; and the partnership interests currently held by FEC
Marketing, Inc. ("FEC") and FMF in FirstMiss Fertilizer Limited Partnership and
FirstMiss Fertilizer Texas LP (the "Partnerships"). As of the Effective Date,
the interests in the Partnerships currently held by FEC will be held by an
entity other than FEC included in the Retained Business that will be designated
by Parent.
(b) Except with respect to information concerning Triad,
as to which the Company makes no representation or warranty for purposes of
this Section 3.7, the Retained Business Financial Statements have been prepared
in accordance with generally accepted accounting principles on a basis
consistent with the Company Financial Statements, and, except as set forth in
Section 3.7 of the Company Disclosure Schedule, fairly present in all material
respects (subject to normal audit adjustments) the consolidated financial
position of the Company and its Subsidiaries as at the date thereof, after
giving pro forma effect to the Distribution (assuming the Distribution occurred
on June 30, 1996), and the consolidated results of their operations for the
one-year period then ended, after giving pro forma effect to the Distribution
(assuming the Distribution occurred on July 1, 1995).
(c) At the Effective Time, except for the Excluded Assets
and as contemplated by this Agreement or the Distribution Agreement, neither
Newco nor any of its Subsidiaries will own or have rights to use any of the
assets or property, whether tangible, intangible or mixed, which are necessary
for the conduct of the Retained Business as conducted on the date hereof.
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Except as set forth in Section 3.7 of the Company Disclosure Schedule, at the
Effective Time neither Newco nor any of its Subsidiaries will be a party to any
material agreement or arrangement with the Surviving Corporation or any of its
Subsidiaries (other than the Distribution Agreement and any agreements
contemplated by the Distribution Agreement, including the Tax Disaffiliation
Agreement and the Employee Benefits Agreement).
Section 3.8 LITIGATION. Except as disclosed in the Company SEC
Documents filed prior to the date hereof or as set forth in Section 3.8 of the
Company Disclosure Schedule and except with respect to information concerning
Triad, as to which the Company makes no representation or warranty for purposes
of this Section 3.8, there is no suit, action, proceeding or investigation
relating to the Retained Business pending or, to the knowledge of the Company,
threatened, against the Company or any of its Subsidiaries before any
Governmental Entity which, individually or in the aggregate, is reasonably
likely to have a material adverse effect on the Retained Business taken as a
whole or the ability of the Company to consummate the transactions contemplated
hereby. Except as disclosed in the Company SEC Documents filed prior to the
date hereof or as set forth in Section 3.8 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is subject to any outstanding
order, writ, injunction or decree relating to the Retained Business which,
individually or in the aggregate, is reasonably likely to have a material
adverse effect on the Retained Business taken as a whole or a material adverse
effect on the ability of the Company to consummate the transactions
contemplated hereby.
Section 3.9 EMPLOYEE BENEFITS.
(a) Other than with respect to Triad, as to which the
Company makes no representation or warranty for purposes of this Section 3.9,
Section 3.9 of the Company Disclosure Schedule contains a list of all "employee
benefit plans" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and all bonus, stock option,
fringe benefit, vacation, incentive, severance, employment or other benefit
plans, programs, agreements and arrangements (the "Benefit Plans"), which cover
employees or former employees of the Company and its Subsidiaries who are or
were employed in the Retained Business (the "Employees"). True and complete
copies of all Benefit Plans, any trust instruments and/or insurance contracts,
if any, forming a part of any such plans, and all amendments thereto; current
summary plan descriptions; where applicable, the most current determination
letter received from the Internal Revenue Service (the "Service") and most
recent determination letter application; and where applicable, annual reports,
financial statements and actuarial reports for the last three plan years, which
fairly and accurately reflect the financial condition of the plans have been
made available to Parent.
(b) All Benefit Plans are in compliance with ERISA, the
Code and all other applicable laws in all material respects. Each Benefit Plan
which is an "employee pension benefit plan" within the meaning of Section 3(2)
of ERISA (a "Pension Plan") and which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Service, and the Company is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. Neither the Company nor
any of its
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Subsidiaries or any ERISA Affiliate (as defined below) has contributed or been
required to contribute to any Multiemployer Plan (as defined in ERISA) with
respect to any Employees.
(c) No liability under Subtitle C or D of Title IV of
ERISA has been incurred by the Company or any Subsidiary with respect to any
ongoing, frozen or terminated Benefit Plan, currently or formerly maintained by
any of them, or the Plan of any entity which is or has been considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the
Code (an "ERISA Affiliate") which would have a material adverse effect on the
Retained Business taken as a whole.
(d) All contributions required to be made or accrued as
of June 30, 1996 under the terms of any Benefit Plan for which the Surviving
Corporation or any of its Subsidiaries may have liability have been timely made
or have been reflected on the Retained Business Balance sheet. Neither any
Pension Plan nor any singleemployer plan of an ERISA Affiliate has incurred an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA in an amount which would have a
material adverse effect on the Retained Business taken as a whole. Neither the
Company nor any of its Subsidiaries has provided, or is required to provide,
security to any Pension Plan pursuant to Section 401(a)(29) of the Code.
(e) Neither the Company nor any of its Subsidiaries has
any obligations for retiree health and life benefits for Employees or former
Employees under any Benefit Plan, except as set forth in Section 3.9 of the
Company Disclosure Schedule or as required by Part 6 of Title I of ERISA.
(f) The Company and its Subsidiaries have no unfunded
liabilities with respect to any Pension Plan which covers former Employees in
an amount which would have a material adverse effect on the Retained Business
taken as a whole.
(g) Immediately after the Effective Time, the Surviving
Corporation or its Subsidiaries could terminate each Benefit Plan in accordance
with its terms without incurring any material liability.
(h) With respect to the Company and the Retained
Business, the transactions contemplated by this Agreement and the Distribution
Agreement will not cause any additional payments to be due under any Benefit
Plan, nor accelerate the payment or vesting of any amounts due under any
Benefit Plan, nor result in any excess parachute payment within the meaning of
Code Section 280G except for payments which are paid prior to the Effective
Time, accrued on the Audited Closing Balance Sheet (as defined in Section 6.13)
or for which funds have been reserved, or amounts due which are assumed by
Newco pursuant to the Distribution Agreement.
Section 3.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30,
1996, the Company and its Subsidiaries have conducted the Retained Business
only in the ordinary and usual course consistent with past practice, except as
set forth in Section 3.10 of the Company
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Disclosure Schedule, and there has not been any change or development, or
combination of changes or developments which individually or in the aggregate
have had or are reasonably likely to have a material adverse effect on the
Retained Business taken as a whole.
Section 3.11 NO VIOLATION OF LAW. Except as disclosed in the
Company SEC Documents as filed prior to the date hereof or as set forth in
Section 3.11 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is in violation of, or, to the knowledge of the Company, is
under investigation with respect to or has been given notice or been charged by
any Governmental Entity with any violation of, any law, statute, order, rule,
regulation or judgment of any Governmental Entity, except for violations which,
in the aggregate, would not have a material adverse effect on the Retained
Business taken as a whole. The Company and its Subsidiaries have all permits,
licenses, franchises and other governmental authorizations, consents and
approvals necessary to conduct the Retained Business as presently conducted,
except for any such permits, licenses, franchises or other governmental
authorizations, consents and approvals the failure of which to have would not
have a material adverse effect on the Retained Business taken as a whole.
Section 3.12 TAXES.
(a) Except as disclosed in the Company Financial
Statements for the year ended June 30, 1995 or as set forth in Section 3.12 of
the Company Disclosure Schedule:
(i) the Company and its Subsidiaries have (A)
duly filed with the appropriate governmental authorities all Tax
Returns (as hereinafter defined) required to be filed by them on or
prior to the Effective Time, other than those Tax Returns the failure
of which to file would not have a material adverse effect on the
Retained Business taken as a whole, and such Tax Returns are true,
correct and complete in all material respects, and (B) duly paid in
full or made provision in accordance with generally accepted
accounting principles for the payment of, and withheld, all Taxes (as
hereinafter defined) required to be shown on such Tax Returns or
required to be withheld by them, respectively;
(ii) as of the date hereof, the Tax Returns for
the Company and its Subsidiaries are not currently the subject of any
audit, investigation or proceeding by the Service or, to the Company's
knowledge, any state or local taxing authority, and the Company and
its Subsidiaries have not received any written notice of deficiency or
assessment from any taxing authority with respect to liabilities for
material Taxes of the Company or its Subsidiaries which have not been
paid or finally settled, other than audits, deficiencies or
assessments disclosed in Section 3.12 of the Company Disclosure
Schedule which are being contested in good faith through appropriate
proceedings;
(iii) no waiver of any statute of limitations in
respect of Taxes or any extension of time with respect to a Tax
assessment or deficiency granted by the Company or any of its
Subsidiaries is currently in effect;
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(iv) none of the Company and its Subsidiaries is a
party to any Tax allocation or sharing agreement, other than the Tax
Disaffiliation Agreement; and
(v) none of the Company and its Subsidiaries has
been a member of any affiliated group within the meaning of Section
1504(a) of the Internal Revenue Code of 1986, as amended, or any
similar affiliated or consolidated group for tax purposes under state,
local or foreign law (other than a group the common parent of which is
the Company), or has any liability for the Taxes of any person (other
than the Company and its Subsidiaries) under Treasury Regulation
Section 1.1502-6 or any similar provision of state, local or foreign
law as a transferee or successor, by contract or otherwise.
(b) "Taxes" means all taxes, charges, fees, levies,
imposts, duties or other assessments, including, without limitation, income,
gross receipts, excise, personal property, real property, sales, ad valorem,
value-added, leasing, withholding, social security, occupation, use, service,
service use, license, payroll, franchise, transfer and recording taxes, fees
and charges, imposed by the United States or any state, local, or foreign
governmental authority whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest, fines,
penalties or additional amounts attributable or imposed on or with respect to
any such taxes, charges, fees, levies, imposts, duties or other assessments.
"Tax Return" means any return, report or other document or information required
to be supplied to a taxing authority in connection with Taxes.
Section 3.13 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the Company SEC Documents as
filed prior to the date hereof or as set forth in Section 3.13 of the Company
Disclosure Schedule, except for such matters that, individually or in the
aggregate, would not have a material adverse effect on the Retained Business
taken as a whole and except with respect to information concerning Triad, as to
which the Company makes no representation or warranty for purposes of this
Section 3.13, (i) the Retained Business of the Company and its Subsidiaries is
in compliance in all material respects with all applicable Environmental Laws
(as hereinafter defined); (ii) the properties included in the Retained Business
and presently owned or operated by the Company or its Subsidiaries (the
"Company Properties") do not contain any Hazardous Substance (as hereinafter
defined) other than as permitted under applicable Environmental Laws; (iii)
neither the Company nor any of its Subsidiaries has since July 1, 1994 received
or is aware of any actual claims, notices, demand letters, lawsuits or requests
for information from any Governmental Entity or any private third party
alleging that the Retained Business is in violation of, or liable under, any
Environmental Laws; and (iv) none of the Company, its Subsidiaries or the
Company Properties is subject to any court order, administrative order or
decree relating to the Retained Business arising under any Environmental Law.
(b) "Environmental Law" means any applicable Federal,
state or local law, regulation, permit, judgment or agreement with any
Governmental Entity, relating to (x) the protection, preservation or
restoration of the environment or to human health or safety, or (y) the
exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing,
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handling, labeling, production, release or disposal of Hazardous Substances.
"Hazardous Substance" means any substance presently listed, defined, designated
or classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law.
Section 3.14 MATERIAL CONTRACTS. Other than with respect to
Triad, Section 3.14 of the Company Disclosure Schedule identifies any Contract
included in the Retained Business to which the Company or any of its
Subsidiaries is a party or by which any of its assets or operations may be
bound that is (i) a loan or similar agreement or indebtedness evidenced by a
note or other instrument, or any direct or indirect guarantee of indebtedness
of any other person, in excess of $1,000,000; (ii) any Contract that expressly
limits the right to terminate the Contract without penalty upon less than one
year's notice and such Contract provides for future payments in excess of
$5,000,000 within the next twelve (12) months from the date hereof; (iii) any
Contract for the purchase, sale or transportation of natural gas; (iv) any
Contract related to product purchases or product sales in excess of $500,000;
and (v) any Contract related to capital expenditures, which provides for future
payments in excess of $5,000,000 within the next twelve (12) months from the
date hereof. Except as set forth in Section 3.14 of the Company Disclosure
Schedule and except with respect to Triad, as to which the Company makes no
representation or warranty for purposes of this Section 3.14, (i) each of the
Contracts included in the Retained Business to which the Company or any of its
Subsidiaries is a party or by which any of its assets or operations may be
bound is in full force and effect, except where the failure to be in full force
and effect would not have a material adverse effect on the Retained Business
taken as a whole and (ii) there are no existing defaults by the Company or such
Subsidiary thereunder which default would result in a material adverse effect
on the Retained Business taken as a whole.
Section 3.15 RIGHTS AGREEMENT. As of the Effective Time, the
Company will have taken all necessary action to render the Company Rights
inapplicable to the Merger, the Distribution and the other transactions
contemplated hereby.
Section 3.16 BROKERS OR FINDERS. Neither the Company nor any of
its Subsidiaries has any liability to any agent, broker, investment banker,
financial advisor or other firm or person for any broker's or finder's fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement except CS First Boston Corporation, whose fees
and expenses, as previously disclosed to Parent, will be paid by the Company in
accordance with the Company's agreement with such firm.
Section 3.17 STATE TAKEOVER STATUTES. The provisions of the
Mississippi Control Share Act and the Mississippi Shareholder Protection Act
will not apply to the Merger, the Distribution or any of the other transactions
contemplated hereby, and to the Company's knowledge, no other state takeover
statute or similar statute or regulation applies to the Merger, the
Distribution, or any of the other transactions contemplated hereby.
Section 3.18 OPINION OF FINANCIAL ADVISOR. The Company has
received the opinion of CS First Boston Corporation to the effect that, as of
the date of such opinion, the terms of the Distribution and Merger, taken
together, are fair, from a financial point of view, to the holders of common
stock of the Company.
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Section 3.19 TITLE TO ASSETS. The Company has title and/or rights
sufficient to carry-on operations as contemplated by (the AMPRO Retrofit as
defined in Section 6.15) or presently conducted to that portion of the real
property (and the rights, privileges and appurtenances pertaining to such real
property) included in the Retained Business on which the AMPRO ammonia plant
and related operations are located, subject only to the following permitted
exceptions: (i) all highway, roadway, railroad, utility, drainage, pipeline
and other like easements, servitudes and rights of way which an inspection or
survey of the property would show and which do not materially adversely affect
use of the property as a fertilizer manufacturing facility and related
operations, (ii) liens for ad valorem taxes not yet due and payable, (iii)
easements, restrictions and encumbrances which do not materially adversely
affect use of the property as a fertilizer manufacturing facility and related
operations and (iv) all rights, title and interests of (x) Parent and (y)
Triad. Except as otherwise set forth above, except with respect to any other
real property included in the Retained Business, as to which the Company makes
no representation or warranty for purposes of this Section 3.19 and except as
set forth in Section 3.19 of the Company Disclosure Schedule, the Company owns
all of the material assets included in the Retained Business free and clear of
any liens, claims, security interests or encumbrances that, individually or in
the aggregate, are reasonably likely to have a material adverse effect on the
Retained Business taken as a whole.
Section 3.20 EMPLOYEES. Other than with respect to Triad, the
Company has made available to Parent a list of the employees currently employed
in the Retained Business indicating the positions which they now hold, their
current rates of compensation and which employees, if any, are on short or long
term disability, family and medical, military, workers' compensation, or any
other type of leave of absence; and copies of all employee handbooks, and
policy and procedure manuals. With respect to the Retained Business other than
Triad, neither the Company nor any of its Subsidiaries is a party to, or is
bound by, any collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor is the Company or
any of its Subsidiaries the subject of any proceeding or organizing activity
asserting that it or any such Subsidiary has committed an unfair labor practice
or seeking to compel it or such Subsidiary to bargain with any labor
organization as to wages and conditions of employment, nor is there any strike,
labor dispute, slow down or stoppage involving the Company or any of its
Subsidiaries pending or, to the knowledge of the Company, threatened that,
individually or in the aggregate, are reasonably likely to have a material
adverse effect on the Retained Business taken as a whole.
Section 3.21 INSURANCE. Set forth in Section 3.21 of the Company
Disclosure Schedule is a schedule of the insurance coverage (including policy
limits, coverage layers, and named insureds) maintained by the Company on the
assets, properties, premises, operations and personnel of the Company,
including the Retained Business.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 4.1 ORGANIZATION. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as now being conducted except where the failure to be so
organized, existing and in good standing or to have such power and authority
would not have a material adverse effect on Parent and its Subsidiaries taken
as a whole. Parent and each of its Subsidiaries are duly qualified or licensed
to do business and in good standing in each jurisdiction in which the property
owned, leased or operated by them or the nature of the business conducted by
them makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not in the
aggregate have a material adverse effect on Parent and its Subsidiaries taken
as a whole or on the ability of Parent or Sub to consummate the transactions
contemplated hereby. True, accurate and complete copies of Parent's and Sub's
Articles of Incorporation and bylaws, including all amendments thereto, have
heretofore been delivered to the Company.
Section 4.2 CAPITALIZATION. As of the date hereof, the
authorized capital stock of Parent consists of: (i) 100,000,000 shares of
Parent Common Stock of which, as of June 30, 1996, 21,353,450 shares were
issued and outstanding and 1,550,000 shares were held in treasury, and (ii)
500,000 shares of preferred stock, par value $0.01 per share, of which, as of
the date hereof, no shares were issued and outstanding ("Parent Preferred
Stock"). 250,000 shares of Parent Preferred Stock are designated Preferred
Stock, Series A and are reserved for issuance in accordance with the Rights
Agreement, dated as of August 8, 1994, by and between Parent and Harris Trust
and Savings Bank, as Rights Agent, pursuant to which Parent has issued rights
to purchase shares of Parent Preferred Stock. All the outstanding shares of
Parent's capital stock are, and all shares of Parent Common Stock which are to
be issued pursuant to the Merger will be when issued in accordance with the
terms hereof, duly authorized, validly issued, fully paid and nonassessable and
free of any preemptive rights in respect thereto. Except for Parent Common
Stock issuable to directors, officers and employees pursuant to Parent stock
option and other benefit plans and except for this Agreement, there are no
existing options, warrants, calls, subscriptions or other rights or other
agreements, commitments, understandings or restrictions of any character
relating to the issued or unissued capital stock of Parent or any of its
Subsidiaries. As of the date hereof, the authorized capital stock of Sub
consists of 1,000 shares of Common Stock, par value $0.01 per share, all of
which are validly issued, fully paid and nonassessable and are owned of record
and beneficially by Parent. After June 30, 1996 and prior to the date hereof,
no material number of shares of Parent Common Stock have been issued except
issuances of shares reserved for issuance as described above.
Section 4.3 AUTHORITY. Parent and Sub have the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions
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contemplated hereby (other than, with respect to the Merger, the approval of
the issuance of shares of Parent Common Stock to the Company's stockholders
pursuant to this Agreement by an affirmative vote of the holders of at least a
majority of the shares of Parent Common Stock present, in person or by proxy,
and entitled to vote at the meeting of Parent's stockholders referred to in
Section 6.3(b) for which a quorum exists). The execution, delivery and
performance of this Agreement by each of Parent and Sub and the consummation by
Sub of the Merger and by Parent and Sub of the other transactions contemplated
hereby have been duly authorized by the Boards of Directors of Parent and Sub
and Parent as the sole stockholder of Sub, and no other corporate proceedings
on the part of Parent or Sub are necessary to authorize this Agreement or for
Parent and Sub to consummate the transactions so contemplated (other than, with
respect to the Merger, the approval of the issuance of shares of Parent Common
Stock to the Company's stockholders pursuant to this Agreement by an
affirmative vote of the holders of at least a majority of the shares of Parent
Common Stock present, in person or by proxy, and entitled to vote at the
meeting of Parent's stockholders referred to in Section 6.3(b) for which a
quorum exists). This Agreement has been duly executed and delivered by each of
Parent and Sub, and, assuming this Agreement constitutes a valid and binding
obligation of the Company, constitutes a valid and binding obligation of each
of Parent and Sub, enforceable against each of them in accordance with its
terms.
Section 4.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except (a) as
set forth in Section 4.4 of the disclosure schedule delivered by Parent to the
Company on or prior to the date hereof (the "Parent Disclosure Schedule"), (b)
for filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, the HSR Act, the NYSE or the NASDAQ National Market, as the case may be,
filings under state securities or "blue sky" laws, and the filing with the
Secretary of State of the State of Mississippi of the Articles of Merger and
(c) as may be necessary as a result of any facts or circumstances relating
solely to the Company and its Subsidiaries, neither the execution, delivery or
performance of this Agreement by Parent and Sub nor the consummation by Parent
and Sub of the transactions contemplated hereby nor compliance by Parent and
Sub with any of the provisions hereof will (i) conflict with or result in any
breach of any provision of the respective charter or bylaws of Parent and Sub,
(ii) require any filing by Parent or its Subsidiaries with, or permit,
authorization, consent or approval to be obtained by Parent or its Subsidiaries
of, any Governmental Entity, (iii) 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, any
of the terms, conditions or provisions of any Contract to which Parent 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 (iv) violate any order, writ, injunction,
decree, statute, ordinance, rule or regulation applicable to Parent or any of
its Subsidiaries, except, in the case of clause (ii), (iii) or (iv), for
failures to file or obtain, violations, breaches or defaults which would not,
individually or in the aggregate, have a material adverse effect on Parent or
Sub or the ability of Parent or Sub to consummate the transactions contemplated
hereby.
Section 4.5 SEC REPORTS AND FINANCIAL STATEMENTS. Each of Parent
and its Subsidiaries has timely filed with the SEC and has heretofore made
available to the Company true and complete copies of all periodic reports
required to be filed by it since July 1, 1995 under
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the Exchange Act (as such documents have been amended since the time of their
filing, together with all such periodic reports to be filed from the date
hereof to the Effective Time, collectively, the "Parent SEC Documents").
Except with respect to information concerning Triad, as to which Parent makes
no representation or warranty for purposes of this Section 4.5, the Parent SEC
Documents, including without limitation any financial statements or schedules
included therein, at the time filed, (a) did not or will not, as the case may
be, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (b) complied or will comply, as the case may be, in all material
respects with the applicable requirements of the Exchange Act. Except with
respect to information concerning Triad, as to which Parent makes no
representation or warranty for purposes of this Section 4.5, the consolidated
financial statements of Parent included in the SEC Documents comply as to form
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited financial statements, as
permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of
the unaudited statements, to normal audit adjustments) the consolidated
financial position of Parent and its consolidated Subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended.
Section 4.6 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION
STATEMENTS. Except with respect to information concerning Triad, as to which
Parent makes no representation or warranty for purposes of this Section 4.6,
none of the information supplied by Parent or Sub or their representatives for
inclusion or incorporation by reference in (i) the S-4 will, at the time the
S-4 becomes effective under the Securities Act and at the Effective Time,
contain any untrue statement of a material fact or omit to state any 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 and
(ii) the Proxy Statement will, at the date mailed to each of the Company's and
Parent's stockholders and at the time of each of the meetings of the Company's
and Parent's stockholders to be held in connection with the Merger, 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. The S-4
and the Proxy Statement will comply as to form in all material respects with
the provisions of the Securities Act of 1933, as amended and the rules and
regulations thereunder, except that no representation is made by Parent and Sub
with respect to statements made therein based on information supplied by the
Company for inclusion in the S-4 and the Proxy Statement, with respect to
information concerning the Company incorporated by reference in the S-4 and the
Proxy Statement or with respect to information concerning Triad.
Section 4.7 LITIGATION. Except as disclosed in the Parent SEC
Documents filed prior to the date of this Agreement and except with respect to
information concerning Triad, as to which Parent makes no representation or
warranty for purposes of this Section 4.7, there is no suit, action, proceeding
or investigation pending or, to the knowledge of Parent, threatened, against
Parent or any of its Subsidiaries before any Governmental Entity which,
individually or
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in the aggregate, might reasonably be expected to have a material adverse
effect on Parent and its Subsidiaries taken as a whole or a material adverse
effect on the ability of Parent or Sub to consummate the transactions
contemplated by this Agreement. Except as disclosed in the Parent SEC
Documents filed prior to the date of this Agreement, neither Parent nor any of
its Subsidiaries is subject to any outstanding order, writ, injunction or
decree which, individually or in the aggregate, might reasonably be expected to
have a material adverse effect on Parent and its Subsidiaries taken as a whole
or a material adverse effect on the ability of Parent or Sub to consummate the
transactions contemplated hereby.
Section 4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30,
1996, there has not been any change or development, or combination of changes
or developments which individually or in the aggregate have had or are
reasonably likely to have a material adverse effect on Parent and its
Subsidiaries taken as a whole.
Section 4.9 NO VIOLATION OF LAW. Except as disclosed in the
Parent SEC Documents as filed prior to the date hereof or as set forth in
Section 4.9 of the Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries is in violation of, or, to the knowledge of Parent, is under
investigation with respect to or has been given notice or been charged by any
Governmental Entity with any violation of, any law, statute, order, rule,
regulation or judgment of any Governmental Entity, except for violations which,
in the aggregate, do not have a material adverse effect on the Parent and its
Subsidiaries taken as a whole. Parent and its Subsidiaries have all permits,
licenses, franchises and other governmental authorizations, consents and
approvals necessary to conduct their businesses as presently conducted, except
for any such permits, licenses, franchises or other governmental
authorizations, consents and approvals the failure of which to have would not
have a material adverse effect on Parent and its Subsidiaries taken as a whole.
Section 4.10 ENVIRONMENTAL MATTERS. Except as disclosed in the
Parent SEC Documents as filed prior to the date hereof or as set forth in
Section 4.10 of the Parent Disclosure Schedule, except for such matters that,
individually or in the aggregate, would not have a material adverse effect on
Parent and its Subsidiaries taken as a whole and except with respect to
information concerning Triad, as to which Parent makes no representation or
warranty for purposes of this Section 4.10, (i) Parent and its Subsidiaries are
in compliance in all material respects with all applicable Environmental Laws;
(ii) the properties presently owned or operated by Parent or its Subsidiaries
(the "Parent Properties") do not contain any Hazardous Substance other than as
permitted under applicable Environmental Laws; (iii) neither Parent nor any of
its Subsidiaries has, since July 1, 1994, received any actual claims, notices,
demand letters, lawsuits or requests for information from any Governmental
Entity or any private third party alleging that Parent is in violation of, or
liable under, any Environmental Laws; and (iv) none of Parent, its Subsidiaries
or the Parent Properties is subject to any court order, administrative order or
decree arising under any Environmental Law.
Section 4.11 INTERIM OPERATIONS OF SUB. Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
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Section 4.12 UNWANTED BUSINESSES. Parent is unwilling to
consummate the Merger unless the Company has divested itself of all of the
Company's assets and Newco has assumed all of the Company's liabilities, other
than those relating to the Retained Business.
Section 4.13 PURCHASES OF COMPANY STOCK. Except as set forth in
Section 4.13 of the Parent Disclosure Schedule, neither Parent nor any of its
affiliates has acquired any shares of capital stock of the Company. Section
4.13 of Parent Disclosure Schedule sets forth the amount of Parent Common Stock
repurchased by Parent in the last six (6) months pursuant to its stock
repurchase program (the "Repurchase Program") or otherwise and the amount of
repurchases authorized by Parent's Board of Directors.
Section 4.14 BROKERS OR FINDERS. Neither Parent nor any of its
Subsidiaries has any liability to any agent, broker, investment banker,
financial advisor or other firm or person for any broker's or finder's fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement except Donaldson, Lufkin & Jenrette Securities
Corporation, whose fees and expenses will be paid by Parent in accordance with
the Parent's agreement with such firm.
Section 4.15 OPINION OF FINANCIAL ADVISOR. Parent has received
the opinion of Donaldson, Lufkin & Jenrette Securities Corporation to the
effect that the Merger Consideration Per Share is fair to Parent from a
financial point of view.
ARTICLE V
COVENANTS PENDING THE EFFECTIVE TIME
Section 5.1 COVENANTS OF THE COMPANY WITH RESPECT TO THE RETAINED
BUSINESS. During the period from the date of this Agreement and continuing
until the Effective Time, the Company agrees as to itself and its Subsidiaries
that except (i) for the Distribution and the other transactions, actions or
events provided for in the Distribution Agreement, including the Employee
Benefits Agreement, (ii) as contemplated or permitted by this Agreement, (iii)
as set forth in Section 5.1 of the Company Disclosure Schedule or (iv) to the
extent that Parent shall otherwise consent in writing (which consent will not
be unreasonably withheld or delayed):
(a) ORDINARY COURSE. The Company and its Subsidiaries
shall carry on the Retained Business in the usual, regular and ordinary course
consistent with past practice and use all reasonable efforts to preserve intact
the present business organization, keep available, consistent with past
practice, the services of the present officers and employees and preserve the
relationships with customers, suppliers and others having business dealings
with the Retained Business, it being understood, however, that (i) certain
employees of the Retained Business will also be engaged in activities for Newco
and its Subsidiaries and certain officers of the Company will resign at the
time of the Distribution and will serve as officers of Newco, and (ii) the
failure of any employees of the Retained Business to remain employees of the
Retained Business or become employees of Parent or any Subsidiary of Parent
shall not constitute a breach of this
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covenant. Without limiting the foregoing, except as set forth in Section 5.1
of the Company Disclosure Schedule and except for "like kind" replacements and
repairs of equipment, the Company will not make or enter into any contracts,
commitments or agreements obligating the Company to make any capital
expenditures primarily relating to, or arising from, the Retained Business in
excess of $1,000,000, in the aggregate.
(b) DIVIDENDS; CHANGES IN STOCK. The Company shall not
(i) declare or pay any dividends (including dividends in Company Common Stock)
on or make other distributions in respect of any of its capital stock
(including such a distribution or dividend made in connection with a
recapitalization, reclassification, merger, consolidation, reorganization or
similar transaction), except for regular quarterly cash dividends consistent
with amounts currently paid and the Distribution, (ii) split (including a
reverse stock split), combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, or (iii)
repurchase, redeem or otherwise acquire, or permit any Subsidiary to
repurchase, redeem or otherwise acquire, any shares of capital stock of the
Company or any of its Subsidiaries.
(c) ISSUANCE OF SECURITIES. The Company shall not, nor
shall the Company permit any of its Subsidiaries included in the Retained
Business to, issue, transfer or sell, or authorize or propose or agree to the
issuance, transfer or sale of, any shares of its capital stock of any class,
any other equity interests or any securities convertible into, or any rights,
warrants, calls, subscriptions, options or other rights or agreements,
commitments or understandings to acquire, any such shares, equity interests or
convertible securities, other than (i) the issuance of shares of Company Common
Stock, Company Preferred Stock and Company Convertible Debentures upon the
exercise or conversion of stock options, debenture options, debentures or stock
grants outstanding on the date of this Agreement pursuant to Company Stock
Plans and in accordance with their present terms (or conversions of Company
Preferred Stock issued upon the exercise of debenture options-outstanding on
the date of this Agreement into Company Common Stock pursuant to the terms
thereof), (ii) issuances by a wholly owned Subsidiary of its capital stock to
its parent, (iii) the authorization and issuance of Company Series X Preferred
Stock or Company Common Stock in connection with the Company Rights and
reservation for issuance of shares of Company Series X Preferred Stock or
Company Common Stock in connection with the Company Rights in addition to those
presently reserved for issuance, and (iv) the granting of stock options,
debenture options or stock grants to employees of the Company other than the
Retained Employees (as defined in Section 6.7) and issuance of securities upon
exercise of the foregoing.
(d) GOVERNING DOCUMENTS. The Company shall not amend its
Charter of Incorporation or bylaws in a manner adverse to Parent and Sub or
otherwise inconsistent with the transactions contemplated hereby.
(e) INDEBTEDNESS. The Company shall not, nor shall it
permit any of its Subsidiaries to, incur (which shall not be deemed to include
(i) entering into credit agreements, lines of credit or similar arrangements
until borrowings are made under such arrangements or (ii) refinancings of
existing indebtedness) any indebtedness for borrowed money or guarantee any
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such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of its Subsidiaries or
guarantee any obligations of others other than (v) in the ordinary course of
business consistent with past practice, (w) pursuant to existing credit or
guaranty agreements, (x) Company Convertible Debentures issuable upon exercise
of debenture options, (y) indebtedness incurred solely by, or that will be
assumed and become the obligation solely of Newco or any of its Subsidiaries at
the Time of Distribution (as defined in the Distribution Agreement) or (z) the
Financing (as defined in Section 6.14).
(f) CHANGES TO BENEFIT PLANS. Except as would not
increase the costs of the Retained Business and except for changes in response
to any changes in applicable law, the Company shall not, nor shall it permit
any of its Subsidiaries (other than Newco and its Subsidiaries) to, (i) enter
into, adopt, amend (except as may be required by law and except for immaterial
amendments) or terminate any Benefit Plan or any agreement, arrangement, plan
or policy between the Company or any such Subsidiary and one or more of its
directors, officers or Employees or (ii) except for normal increases in the
ordinary course of business consistent with past practice and the payment of
bonuses to employees in the aggregate not to exceed the amount set forth in
Section 5.1 of the Company Disclosure Schedule, increase in any manner the
compensation or fringe benefits of any director, officer or Employee or pay any
benefit to any director, officer or Employee not required by any plan or
arrangement as in effect as of the date hereof or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing; provided that
the foregoing shall not prohibit the Company from hiring and paying new
employees in the ordinary course of business consistent with past practice.
(g) FILINGS. The Company shall promptly provide Parent
(or its counsel) copies of all filings (other than those portions of filings
under the HSR Act which Parent has no reasonable interest in obtaining in
connection with the Merger) made by the Company with any Federal, state or
foreign Governmental Entity in connection with this Agreement, the Distribution
Agreement and the transactions contemplated hereby and thereby.
(h) ACCOUNTING POLICIES AND PROCEDURES. The Company will
not and will not permit any of its Subsidiaries to change any of its accounting
principles, policies or procedures, except as may be required by generally
accepted accounting principles.
(i) NEWCO. The Company shall (i) abide and cause Newco
to abide by their respective obligations under the Distribution Agreement, Tax
Disaffiliation Agreement and Employee Benefits Agreement and (ii) not terminate
or amend, or waive compliance with any obligations under, the Distribution
Agreement, Tax Disaffiliation Agreement or Employee Benefits Agreement in any
manner adverse to Parent and Sub.
(j) SALE OF ASSETS. The Company shall not sell, lease,
exchange, mortgage, pledge, transfer or otherwise dispose of, or agree to sell,
lease, exchange, mortgage, pledge, transfer or otherwise dispose of, any of the
assets included in the Retained Business, except for dispositions of
inventories and equipment in the ordinary course of the Retained Business and
consistent with past practice.
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(k) RETAINED CASH. After December 31, 1996, all net cash
generated by the Retained Business after December 31, 1996 shall be retained by
the Company.
Section 5.2 COVENANTS OF THE COMPANY. During the period from the
date of this Agreement and continuing to the Effective Time, the Company agrees
as to itself and its Subsidiaries that the Company shall not, and shall not
permit any of its Subsidiaries to, take any action, including, without
limitation, with respect to the terms of the Articles of Incorporation or
bylaws of Newco, that would or is reasonably likely to result in any of the
conditions to the Merger set forth in Article VII not being satisfied or that
would materially impair the ability of the Company to consummate the
Distribution in accordance with the terms of the Distribution Agreement or the
Merger in accordance with the terms hereof or would materially delay such
consummation.
Section 5.3 COVENANTS OF PARENT. During the period from the date
of this Agreement and continuing until the Effective Time, Parent agrees as to
itself and its Subsidiaries that except (i) as contemplated or permitted by
this Agreement, (ii) as set forth in Section 5.3 of the Parent Disclosure
Schedule or (iii) to the extent that the Company shall otherwise consent in
writing (which consent will not be unreasonably withheld or delayed):
(a) ORDINARY COURSE. Parent and its Subsidiaries shall
carry on their businesses in the usual, regular and ordinary course consistent
with past practice and use all reasonable efforts to preserve intact the
present business organization, keep available, consistent with past practice,
the services of the present officers and employees and preserve the
relationships with customers, suppliers and others having business dealings
with them.
(b) DIVIDENDS; CHANGES IN STOCK. Parent shall not (i)
declare or pay any dividends (including dividends in Parent Common Stock) on or
make other distributions in respect of any of its capital stock (including such
a distribution or dividend made in connection with a recapitalization,
reclassification, merger, consolidation, reorganization or similar
transaction), except for regular quarterly cash dividends, (ii) split
(including a reverse split), combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or (iii)
repurchase, redeem or otherwise acquire, or permit any Subsidiary to
repurchase, redeem or otherwise acquire, any shares of capital stock of Parent
or any of its Subsidiaries other than repurchases of Parent Common Stock
pursuant to the Repurchase Program and made prior to the ten (10) trading days
prior to the date of the first trading day used in calculating the Average
Parent Price.
(c) ISSUANCE OF SECURITIES. Parent shall not, nor shall
Parent permit any of its Subsidiaries to, issue, transfer or sell, or authorize
or propose or agree to the issuance, transfer or sale of, any shares of its
capital stock of any class, any other equity interests or any securities
convertible into, or any rights, warrants, calls, subscriptions, options or
other rights or agreements, commitments or understandings to acquire, any such
shares, equity interests or convertible securities, other than (i) the issuance
of shares of Parent Common Stock upon the exercise of stock options or stock
grants pursuant to existing employee benefit plans,
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(ii) issuances by a wholly owned Subsidiary of its capital stock to its parent,
and (iii) the authorization and issuance of capital stock upon exercise of
Parent's existing rights plan and reservation for issuance of shares of capital
stock in addition to those presently reserved for issuance pursuant to Parent's
existing rights plan.
(d) GOVERNING DOCUMENTS. Parent shall not amend its
Articles of Incorporation or bylaws in a manner adverse to the Company or
otherwise inconsistent with the transactions contemplated hereby.
(e) INDEBTEDNESS. Parent shall not, nor shall it permit
any of its Subsidiaries to, incur (which shall not be deemed to include (i)
entering into credit agreements, lines of credit or similar arrangements until
borrowings are made under such arrangements or (ii) refinancings of existing
indebtedness) any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of Parent or any of its Subsidiaries or guarantee
any obligations of others other than (w) in the ordinary course of business
consistent with past practice, (x) pursuant to existing credit or guaranty
agreements, (y) the Financing (as defined in Section 6.14) or (z) additional
indebtedness not to exceed $50,000,000 in the aggregate.
(f) FILINGS. Parent shall promptly provide the Company
(or its counsel) copies of all filings (other than those portions of filings
under the HSR Act which the Company has no reasonable interest in obtaining in
connection with the Merger) made by Parent with any Federal, state or foreign
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby and thereby.
(g) ACCOUNTING POLICIES AND PROCEDURES. Parent will not
and will not permit any of its Subsidiaries to change any of its accounting
principles, policies or procedures, except as may be required by generally
accepted accounting principles.
(h) COOPERATION. Parent shall not take, nor permit Sub
or any of its other Subsidiaries to take, any action that would or is
reasonably likely to result in any of the conditions to the Merger set forth in
Article VII not being satisfied or that would materially impair the ability of
Parent or Sub to consummate the Merger in accordance with the terms hereof or
materially delay such consummation, and Parent shall promptly advise the
Company orally and in writing of any change in, or event with respect to, the
business or operations of Parent having, or which, insofar as can reasonably be
foreseen, could have, a material adverse effect on Parent and its Subsidiaries
taken as a whole.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under
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applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement including, without limitation, (i)
the prompt preparation and filing with the SEC of the S-4 and the Proxy
Statement, (ii) such actions as may be required to have the S-4 declared
effective under the Securities Act and to have the Proxy Statement cleared by
the SEC, in each case as promptly as practicable, including by consulting with
each other as to, and responding promptly to, any SEC comments with respect
thereto, (iii) the prompt preparation and filing of all necessary documents
under the HSR Act, (iv) such actions as may be required to have the applicable
waiting period under the HSR Act expire or terminate as promptly as
practicable, including by consulting with each other as to, and responding
promptly to any comments or requests for information with respect thereto, (v)
such actions as may be required to be taken under applicable state securities
or "blue sky" laws in connection with the issuance of shares of Parent Common
Stock contemplated hereby, and (vi) the distribution of the prospectus
constituting a part of the S-4 and the Proxy Statement to stockholders of the
Company. Each party shall promptly consult with the other and provide any
necessary information with respect to all filings made by such party with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
Section 6.2 ACCESS TO INFORMATION. Upon reasonable notice, each
of the Company and Parent shall (and shall cause its Subsidiaries to) afford to
the officers, employees, accountants, counsel and other representatives of the
other party, access, during normal business hours during the period prior to
the Effective Time, to all its properties, books, contracts, commitments and
records (with respect to the Company, to the extent relating to the Retained
Business), and, during such period, each of the Company and Parent shall (and
shall cause each of their respective Subsidiaries to) furnish promptly to the
other (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its business,
properties and personnel (with respect to the Company, to the extent related to
the Retained Business) as such other party may reasonably request. After the
Effective Time, upon reasonable notice, Parent shall cause the Surviving
Corporation and its Subsidiaries to afford to the officers, employees,
accountants, counsel and other representatives of Newco access, during normal
business hours, to the Surviving Corporation's and its Subsidiaries' books and
records which Newco may reasonably request in order to complete tax filings or
for other legitimate business purposes. Unless otherwise required by law, the
parties will hold any information made available pursuant to this Section 6.2
which is nonpublic in confidence in accordance with the confidentiality
agreement, dated August 9, 1996 (the "Confidentiality Agreement"), between
Parent and the Company.
Section 6.3 STOCKHOLDERS MEETINGS.
(a) The Company shall call a meeting of its stockholders
to be held as promptly as practicable for the purpose of voting upon the
approval and adoption of this Agreement. The Company will, through its Board
of Directors, recommend to its stockholders approval and adoption of this
Agreement and, if the Company determines such approval to be necessary or
appropriate, the Distribution and shall use all reasonable efforts to hold such
meeting as soon as practicable after the date hereof; PROVIDED, HOWEVER, that
the Board of
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Directors of the Company may fail to make such a recommendation, or withdraw,
modify or change any such recommendation if it determines after receiving the
advice of outside counsel that making such recommendation, or that the failure
to withdraw, modify or change its recommendation, would be inconsistent with
its fiduciary duties under applicable law.
(b) Parent shall call a meeting of its stockholders to be
held as promptly as practicable for the purpose of voting upon the approval of
the issuance of the shares of Parent Common Stock to the Company's stockholders
pursuant to this Agreement. Parent will, through its Board of Directors,
recommend to its stockholders such approval and shall use all reasonable
efforts to hold such meeting as soon as practicable after the date hereof;
provided, however, that the Board of Directors of Parent may fail to make such
a recommendation, or withdraw, modify or change any such recommendation if it
determines after receiving the advice of outside counsel that making such
recommendation, or that the failure to withdraw, modify or change its
recommendation, would be inconsistent with its fiduciary duties under
applicable law.
Section 6.4 LEGAL CONDITIONS TO DISTRIBUTION AND MERGER. Each of
the Company, Parent and Sub will use all reasonable efforts to comply promptly
with all legal requirements which may be imposed on it or its respective
Subsidiaries with respect to the Distribution and the Merger (which actions
shall include, without limitation, furnishing all information required under
the HSR Act and will promptly cooperate with and furnish information to each
other in connection with any such requirements imposed upon any of them or any
of their respective Subsidiaries in connection with the Distribution or the
Merger). Subject to the terms and conditions hereof, each of the Company,
Parent and Sub will, and will cause its Subsidiaries to, promptly use all
reasonable efforts to obtain (and will consult and cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party, required to
be obtained or made by such party in connection with the Distribution or the
Merger or the taking of any action contemplated thereby or by this Agreement or
the Distribution Agreement.
Section 6.5 STOCK EXCHANGE LISTING. Parent shall use all
reasonable efforts to cause the shares of Parent Common Stock to be issued in
the Merger to be approved for listing on either the NYSE or the NASDAQ National
Market System, depending on where the Parent Common Stock is listed as of the
Effective Time, and any other securities exchange on which shares of Parent
Common Stock may at such time be listed, subject to official notice of
issuance, prior to the Closing Date.
Section 6.6 COMPANY SEVERANCE OBLIGATIONS. Subject to the
proviso in the following sentence, the Company will pay with the proceeds of
the Financing (as defined in Section 6.14) or Newco will assume the transaction
bonus and severance payments arising out of the transactions contemplated by
this Agreement pursuant to any contract, agreement or arrangement of which the
Company or any of its Subsidiaries is a party, including, without limitation,
payments pursuant to the agreements listed in Section 6.6 of the Company
Disclosure Schedule. In no event shall Parent, any of its Subsidiaries or the
Surviving Corporation be responsible for any such payments, or be under any
obligation to honor or assume any such obligations; provided, however, Parent
and the Surviving Corporation shall assume and retain, with respect to
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the Retained Employees (as defined in Section 6.7), any and all severance
obligations that arise due to events or actions occurring after the Effective
Time.
Section 6.7 EMPLOYEE MATTERS; COMPANY STOCK PLANS.
(a) The Company and Parent agree that Parent will, to the
extent practicable, immediately after the Effective Time and for at least six
(6) months thereafter, permit the operating personnel of the Retained Business
and the other Company employees listed in Section 6.7 to the Parent Disclosure
Schedule who will remain in the employ of the Surviving Corporation after the
Effective Time (collectively, the "Retained Employees") (i) to participate in a
group health plan of Parent, or one of its Subsidiaries that similarly situated
employees of Parent participate, in accordance with the terms of the plan and,
subject to the approval of its stop-loss carrier on reasonable terms and
subject to applicable legal requirements, to waive any pre-existing condition
clause or waiting period requirement in such group health plan and to give
credit for deductible amounts paid by a Retained Employee during the current
deductible year of such group health plan while employed by the Company; (ii)
to participate in and receive credit under tax qualified retirement plans of
Parent or any of its Subsidiaries that similarly situated employees of Parent
participate, for which they are otherwise eligible, solely for eligibility and
vesting purposes, for their service with the Company, to the extent permitted
by applicable tax-qualification requirements; and (iii) to participate in other
benefit plans of Parent which are offered to similarly situated employees.
(b) Effective as of the Effective Time, each outstanding
option to purchase shares of Company Common Stock or to purchase Company
Convertible Debentures (a "Company Option") held by a Retained Employee under
the Company Stock Plans whether vested or unvested, exercisable or
unexercisable, shall be exchanged for an option (a "Parent Option") to purchase
the number of shares of Parent Common Stock equal to the product of (1) the
quotient of (x) the Average Company Stock Price, and (y) the Average Parent
Stock Price (the "Conversion Ratio") and (2) the number of shares of Company
Common Stock that the holder of such option would have been entitled to receive
had such holder exercised such option in full and in the case of a Company
Option exercisable for Company Convertible Debentures, converted such
convertible debentures into Company Preferred Stock and then into Company
Common Stock, (not taking into account whether or not such option or
convertible debenture was in fact exercisable) (rounded to the nearest whole
share) at an exercise price equal to the per share exercise price of such
Company Options divided by the Conversion Ratio (rounded to the nearest cent),
which Parent Option shall be subject to the same terms and conditions
(including the vesting schedule) as the Company Option; provided, however, that
the Parent Option shall be exercisable only for Parent Common Stock. The
obligations of the Company with respect to such Parent Options shall be
transferred to and assumed by Parent. For purposes of this Section 6.7(b), (i)
"Average Parent Stock Price" shall mean the average of the closing prices of
the Parent Common Stock on the New York Stock Exchange Composite Transactions
Reporting System or the NASDAQ National Market System, as the case may be, as
reported by The Wall Street Journal, for the 10 trading days immediately
proceeding the trading day prior to the date that the Company Common Stock
commences trading on an x- dividend basis with respect to the Distribution (the
"Measuring Period") and (ii) "Average Company Stock Price" shall mean the
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average of the closing prices of the Company Common Stock on the New York Stock
Exchange Composite Transactions Reporting System, as reported by THE WALL
STREET JOURNAL, for the Measuring Period.
(c) As soon as practicable after the Effective Time,
Parent shall deliver to the Retained Employees having options exchanged
pursuant to Section 6.7(b) above appropriate notices setting forth their rights
pursuant thereto.
(d) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery under the options converted in accordance with this Section 6.7. As
soon as practicable after the Effective Time, Parent shall file a registration
statement on Form S3 or Form S8, as appropriate (or any successor or other
appropriate forms), or another appropriate form with respect to the shares of
Parent Common Stock subject to such options or, to the extent required by law
or in accordance with past practice, awards and shall use its best efforts to
maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options or awards remain outstanding.
With respect to those individuals who subsequent to the Merger will be subject
to the reporting requirements under Section 16(a) of the Exchange Act, where
applicable, Parent shall administer the options exchanged pursuant to this
Section 6.7 in a manner that complies with Rule 16b-3 promulgated under the
Exchange Act to the extent the applicable options complied with such rule prior
to the Merger.
(e) Nothing in this Agreement shall be construed to
require Parent or the Company to continue the employment of any Retained
Employee for any period of time, or, except as required by Section 6.7(a)
above, to offer any particular type or level of benefits to any employee.
Nothing in this Agreement shall prevent Parent or the Company from disciplining
or terminating any Retained Employee or from amending or terminating any
benefit plans at any time.
Section 6.8 FEES AND EXPENSES. Subject to the Distribution
Agreement, whether or not the Merger is consummated and except as otherwise
provided herein, all fees, costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses; provided, however, that Parent and the Company shall
each pay one-half of the printing costs incurred with respect to the S4 and the
Proxy Statement.
Section 6.9 INDEMNIFICATION.
(a) The Company shall, and from and after the Effective
Time the Surviving Corporation shall, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date of this Agreement
or who becomes prior to the Effective Time, an officer, director or employee of
the Company or any of its Subsidiaries (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses, liabilities or judgments, or amounts
that are paid in settlement with the approval of the indemnifying party (which
approval shall not be unreasonably withheld) of, or in connection with, any
claim, action, suit, proceeding or
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investigation to the extent related to, or to the extent arising from, the
Retained Business and based in whole or in part on or arising in whole or in
part out of the fact that such person is or was a director, officer or employee
of the Company or any of its Subsidiaries, whether pertaining to any matter
existing or occurring at or prior to the Effective Time and whether asserted or
claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities"), in each case to the full extent a corporation is permitted under
the MBCA (notwithstanding the bylaws of the Company or the Surviving
Corporation) to indemnify its own directors, officers and employees, as the
case may be (and the Surviving Corporation will pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the full extent permitted by law upon receipt of any affirmation and
undertaking contemplated by Section 8.53 of the MBCA). Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising before
or after the Effective Time), (i) the Indemnified Parties may retain counsel
satisfactory to them with the consent of the Company (or the consent of the
Surviving Corporation after the Effective Time) which consent of the Company
(or, after the Effective Time, the Surviving Corporation) with respect to such
counsel retained by the Indemnified Parties may not be unreasonably withheld,
(ii) the Company (or after the Effective Time, the Surviving Corporation) shall
pay all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received, and (iii) the Company (or
after the Effective Time, the Surviving Corporation) will use all reasonable
efforts to assist in the vigorous defense of any such matter, PROVIDED that
neither the Company nor the Surviving Corporation shall be liable for any
settlement of any claim effected without its written consent, which consent,
however, shall not be unreasonably withheld. Any Indemnified Party wishing to
claim indemnification under this Section 6.9, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Company or the
Surviving Corporation (but the failure so to notify shall not relieve the
Company or the Surviving Corporation from any liability which it may have under
this Section 6.9 except to the extent such failure materially prejudices such
party), and shall deliver to the Company (or after the Effective Time, the
Surviving Corporation) the affirmation and undertaking contemplated by Section
8.53 of the MBCA. The Indemnified Parties as a group may retain only one law
firm to represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
(b) The provisions of this Section 6.9 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and representatives.
Section 6.10 NO SOLICITATIONS. The Company will immediately cease
any existing discussions or negotiations conducted prior to the date hereof
with respect to any merger, consolidation, business combination, sale of a
significant amount of assets outside of the ordinary course of business, sale
of shares of capital stock outside of the ordinary course of business, tender
or exchange offer, spin-off, recapitalization or similar transaction involving
the sale of the Company or any of its Subsidiaries or divisions but excluding
those potential transactions set forth in Section 6.10 of the Company
Disclosure Schedule (an "Acquisition Transaction"). The Company, its
Subsidiaries and their respective directors and officers shall not, and its or
its Subsidiaries' affiliates, representatives and agents shall not, directly or
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indirectly, solicit any person, entity or group concerning any Acquisition
Transaction (other than the transactions contemplated by this Agreement);
provided that the Company may (i) furnish information or enter into
negotiations to the extent the Company's Board of Directors determines after
receiving the advice of outside counsel that the failure to do so would be
inconsistent with its fiduciary duties under applicable law and prior to
furnishing such information to, or entering into discussions or negotiations
with such person, entity or group the Company (x) provides immediate written
notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person, entity or group,
and (y) either enters into with such person, entity or group a confidentiality
agreement in reasonable, customary form on terms not more favorable to such
person, entity or group than the terms contained in the Confidentiality
Agreement or releases Parent from the standstill provisions of the
Confidentiality Agreement not applicable to such person; and (ii) recommend to
its stockholders a bona fide transaction or combination of transactions that
the Board of Directors determines after consulting with its legal and other
advisors is more favorable, from a financial point of view, to the stockholders
of the Company than the Distribution and the Merger (a "Higher Proposal"). The
Company agrees not to release any third party from its obligations, or grant
any consent, under any existing standstill provision relating to any
Acquisition Transaction or otherwise under any confidentiality or other
agreement without similarly releasing or granting a consent to Parent under the
Confidentiality Agreement.
Section 6.11 DISTRIBUTION. Prior to the Closing, the Company will
enter into the Distribution Agreement in the form attached hereto with such
changes which are not adverse to Parent and Sub and cause Newco to enter into
the Distribution Agreement and the Company will take all action necessary to
effect the Distribution pursuant to the terms of the Distribution Agreement.
Section 6.12 TAX-FREE NATURE OF TRANSACTIONS. Each party agrees
to report the Transfer as a tax-free transaction under Section 332, 351 or
368(a) of the Code, the Distribution as a tax-free distribution under Section
355 of the Code and the Merger as a tax-free reorganization within the meaning
of Section 368(a)(1)(B) of the Code on all Tax Returns and other filings, and
take no position inconsistent therewith. The parties shall not, and shall not
permit any of their respective Subsidiaries to, take or cause or permit to be
taken, any action that would disqualify the Distribution as a tax-free
distribution under Section 355 of the Code, disqualify the Transfer as a
tax-free transaction under Section 332, 351 or 368(a) or disqualify the Merger
as a reorganization within the meaning of Section 368(a)(1)(B) of the Code,
excluding any action to be taken pursuant to this Agreement to effect the
Merger.
Section 6.13 AUDITED CLOSING BALANCE SHEET. No later than 45 days
after the Effective Date, Newco shall deliver to Parent an audited consolidated
balance sheet for the Retained Business at the earlier of the Effective Date or
December 31, 1996 after giving effect to the Distribution (but not to the
Financing (as defined in Section 6.14) or the Merger), which shall be audited
by Newco's independent public accountants as in accordance with generally
accepted auditing standards (the "Audited Closing Balance Sheet"). The Audited
Closing Balance Sheet shall be prepared in accordance with generally accepted
accounting principles on a basis consistent with the Company Financial
Statements. To the extent that the net working capital
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<PAGE> 37
(current assets less current liabilities) of the Retained Business as shown on
the Audited Closing Balance Sheet is more or less than the estimated net
working capital as of the Effective Date certified pursuant to Section 6.14,
the Company shall pay to Newco, or Newco shall pay to the Company, the amount
of such excess or shortfall, respectively, in cash within five days of the
delivery of the Audited Closing Balance Sheet. The Company agrees that
representatives of Parent and Newco shall be given access to all work papers,
books, records and other information related to the preparation of the Audited
Closing Balance Sheet. In addition, the Company will authorize, and will use
all reasonable efforts to provide Parent and Newco with access to all work
papers of the Company's independent public accountants in connection with or
relating to their audit of the Audited Closing Balance Sheet.
Section 6.14 FINANCING. Parent will use its best efforts to
assist the Company in arranging a customary bank facility for the Company that
will be funded immediately prior to the Time of Distribution (as defined in the
Distribution Agreement) (the "Financing"). The Financing will be in an
aggregate amount equal to $150,000,000 plus (i) the product of (x) the lesser
of (A) $2.00 and (B) the amount, if any, by which the Average Parent Price is
less than $19.00 times (y) 6,904,762, plus (ii) the costs of obtaining the
Financing (including, without limitation, any commitment or agent fees,
reasonable attorney fees or other costs and expenses associated with the
Financing), plus (iii) the product of (x) $56,575 times (y) the number of
calendar days by which the Effective Date is after December 31, 1996, plus (iv)
the net cash used by the Retained Business after December 31, 1996 through the
Effective Date, minus (v) the unpaid balance as of the Effective Date of the
AMPRO Retrofit due under the Kellogg Agreement (as defined in Section 6.15)
(which unpaid balance as of July 31, 1996 is set forth in Section 6.15 of the
Company Disclosure Schedule), plus or minus (vi) the amount by which the
estimated net working capital of the Retained Business as of the earlier of the
Effective Date or December 31, 1996 as certified by the chief financial officer
of the Company is more or less, respectively, than $8,000,000. Without
qualifying Parent's obligations pursuant to the last sentence of this Section
6.14, the Financing will be on terms that are acceptable to Parent. The
parties agree that the proceeds of the Financing will be used to refinance in
full all outstanding debt of the Retained Business (other than accounts payable
incurred in the ordinary course of the Retained Business), as well as any and
all transaction, severance and other costs payable by the Company in connection
with the transactions contemplated by this Agreement. To the extent that the
proceeds of the Financing are not fully applied as set forth above, any
remaining proceeds may be contributed to Newco at the discretion of the
Company. The Company shall be responsible for the costs of obtaining the
Financing (including, without limitation, any commitment or agent fees,
reasonable attorney fees or other costs and expenses associated with the
Financing), although the parties recognize that Parent will incur costs related
to the Financing in connection with satisfying itself as to the terms and
conditions of the Financing. In the event that the Company's stockholders do
not approve the Merger, the Distribution and the other transactions
contemplated by this Agreement, the Company and Parent will reimburse each
other for one-half of any costs incurred by them in connection with the
Financing. In the event this Agreement is terminated for any other reason,
Parent shall be responsible for and reimburse the Company for any costs
reasonably incurred in connection with the Financing. In the event that the
Company is unable to arrange a bank facility for the Financing, Parent will be
responsible for arranging alternative funds from an independent, unrelated
third party for the Financing.
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<PAGE> 38
Section 6.15 AMPRO FACILITY. The Company shall use all reasonable
efforts to cause the capital improvements to the Company's AMPRO Facility
currently in progress (the "AMPRO Retrofit") as set forth in that certain
contract dated September 7, 1995 between the Company and M.W. Kellogg (the
"Kellogg Agreement") to be completed (including plant shutdowns, tie-ins and
resumption of operations) by December 31, 1996 (with performance testing to be
completed after December 31, 1996) on the terms and conditions set forth in the
Kellogg Agreement. Section 6.15 of the Company Disclosure Schedule sets forth
the unpaid balance of the cost of completion of the AMPRO Retrofit as of July
31, 1996 under the Kellogg Agreement. If despite the Company's reasonable
efforts, the AMPRO Retrofit is not mechanically complete and ready for tie-ins
to be made during the time of turnaround scheduled for December 1, 1996 through
December 15, 1996 then the turnaround shall be delayed until such time as the
AMPRO Retrofit can be mechanically completed and made ready for tie-ins during
the turnaround period.
Section 6.16 COMFORT LETTERS.
(a) The Company shall use all reasonable efforts to cause
KPMG Peat Marwick LLP, the Company's independent public accountants, to deliver
a letter dated as of the date of the Proxy Statement, and addressed to itself
and Parent and their respective Boards of Directors, in form and substance
reasonably satisfactory to Parent, and customary in scope and substance for
agreed-upon procedures letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the S-4
and the Proxy Statement.
(b) Parent shall use all reasonable efforts to cause
Arthur Andersen & Co., the Parent's independent public accountants, to deliver
a letter dated as of the date of the Proxy Statement, and addressed to itself
and the Company and their respective Boards of Directors, in form and substance
reasonably satisfactory to the Company, and customary in scope and substance
for agreed-upon procedures letters delivered by independent public accountants
in connection with registration statements and proxy statements similar to the
S-4 and the Proxy Statement.
ARTICLE VII
CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of the parties to effect the Merger are
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:
(a) STOCKHOLDER APPROVALS. This Agreement shall have
been approved and adopted by (i) the affirmative vote of the holders of at
least a majority of the outstanding shares of Company Common Stock and (ii) the
affirmative vote of the holders of at least a majority of
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<PAGE> 39
the shares of Parent Common Stock present, in person or by proxy, and entitled
to vote at the meeting of stockholders of Parent referred to in Section 6.3(b)
for which a quorum exists.
(b) STOCK EXCHANGE LISTING. The shares of Parent Common
Stock issuable to the Company's stockholders pursuant to this Agreement shall
have been authorized for listing on the NYSE or the NASDAQ National Market
System, if Parent Common Stock has not been listed on the NYSE, upon official
notice of issuance.
(c) OTHER APPROVALS. Other than the filing of the
Articles of Merger provided for by Section 1.2, all authorizations, consents,
orders or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity or other public or private
third party, the failure of which to obtain would have a material adverse
effect on Parent and its Subsidiaries or the Surviving Corporation and its
Subsidiaries, in each case taken as a whole, shall have been filed, occurred or
been obtained. Parent shall have received all state securities or "blue sky"
permits and other authorizations necessary to issue the Parent Common Stock
pursuant to this Agreement.
(d) REGISTRATION STATEMENT. The S-4 shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceeding by the SEC seeking a stop order.
(e) NO INJUNCTIONS OR RESTRAINTS. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger or the Distribution shall be in
effect (each party agreeing to use all reasonable efforts to have any such
order reversed or injunction lifted).
(f) HSR APPROVAL. Any applicable waiting period under
the HSR Act shall have expired or been terminated.
(g) CONSUMMATION OF THE DISTRIBUTION. The Distribution
shall have become effective in accordance with the Distribution Agreement.
Section 7.2 CONDITIONS OF OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions
unless waived by Parent and Sub:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company contained herein shall be true and correct in all
material respects as of the Closing Date as though made on and as of the
Closing Date, except to the extent such representations and warranties speak as
of an earlier date (in which case, such representations and warranties shall be
true and correct in all material respects as of such earlier date) and except
as otherwise contemplated by this Agreement, and Parent shall have received a
certificate signed on behalf of the Company by the chief financial officer of
the Company to such effect.
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<PAGE> 40
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The
Company shall have performed in all material respects all obligations required
to be performed by it under this Agreement and the Distribution Agreement at or
prior to the Closing Date, and Parent shall have received a certificate signed
on behalf of the Company by the chief financial officer of the Company to such
effect.
(c) OPINION OF COUNSEL. Parent shall have received the
opinion of Skadden, Arps, Slate, Meagher & Flom or Baker, Donelson, Bearman &
Caldwell substantially to the effect set forth in Section 7.2(c) of the Company
Disclosure Schedule.
(d) OPINION OF TAX COUNSEL. Parent shall have received
the opinion of Hughes & Luce, L.L.P. to the effect the Merger qualifies as a
tax-free reorganization within the meaning of Section 368(a) of the Code.
(e) OPINION OF COUNSEL REGARDING THE DISTRIBUTION.
Parent shall have received the opinion of Skadden, Arps, Slate, Meagher & Flom
to the effect that the Transfer qualifies as one or more tax-free transactions
under one or more of Sections 332, 351, and 368(a)(1)(D) of the Code and that
the Distribution qualifies as a tax-free distribution under Section 355 of the
Code.
(f) INDEBTEDNESS OF THE RETAINED BUSINESS. As of the
Effective Time, the Retained Business shall have no outstanding Indebtedness,
other than the Financing. The term "Indebtedness" shall mean any indebtedness
for borrowed money, indebtedness evidenced by a note or other instrument,
capitalized lease obligations, obligations for the deferred purchase price of
assets or direct or indirect guarantees of any of the foregoing.
(g) COMPANY OPTIONS. At the Effective Time, all Company
Options, other than Company Options held by Retained Employees, shall have been
terminated or exchanged for Newco Options or shall have been fully assumed by
Newco.
Section 7.3 CONDITIONS OF OBLIGATIONS OF THE COMPANY. The
obligation of the Company to effect the Merger is subject to the satisfaction
of the following conditions, on or prior to the Closing Date, unless waived by
the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Parent and Sub contained in this Agreement shall be true and
correct in all material respects as of the Closing Date as though made on and
as of the Closing Date, except to the extent such representations and
warranties speak as of an earlier date (in which case, such representations and
warranties shall be true and correct in all material respects as of such
earlier date) and except as otherwise contemplated by this Agreement, and the
Company shall have received a certificate signed on behalf of Parent and Sub by
the chief financial officer of Parent and Sub, respectively, to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Parent
and Sub shall have performed in all material respects all obligations required
to be performed by them under this
35
<PAGE> 41
Agreement at or prior to the Closing Date, and the Company shall have received
a certificate signed on behalf of Parent by the chief financial officer of
Parent to such effect.
(c) OPINION OF COUNSEL. The Company shall have received
the opinion of Hughes & Luce, L.L.P. substantially to the effect set forth in
Section 7.3 of the Parent Disclosure Schedule. In giving such opinion, Hughes
& Luce, L.L.P. may rely as to matters of Mississippi law on opinions of local
counsel reasonably satisfactory to the Company.
(d) OPINION OF TAX COUNSEL. The Company shall have
received an opinion of Skadden, Arps, Slate, Meagher & Flom to the effect that
the Merger qualifies as a tax-free reorganization within the meaning of Section
368(a) of the Code, that the Transfer qualifies as one or more tax-free
transactions under one or more of Sections 332, 351, and 368(a)(1)(D) of the
Code and that the Distribution qualifies as a tax-free distribution under
Section 355 of the Code.
(e) FINANCING. The Financing shall have been obtained by
the Company; the Financing shall have been funded; and the proceeds of the
Financing shall have been applied pursuant to Section 6.14 and the Distribution
Agreement.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of the
Merger and this Agreement by the stockholders of the Company:
(a) by mutual consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall
not have been consummated before March 31, 1997 (unless the failure to so
consummate the Merger by such date shall be due to the action or failure to act
of the party seeking to terminate this Agreement);
(c) by either Parent or the Company if the Average Parent
Price is less than $17.00;
(d) by Parent, upon a material breach of any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement, or if any representation or warranty of the Company
shall have become untrue in any material respect, in either case such that the
conditions set forth in Section 7.2(a) or Section 7.2(b) of this Agreement, as
the case may be, would be incapable of being satisfied by March 31, 1997;
provided, that in any case, a willful breach shall be deemed to cause such
conditions to be incapable of being satisfied for purposes of this Section
8.1(c) if such willful breach shall not
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<PAGE> 42
have been remedied within ten (10) days after receipt by the Company of written
notice from Parent specifying the nature of such willful breach and requesting
that it be remedied;
(e) by the Company, upon a material breach of any
representation, warranty, covenant or agreement on the part of Parent set forth
in this Agreement, or if any representation or warranty of Parent shall have
become untrue in any material respect, in either case such that the conditions
set forth in Section 7.3(a) or Section 7.3(b) of this Agreement, as the case
may be, would be incapable of being satisfied by March 31, 1997; or provided,
that in any case, a willful breach shall be deemed to cause such conditions to
be incapable of being satisfied for purposes of this Section 8.1(d) if such
willful breach shall not have been remedied within ten (10) days after receipt
by Parent of written notice from the Company, specifying the nature of such
willful breach and requesting that it be remedied;
(f) by Parent if (i) the Company's stockholders do not
approve the Merger and this Agreement at the meeting required under Section
6.3(a) hereof, (ii) Parent's stockholders do not approve the issuance of the
shares of Parent Common Stock to the Company's stockholders pursuant to this
Agreement at the meeting required under Section 6.3(b) or (iii) the Company
withdraws, amends or modifies in a manner adverse to Parent its favorable
recommendation of the Merger; or
(g) by the Company if (i) the Company's stockholders do
not approve the Merger and this Agreement at the meeting required under Section
6.3(a) hereof, (ii) Parent's stockholders do not approve the issuance of the
shares of Parent Common Stock to the Company's stockholders pursuant to this
Agreement at the meeting required under Section 6.3(b), (iii) the Company has
received a proposal for an Acquisition Transaction that it advises Parent in
writing the Company wishes to accept or (iv) the Financing has not been
arranged by December 31, 1996.
Section 8.2 EFFECT OF TERMINATION. In the event of a termination
of this Agreement by either the Company or Parent as provided in Section 8.1,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their affiliates or
respective officers or directors, other than the provisions of Section 8.3;
PROVIDED, HOWEVER, that any such termination shall not relieve any party from
liability for willful breach of this Agreement (including, without limitation,
a willful breach of Section 6.14 by Parent) or from its obligations under the
Confidentiality Agreement.
Section 8.3 TERMINATION FEE. If (a)(i) Parent terminates this
Agreement pursuant to Section 8.1(f)(iii) or (ii) the Company terminates this
Agreement pursuant to 8.1(g)(iii) and (b) within one year after such
termination, the Company enters into an agreement, letter of intent or binding
arrangement with respect to an Acquisition Transaction or an Acquisition
Transaction occurs (PROVIDED, HOWEVER, that in the case of an Acquisition
Transaction involving only Newco or any of its Subsidiaries (a "Newco
Acquisition Transaction"), payment hereunder will be due only if the Company
began discussions or negotiations, received a proposal or indication of
interest or entered into an agreement, letter of intent or binding arrangement
with respect to such Newco Acquisition Transaction prior to the termination of
this Agreement), the Company will
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<PAGE> 43
pay to Parent within one business day following the execution and delivery of
such agreement or letter of intent or the entering into of such an arrangement
or the occurrence of such Acquisition Transaction, as the case may be, a fee,
in cash, of $8,000,000; PROVIDED, HOWEVER, that the Company in no event will be
obligated to pay more than one such $8,000,000 fee with respect to all such
agreements and occurrences and such termination and such fee shall be the
exclusive remedy of Parent for the transactions contemplated hereby upon
termination of this Agreement pursuant to Section 8.1(f)(iii) or Section
8.1(g)(iii) and shall be deemed inclusive of expenses incurred by Parent. Upon
the payment of the $8,000,000 to Parent in accordance with this Section 8.3,
the Company shall have no further liability with respect to the transactions
contemplated hereby.
Section 8.4 AMENDMENT. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company or of Parent;
PROVIDED that (i) after any such approval, no amendment shall be made which by
law requires further approval by such stockholders without such further
approval and (ii) after the Effective Time, this Agreement may be amended only
with the written consent of Newco. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
Section 8.5 EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by the respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(iii) waive compliance with any of the agreements or conditions contained here.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party.
ARTICLE IX
MISCELLANEOUS
Section 9.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None
of the representations or warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.1 shall not limit any covenant or agreement of the parties set forth
in this Agreement or in any instrument delivered pursuant to the terms hereof.
Section 9.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given on the date delivered
if delivered personally (including by reputable overnight courier), on the date
transmitted if sent by facsimile (which is confirmed) or mailed by registered
or certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
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<PAGE> 44
(a) if to Parent or Sub, to
Mississippi Chemical Corporation
Owen Cooper Administration Building
Highway 49 East
Yazoo City, Mississippi 39194
Attn: Robert E. Jones
Facsimile: (601) 751-2912
Confirmation: (601) 751-2930
with a copy to
Hughes & Luce, L.L.P.
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attn: Alan J. Bogdanow
Facsimile: (214) 939-6100
Confirmation: (214) 939-5500
and
(b) if to the Company, to
First Mississippi Corporation
700 North Street
Jackson, Mississippi 39215-1249
Attn: Michael Summerford
Facsimile: 601) 948-7550
Confirmation: (601) 949-9876
with a copy to
Skadden, Arps, Slate, Meagher & Flom
333 West Wacker Drive
Chicago, Illinois 60606
Attn: Charles W. Mulaney, Jr.
Facsimile: (312) 407-0411
Confirmation: (312) 407-0700
Section 9.3 INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
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<PAGE> 45
followed by the words "without limitation." The phrase "made available" in
this Agreement shall mean that the information referred to has been made
available if requested by the party to whom such information is to be made
available. The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to August 27, 1996.
Section 9.4 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when a counterpart has been signed by each of the
parties and delivered to each of the other parties, it being under stood that
all parties need not sign the same counterpart.
Section 9.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein,
including the Distribution Agreement) and the Confidentiality Agreement (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof, and (b) except as provided in Section 6.9,
are not intended to confer upon any person other than the parties hereto and
thereto any rights or remedies hereunder or thereunder; provided that after the
Effective Time, Newco may enforce the obligations of Parent, Sub or the Company
under this Agreement.
Section 9.6 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Mississippi without
regard to any applicable conflicts-of-law principles.
Section 9.7 SPECIFIC PERFORMANCE. The parties hereto agree that
if any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached, irreparable damage would
occur, no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties shall be entitled to specific performance of
the terms hereof, in addition to any other remedy at law or equity.
Section 9.8 PUBLICITY. Except as otherwise required by law or
the rules of the NYSE or the NASDAQ National Market System, for so long as this
Agreement is in effect and then with as much advance notice to the other party
as is practicable under the circumstances, neither the Company nor Parent
shall, or shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the
other party, which consent shall not be unreasonably withheld or delayed.
Section 9.9 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, except that Sub may assign, in its sole
discretion, any or all of its rights hereunder to any direct or indirect wholly
owned Subsidiary of Parent, and after the Effective Time, Newco shall be
entitled to enforce the obligations of Parent, Sub and the Company pursuant to
this Agreement (including the documents and instruments referred to herein) and
the Confidentiality Agreement. Subject to the
40
<PAGE> 46
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
Section 9.10 ATTORNEY-CLIENT PRIVILEGE; WORK PRODUCT. Anything
herein or in the Distribution Agreement notwithstanding, except with respect to
matters addressed in the opinion referred to in Section 7.3(d) hereof, the
transactions contemplated hereby and by the Distribution Agreement shall not be
deemed to transfer to Parent, Sub or the Surviving Corporation any right to
waive, nor shall they be deemed to waive, any attorney-client privilege between
the Company, the present officers and directors of the Company or Newco and
their legal counsel with respect to legal advice concerning the transactions
contemplated hereby and by the Distribution Agreement, in either case
concerning privileged communications (or work product related thereto) at any
time prior to the Closing Date. Parent, Sub and the Surviving Corporation and
their successors and assigns shall not be entitled to waive or have access, nor
shall they attempt to waive or seek access, to any privileged communication (or
work product related thereto) between the Company, the present officers and
directors of the Company or Newco and their legal counsel relating to the
Merger or the Distribution or matters relating to Newco, its subsidiaries and
their respective businesses.
Section 9.11 OTHER. Except as otherwise provided for herein and
the other agreements to be entered into in connection herewith as to which
Parent and the Company agree that neither of them has a cause of action against
the other for violation of the parties rights with respect to Triad, it is
expressly understood and agreed that this Agreement and any other agreement to
be entered into in connection herewith shall not affect in any way and shall be
without prejudice to and with full reservation of Parent's and the Company's
rights with respect to Triad. Nothing in this Agreement or any other agreement
to be entered into in connection herewith shall constitute an acknowledgment by
either Parent or the Company of the existence and enforceability of any such
rights.
Section 9.12 FURTHER ASSURANCES. Subject to the terms and
conditions hereof and, as applicable, of the Distribution Agreement, the
Company and Parent will, and will cause their respective Subsidiaries to, do
such additional things as are necessary or proper to carry out and effectuate
the intent of this Agreement or any part hereof or the transactions
contemplated hereby, including, without limitation, the providing of reasonable
transition assistance services by Newco at cost to the Surviving Corporation
for a period not to exceed one year after the Effective Time.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement and Plan of Merger and Reorganization to be signed by their
respective officers thereunto duly authorized as of the date first written
above.
MISSISSIPPI CHEMICAL CORPORATION
By: /s/ ROBERT E. JONES
----------------------------------
Name: Robert E. Jones
Title: Senior Vice President and
General Counsel
MISS SUB, INC.
By: /s/ ROBERT E. JONES
----------------------------------
Name: Robert E. Jones
Title: Vice President
FIRST MISSISSIPPI CORPORATION
By: /s/ R. MICHAEL SUMMERFORD
----------------------------------
Name: R. Michael Summerford
Title: Vice President and Chief
Financial Officer
42
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF FIRST MISSISSIPPI CORPORATION
<TABLE>
<CAPTION>
State of
Company Name Incorporation
------------ -------------
<S> <C>
AMPRO Fertilizer, Inc. Louisiana
Arcadian/FMF, L.L.C. (50% owned) Delaware
Burmar Chemical, Inc. California
Callidus Technologies Inc. Oklahoma
Callidus Technologies International, Inc. Delaware
Dew Resources, Inc. Florida
EKC Technology, Inc. California
EKC Technology, Ltd. Scotland
FCC Acquisition Corporation California
FEC Marketing, Inc. Texas
First Chemical Corporation Mississippi
First Chemical Holdings, Inc. Mississippi
First Chemical Texas, L.P. Delaware
First Energy Corporation Mississippi
FirstMiss Fertilizer, Inc. Mississippi
FirstMiss Fertilizer Limited Partnership (50% owned) Delaware
FirstMiss Fertilizer Texas LP Delaware
FirstMiss, Inc. Iowa
FirstMiss Steel, Inc. Pennsylvania
First Mississippi Corporation Foundation, Inc. Mississippi
FMF, Inc. Mississippi
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
State of
Company Name Incorporation
------------ -------------
<S> <C>
FMF Barge, Inc. Mississippi
FRM, Inc. Mississippi
FRM Industries, Inc. Delaware
FRM International, Inc. U.S. Virgin Islands
FT Chemical, Inc. Texas
Industrial Insulations of Texas, Inc. Texas
Maxadyne Corporation California
Maxadyne Corporation of Louisiana Louisiana
Micropel, Inc. California
Mycosil, Inc. California
Newminco Joint Venture (50% owned) N/A
OMNIRAD, INC. Mississippi
Plasma Energy Corporation North Carolina
Plasma Energy Technologies Corporation North Carolina
Plasma Processing Corporation Delaware
Power Sources, Inc.(50% owned) North Carolina
Quality Chemicals, Inc. Pennsylvania
Star Corrosion & Refractory, Inc. Louisiana
SCE Technologies, Inc. Delaware
Triad Chemical (Partnership) Louisiana
</TABLE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
First Mississippi Corporation:
We consent to incorporation by reference in the Registration
Statements on Form S-8 (Nos. 2-93584, 2-93585, 2-74337, 2-54048, 33-512,
33-9106, 33-17483, 33-24413, 33-24414, 33-26895, 33-31343, 33-33135, 33-37084,
33-39137, 33-43586, 33-43600, 33-45344, 33-56026, 33-57799 and 33-64239) of
our report dated September 24, 1996, relating to the consolidated financial
statements of First Mississippi Corporation and subsidiaries as of June 30,
1996 and 1995, and for each of the years in the three-year period ended June
30, 1996, which report appears in the June 30, 1996, annual report on Form 10-K
of First Mississippi Corporation. Our report on the consolidated financial
statements refers to a change in the method of accounting for income taxes.
Jackson, Mississippi
September 24, 1996
KPMG Peat Marwick LLP
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