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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition Period from ____to ______
Commission File Number: 1-6244
AMERICAN MAIZE - PRODUCTS COMPANY
(Exact name of registrant as specified in its charter)
Maine 13-0432720
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 Harbor Drive, Stamford, CT 06902
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 356-9000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Class A Common Stock, par value of American Stock Exchange
$.80 per share
Class B Common Stock, par value of American Stock Exchange
$.80 per share
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. [X]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant: $209,075,605.47 (based upon closing prices on the American
Stock Exchange on March 6, 1995).
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of March 6, 1995:
Class A Common Stock, par value $.80 per share: 8,565,374 shares
Class B Common Stock, par value $.80 per share: 1,742,057 shares
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's Annual Report to security holders for the fiscal year ended
December 31, 1994 is incorporated by reference in Parts I, II and IV hereof.
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PART I
ITEM 1 -- BUSINESS
American Maize-Products Company is a Maine corporation organized in 1906
(together with its subsidiaries hereinafter referred to as "American Maize" or
"Company"). American Maize is engaged primarily in the manufacture and sale of
products derived from corn wet milling, such as corn sweeteners and starches for
use in the manufacturing processes of several industries. It also manufactures
and markets cigars and smokeless tobacco products.
In October 1993, the Company's Board of Directors approved a $160,000,000
program to modernize and expand its corn wet milling plant located in Hammond,
Indiana. As part of the program the grind capacity will be increased by
approximately 30% and the corn syrup capacity by approximately 50%. Construction
on this project is well underway and is expected to be completed by mid-1996.
In 1994, the Company consolidated its tobacco operations. Helme Tobacco
Company was merged, effective June 30, 1994, into Swisher International Inc.,
Helme's parent company and a wholly owned subsidiary of the Company. Helme's
executive office in Stamford, Connecticut was closed, and the Helme and Swisher
management and sales forces were consolidated. The operations of Helme are now
carried out by Swisher. In addition, by the end of the first quarter of 1995,
Swisher will have closed its Waycross, Georgia manufacturing facility and
consolidated all cigar manufacturing into its expanded Jacksonville, Florida
plant. The consolidation of the tobacco businesses has yielded substantial
savings in operating costs and is expected to continue to contribute cost
savings in the future.
Information required with respect to industry segments of American Maize, is
hereby incorporated by reference to Note 16 of "NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS" in the Company's 1994 Annual Report to Shareholders, attached hereto
as Exhibit 13. See "INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES" elsewhere in this report.
Recent Developments
On February 22, 1995, the Company entered into a definitive merger agreement
(the "Merger Agreement") providing for the acquisition of the Company by
Eridania Beghin-Say, S.A. ("EBS"). Pursuant to the Merger Agreement, EBS
commenced a tender offer for all outstanding shares of common stock of the
Company at a purchase price of $40 per share. Following the successful
completion of the tender offer, a subsidiary of EBS will merge with the Company
and each remaining share of the Company will be converted into the right to
receive $40.
In connection with the Merger Agreement, the parties entered into a stock
purchase agreement (the "Stock Purchase Agreement"), pursuant to which EBS will
purchase, at a price of $40 per share, all authorized but unissued shares and
all treasury shares of Class B common stock of the Company (an aggregate of
757,943 shares) which remain available for purchase following the exercise by
holders of the Class B common stock of preemptive rights. In this connection,
the Company intends to distribute rights to its Class B stockholders which will
entitle such stockholders to purchase, at $40 per share, their proportionate
share of the Class B common stock available for purchase by EBS.
The tender offer is subject to a number of conditions including, among
others, the receipt by EBS of a number of the Company's shares following the
tender offer which, together with the shares that EBS is then obligated to
purchase under the Stock Purchase Agreement, constitutes a majority of the
outstanding shares of each class of the Company's stock. The Stock Purchase
Agreement is conditioned upon, among other things, the completion of the tender
offer and the preemptive rights offering.
Several lawsuits have been filed in connection with EBS's offer and the
Merger Agreement. See also "ITEM 3 -- LEGAL PROCEEDINGS" below.
CORN BUSINESS
American Maize manufactures a number of corn-derived products by the wet
milling process through its Ingredients and Sweetener Divisions. The wet milling
process involves grinding wet corn and then separating it into starch and other
components; thereafter, the starch component is either dried for sale as common
starch or processed further into other principal products.
The Sweetener Division produces glucose corn syrups and high fructose corn
syrup. Corn syrup is used in many foods and beverages for both sweetness and to
provide a wide range of functionalities such as color, texture and freezability.
High fructose corn syrup is primarily used by the soft drink industry as a
sweetener.
The Ingredients Division makes unmodified and modified starches, corn syrup
solids, maltodextrins, dextrins and cyclodextrins. The Ingredients Division
extracts starch from common, waxy, high amylose, and various new hybrid strains
of corn. It also produces modifications of these starches by chemical or
physical processes to make products designed to serve the particular needs of a
wide variety of food and industrial users. The Company continues to research new
hybrid corn strains to develop new specialty starches which reduce or eliminate
chemical usage in the modification process and for new product applications.
Specialty starch products derived from waxy corn have characteristics differing
from common corn starches, making them useful in many specialty applications.
The Company's waxy corn based specialty starches are used as stabilizers,
fillers, thickeners and extenders in such products as canned and frozen foods,
pie fillings, puddings, salad dressings, baby foods, soups and snack foods.
Corn syrup solids and maltodextrins are used in a variety of food
applications, including dry food mixes, beverage mixes, microwaveable and
convenience foods.
American Maize is a major supplier of dextrins which are sold to the paper,
adhesives, textile and chemical industries for their sizing and adhesive
properties. Significant quantities of American Maize's waxy corn starches are
used as adhesives by the gummed tape industry.
American Maize is the largest producer of cyclodextrins in the world and the
only producer in North America. Cyclodextrins are doughnut-shaped molecular
structures, produced from starch, which have many food and non-food
applications, including fragrance carrying, cholesterol removing, and drug
delivery in the pharmaceutical industry.
The principal by-products produced by American Maize are corn germ, corn
gluten feed and corn gluten meal. Corn germ is sold for further processing into
corn oil and its co-product, corn germ meal. Corn oil is used as a cooking oil
and as an ingredient in salad dressings and margarine. Corn gluten feed and corn
gluten meal are sold in commodities markets and directly to manufacturers of
various animal feeds.
Competition
The corn wet milling business is highly competitive. Almost all of the
Company's products compete with virtually identical or similar products and
derivatives manufactured by other companies in the industry. In addition to
American Maize, there are ten companies in the corn wet milling industry in the
United States, most of which are larger and have greater resources than American
Maize.
In addition, many of American Maize's products are in competition with
products made from raw materials other than corn. Corn syrup and high fructose
corn syrup compete principally with cane and beet sugar. By-products compete
with products of the corn dry milling industry and with soybean products.
Fluctuation in the prices of these competing products may affect prices of, and
profits derived from, the products of American Maize.
The cost of producing corn products is largely dependent upon the market
price of corn. As a result, American Maize's profit margins in its corn business
are frequently subjected to commodity price pressures which the Company is
unable to anticipate. The price of corn sweeteners (especially high fructose
corn syrups) is indirectly impacted by government programs supporting sugar
prices. If sugar price supports are not continued, American Maize's earnings may
be adversely affected.
Raw Materials
Corn is the basic raw material of the corn wet milling industry, which
processes approximately 10-15% of the annual domestic crop. The supply of
domestic corn has been, and continues to be, adequate for American Maize's
needs. The price of this agricultural commodity fluctuates widely as a result of
a number of factors, including levels of agricultural production, market demand,
livestock feeding demand, government agricultural programs and exports. Due to
the competitive nature of the business and to fluctuating prices of competing
products such as sugar, end-product prices may not necessarily relate to raw
material costs; therefore, an increase in corn prices may adversely affect
American Maize's earnings. American Maize purchases common corn in both the cash
market and the corn futures market. Waxy and high amylose corn are purchased
under contracts with individual farmers.
General
Sales of American Maize's corn products generally are highest during the
spring, summer and fall, and decrease during the winter months.
Sales to The Coca-Cola Company accounted for approximately 14% of American
Maize's revenues in 1994 and are expected to account for greater than 10% in
1995. The Coca-Cola Company is publicly reported to control approximately 40% of
the domestic soft drink industry, the principal user of 55% high fructose corn
syrup.
TOBACCO BUSINESS
The Company manufactures and sells cigars and smokeless tobacco products
through its wholly owned subsidiary, Swisher International, Inc. ("Swisher").
Prior to the business consolidation and merger which took place in 1994 (see
"Business"), Swisher's smokeless tobacco business had been carried on through
its wholly owned subsidiary, Helme Tobacco Company.
Swisher is a leading producer of popular priced cigars in the United States
under the "King Edward" and "Swisher Sweets" brand names. It also manufactures
and sells mid-priced cigars under several brands including "Optimo", "El
Trelles", "Santa Fe" and "Keep Moving". Swisher markets little cigars nationally
under the brand names "Swisher Sweets Little Cigars", "Swisher Sweets Lights
Little Cigars", "Swisher Sweets Menthol Little Cigars" and "King Edward Little
Cigars". In addition, Swisher also markets higher priced cigars under its
trademarks of "Bering", "La Primadora" and imports and markets "Pleiades" and
"Dannemann" cigars and other tobacco products including "MacBaren" pipe tobacco.
Swisher competes in the dry snuff, loose leaf chewing tobacco and moist snuff
market segments of the smokeless tobacco industry. Since 1888, it has been a
significant producer of dry snuff, the original smokeless tobacco product, which
consists of finely powdered tobacco. Swisher's dry snuff brands include "Navy"
and "Railroad Mills" and its sales represent approximately one third of this
smokeless tobacco market segment. Swisher also produces and markets loose leaf
chewing tobacco with its "Mail Pouch", "Chattanooga Chew" and "Lancaster"
brands, among others. Swisher has a small share of the moist snuff market with
its "Silver Creek", "Gold River" and "Redwood" brands. It markets a low nicotine
moist snuff under the "Cooper" brand name. Swisher markets all of its branded
moist snuff products under a "buy-one-get-one-free" pricing strategy. Swisher
also provides moist snuff and loose leaf chewing tobacco products for the
private label market.
Industry and Markets
Unit sales in the domestic cigar industry have been in a general decline for
many years. Preliminary estimates for 1994, however, indicate an increase in
domestic consumption for large cigars. Swisher has maintained its share of
market in this category for the past five years. While domestic consumption of
little cigars has grown modestly over the past five years, Swisher's share of
this market has grown each year. Unit sales of dry snuff and chewing tobacco
have, in general, been declining for the past five years while unit sales of
moist snuff have steadily increased. The Company cannot predict whether these
trends in consumption will continue.
Swisher sells cigars and smokeless tobacco products through its sales force
to direct buying accounts, consisting principally of tobacco distributors,
grocery wholesalers and retail chains. Although Swisher's products are sold
nationwide, the majority of cigar sales are concentrated in the Southeast,
Southwest and Midwest, and the majority of sales of smokeless tobacco products
are concentrated in the Southeast, Southwest and Mid-Atlantic states. A small
percentage of cigar sales results from exports to the United Kingdom, other
European Economic Community member countries and approximately 50 other foreign
markets. Although exports represent a small percentage of sales, Swisher is the
leading exporter of domestic cigars and is increasing its presence in foreign
markets through licensing agreements in addition to its export activities. All
of the tobacco markets in which Swisher competes are highly competitive.
Sales of Swisher's tobacco products are not dependent upon any one customer
or group of customers and are not affected by seasonal selling factors in any
significant degree.
Raw Materials
There are three tobacco components of cigars: filler, binder and wrapper.
Swisher uses domestic and imported tobacco purchased through domestic sources
for filler and manufactures its own binder. Swisher uses natural wrapper tobacco
purchased from domestic dealers, who deal with growers and suppliers in Central
America, or specially formulated structured wrapper tobacco which Swisher also
manufactures.
The various tobaccos used in the manufacture of smokeless tobacco products
are purchased primarily in domestic markets either directly from growers or at
auction from several growing areas.
The supply of all the raw materials used in manufacturing cigars and
smokeless tobacco products has been, and is expected to continue to be,
adequate. However, due to consumer resistance, increases in raw material costs
cannot always be passed along on a timely basis in the form of price increases
for finished products. Swisher is not substantially dependent upon any one
supplier of raw materials and, to date, has not experienced any significant
shortage of raw materials.
Trademarks and Trade Secrets
Swisher markets its tobacco products under numerous registered trademarks,
including the brand names referred to above. These United States trademarks,
which are significant to the Company's tobacco business, expire periodically and
are renewable for additional ten year terms upon expiration. A number of these
trademarks are registered in several foreign countries. Flavor formulas relating
to all of the Company's tobacco products are principal assets of the Company and
are maintained under strict secrecy.
GENERAL
The backlog of orders of American Maize and its subsidiaries estimated to be
firm at December 31, 1993 and 1994 was $11,911,000 and $9,784,000, respectively.
All of the backlog orders at December 31, 1994 are expected to be filled within
the current fiscal year.
American Maize is committed to sell some of its products under short-term
(two to three months) and long-term (up to one year) contracts. Long-term
commitments at December 31, 1993 and 1994, approximated $69,717,000 and
$90,041,000, respectively.
American Maize owns a number of patents, is licensed under others, and owns
various registered trademarks, relating to products sold by it and processes
used in its business. No one patent and no one registered trademark is
considered material to the business as a whole.
The day-to-day activities of American Maize are conducted through its
operating divisions and subsidiaries. At December 31, 1994, the total number of
persons employed by American Maize and its subsidiaries was 1,833, approximately
834 of whom are members of labor unions. American Maize and certain of its
subsidiaries maintain for their respective employees who are eligible, employee
pension or retirement plans, group life, temporary disability and medical plans,
some of which are contributory. American Maize considers its employee relations
to be good.
American Maize is engaged continuously in the development of new products and
new applications and uses of existing products. During 1992, 1993 and 1994 the
expenditures on research activities relating to the development of new products
and improvements of existing products were approximately $3,147,000, $3,890,000
and $3,702,000, respectively.
GOVERNMENT REGULATION
General production, packaging, labeling and distribution of many of American
Maize's products are subject to various laws and regulations, including
regulation by the Federal Food and Drug Administration, the United States
Department of Agriculture, the Federal Trade Commission, the Alcohol and Tobacco
Tax Unit of the Treasury Department and by various comparable state agencies.
Certain of these federal and state agencies have the power, among other things,
to order the recall of products that do not meet applicable standards.
In recent years, an increasing amount of legislation affecting the use and
sale of tobacco products has been implemented or proposed. Federal legislation
requires, among other things, that smokeless tobacco products and advertisements
for such products bear one of a series of specified health warnings on a
rotating basis and prohibits radio or television advertising of such products.
In addition, federal, state and local regulations have been implemented or
proposed that would prohibit smoking in certain areas or in certain buildings,
require stronger health warnings on tobacco products, impose bans on advertising
and promotion, significantly increase tobacco excise taxes, prohibit or impose
restrictions on sampling of tobacco products, impose mandatory negative
advertising campaigns and eliminate the tax deductions for tobacco advertising
and promotional expenses. The Company is unable to assess the future effects
these actions may have on the marketing and sale of its tobacco products.
ENVIRONMENTAL MATTERS
The application of federal and state regulations to protect the environment,
particularly with respect to emissions into the air and wastewater discharges,
may limit or prevent the operation of American Maize's businesses or may
substantially increase the cost of operation and/or financing of its operations.
American Maize presently spends various amounts, from time to time, for capital
improvements to regulate discharges into the environment. In 1995 the Company
intends to complete approximately $20 million of capital improvements for
wastewater treatment facilities at its Hammond, Indiana facility. See also "ITEM
3 -- LEGAL PROCEEDINGS" below.
ITEM 2 -- PROPERTIES
American Maize leases its executive offices consisting of approximately
17,000 square feet of space in Stamford, Connecticut, and the offices of its
Sweetener Division consisting of approximately 6,500 square feet of space in
Chicago, Illinois. In 1994, the aggregate annual rental of all leased real and
personal properties of American Maize and its subsidiaries was approximately
$13,726,000 most of which represents railroad tank car leases. The Company's
leases contain expiration dates ranging from 1995 to 2005.
Corn Processing Facilities
American Maize operates three manufacturing facilities in its corn wet
milling business. These facilities are located in Hammond, Indiana; Decatur,
Alabama; and Dimmitt, Texas. All three facilities are operated on a continuous
basis except for normal maintenance. Capacity utilization of the three
facilities in 1994 was approximately 92% reflecting seasonal demand variations
and maintenance shutdowns.
The Hammond facility, which is owned by the Company, is located on
approximately 113 acres and has a grind capacity of approximately 85,000 bushels
per day. For a discussion of expansion and modernization of the Hammond
facility, see "ITEM 1 -- BUSINESS" on page 1. The Decatur facility and most of
its equipment are leased from the Industrial Development Board of the City of
Decatur, Alabama under an Industrial Revenue Bond financing lease. The Decatur
facility is located on a 33 acre site and has a grind capacity of approximately
55,000 bushels per day. The Dimmitt facility, is owned by the Company in part,
and the remainder is leased from Dimmitt Agri Industries, Inc. with an option
for the Company to purchase the leased premises and equipment at the end of the
lease term for a nominal price. The Dimmitt facility is located on a 22 acre
site and has a grind capacity of approximately 55,000 bushels per day.
Additionally, there is a 410 acre parcel of undeveloped land approximately two
miles from the facility which is used for disposition of processed wastewater.
The Company has an option to purchase approximately 655 acres of additional land
and is currently studying the site to determine whether it is acceptable for
construction of a new wastewater facility for the Dimmitt plant.
American Maize also owns or leases various storage and distribution
facilities in various locations and leases its rail transportation equipment.
Tobacco Facilities
Swisher owns cigar manufacturing plants in Jacksonville, Florida (382,500
square feet) and in Waycross, Georgia (105,000 square feet). By the end of the
first quarter of 1995, Swisher will have closed its Waycross, Georgia
manufacturing facility and consolidated all cigar manufacturing into its
expanded Jacksonville, Florida plant. Swisher owns virtually all of its cigar
manufacturing equipment except for certain machinery which is leased on a
year-to-year basis. In addition, Swisher owns storage facilities and tobacco
warehouses in Quincy, Florida; Edgerton, Wisconsin; Lancaster, Pennsylvania;
Brookneal, Virginia; and Hopkinsville, Kentucky (totaling approximately 430,000
square feet) which are currently for sale.
Swisher owns, and has listed for sale, the former Helme manufacturing
facility in Helmetta, New Jersey. It leases another in Wheeling, West Virginia
(389,000 square feet) pursuant to an Industrial Revenue Bond financing lease
where it manufactures dry snuff, moist snuff and chewing tobacco.
ITEM 3 -- LEGAL PROCEEDINGS
Grain Processing Corporation v. American Maize-Products Company
On May 12, 1981, Grain Processing Corporation ("GPC") brought a lawsuit
against the Company in the United States District Court for the Northern
District of Indiana alleging infringement of a patent owned by GPC relating to
certain kinds of waxy starch maltodextrins. The trial court in 1987 found
infringement as to one small-volume product, which had been discontinued by the
time of the decision. On appeal by GPC, the Court of Appeals in 1988 found that
another product also had infringed, in some instances. The case was sent back to
trial court to determine how much of the accused product was infringing, to
assess what damages should be paid to GPC, and to rule on GPC's claims for
increased damages and attorney fees. GPC is contending that it should receive
damages based on its lost profits on products it would have sold except for the
infringement. The Company contends that any damages awarded should be based on a
reasonable royalty rather than lost profits, because GPC never sold the patented
product. The law on that issue is in conflict at present. A hearing date of July
10, 1995 has been set to determine the amount of damages the Company will be
required to pay to GPC. During the second quarter of 1994, after the trial court
denied the Company's motion for reconsideration of the court's previous ruling
that the patent was valid, the Company established a reserve in the amount of
$4,000,000 based on its contention that damages should be based on a reasonable
royalty. However, the Company's ultimate liability for this action is not
currently determinable. The GPC patent expired in 1991 and has no present effect
on the Company's activities.
U.S. v. The Sanitary District of Hammond, et al.
On August 2, 1993, the United States, on behalf of the U. S. Environmental
Protection Agency ("EPA"), filed suit against the Company, four other industrial
companies and four municipalities for alleged violations of the Clean Water Act
and the Rivers and Harbors Act. The issue in the suit involves discharges of
industrial and municipal wastewater by the defendants into the sewage treatment
facilities of the City of Hammond, Indiana and from there into the Grand Calumet
River. The Government is seeking civil penalties in an unspecified amount for
alleged violations of discharge permit limitations, injunctive relief to require
compliance with permit terms, and, from the Company and the other industrial
defendants and the City of Hammond, additional injunctive relief requiring the
development and implementation of a plan to remediate allegedly contaminated
sediments in the Grand Calumet River. The Company does not believe that its
discharges have caused or contributed to any sedimentation problem in the Grand
Calumet River, and it has already taken measures to ensure continued compliance
with the terms of its discharge permits. The Company is contesting the
Government's allegations vigorously; however, management is unable to predict
the final outcome of this matter or the ultimate effect, if any, on its
operations or financial condition.
Whitaker v. Swisher International, Inc.
On April 23, 1992, Lloyd T. Whitaker, the trustee in bankruptcy for Olympia
Holding Corporation a/k/a P-I-E Nationwide, Inc. ("Olympia") commenced a lawsuit
in United States Bankruptcy Court for the Middle District of Florida against
Swisher seeking recovery of freight charges that allegedly should have been paid
under tariffs filed with the Interstate Commerce Commission ("ICC"). Actual
amounts paid were pursuant to a separate lower tariff filed with the ICC which
the trustee claims is unlawful. The trustee seeks recovery of approximately
$973,000 plus interest on behalf of Olympia for past shipments. In September,
1993, the court ruled in a similar case that the trustee does not have standing
to challenge the lower tariff. Swisher believes that it has meritorious defenses
to plaintiff's claims, and is contesting this litigation vigorously.
Steiner v. American Maize-Products Company; Katz v. American Maize-Products
Company; and Saltzman v. American Maize-Products Company
Three putative class action lawsuits were filed in January, 1995 in
Connecticut Superior Court, Stamford, Connecticut, purportedly on behalf of a
class of the Company's shareholders naming as defendants the Company and each
member of the Board of Directors. The complaints allege that the directors
breached their fiduciary duties to the shareholders by not adequately
considering an offer by Eridania Beghin-Say to purchase the outstanding common
stock of the Company at a price of $32.00 per share, by rejecting the offer, by
failing to make adequate disclosure of the offer, and by placing personal
interests, including an alleged attempt by the Chairman to retain control of the
Company, ahead of the interest of the public shareholders. The plaintiffs seek
injunctive relief, including appointment of an independent committee to evaluate
the offer, and monetary relief in an unspecified amount. The defendants believe
that the allegations in the complaints are without merit and will contest these
actions vigorously.
GIH Corp. and William Ziegler, III v. American Maize-Products Company
On February 22, 1995 William Ziegler, III, Chairman of the Board of the
Company, commenced litigation in Superior Court, Cumberland County, Maine on
behalf of himself and, purportedly, GIH Corp., a Delaware corporation that Mr.
Ziegler claims to control, seeking injunctive relief against completion of the
Merger Agreement and the Stock Purchase Agreement entered into between the
Company and EBS (See also "ITEM 1 -- BUSINESS"). The complaint names as
defendants the remaining members of the Company's Board of Directors and asserts
that they wrongfully approved the Merger Agreement and Stock Purchase Agreement
and states that a "break-up" fee payable to EBS under certain conditions is
illegal. The complaint also alleges that the Board wrongfully approved certain
severance contracts for its employees. The Company believes this litigation is
without merit and intends to vigorously defend it.
Steiner, Steiner, Sarnoff, Katz and Saltzman v. William Ziegler, III
On February 28, 1995, the plaintiffs in the Connecticut actions entitled
Steiner, Katz and Saltzman described above filed suit against William Ziegler,
III in Maine Superior Court, purportedly as a class action, claiming that Mr.
Ziegler has breached his fiduciary duties to the Company's shareholders by
refusing to adequately consider the EBS merger, seeking to advance his own
interest at the expense of the shareholders and denying the shareholders the
opportunity to maximize value by participating in the EBS merger. The plaintiffs
seek to consolidate this lawsuit with the lawsuit entitled GIH Corp. and William
Ziegler, III v. American Maize-Products Company described above.
Application of Helen Z. Steinkraus
In March 1991, an agreement was entered into settling various lawsuits which
concerned disputes between William Ziegler, III, Helen Z. Steinkraus, GIH Corp.
and United States Trust Company of New York with respect to issues of corporate
governance and management succession of the Company (the "Settlement
Agreement"). Mr. Ziegler is a director and Chairman of the Board and former
Chief Executive Officer of the Company. Mrs. Steinkraus, the sister of Mr.
Ziegler, is the wife of William C. Steinkraus, a director of the Company. GIH
Corp. is a Delaware corporation which owns 47.3% of the Class B Common Stock of
the Company. The Class B shares have power to elect 70% of the Board of
Directors. GIH Corp., in turn, is wholly owned by a group of trusts for the
benefit of Mr. Ziegler, Mrs. Steinkraus and their respective descendants and by
Mr. Ziegler, Mrs. Steinkraus and members of their respective families.
In December 1991, Mrs. Steinkraus commenced an action in the Surrogate's
Court for New York County, New York to enforce the Settlement Agreement,
alleging that the management succession and other provisions of the Settlement
Agreement had been breached by Mr. Ziegler and by Donald E. McNicol, a former
director of the Company and a party to the Settlement Agreement. Mr. Ziegler and
Mr. McNicol have filed answers and counterclaims against Mrs. Steinkraus. On
November 17, 1994, the action, including all claims and counterclaims, was
discontinued with prejudice by stipulation of the parties.
Eric M. Steinkraus v. William Ziegler, III, et al.
On February 20, 1992, a lawsuit was filed in Superior Court for the County of
Cumberland, Maine naming as defendants five then directors of the Company
(William Ziegler, III, Leslie C. Liabo, Charles B. Cook, Jr., Patric J.
McLaughlin and Donald E. McNicol) and naming the Company as a nominal defendant.
The complaint was filed by Eric M. Steinkraus (a son of William C. Steinkraus
and Helen Z. Steinkraus). The plaintiff filed the action in the right of the
Company, personally and on behalf of a class of the Company's stockholders. The
complaint alleged two counts of breach of fiduciary duty and one count of common
law fraud, and included derivative and class action allegations. The charges
were based on (a) allegations of deception and concealment regarding the
"forcible retirement" of two directors of the Company and a proposal to sell the
Company's Hammond, Indiana plant to American Fructose Corporation ("AFC"), a
former subsidiary of the Company which was merged with and into the Company on
February 26, 1993, (b) allegations of actions taken to prevent the election of a
new president of the Company, (c) allegations of scheming and misrepresentation
to cause the Company to pay fees on behalf of certain of the defendants and
salaries to certain other defendants, and (d) an alleged failure to disclose
what plaintiff characterizes as an unconditional offer by Archer-Daniels-Midland
Company ("ADM") to purchase all of the Company's stock at a premium. On November
8, 1994, the action was dismissed by order of the court, pursuant to stipulation
of the parties.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
<PAGE>
PART II
ITEM 5 -- MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information.
Information required with respect to this Item 5 (a) is hereby incorporated
by reference to information under "Stock Price and Dividend Review" on page 37
of the Company's 1994 Annual Report to security holders, attached hereto as
Exhibit "13".
(b) Holders.
Information required with respect to this Item 5 (b) is hereby incorporated
by reference to information under "Stock Price and Dividend Review" on page 37
of the Company's 1994 Annual Report to security holders, attached hereto as
Exhibit "13".
(c) Dividends.
During 1993 and the first three quarters of 1994, the Company declared and
paid a quarterly dividend of $.16 per share on its Class A Common Stock and
Class B Common Stock. In the fourth quarter of 1994 the Company declared and
paid a quarterly dividend of $.17 per share.
Other information required with respect to this Item 5 (c) is hereby
incorporated by reference to the Company's 1994 Annual Report to security
holders, attached hereto as Exhibit "13", as follows:
(i) With respect to dividend history, see "Five-Year Summary of Selected
Financial Data" on page 19.
(ii) With respect to restrictions on the payment of dividends, see Note 4
of "Notes to Consolidated Financial Statements" on page 25.
ITEM 6 - SELECTED FINANCIAL DATA
Information required with respect to this Item 6 is hereby incorporated by
reference to information under "Five-Year Summary of Selected Financial Data" on
page 19 of the Company's 1994 Annual Report to security holders, attached hereto
as Exhibit "13".
ITEM 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information required with respect to this Item 7 is hereby incorporated by
reference to material under "Financial Review" on pages 15-18 of the Company's
1994 Annual Report to security holders, attached hereto as Exhibit "13".
ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required with respect to this Item 8 is hereby incorporated by
reference to the applicable sections in the Company's 1994 Annual Report to
security holders, attached hereto as Exhibit "13". See Financial Statements
Incorporated by Reference under "Index to Consolidated Financial Statements and
Financial Statement Schedules" elsewhere in this report.
ITEM 9 -- CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
DIRECTORS OF THE COMPANY
The names and ages (as of March 6, 1995) of the directors of the Company,
their principal occupations or employment during the past five years and other
data regarding them, based on information received from the respective
directors, are set forth below:
<TABLE>
<CAPTION>
Director
Name Age Principal occupation since
<S> <C> <C> <C>
Class A Directors
Paul F. Engler(1).......... 65 President and Chief Executive Officer of 1993
Cactus Feeders, Inc. (farming, ranching
and cattle feeding).
John R. Kennedy............ 64 President, Chief Executive Officer and a 1992
director of Federal Paper Board Company,
Inc. (paper and wood products). Also a
director of DeVlieg-Bullard, Inc., First
Fidelity Bancorporation, Magma Copper
Company and Chase Brass Industries, Inc.
William L. Rudkin(1)....... 68 Retired Chairman of Pepperidge 1993
Farm Incorporated (consumer food products).
Wendell M. Smith........... 59 Chairman and Chief Executive Officer of 1993
Baldwin Technology Company, Inc.
(manufacturer of printing press controls
and accessories). Also a director of Bowne
& Company.
Class B Directors
Charles B. Cook, Jr........ 65 Vice Chairman and a director of Janney 1964
Montgomery Scott Inc. (investment bankers).
James E. Harwood........... 58 President, Sterling Equities, Inc. (venture 1992
capitalists and management advisors);
formerly Corporate Vice President of
Technical Operations of Schering Plough
Corporation. Also a director of Morgan
Keegan & Company and Leader Financial
Corporation Inc.
Leslie C. Liabo(1)......... 71 Former Vice Chairman of the Board of the 1975
Company (1986-1993).
C. Alan MacDonald.......... 61 General Partner, The Marketing Partnership, 1992
Inc., formerly Chairman and Chief Executive
Officer of Lincoln Snacks Company (1992-1994)
and President and Chief Executive Officer
of Nestle Foods Corporation. Also a director
of Lord Abbett & Company, Fountainhead Water
Company, J.B. Williams Company, Great American
Restaurants and Lincoln Snacks Company.
Patric J. McLaughlin(1) ... 49 President and Chief Executive Officer of the 1988
Company since July 1, 1993; formerly President
and Chief Operating Officer of the Company
(1992-1993) and President of its Corn
Processing Division (1984-1992).
H. Barclay Morley.......... 65 Retired Chairman and Chief Executive Officer 1991
of Stauffer Chemical Company. Also a director
of Champion International Corporation,
Schering Plough Corporation and The Bank of
New York Company.
William C.
Steinkraus(1) (2)......... 69 Private investor and Chairman Emeritus of 1980
United States Equestrian Team, Incorporated,
a charitable organization responsible for
providing United States international
equestrian representation.
<PAGE>
Raymond S. Troubh.......... 68 Financial consultant. Also a director of ADT 1992
Limited; America West Airlines, Inc.; Applied
Power Incorporated; ARIAD Pharmaceuticals,
Inc.; Becton, Dickinson and Company; Benson
Eyecare Corporation; Foundation Health
Corporation; General American Investors Company,
Inc.; Manville Corporation; The Olsten
Corporation; Petrie Stores Corporation;
Riverwood International Corporation;
Time Warner Inc.; Triarc Companies, Inc.;
and WHX Corporation.
William Ziegler,
III(1) (2)................. 66 Chairman of the Board of the Company since 1958
1964; formerly Chief Executive Officer of
the Company (1976-1993).
<FN>
- ----------------
(1) Member of the Executive Committee.
(2) Mr. Ziegler and Mr. Steinkraus's wife are brother and sister.
</TABLE>
Agreements Affecting Board Membership
The Company's Class B Common Stock has the power to elect 70% of the
Company's Board of Directors. GIH Corp. owns approximately 13.3% of the Class A
Common Stock and approximately 47.3% of the Class B Common Stock. All the shares
of GIH Corp. are held directly by, or in various trusts for the benefit of,
William Ziegler, III and his sister, Mrs. Helen Steinkraus.
Control over GIH Corp. is the subject of litigation initiated in New York
Surrogate's Court by the children of Mrs. Helen Steinkraus challenging the prior
distribution of the controlling share of GIH Corp. common stock to a trust for
the benefit of William Ziegler, III. On April 4, 1994, the New York Surrogate's
Court issued a decision in favor of Mr. Ziegler, and Mrs. Steinkraus' children
have filed an appeal of such decision. The appeal was argued on February 15,
1995.
Until the final resolution of the litigation described above, Mr. Ziegler,
Mrs. Steinkraus and GIH Corp. agreed in March, 1991 that their shares of the
Company will be voted for directors nominated by the Company in accordance with
the Succession Resolutions adopted by the Board of Directors in March, 1991. The
resolutions provide for the Board seats for Mr. Ziegler and Mrs. Steinkraus or
their designees and require that the majority of the Board consist of directors
who are neither employees of the Company nor members of the Ziegler or
Steinkraus families.
Mr. Ziegler has informed the Board of Directors of the Company that it is his
position that the March, 1991 agreement is no longer in effect as a result of
the Surrogate's Court decision. The Company believes that the March, 1991
agreement remains in effect, and the foregoing slate of nominees for election as
directors was selected in accordance with the Succession Resolutions.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is the age as of March 6, 1995 and certain other information
regarding each person currently serving as an executive officer of the Company.
Name Age Office
---- -- ------
William Ziegler, III (1)... 66 Chairman of the Board
Patric J. McLaughlin (1)... 49 President and Chief Executive
Officer
Robert A. Britton ......... 48 Vice President, Treasurer and
Assistant Secretary
Jane E. Downey ............ 44 Vice President, Human Resources
Thomas H. Fisher .......... 48 Director of Taxes
Edmond G. Herve, Jr........ 45 Controller
Charles A. Koons........... 51 Vice President, Corporate
Development and Planning
Edward P. Norris........... 54 Vice President and Chief
Financial Officer
Robert M. Stephan ......... 52 Vice President, General Counsel
and Secretary
- -------------
(1) Member of Board of Directors and its Executive Committee
The terms of office of certain of the Company's Executive Officers are
governed by their employment agreements. See "ITEM 11 -- EXECUTIVE COMPENSATION
- -- Employment Agreements." The Company's other Executive Officers do not have a
fixed term of office; they serve at the pleasure of the Board of Directors.
Messrs. Britton, Fisher, Herve, Koons and Norris have served in their
respective capacities with the Company for more than the past five years.
Mr. Ziegler retired as Chief Executive Officer effective July 1, 1993 and
remains Chairman of the Board of Directors; prior thereto he served as Chairman
and Chief Executive Officer since 1976.
Mr. McLaughlin was elected President and Chief Executive Officer of the
Company effective July 1, 1993; prior thereto he served as President and Chief
Operating Officer (1992-1993) and President of the Corn Processing Division
(1984-1992).
Ms. Downey was elected Vice President, Human Resources of the Company
effective August 1, 1993; prior thereto she served as Vice President, Human
Resources of the Corn Processing Division (1988-1993).
Mr. Stephan was elected Vice President and General Counsel of the Company in
April, 1992 and Secretary in January, 1995. Prior thereto he served as Vice
President, General Counsel and Secretary of Erbamont N.V. since 1983.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's officers and directors, and any persons
who are beneficial owners of more than ten percent of any class of the Company's
Common Stock, to report their initial ownership of Common Stock and any
subsequent changes in that ownership to the SEC and the American Stock Exchange.
Based solely on the Company's review of forms submitted to the Company in
accordance with the Exchange Act, and the representations of its officers and
directors, the Company believes that all of its officers, directors and greater
than ten percent beneficial owners complied with all filing requirements
applicable to them with respect to transactions during the fiscal year 1994.
ITEM 11 -- EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation paid or awarded during the last
three fiscal years to the Chief Executive Officer and the four other most highly
compensated executive officers of the Company in 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------------- -------------------
Other Securities
Name and Principal Annual Underlying Options/ All Other
Position Year Salary Bonus Compensation(1) SARs(2) Compensation(3)
- ---------------------- ---- ------- ------- ------------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Patric J. McLaughlin ..... 1994 $420,000 $396,000 $ 37,854 30,000 $ 34,489
President and Chief 1993 350,000 272,000 27,120 20,000 28,848
Executive Officer 1992 254,000 157,000 11,808 10,000 22,204
Edward P. Norris.......... 1994 206,000 127,200 39,922 12,000 29,120
Vice President and 1993 185,850 108,000 36,224 6,000 29,356
Chief Financial Officer 1992 166,100 98,000 20,211 3,000 29,025
Robert M. Stephan(4) ..... 1994 177,250 108,000 30,775 7,000 27,120
Vice President, General 1993 166,750 94,000 28,733 5,000 27,165
Counsel and Secretary 1992 124,058 70,000 16,328 3,000 23,441
Charles A. Koons.......... 1994 148,000 79,500 28,523 5,000 22,920
Vice President, Corporate 1993 140,500 68,000 27,138 3,000 22,620
Development and Planning 1992 132,000 63,000 15,520 3,000 22,280
Jane E. Downey(5) ........ 1994 125,000 69,300 51,474 6,000 45,860
Vice President, 1993 108,333 60,000 16,963 4,000 23,473
Human Resources
<FN>
- ---------------
(1) Amounts in this column represent tax reimbursements on life insurance and
company automobiles. The amounts with respect to life insurance are as follows:
Mr. McLaughlin $23,126; Mr. Norris $22,540; Mr. Stephan $17,119; Mr. Koons
$13,858 and Ms. Downey $33,309.
(2) All amounts in this column represent option grants and all such options
were immediately exercisable (see Option Grants in Last Fiscal Year and
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values tables).
<PAGE>
(3) Amounts in this column represent the following items as set forth in the
table below: (a) Company contributions to the executive's 401(k) plan account
(b) universal life insurance premiums paid by the Company on policies owned by
the executives.
</TABLE>
<TABLE>
<CAPTION>
Patric J. Edward P. Robert M. Charles A. Jane E.
1994 McLaughlin Norris Stephan Koons Downey
---- ---------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
401(k) Contribution $ 6,120 $ 6,120 $ 6,120 $ 5,920 $ 5,000
Life Insurance Premiums 28,369 23,000 21,000 17,000 40,860
------ ------- ------ ------ -------
$ 34,489 $29,120 $ 27,120 $ 22,920 $45,860
<FN>
(4) Mr. Stephan was elected Secretary of the Company on January 25, 1995 and
Vice President and General Counsel of the Company on April 24, 1992. Prior
thereto, he served for a one-month period as Vice President and Associate
General Counsel of the Company.
(5) Ms. Downey was elected Vice President, Human Resources on August 1, 1993.
Prior thereto she served as Vice President--Human Resources of the Company's
Corn Processing Division (1988-1993).
</TABLE>
<PAGE>
Stock Option Tables
The following tables provide information with respect to stock options
granted to, exercised or held by the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term(2)
------------------------------------------------------ ----------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted(1) in 1994 $/SH Date 5% ($) 10% ($)
------- --------- ------- ------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Patric J. McLaughlin 30,000 17.80% $ 20.00 6/29/04 $ 646,200 $1,384,200
Edward P. Norris 12,000 7.12% 20.00 6/29/04 258,480 553,680
Robert M. Stephan 7,000 4.15% 20.00 6/29/04 150,780 322,980
Charles A. Koons 5,000 2.97% 20.00 6/29/04 107,700 230,700
Jane E. Downey 6,000 3.56% 20.00 6/29/04 129,240 276,840
<FN>
- -----------------
(1) All amounts in this column represent option grants and all such options
were immediately exercisable.
(2) Potential realizable value is based on the assumed annual growth of the
Company's Class A Common Stock for the ten-year option term. Annual growth of 5%
results in a stock price of $41.54 per share and 10% results in a price of
$66.14 per share. Actual gains, if any, on stock option exercises are dependent
on the future performance of the stock. There can be no assurance that the
amounts reflected in this table will be achieved.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table details the value on December 31, 1994 of options to
purchase Common Stock held by those persons named in the Summary Compensation
Table above.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End At Year-End
Shares --------------------------- -----------------------------
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
----- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Patric J. McLaughlin 2,750 $ 8,415 96,000 0 $ 779,156 0
Edward P. Norris 750 2,389 36,750 0 285,576 0
Robert M. Stephan 0 0 15,000 0 96,000 0
Charles A. Koons 0 0 15,300 0 85,563 0
Jane E. Downey 0 0 14,400 0 91,606 0
</TABLE>
<PAGE>
RETIREMENT BENEFITS
The approximate annual retirement benefits provided under Company retirement
plans for employees in higher salary classifications retiring from the Company
at age 62 or later are shown in the table below.
<TABLE>
<CAPTION>
30 OR MORE
EARNINGS CREDITED FOR 10 YEARS OF 15 YEARS OF 20 YEARS OF 25 YEARS OF YEARS OF
RETIREMENT BENEFITS SERVICE SERVICE SERVICE SERVICE SERVICE
- ------------------------ ------------- ------------ ------------ ------------- ----------------
<S> <C> <C> <C> <C> <C>
$100,000................ $ 18,568 $ 27,775 $ 36,981 $ 46,188 $ 55,395
150,000................ 29,175 43,595 58,014 72,434 86,853
250,000................ 50,389 75,234 100,080 124,925 149,770
350,000................ 71,603 106,874 142,145 177,416 212,687
450,000................ 92,817 138,513 184,210 229,906 275,603
550,000................ 114,031 170,153 226,275 282,397 338,520
650,000................ 135,245 201,793 268,341 334,888 401,436
750,000................ 156,458 233,432 310,405 387,379 464,352
850,000................ 177,672 265,071 352,471 439,870 527,269
</TABLE>
The amounts of earnings credited for retirement benefits ("Credited
Earnings") are essentially salaries and bonuses as shown in the Summary
Compensation Table on page 13. The calculation of each individual's Credited
Earnings is based on the highest consecutive 60 months during his or her last
120 months of employment.
The amounts shown in the table are 10 year certain and continuous benefits,
converted to straight life annuities. Pay is assumed to remain constant to
Normal Retirement Date. The figures shown are not limited by any law or
regulation such as Section 415(b) and (e) or Section 401(a)(17) of the Code. The
benefits shown reflect the total benefit to be paid under both the 1952 Plan and
the Supplemental Plan.
As of December 31, 1994, the executive officers named in the Summary
Compensation Table on page 13 had the following credited years of service under
the retirement plan: Mr. McLaughlin 20.5 years; Mr. Norris 16.8 years, Mr.
Stephan 2.8 years, Mr. Koons 18.0 years, and Ms. Downey 6.3 years.
Compensation of Directors
Directors who are not employees of the Company or its subsidiaries are paid
an annual retainer of $15,000 plus an attendance fee of $1,000 for each Board
meeting and each Board committee meeting. Directors are also reimbursed for
travel expenses to attend Board and committee meetings. Committee Chairs receive
additional annual retainers ranging from $5,000 to $12,000. In lieu of the
annual director's retainer and Executive Committee attendance fees, Mr.
MacDonald received until October, 1994 an annual retainer of $120,000 and was
granted 20,000 stock appreciation rights for his service as a director and
Chairman of the Executive Committee. In lieu of the annual director's retainer
and Board meeting attendance fees, Mr. Ziegler receives an annual retainer of
$120,000, use of an office and part-time secretarial support and use of a club
membership for his service as a director and Chairman of the Board.
Directors with five years or more of service as a non-employee member of the
Board participate in a directors' retirement plan that provides eligible
directors, upon retirement, with an annual retirement income equal to 50-100%
(depending on the number of years served) of the director's highest twelve
monthly consecutive retainers paid during the last 120 months of Board service.
For purposes of this calculation, the current annual retainer for the Chairman
of the Board is deemed to be $15,000.
Employment Agreements
The Company entered into an employment agreement with Patric J. McLaughlin as
President and Chief Executive Officer (the "Agreement") commencing July 1, 1993
and terminating June 30, 1996, subject to automatic one-year extensions on each
anniversary date until July 1, 2000. The Agreement provides for a base salary of
$400,000 per annum, subject to annual reviews by the Compensation Committee,
plus an annual incentive bonus under the Company's management incentive plan
with a bonus "target" rate at 50% of base salary. Under the Agreement, in the
event Mr. McLaughlin's employment is terminated without "cause," he shall be
entitled to severance benefits until the Agreement's termination date, including
(i) salary, (ii) target bonus payments and (iii) continued participation in
welfare benefit plans, retirement plans and the Company's 401(k) Plan. In such
case, stock options awarded prior to his termination without "cause" shall
remain exercisable until the earlier of their expiration date or the third
anniversary of the termination of his employment. In the event of termination of
employment for "cause" or due to death or disability, the Company shall not be
obligated to make any severance payments to Mr. McLaughlin. The Agreement
provides that the Company will pay an amount necessary to reimburse Mr.
McLaughlin, on an after tax basis, for any excise tax due under Section 4999 of
the Code as a result of any payment under the Agreement being treated as a
"parachute payment" under Section 280G of the Code. The Agreement contains
provisions relating to nondisclosure of confidential information by Mr.
McLaughlin and nonsolicitation of Company employees for a period of two years
after his termination. The Agreement is not assignable by either party, but is
binding upon successors of the Company.
The Company entered into employment agreements with Jane E. Downey, Charles
A. Koons, Edward P. Norris, Robert M. Stephan and three other executive officers
of the Company (the "Agreements") commencing as of January 2, 1995 and
terminating December 31, 1997 subject to automatic one-year extensions as of
December 31, 1995 and each December 31st thereafter, unless timely notice is
given that the term shall not be extended. The Agreements provide that each of
the executive officers will serve the Company in the offices listed (with
respect to named executive officers) in the Summary Compensation Table and set
forth in the Agreements at specified annual base salary rates. The base salaries
are subject to annual reviews by the Compensation Committee, plus annual
incentive bonuses under the Company's management incentive plan at the bonus
"target" rate specified in each Agreement. The Agreements include provisions
that are effective in the event the employment of the executive officer is
terminated by the Company without "cause" or by the executive officer for "good
reason" (each as defined in the Agreements). In such cases, the executive
officer is entitled to severance benefits for the remainder of the agreement
term, including (i) salary, (ii) target bonus payments and (iii) continued
participation in welfare benefit plans, retirement plans and the Company's
401(k) Plan. In such case, stock options awarded prior to the executive
officer's termination without "cause" shall become fully vested and shall remain
exercisable until the earlier of their expiration date or the third anniversary
of the termination of his or her employment. Pursuant to the terms of the
Agreements, the Company will pay each executive officer an amount necessary to
reimburse him or her, on an after tax basis, for any excise tax due under
Section 4999 of the Code as a result of any payment under the Agreements being
treated as a "parachute payment" under Section 280G of the Code. The Agreements
contain a provision relating to nondisclosure of confidential information by the
executive officers. The Agreements are not assignable by either party, but are
binding upon successors of the Company.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee are current or former
employees of the Company or its affiliates.
<PAGE>
ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OWNERSHIP OF COMMON STOCK BY DIRECTORS AND OFFICERS
The following table sets forth certain information as of February 21, 1995,
as to shares of the Company's Common Stock beneficially owned by (a) each
director of the Company, (b) each of the executive officers of the Company named
in the "Summary Compensation Table" on page 13 and (c) all directors and
officers of the Company as a group. Unless otherwise indicated in the footnotes,
each of the following persons has sole voting and investment power with respect
to the shares of the Company's Common Stock set forth in the table.
OWNERSHIP OF COMMON STOCK BY DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
TITLE OF CLASS
OF COMMON AMOUNT AND NATURE OF PERCENT
NAME STOCK BENEFICIAL OWNERSHIP OF CLASS
- ------------------------------------- --------------- ----------------------- ----------
<S> <C> <C> <C>
William Ziegler, III................. Class A 1,330,098 (1)(2) 15.5%
Class B 949,920 (1)(3) 54.5%
Charles B. Cook, Jr.................. Class A 2,336 *
Class B 2,669 *
Jane E. Downey....................... Class A 15,395 (2) *
Class B -0- --
Paul F. Engler....................... Class A 2,500 *
Class B -0- --
James E. Harwood..................... Class A 1,000 *
Class B -0- --
John R. Kennedy...................... Class A 800 *
Class B 200 *
Charles A. Koons..................... Class A 16,083 (2) *
Class B -0- --
Leslie C. Liabo...................... Class A 14,475 (2) *
Class B 3,875 *
Patric J. McLaughlin................. Class A 106,672 (2) 1.3%
Class B -0- --
C. Alan MacDonald.................... Class A 1,000 *
Class B -0- --
H. Barclay Morley.................... Class A 2,500 *
Class B -0- --
Edward P. Norris..................... Class A 48,042 (2) *
Class B -0- --
William L. Rudkin.................... Class A 1,000 (4) *
Class B -0- --
Wendell M. Smith..................... Class A -0- --
Class B 100 *
William C. Steinkraus................ Class A 110 (5) *
Class B -0- (5) --
Robert M. Stephan.................... Class A 20,117 (2) *
Class B -0- --
Raymond S. Troubh.................... Class A 3,000 *
Class B 500 *
All directors and officers as a
group................................ Class A 1,643,851 19.2%
Class B 957,264 55.0%
<FN>
- ---------------
* Does not exceed one percent of the total outstanding shares of such
class.
(1) Based upon Schedule 13G, Amendment No. 16, dated February 13, 1995, filed
with the Securities and Exchange Commission (the "Commission"). Mr. Ziegler
reports that he shares voting and investment power over 1,264,594 and 876,158 of
such shares of the Company's Class A Common Stock and Class B Common Stock,
respectively. Mr. Ziegler shares voting and investment power of such shares with
First Fidelity Bank ("First Fidelity") as co-trustees of two trusts (the
"Ziegler Trusts"). Of such shares, 1,140,294 shares of the Company's Class A
Common Stock and 824,521 shares of the Company's Class B Common Stock are owned
by GIH Corp. ("GIH"). GIH is wholly owned by Mr. Ziegler, Mrs. Steinkraus and
the co-trustees of the Ziegler Trusts and the Steinkraus Trusts.
(2) Includes the following shares of the Company's Class A Common Stock that
may be acquired within 60 days pursuant to the exercise of options: Ms. Downey,
14,400 shares; Mr. Koons, 15,300 shares; Mr. Liabo, 8,000 shares; Mr.
McLaughlin, 96,000 shares; Mr. Norris, 36,750 shares; Mr. Stephan, 15,000
shares; Mr. Ziegler, 54,948 shares; and all directors and officers as a group,
304,498 shares. Also includes shares of the Company's Class A Common Stock
credited under the Company's capital accumulation plan through December 31, 1994
as follows: Ms. Downey, 995.4392 shares; Mr. McLaughlin, 8,666.5407 shares; Mr.
Koons, 783.0609 shares; Mr. Norris, 11,167.1858 shares; and Mr. Stephan,
2,116.6837 shares.
(3) Excludes 1,003 shares of the Company's Class B Common Stock owned by Mr.
Ziegler's wife. Mr. Ziegler disclaims beneficial ownership of such shares.
(4) Excludes 587 shares of the Company's Class A Common Stock owned by Mr.
Rudkin's wife. Mr. Rudkin disclaims beneficial ownership of such shares.
(5) Excludes shares of the Company's Class A and Class B Common Stock owned
by Mrs. Steinkraus and disclosed on page 8. Mr. Steinkraus disclaims beneficial
ownership of such shares.
</TABLE>
OWNERSHIP OF COMMON STOCK BY CERTAIN HOLDERS
The following table sets forth certain information as of February 21, 1995
with respect to the shares of the Company's Common Stock beneficially owned by
each person who is known to the Company to be the beneficial owner of more than
5% of a class of the Company's outstanding Common Stock.
<TABLE>
<CAPTION>
TITLE OF CLASS
OF COMMON AMOUNT AND NATURE OF BENEFICIAL PERCENT
NAME AND ADDRESS STOCK OWNERSHIP OF CLASS
- --------------------------- --------------- ---------------------------------- ----------
<S> <C> <C> <C>
William Ziegler, III....... Class A(1) Aggregate Amount--1,330,098 15.5%
250 Harbor Drive Sole Voting Power--65,504 *
P.O. Box 10128 Shared Voting Power--1,264,594 14.8%
Stamford, CT 06904 Sole Investment Power--65,504 *
Shared Investment Power--1,264,594 14.8%
Class B(1) Aggregate Amount--949,920 54.5%
Sole Voting Power--73,762 4.2%
Shared Voting Power--876,158 50.3%
Sole Investment Power--73,762 4.2%
Shared Investment Power--876,158 50.3%
Helen Z. Steinkraus........ Class A(2) Aggregate Amount--1,257,989 (3) 14.7%
250 Harbor Drive Sole Voting Power--3,394 *
P.O. Box 10128 Shared Voting Power--1,254,595 14.7%
Stamford, CT 06904 Sole Investment Power--3,394 *
Shared Investment Power--1,254,595 14.7%
Class B(2) Aggregate Amount--882,040 (3) 50.6%
Sole Voting Power--5,883 *
Shared Voting Power--876,157 50.3%
Sole Investment Power--5,883 *
Shared Investment Power--876,157 50.3%
United States Trust
Company of New York........ Class A(4) Aggregate Amount--1,256,767 14.7%
114 West 47th Street Sole Voting Power--0 --
New York, NY 10036 Shared Voting Power--1,256,767 14.7%
Sole Investment Power--0 --
Shared Investment Power--1,256,767 14.7%
Class B(4) Aggregate Amount--876,158 50.3%
Sole Voting Power--0 --
Shared Voting Power--876,158 50.3%
Sole Investment Power--0 --
Shared Investment Power--876,158 50.3%
First Fidelity Bank........ Class A(5) Aggregate Amount--1,264,594 14.8%
P.O. Box 1297 Sole Voting Power--0 --
Stamford, CT 06904 Shared Voting Power--1,264,594 14.8%
Sole Investment Power--0 --
Shared Investment Power--1,264,594 14.8%
Class B(5) Aggregate Amount--876,158 50.3%
Sole Voting Power--0 --
Shared Voting Power--876,158 50.3%
Sole Investment Power--0 --
Shared Investment Power--876,158 50.3%
GIH Corp................... Class A(6) Aggregate Amount--1,140,294 13.3%
250 Harbor Drive Sole Voting Power--1,140,294 13.3%
P.O. Box 10128 Shared Voting Power--0 --
Stamford, CT 06904 Sole Investment Power--1,140,294 13.3%
Shared Investment Power--0 --
Class B(6) Aggregate Amount--824,521 47.3%
Sole Voting Power--824,521 47.3%
Shared Voting Power--0 --
Sole Investment Power--824,521 47.3%
Shared Investment Power--0 --
<PAGE>
Archer Daniels Midland
Co......................... Class A(7) Aggregate Amount--2,429,700 28.4%
4666 Faries Parkway Sole Voting Power--2,115,200 24.7%
P.O. Box 1470 Shared Voting Power--0 --
Decatur, IL 62525 Sole Investment Power--2,429,700 28.4%
Shared Investment Power--0 --
Marvin C. Schwartz......... Class B(8) Aggregate Amount--143,300 8.2%
c/o Kenneth E. Leopold Sole Voting Power--143,300 8.2%
Neuberger & Berman Shared Voting Power--0 --
522 Fifth Avenue Sole Investment Power--143,300 8.2%
New York, NY 10036 Shared Investment Power--0 --
<FN>
- ---------------
* Does not exceed one percent of the total outstanding shares of such
class.
(1) Based upon Schedule 13G, Amendment No. 16, dated February 13, 1995, filed
with the Commission. Mr. Ziegler reports that he shares voting and investment
power over 1,264,594 and 876,158 of such shares of the Company's Class A Common
Stock and Class B Common Stock, respectively. Mr. Ziegler shares voting and
investment power of such shares with First Fidelity as co-trustee of the Ziegler
Trusts. Of such shares, 1,140,294 shares of the Company's Class A Common Stock
and 824,521 shares of the Company's Class B Common Stock are owned by GIH. GIH
is wholly owned by Mr. Ziegler, Mrs. Steinkraus and the co-trustees of the
Ziegler Trusts and the Steinkraus Trusts.
(2) Based upon Schedule 13D, Amendment Nos. 1 and 3, dated March 2, 1992,
filed with the Commission and information received from the United States Trust
Company of New York ("U.S. Trust"). Mrs. Steinkraus and U.S. Trust report that
she shares voting and investment power over 1,254,595 and 876,157 of such shares
of the Company's Class A Common Stock and the Company's Class B Common Stock,
respectively. Mrs. Steinkraus shares such voting and investment power with U.S.
Trust as co-trustees of two trusts (the "Steinkraus Trusts"). Of such shares,
1,140,294 shares of the Company's Class A Common Stock and 824,521 shares of the
Company's Class B Common Stock are owned by GIH. GIH is wholly owned by Mr.
Ziegler, Mrs. Steinkraus and the co-trustees of the Ziegler Trusts and the
Steinkraus Trusts.
(3) Excludes 132.25 shares of the Company's Class A Common Stock owned by
Eric M. Steinkraus and 695 shares of the Company's Class B Common Stock owned by
Philip C. Steinkraus (based upon Schedule 13D, Amendment Nos. 1 and 3, dated
March 2, 1992, filed with the Commission by Helen Z. Steinkraus, Eric M.
Steinkraus and Philip C. Steinkraus, who stated therein that they are members of
a group and have executed a joint filing agreement pursuant to Rule 13d-1(f)
under the Securities Exchange Act of 1934).
(4) Based upon Schedule 13G, Amendment No. 16, dated February 11, 1995, filed
with the Commission. U.S. Trust reports that it shares voting and investment
power with Mrs. Steinkraus as co-trustee of certain trusts. Included in such
shares are 1,140,294 shares of the Company's Class A Common Stock and 824,521
shares of the Company's Class B Common Stock owned by GIH.
(5) Based upon Schedule 13G dated April 8, 1994, filed with the Commission.
(6) Based upon Schedule 13G, Amendment No. 16, dated February 24, 1995, filed
with the Commission. See also Footnote Nos. 1 and 2 above.
(7) Based upon Schedule 13D, Amendment No. 7, dated September 17, 1993, filed
with the Commission.
(8) Based upon Schedule 13D, Amendment No. 1, dated January 10, 1991, filed
with the Commission.
</TABLE>
<PAGE>
ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Transactions
The Company subleases office space to and shares certain office facilities
with GIH Corp., of which Mr. Ziegler is President, for an annual fee of
approximately $15,000. Swisher International, Inc., a subsidiary of the Company,
has engaged the consulting services of Mr. Harwood in its business and paid Mr.
Harwood $30,000 in 1994 for such services. During 1994, the Company and its
subsidiaries have had purchase, sale, financial and other transactions in the
normal course of business with companies or organizations (including their
affiliates) with which some of the Company's directors are associated, including
the following: Champion International Corporation, The Bank of New York Company
and Janney Montgomery Scott Inc. To the best of the Company's knowledge, none of
the above transactions resulted in aggregate payments that were large enough to
require disclosure of such transactions by the Company. Management believes that
all of the above transactions were on terms that were reasonable and
competitive. Additional transactions of this nature may be expected to take
place in the ordinary course of business in the future.
In connection with his relocation from Illinois to Connecticut, Mr.
McLaughlin was granted a housing loan by the Company on April 29, 1993 in the
amount of $150,000 payable in three equal annual installments commencing April
29, 1994 with interest at the rate of 5.24% per annum. The note is secured by a
second mortgage on Mr. McLaughlin's principal residence.
<PAGE>
PART IV
ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) and (2) See "Consolidated Financial Statements and Schedules"
elsewhere in this report.
(a)(3) Exhibits
Regulation S-K
Exhibit No. :
2 (a) -- Agreement and Plan of Merger among the Company, Eridania
Beghin-Say, S.A. and Cerestar USA, dated February 22, 1995,
filed as Exhibit "2.1" to the Company's Registration Statement on
Form S-3 (File No. 33-57863), is incorporated herein by
reference.
(b) -- Stock Purchase Agreement between the Company, Eridania Beghin
Say, S.A. and Cerestar USA, dated February 22, 1995, filed as
Exhibit "2.2" to the Company's Registration Statement on Form S-3
(File No. 33-57863), is incorporated herein by reference.
(c) -- The Amended and Restated Agreement and Plan of Merger, dated as
of December 15, 1992, by and between the Company and AFC attached
as Annex A to the Joint Proxy Statement/Prospectus forming a part
of the Company's Registration Statement on Form S-4 (File No. 33-
55946), is incorporated herein by reference.
3.(a) -- The Restated Articles of Incorporation of the Company, as amended
through February 26, 1993, filed as Exhibit "3.(a)" to the
Company's Form 10-K Annual Report for the fiscal year ended
December 31, 1992 (File No. 1- 6244), is incorporated herein by
reference.
(b) -- By-Laws, as amended to February 24, 1993, filed as Exhibit
"3.(b)" to the Company's Form 10-K Annual Report for the fiscal
year ended December 31, 1992 (File No. 1-6244), is incorporated
herein by reference.
4.(a) -- A specimen copy of the certificates for the Company's Class A
Common Stock, par value $.80 per share, filed as Exhibit "4.3" to
the Company's Registration Statement on Form S-4 (File No.
33-55946), is incorporated herein by reference.
(b) -- A specimen copy of the certificates for the Company's Class B
Common Stock, par value $.80 per share, filed as Exhibit "4.(b)"
to the Company's Form 10-K Annual Report for the fiscal year
ended December 31, 1992 (File No. 1-6244), is incorporated herein
by reference.
(c) -- Note Agreement dated as of March 3, 1993 among the Company and
each Purchaser in the Private Placement of the Company's 7.875%
Senior Notes due March 3, 2003, filed as Exhibit "4.(g)" to the
Company's Form 10-K Annual Report for the fiscal year ended
December 31, 1992 (File No. 1-6244), is incorporated herein by
reference.
10.(a) -- Supplemental Pension Program, filed as Exhibit "10.(f)" to the
Company's Form 10-K Annual Report for the fiscal year ended
December 31, 1991 (File No. 1- 6244), is incorporated herein by
reference.
(b) -- Unfunded Supplemental Pension Plan Trust Agreement relating to
Item 10.(a) above, filed as Exhibit "10.(g)" to the Company's
Form 10-K Annual Report for the fiscal year ended December 31,
1991 (File No. 1- 6244), is incorporated herein by reference.
(c) -- Funded Supplemental Pension Plan Trust Agreement relating to Item
10.(a) above, filed as Exhibit "10.(h)" to the Company's Form
10-K Annual Report for the fiscal year ended December 31, 1991
(File No. 1- 6244), is incorporated herein by reference.
(d) -- Deferred Compensation Plan, filed as Exhibit "10." to the
Company's Form 10-K Annual Report for the fiscal year ended
December 31, 1981 (File No. 1-6244), is incorporated herein by
reference.
(e) -- Executive Life Insurance Program summary, filed as Exhibit
"10.(j)" to the Company's Form 10-K Annual Report for the fiscal
year ended December 31, 1991 (File No. 1-6244), is incorporated
herein by reference.
(f) -- Summary of 1994 Management Incentive Plan is attached hereto as
Exhibit "10.(f)".
(g) -- American Maize-Products Company Directors Retirement Benefit
Plan, filed as Exhibit "10.(l)" to the Company's Form 10-K Annual
Report for the fiscal year ended December 31, 1991 (File No.
1-6244), is incorporated herein by reference.
(h) -- The 1985 Stock Option Plan, filed as Exhibit "5." to the
Company's Form 10-K Annual Report for the fiscal year ended
December 31, 1985 (File No. 1-6244), is incorporated herein by
reference.
(i) -- The 1985 Stock Option Plan, as amended, filed as Exhibit "4.(f)"
to the Company's Registration Statement on Form S-8 on July 7,
1988 (File No. 33-22943), is incorporated herein by reference.
(j) -- Lease between Harbor Plaza Associates, Landlord, and the Company,
Tenant, relating to the offices located at 41 Harbor Plaza Drive
(presently known as 250 Harbor Drive), Stamford, Connecticut,
filed as Exhibit "13." to the Company's Form 10-K Annual Report
for the fiscal year ended December 31, l981 (File No. 1-6244), is
incorporated herein by reference.
(k) -- Services Agreement dated February 1, 1973 between Dimmitt Agri
Industries, Inc. and Amstar Corporation, filed as Exhibit
"10.1(a)" to the Company's Form 8-K Current Report on December
13, 1984 (File No. 1-6244), is incorporated herein by reference.
(l) -- Assignment of Services Agreement dated November 28, 1984 among
Amstar Corporation, Dimmitt Operating Inc. and Dimmitt Agri
Industries, Inc., filed as Exhibit "10.1(e)" to the Company's
Form 8-K Current Report on December 13, 1984 (File No. 1-6244),
is incorporated herein by reference.
(m) -- Letter Amendments dated August 24, 1977, November 24, 1980 and
November 18, 1982 in connection with Exhibit "10(l)" above, filed
as Exhibits "10.1(b)", "10.1(c)" and "10.1(d)" to the Company's
Form 8-K Current Report on December 13, 1984 (File No. 1-6244),
are incorporated herein by reference.
(n) -- Lease Agreement dated as of February 1, 1973 between Dimmitt Agri
Industries, Inc. and Amstar Corporation, filed as Exhibit
"10.2(a)" to the Company's Form 8-K Current Report on December
13, 1984 (File No. 1-6244), is incorporated herein by reference.
(o) -- Assignment of Lease Agreement dated November 28, 1984 among
Amstar Corporation, Dimmitt Operating Inc., Dimmitt Agri
Industries, Inc. and Texas Bank for Cooperatives filed as Exhibit
"10.2(b)" to the Company's Form 8-K Current Report on December
13, 1984 (File No. 1-6244), is incorporated herein by reference.
(p) -- Agreement dated as of March 1, 1991 among William Ziegler, III,
Helen Z. Steinkraus, GIH Corp., Donald E. McNicol and the
trustees of certain trusts for the benefit of Mr. Ziegler and his
issue and the trustees of certain trusts for the benefit of Mrs.
Steinkraus and her issue, filed as Exhibit "10.(a)" to the
Company's Form 8-K Current Report dated March 29, 1991 (File No.
1-6244), is incorporated herein by reference.
(q) -- Amendment No. 1 dated as of March 14, 1991, to Item 10.(p) above,
filed as Exhibit "10.(b)" to the Company's Form 8-K Current
Report dated March 29, 1991 (File No. 1-6244), is incorporated
herein by reference.
(r) -- Stockholders Agreement dated as of March 1, 1991 among William
Ziegler, III, Helen Z. Steinkraus, certain trusts for the benefit
of Mr. Ziegler and his issue and certain trusts for the benefit
of Mrs. Steinkraus and her issue, filed as Exhibit "10.(c)" to
the Company's Form 8-K Current Report dated March 29, 1991 (File
No. 1-6244), is incorporated herein by reference.
(s) -- Amendment effective April 24, 1992 to the 1985 Stock Option Plan,
as amended, filed as Exhibit "10.(bb)" to the Company's Form 10-K
Annual Report for the fiscal year ended December 31, 1992 (File
No. 1-6244), is incorporated herein by reference.
(t) -- The American Fructose Corporation 1986 Stock Option Plan, assumed
by the Company pursuant to the merger of American Fructose
Corporation with and into the Company on February 26, 1993, filed
on July 14, 1986 on Form S-8 (File No. 33-7062), is incorporated
herein by reference.
(u) -- Employment Agreement dated as of July 1, 1993 between the Company
and Patric J. McLaughlin filed as Exhibit "10.(cc)" to the
Company's Form 10-K Annual Report for the fiscal year ended
December 31, 1993 (File No. 1- 6244), is incorporated herein by
reference.
(v) -- Promissory Note dated April 29, 1993 in the amount of $150,000 of
Patric J. McLaughlin in favor of the Company filed as Exhibit
"10.(dd)" to the Company's Form 10-K Annual Report for the fiscal
year ended December 31, 1993 (File No. 1-6244), is incorporated
herein by reference.
(w) -- Credit Agreement dated as of March 31, 1994 among the Company,
the signatory lenders thereto, and The Bank of New York, as
agent, filed as Exhibit "10(a)" to the Company's Form 10-Q
Quarterly Report for the quarterly period ended March 31, 1994
(File No. 1-6244), is incorporated herein by reference.
(x) -- First Amendment, dated as of January 2, 1995 to Employment
Agreement, dated July 1, 1993 between the Company and Patric J.
McLaughlin (item 10.(u) above), filed with Exhibit "11" to the
Company's Solicitation/Recommendation Statement on Schedule 14D-
9 dated February 28, 1995, is incorporated herein by reference.
(y) -- Employment Agreement dated as of January 2, 1995, between the
Company and Frederick M. Ash, filed as Exhibit "10" to the
Company's Solicitation/Recommendation Statement on Schedule 14D-
9 dated February 28, 1995, is incorporated herein by reference.
(z) -- Employment Agreement dated as of January 2, 1995, between the
Company and Jane E. Downey, filed as Exhibit "9" to the Company's
Solicitation/Recommendation Statement on Schedule 14D- 9 dated
February 28, 1995, is incorporated herein by reference.
(aa) -- Employment Agreement dated as of January 2, 1995, between the
Company and Michael J. Gorbitz, filed as Exhibit "8" to the
Company's Solicitation/Recommendation Statement on Schedule 14D-
9 dated February 28, 1995, is incorporated herein by reference.
(bb) -- Employment Agreement dated as of January 2, 1995, between the
Company and Charles A. Koons, filed as Exhibit "7" to the
Company's Solicitation/Recommendation Statement on Schedule 14D-
9 dated February 28, 1995, is incorporated herein by reference.
(cc) -- Employment Agreement dated as of January 2, 1995, between the
Company and Timothy Mann, filed as Exhibit "6" to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 dated
February 28, 1995, is incorporated herein by reference.
(dd) -- Employment Agreement dated as of January 2, 1995, between the
Company and Edward P. Norris, filed as Exhibit "5" to the
Company's Solicitation/Recommendation Statement on Schedule 14D-
9 dated February 28, 1995, is incorporated herein by reference.
(ee) -- Employment Agreement dated as of January 2, 1995, between the
Company and Robert M. Stephan, filed as Exhibit "4" to the
Company's Solicitation/Recommendation Statement on Schedule 14D-
9 dated February 28, 1995, is incorporated herein by reference.
(ff) -- The 1994 Stock Plan filed as Exhibit "4.4" to the Company's
Registration Statement on Form S-8 (File No. 33-54893), is
incorporated herein by reference.
(gg) -- Loan Agreement dated as of December 1, 1994 between the Company
and the City of Hammond, Indiana is attached hereto as "Exhibit
10.(gg)".
(hh) -- Indenture of Trust dated December 1, 1994 between the City of
Hammond, Indiana as Issuer and Bank One, Indianapolis, N.A. as
Trustee, is attached hereto as "Exhibit 10.(hh)".
11.(a)-- Calculation of Primary Earnings Per Share for the fiscal years
ended December 31, 1994, 1993 and 1992 inclusive is attached
hereto as Exhibit "11.(a)".
11.(b)-- Calculation of Fully-Diluted Earnings Per Share for the fiscal
years ended December 31, 1994, 1993 and 1992 inclusive is
attached hereto as Exhibit "11.(b)".
13. -- 1994 Annual Report to security holders of the Company, is
attached hereto as Exhibit "13".
21. -- Subsidiaries of the Company as of December 31, 1994 is attached
hereto as Exhibit "21.".
23. -- Consent of Coopers & Lybrand L.L.P., dated March 6, 1995, is
attached hereto as Exhibit "23.".
(b) Reports on Form 8-K
A Form 8-K Current Report was filed during the quarterly period ended
December 31, 1994. The report was dated November 30, 1994 and described an
agreement among shareholders concerning membership of the Company's Board of
Directors and differing views on whether the agreement remains in effect.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN MAIZE-PRODUCTS COMPANY
(Company)
March 7, 1995 By Edward P. Norris
-------------------------------------
Edward P. Norris,
Vice President and Chief Financial 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 Company
and in the capacities and on the dates indicated.
March 7, 1995 By Patric J. McLaughlin
-------------------------------------
Patric J. McLaughlin,
President and Chief Executive Officer
and Director (Principal Executive
Officer)
March 7, 1995 By Leslie C. Liabo
-------------------------------------
Leslie C. Liabo,
Director
March 7, 1995 By Charles B. Cook, Jr.
-------------------------------------
Charles B. Cook, Jr.,
Director
March 7, 1995 By Paul F. Engler
-------------------------------------
Paul F. Engler,
Director
March 7, 1995 By James E. Harwood
-------------------------------------
James E. Harwood,
Director
March 7, 1995 By John R. Kennedy
-------------------------------------
John R. Kennedy,
Director
March 7, 1995 By C. Alan MacDonald
-------------------------------------
C. Alan MacDonald,
Director
March 7, 1995 By H. Barclay Morley
-------------------------------------
H. Barclay Morley,
Director
<PAGE>
March 7, 1995 By William L. Rudkin
-------------------------------------
William L. Rudkin,
Director
March 7, 1995 By Wendell M. Smith
-------------------------------------
Wendell M. Smith,
Director
March 7, 1995 By William C. Steinkraus
-------------------------------------
William C. Steinkraus,
Director
March 7, 1995 By Raymond S. Troubh
-------------------------------------
Raymond S. Troubh,
Director
March 7, 1995 By Edward P. Norris
-------------------------------------
Edward P. Norris,
Vice President and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
<PAGE>
FORM 10-K
ANNUAL REPORT
----------
CONSOLIDATED FINANCIAL STATEMENTS AND
SCHEDULES for the years ended December 31,
1994, 1993 and 1992
----------
AMERICAN MAIZE-PRODUCTS COMPANY
----------
<PAGE>
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Consolidated Financial Statements Incorporated by Reference
The consolidated financial statements of American Maize-Products Company and its
subsidiaries and the Report of Independent Accountants related thereto are
incorporated herein by reference to the Company's 1994 Annual Report to
shareholders (Exhibit 13), which Exhibit is not "filed" as a part of this Form
10-K except for the consolidated financial statements and notes thereto and
Report of Independent Accountants on pages 20 through 37 thereof and certain
other information incorporated elsewhere herein.
Consolidated Financial Statements and Financial Statement Schedules: Page
Report of Independent Accountants F-2
Financial Statement Schedules:
II. Valuation and Qualifying Accounts and Reserves for the
years ended December 31, 1994, 1993 and 1992 F-3
Financial Statement Schedules Omitted
Financial Statement Schedules other than those listed above are omitted because
they are not required or are not applicable or that the required information is
presented in the consolidated financial statements or notes thereto. Columns
omitted from financial statement schedules filed have been omitted because the
information is not applicable. Any other information omitted from the financial
statement schedules filed has been omitted due to immateriality.
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
American Maize-Products Company:
We have audited the consolidated financial statements of American Maize-Products
Company and Subsidiaries as of December 31, 1994 and 1993, and for each of the
three years in the period ended December 31, 1994, which financial statements
are included on Pages 20 through 37 of the 1994 Annual Report to Shareholders of
American Maize-Products Company and incorporated by reference herein. We have
also audited the financial statement schedules listed in the accompanying index
of this Form 10-K. These financial statements and financial statement schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of American
Maize-Products Company and Subsidiaries as of December 31, 1994 and 1993, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedules referred to above, when considered in relation to
the basic financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
As discussed in Notes 7 and 8 to the consolidated financial statements referred
to above, effective January 1, 1993, the Company changed its methods of
accounting for postretirement benefits other than pensions and postemployment
benefits.
As discussed in Note 14 to the consolidated financial statements referred to
above, the consolidated financial statements include an accrual related to a
patent infringement claim. The Company's ultimate liability for this action is
not presently determinable. In addition, the Company is a defendant in an
environmental civil action, the ultimate financial effect of which is not
presently determinable, and, accordingly, no amounts have been recorded in the
financial statements.
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
February 28, 1995.
F-2
<PAGE>
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the years ended December 31, 1994, 1993 and 1992
(In thousands)
<TABLE>
<CAPTION>
Col A. Col B. Col C. Col. D. Col. E.
------ ------ ------ ------- -------
Additions
Balance at Charged to
Beginning Costs and Balance at
Description of Period Expenses Deductions End of Period
<S> <C> <C> <C> <C>
For the year ended
December 31, 1994:
Allowance for
doubtful accounts $3,609 $ 440 $ 215(A) $3,834
====== ====== ====== ======
For the year ended
December 31, 1993:
Allowance for
doubtful accounts $2,109 $1,979 $ 479(A) $3,609
====== ====== ====== ======
For the year ended
December 31, 1992:
Allowance for
doubtful accounts $1,600 $ 895 $ 386(A) $2,109
====== ====== ====== ======
<FN>
-------------------------
Notes:
(A) Doubtful accounts written off.
</TABLE>
F-3
<PAGE>
INDEX TO EXHIBITS
Sequential
Regulation S-K Page
Exhibit No: Exhibit Number
2(a) -- Agreement and Plan of Merger among the Company, *
Eridania Beghin-Say, S.A. and Cerestar USA,
dated February 22, 1995, filed as Exhibit "2.1"
to the Company's Registration Statement on Form
S-3 (File No. 33-57863).
(b) -- Stock Purchase Agreement between the Company, *
Eridania Beghin-Say, S.A. and Cerestar USA,
dated February 22, 1995, filed as Exhibit "2.2"
to the Company's Registration Statement on Form
S-3 (File No. 33-57863).
(c) -- The Amended and Restated Agreement and Plan of *
Merger, dated as of December 15, 1992, by and
between the Company and AFC attached as Annex A
to the Joint Proxy Statement/Prospectus forming
a part of the Company's registration statement
on Form S-4 (File No. 33-55946).
3.(a)-- The Restated Articles of Incorporation of the *
Company, as amended through February 26, 1993,
filed as Exhibit "3.(a)" to the Company's Form
10-K Annual Report for the fiscal year ended
December 31, 1992 (File No. 1-6244).
(b)-- By-Laws, as amended to February 24, 1993, filed *
as Exhibit "3.(b)" to the Company's Form 10-K
Annual Report for the fiscal year ended December
31, 1992 (File No. 1-6244).
4.(a)-- A specimen copy of the certificates for the *
Company's Class A Common Stock, par value $.80
per share, filed as Exhibit "4.3" to the
Company's registration statement on Form S-4
(File No. 33-55946).
(b)-- A specimen copy of the certificates for the *
Company's Class B Common Stock, par value $.80
per share, filed as Exhibit "4.(b)" to the
Company's Form 10-K Annual Report for the fiscal
year ended December 31, 1992 (File No. 1-6244).
(c)-- Note Agreement dated as of March 3, 1993 among *
the Company and each Purchaser in the Private
Placement of the Company's 7.875% Senior Notes
due March 3, 2003, filed as Exhibit "4.(g)" to
the Company's Form 10-K Annual Report for the
fiscal year ended December 31, 1992 (File No.
1-6244).
10.(a)-- Supplemental Pension Program, filed as Exhibit *
"10.(f)" to the Company's Form 10- K Annual
Report for the fiscal year ended December 31,
1991 (File No. 1-6244).
(b)-- Unfunded Supplemental Pension Plan Trust *
Agreement relating to Item 10.(a) above, filed
as Exhibit "10.(g)" to the Company's Form 10-K
Annual Report for the fiscal year ended December
31, 1991 (File No. 1-6244).
(c)-- Funded Supplemental Pension Plan Trust Agreement *
relating to Item 10.(a) above, filed as Exhibit
"10.(h)" to the Company's Form 10-K Annual
Report for the fiscal year ended December 31,
1991 (File No. 1-6244).
(d)-- Deferred Compensation Plan, filed as Exhibit *
"10." to the Company's Form 10-K Annual Report
for the fiscal year ended December 31, 1981
(File No. 1- 6244).
(e)-- Executive Life Insurance Program summary, filed *
as Exhibit "10.(j)" to the Company's Form 10- K
Annual Report for the fiscal year ended December
31, 1991 (File No. 1-6244).
(f)-- Summary of 1994 Management Incentive Plan is *
attached hereto as Exhibit "10.(f)".
<PAGE>
(g)-- American Maize- Products Company Directors *
Retirement Benefit Plan, filed as Exhibit
"10.(l)" to the Company's Form 10- K Annual
Report for the fiscal year ended December 31,
1991 (File No. 1-6244).
(h)-- The 1985 Stock Option Plan, filed as Exhibit *
"5." to the Company's Form 10-K Annual Report
for the fiscal year ended December 31, 1985
(File No. 1- 6244).
(i)-- The 1985 Stock Option Plan, as amended, filed as *
Exhibit "4.(f)" to the Company's registration
statement on Form S-8 on July 7, 1988 (File No.
33-22943).
(j)-- Lease between Harbor Plaza Associates, Landlord, *
and the Company, Tenant, relating to the offices
located at 41 Harbor Plaza Drive (presently
known as 250 Harbor Drive), Stamford,
Connecticut, filed as Exhibit "13." to the
Company's Form 10-K Annual Report for the fiscal
year ended December 31, l981 (File No. 1-6244).
(k)-- Services Agreement dated February 1, 1973 *
between Dimmitt Agri Industries, Inc. and Amstar
Corporation, filed as Exhibit "10.1(a)" to the
Company's Form 8-K Current Report on December
13, 1984 (File No. 1-6244).
(l)-- Assignment of Services Agreement dated November *
28, 1984 among Amstar Corporation, Dimmitt
Operating Inc. and Dimmitt Agri Industries,
Inc., filed as Exhibit "10.1(e)" to the
Company's Form 8-K Current Report on December
13, 1984 (File No. 1-6244).
(m)-- Letter Amendments dated August 24, 1977, *
November 24, 1980 and November 18, 1982 in
connection with Exhibit "10(l)" above, filed as
Exhibits "10.1(b), "10.1(c)" and "10.1(d)" to
the Company's Form 8-K Current Report on
December 13, 1984 (File No. 1-6244).
(n)-- Lease Agreement dated as of February 1, 1973 *
between Dimmitt Agri Industries, Inc. and Amstar
Corporation, filed as Exhibit "10.2(a)" to the
Company's Form 8-K Current Report on December
13, 1984 (File No. 1-6244).
(o)-- Assignment of Lease Agreement dated November 28, *
1984 among Amstar Corporation, Dimmitt Operating
Inc., Dimmitt Agri Industries, Inc. and Texas
Bank for Cooperatives filed as Exhibit "10.2(b)"
to the Company's Form 8-K Current Report on
December 13, 1984 (File No. 1-6244).
(p)-- Agreement dated as of March 1, 1991 among *
William Ziegler, III, Helen Z. Steinkraus, GIH
Corp., Donald E. McNicol and the trustees of
certain trusts for the benefit of Mr. Ziegler
and his issue and the trustees of certain trusts
for the benefit of Mrs. Steinkraus and her
issue, filed as Exhibit "10.(a)" to the
Company's Form 8-K Current Report dated March
29, 1991 (File No. 1-6244).
(q)-- Amendment No. 1 dated as of March 14, 1991, to *
Item 10.(p) above, filed as Exhibit "10.(b)" to
the Company's Form 8-K Current Report dated
March 29, 1991 (File No. 1-6244).
(r)-- Stockholders Agreement dated as of March 1, 1991 *
among William Ziegler, III, Helen Z. Steinkraus,
certain trusts for the benefit of Mr. Ziegler
and his issue and certain trusts for the benefit
of Mrs. Steinkraus and her issue, filed as
Exhibit "10.(c)" to the Company's Form 8-K
Current Report dated March 29, 1991 (File No.
1-6244).
<PAGE>
(s)-- Amendment effective April 24, 1992 to the 1985 *
Stock Option Plan, as amended, filed as Exhibit
"10.(bb)" to the Company's Form 10-K Annual
Report for the fiscal year ended December 31,
1992 (File No. 1-6244).
(t)-- The American Fructose Corporation 1986 Stock *
Option Plan, assumed by the Company pursuant to
the merger of American Fructose Corporation with
and into the Company on February 26, 1993, filed
on July 14, 1986 on Form S-8 (File No. 33-7062).
(u)-- Employment Agreement dated as of July 1, 1993 *
between the Company and Patric J. McLaughlin
filed as Exhibit "10.(cc)" to the Company's Form
10- K Annual Report for the fiscal year ended
December 31, 1993 (File No. 1-6244).
(v)-- Promissory Note dated April 29, 1993 in the *
amount of $150,000 of Patric J. McLaughlin in
favor of the Company filed as Exhibit "10.(dd)"
to the Company's Form 10- K Annual Report for
the fiscal year ended December 31, 1993 (File
No. 1-6244).
(w)-- Credit Agreement dated as of March 31, 1994 *
among the Company, the signatory lenders
thereto, and The Bank of New York, as agent,
filed as Exhibit "10(a)" to the Company's Form
10-Q Quarterly Report for the quarterly period
ended March 31, 1994 (File No. 1-6244).
(x)-- First Amendment, dated as of January 2, 1995 to *
Employment Agreement, dated July 1, 1993 between
the Company and Patric J. McLaughlin (item
10.(u) above), filed with Exhibit "11" to the
Company's Solicitation/Recommendation Statement
on Schedule 14D-9 dated February 28, 1995.
(y)-- Employment Agreement dated as of January 2, *
1995, between the Company and Frederick M. Ash,
filed as Exhibit "10" to the Company's
Solicitation/Recommendation Statement on
Schedule 14D-9 dated February 28, 1995.
(z)-- Employment Agreement dated as of January 2, *
1995, between the Company and Jane E. Downey,
filed as Exhibit "9" to the Company's
Solicitation/Recommendation Statement on
Schedule 14D-9 dated February 28, 1995.
(aa)-- Employment Agreement dated as of January 2, *
1995, between the Company and Michael J.
Gorbitz, filed as Exhibit "8" to the Company's
Solicitation/ Recommendation Statement on
Schedule 14D-9 dated February 28, 1995.
(bb)-- Employment Agreement dated as of January 2, *
1995, between the Company and Charles A. Koons,
filed as Exhibit "7" to the Company's
Solicitation/Recommendation Statement on
Schedule 14D-9 dated February 28, 1995.
(cc)-- Employment Agreement dated as of January 2, *
1995, between the Company and Timothy Mann,
filed as Exhibit "6" to the Company's
Solicitation/Recommendation Statement on
Schedule 14D-9 dated February 28, 1995.
(dd)-- Employment Agreement dated as of January 2, *
1995, between the Company and Edward P. Norris,
filed as Exhibit "5" to the Company's
Solicitation/Recommendation Statement on
Schedule 14D-9 dated February 28, 1995.
(ee)-- Employment Agreement dated as of January 2, *
1995, between the Company and Robert M. Stephan,
filed as Exhibit "4" to the Company's
Solicitation/Recommendation Statement on
Schedule 14D-9 dated February 28, 1995.
(ff)-- The 1994 Stock Plan filed as Exhibit "4.4" to *
the Company's Registration Statement on Form S-8
(File No. 33-54893).
(gg)-- Loan Agreement dated as of December 1, 1994 *
between the Company and the City of Hammond,
Indiana is attached hereto as "Exhibit 10.(gg)".
(hh)-- Indenture of Trust dated December 1, 1994 *
between the City of Hammond, Indiana as Issuer
and Bank One, Indianapolis, N.A. as Trustee, is
attached hereto as "Exhibit 10.(hh)".
11.(a)-- Calculation of Primary Earnings Per Share for
the fiscal years ended December 31, 1994, 1993
and 1992 inclusive is attached hereto as Exhibit
"11.(a)".
11.(b)-- Calculation of Fully Diluted Earnings Per Share
for the fiscal years ended December 31, 1994,
1993 and 1992 inclusive is attached hereto as
Exhibit "11.(b)".
13. -- 1994 Annual Report to security holders of the
Company is attached hereto as Exhibit "13".
21. -- Subsidiaries of the Company as of December 31,
1994 is attached hereto as Exhibit "21.".
23. -- Consent of Coopers & Lybrand L.L.P., dated March
6, 1995, is attached hereto as Exhibit "23.".
- ------------------
* Incorporated by Reference.
The Company will make the foregoing exhibits available upon request
upon payment of a charge of $.25 per page and postage. Requests should be
addressed to the Secretary, American Maize-Products Company, P.O. Box 10128, 250
Harbor Drive, Stamford, CT 06904.
<PAGE>
EXHIBIT 10(f)
AMERICAN MAIZE-PRODUCTS COMPANY
1994 Management Incentive Plan
The Management Incentive Plan recognizes the achievement of the Company's
strategy of improving operating profit through revenue growth, better control of
our costs, and improved utilization of our expanded production capacities. The
MIP helps to communicate our goals and supports the Company's investment in
human capital by rewarding outstanding performance in all parts of the business.
For each business unit, bonuses for 1994 will be based on the achievement of
financial performance targets and individual performance goals. These objectives
have been carefully developed during the first quarter of the year.
Each participant in the plan has a target bonus opportunity that is expressed as
a percentage of his or her base salary. This percentage varies based on the
potential of the position to have a positive impact on the performance of the
Company.
Seventy percent of the target bonus opportunity is tied directly to the
financial performance of the participant's business unit. The remaining thirty
percent of the target bonus opportunity is made available by financial
performance, and is awarded on a discretionary basis that recognizes individual
contributions.
FINANCIAL PERFORMANCE ABOVE GOAL
Performance above goal will cause actual bonus awards to increase by 2% for each
1% that performance exceeds target, up to a maximum of 150% of the target bonus.
Example:
Target Operating Profit: $10,000,000
Target Incentive Award for 25% of salary x 70% for
a participant: financial performance,
or 17.5% of salary
<PAGE>
If actual operating profit for the year exceeds target by
$1,000,000, or 10%, the participant's actual award would be
increased by a factor of 20%, which in this case is 3.5% of
salary:
17.5% of salary
+3.5% of salary
------------------
21.0% of salary for financial performance
FINANCIAL PERFORMANCE BELOW GOAL
Performance below goal has the opposite effect: actual awards are decreased by
2% for each 1% under target, so that the awards for financial performance are
reduced to zero in the event that financial results are 50% below target.
INDIVIDUAL PERFORMANCE
Awards for individual performance will be based on each participant's
contributions to the Company's goals and strategies. The maximum bonus award
available for individual performance will be determined by the achievement of
the financial performance target.
Example:
Target Incentive Award for 25% of salary x 30% for
a participant: individual performance,
or 7.5% of salary
Actual operating profit exceeds target by 10% (as above)
Award Range for Up to 9.0% of salary (same
Individual Performance: adjustment factor as for
financial performance)
<PAGE>
GENERAL PROVISIONS
1) Management shall review the awards recommended for all eligible
employees under the plan. No award will be paid to participants who, in
the sole judgement of Management, have not carried out their assignment
and fulfilled their responsibilities in a satisfactory manner and in
accordance with the policies and procedures of the Company.
2) Management shall have full authority to make the rules and regulations
pertaining to administration of the plan, and to modify or to
discontinue the plan at any time.
3) The judgement of Management in construing this plan and of any
provision thereof, or in making any decision hereunder shall be final
and conclusive and binding upon all employees of the Company and their
heirs, executors, personal representatives, and assigns.
4) Nothing herein contained shall be construed to limit or affect in any
manner or degree the normal and usual powers of Management to change
the character of employment of any employee of the Company, all of
which rights and powers are expressly reserved.
ADMINISTRATION
1) No award will be paid to any individual who is not a regular full-time
employee in good standing at the time payments are made in 1995 except
in the event an eligible employee dies or retires, the participant (or
beneficiary) may be recommended for an award which, if approved by
Management, will be prorated for actual months of service during the
plan year.
2) Prorated incentive awards will be considered, but not guaranteed, for
any employee hired or promoted/transferred into an eligible position
during the course of the plan year.
3. If an eligible employee transfers to another business unit during the
year, the award will be based on the weighted financial results of the
two organizations.
SUMMARY
The 1994 Management Incentive Plan establishes an important change from prior
years -- a shift from a traditional bonus pool to a goal-oriented structure in
which each participant's award is unaffected by the compensation levels and
performance rating of other participants. Moreover, for some business units, the
plan now includes goals for sales and working capital in addition to operating
profit. It is a stronger plan, aimed at stronger performance in 1994.
<PAGE>
Exhibit 10(gg)
================================================================================
CITY OF HAMMOND, INDIANA
and
AMERICAN MAIZE-PRODUCTS COMPANY
LOAN AGREEMENT
Dated as of December 1, 1994
================================================================================
All right, title and interest of City of Hammond, Indiana in this Agreement
(with the exception of its rights under Sections 4.2(b), 5.2 and 6.3 hereof)
have been assigned pursuant to the Indenture referred to herein, for the benefit
of the owners of, and as security for payment of, the Bonds of said Issuer
described herein.
<PAGE>
LOAN AGREEMENT
(This Table of Contents is not
a part of this Loan Agreement
and is only for convenience of reference)
TABLE OF CONTENTS
SECTION HEADING PAGE
Parties 1
Preambles 1
ARTICLE I DEFINITION OF TERMS 1
ARTICLE II REPRESENTATIONS 5
Section 2.1. Representations of the Issuer 5
Section 2.2. Representations of the Company 5
ARTICLE III CONSTRUCTION OF THE PROJECT; ISSUANCE OF BONDS 6
Section 3.1. Agreement to Construct and Equip the Project 6
Section 3.2. Agreement to Issue Bonds; Application of Bond Proceeds 6
Section 3.3. Disbursements from the Construction Fund 6
Section 3.4. Establishment of Completion Date; Obligation of the
Company to Complete 8
Section 3.5. Investments 9
Section 3.6. Arbitrage Certifications 10
ARTICLE IV LOAN OF BOND PROCEEDS; PAYMENT OBLIGATIONS 10
Section 4.1. Loan of Bond Proceeds 10
Section 4.2. Amounts Payable by Company 10
Section 4.3. No Defense or Set-Off; Unconditional Obligation 11
Section 4.4. Assignment and Pledge of Issuer's Rights 12
ARTICLE V SPECIAL COVENANTS AND AGREEMENTS 12
Section 5.1. Company to Maintain its Existence; Conditions
Under Which Exceptions Permitted 12
Section 5.2. Release and Indemnification Covenants 12
Section 5.3. Validity and Tax-Exempt Status of the Bonds 13
Section 5.4. Taxes and Governmental Charges 13
Section 5.5. Maintenance and Repair; Insurance 13
Section 5.6. Filings; Lien of Indenture 13
Section 5.7. Operation of Project 14
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES 14
Section 6.1. Events of Default 14
Section 6.2. Remedies on Default 15
Section 6.3. Agreement to Pay Attorneys' Fees and Expenses 16
Section 6.4. No Remedy Exclusive 16
Section 6.5. No Additional Waiver Implied by One Waiver 16
ARTICLE VII PREPAYMENT 17
Section 7.1. Obligation to Prepay 17
Section 7.2. Option to Prepay 17
Section 7.3. Redemption of the Bonds 17
ARTICLE VIII MISCELLANEOUS 17
Section 8.1. Notices 17
Section 8.2. Assignments 18
Section 8.3. Severability 18
Section 8.4. Execution of Counterparts 18
Section 8.5. Amounts Remaining in any Fund or with Trustee 18
Section 8.6. Amendments, Changes and Modifications 18
Section 8.7. Governing Law 18
Section 8.8. Authorized Company Representative 18
Section 8.9. Term of this Agreement 18
Section 8.10. Binding Effect 19
Section 8.11. Limited Liability of Officers, Etc 19
Testimonium 20
EXHIBIT A
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of December 1, 1994, by and between CITY
OF HAMMOND, INDIANA, a municipal corporation duly organized and existing under
the Constitution and laws of the State of Indiana (the "Issuer"), and AMERICAN
MAIZE-PRODUCTS COMPANY, a corporation duly organized and validly existing under
the laws of the State of Maine (the "Company");
W I T N E S S E T H:
WHEREAS, pursuant to the provisions of Title 36, Article 7, Chapters
11.9 and 12 of the Indiana Code, as amended (the "Act"), the Issuer has the
authority to issue revenue bonds to defray the cost of acquiring, constructing
and installing economic development and pollution control facilities within the
meaning of the Act including sewage and solid waste disposal facilities; and
WHEREAS, pursuant to and in accordance with the provisions of the Act,
and at the request of the Company, the Issuer has agreed to issue its Sewage and
Solid Waste Disposal Revenue Bonds (American Maize-Products Company Project)
Series 1994 in the aggregate principal amount of $39,000,000 (the "Bonds") in
order to provide funds to be lent to the Company hereunder to finance costs of
the Project hereinafter described; and
WHEREAS, the Bonds will be secured by an assignment and pledge of the
Issuer's rights under this Agreement (except its rights under Sections 4.2(b),
5.2 and 6.3 hereof); and
WHEREAS, the execution and delivery of this Agreement have been in all
respects duly and validly authorized by action of the Issuer's governing body
and the Company's board of directors;
NOW, THEREFORE, in consideration of the respective representations and
agreements herein contained, the parties hereto agree as follows (provided, that
in the performance of the agreements of the Issuer herein contained, any
obligation it may thereby incur shall be payable solely out of the revenues and
receipts derived from this Agreement, the sale of the Bonds and the income from
the temporary investment thereof):
ARTICLE I
DEFINITION OF TERMS
All words and phrases defined in Article I of the Indenture shall have
the same meanings in this Agreement. Certain terms used in this Agreement are
hereinafter defined in this Article I. When used herein, such terms shall have
the meanings given them by the language employed in this Article I defining such
terms unless the context clearly indicates otherwise:
"Agreement" means this Loan Agreement, as from time to time
supplemented and amended.
"Authorized Company Representative" means such person at the time and
from time to time designated to act on behalf of the Company by written
certificate furnished to the Issuer and the Trustee, containing the specimen
signature of such person, signed on behalf of the Company by the chief executive
officer, the chairman, any vice president, the treasurer, any assistant
treasurer, the secretary or any assistant secretary of the Company. Such
certificate may designate an alternate or alternates.
"Bond Counsel" means the counsel who rendered the opinion as to the
tax-exempt status of the interest on the Bonds on the date of the issuance, sale
and delivery of the Bonds or such other nationally recognized municipal bond
counsel of recognized expertise with respect to such matters as may be mutually
satisfactory to the Issuer, the Company and the Trustee.
"Bond Fund" means the fund created and established in Section 5.2 of
the Indenture.
"Bonds" means the Sewage and Solid Waste Disposal Revenue Bonds
(American Maize-Products Company Project) Series 1994 of the Issuer, in the
aggregate principal amount of $39,000,000, issued pursuant to the Indenture.
"Code" means the Internal Revenue Code of 1986, as amended, together
with any regulations promulgated thereunder or applicable thereto.
"Company" means American Maize-Products Company, a corporation duly
organized and validly existing under the laws of the State of Maine, and any
surviving, resulting or transferee corporation as permitted by Section 5.1
hereof.
"Completion Date" means the date of completion of construction of the
Project.
"Construction Fund" means the Construction Fund created and established
in Section 5.6 of the Indenture.
"Construction Period" means the period between the beginning of
construction of the Project or the date on which the Bonds are first delivered
to the purchasers thereof, whichever is earlier, and the Completion Date.
"Cost of the Project" means the sum of the items authorized to be paid
from the Construction Fund pursuant to the provisions of Section 3.3 hereof.
"Event of Default" means any occurrence or event specified as such in
and defined as such by Section 6.1 hereof.
"Indenture" means the Indenture of Trust dated as of December 1, 1994,
by and between the Issuer and the Trustee, as from time to time supplemented and
amended.
"Issuer" means the City of Hammond, Indiana, a municipal corporation
duly organized and validly existing under the Constitution and laws of the State
of Indiana, and any successor body to the duties or functions of the Issuer.
"Moody's" means Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its successors
and assigns.
"Permitted Investments" means:
(a) Bonds or other obligations of the United States of
America;
(b) Bonds or other obligations, the payment of the principal
and interest of which is unconditionally guaranteed by the United
States of America;
(c) Obligations issued or guaranteed as to principal and
interest by any agency or person controlled or supervised by and acting
as an instrumentality of the United States of America pursuant to
authority granted by the Congress of the United States of America;
(d) Securities or receipts evidencing ownership interests in
obligations or specified portions (such as principal or interest) of
obligations described in (a), (b) or (c) above;
(e) Commercial or finance company paper which is rated at
least either P-2 or A-2 or an equivalent by Moody's or S&P (including
investments in pools or such commercial or finance company paper owned
by the Trustee or any affiliate of the Trustee);
(f) Obligations issued by or on behalf of any state of the
United States of America, or any political subdivision of any such
state, which are rated at least A (or an equivalent) by Moody's or S&P;
(g) Funds comprised of obligations described in (f) above to
the extent described in Treasury Regulation 1.148-8(e)(3)(iii),
including any such fund managed by the Trustee or any affiliate of the
Trustee;
(h) Obligations issued by any corporation organized under
the laws of any state of the United States of America, which are rated
at least A (or an equivalent) by Moody's or S&P;
(i) Money market funds which are rated prime-1 or AAAm (or
an equivalent) by Moody's or S&P, including any such money market fund
managed by the Trustee or any affiliate of the Trustee;
(j) Any other investment not prohibited by applicable law;
or
(k) Repurchase agreements collateralized by any of the
investments described in (a) through (j) above.
"Plans and Specifications" means the plans and specifications prepared
for the Project by the Company, as amended from time to time prior to the
Completion Date, which plans and specifications are on file at the office of the
Company located in Hammond, Indiana.
"Project" means facilities described in Exhibit A hereto, which are
further described in the Project Certificate.
"Project Certificate" means the Company's Project Certificate delivered
concurrently with the issuance of the Bonds, concerning facts, estimates and
circumstances so as to enable Bond Counsel to render its approving opinion
required under the Indenture.
"Rebate Fund" means the Rebate Fund established in accordance with the
requirements of the Tax Agreement.
"Regulations" means the Treasury Regulations dealing with the
tax-exempt bond provisions of the Code.
"State" means the State of Indiana.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
a corporation organized and existing under the laws of the State of New York, it
successors and assigns.
"Tax Agreement" means the Tax Exemption Certificate and Agreement,
dated the date of delivery of the Bonds, by and among the Issuer, the Company
and the Trustee, as from time to time supplemented and amended.
"Trustee" means the Trustee at the time serving as such under the
Indenture.
"Underwriter" means CS First Boston Corporation, and its successors and
assigns.
The words "hereof", "herein", "hereunder" and other words of similar
import refer to this Agreement as a whole.
Unless otherwise specified, references to Articles, Sections and other
subdivisions of this Agreement are to the designated Articles, Sections and
other subdivisions of this Agreement as originally executed.
The headings of this Agreement are for convenience only and shall not
define or limit the provisions hereof.
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations of the Issuer. The Issuer makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) The Issuer is a municipal corporation duly organized and
validly existing under the Constitution and the laws of the State.
(b) Under the provisions of the Act and proceedings of the
Issuer, the Issuer has the power and authority to enter into the
transactions contemplated by, and to execute and deliver, this
Agreement, the Tax Agreement, the Indenture and the Bonds and to carry
out its obligations hereunder and thereunder.
(c) Neither the execution and delivery of this Agreement,
the Indenture, the Tax Agreement and the Bonds, the consummation of the
transactions contemplated hereby or thereby nor the fulfillment of or
compliance with the terms and conditions of this Agreement, the
Indenture, the Tax Agreement and the Bonds conflicts with or results in
a breach of the terms, conditions or provisions of any restriction or
any agreement or instrument to which the Issuer is now a party or by
which it is bound, or constitutes a default under any of the foregoing.
(d) The Bonds are to be issued under the Indenture and the
payment of the principal of, premium, if any, and interest on the Bonds
are to be secured under the Indenture by an assignment and pledge to
the Trustee of all right, title and interest of the Issuer in and to
this Agreement (except the rights of the Issuer under Sections 4.2(b),
5.2 and 6.3 hereof).
(e) The Issuer has not assigned or pledged and will not
assign or pledge its right, title or interest in or to this Agreement,
other than to secure the Bonds and as otherwise provided in the
Indenture.
Section 2.2. Representations of the Company. The Company makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) The Company is a corporation duly organized and validly
existing under the laws of the State of Maine, is authorized to do
business in, and is in good standing under the laws of, the State, and
has the power to enter into, and by proper corporate action has been
duly authorized to execute and deliver, this Agreement and the Tax
Agreement.
(b) Neither the execution and delivery of this Agreement and
the Tax Agreement, the consummation of the transactions contemplated
hereby or thereby, nor the fulfillment of or compliance with the terms
and conditions of this Agreement and the Tax Agreement, conflicts with
or results in a breach of any of the terms, conditions or provisions of
any restriction or any agreement or instrument to which the Company is
now a party or by which it is bound, or constitutes a default under any
of the foregoing, or results in the creation or imposition of any lien,
charge or encumbrance whatsoever upon any of the property or assets of
the Company or any subsidiary thereof.
(c) The statements, information, descriptions, estimates and
assumptions contained in the Project Certificate and in the Tax
Agreement are true, correct and complete and are based upon the best
information available to the Company at the time of issuance of the
Bonds.
ARTICLE III
CONSTRUCTION OF THE PROJECT; ISSUANCE OF BONDS
Section 3.1. Agreement to Construct and Equip the Project. The Company
agrees that it will acquire or construct, or complete the acquisition and
construction of, the Project substantially in accordance with the Plans and
Specifications.
In the event that Exhibit A hereto is to be amended or supplemented in
accordance with the provisions of Section 11.1 of the Indenture, the Issuer will
enter into, and will instruct the Trustee to consent to, an amendment of or
supplement to Exhibit A hereto upon receipt of:
(i) a certificate of an Authorized Company
Representative describing in detail the proposed changes; and
(ii) a copy of the proposed form of amendment or supplement to
Exhibit A hereto and such other documents, certificates and showings as
may be required by counsel rendering the opinion clause (iii) of this
paragraph; and
(iii) an opinion of Bond Counsel to the effect that such
amendment complies with the requirements of this Section 3.1, is in
proper form for execution and delivery by the Issuer and will not
adversely affect the validity of the Bonds or the exclusion of the
interest thereon from gross income for federal income tax purposes.
Section 3.2 Agreement to Issue Bonds: Application of Bond Proceeds . In
order to provide funds to finance the Cost of the Project, the Issuer agrees
that it will issue under the Indenture, sell and cause to be delivered to the
Underwriter, the Bonds, bearing interest and maturing as set forth in the
Indenture. The Issuer will thereupon cause the accrued interest, if any,
received upon the delivery of the Bonds to be deposited in the Bond Fund and the
balance of the proceeds (net of underwriting discount) received from the sale of
the Bonds to be deposited in the Construction Fund.
Section 3.3. Disbursements from the Construction Fund. The Issuer
hereby authorizes and directs the Trustee, upon compliance with Section 5.7 of
the Indenture, to disburse the moneys in the Construction Fund to or on behalf
of the Company for the following purposes (but, subject to the provisions of
Sections 3.4 and 3.5 hereof, for no other purpose):
(a) Payment to the Company of such amounts, if any, as shall
be necessary to reimburse the Company in full for all advances and
payments made by it at any time prior to or after the delivery of the
Bonds for expenditures in connection with the preparation of the Plans
and Specifications (including any preliminary study or planning of the
Project or any aspect thereof) and the construction and acquisition of
the Project.
(b) Payment of the initial or acceptance fee of the Trustee,
legal, financial and accounting fees and expenses, original issue
discount, and printing and engraving costs incurred in connection with
the authorization, issuance and sale of the Bonds, the execution and
filing of the Indenture and the preparation and recording or filing of
all other documents in connection therewith, and payment of all fees,
costs and expenses for the preparation of this Agreement, the Tax
Agreement, the Indenture and all other documents in connection with the
authorization, issuance and sale of the Bonds.
(c) Payment for labor, services, materials and supplies used
or furnished in the construction and acquisition of the Project, and
payment of amounts due under contracts for the acquisition,
construction and installation of the Project, all as provided in the
plans, specifications and work orders therefor.
(d) Payment of the fees, if any, for architectural,
engineering, legal, underwriting and supervisory services with respect
to the Project.
(e) To the extent not paid by a contractor for construction
or installation with respect to any part of the Project, payment of the
premiums on all insurance required to be taken out and maintained
during the Construction Period.
(f) Payment of the taxes, assessments and other charges, if
any, that may become payable during the Construction Period with
respect to the Project, or reimbursement thereof if paid by the
Company.
(g) Payment of expenses incurred in seeking to enforce any
remedy against any contractor or subcontractor in respect of any
default under a contract relating to the Project.
(h) Interest during construction of the Project.
(i) Payment of any other costs which constitute part of the
Cost of the Project in accordance with generally accepted accounting
principles and which are permitted by the Act and will not affect the
exclusion of the interest thereon from gross income for federal income
tax purposes.
(j) For transfer to the Rebate Fund in order to comply with
the provisions of the Tax Agreement.
All moneys remaining in the Construction Fund after the Completion Date
and after payment or provision for payment of all other items provided for in
the preceding subsections (a) to (j), inclusive, of this Section, shall at the
direction of the Company be used in accordance with Section 3.4 hereof.
Section 3.4. Establishment of Completion Date: Obligation of the
Company to Complete. As soon as practicable after the completion of construction
of the Project, and in any event not more than ninety (90) days thereafter, the
Company shall furnish to the Trustee a certificate signed by an Authorized
Company Representative stating (i) that construction of the Project has been
completed substantially in accordance with the Plans and Specifications, (ii)
the Completion Date, (iii) the Cost of the Project, (iv) the portion of the Cost
of the Project which has then been paid and (v) the portion of the Cost of the
Project which has not yet then been paid. Such certificate may state that it is
given without prejudice to any rights against third parties which exist at the
date of such certificate or which may subsequently come into being. Moneys
(including investment proceeds) remaining in the Construction Fund on the date
of such certificate may be used, at the direction of an Authorized Company
Representative, to the extent indicated, for one or more of the following
purposes:
(1) for the payment, in accordance with the provisions of
this Agreement, of any Cost of the Project not then paid as specified
in the above-mentioned certificate; or
(2) for transfer to the Bond Fund, but only if, and to the
extent that, the Company deliver to the Trustee an opinion of Bond
Counsel to the effect that such transfer is permitted by the Act and
does not adversely affect the exclusion of the interest thereon from
gross income for federal income tax purposes; or
(3) for the payment of redemption of Bonds in accordance
with the provisions of Section 3.1(d) of the Indenture within 180 days
following the filing of said completion certificate with the Trustee,
such moneys to be used only to pay principal of Bonds upon any such
redemption.
Any moneys (including investment proceeds) remaining in the
Construction Fund on the date of the aforesaid certificate and not set aside for
the payment of the Cost of the Project as specified in (1) above or transferred
to the Bond Fund pursuant to (2) above shall on such date be placed by the
Trustee in a separate and segregated subaccount in the Construction Fund
(designated the escrow subaccount) and used to pay principal of Bonds upon the
redemption thereof as provided in (3) above; provided that, until so used such
moneys may also be used, at the direction of the Company, for one or more of the
following purposes:
(a) to pay all or part of the price of purchasing Bonds on
tender, in the open market or at private sale, on or before such date
or dates, for the purpose of cancellation;
(b) for the payment of the cost of any purpose authorized
under the Act, provided that prior to such use this Agreement is
amended in accordance with Section 3.1 hereof to include such
additional facilities within the definition of Project as used herein;
or
(c) for any other purpose;
provided that, no moneys on deposit in such escrow subaccount may be used for
any of the purposes specified in (a), (b) or (c) in this paragraph unless and
until the Company delivers to the Trustee the opinion of Bond Counsel upon which
the Trustee may rely to the effect that such use is permitted by the Act and
does not adversely affect the exclusion from federal income taxes of interest on
any of the Bonds; and provided further that, until used for one or more of the
foregoing purposes, moneys on deposit in such escrow subaccount may be invested
in investments authorized by the first paragraph of Section 3.5 of this
Agreement, but may not be invested to produce a yield on such moneys (computed
from the Completion Date and taking into account any investment of such moneys
during the period from the Completion Date until such moneys were deposited in
such escrow subaccount) greater than the yield on the Bonds, all as such terms
are used in and determined in accordance with relevant provisions of the Code
and the Regulations. The interest accruing on any such investment and any profit
realized therefrom shall be credited to such subaccount and any net losses
resulting from any such investment shall be charged to such subaccount and paid
by the Company.
In the event the moneys in the Construction Fund available for payment
of the Cost of the Project should not be sufficient to pay the costs thereof in
full, the Company agrees to pay directly, or to deposit in the Construction Fund
moneys sufficient to pay, the costs of completing the Project as may be in
excess of the moneys available therefor in the Construction Fund. The Issuer
does not make any warranty, either express or implied, that the moneys which
will be paid into the Construction Fund and which, under the provisions of this
Agreement, will be available for payment of the Cost of the Project, will be
sufficient to pay all the costs which will be incurred in that connection. The
Company agrees that if after exhaustion of the moneys in the Construction Fund
the Company should pay, or deposit moneys in the Construction Fund for the
payment of, any portion of the Cost of the Project pursuant to the provisions of
this Section, it shall not be entitled to any reimbursement therefor from the
Issuer or from the Trustee or from the owners of any of the Bonds, nor shall it
be entitled to any diminution of the loan repayment installments or other
amounts payable under Section 4.2 hereof. Nothing herein contained shall be
construed in derogation of the intent of the Issuer to issue additional bonds
under the Act for the purpose of financing such excess costs.
Section 3.5. Investments. Any moneys held as a part of the Construction
Fund or the Bond Fund shall be invested or reinvested by the Trustee, at the
written direction (which may be by facsimile transmission) of the Authorized
Company Representative as provided in Article VI of the Indenture and in the Tax
Agreement, to the extent permitted by law in Permitted Investments. The Trustee
may make any and all such investments through its own investment department.
The investments so purchased shall be held by the Trustee and shall be
deemed at all times a part of the Construction Fund or the Bond Fund, as the
case may be, and the interest accruing thereon and any profit realized therefrom
shall be credited to such fund and any net losses resulting from such investment
shall be charged to such fund (on the date on which the proceeds of any such
investment are needed for the purposes of such fund) and paid by the Company.
The Company covenants that any funds (including investment proceeds) on
deposit in the Construction Fund more than three years after the date of
delivery of the Bonds will not be invested to produce a yield greater than the
yield on the Bonds, all as such terms are used in and determined in accordance
with the regulations promulgated or proposed under relevant provisions of the
Code and shall be treated as provided in the Tax Agreement.
Section 3.6. Arbitrage Certifications. The Company reasonably expects,
based on its knowledge, information and belief, and hereby certifies and
represents to the Issuer, and the Issuer hereby certifies that it reasonably
expects, that the proceeds of the Bonds will not be used in a manner that would
cause the Bonds to be classified as "arbitrage bonds" under Section 148 of the
Code and Regulations prescribed under that Section. The Issuer and the Company
jointly and severally certify and covenant with all purchasers and owners of the
Bonds from time to time outstanding that so long as any of the Bonds remain
outstanding moneys on deposit in any fund or account in connection with the
Bonds, whether or not such moneys were derived from the proceeds of the sale of
the Bonds or from any other sources, will not be used in a manner which will
cause the Bonds to be "arbitrage bonds" within the meaning of the Code and the
Regulations.
ARTICLE IV
LOAN OF BOND PROCEEDS; PAYMENT OBLIGATIONS
Section 4.1. Loan of Bond Proceeds. The Issuer agrees, upon the terms
and conditions in this Agreement, to lend to the Company the proceeds (exclusive
of accrued interest, if any) received by the Issuer from the sale of the Bonds.
Section 4.2. Amounts Payable by Company. (a) The Company covenants and
agrees to pay to the Trustee as a loan repayment installment, no later than
10:00 a.m., New York City time, on each date provided in or pursuant to the
Indenture for the payment of principal (whether at maturity or upon redemption
or acceleration) of, premium, if any, and/or interest on the Bonds, until the
principal of, premium, if any, and interest on the Bonds shall have been fully
paid or provision for the payment thereof shall have been made in accordance
with the Indenture, in lawful money of the United States of America in federal
or other immediately available funds, for deposit in the Bond Fund, a sum equal
to the amount payable on such date as principal (whether at maturity or upon
redemption or acceleration), premium, if any, and interest upon the Bonds as
provided in the Indenture. Each payment pursuant to this Section 4.2(a) shall at
all times be sufficient to pay the corresponding amount of interest and
principal (whether at maturity or upon redemption or acceleration) and premium,
if any, payable on the Bonds; provided that any amount held by the Trustee in
the Bond Fund on any due date for an installment hereunder shall be credited
against the amount due on such date to the extent available for such purpose;
and provided further that, subject to the provisions of this Section 4.2(a), if
at any time the amounts held by the Trustee in the Bond Fund are sufficient to
pay all of the principal of and interest and premium, if any, on the Bonds as
such payments become due, the Company shall be relieved of any obligation to
make any further payments under the provisions of this Section 4.2(a).
Notwithstanding the foregoing, if on any date the amount held by the Trustee in
the Bond Fund is insufficient to make any required payments of principal of
(whether at maturity or upon redemption or acceleration) and interest and
premium, if any, on the Bonds as such payments become due, the Company shall
forthwith pay such deficiency as an installment hereunder. If the Company shall
fail to pay any amount under this Section 4.2(a), the amount so in default shall
continue as an obligation of the Company until the amount so in default shall
have been fully paid, and the Company agrees to pay the same with interest
thereon until paid (to the extent legally enforceable) at a rate equal to the
rate borne by the Bonds from the due date thereof until paid.
(b) The Company also agrees to pay to the Issuer its fees, if any, for
issuing the Bonds, plus the reasonable expenses of the Issuer incurred in
fulfilling the Issuer's obligations under this Agreement, the Tax Agreement and
the Indenture, which are not otherwise required to be paid by the Company under
the terms of this Agreement.
(c) The Company also agrees to pay to the Trustee, Registrar and Paying
Agent (l) the initial acceptance fee of the Trustee and the costs and expenses,
including reasonable attorney's fees, incurred by the Trustee in entering into
and executing the Indenture, and (2) during the term of this Agreement (i) an
amount equal to the annual fee of the Trustee for the ordinary services of the
Trustee, as trustee, rendered and its ordinary expenses incurred under the
Indenture, including reasonable attorneys' fees, as and when the same become
due, (ii) the fees, charges and expenses of the Trustee, the Paying Agent and
the Registrar, as and when the same become due, and (iii) the fees, charges and
expenses of the Trustee for the necessary extraordinary services rendered by it
and extraordinary expenses incurred by it under the Indenture, including
reasonable attorneys' fees, as and when the same become due.
Section 4.3 No Defense or Set-Off: Unconditional Obligation. The
obligations of the Company to make the payments required in Section 4.2(a)
hereof shall be absolute and unconditional, irrespective of any defense or any
rights of set-off, recoupment or counterclaim it might otherwise have against
the Issuer, the Trustee, the Paying Agent or the Registrar. The Company shall
pay net during the term of this Agreement the payments to be made under Section
4.2(a) hereof free of any deductions and without abatement, diminution or
set-off other than those herein expressly provided. Until such time as the
principal of, premium, if any, and interest on the Bonds shall have been fully
paid, or provision for the payment thereof shall have been made in accordance
with the Indenture, the Company: (i) will not suspend or discontinue any
payments provided for in Section 4.2(a) hereof; (ii) will perform and observe
all of its agreements contained in this Agreement; and (iii) will not terminate
this Agreement for any cause, including, without limiting the generality of the
foregoing, the occurrence of any acts or circumstances that may constitute
failure of consideration, destruction of or damage to the Project, commercial
frustration of purpose, any change in the tax laws of the United States of
America or the State or any political subdivision thereof, or any failure of the
Issuer or the Trustee to perform and observe any agreement, whether express or
implied, or any duty, liability or obligation arising out of or connected with
this Agreement, except to the extent permitted by this Agreement.
Section 4.4. Assignment and Pledge of Issuer's Rights. As security for
the payment of its Bonds, the Issuer will assign and pledge to the Trustee all
right, title and interest of the Issuer in and to this Agreement, including the
right to receive payments hereunder (except the right to receive payments, if
any, under Sections 4.2(b), 5.2 and 6.3 hereof and the rights to make
determinations and receive notices as herein provided), and hereby directs the
Company to make said payments directly to the Trustee. The Company herewith
assents to such assignment and pledge and will make payments directly to the
Trustee without defense or set-off by reason of any dispute between the Company
and the Issuer or the Trustee.
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
Section 5.1. Company to Maintain its Existence; Conditions Under Which
Exceptions Permitted. The Company agrees that during the term of this Agreement
it will maintain its corporate existence, will not dissolve or otherwise dispose
of all or substantially all of its assets, and will not consolidate with or
merge into another corporation or permit one or more corporations to consolidate
with or merge into it unless the Company is the surviving, resulting or
transferee corporation, as the case may be, provided, that the Company may,
without violating the agreements contained in this Section 5.1, consolidate with
or merge into another domestic corporation (i.e., a corporation incorporated and
existing under the laws of the United States of America or any state, district
or territory thereof) or permit one or more other domestic corporations to
consolidate with or merge into it, or sell or otherwise transfer to another
domestic corporation all or substantially all of its assets as an entirety and
thereafter dissolve, provided, in the event the Company is not the surviving,
resulting or transferee corporation, as the case may be, that the surviving,
resulting or transferee corporation (i) is a domestic corporation as aforesaid,
(ii) is qualified to do business in the State, and (iii) assumes in writing all
of the obligations of the Company under this Agreement and the Tax Agreement.
Section 5.2. Release and Indemnification Covenants. The Company
releases the Issuer and the Trustee from and covenants and agrees that the
Issuer and the Trustee shall not be liable for, and to indemnify, defend and
hold the Issuer and the Trustee harmless against, any loss or damage to property
or any injury to or death of any person occurring on or about or resulting from
the Project or the operation thereof, provided that the indemnity provided in
this sentence shall not be effective for damages that result from gross
negligence or intentional acts on the part of the Issuer or the Trustee. The
Company further releases the Issuer and the Trustee from and covenants and
agrees that the Issuer and the Trustee shall not be liable for, and to
indemnify, defend and hold the Issuer and the Trustee harmless against, any
liability resulting from or related to the issuance or sale of the Bonds, or any
of them, including without limitation any liability arising out of any offering
statement or lack of offering statement or disclosure in connection with the
sale or resale of the Bonds, or out of any determination of taxability of the
Bonds or the interest thereon, or out of any determination that the Bonds or the
Indenture or the transactions contemplated thereby are in violation of any
federal or state securities laws, provided that the indemnity provided in this
sentence shall not be effective as to the Issuer for damages that result from
gross negligence or intentional acts on the part of the Issuer and shall not be
effective as to the Trustee for damages that result from gross negligence or
intentional acts on the part of the Trustee. The indemnities provided in this
paragraph shall also extend to the commissioners, officers, employees and agents
of the Issuer and the Trustee; provided that any such indemnity shall not be
effective for damages that result from gross negligence or intentional acts of
any such individual of the Issuer or from the gross negligence or intentional
acts of any such individual of the Trustee.
Section 5.3. Validity and Tax-Exempt Status of the Bonds. The Company
and the Issuer covenant and agree that they, and each of them, will not
knowingly take or authorize or permit any action to be taken and have not taken
or authorized or permitted any action to be taken which results in interest paid
on the Bonds being included in gross income of any owner or beneficial owner
thereof for purposes of federal income taxation (other than an owner or
beneficial owner who is a "substantial user" of the Project or a "related
person" within the meaning of Section 147(a) of the Code) or adversely affects
the validity of the Bonds. Promptly after the Company first becomes aware of any
event which would result in a mandatory redemption of the Bonds under Section
3.1(c)(2) of the Indenture, the Company shall give written notice thereof to the
Issuer and the Trustee.
Section 5.4. Taxes and Governmental Charges. The Company will promptly
pay, as the same become due, all material lawful taxes, assessments, utility
charges and other governmental charges of any kind whatsoever levied or assessed
by federal, state or any municipal government upon or with respect to the
Project or any part thereof. The Company may, at its expense and in its own name
and behalf or in the name and behalf of the Issuer, if it is a necessary party
thereto, in good faith contest any such taxes, assessments and other charges
and, in the event of any such contest, permit the taxes, assessments or other
charges so contested to remain unpaid during the period of such contest and any
appeal therefrom, provided that such non-payment does not materially adversely
affect the payment by the Company of all other amounts required to be paid by it
hereunder or adversely affect the validity of the Bonds or the tax-exempt status
of the interest thereon.
Section 5.5. Maintenance and Repair; Insurance. The Company will
maintain the Project in a reasonably safe and sound operating condition, making
from time to time all reasonably needed repairs thereto, and shall maintain
insurance coverage (including self-insurance) with respect to the Project, all
in accordance with its corporate practice for similar assets (subject, however,
to its right to discontinue operation of any portion of the Project as provided
in Section 5.7 hereof), and shall pay all costs of such maintenance, repair and
insurance.
Section 5.6. Filings; Lien of Indenture. The Company will, at its
expense, take all necessary action in cooperation with the Issuer and the
Trustee to maintain and preserve the lien and security interest of the Indenture
so long as the Bonds remain outstanding.
Section 5.7. Operation of Project. Although the Company intends to
operate, or cause to be operated, the Project for its designed purposes until
the date on which no Bonds are outstanding, the Company is not required by this
Agreement to operate, or cause to be operated, any portion of the Project after
the Company shall deem in its discretion that such continued operation is not
advisable, and in such event it is not prohibited by this Agreement from
selling, leasing or retiring all or any such portion of the Project, subject to
the provisions of Section 5.3 hereof. The net proceeds from such sale, lease or
other disposition, if any, shall belong to, and may be used for any lawful
purpose by, the Company, subject to the provisions of Section 5.3. No such sale,
lease or other disposition of all or any portion of the Project shall reduce or
otherwise affect the Company's obligation to pay amounts under Section 4.2
hereof. The books and records of the Company relating to the Project shall be
available for inspection by the Trustee upon reasonable request.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default. The occurrence and continuation of any
one of the following shall constitute an Event of Default hereunder:
(a) failure by the Company to pay any amounts required to be
paid under Section 4.2(a) hereof on the dates and in the manner
specified herein; or
(b) failure by the Company to perform any covenant,
condition or agreement on its part to be observed or performed in this
Agreement, other than as referred to in subsection (a) above, for a
period of thirty (30) days after written notice, specifying such
failure and requesting that it be remedied, is given to the Company by
the Issuer or the Trustee, unless (i) the Issuer and the Trustee shall
agree in writing to an extension of such time prior to its expiration
or (ii) if the failure is such that it can be corrected but not within
such 30-day period, corrective action is instituted by the Company
within such period and diligently pursued until such failure is
corrected; or
(c) the dissolution or liquidation of the Company or the
filing by the Company of a voluntary petition in bankruptcy, or failure
by the Company promptly to lift any execution, garnishment or
attachment of such consequence as will impair its ability to carry on
its obligations hereunder, or an order for relief under Title 11 of the
United States Code, as amended from time to time, is entered against
the Company, or a petition or answer proposing the entry of an order
for relief against the Company under Title 11 of the United States
Code, as amended from time to time, or its reorganization, arrangement
or debt readjustment under any present or future federal bankruptcy act
or any similar federal or state law shall be filed in any court and
such petition or answer shall not be discharged within ninety (90) days
after the filing thereof, or the Company shall fail generally to pay
its debts as they become due, or a custodian (including without
limitation a receiver, trustee, assignee for the benefit of creditors
or liquidator of the Company) shall be appointed for or take possession
of all or a substantial part of its property and shall not be
discharged within ninety (90) days after such appointment or taking
possession, or the Company shall consent to or acquiesce in such
appointment or taking possession, or assignment by the Company for the
benefit of its creditors, or the entry by the Company into an agreement
of composition with its creditors, or the adoption of a resolution by
the board of directors of the Company or the taking of any other
corporate action to file a petition or answer proposing the entry of an
order for relief against the Company under TitleE11 of the United
States Code, as amended from time to time, or its reorganization,
arrangement or debt readjustment under any present or future federal
bankruptcy act or any similar federal or state laws; provided, that the
term Odissolution or liquidation of the CompanyO, as used in this
subsection (c), shall not be construed to include the cessation of the
corporate existence of the Company resulting either from a merger or
consolidation of the Company into or with another domestic corporation
or a dissolution or liquidation of the Company following a transfer of
all or substantially all of its assets as an entirety, under the
conditions permitting such actions contained in Section 5.1 hereof; or
(d) an "event of default" shall occur and be continuing
under the Indenture.
Section 6.2. Remedies on Default. Whenever the unpaid principal balance
of the Bonds and interest accrued thereon has automatically become or been
declared to be immediately due and payable under the Indenture, then upon any
such acceleration the amounts payable under Section 4.2(a) hereof shall
automatically become and shall be immediately due and payable in the amount set
forth in Section 8.2 of the Indenture; provided, however, that any such
automatic acceleration of unpaid loan repayment installments payable under
Section 4.2(a) of this Agreement shall be deemed automatically rescinded upon
any rescission by the Trustee of the corresponding acceleration of the Bonds
under Section 8.11 of the Indenture.
Whenever any Event of Default shall have happened and is subsisting,
the Issuer, with the consent of the Trustee, or the Trustee may take whatever
action at law or in equity may appear necessary or desirable to collect the
payments and other amounts then due or enforce performance and observance of any
obligation, agreement or covenant of the Company under this Agreement.
In case the Issuer or the Trustee shall have proceeded to enforce its
rights under this Agreement, and such proceedings shall have been discontinued
or abandoned for any reason or shall have been determined adversely to the
Issuer or the Trustee, as the case may be, then and in every such case the
Company, the Issuer and the Trustee shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies and powers of
the Company, the Issuer and the Trustee shall continue as though no such
proceeding had been taken.
The Company covenants that, in case an Event of Default shall occur
with respect to the payment of any repayment installment payable under Section
4.2(a) hereof, then, upon demand of the Trustee, the Company will pay to the
Trustee the whole amount that then shall have become due and payable under said
Section 4.2(a), with interest (to the extent permitted by law) on such amount at
the rate borne by the Bonds from the due date thereof until paid.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company under the federal bankruptcy laws or any other
applicable law, or in case a receiver or trustee shall have been appointed for
the property of the Company, or in the case of any other similar judicial
proceedings relative to the Company, or to the creditors or property of the
Company, the Trustee shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount owing and unpaid pursuant to this Agreement and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee allowed in
such judicial proceedings relative to the Company, its creditors or its
property, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of its charges and expenses; and any receiver, assignee or trustee in bankruptcy
or reorganization is hereby authorized to make such payments to the Trustee, and
to pay to the Trustee any amount due it for compensation and expenses, including
reasonable counsel fees incurred by it up to the date of such distribution.
Section 6.3. Agreement to Pay Attorneys' Fees and Expenses. In the
event the Issuer or the Trustee should reasonably employ attorneys or incur
other documented reasonable expenses for the collection of the payments due
under this Agreement or the enforcement of the performance or observance of any
obligation or agreement on the part of the Company herein contained, the Company
agrees that it will on demand therefor pay to the Issuer or the Trustee the
reasonable fees of such attorneys and such other expenses so incurred by the
Issuer or the Trustee.
Section 6.4. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Issuer or the Trustee is intended to be exclusive of any other
available remedy or remedies but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Agreement and
the Indenture or now or hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing upon any Event of
Default hereunder shall impair any such right or power or shall be construed to
be a waiver thereof, but any such right and power may be exercised from time to
time and as often as may be deemed expedient. In order to entitle the Issuer to
exercise any remedy reserved to it in this Article VI, it shall not be necessary
to give any notice other than such notice as may be herein expressly required.
Such rights and remedies as are given the Issuer hereunder shall also extend to
the Trustee, and the Trustee and the owners from time to time of the Bonds shall
be deemed third party beneficiaries of all covenants and agreements herein
contained.
Section 6.5. No Additional Waiver Implied by One Waiver. In the event
any agreement contained in this Agreement should be breached by the Company and
thereafter waived by the Issuer or the Trustee, such waiver shall be limited to
the particular breach so waived and shall not be deemed to waive any other
breach hereunder.
ARTICLE VII
PREPAYMENT
Section 7.1. Obligation to Prepay. The Company shall have the
obligation to prepay the principal payable under Section 4.2(a) hereof with
respect to the Bonds as a whole, or in part, by paying to the Trustee an amount
sufficient to redeem all or a portion of the Bonds then Outstanding, in the
manner, at the redemption prices and on the dates specified in Sections 3.1(c)
and 3.1(d) of the Indenture.
Section 7.2. Option to Prepay. The Company shall have, and is hereby
granted, the option to prepay the principal payable under Section 4.2(a) hereof
with respect to the Bonds as a whole, or in part, by paying to the Trustee an
amount sufficient to redeem all or a portion of the Bonds then Outstanding, in
the manner, at the redemption prices (including premium, if any) and on the
dates specified in Sections 3.1(a) and 3.1(b) of the Indenture.
Section 7.3. Redemption of the Bonds. To perform an obligation imposed
upon the Company or to exercise an option granted to the Company by this
Article VII, the Company shall give written notice to the Issuer, the Trustee
and the Registrar, which notice shall specify therein the date upon which
prepayment of the principal payable under Section 4.2(a) hereof (or a portion
thereof) will be made, which date shall be not less than forty-five (45) days
from the date the notice is mailed (or such later date as is acceptable to the
Issuer and the Trustee), shall specify that all of the principal amount payable
under Section 4.2(a) hereof or a specified portion thereof is to be so prepaid
and the provisions of the Indenture pursuant to which the redemption of Bonds
with such prepayment moneys is to be made, and, in connection with any optional
redemption of Bonds, shall specify whether or not the notice of redemption shall
contain the information contemplated by the second paragraph of Section 3.2 of
the Indenture. The Issuer has directed the Trustee and the Registrar to take
forthwith all steps (other than the payment of the money required to redeem the
Bonds) necessary under the applicable provisions of the Indenture to effect the
redemption of the Bonds (or a portion thereof) in amounts equal to the amount of
the principal so prepaid as provided in this Article VII. It is understood and
agreed by the parties hereto that, in connection with any optional redemption of
Bonds, if a notice of redemption contains the information contemplated by the
second paragraph of Section 3.2 of the Indenture, the Company may, but is not
required to, provide moneys for the redemption of such Bonds.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Notices. All notices, certificates or other communications
shall be sufficiently given and shall be deemed given when the same are (i)
deposited in the United States mail and sent by first class mail, postage
prepaid, or (ii) delivered by hand, or (iii) sent by facsimile transmission, in
each case, to the parties at the addresses or to the telecopier numbers set
forth below or at such other address or telecopy number as a party may designate
by notice to the other parties: if to the Issuer, at 649 Conkey Street, Hammond,
Indiana 46324, or to (219) 853-6500, Attention: Director of Mayor's Office of
Economic Development; if to the Company, at 250 Harbor Drive, Stamford,
Connecticut 06904-2128, or to (203) 359-1020, Attention: Treasurer; and if to
the Trustee, at 111 Monument Circle, Suite 1611, Indianapolis, Indiana
46277-0116, or to (317) 321-3864, Attention: Corporate Trust Administration. A
duplicate copy of each notice, certificate or other communication given
hereunder by either the Issuer or the Company to the other shall also be given
to the Trustee.
Section 8.2. Assignments. This Agreement may not be assigned by either
party without the consent of the other and the Trustee, except that the Issuer
shall assign and pledge to the Trustee certain of its right, title and interest
in and to this Agreement as provided by Section 4.4 hereof, and the Company may
without any consent assign to any surviving, resulting or transferee corporation
its rights under this Agreement as provided by Section 5.1 hereof.
Section 8.3. Severability. If any provision of this Agreement shall be
held or deemed to be or shall, in fact, be illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative or unenforceable to any
extent whatsoever.
Section 8.4. Execution of Counterparts. This Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 8.5. Amounts Remaining in any Fund or with Trustee. It is
agreed by the parties hereto that, subject to Section 5.14 of the Indenture,
after payment in full of (i) the principal of, premium, if any, and interest on
the Bonds, (ii) the fees, charges, and expenses of the Issuer, the Trustee and
the Bond Registrar in accordance herewith and with the Indenture, and (iii) all
other amounts required to be paid under this Agreement and the Indenture, any
amounts remaining in any fund or account maintained under this Agreement or the
Indenture and not applied to the payment of the above in accordance with the
provisions of the Indenture or this Agreement shall belong to and be paid to the
Company by the Trustee.
Section 8.6. Amendments, Changes and Modifications. Except as otherwise
provided in this Agreement or the Indenture subsequent to the initial issuance
of the Bonds and prior to their payment in full, this Agreement may not be
effectively amended, changed, modified, altered or terminated without the
written consent of the Trustee.
Section 8.7. Governing Law. This Agreement shall be governed
exclusively by and construed in accordance with the applicable law of the State.
Section 8.8. Authorized Company Representative. Whenever under the
provisions of this Agreement the approval of the Company is required or the
Company is required to take some action at the request of the Issuer, the
Trustee or the Registrar, such approval or such request shall be given for the
Company by the Authorized Company Representative, and the Issuer, the Trustee
and the Registrar shall be authorized to act on any such approval or request and
neither party hereto shall have any complaint against the other or against the
Trustee or the Registrar as a result of any such action taken.
Section 8.9. Term of this Agreement. This Agreement shall be in full
force and effect from the date hereof, and shall continue in effect until the
payment in full of all principal of, and premium, if any, and interest on the
Bonds, or provision for the payment thereof shall have been made pursuant to
Article VII of the Indenture, all fees, charges, indemnities and expenses of the
Issuer and the Trustee have been fully paid or provision made for such payment
(the payment of which fees, charges, indemnities and expenses shall be evidenced
by a written certification of the Company that it has fully paid all such fees,
charges, indemnities and expenses) and all other amounts due hereunder have been
duly paid or provision made for such payment. All representations,
certifications and covenants by the Company as to the indemnification of various
parties as described in Section 5.2 hereof, the payment of fees and expenses of
the Issuer and the Trustee as described in Section 6.3 hereof, and all matters
affecting the tax-exempt status of the Bonds shall survive the termination of
this Agreement.
<PAGE>
Section 8.10. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the Issuer, the Company and their respective
successors and assigns, subject, however, to the limitations contained in
Sections 4.4 and 5.1 hereof.
Section 8.11. Limited Liability of Officers, Etc. No recourse shall be
had for the payment of the principal of, premium, if any, and interest on the
Bonds or for any claim based thereon or upon any obligation, covenant or
agreement contained in this Agreement, the Indenture or the Bonds against any
past, present or future officer, agent or employee of the Issuer, or any
officer, agent or employee of any successor thereto, as such, either directly or
through the Issuer or any successor thereto, under any rule of law or equity,
statute or constitution or by the enforcement of any assessment or penalty or
otherwise, and all such liability of any such officer, employee or agent as such
is hereby expressly waived and released as a condition of and in consideration
for the execution of this Agreement and the Indenture and the issuance of the
Bonds.
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Company have caused this
Agreement to be executed in their respective names and attested by their duly
authorized officers and sealed, all as of the date first above written.
CITY OF HAMMOND, INDIANA
By /s/ Duane W. Dedelow, Jr.
_________________________
Mayor
(SEAL)
Attest:
/s/ Gerald Bobos
______________________________
City Clerk
AMERICAN MAIZE-PRODUCTS COMPANY
By /s/ Robert A. Britton
_________________________
Robert A. Britton
Vice President and Treasurer
(SEAL)
Attest:
/s/ Robert S. West
______________________________
Robert S. West
Assistant Treasurer
<PAGE>
EXHIBIT A
The Project consists of sewage and solid waste disposal facilities at
the Plant, all as more fully described in the Project Certificate.
<PAGE>
Exhibit 10(hh)
===============================================================================
CITY OF HAMMOND, INDIANA
TO
BANK ONE, INDIANAPOLIS, NA
Trustee
--------------------------------
INDENTURE OF TRUST
--------------------------------
Dated as of December 1, 1994
===============================================================================
<PAGE>
INDENTURE OF TRUST
(This Table of Contents is not a part of
this Indenture of Trust and is only for
convenience of reference)
TABLE OF CONTENTS
SECTION HEADING PAGE
Parties
Recitals 1
Form of Bonds 2
Granting Clauses 10
ARTICLE I DEFINITIONS AND RULES OF INTERPRETATION 11
Section 1.1. Definitions 11
Section 1.2. Rules of Interpretation 13
ARTICLE II THE BONDS 14
Section 2.1. Authorized Amount of Bond; Application of Bond Proceeds 14
Section 2.2. Issuance of Bonds 14
Section 2.3. Execution; Limited Obligation 15
Section 2.4. Authentication 15
Section 2.5. Form of Bonds 15
Section 2.6. Delivery of Bonds 15
Section 2.7. Mutilated, Lost, Stolen or Destroyed Bonds 16
Section 2.8. Registration and Exchange of Bond; Persons Treated as
Owners 16
Section 2.9. Cancellation of Bonds 17
Section 2.10. Book Entry System 17
ARTICLE III REDEMPTION OF BONDS BEFORE MATURITY 17
Section 3.1. Redemption Dates and Prices 17
Section 3.2. Notice of Redemption 19
Section 3.3. Deposit of Funds 20
Section 3.4. Partial Redemption of Bonds 20
Section 3.5. Selection of Bonds for Redemption 20
ARTICLE IV GENERAL COVENANTS 21
Section 4.1. Payment of Principal, Premium, if any, and Interest 21
Section 4.2. Performance by Issuer of Covenants 21
Section 4.3. Right to Payments under Agreement; Instruments of
Further Assurance 21
Section 4.4. Recordation and Other Instruments 22
Section 4.5. Inspection of Project Books 22
Section 4.6. List of Bondholders 22
Section 4.7. Rights Under Agreement 22
Section 4.8. Prohibited Activities 23
ARTICLE V REVENUES AND FUNDS 23
Section 5.1. Source of Payment of Bonds 23
Section 5.2. Creation of Bond Fund 23
Section 5.3. Payments into Bond Fund 23
Section 5.4. Use of Moneys in Bond Fund 23
Section 5.5. Custody of Bond Fund 23
Section 5.6. Construction Fund 24
Section 5.7. Payments into Construction Fund; Disbursements 24
Section 5.8. Completion of Project 24
Section 5.9. Transfer of Construction Fund 24
Section 5.10. Non-presentment of Bonds 25
Section 5.11. Moneys to be Held in Trust 25
Section 5.12. Repayment to the Company from Bond Fund 25
Section 5.13. Additional Payments Under the Agreement 25
Section 5.14. Arbitrage Requirements 25
ARTICLE VI INVESTMENT OF MONEYS 26
Section 6.1. Investment of Moneys 26
ARTICLE VII DISCHARGE OF LIEN 26
ARTICLE VIII DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS 28
Section 8.1. Defaults; Events of Default 28
Section 8.2. Acceleration 28
Section 8.3. Other Remedies; Rights of Bondholders 28
Section 8.4. Right of Bondholders to Direct Proceedings 29
Section 8.5. Appointment of Receivers 29
Section 8.6. Waiver 29
Section 8.7. Application of Moneys 29
Section 8.8. Remedies Vested in Trustee 31
Section 8.9. Rights and Remedies of Bondholders 31
Section 8.10. Termination of Proceedings 32
Section 8.11. Waivers of Events of Default 32
Section 8.12. Notice of Defaults under Section 8.1(c); Opportunity of
the Issuer and the Company to Cure Such Defaults 32
Section 8.13. Notice to Bondholders; Defaults; Acceleration 33
ARTICLE IX THE TRUSTEE 33
Section 9.1. Acceptance of Trusts 33
Section 9.2. Fees, Charges and Expenses of the Trustee 36
Section 9.3. Trustee as Paying Agent and Registrar 36
Section 9.4. Intervention by the Trustee 36
Section 9.5. Successor Trustee 36
Section 9.6. Resignation by the Trustee 37
Section 9.7. Removal of the Trustee 37
Section 9.8. Appointment of Successor Trustee by Bondholders or Issuer 37
Section 9.9. Concerning Any Successor Trustee 37
Section 9.10. Appointment of Co-Trustee 38
ARTICLE X SUPPLEMENTAL INDENTURES 39
Section 10.1. Supplemental Indentures Not Requiring Consent of
Bondholders 39
Section 10.2. Supplemental Indentures Requiring Consent of Bondholders 39
Section 10.3. Consent of Company 40
ARTICLE XI AMENDMENT OF AGREEMENT 41
Section 11.1. Amendments, etc., to Agreement Not Requiring Consent of
Bondholders 41
Section 11.2. Amendments, etc., to Agreement Requiring Consent of
Bondholders 41
ARTICLE XII MISCELLANEOUS 42
Section 12.1. Consents, etc., of Bondholders 42
Section 12.2. Limitation of Rights 43
Section 12.3. Severability 43
Section 12.4. Notices 43
Section 12.5. Payments Due on Saturdays, Sundays and Holidays 43
Section 12.6. Action by Company and Issuer 44
Section 12.7. Limited Liability of Officers 44
Section 12.8. Counterparts 44
Section 12.9. Applicable Provisions of Law 44
<PAGE>
INDENTURE OF TRUST
THIS INDENTURE OF TRUST dated as of December 1, 1994, by and between
the CITY OF HAMMOND, INDIANA, a municipal corporation duly organized and
existing under the Constitution and laws of the State of Indiana, party of the
first part (hereinafter sometimes referred to as the "Issuer"), and Bank One,
Indianapolis, NA, a national association duly organized, existing and authorized
to accept and execute trusts of the character herein set out under and by virtue
of the laws of the United States of America, with its principal corporate trust
office located in Indianapolis, Indiana as trustee (hereinafter sometimes
referred to as the "Trustee"), party of the second part,
W I T N E S S E T H:
WHEREAS, the Issuer is empowered by the provisions of Title 36,
Article 7, Chapters 11.9 and 12 of the Indiana Code, as amended (the "Act"), to
issue revenue bonds to defray the cost of acquiring, constructing and installing
economic development or pollution control facilities within the meaning of the
Act, including sewage and solid waste disposal facilities; and
WHEREAS, pursuant to and in accordance with the provisions of the Act,
the Issuer has authorized the issuance of its $39,000,000 Sewage and Solid Waste
Disposal Revenue Bonds (American Maize-Products Company Project) SeriesE1994
(the "Bonds"), the proceeds of which are to be used to pay the costs of the
acquisition, construction and installation of certain sewage and solid waste
disposal facilities (the "Project") for American Maize-Products Company (the
"Company") at the manufacturing facilities of the Company located in Hammond,
Indiana (the "Plant").
WHEREAS, the Issuer is entering into a Loan Agreement, of even date
herewith (the "Agreement"), with the Company, in which the Issuer has agreed to
use the proceeds of the Bonds for the purpose of financing costs to the Company
of the Project, and pursuant to which the Company has agreed to make loan
repayment installments in an amount sufficient to pay the principal of, and
premium, if any, and interest on, the Bonds when due; and
WHEREAS, in furtherance of the Act the Issuer has determined that the
Bonds in the aggregate principal amount of $39,000,000 should be issued, sold
and delivered pursuant to the Act to provide proceeds for the financing of the
Project; and
WHEREAS, the Issuer has contracted for the sale and delivery of the
Bonds to be issued in the aggregate principal amount of $39,000,000 as herein
provided; and
WHEREAS, all Bonds issued under this Indenture will be secured by a
pledge and assignment of the Agreement (except as otherwise herein provided);
and
WHEREAS, the Bonds and the Trustee's certificate of authentication to
be endorsed on the Bonds are to be in substantially the following form, with
appropriate variations, omissions and insertions as permitted or required by
this Indenture, to-wit:
<PAGE>
(FORM OF BONDS)
UNITED STATES OF AMERICA
CITY OF HAMMOND, INDIANA
SEWAGE AND SOLID WASTE DISPOSAL REVENUE BOND
(AMERICAN MAIZE-PRODUCTS COMPANY PROJECT)
SERIES 1994
Registered Registered
No. R-____________ $______________
Interest Rate: Maturity Date: CUSIP:
8.00% December 1, 2024 _____
Registered Owner:
Principal Amount:
KNOW ALL MEN BY THESE PRESENTS that the City of Hammond, Indiana (the
"Issuer"), a municipal corporation duly organized and existing under the
Constitution and laws of the State of Indiana, for value received, promises to
pay (but only out of the sources and in the manner as hereinafter provided) to
the Registered Owner identified above, or registered assigns as hereinafter
provided, on the Maturity Date identified above, except as the provisions set
forth in the hereinafter defined Indenture with respect to redemption or
acceleration of principal prior to maturity may become applicable hereto, the
Principal Amount identified above, and in like manner to pay interest on said
Principal Amount from the date hereof at the Interest Rate per annum identified
above, payable semi-annually on the first day of June and December of each year,
commencing June 1, 1995, until said Principal Amount is paid. The principal of
and premium, if any, on this Bond shall be payable in lawful money of the United
States of America at the designated corporate trust office of Bank One,
Indianapolis, NA, a national association duly organized, existing and authorized
to accept and execute trusts of the character herein set out under and by virtue
of the laws of United States of America, as Trustee, or its successor in trust
(the "Trustee"). Payment of interest on the first day of any June or December
shall be made in lawful money of the United States of America to the Registered
Owner hereof as of the close of business on the Record Date with respect to the
first day of such June or December and shall be paid (i) by check or draft
mailed to such Registered Owner at his address as it appears on the registration
books of the Issuer maintained by the Trustee or at such other address as is
furnished in writing by such Registered Owner to the Trustee not later than the
close of business on such Record Date or (ii) at the option of any Registered
Owner of at least $1,000,000 in aggregate principal amount of the Bonds, by wire
transfer or other means acceptable to the Trustee at an address within the
United States upon written instructions filed by such Registered Owner with the
Trustee not later than the close of business on such Record Date (which
instructions shall remain in effect until revoked by subsequent written
instructions).
--------------------------------------
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET
FORTH ON THE REVERSE HEREOF AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
--------------------------------------
THIS BOND AND ALL OTHER BONDS OF THE ISSUE OF WHICH IT FORMS A PART ARE
A LIMITED AND NOT A GENERAL OBLIGATION OF THE ISSUER AND DO NOT CONSTITUTE A
DEBT OR LIABILITY OF THE ISSUER, THE STATE OF INDIANA OR ANY POLITICAL
SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY
PROVISION OR LIMITATION, AND SHALL NEVER CONSTITUTE OR GIVE RISE TO A CHARGE
AGAINST THE GENERAL CREDIT OR TAXING POWERS OF THE ISSUER, THE STATE OF INDIANA
OR ANY POLITICAL SUBDIVISION THEREOF OR THE GENERAL FUNDS OR ASSETS OF THE
ISSUER, BUT SHALL BE PAYABLE SOLELY FROM THE REVENUES AND RECEIPTS DERIVED FROM
THE AGREEMENT.
No recourse shall be had for the payment of the principal of, premium,
if any, and interest on this Bond or for any claim based hereon or upon any
obligation, covenant or agreement contained in the Indenture, the Agreement or
the Tax Agreement against any past, present or future officer, agent or employee
of the Issuer, or any officer, agent or employee of any successor thereto, as
such, either directly or through the Issuer or any successor thereto, under any
rule of law or equity, statute or constitution or by the enforcement of any
assessment or penalty or otherwise, and all such liability of any such officer,
employee or agent as such is hereby expressly waived and released as a condition
of and consideration for the execution of the Indenture and the Agreement and
the issuance of the Bonds.
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the certificate of
authentication hereon shall have been manually executed by the Trustee.
<PAGE>
This Bond is issued with the intent that the laws of the State of
Indiana will govern its construction.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions
and things required to exist, happen and be performed precedent to and in the
execution and delivery of the Indenture and the issuance of this Bond do exist,
have happened and have been performed in due time, form and manner as required
by law; and that the issuance of this Bond and the series of which it forms a
part does not exceed or violate any constitutional or statutory limitation.
IN WITNESS WHEREOF, the City of Hammond, Indiana has caused this Bond
to be executed in its name by the manual or facsimile signature of its Mayor as
of the 1st day of December, 1994.
CITY OF HAMMOND, INDIANA
By
--------------------------------
Mayor
[SEAL]
Attest:
- ----------------------------------
City Clerk
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This Bond is one of the Bonds of the issue described in the within
mentioned Indenture of Trust.
BANK ONE, INDIANAPOLIS, NA, as Trustee
Date of Authentication:
- ------------------------------ By
-----------------------------------
Authorized Signatory
<PAGE>
(FORM OF REVERSE OF BONDS)
This Bond is one of an authorized series of Bonds in the aggregate
principal amount of $39,000,000 (the "Bonds") issued by the Issuer for the
benefit of American Maize-Products Company, a Maine corporation (the "Company"),
to pay the costs of certain sewage and solid waste disposal facilities (the
"Project") for use at the manufacturing facilities of the Company located in
Hammond, Indiana (the "Plant").
The Bonds are all issued under and are equally and ratably secured by
and entitled to the protection of an Indenture of Trust dated as of DecemberE1,
1994 (which indenture, as from time to time amended and supplemented, is herein
referred to as the "Indenture"), duly executed and delivered by the Issuer to
the Trustee. Reference is hereby made to the Indenture for a description of the
rights, duties and obligations of the Issuer, the Trustee and the owners of the
Bonds and the terms upon which the Bonds are issued and secured. The terms and
conditions of the acquisition and completion of construction of the Project, the
loan of the proceeds of the Bonds to the Company for such purpose and the
repayment of such loan by the Company, are contained in a Loan Agreement dated
as of December 1, 1994 between the Issuer and the Company (which agreement, as
from time to time amended and supplemented, is herein referred to as the
"Agreement").
This Bond is issued pursuant to and in full compliance with the
Constitution and laws of the State of Indiana, and particularly Title 36,
Article 7, Chapters 11.9 and 12 of the Indiana Code, as amended (the "Act"), and
pursuant to an ordinance duly adopted by the governing body of the Issuer
authorizing, among other things, the execution and delivery of the Indenture.
The Bonds are limited obligations of the Issuer payable solely from certain
payments provided to be made by the Company under the Agreement, which payments
are designed to be sufficient to pay the principal of, premium, if any, and
interest on, the Bonds as the same become due and payable. The principal of, and
premium, if any, and interest on, the Bonds are payable solely from the funds
pledged for their payment in accordance with the proceedings authorizing their
issuance and the Indenture. All payments under the Agreement are to be paid to
the Trustee for the account of the Issuer and deposited in a special trust fund
created by the Issuer, maintained by the Trustee and designated "City of
Hammond, Indiana Sewage and Solid Waste Disposal Revenue Bond Fund (American
Maize-Products Company Project) Series 1994," and, in addition the rights of the
Issuer under the Agreement (except the right to receive certain expense and
indemnification payments) have been assigned and pledged to the Trustee to
secure the payment of the principal of, premium, if any, and interest on the
Bonds under the Indenture.
This Bond is transferable by the registered owner hereof in person or
by his attorney duly authorized in writing at the designated corporate trust
office of the Trustee but only in the manner, subject to the limitations and
upon payment of the charges provided in the Indenture, and upon surrender and
cancellation of this Bond. Upon such transfer a new registered Bond or Bonds of
Authorized Denomination or Authorized Denominations, for the same aggregate
principal amount, will be issued to the transferee in exchange therefor. Subject
to the limitations and upon payment of the charges provided in the Indenture,
and upon surrender and cancellation thereof, Bonds may be exchanged for a like
aggregate principal amount of Bonds of other Authorized Denomination or
Authorized Denominations. The Trustee shall not be required to transfer or
exchange any Bond during the period of fifteen days next preceding any Interest
Payment Date nor to transfer or exchange any Bond after the mailing of notice
calling such Bond or a portion thereof for redemption, nor during the period of
fifteen days next preceding the giving of such notice of redemption. The Issuer
and the Trustee may deem and treat the registered owner hereof as the absolute
owner hereof for the purpose of receiving payment of or on account of principal
hereof and premium, if any, hereon and interest due hereon and for all other
purposes and neither the Issuer nor the Trustee shall be affected by any notice
to the contrary.
The Bonds are subject to optional redemption on any business day in
whole, but not in part, at a redemption price equal to 100% of the principal
amount thereof plus accrued interest, if any, to the redemption date, upon the
exercise by the Company of its option to prepay loan repayment installments
under the Agreement, if any of the following shall have occurred:
(1) All or substantially all of the Project or the Plant
shall be damaged or destroyed and the Company shall determine that it
is not practicable or desirable to rebuild, repair or restore the
Project or the Plant;
(2) All or substantially all of the Project or the Plant
shall be condemned or such use or control thereof shall be taken as to
render the Project or the Plant unsatisfactory to the Company for
continued operation; or
(3) Unreasonable burdens or excessive liabilities shall be
imposed upon the Issuer or the Company with respect to the Project or
the Plant or the operation thereof.
The Bonds are also subject to optional redemption by the Issuer at the
direction of the Company prior to maturity on or after December 1, 2004, in
whole or in part at any time, at the redemption prices (expressed as percentages
of principal amount) set forth in the following table plus accrued interest, if
any, to the redemption date:
Redemption
Redemption Dates Prices
---------------- ----------
December 1, 2004 through November 30, 2005 102%
December 1, 2005 through November 30, 2006 101%
December 1, 2006 thereafter 100%
The Bonds are subject to mandatory redemption at any time in whole (or
in the case of the event stated in (2) of this paragraph in whole or in part as
provided in the Indenture), at a redemption price equal to 100% of the principal
amount thereof, plus accrued interest, if any, to the redemption date, on any
business day within 180 days after the occurrence of either of the following
events:
(1) As a result of any changes in the Constitution of the
State of Indiana or the Constitution of the United States of America or
of legislative or administrative action (whether state or federal) or
by final decree, judgment or order of any court or administrative body
(whether state or federal) entered after the contest thereof by the
Company in good faith, the Agreement shall have become void or
unenforceable or impossible of performance in accordance with the
intent and purposes of the parties as expressed in the Agreement; or
(2) A final determination by the Internal Revenue Service or
a court of competent jurisdiction as a result of a proceeding in which
the Company participates to the degree it deems sufficient, which
determination the Company, in its discretion, does not contest by an
appropriate proceeding, or an opinion of Bond Counsel shall have been
filed at the request of the Company with the Issuer and the Trustee
stating, that, as a result of a failure by the Company to observe any
covenant, agreement or representation by the Company in the Agreement,
the interest payable on the Bonds or any of them is includable for
federal income tax purposes in the gross income of any owner or
beneficial owner of a Bond (other than an owner or beneficial owner who
is a "substantial user" of the Project or a "related person" within the
meaning of Section 147(a) of the Internal Revenue Code of 1986 (the
"Code") and the applicable regulations thereunder).
The Bonds shall be subject to mandatory redemption by the Issuer, in
whole or in part, at a redemption price of 100% of the principal amount thereof
plus accrued interest, if any, to the redemption date, on any date within one
hundred and eighty (180) days after the Completion Date with any proceeds of the
Bonds, including income from the investment thereof, which shall remain in the
Construction Fund after completion of the Project and the payment of the Cost of
the Project. In such event, the principal amount of the Bonds to be redeemed
will be a principal amount equal to the lowest integral multiple of $5,000,
equal to or in excess of the remaining proceeds of the Bonds, including income
from the investment thereof.
In the event any of the Bonds or portions thereof (in Authorized
Denominations) are called for redemption as aforesaid, notice thereof
identifying the Bonds or portions thereof to be redeemed will be given by the
Trustee by mailing a copy of the redemption notice by first class mail at least
thirty (30) days prior to the date fixed for redemption to the registered owner
of each Bond to be redeemed in whole or in part at the address shown on the
registration books; provided, however, that failure to duly give such notice by
mailing, or any defect therein, shall not affect the validity of any proceeding
for the redemption of any Bond with respect to which no such failure or defect
has occurred. Any notice mailed in such manner shall be conclusively presumed to
have been duly given whether or not the registered owner receives such notice.
If less than all of the Bonds are to be redeemed, Bonds or portions thereof (in
Authorized Denominations) shall be selected by lot in the manner provided in the
Indenture. All Bonds or portions thereof so called for redemption will cease to
bear interest on and after the specified redemption date provided funds for the
redemption thereof are on deposit with the Trustee at that time.
With respect to any notice of optional redemption of Bonds, unless upon
the giving of such notice such Bonds shall be deemed to have been paid within
the meaning of Article VII of the Indenture, such notice may state that such
redemption shall be conditional upon the receipt by the Trustee on or prior to
the date fixed for such redemption of moneys sufficient to pay the principal of,
premium, if any, and interest on, such Bonds to be redeemed, and that if such
moneys shall not have been received, said notice shall be of no force and effect
and the Issuer shall not redeem such Bonds. In the event that such notice of
redemption contains such a condition and such moneys are not so received, the
redemption shall not be made and the Trustee shall within a reasonable time
thereafter give notice, in the manner in which the notice of redemption was
given, that such moneys were not so received.
The owner of this Bond shall have no right to enforce the provisions of
the Indenture or the Agreement or to institute action to enforce the covenants
therein, or to take any action with respect to any event of default under the
Indenture or the Agreement, or to institute, appear in or defend any suit or
other proceedings with respect thereto, except as provided in the Indenture. In
certain events, on the conditions, in the manner and with the effect set forth
in the Indenture, the principal of all the Bonds issued under the Indenture and
then outstanding may become or may be declared due and payable before the stated
maturity thereof, together with interest accrued thereon. The Indenture
prescribes the manner in which it may be discharged, including a provision that
under certain circumstances the Bonds shall be deemed to be paid if Governmental
Obligations, maturing as to principal and interest in such amounts and at such
times as will without reinvestment provide sufficient funds to pay the principal
of and interest and premium, if any, on the Bonds, shall have been deposited
with the Trustee, and all fees and expenses of the Trustee and all other
liabilities of the Company under the Agreement are paid or provided for, after
which the Bonds shall no longer be secured by or entitled to the benefits of the
Indenture or the Agreement, except for purposes of exchange and transfer and
payment from such Governmental "bligations on the date or dates specified at the
time of such deposit.
The Indenture permits the amendment thereof and the modification of the
rights and obligations of the Issuer and the rights of the owners of the Bonds
at any time by the Issuer with the consent of the owners of a majority, or in
certain instances 100%, in aggregate principal amount of the Bonds at the time
outstanding, as defined in the Indenture. Any such consent or waiver by the
owner of this Bond shall be conclusive and binding upon such owner and upon all
future owners of this Bond and of any Bond issued upon the transfer or exchange
of this Bond whether or not notation of such consent or waiver is made upon this
Bond. The Indenture also contains provisions permitting the Trustee to enter
into certain supplemental indentures without the consent of the owners of the
Bonds and to waive certain past defaults under the Indenture and their
consequences. No supplemental indenture will become effective without the
consent of the Company or without receipt of an opinion of Bond Counsel to the
effect that such supplemental indenture will not cause interest on the Bonds to
be includable for federal income tax purposes in the gross income of any owner
or beneficial owner thereof (other than an owner or beneficial owner who is a
"substantial user" of the Project or a "related person" within the meaning of
Section 147(a) of the Code and the applicable regulations thereunder).
Terms which are used herein as defined terms and which are not
otherwise defined herein shall have the meanings assigned to them in the
Indenture.
The following abbreviations, when used in the inscription on the face
of this Bond, shall be construed as though they were written out in full
according to applicable laws or regulations:
UNIF GIFT MIN ACT--
TEN COM --as tenants in common ______________Custodian______________
TEN ENT --as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act ______________________________
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
(FORM OF ASSIGNMENT)
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers
unto ___________________________________________________
- -------------------------------------------------------------------------------
(Name and Address of Assignee)
the within Bond of the City of Hammond, Indiana and does hereby irrevocably
constitute and appoint ________________ to transfer said Bond on the books kept
for registration thereof with full power of substitution in the premises.
Dated: __________________________
-----------------------------------------
Signature Guaranteed:
-----------------------------------------
NOTICE: The signature to this Assignment must correspond with the name of the
registered owner as it appears upon the face of the within Bond in every
particular, without alteration or enlargement or any change whatever; and
NOTICE: Signature guarantee must be provided in accordance with the prevailing
standards and procedures of the Trustee. Such standards and procedures may
require signatures to be guaranteed by certain eligible guarantor institutions
that participate in a recognized signature guarantee program, including the
Securities Transfer Agent Medallion Program.
<PAGE>
(END OF FORM OF BONDS)
WHEREAS, all things necessary to make the Bonds, when authenticated by
the Trustee and issued as in this Indenture provided, the valid, binding and
legal obligations of the Issuer according to the import thereof, and to
constitute this Indenture a valid assignment and pledge of the amounts assigned
and pledged to the payment of the principal of, and premium, if any, and
interest on, the Bonds and a valid assignment of certain rights of the Issuer
under the Agreement have been done and performed, and the creation, execution
and delivery of this Indenture, and the creation, execution and issuance of the
Bonds, subject to the terms hereof, have in all respects been duly authorized;
GRANTING CLAUSES
NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSETH;
That the Issuer in consideration of the premises and the acceptance by
the Trustee of the trusts hereby created and of the purchase and acceptance of
the Bonds by the owners thereof, and of the sum of one dollar, lawful money of
the United States of America, to it duly paid by the Trustee at or before the
execution and delivery of these presents, and for other good and valuable
considerations, the receipt of which is hereby acknowledged, in order to secure
the payment of the principal of, and premium, if any, and interest on, the Bonds
according to their tenor and effect and to secure the performance and observance
by the Issuer of all the covenants expressed or implied herein and in the Bonds,
does hereby grant, bargain, sell, convey, assign and pledge, and grant a
security interest in, to Bank One, Indianapolis, NA, as Trustee, and its
successors in trust and assigns forever, to the extent provided in this
Indenture:
GRANTING CLAUSE FIRST
All of the rights and interest of the Issuer in and to the Loan
Agreement dated as of December 1, 1994 between the Issuer and American
Maize-Products Company, except for the rights of the Issuer under
Sections 4.2(b), 5.2 and 6.3 of said Agreement.
GRANTING CLAUSE SECOND
All moneys and securities from time to time held by the Trustee under
the terms of this Indenture and any and all other real or personal property of
every name and nature from time to time hereafter by delivery or by writing of
any kind conveyed, mortgaged, pledged, assigned or transferred, as and for
additional security hereunder by the Issuer or by anyone in its behalf, or with
its written consent to the Trustee which is hereby authorized to receive any and
all such property at any and all times and to hold and apply the same subject to
the terms hereof.
<PAGE>
TO HAVE AND TO HOLD all and singular the Trust Estate, whether now
owned or hereafter acquired, unto the Trustee and its respective successors in
said trust and assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for
the equal and proportionate benefit, security and protection of all present and
future owners of the Bonds from time to time issued under and secured by this
Indenture without privilege, priority or distinction as to the lien or otherwise
of any of the Bonds over any of the other Bonds (except as herein otherwise
expressly provided);
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall
well and truly pay, or cause to be paid, the principal of, and premium, if any,
and interest on, the Bonds due or to become due, at the times and in the manner
mentioned in the Bonds according to the true intent and meaning thereof, and
shall cause the payments to be made on the Bonds as required under Article IV
hereof, or shall provide, as permitted hereby, for the payment thereof by
depositing with the Trustee the entire amount due or to become due thereon (or
Governmental Obligations sufficient for that purpose as provided in Article VII
hereof), and shall pay or cause to be paid to the Trustee all sums of money due
or to become due to it in accordance with the terms and provisions hereof, then
upon the final payment thereof or provision therefor this Indenture and the
rights hereby granted shall cease, determine and be void; otherwise this
Indenture is to be and remain in full force and effect.
THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is expressly
declared that, all Bonds issued and secured hereunder are to be issued,
authenticated and delivered and all property, rights and interest, including,
without limitation, the amounts hereby assigned and pledged, are to be dealt
with and disposed of under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes as hereinafter
expressed, and the Issuer has agreed and covenanted, and does hereby agree and
covenant with the Trustee and with the respective owners of the Bonds as follows
(subject, however, to the provisions of Section 2.3 hereof):
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
Section 1.1. Definitions. All words and phrases defined in ArticleEI of
the Agreement shall have the same meaning in this Indenture. In addition, the
following words and phrases shall have the following meanings:
"Act" means Title 36, Article 7, Chapters 11.9 and 12 of the Indiana
Code, as amended.
"Agreement" means the Loan Agreement of even date herewith, between the
Issuer and the Company, and any amendments and supplements thereto.
"Authorized Denominations" means $5,000 and any integral multiple
thereof.
"Authorized Issuer Representative" means such person at the time and
from time to time designated to act on behalf of the Issuer, by written
certificate furnished to the Company and the Trustee, containing the specimen
signature of such person, signed on behalf of the Issuer by the Mayor or City
Clerk of the Issuer. Such certificate may designate an alternate or alternates.
"Bondholder" or "holder" or "owner" or "Owner" means the registered
owner of any Bond.
"Bonds" means the $39,000,000 aggregate principal amount of Bonds
authorized to be issued by the Issuer pursuant to the terms and conditions of
Sections 2.1 and 2.2 hereof.
"Default" or "event of default" means any occurrence or event specified
in and defined by Section 8.1 hereof.
"Designated corporate trust office" of the Trustee means the corporate
trust office of the Trustee designated in writing by notice to the Issuer and
the Company given as provided in Section 12.4 hereof, and initially shall be 111
Monument Circle, Suite 1611, Indianapolis, Indiana 46277-0116.
"Governmental Obligations" means noncallable direct general obligations
of, or obligations the full and timely payment of the principal and interest of
which are unconditionally guaranteed by, the United States of America.
"Interest Payment Date" means the first day of June and December of
each year, commencing June 1, 1995.
"Outstanding" or "Bonds outstanding" means all Bonds which have been
authenticated and delivered by the Trustee under this Indenture, except:
(a) Bonds cancelled after purchase or because of payment
at or redemption prior to maturity;
(b) Bonds or portions thereof (in Authorized Denominations)
for the payment or redemption of which cash funds or Governmental
Obligations shall have been theretofore deposited with the Trustee in
accordance with ArticleEVII hereof (whether upon or prior to the
maturity or redemption date of any such Bonds or portions thereof);
provided that, if such Bonds or portions thereof are to be redeemed
prior to the maturity thereof, notice of such redemption shall have
been given or arrangements satisfactory to the Trustee shall have been
made therefor, or waiver of such notice satisfactory in form to the
Trustee shall have been filed with the Trustee; and
(c) Bonds in lieu of which others have been authenticated
under Section 2.7 hereof.
If this Indenture shall have been discharged pursuant to the provisions of
Article VII hereof, no Bonds shall be deemed to be outstanding within the
meaning of this provision.
"Paying Agent" means the Trustee.
"Plant" means the manufacturing facilities of the Company located in
Hammond, Indiana.
"Record Date" means the fifteenth calendar day next preceding an
Interest Payment Date.
"Registered owner" shall mean the person or persons in whose name or
names a Bond shall be registered on books of the Issuer kept by the Trustee for
that purpose in accordance with the terms of this Indenture.
"Registrar" means the Trustee.
"Revenues" means all amounts payable pursuant to Section 4.2(a) of the
Agreement.
"Tax Agreement" means the Tax Exemption Certificate and Agreement,
dated as of the date of issuance of the Bonds, among the Issuer, the Trustee and
the Company.
"Trust Estate" means the property conveyed to the Trustee pursuant to
the Granting Clauses hereof.
"Trustee" means Bank One, Indianapolis, NA, and its successors and any
corporation resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee and/or co-trustee at
the time serving as such hereunder.
"Underwriter" means CS First Boston Corporation.
Section 1.2. Rules of Interpretation. The following rules of
interpretation shall govern the interpretation of this Indenture unless the
context clearly indicates otherwise:
The words "hereof", "herein", "hereunder" and other words of similar
import refer to this Indenture as a whole.
References to Articles, Sections and other subdivisions of this
Indenture are to the designated Articles, Sections and other subdivisions of
this Indenture as originally executed.
The plural includes the singular, and the singular includes the plural.
The headings of this Indenture are for convenience only and shall not
define or limit the provisions hereof.
ARTICLE II
THE BONDS
Section 2.1. Authorized Amount of Bond; Application of Bond Proceeds.
No Bonds may be issued under the provisions of this Indenture except in
accordance with this Article. The total principal amount of Bonds that may be
issued is hereby expressly limited to $39,000,000, except as provided in Section
2.7 hereof. The proceeds of the Bonds shall be deposited as provided in Sections
5.3 and 5.7 hereof.
Section 2.2. Issuance of Bonds. The Bonds shall be designated "City of
Hammond, Indiana Sewage and Solid Waste Disposal Revenue Bonds (American
Maize-Products Company Project) Series 1994" and shall be issuable only as fully
registered Bonds without coupons in Authorized Denominations. Unless the Issuer
shall otherwise direct, the Bonds shall be numbered separately from 1 upward.
The Bonds shall be dated as of December 1, 1994 and shall mature,
subject to prior redemption, upon the terms and conditions hereinafter set
forth, on December 1, 2024. The Bonds shall bear interest at the rate of Eight
percent (8%) per annum from and including the date thereof until payment of the
principal or redemption price thereof shall have been made or provided for in
accordance with the provisions hereof, whether at maturity, upon redemption or
otherwise. Interest on the Bonds shall be computed upon the basis of a 360-day
year, consisting of twelve (12) thirty (30) day months. Each Bond shall bear
interest on overdue principal and premium, if any, and, to the extent permitted
by law, on overdue interest at the rate of interest borne by the Bonds.
The principal of and premium, if any, on the Bonds shall be payable in
lawful money of the United States of America upon presentation and surrender of
the Bonds at the designated corporate trust office of the Trustee. Payment of
interest on any Bond on any Interest Payment Date shall be made in lawful money
of the United States of America to the registered owner as of the close of
business on the Record Date immediately prior thereto and shall be paid (i) by
check or draft mailed to the registered owner at his address as it appears on
the registration books of the Issuer maintained by the Trustee or at such other
address as is furnished to the Trustee in writing by such registered owner not
later than the close of business on the Record Date immediately prior thereto,
or (ii) at the option of any registered owner of at least $1,000,000 in
aggregate principal amount of the Bonds, by wire transfer or other means
acceptable to the Trustee at an address within the United States upon written
instructions filed by such registered owner with the Trustee not later than the
close of business on the Record Date immediately prior thereto (which
instructions shall remain in effect until revoked by subsequent written
instructions).
Interest on each Bond shall be computed from the Interest Payment Date
to which interest has been paid or duly provided for next preceding its date of
authentication, unless (i) such date shall be prior to the first Interest
Payment Date, in which case such interest shall be computed from the date of the
Bonds, or (ii) such date of authentication shall be an Interest Payment Date to
which interest on the Bonds has been paid in full or duly provided for, in which
case interest on such Bond shall be computed from such date of authentication;
provided, however, that if, as shown by the records of the Trustee, interest on
the Bonds shall be in default, interest on Bonds issued in exchange for Bonds
surrendered for transfer or exchange shall be computed from the last date to
which interest has been paid in full or duly provided for on the Bonds, or if no
interest has been paid or duly provided for on the Bonds, from the date thereof.
Section 2.3. Execution; Limited Obligation. The Bonds shall be executed
on behalf of the Issuer with the manual or facsimile signature of its Mayor, and
attested by the manual or facsimile signature of its City Clerk, and shall have
impressed or imprinted thereon the official seal of the Issuer or a facsimile
thereof. All authoried facsimile signatures shall have the same force and
effect as if manually signed. In case any official whose signature or a
facsimile of whose signature shall appear on the Bonds shall cease to be such
official before the delivery of such Bonds, such signature or such facsimile
shall nevertheless be valid and sufficient for all purposes, the same as if such
official had remained in office until delivery.
The Bonds, together with premium, if any, and interest thereon, shall
be special, limited obligations of the Issuer secured by the Agreement and
payable solely from the Revenues (except to the extent paid out of moneys
attributable to the Bond proceeds or the income from the temporary investment
thereof) and shall be a valid claim of the respective owners thereof only
against the Bond Fund and other moneys held by the Trustee and the Revenues,
which Revenues shall be used for no other purpose than to pay the principal of,
and premium, if any, and interest on, the Bonds, except as may be otherwise
expressly authorized in this Indenture. The Bonds do not represent a debt or
pledge of the faith and credit of the Issuer. No moneys of the Issuer raised by
taxation shall be obligated or pledged for the payment of the Bonds or other
obligations of the Issuer pursuant to the Act.
Section 2.4. Authentication. No Bond shall be valid or
obligatory for any purpose or entitled to any security or benefit under this
Indenture unless and until a certificate of authentication on such Bond
substantially in the form hereinabove set forth shall have been duly executed by
the Trustee, and such executed certificate of the Trustee by a duly authorized
signatory upon any such Bond shall be conclusive evidence that such Bond has
been authenticated and delivered under this Indenture. The Trustee's certificate
of authentication on any Bond shall be deemed to have been executed by it if
manually signed by an authorized signatory of the Trustee, but it shall not be
necessary that the same signatory sign the certificate of authentication on all
of the Bonds issued hereunder. The Trustee shall insert the date of
authentication of each Bond in the place provided for such purpose in the form
of certificate of authentication of the Trustee to appear on each Bond.
Section 2.5. Form of Bonds. The Bonds issued under this
Indenture shall be substantially in the form hereinabove set forth with such
variations, omissions and insertions as are permitted or required by this
Indenture.
Section 2.6. Delivery of Bonds. Upon the execution and
delivery of this Indenture, the Issuer shall execute and deliver to the Trustee
and the Trustee shall authenticate the Bonds and deliver them to the Underwriter
as directed by the Issuer as hereinafter in this Section provided.
Prior to the delivery by the Trustee of any of the Bonds there shall be
filed with the Trustee:
1. A copy, duly certified by the City Clerk of the Issuer,
of the proceedings of the Issuer authorizing the execution and delivery
of the Agreement, this Indenture and the Tax Agreement and the issuance
of the Bonds.
2. Original executed counterparts of this Indenture, the
Agreement and the Tax Agreement.
3. A request and authorization to the Trustee on behalf of
the Issuer and signed by its Mayor to authenticate and deliver the
Bonds to or as directed by the Underwriter upon payment to the Trustee,
but for the account of the Issuer, of a sum specified in such request
and authorization. The proceeds of such payment shall be deposited in
accordance with Section 2.1 hereof.
Section 2.7. Mutilated, Lost, Stolen or Destroyed Bonds. In
the event any Bond is mutilated, lost, stolen, or destroyed, the Issuer may
execute and the Trustee may authenticate a new Bond of like denomination as that
mutilated, lost, stolen or destroyed; provided that, in the case of any
mutilated Bond, such mutilated Bond shall first be surrendered to the Trustee
and in the case of any lost, stolen or destroyed Bond, there shall be first
furnished to the Trustee evidence of such loss, theft or destruction
satisfactory to the Trustee, together with any indemnity satisfactory to it. In
the event any such Bond shall have matured, instead of issuing a duplicate Bond,
the Issuer may pay the same without surrender thereof. The Issuer and the
Trustee may charge the owner of such Bond with their reasonable fees and
expenses in this connection.
Section 2.8. Registration and Exchange of Bond; Persons Treated as
Owners. The Issuer shall cause books for the registration and for the transfer
of the Bonds as provided in this Indenture to be kept by the Trustee which is
hereby constituted and appointed the Registrar of the Issuer.
Upon surrender for transfer of any Bond at the designated corporate
trust office of the Trustee, duly endorsed for transfer or accompanied by an
assignment duly executed by the registered owner or his attorney duly authorized
in writing, the Trustee shall authenticate and deliver in the name of the
transferee or transferees a new Bond or Bonds duly executed by the Issuer of an
Authorized Denomination or Authorized Denominations for a like aggregate
principal amount.
Any Bond or Bonds may be exchanged at the designated corporate trust
office of the Trustee for a new Bond or Bonds of like principal amount of
another Authorized Denomination or other Authorized Denominations. Upon
surrender of any Bond or Bonds for exchange, the Trustee shall authenticate and
deliver a new Bond or Bonds duly executed by the Issuer which the Bondholder
making the exchange is entitled to receive.
The Trustee shall not be required to transfer or exchange any Bond
during the period of fifteen days next preceding any Interest Payment Date nor
to transfer or exchange any Bond after the mailing of notice calling such Bond
or portion thereof for redemption has been given as herein provided, nor during
the period of fifteen days next preceding the giving of such notice of
redemption.
The person in whose name any Bond shall be registered shall be deemed
and regarded as the absolute owner thereof for all purposes, and payment of or
on account of the principal of or premium, if any, or interest on any such Bond
shall be made only to or upon the written order of the registered owner thereof
or his legal representative, but such registration may be changed as hereinabove
provided. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Bond to the extent of the sum or sums so paid.
In each case the Trustee shall require the payment by the Bondholder
requesting exchange or transfer of any tax or other governmental charge required
to be paid with respect to such exchange or transfer, but otherwise no charge
shall be made to the Bondholder for such exchange or transfer.
Section 2.9. Cancellation of Bonds. Whenever any outstanding
Bond shall be delivered to the Trustee for cancellation pursuant to this
Indenture, upon payment of the principal amount represented thereby, or for
replacement pursuant to Section 2.7, such Bond shall be promptly cancelled and
destroyed by the Trustee and counterparts of a certificate of destruction
evidencing such cancellation and destruction shall be furnished by the Trustee
to the Issuer and the Company upon request.
Section 2.10. Book Entry System. The Trustee and the Issuer
may enter into an agreement with a "clearing agency" (securities depository)
registered under Section 17A of the Securities Exchange Act of 1934, as amended
(a "Securities Depository"), which is the owner of Bonds, to establish
procedures with respect to such Bonds, not inconsistent with the provisions of
this Indenture; provided, however, that any such agreement may provide that such
Securities Depository is not required to present a Bond in order to receive a
partial payment of principal and a legend may appear on each Bond so long as the
Bonds are subject to such agreement.
ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
Section 3.1. Redemption Dates and Prices. (a) The Bonds shall
be subject to optional redemption in whole by the Issuer, but not in part, on
any business day, at a redemption price equal to 100% of the principal amount
thereof plus accrued interest, if any, to the redemption date, upon the exercise
by the Company of its option to prepay loan repayment installments under
Section 7.2 of the Agreement, if any of the following shall have occurred:
(1) All or substantially all of the Project or the Plant
shall be damaged or destroyed and the Company shall determine that it
is not practicable or desirable to rebuild, repair or restore the
Project or the Plant;
(2) All or substantially all of the Project or the Plant
shall be condemned or such use or control thereof shall be taken as to
render the Project or the Plant unsatisfactory to the Company for
continued operation; or
(3) Unreasonable burdens or excessive liabilities shall be
imposed upon the Issuer or the Company with respect to the Project or
the Plant or the operation thereof.
(b) The Bonds shall also be subject to optional redemption by the
Issuer at the direction of the Company prior to maturity on or after DecemberE1,
2004, in whole or in part at any time, at the redemption prices (expressed as
percentages of principal amount) set forth in the following table plus accrued
interest, if any, to the redemption date:
Redemption
Redemption Dates Prices
---------------- ----------
December 1, 2004 through November 30, 2005 102%
December 1, 2005 through November 30, 2006 101%
December 1, 2006 and thereafter 100%
(c) The Bonds shall be subject to mandatory redemption in whole (or
in the case of the event stated in (2) of this paragraph in whole or in part as
provided below), at a redemption price equal to 100% of the principal amount
thereof, plus accrued interest, if any, to the redemption date, on any business
day within 180 days after the occurrence of either of the following events:
(1) As a result of any changes in the Constitution of the
State or the Constitution of the United States of America or of
legislative or administrative action (whether state or federal) or by
final decree, judgment or order of any court or administrative body
(whether state or federal) entered after the contest thereof by the
Company in good faith, the Agreement shall have become void or
unenforceable or impossible of performance in accordance with the
intent and purposes of the parties as expressed in the Agreement; or
(2) A final determination by the Internal Revenue Service or
a court of competent jurisdiction as a result of a proceeding in which
the Company participates to the degree it deems sufficient, which
determination the Company, in its discretion, does not contest by an
appropriate proceeding, or an opinion of Bond Counsel shall have been
filed at the request of the Company with the Issuer and the Trustee
stating, that, as a result of a failure by the Company to observe any
covenant, agreement or representation by the Company in the Agreement,
the interest payable on the Bonds or any of them is includable for
federal income tax purposes in the gross income of any owner or
beneficial owner of a Bond (other than an owner or beneficial owner who
is a "substantial user" of the Project or a "related person" within the
meaning of Section 147(a) of the Code and the applicable Regulations).
Upon the occurrence of the event stated in Section 3.1(c)(2) hereof, the Bonds
will be redeemed in whole unless the Company delivers to the Trustee, at the
Company's expense, an opinion of Bond Counsel upon which the Trustee may rely to
the effect that redemption of a portion of the Bonds outstanding would have the
result that interest payable on the Bonds remaining outstanding after such
redemption would not be includable for federal income tax purposes in the gross
income of any owner or beneficial owner of a Bond (other than an owner or
beneficial owner who is a "substantial user" of the Project or a "related
person" within the meaning of Section 147(a) of the Code and the applicable
Regulations), and in such event the Bonds or portions thereof (in Authorized
Denominations) shall be redeemed at such times and in such amounts as Bond
Counsel shall so direct in such opinion.
(d) The Bonds shall be subject to mandatory redemption by the Issuer,
in whole or in part, at a redemption price of 100% of the principal amount
thereof plus accrued interest, if any, to the redemption date, on any date
within one hundred and eighty (180) days after the Completion Date with any
proceeds of the Bonds, including income from the investment thereof, which shall
remain in the Construction Fund after completion of the Project and the payment
of the Cost of the Project. Upon the occurrence of the event stated in this
Section 3.1(d), the principal amount of the Bonds to be redeemed will be a
principal amount equal to the lowest integral multiple of $5,000, equal to or in
excess of the remaining proceeds of the Bonds, including income from the
investment thereof.
Section 3.2. Notice of Redemption. Upon receipt of notice
given by the Company pursuant to Section 7.3 of the Agreement not less than
forty-five (45) days prior to the date of redemption (or such later date as is
acceptable to the Issuer and the Trustee), notice of the call for any redemption
of Bonds or any portions thereof pursuant to Section 3.1 hereof identifying the
Bonds or portions thereof to be redeemed, specifying the redemption date, the
redemption price, the place and manner of payment and that from the redemption
date interest will cease to accrue provided that funds for the redemption
thereof are on deposit with the Trustee at that time, shall be given by the
Trustee by mailing a copy of the redemption notice by first-class mail at least
thirty (30) days prior to the date fixed for redemption to the owner of each
Bond to be redeemed in whole or in part at the address shown on the registration
books; provided, however, that failure to duly give such notice, or any defect
therein, shall not affect the validity of any proceedings for the redemption of
Bonds with respect to which no such failure or defect occurred. No defect in or
delay or failure in giving any recommended notice described in the preceding
sentence of this Section 3.2 shall in any manner affect the notice of redemption
described in the first sentence of this Section 3.2. Any notice mailed as
provided in this Section shall be conclusively presumed to have been duly given,
whether or not the owner receives the notice.
With respect to any notice of optional redemption of Bonds, unless upon
the giving of such notice such Bonds shall be deemed to have been paid within
the meaning of Article VII hereof, such notice may state that such redemption
shall be conditional upon the receipt by the Trustee on or prior to the date
fixed for such redemption of moneys sufficient to pay the principal of, and
premium, if any, and interest on, such Bonds to be redeemed, and that if such
moneys shall not have been so received, said notice shall be of no force and
effect and the Issuer shall not redeem such Bonds. In the event that such notice
of redemption contains such a condition and such moneys are not so received, the
redemption shall not be made and the Trustee shall within a reasonable time
thereafter give notice, in the manner in which the notice of redemption was
given, that such moneys were not so received.
Section 3.3. Deposit of Funds. For the redemption of any of
the Bonds, the Issuer shall cause to be deposited in the Bond Fund out of the
Revenues (or out of maturing principal and interest, if any, of Governmental
Obligations in which Revenues for such purpose are required to be invested)
moneys sufficient to pay when due the principal of, and premium, if any, and
interest on, the Bonds or portions thereof to be redeemed on the redemption
date. All Bonds or portions thereof called for redemption will cease to bear
interest on and after the specified redemption date provided that funds for the
redemption thereof are on deposit with the Trustee at that time. Moneys in the
Bond Fund which are available therefor shall be credited against any moneys
which the Issuer is required to cause to be so deposited in the Bond Fund.
Section 3.4. Partial Redemption of Bonds. In case a Bond is
of a denomination larger than the minimum Authorized Denomination, all or a
portion of such Bond may be redeemed in an Authorized Denomination. Upon
surrender of any Bond for redemption in part only, the Trustee shall
authenticate and deliver to the owner thereof, without cost to the owner, a new
Bond or Bonds duly executed by the Issuer in Authorized Denominations in
aggregate principal amount equal to the unredeemed portion of the Bond
surrendered.
Section 3.5. Selection of Bonds for Redemption. If less than
all of the Bonds are called for redemption, the Trustee shall select the Bonds
or portions thereof (in Authorized Denominations) to be redeemed from the Bonds
outstanding not previously called for redemption by lot in such manner as the
Trustee in its discretion may deem proper, and each $5,000 of face value of each
Bond shall be treated as a separate Bond for the purpose of selection by lot. If
it is determined that a portion but not all of the principal amount of any Bond
is to be called for redemption, then, upon notice of intention to redeem such
portion, the owner of such Bond shall surrender such Bond to the Trustee for (a)
payment to such owner of the redemption price of the portion of principal amount
called for redemption, and (b) delivery to such owner of a new Bond or Bonds in
the aggregate principal amount of the unredeemed portion of the principal amount
of such Bond. New Bonds representing the unredeemed portion of the principal
amount of such Bond shall be issued to the owner thereof without charge
therefor. If the owner of any such Bond shall fail to present such Bond to the
Trustee for payment and exchange as aforesaid, such Bond shall, nevertheless,
become due and payable on the date fixed for redemption to the extent of the
portion of principal amount called for redemption (and to that extent only) and
interest with respect to such portion will cease to accrue provided that funds
for the redemption thereof are on deposit with the Trustee at that time.
ARTICLE IV
GENERAL COVENANTS
Section 4.1. Payment of Principal, Premium, if any, and
Interest. The Issuer covenants that it will promptly pay the principal of, and
premium, if any, and interest on, every Bond issued under this Indenture at the
place, on the dates and in the manner provided herein and in said Bonds
according to the true intent and meaning thereof. The principal and interest and
premium, if any, are payable by the Issuer solely from the Revenues (except to
the extent paid out of moneys attributable to the Bond proceeds or the income
from the temporary investment thereof) and nothing in the Bonds or this
Indenture should be considered as assigning or pledging any other funds or
assets of the Issuer other than such Revenues and the right, title and interest
of the Issuer in the Agreement in the manner and to the extent herein specified.
Section 4.2. Performance by Issuer of Covenants. The Issuer
covenants that it will faithfully perform at all times any and all covenants,
undertakings, stipulations and provisions contained in this Indenture, in any
and every Bond executed, authenticated and delivered hereunder and in all of its
proceedings pertaining thereto; provided, however, that except for the matters
set forth in Section 4.1 the Issuer shall not be obligated to take any action or
execute any instrument pursuant to any provision hereof until it shall have been
requested to do so by the Company or by the Trustee, or shall have received the
instrument to be executed, and at the Issuer's option shall have received from
the Company assurance satisfactory to the Issuer that the Issuer shall be
reimbursed for its reasonable expenses incurred or to be incurred in connection
with taking such action or executing such instrument. The Issuer covenants that
it is duly authorized under the Constitution and laws of the State, including
particularly the Act, to issue the Bonds authorized hereby and to execute this
Indenture, to grant the security interest herein provided, to assign the
Agreement and to assign and pledge the amounts hereby assigned and pledged in
the manner and to the extent herein set forth; that all action on its part for
the issuance of the Bonds and the execution and delivery of this Indenture has
been duly and effectively taken, and that the Bonds in the hands of the owners
thereof are and will be valid and enforceable obligations of the Issuer
according to the terms thereof and hereof.
Section 4.3. Right to Payments under Agreement; Instruments
of Further Assurance. The Issuer covenants that it will defend its right to the
payment of amounts due from the Company under the Agreement to the Trustee for
the benefit of the owners of the Bonds against the claims and demands of all
persons whomsoever. The Issuer covenants that it will do, execute, acknowledge
and deliver such indentures supplemental hereto and such further acts,
instruments and transfers as the Trustee may reasonably request in writing for
the better assuring, transferring, conveying, pledging, assigning and confirming
unto the Trustee all and singular the rights assigned hereby and the amounts
pledged and assigned hereby to the payment of the principal of, and premium, if
any, and interest on, the Bonds. The Issuer covenants and agrees that, except as
herein and in the Agreement provided, it will not sell, convey, mortgage,
encumber or otherwise dispose of any part of the Revenues or its rights under
the Agreement.
Section 4.4. Recordation and Other Instruments. The Issuer
and the Trustee covenant that they will cooperate with the Company in causing
such security agreements, financing statements and all supplements thereto and
other instruments as may be required hereunder or under the Agreement from time
to time to be kept, recorded and filed, including any continuation statements
which may from time to time be required to be filed under the Uniform Commercial
Code, in such manner and in such places as may be required by law in order to
fully preserve and protect the security of the Trustee on behalf of the owners
of the Bonds and the rights of the Trustee hereunder, and to perfect and
continue the perfection of the security interest of the Trustee. Notwithstanding
anything to the contrary contained in this Section, the Trustee, in the absence
of such action by the Company, may take such action at the Company's expense as
the Trustee deems necessary to cause such security agreements, financing
statements, continuation statements and all supplements thereto and other
instruments to be filed in such locations as the initial financing statements
are filed.
Section 4.5. Inspection of Project Books. The Issuer and the
Trustee covenant and agree that all books and documents in their possession
relating to the Project and the Revenues shall at all reasonable times be open
to inspection by such accountants or other agencies as the other party may from
time to time designate.
Section 4.6. List of Bondholders. The Trustee will keep on
file a list of the names and addresses of all registered owners of Bonds on the
registration books of the Issuer maintained by the Trustee as Registrar,
together with the principal amount and numbers of such Bonds. At reasonable
times and under reasonable regulations established by the Trustee, said list may
be inspected and copied by the Company or by owners (or a designated
representative thereof) of 15% or more in principal amount of Bonds then
outstanding, such ownership and the authority of such designated representative
to be evidenced to the satisfaction of the Trustee, and provided that such
inspection and copying is lawful under applicable law.
Section 4.7. Rights Under Agreement. The Agreement, a duly
executed counterpart of which has been filed with the Trustee, sets forth the
covenants and obligations of the Issuer and the Company, including provisions
that subsequent to the issuance of Bonds and prior to their payment in full or
provision for payment thereof in accordance with the provisions hereof the
Agreement may not be effectively amended, changed, modified, altered or
terminated without the written consent of the Trustee, and reference is hereby
made to the same for a detailed statement of said covenants and obligations of
the Company thereunder, and the Issuer agrees that the Trustee in its name or in
the name of the Issuer may enforce all rights of the Issuer and all obligations
of the Company under and pursuant to the Agreement for and on behalf of the
Bondholders, whether or not the Issuer is in default hereunder.
Section 4.8. Prohibited Activities. The Issuer covenants and
agrees that it will not take any action which might result in any interest on
the Bonds becoming includable in the gross income of the owners thereof under
federal income tax laws.
<PAGE>
ARTICLE V
REVENUES AND FUNDS
Section 5.1. Source of Payment of Bonds. The Bonds herein
authorized and all payments to be made by the Issuer hereunder are not general
obligations of the Issuer but are limited obligations payable solely from the
Revenues (except to the extent paid out of moneys attributable to the Bond
proceeds or the income from the temporary investment thereof), and as authorized
by the Act and provided in the Agreement and in this Indenture. The Revenues are
to be remitted directly to the Trustee for the account of the Issuer and
deposited in the Bond Fund (hereinafter created). The entire amount of the
Revenues is hereby pledged and assigned to the payment of the principal of, and
interest and premium, if any, on, the Bonds.
Section 5.2. Creation of Bond Fund. There is hereby created
by the Issuer and ordered established with the Trustee a trust fund to be
designated "City of Hammond, Indiana Sewage and Solid Waste Disposal Revenue
Bond Fund (American Maize-Products Company Project) Series 1994," which is
pledged and shall be used to pay the principal of, and premium, if any, and
interest on, the Bonds.
Section 5.3. Payments into Bond Fund. There shall be
deposited into the Bond Fund, as and when received, (a) accrued interest
received upon the delivery of the Bonds to the Underwriter; (b) any amount in
the Construction Fund directed to be paid into the Bond Fund under Section 5.8
and 5.9 hereof; (c) all Revenues; and (d) all other moneys received by the
Trustee under and pursuant to any of the provisions of the Agreement which are
required or which are accompanied by directions that such moneys are to be paid
into the Bond Fund. The Issuer hereby covenants and agrees that so long as any
of the Bonds issued hereunder are outstanding it will deposit, or cause to be
paid to the Trustee for deposit in the Bond Fund for its account, sufficient
sums from revenues and receipts derived from the Agreement promptly to meet and
pay the principal of, and premium, if any, and interest on, the Bonds as the
same become due and payable.
Section 5.4. Use of Moneys in Bond Fund. Except as provided
in Sections 5.12 and 9.2 hereof, moneys in the Bond Fund shall be used solely
for the payment of the principal of, and premium, if any, and interest on, the
Bonds.
Section 5.5. Custody of Bond Fund. The Bond Fund shall be in
the custody of the Trustee but in the name of the Issuer, and the Issuer hereby
authorizes and directs the Trustee to withdraw sufficient funds from the Bond
Fund to pay the principal of, and premium, if any, and interest on, the Bonds as
the same become due and payable, which authorization and direction the Trustee
hereby accepts.
Section 5.6. Construction Fund. There is hereby created and
established with the Trustee a trust fund in the name of the Issuer to be
designated "City of Hammond, Indiana Sewage and Solid Waste Disposal Revenue
Bonds Construction Fund (American Maize-Products Company Project) Series 1994,"
which shall be expended in accordance with the provisions of the Agreement.
Section 5.7. Payments into Construction Fund; Disbursements. The
proceeds of the issuance and delivery of the Bonds (excluding accrued interest,
if any, and underwriters discount) shall be deposited in the Construction Fund.
Moneys in the Construction Fund shall be expended pursuant to requisitions
signed by an Authorized Company Representative and delivered to the Trustee
stating with respect to each payment to be made:
(a) The requisition number;
(b) The name and address of the person, firm or corporation
to whom payment is due or has been made, which may include the Company;
(c) The amount to be or which has been paid; and
(d) That each obligation mentioned therein has been properly
incurred, is a proper charge against the Construction Fund in
accordance with the provisions of the Agreement and the Project
Certificate and has not been the basis of any previous requisition from
the Construction Fund or from the proceeds (including investment
income) of any other obligations issued by or on behalf of any state or
political subdivision, including authorities, agencies, departments or
other similar issuers.
The Trustee is hereby authorized and directed to make the disbursement
pursuant to each such requisition and to issue its checks therefor. In making
any such disbursement, the Trustee may rely on any such requisition. The Trustee
shall keep and maintain adequate records pertaining to the Construction Fund and
all disbursements therefrom and shall provide monthly statements of transactions
and investments pertaining to the Construction Fund to the Company so long as
any Bonds remain outstanding.
<PAGE>
Section 5.8. Completion of Project. The completion of the
Project and payment or provision made for payment of the full Cost of the
Project shall be evidenced by the filing with the Trustee of a certificate
required by the provisions of Section 3.4 of the Agreement. Any balance
remaining in the Construction Fund on the Completion Date shall be used in
accordance with Section 3.4 of the Agreement.
Section 5.9. Transfer of Construction Fund. If all of the
Bonds are paid or deemed to be paid or canceled as herein provided or if the
principal of the Bonds shall have become due and payable pursuant to
Article VIII hereof, then, notwithstanding anything herein to the contrary, any
balance then remaining in the Construction Fund shall without further
authorization be deposited in the Bond Fund by the Trustee.
Section 5.10. Non-presentment of Bonds. In the event any Bond
shall not be presented for payment when the principal thereof becomes due,
either at maturity or otherwise, or at the date fixed for redemption thereof, or
in the event any check for the payment of interest shall not be cashed, then if
funds sufficient to pay such Bond or interest shall have been made available to
the Trustee, all liability of the Issuer for the payment of such Bond or
interest shall forthwith cease, terminate and be completely discharged, and
thereupon it shall be the duty of the Trustee to hold such funds uninvested,
without liability for interest thereon, for the benefit of the owner of such
Bond, who shall thereafter be restricted exclusively to such funds, for any
claim of whatever nature on his part under this Indenture or on, or with respect
to, said Bond or interest. Any moneys so deposited with and held by the Trustee
for the benefit of such persons, if any, for two years after the date upon which
such moneys were so deposited, shall be paid to the Company as provided in
Section 5.12 hereof, on written request of the Company, and thereafter such
persons shall look only to the Company for the purpose of payment from such
moneys and the Trustee shall have no further liability with respect to such
moneys.
Section 5.11. Moneys to be Held in Trust. All moneys required
to be deposited with or paid to the Trustee for the account of the Bond Fund or
the Construction Fund under any provision of this Indenture shall be held by the
Trustee in trust, and except for moneys deposited with or paid to the Trustee
for the redemption of Bonds, notice of the redemption of which has been duly
given, and moneys referred to in Section 5.10 hereof held by the Trustee for the
payment of Bonds or interest, shall, while held by the Trustee, constitute part
of the Trust Estate and be subject to the lien or security interest created
hereby.
Section 5.12. Repayment to the Company from Bond Fund. Any
amounts remaining in the Bond Fund after payment in full of the Bonds (or
provision therefor having been made in accordance herewith), the fees, charges
and expenses (including reasonable attorneys' fees and expenses) of the Trustee,
and all other amounts required to be paid hereunder or under the Agreement,
shall be paid to the Company as provided in Section 8.5 of the Agreement.
Section 5.13. Additional Payments Under the Agreement.
Pursuant to Section 4.2(c) of the Agreement, the Company has agreed to pay as
provided therein fees and expenses (including reasonable attorneys' fees and
expenses) of the Trustee. Such additional payments received by the Trustee shall
not be paid into the Bond Fund but shall be for the account of the Trustee.
Section 5.14. Arbitrage Requirements. Anything in the
Agreement or this Indenture to the contrary notwithstanding, the Trustee is
hereby authorized to deposit moneys in the Construction Fund and the Bond Fund
and to withdraw moneys from the Construction Fund and the Bond Fund upon the
written direction of the Company in order to comply with the provisions of the
Tax Agreement.
ARTICLE VI
INVESTMENT OF MONEYS
Section 6.1. Investment of Moneys. Any moneys held as part of
the Construction Fund or the Bond Fund shall be invested and reinvested by the
Trustee in accordance with the provisions of Section 3.5 of the Agreement. The
Trustee may make any and all such investments through its own trust investment
department and may invest in mutual funds offered by the Trustee or its
affiliates otherwise qualifying for investment hereunder. Any such investments
shall be held by or under the control of the Trustee and shall be deemed at all
times a part of the fund for which they were made. The interest accruing thereon
and any profit realized from such investments shall be credited to such fund,
and any net loss resulting from such investments shall be charged to such fund.
Upon written direction of the Authorized Company Representative (which may be by
facsimile transmission), the Trustee shall sell and reduce to cash a sufficient
amount of such investments of the Construction Fund whenever the cash balance in
the Construction Fund is insufficient to pay a requisition when presented or of
the Bond Fund whenever the cash balance in the Bond Fund is insufficient to pay
the principal of, and premium, if any, and interest on, the Bonds when due. The
Trustee shall not be responsible for any losses resulting from any such
investment.
<PAGE>
ARTICLE VII
DISCHARGE OF LIEN
If the Issuer shall pay or cause to be paid, or there shall be
otherwise paid or provision for payment made to or for the owners of the Bonds,
of the principal, premium, if any, and interest due or to become due on the
Bonds at the times and in the manner stipulated therein, and shall pay or cause
to be paid to the Trustee all sums of money due or to become due according to
the provisions hereof, and if all other liabilities of the Company under the
Agreement shall have been paid or the payment thereof provided for, then these
presents and the estate and rights hereby granted shall cease, determine and be
void, whereupon the Trustee shall cancel and discharge the lien of this
Indenture and execute and deliver to the Issuer such instruments in writing as
shall be requisite to cancel and discharge the lien hereof, and reconvey,
release, assign and deliver unto the Issuer any and all of the estate, right,
title and interest in and to any and all property conveyed, assigned or pledged
to the Trustee or otherwise subject to the lien of this Indenture, except (i)
amounts in the Bond Fund required to be paid to the Company under Section 5.12
hereof and (ii) moneys or securities held by the Trustee for the payment of the
principal of, and premium, if any, and interest on, the Bonds.
Any Bond shall be deemed to be paid within the meaning of this Article
when payment of the principal of and premium, if any, on such Bond, plus
interest thereon to the due date thereof (whether such due date be by reason of
maturity or upon redemption as provided in this Indenture, or otherwise), either
(i) shall have been made or caused to be made in accordance with the terms
thereof, or (ii) shall have been provided by irrevocably depositing with the
Trustee, in trust and irrevocably set aside exclusively for such payment, (1)
moneys sufficient to make such payment or (2) Governmental Obligations (provided
that the Company delivers to the Trustee, at the Company's expense, an opinion
of Bond Counsel upon which the Trustee may rely to the effect that all
conditions with respect to such deposit specified in this ArticleVII have been
satisfied or provision therefor made and that such deposit will not cause
interest on any of the Bonds to be includable for federal income tax purposes in
the gross income of any owner or beneficial owner thereof (other than an owner
or beneficial owner who is a "substantial user" of the Project or a "related
person" within the meaning of Section 147(a) of the Code and the applicable
Regulations) or cause any of the Bonds to be classified as arbitrage bonds
(within the meaning of Section 148 of the Code and the applicable Regulations))
maturing as to principal and interest in such amounts and at such times as will
without reinvestment provide sufficient moneys to make such payment, and all
necessary and proper fees, compensation and expenses (including reasonable
attorneys' fees and expenses) of the Trustee pertaining to the Bonds with
respect to which such deposit is made shall have been paid or provided for to
the satisfaction of the Trustee. At such time as a Bond shall be deemed to be
paid hereunder, as aforesaid, it shall no longer be secured by or entitled to
the benefits of this Indenture, except, in the case of any Bond deemed paid
pursuant to clause (ii) above, for the purposes of transfer and exchange and of
payment from such moneys or Governmental Obligations on the date or dates
specified at the time of such deposit.
Notwithstanding the foregoing, in the case of Bonds which by their
terms may be redeemed prior to the stated maturities thereof, no deposit under
clause (ii) of the immediately preceding paragraph shall be deemed a payment of
such Bonds as aforesaid until the deposit shall have been made under the terms
of an escrow deposit arrangement in form and substance satisfactory to the
Trustee and consistent herewith and until the Company, on behalf of the Issuer,
shall have given the Trustee, in form satisfactory to the Trustee, irrevocable
instructions in writing:
(a) stating the date when principal (and premium, if any) of
each such Bond is to be paid whether at maturity or on a redemption
date (which may be any redemption date permitted by this Indenture);
(b) to call for redemption pursuant to the Indenture any
Bonds to be redeemed prior to maturity pursuant to (a) hereof; and
(c) to mail, as soon as practicable, in the manner prescribed
by Article III hereof, a notice to the owners of such Bonds that the
deposit required by (ii) above has been made with the Trustee and that
said Bonds are deemed to have been paid in accordance with this Article
and stating the maturity or redemption date upon which moneys are to be
available for the payment of the principal or redemption price, if
applicable, and interest on said Bonds as specified in (a) hereof.
Anything in Article X hereof to the contrary notwithstanding, if moneys
or Governmental Obligations have been deposited or set aside with the Trustee
pursuant to this Article for the payment of Bonds and the interest and premium,
if any, thereon and such Bonds and the interest and premium, if any, thereon
shall not have in fact been actually paid in full, no amendment to the
provisions of this Article shall be made without the consent of the owner of
each of the Bonds affected thereby.
<PAGE>
ARTICLE VIII
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE
AND BONDHOLDERS
Section 8.1 Defaults; Events of Default. If any of the following events
occur, it is hereby declared to constitute an "event of default":
(a) Failure to pay interest on any Bond as and when such
interest shall have become due and payable;
(b) Failure to pay any principal of, or premium, if any, on,
any Bond, as and when due, whether at the stated maturity thereof or
upon proceedings for redemption thereof;
(c) Failure to perform or observe any other of the covenants,
agreements or conditions on the part of the Issuer in this Indenture or
in the Bonds contained and failure to remedy the same after notice
thereof pursuant to Section 8.12 hereof; or
(d) The occurrence of an "Event of Default" under the
Agreement.
Section 8.2. Acceleration. Upon the occurrence of an event of default
under Section 8.1(d) due to an Event of Default under Section 6.1(c) of the
Agreement, the principal of and accrued interest on all Bonds then outstanding
shall automatically become and be immediately due and payable. Upon the
occurrence of any other event of default hereunder, the Trustee may, and upon
the written request of the owners of not less than a majority in aggregate
principal amount of Bonds then outstanding shall, by notice in writing delivered
to the Issuer, declare the principal of all Bonds then outstanding and the
interest accrued thereon to the date of such declaration immediately due and
payable, and such principal, interest, and any premium the Issuer shall have
become obligated to pay prior to such date, if any, shall thereupon become and
be immediately due and payable. Upon any acceleration hereunder, an amount equal
to all amounts then due and payable on the Bonds shall automatically become and
be immediately due and payable under Section 4.2(a) of the Agreement.
Section 8.3. Other Remedies; Rights of Bondholders. Upon the occurrence
of an event of default the Trustee may, in addition or as an alternative, pursue
any available remedy by suit at law or in equity to enforce the payment of the
principal of, and premium, if any, and interest on, the Bonds then outstanding.
If an event of default shall have occurred, and if requested so to do
by the owners of a majority in aggregate principal amount of Bonds then
outstanding and upon being indemnified as provided in Section 9.1(1) hereof, the
Trustee shall be obligated to exercise such one or more of the rights and powers
conferred by this Section 8.3, as the Trustee, being advised by counsel, shall
deem most expedient in the interests of the Bondholders. No remedy by the terms
of this Indenture conferred upon or reserved to the Trustee (or to the
Bondholders) is intended to be exclusive of any other remedy, but each and every
such remedy shall be cumulative and shall be in addition to any other remedy
given to the Trustee or to the Bondholders hereunder or now or hereafter
existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any
default or event of default shall impair any such right or power or shall be
construed to be a waiver of any such default or event of default or acquiescence
therein; and such right and power may be exercised from time to time as often as
may be deemed expedient.
No waiver of any default or event of default hereunder, whether by the
Trustee or by the Bondholders, shall extend to or shall affect any subsequent
default or event of default or shall impair any rights or remedies consequent
thereon.
Section 8.4. Right of Bondholders to Direct Proceedings.
Subject to the provisions of Section 9.1(1) hereof, anything in this Indenture
to the contrary notwithstanding, the owners of a majority in aggregate principal
amount of the Bonds then outstanding shall have the right, at any time, by an
instrument or instruments in writing executed and delivered to the Trustee, to
direct the method and place of conducting all proceedings to be taken in
connection with the enforcement of the terms and conditions of this Indenture,
or for the appointment of a receiver or any other proceedings hereunder;
provided, that such direction shall not be otherwise than in accordance with the
provisions of law and of this Indenture.
Section 8.5. Appointment of Receivers. Upon the occurrence of
an event of default, and upon the filing of a suit or other commencement of
judicial proceedings to enforce the rights of the Trustee and of the Bondholders
under this Indenture, the Trustee shall be entitled, as a matter of right, to
the appointment of a receiver or receivers of the Trust Estate and of the
revenues, earnings, income, products and profits thereof, pending such
proceedings, with such powers as the court making such appointment shall confer.
Section 8.6. Waiver. Upon the occurrence of an event of
default, to the extent that such rights may then lawfully be waived, neither the
Issuer, nor anyone claiming through or under the Issuer, shall set up, claim, or
seek to take advantage of any appraisement, valuation, stay, extension or
redemption laws now or hereafter in force, in order to prevent or hinder the
enforcement of this Indenture, and the Issuer, for itself and all who may claim
through or under it, hereby waives, to the extent that it lawfully may do so,
the benefit of all such laws.
Section 8.7. Application of Moneys. All moneys received by
the Trustee pursuant to any right given or action taken under the provisions of
this Article shall, after payment of the reasonable costs and expenses of the
proceedings resulting in the collection of such moneys and of the expenses,
liabilities and advances reasonably incurred or made by the Trustee and the
Issuer, be deposited in the Bond Fund and, subject to the provisions of
Section 9.2 hereof, all moneys held or deposited in the Bond Fund during the
continuation of the event of default shall be applied as follows:
(a) Unless the principal of all the Bonds shall have become
or shall have been declared due and payable, all such moneys
shall be applied:
FIRST To the payment to the persons entitled thereto
of all interest then due on the Bonds (other than interest due
on Bonds for the payment of which moneys are held pursuant to
the provisions of this Indenture), and, if the amount
available shall not be sufficient to pay said amount in full,
then to the payment ratably, according to the amounts due, to
the persons entitled thereto, without any discrimination or
privilege;
SECOND To the payment to the persons entitled thereto
of the unpaid principal of and premium, if any, on any of the
Bonds which shall have become due (other than Bonds matured or
called for redemption for the payment of which moneys are held
pursuant to the provisions of this Indenture), and, if the
amount available shall not be sufficient to pay in full such
unpaid principal and premium, then to the payment ratably to
the persons entitled thereto without any discrimination or
privilege; and
THIRD To the payment to the persons entitled thereto
of interest on overdue principal of and premium, if any, on
any Bonds and, to the extent permitted by law, interest on
overdue interest on any Bonds, without preference or priority
as between principal or premium or interest one over the
others, or any installment of interest over any other
installment of interest, or of any Bond over any other Bond,
and if the amount available shall not be sufficient to pay
such amounts in full, then ratably, without any discrimination
or privilege.
(b) If the principal of all the Bonds shall have become due
or shall have been declared due and payable, all such moneys shall be
applied to the payment of the principal and premium, if any, and
interest then due and unpaid upon the Bonds (other than Bonds matured
or called for redemption or interest due on Bonds for the payment of
which moneys are held pursuant to the provisions of this Indenture),
without preference or priority of principal, premium or interest one
over the others, or of any installment of interest over any other
installment of interest, or of any Bond over any other Bond, ratably,
according to the amounts due respectively for principal and interest,
to the persons entitled thereto without any discrimination or
privilege.
(c) If the principal of all the Bonds shall have been
declared due and payable, and if such declaration shall thereafter have
been rescinded and annulled under the provisions of this Article then,
subject to the provisions of Section 8.7(b) hereof in the event that
the principal of all the Bonds shall later become due or be declared
due and payable, the moneys shall be applied in accordance with the
provisions of Section 8.7(a) hereof.
Subject to the provisions of Section 9.2 hereof, whenever moneys are to
be applied pursuant to the provisions of this Section 8.7, such moneys shall be
applied at such times, and from time to time, as the Trustee shall determine,
having due regard to the amount of such moneys available for application and the
likelihood of additional moneys becoming available for such application in the
future. Whenever the Trustee shall apply such funds, it shall fix the date
(which shall be an Interest Payment Date unless it shall deem another date more
suitable) upon which such application is to be made and upon such date interest
on the amounts of principal to be paid on such date shall cease to accrue. The
Trustee shall give such notice as it may deem appropriate of the deposit with it
of any such moneys and of the fixing of any such date, and shall not be required
to make payment to the owner of any Bond until such Bond shall be presented to
the Trustee for appropriate endorsement or for cancellation if fully paid.
<PAGE>
Whenever the principal of, premium, if any, and interest on all Bonds
has been paid under the provisions of this Section 8.7 and all reasonable
expenses, charges and fees of the Trustee and the Issuer have been paid, any
balance remaining in the Bond Fund shall be paid to the Company as provided in
Section 5.12 hereof.
Section 8.8. Remedies Vested in Trustee. All rights of action
(including the right to file proofs of claim) under this Indenture or under any
of the Bonds may be enforced by the Trustee without the possession of any of the
Bonds or the production thereof in any trial or other proceeding relating
thereto and any such suit or proceeding instituted by the Trustee shall be
brought in its name as Trustee without the necessity of joining as plaintiffs or
defendants any owners of the Bonds, and any recovery of judgment shall be for
the equal and ratable benefit of the owners of the outstanding Bonds.
Section 8.9. Rights and Remedies of Bondholders. No owner of
any Bond shall have any right to institute any suit, action or proceeding at law
or in equity for the enforcement of this Indenture or the Agreement or for the
execution of any trust hereof or for the appointment of a receiver or any other
remedy hereunder or thereunder, unless also a default has occurred of which the
Trustee has been notified as provided in Section 9.1(h) hereof, or of which by
said subsection it is deemed to have notice, nor unless also such default shall
have become an event of default and the owners of a majority in aggregate
principal amount of Bonds then outstanding shall have made written request to
the Trustee and shall have offered it reasonable opportunity either to proceed
to exercise the powers hereinbefore granted or to institute such action, suit or
proceeding in its own name, nor unless also they have offered to the Trustee
indemnity as provided in Section 9.1(1), nor unless the Trustee shall thereafter
fail or refuse to exercise the powers hereinbefore granted, or to institute such
action, suit or proceeding in its own name; and such notification, request and
offer of indemnity are hereby declared in every case at the option of the
Trustee to be conditions precedent to the execution of the powers and trusts of
this Indenture, and to any action or cause of action for the enforcement of this
Indenture or the Agreement, or for the appointment of a receiver or for any
other remedy hereunder or thereunder; it being understood and intended that no
one or more owners of the Bonds shall have any right in any manner whatsoever to
affect, disturb or prejudice the lien of this Indenture by its, his or their
action or to enforce any right hereunder or thereunder except in the manner
herein provided, and that all proceedings at law or in equity shall be
instituted, had and maintained in the manner herein provided and for the equal
and ratable benefit of the owners of all Bonds then outstanding. However,
nothing contained in this Indenture shall affect or impair the right of any
Bondholder to enforce the payment of the principal of, and premium, if any, and
interest on, any Bond at and after the maturity thereof, or the obligation of
the Issuer to pay the principal of, and premium, if any, and interest on, each
of the Bonds issued hereunder to the respective owners thereof at the time,
place, from the source and in the manner in the Bonds expressed.
Section 8.10. Termination of Proceedings. In case the Trustee
shall have proceeded to enforce any right under this Indenture by the
appointment of a receiver or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely, then and in every such case the Issuer, the Trustee and the
Bondholders shall be restored to their former positions and rights hereunder
respectively with regard to the property subject to this Indenture, and all
rights, remedies and powers of the Trustee shall continue as if no such
proceedings had been taken.
Section 8.11. Waivers of Events of Default. The Trustee may at
its discretion waive any event of default hereunder (other than an event of
default under Section 8.1(a) or (b) or under Section 8.1(d) due to an Event of
Default under Section 6.1(c) of the Agreement) and its consequences and rescind
any declaration of acceleration of principal, and shall do so (even if the event
of default is described in Section 8.1(a) or (b)) upon the written request of
the owners of (1) a majority in principal amount of all the Bonds then
outstanding in respect of which default in the payment of principal and premium,
if any, and interest, on any of them, exists, or (2) a majority in principal
amount of all Bonds then outstanding in the case of any other default; provided,
however, that there shall not be waived any event of default under
Section 8.1(d) hereof due to a failure by the Company to pay amounts due under
Sections 4.2(b), 5.2 and 6.3 of the Agreement without the written consent of the
Issuer; provided, further, that there shall not be waived (a) any event of
default in the payment of the principal of or premium on any outstanding Bonds
or (b) any default in the payment when due of the interest on any such Bonds,
unless prior to such waiver or rescission all arrears of principal and premium,
if any, with interest thereon as in the Bonds provided and all arrears of
interest with interest thereon to the extent permitted by law as in the Bonds
provided, and all reasonable expenses of the Trustee in connection with such
default, shall have been paid or provided for, and in case of any such waiver or
rescission, or in case any proceeding taken by the Trustee on account of any
such default shall have been discontinued or abandoned or determined adversely,
then and in every such case the Issuer, the Trustee and the Bondholders shall be
restored to their former positions and rights hereunder respectively, but no
such waiver or rescission shall extend to any subsequent or other default or
impair any right consequent thereon.
<PAGE>
Section 8.12. Notice of Defaults under Section 8.1(c); Opportunity of
the Issuer and the Company to Cure Such Defaults. Anything herein to the
contrary notwithstanding, no default under Section 8.1(c) hereof shall
constitute an event of default until actual notice of such default by registered
or certified mail, return receipt requested, shall be given to the Issuer and
the Company by the Trustee or by the owners of not less than a majority in
aggregate principal amount of all Bonds outstanding, and the Issuer and the
Company shall have had thirty days after receipt of such notice to correct said
default or cause said default to be corrected within the applicable period;
provided, however, if said default be such that it cannot be corrected within
the applicable period, it shall not constitute an event of default if corrective
action is instituted within the applicable period and diligently pursued until
the default is corrected.
With regard to any default concerning which notice is given to the
Issuer and the Company under the provisions of this Section, the Issuer hereby
grants the Company full authority for account of the Issuer to perform any
covenant or obligation alleged in said notice to constitute a default, in the
name and stead of the Issuer with full power to do any and all things and acts
to the same extent that the Issuer could do and perform any such things and acts
and with power of substitution.
If a default occurs of which the Trustee is by Section 9.1(h) hereof
required to take notice or if notice of default be given as therein provided,
then the Trustee shall promptly give written notice thereof by first-class mail
to the Issuer and the owner of each Bond. If the Trustee declares the principal
of all Bonds then outstanding and the interest accrued thereon to the date of
such declaration immediately due and payable pursuant to Section 8.2 hereof,
then the Trustee shall promptly give written notice thereof by first-class mail
to the Issuer and to the owner of each Bond.
ARTICLE IX
THE TRUSTEE
Section 9.1. Acceptance of Trusts. The Trustee hereby accepts
the trusts imposed upon it by this Indenture, and agrees to perform said trusts,
but only upon and subject to the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an event of
default and after the curing of all events of default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an event of default
has occurred (which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by this Indenture,
and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) The Trustee may execute any of the trusts or powers
hereof and perform any of its duties by or through attorneys,
accountants and other experts, agents, receivers or employees but shall
be answerable for the conduct of the same in accordance with the
standard specified above, and shall be entitled to advice of counsel
concerning its duties hereunder, and may in all cases pay such
reasonable compensation to all such attorneys, accountants and other
experts, agents and receivers as may reasonably be employed in
connection with the trusts hereof.
(c) The Trustee shall not be responsible for any recital
herein, or in the Bonds, or for the recording or filing of any
instrument required to secure the Bonds, or for the validity of the
execution by the Issuer of this Indenture, or of any instruments of
further assurance, or for the sufficiency of the security for the Bonds
issued hereunder or intended to be secured hereby. The Trustee shall
not be responsible for insuring the Project or collecting any insurance
moneys, or for the validity of the execution by the Issuer of this
Indenture or of any supplements thereto or instruments of further
assurance, or for the sufficiency of documents relating to the security
for the Bonds issued hereunder or intended to be secured hereby, and
the Trustee shall not be bound to ascertain or inquire as to the
observance or performance of any covenants, conditions or agreements on
the part of the Issuer or on the part of the Company under the
Agreement except as herein set forth.
(d) The Trustee shall not be accountable for the use of any
Bonds authenticated or delivered hereunder. The Trustee may become the
owner of Bonds secured hereby with the same rights which it would have
if not the Trustee.
(e) The Trustee shall be protected in acting upon any notice,
request, consent, certificate, order, affidavit, letter, telegram or
other paper or document believed in good faith to be genuine and
correct and to have been signed or sent by the proper person or
persons. Any action taken by the Trustee pursuant to this Indenture
upon the request or authority or consent of any person who at the time
of making such request or giving such authority or consent is the owner
of any Bond, shall be conclusive and binding upon all future owners of
the same Bond and upon Bonds issued in exchange therefor or in place
thereof.
(f) As to the existence or non-existence of any fact or as to
the sufficiency or validity of any instrument, paper or proceeding, the
Trustee shall be entitled to rely upon a certificate signed by the
Mayor or the City Clerk of the Issuer or an Authorized Company
Representative under the Agreement as sufficient evidence of the facts
therein contained and prior to the occurrence of a default of which the
Trustee has been notified as provided in Section 9.1(h) hereof, or of
which by Section 9.1(h) it is deemed to have notice, shall also be at
liberty to accept a similar certificate to the effect that any
particular dealing, transaction or action is necessary or expedient,
but may at its discretion secure such further evidence deemed by it to
be necessary or advisable, but shall in no case be bound to secure the
same. The Trustee may accept a certificate of the City Clerk of the
Issuer under the seal of the Issuer to the effect that an authorization
in the form therein set forth has been adopted by the Issuer as
conclusive evidence that such authorization has been duly adopted and
is in full force and effect.
(g) The permissive right of the Trustee to do things
enumerated in this Indenture shall not be construed as a duty and it
shall not be answerable for other than its gross negligence or willful
default. The Trustee shall not be subject to any implied duties by
reason of serving as Trustee hereunder.
(h) The Trustee shall not be required to take notice or be
deemed to have notice of any default hereunder except failure by the
Issuer to cause to be made any of the payments to the Trustee required
to be made by Article IV hereof, unless the Trustee shall be
specifically notified in writing of such default by the Issuer or by an
owner of Bonds, and all notices or other instruments required by this
Indenture to be delivered to the Trustee, must, in order to be
effective, be delivered at the principal corporate trust office of the
Trustee, and in the absence of such notice so delivered the Trustee may
conclusively assume there is no default except as aforesaid.
(i) At any and all reasonable times the Trustee, and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives, shall have the right fully to inspect any and all of
the property herein conveyed, including all books, papers and records
of the Issuer or the Company pertaining to the Project and the Bonds,
and to take such memoranda from and with regard thereto as may be
desired.
(j) The Trustee shall not be required to give any bond or
surety in respect of the execution of the said trusts and powers or
otherwise in respect of the premises.
(k) Notwithstanding anything elsewhere in this Indenture with
respect to the authentication of any Bonds, the withdrawal of any cash,
the release of any property, or any action whatsoever within the
purview of this Indenture, the Trustee shall have the right, but shall
not be required, to demand any showings, certificates, opinions,
appraisals or other information, or corporate action or evidence
thereof, in addition to that by the terms hereof required as a
condition of such action, by the Trustee deemed desirable for the
purpose of establishing the right to the authentication of any Bonds,
the withdrawal of any cash, or the taking of any other action by the
Trustee.
(l) Before taking any action referred to in Section 8.3, 8.4,
8.9 or 9.4 hereof the Trustee may require that a satisfactory indemnity
bond be furnished for the reimbursement of all expenses to which it may
be put and to protect it against all liability, except liability which
is adjudicated to have resulted from its failure to comply with the
standard of care prescribed by Section 9.1(a) hereof by reason of any
action so taken.
(m) All moneys received by the Trustee shall, until used or
applied or invested as herein provided, be held in trust for the
purposes for which they were received but need not be segregated from
other funds except to the extent required by law.
(n) The Trustee may rely upon advice of counsel chosen by the
Trustee with due care and shall not be responsible for any loss or
damage resulting from any action or non-action by it taken or omitted
to be taken in good faith in reliance upon advice of such counsel. The
permissive right of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty and the Trustee shall not be
answerable for the exercise of any discretion or power under this
Indenture or for anything whatsoever in connection with the trusts
created hereby, except only for its own negligence or willful
misconduct, including that of its directors, officer, employees or
agents.
(o) None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise to
incur financial liability in the performance of any of its duties or
the exercise of any of its rights or powers hereunder, except as
expressly provided herein. The Trustee shall not be required to give
any bond or surety in respect to the execution of its rights and
obligations hereunder.
Section 9.2. Fees, Charges and Expenses of the Trustee. The
Trustee shall be entitled to payment and reimbursement for reasonable fees for
its services rendered hereunder and all advances, counsel fees and other
expenses reasonably made or incurred by the Trustee in connection with such
services and in connection with entering into this Indenture. Upon an event of
default, but only upon an event of default, the Trustee shall have a first lien
with right of payment prior to payment on account of principal of, premium, if
any, and interest on any Bond upon the Trust Estate for the foregoing fees,
charges and expenses incurred by it.
Section 9.3. Trustee as Paying Agent and Registrar. The
Trustee shall also serve as the Paying Agent and the Registrar for the Bonds,
and all references to fees, charges and expenses of the Trustee in this
Indenture, including without limitation such references in Section 9.2 hereof,
shall be deemed also to refer to the fees, charges and expenses of the Paying
Agent and the Registrar.
Section 9.4. Intervention by the Trustee. In any judicial
proceeding to which the Issuer is a party which, in the opinion of the Trustee
and its counsel, has a substantial bearing on the interests of owners of the
Bonds, the Trustee may intervene on behalf of Bondholders and shall do so if
requested in writing by the owners of at least a majority of the aggregate
principal amount of Bonds then outstanding, provided that the Trustee shall
first have been offered indemnification in accordance with Section 9.1(l) hereof
against such liability as it may incur in or by reason of such proceeding. The
rights and obligations of the Trustee under this Section are subject to the
approval of a court of competent jurisdiction.
Section 9.5. Successor Trustee. Any corporation or
association into which the Trustee may be converted or merged, or with which it
may be consolidated, or to which it may sell or transfer its trust business and
assets as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer, to
which it is a party, shall be and become successor Trustee hereunder and vested
with all of the title to the Trust Estate and all the trusts, powers,
discretions, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instrument or any further
act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. Any such successor Trustee shall give
notice thereof to the Issuer and the Company.
Section 9.6. Resignation by the Trustee. The Trustee and any
successor Trustee may at any time resign from the trusts hereby created by
giving sixty (60) days written notice by registered or certified mail, return
receipt requested, to the Issuer and the Company and by first class mail,
postage prepaid, to the owner of each Bond, and such resignation shall take
effect at the end of such sixty days (or upon the earlier appointment of a
successor Trustee by the Bondholders or by the Issuer) provided that a successor
Trustee has been appointed pursuant to Section 9.8 hereof. If no successor
Trustee shall have been so appointed and shall have accepted appointment within
sixty (60) days of the giving of notice by the resigning Trustee, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
Section 9.7. Removal of the Trustee. The Trustee may be
removed at any time, by an instrument or concurrent instruments in writing
delivered to the Trustee, to the Issuer and to the Company, and signed by the
owners of a majority in aggregate principal amount of Bonds then outstanding, or
(so long as no Event of Default is then existing under the Agreement) signed by
the Company and delivered to the Trustee and the Issuer, and such removal shall
take effect upon the appointment of a successor Trustee pursuant to the
provisions of Section 9.8 hereof and the acceptance by the successor Trustee of
such appointment.
Section 9.8. Appointment of Successor Trustee by Bondholders
or Issuer. In case the Trustee hereunder shall resign or be removed, or be
dissolved, or shall be in the course of dissolution or liquidation, or otherwise
become incapable of acting hereunder, or in case it shall be taken under the
control of any public officer or officers, or of a receiver appointed by a
court, a successor may be appointed by the Issuer (at the direction of the
Company so long as no Event of Default is then existing under the Agreement), or
if no successor Trustee is so appointed by the Issuer, then by the owners of a
majority in aggregate principal amount of Bonds then outstanding, by an
instrument or concurrent instruments in writing signed by such owners, or by
their duly authorized attorneys in fact, a copy of which shall be delivered
personally or sent by registered mail, return receipt requested, to the Issuer
and the Company. Every such Trustee appointed pursuant to the provisions of this
Section shall be a trust company or bank in good standing having a reported
capital and surplus of not less than $50,000,000, if there be such an
institution willing, qualified and able to accept the trust upon customary
terms, and (unless the Company shall then be in default under the Agreement)
shall be satisfactory to the Company.
Section 9.9. Concerning Any Successor Trustee. Every
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
its or his predecessor and also to the Issuer and the Company an instrument in
writing accepting such appointment hereunder and thereupon such successor,
without any further act, deed or conveyance, shall become fully vested with all
the estates, properties, rights, powers, trust, duties and obligations of its
predecessors; but such predecessor shall, nevertheless, on the written request
of the Issuer, or of its successor, execute and deliver an instrument
transferring to such successor all the estates, properties, rights, powers and
trusts of such predecessor hereunder; and every predecessor Trustee shall
deliver all securities and moneys held by it as Trustee hereunder to its
successor. Should any instrument in writing from the Issuer be required by any
successor Trustee for more fully and certainly vesting in such successor the
estate, rights, power and duties hereby vested or intended to be vested in the
predecessor, any and all such instruments in writing shall, on request, be
executed, acknowledged and delivered by the Issuer. The resignation of any
Trustee and the instrument or instruments removing any Trustee and appointing a
successor hereunder, together with all other instruments provided for in this
Article, shall be filed or recorded by the successor Trustee in each recording
office, if any, where the Indenture shall have been filed or recorded.
Section 9.10. Appointment of Co-Trustee. It is the purpose of
this Indenture that there shall be no violation of any law of any jurisdiction
(including particularly the law of the State) denying or restricting the right
of banking corporations or associations to transact business as Trustee in such
jurisdiction. It is recognized that in case of litigation under this Indenture
or the Agreement, and in particular in case of the enforcement of either on
default, or in case the Trustee deems that by reason of any present or future
law of any jurisdiction it may not exercise any of the powers, rights or
remedies herein granted to the Trustee or hold title to the properties, in
trust, as herein granted, or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Trustee appoint
an individual or an additional institution as a separate or co-trustee. The
following provisions of this Section 9.10 are adapted to these ends.
In the event that the Trustee appoints an individual or an additional
institution as a separate or co-trustee, each and every remedy, power, right,
obligation, claim, demand, cause of action, immunity, estate, title, interest
and lien expressed or intended by this Indenture to be imposed upon, exercised
by or vested in or conveyed to the Trustee with respect thereto shall be imposed
upon, exercisable by and vest in such separate or co-trustee but only to the
extent necessary to enable such separate or co-trustee to exercise such powers,
rights and remedies and every covenant and obligation necessary to the exercise
thereof by such separate or co-trustee shall run to and be enforceable by either
of them. Such separate or co-trustee shall deliver an instrument in writing
acknowledging and accepting its appointment hereunder to the Issuer, the Trustee
and the Company.
Should any instrument in writing from the Issuer be required by the
separate trustee or co-trustee so appointed by the Trustee for more fully and
certainly vesting in and confirming to him or it such properties, rights,
powers, trusts, duties and obligations, any and all such instruments in writing
shall, on request, be executed, acknowledged and delivered by the Issuer. In
case any separate trustee or co-trustee, or a successor to either, shall die,
become incapable of acting, resign or be removed, all the estates, properties,
rights, powers, trusts, duties and obligations of such separate trustee or
co-trustee, so far as permitted by law, shall vest in and be exercised by the
Trustee until the appointment of a new trustee or successor to such separate
trustee or co-trustee.
The appointment of a co-trustee hereunder shall not in any way change
the Trustee's fiduciary duties and obligations hereunder.
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.1. Supplemental Indentures Not Requiring Consent of
Bondholders. The Issuer and the Trustee may, without consent of, or notice to,
any of the Bondholders enter into an indenture or indentures supplemental to
this Indenture for any one or more of the following purposes:
(a) To cure any ambiguity or formal defect or omission in
this Indenture;
(b) To grant to or confer upon the Trustee for the benefit of
the Bondholders any additional rights, remedies, powers or authority
that may lawfully be granted to or conferred upon the Bondholders or
the Trustee;
(c) To evidence the appointment of a separate trustee or a
co-trustee or the succession of a new Trustee hereunder;
(d) To provide for an uncertificated book-entry system of
registration for the Bonds;
(e) To preserve the tax exempt status of interest on the
Bonds;
(f) To obtain or maintain an appropriate rating or ratings on
the Bonds; and
(g) To make any other change which in the judgment of the
Trustee is not to the prejudice of the Bondholders.
Section 10.2. Supplemental Indentures Requiring Consent of
Bondholders. Exclusive of supplemental indentures covered by Section 10.1 hereof
and subject to the terms and provisions contained in this Section, and not
otherwise, the owners of not less than a majority in aggregate principal amount
of the Bonds then outstanding shall have the right, from time to time, anything
contained in this Indenture to the contrary notwithstanding, to consent to and
approve the execution by the Issuer and the Trustee of such other indenture or
indentures supplemental hereto as shall be deemed necessary and desirable by the
Issuer for the purpose of modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in this
Indenture or in any supplemental indenture; provided, however, that nothing in
this Section or in Section 10.1 hereof contained shall permit, or be construed
as permitting, without the consent of the owners of 100% in aggregate principal
amount of the Bonds then outstanding, (a) an extension of the maturity (or
mandatory redemption date) of the principal of, or the interest on, any Bond
issued hereunder, or (b) a reduction in the principal amount of, or redemption
premium or rate of interest on, any Bond issued hereunder, or (c) a privilege or
priority of any Bond or Bonds over any other Bond or Bonds, or (d) a reduction
in the aggregate principal amount of the Bonds the owners of which are required
to consent to such supplemental indenture, or (e) the creation of any lien
ranking prior to or on a parity with the lien of this Indenture on the Trust
Estate or any part thereof, or (f) deprivation of the owner of any Bond then
outstanding of the lien hereby created on the Trust Estate.
If at any time the Issuer shall request the Trustee to enter into any
such supplemental indenture for any of the purposes of this Section, the Trustee
shall, upon being satisfactorily indemnified with respect to expenses, cause
notice of the proposed execution of such supplemental indenture to be mailed by
first class mail to all Bondholders. Such notice shall briefly set forth the
nature of the proposed supplemental indenture and shall state that copies
thereof are on file at the principal corporate trust office of the Trustee for
inspection by all Bondholders. If, within sixty days or such longer period as
shall be prescribed by the Issuer following the mailing of such notice, the
owners of not less than a majority or 100%, as the case may be, in aggregate
principal amount of the Bonds then outstanding shall have consented to and
approved the execution thereof as herein provided, no owner of any Bond shall
have any right to object to any of the terms and provisions contained therein,
or the operation thereof, or in any manner to question the propriety of the
execution thereof, or to enjoin or restrain the Trustee or the Issuer from
executing the same or from taking any action pursuant to the provisions thereof.
Upon the execution of any such supplemental indenture as in this Section
permitted and provided, this Indenture shall be and be deemed to be modified and
amended in accordance therewith.
Section 10.3. Consent of Company. Anything herein to the
contrary notwithstanding, a supplemental indenture under this Article shall not
become effective unless and until (i) the Company shall have consented to the
execution and delivery of such supplemental indenture, and (ii) the Issuer and
the Trustee shall have received an opinion of Bond Counsel to the effect that
any such supplemental indenture will not cause interest on any of the Bonds to
be includable for federal income tax purposes in the gross income of any owner
or beneficial owner thereof (other than an owner or beneficial owner who is a
"substantial user" of the Project or a "related person" within the meaning of
Section 147(a) of the Code and the applicable Regulations). In this regard, the
Trustee shall cause notice of the proposed execution of any such supplemental
indenture together with a copy of the proposed supplemental indenture to be
mailed by certified or registered mail, return receipt requested, to the Company
at least fifteen days prior to the proposed date of execution and delivery of
any such supplemental indenture. The Company shall be deemed to have consented
to the execution and delivery of any such supplemental indenture if the Trustee
does not receive a letter of protest or objection thereto signed by or on behalf
of the Company on or before 4:30 o'clock P.M. local time at the designated
corporate trust office of the Trustee, on the fifteenth day after the mailing of
said notice.
ARTICLE XI
AMENDMENT OF AGREEMENT
Section 11.1. Amendments, etc., to Agreement Not Requiring
Consent of Bondholders. The Trustee and the Issuer shall without the consent of
or notice to the Bondholders consent to any amendment, change or modification of
the Agreement which does not adversely affect the Bondholders (i) as may be
required by the provisions of the Agreement or this Indenture, (ii) for the
purpose of curing any ambiguity or formal defect or omission, (iii) to describe
more fully or to amplify or correct the description of any property financed
under the Agreement or intended so to be; (iv) to preserve the tax exempt status
of interest on the Bonds, (v) to obtain or maintain an appropriate rating or
ratings on the Bonds, or (vi) in connection with any other change therein which,
in the judgment of the Trustee, is not to the prejudice of the Bondholders;
provided, however, that the Trustee and the Issuer shall not consent to any
amendment, change or modification of the Agreement unless the Issuer and the
Trustee shall have received an opinion of Bond Counsel to the effect that such
amendment, change or modification will not cause interest on any of the Bonds to
be includable for federal income tax purposes in the gross income of any owner
or beneficial owner thereof (other than an owner or beneficial owner who is a
"substantial user" of the Project or a "related person" within the meaning of
Section 147(a) of the Code and the applicable Regulations).
Section 11.2. Amendments, etc., to Agreement Requiring Consent
of Bondholders. Except for the amendments, changes or modifications as provided
in Section 11.1 hereof, the Trustee and the Issuer shall not consent to any
other amendment, change or modification of the Agreement without the giving of
notice and the written approval or consent of the owners of not less than a
majority in aggregate principal amount of the Bonds at the time outstanding
given as in this Section provided; provided, however, that nothing in this
Section or in Section 11.1 herein contained shall permit or be construed as
permitting, without the consent of the owners of 100% in aggregate principal
amount of the Bonds then outstanding, (a) an extension of time for the payment
of an amount due pursuant to Section 4.2(a) of the Agreement or (b) a reduction
in an amount due or in the total amount due pursuant to Section 4.2(a) of the
Agreement or (c) a reduction in the aggregate principal amount of the Bonds the
owners of which are required to consent to such amendment, change or
modification of the Agreement; provided further, however, that nothing in this
Section shall permit or be construed as permitting any amendments, changes or
modifications of the Agreement unless the Issuer and the Trustee shall have
received the opinion of Bond Counsel referred to in Section 11.1 hereof. If at
any time the Issuer and the Company shall request the consent of the Trustee to
any such proposed amendment, change or modification of the Agreement, the
Trustee shall, upon being satisfactorily indemnified by the Company with respect
to expenses, cause notice of such proposed amendment, change or modification to
be given in the same manner as provided by Section 10.2 hereof with respect to
supplemental indentures. Such notice shall briefly set forth the nature of such
proposed amendment, change or modification and shall state that copies of the
instrument embodying the same are on file at the principal corporate trust
office of the Trustee for inspection by all Bondholders.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Consents, etc., of Bondholders. Any consent,
request, direction, approval, notice, objection or other instrument required by
this Indenture to be signed and executed by the Bondholders may be in any number
of concurrent documents and may be executed by such Bondholders in person or by
agent appointed in writing. Proof of the execution of any such consent, request,
direction, approval, notice, objection or other instrument or of the writing
appointing any such agent and of the ownership of Bonds, if made in the
following manner, shall be sufficient for any of the purposes of this Indenture,
and shall be conclusive in favor of the Trustee with regard to any action taken
by it under such request or other instrument, namely:
(a) The fact and date of the execution by any person of any
such writing may be proved by the certificate of any officer in any
jurisdiction who by law has power to take acknowledgments within such
jurisdiction that the person signing such writing acknowledged before
him the execution thereof, or by an affidavit of any witness to such
execution.
(b) The fact of ownership of Bonds and the amount or amounts,
numbers and other identification of such Bonds, and the date of owning
the same shall be proved by the registration books of the Issuer
maintained by the Trustee pursuant to Section 2.8 hereof.
For all purposes of this Indenture and of the proceedings for the
enforcement hereof, such person shall be deemed to continue to be the owner of
such Bond until the Trustee shall have received notice in writing to the
contrary.
In determining whether the owners of the requisite principal amount of
Bonds outstanding have given any request, demand, authorization, direction,
notice, consent or waiver under this Indenture, Bonds owned by the Company shall
be disregarded and deemed not to be Outstanding under this Indenture, except
that in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Bonds which the Trustee knows to be so owned shall be so disregarded.
Notwithstanding the foregoing, Bonds so owned which have been pledged in good
faith shall not be disregarded as aforesaid if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Bonds and that the pledgee is not the Company.
Notwithstanding the foregoing paragraph, Bonds owned by the Company
shall be deemed to be Outstanding under the Indenture if all the Bonds
Outstanding at the time are owned by the Company; provided, however, that in
such event the Company may not consent to any supplement to this Indenture that
would affect the validity of the Bonds or the tax-exempt status of the interest
on the Bonds; and provided further that if a supplement to this Indenture is
executed at a time when the Company is the owner of all the Outstanding Bonds,
Bond Counsel shall render an opinion that the execution of the supplement to
this Indenture does not adversely affect the validity of the Bonds or the
tax-exempt status of the interest thereon.
Section 12.2. Limitation of Rights. With the exception of
rights herein expressly conferred, nothing expressed or mentioned in or to be
implied from this Indenture or the Bonds is intended or shall be construed to
give to any person or company other than the parties hereto and the Company, and
the owners of the Bonds, any legal or equitable right, remedy or claim under or
with respect to this Indenture or any covenants, conditions and provisions
herein contained; this Indenture and all of the covenants, conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and the Company and the owners of the Bonds as
herein provided.
Section 12.3. Severability. If any provisions of this
Indenture shall be held or deemed to be or shall, in fact, be illegal,
inoperative or unenforceable, the same shall not affect any other provision or
provisions herein contained or render the same invalid, inoperative, or
unenforceable to any extent whatever; provided that no holding or invalidity
shall require the Issuer to make any payments from revenues other than Revenues
derived from the Agreement.
Section 12.4. Notices. Except as hereinafter provided, all
notices, certificates or other communications shall be sufficiently given and
shall be deemed given when the same are (i) deposited in the United States mail
and sent by first class mail, postage prepaid, or (ii) delivered by hand, or
(iii) sent by facsimile transmission, in each case, to the parties at the
addresses or to the telecopier numbers set forth below or at such other address
or telecopy number as a party may designate by notice to the other parties: if
to the Issuer, at 649 Conkey Street, Hammond, Indiana 46324, or to (219)
853-6500, Attention: Director of Mayor's Office of Economic Development; if to
the Company, at 250 Harbor Drive, Stamford, Connecticut 06904-2128, or to
(203) 359-1020, Attention: Treasurer; and if to the Trustee, at 111 Monument
Circle, Suite 1611, Indianapolis, Indiana 46277-0116 or to (317) 321-3864,
Attention: Corporate Trust Administration. A duplicate copy of each notice
required to be given hereunder by the Trustee to either the Issuer or the
Company shall also be given to the other. Any notice to the Trustee shall be
deemed received only upon actual receipt by the Trustee.
Section 12.5. Payments Due on Saturdays, Sundays and Holidays.
In any case where the date of maturity of interest on or principal of the Bonds
or the date fixed for redemption of any Bonds shall be at the designated
corporate trust office of the Trustee, a Saturday, a Sunday or a legal holiday
or a day on which banking institutions are authorized by law to close (and the
designated corporate trust office of the Trustee is in fact closed), then
payment of principal, premium, if any, or interest need not be made on such date
but may be made on the next succeeding business day (i.e., a day that is not a
Saturday, a Sunday or a legal holiday or a day on which banking institutions are
authorized by law to close and the designated corporate trust office of the
Trustee is in fact closed) with the same force and effect as if made on the date
of maturity or the date fixed for redemption.
Section 12.6. Action by Company and Issuer. Wherever it is
herein provided or permitted for any action to be taken by the Company, such
action may be taken by an Authorized Company Representative under the Agreement
unless the context clearly indicates otherwise. Whenever it is herein provided
or permitted for any action to be taken by the Issuer, such action may be taken
by an Authorized Issuer Representative under the Agreement unless the context
clearly indicates otherwise.
Section 12.7. Limited Liability of Officers. No recourse shall
be had for the payment of the principal of, premium, if any, and interest on any
of the Bonds or for any claim based thereon or upon any obligation, covenant or
agreement contained in this Indenture, the Agreement or the Tax Agreement
against any past, present or future officer, agent or employee of the Issuer, or
any officer, agent or employee of any successor thereto, as such, either
directly or through the Issuer or any successor thereto, under any rule of law
or equity, statute or constitution or by the enforcement of any assessment or
penalty or otherwise, and all such liability of any such officer, agent or
employee as such is hereby expressly waived and released as a condition of and
consideration for the execution of this Indenture, the Agreement, the Tax
Agreement and the issuance of the Bonds.
Section 12.8. Counterparts. This Indenture may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 12.9. Applicable Provisions of Law. This Indenture
shall be governed by and construed in accordance with the laws of the State,
except that the Trustee's immunities and its standard of care in the performance
of its responsibilities under this Indenture shall be governed by and construed
in accordance with the laws of the state in which is located the Trustee's
principal place of business.
<PAGE>
IN WITNESS WHEREOF, the Issuer and Trustee have caused this Indenture
of Trust to be executed in their respective corporate names and caused their
respective corporate seals to be hereunto affixed and attested by their
respective duly authorized officers, as of the day first above written.
CITY OF HAMMOND, INDIANA
By /s/ Duane W. Dedelow, Jr.
---------------------------------
Mayor
[SEAL]
Attest:
/s/ Gerald Bobos
- ---------------------
City Clerk
BANK ONE, INDIANAPOLIS, NA, as Trustee
By
Its /s/ John H. Pease
-------------------------------
John H. Pease
Vice President & Trust Officer
[SEAL]
Attest:
/s/ Kathleen D. Back
- ----------------------------------
Kathleen D. Back
Assistant Vice President and
Trust Officer
<PAGE>
Exhibit 11.(a)
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
CALCULATION OF PRIMARY EARNINGS (LOSS) PER SHARE
For the years ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
ITEM 1994 1993 1992
---- ------------ ------------ --------
<S> <C> <C> <C>
Weighted average number of common shares
outstanding . . . . . . . . . . . . . . . . . 10,245,112 9,634,622 6,442,065
============ ============ ==========
Income before extraordinary losses and
cumulative effect of accounting changes . . . $ 26,945,000 $ 214,000 $ 9,995,000
Extraordinary losses from early
extinguishment of debt. . . . . . . . . . . . - (4,182,000) -
Cumulative effect of change in accounting
for postretirement benefits other than
pensions and other postemployment
benefits. . . . . . . . . . . . . . . . . . . - (27,200,000) -
Cumulative effect of change in accounting
for income taxes. . . . . . . . . . . . . . . - - 3,016,000
------------ ------------ -----------
Net income (loss) . . . . . . . . . . . . $ 26,945,000 $(31,168,000) $13,011,000
============ ============ ===========
Primary earnings (loss) per share:
Income before extraordinary losses and
cumulative effect of accounting changes . . $2.63 $ .02 $1.55
Extraordinary losses from early
extinguishment of debt. . . . . . . . . . . - (.43) -
Cumulative effect of change in accounting
for postretirement benefits other than
pensions and other postemployment
benefits. . . . . . . . . . . . . . . . . . - (2.82) -
Cumulative effect of change in accounting
for income taxes. . . . . . . . . . . . . . - - .47
----- ------ -----
Net income (loss) . . . . . . . . . . . . $2.63 $(3.23) $2.02
===== ====== =====
</TABLE>
<PAGE>
Exhibit 11.(b)
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
CALCULATION OF FULLY-DILUTED EARNINGS (LOSS) PER SHARE
For the years ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
ITEM 1994 1993 1992
---- ------------ ------------ --------
<S> <C> <C> <C>
Weighted average number of common shares
outstanding. . . . . . . . . . . . . . . . . 10,245,112 9,634,622 6,442,065
Assumed exercise of certain options. . . . . . 90,873 19,134 24,835
------------ ------------ -----------
10,335,985 9,653,756 6,466,900
============ ============ ===========
Income before extraordinary losses and
cumulative effect of accounting changes. . . $ 26,945,000 $ 214,000 $ 9,995,000
Extraordinary losses from early
extinguishment of debt . . . . . . . . . . . - (4,182,000) -
Cumulative effect of change in accounting
for postretirement benefits other than
pensions and other postemployment
benefits . . . . . . . . . . . . . . . . . . - (27,200,000) -
Cumulative effect of change in accounting
for income taxes . . . . . . . . . . . . . . - - 3,016,000
------------ ------------ -----------
Net income (loss). . . . . . . . . . . . $ 26,945,000 $(31,168,000) $13,011,000
============ ============ ===========
Fully-diluted earnings (loss) per share:
Income before extraordinary losses and
cumulative effect of accounting changes. . $2.61 $ .02 $1.54
Extraordinary losses from early
extinguishment of debt . . . . . . . . . . - (.43) -
Cumulative effect of change in accounting
for postretirement benefits other than
pensions and other postemployment
benefits . . . . . . . . . . . . . . . . . - (2.82) -
Cumulative effect of change in accounting
for income taxes . . . . . . . . . . . . . - - .47
----- ------ -----
Net income (loss). . . . . . . . . . . . $2.61 $(3.23) $2.01
===== ====== =====
</TABLE>
<PAGE>
Exhibit 13
AMERICAN MAIZE-PRODUCTS COMPANY AND ITS SUBSIDIARIES
1994 Annual Report to Security Holders
Index to Items Incorporated by Reference to the Company's 1994 Annual Report to
Security Holders
<TABLE>
<CAPTION>
Reference(Page)
-----------------
Annual Report
to Security
Exhibit 13 Holders
---------- ------------
<S> <C> <C> <C>
ITEM 5 - Market for Company's Common Equity and Related Stockholder
Matters:
(a) Market Information. 13-1 37
(b) Holders. 13-1 37
(c) Dividends.
(i) 13-2 19
(ii) 13-13 25
ITEM 6 - Selected Financial Data 13-2 19
ITEM 7 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 13-3 15
through through
13-6 18
ITEM 8 - Financial Statements and Supplementary
Data:
Report of Independent Accounts 13-7 37
Consolidated balance sheets for the
years ended December 31, 1994 and 1993 13-8 20
Consolidated statements of operations and
retained earnings for the years ended
December 31, 1994, 1993 and 1992 13-9 21
Consolidated statements of cash flows for
the years ended December 31, 1994, 1993
and 1992 13-10 22
Notes to consolidated financial statements 13-11 23
through through
13-24 36
</TABLE>
<PAGE>
Item 5 Market for Company's Common Equity and Related Stockholder Matters
The common stock of American Maize-Products Company is traded on the American
Stock Exchange. The quarterly range of prices and dividends per share during the
last two years was as follows:
<TABLE>
<CAPTION>
Market Price Per Share
Class A Class B Dividends
High Low High Low per Share
<S> <C> <C> <C> <C> <C>
1994
First Quarter $ 22 3/8 $ 15 7/8 $ 21 7/8 $ 15 1/2 $ .16
Second Quarter 20 3/4 18 1/8 21 17 7/8 .16
Third Quarter 23 1/2 19 5/8 23 1/4 20 1/8 .16
Fourth Quarter 26 21 5/8 25 3/8 21 7/8 .17
------
Total $ .65
------
1993
First Quarter $ 23 1/2 $ 21 5/8 $ 24 3/8 $ 22 3/4 $ .16
Second Quarter 22 5/8 16 5/8 22 3/4 18 .16
Third Quarter 19 14 3/8 18 1/2 15 7/8 .16
Fourth Quarter 16 7/8 15 1/4 16 3/4 14 7/8 .16
-----
Total $ .64
=====
<FN>
The approximate number of security holders of record at December 31, 1994 was 1,056 for Class
A Common Stock and 405 for Class B Common Stock.
</TABLE>
<PAGE>
Item 6 Selected Financial Data
American Maize-Products Company and its Subsidiaries
Five-Year Summary of Selected Financial Data
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the years ended December 31, 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Net sales $ 603,988 $ 538,534 $ 542,172 $ 533,565 $ 501,498
----------------------------------------------------------------------
Operating profit $ 56,188 $ 15,549 $ 44,329 $ 56,983 $ 60,126
----------------------------------------------------------------------
Income from continuing operations before income
taxes, minority interest, extraordinary losses and
cumulative effect of accounting changes $ 44,453 $ 1,036 $ 32,892 $ 39,595 $ 48,739
Income taxes (17,508) (1,151) (12,901) (15,294) (18,922)
----------------------------------------------------------------------
Income (loss) from continuing operations before
minority interest, extraordinary losses and
cumulative effect of accounting changes 26,945 (115) 19,991 24,301 29,817
Minority interest in loss (earnings) of subsidiary - 329 (9,996) (11,496) (13,657)
----------------------------------------------------------------------
Income from continuing operations 26,945 214 9,995 12,805 16,160
Loss on disposal of discontinued operation, net of tax - - - (1,518) (2,640)
----------------------------------------------------------------------
Income before extraordinary losses and
cumulative effect of accounting changes 26,945 214 9,995 11,287 13,520
Extraordinary losses from early extinguishment of debt - (4,182) - - -
Cumulative effect of accounting changes (1) - (27,200) 3,016 - -
----------------------------------------------------------------------
Net income (loss) $ 26,945 $ (31,168) $ 13,011 $ 11,287 $ 13,520
----------------------------------------------------------------------
Cash dividends $ 6,660 $ 5,935 $ 4,124 $ 4,107 $ 4,252
Depreciation and amortization 32,577 32,083 26,434 26,343 24,177
Capital expenditures 63,721 43,633 32,266 19,428 32,431
Financial Position
Cash and cash equivalents $ 9,957 $ 2,862 $ 69,180 $ 45,883 $ 30,966
Working capital 100,198 105,246 156,306 140,603 63,743
Current ratio 2.64:1 3.17:1 4.04:1 3.93:1 1.65:1
Total assets 551,972 489,058 484,003 459,639 433,222
Long-term debt, less current installments 164,749 139,294 136,227 127,542 70,530
Stockholders' equity 236,683 215,666 168,240 158,665 151,066
Per Common Share
Primary earnings (loss) per share (2):
Continuing operations $ 2.63 $ .02 $ 1.55 $ 2.00 $ 2.44
Discontinued operation - - - (.24) (.40)
Extraordinary losses from early extinguishment of debt - (.43) - - -
Cumulative effect of accounting changes (1) - (2.82) .47 - -
----------------------------------------------------------------------
Net income (loss) $ 2.63 $ (3.23) $ 2.02 $ 1.76 $ 2.04
----------------------------------------------------------------------
Cash dividends $ .65 $ .64 $ .64 $ .64 $ .64
Stockholders' equity (3) $ 23.05 $ 21.09 $ 26.05 $ 24.70 $ 23.60
General
Common shares outstanding (4) 10,266,562 10,223,970 6,458,196 6,423,892 6,401,871
Number of employees (4) 1,833 1,986 2,154 2,009 2,158
Return on average common stockholders' equity 11.9% - 8.0% 7.3% 9.1%
<FN>
(1) Reflects adoption of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" and No. 112,
"Employers' Accounting for Postemployment Benefits" in 1993 and No. 109,
"Accounting for Income Taxes" in 1992.
(2) Based on weighted average number of shares outstanding during the year.
(3) Based on shares outstanding at the end of the year.
(4) As of the end of the year.
</TABLE>
<PAGE>
Item 7 Management's Discussion and Analysis of Financial Condition and Results
of Operations
Financial Review
Overview
Net income for the year 1994 was $26,945,000, or $2.63 per share, compared to a
net loss of $31,168,000, or $3.23 per share, in 1993. The net loss in 1993 was
after extraordinary losses of $4,182,000 (net of tax), or $.43 per share,
related to the early extinguishment of debt and $27,200,000 (net of tax), or
$2.82 per share, related to the cumulative effect of accounting changes for
retiree health and life and other postemployment benefits.
The results for 1994 included a restructuring charge of $3,294,000 (net of tax),
or $.32 per share, related to a plant consolidation and restructuring of the
Company's tobacco businesses. In addition, a charge of $2,600,000 (net of tax),
or $.25 per share, related to the establishment of a reserve for ongoing patent
infringement litigation, was included in the 1994 results. The 1993 results also
included restructuring charges of $7,720,000 (net of tax), or $.80 per share,
reflecting costs associated with consolidation and modernization programs in the
Company's business units, divestiture of nonperforming assets and organizational
changes. Additional information regarding the restructuring charges is included
in Note 12 of Notes to Consolidated Financial Statements.
Comparing 1994 results to 1993 results on an operating basis, before
restructuring charges, extraordinary losses, cumulative effect of accounting
changes and the patent infringement reserve, net income in 1994 was $32,839,000,
or $3.20 per share, compared to $7,934,000, or $.82 per share, in 1993. The
principal reasons for the significant improvement in operating profitability
were higher selling prices and margins for corn sweeteners and higher levels of
profitability in the tobacco business. The improvement in the tobacco business
results was due to higher selling prices and unit volumes for cigars and moist
snuff products, as well as cost savings associated with the business
consolidation completed during the second quarter of 1994.
Operating Results
CORN BUSINESS
Net sales increased to $440,703,000 in 1994 from $380,315,000 in 1993. Net sales
in 1992 were $391,513,000. Operating profits increased to $43,669,000 in 1994
compared to $16,958,000 in 1993 and $37,995,000 in 1992. The significant
increase in sales and profitability between 1993 and 1994 was primarily due to
higher selling prices and profit margins for corn sweeteners. Year to year
profitability comparisons were also affected by changes in LIFO inventory
valuations. The impact of lower year-end corn prices in 1994 on LIFO inventory
valuations resulted in a decrease in cost of sales of $2,821,000. Significantly
higher year-end corn prices at the end of 1993 resulted in an increase of
$3,649,000 in cost of sales during 1993 related to LIFO inventory valuations. In
addition, cost of sales in 1994 included approximately $4,000,000 in charges
related to the expansion and modernization of the Hammond plant. The $21,037,000
decline in operating profit between 1992 and 1993 was due in part to higher cost
of sales as a result of a $4,245,000 increase in the LIFO inventory charge,
$3,925,000 in additional depreciation and amortization related to the merger
with American Fructose Corporation and $2,678,000 of additional retiree health
care expense due to the accounting change for postretirement benefits. The
remainder of the decline was due to lower selling prices for corn sweeteners and
higher energy costs.
TOBACCO BUSINESS
Net sales increased to $163,285,000 in 1994 from $158,219,000 in 1993 and
$150,659,000 in 1992. Operating profits increased to $23,986,000 in 1994 from
$13,846,000 in 1993 and $14,818,000 in 1992. Operating results in 1994, 1993 and
1992 include restructuring charges of $5,400,000, $5,200,000 and $3,593,000,
respectively. The charge in 1994 represents the costs associated with the
consolidation of the Company's smokeless tobacco and cigar businesses which were
merged in the first half of 1994. The 1994 charge also related to the
consolidation of the Company's two cigar plants which will be completed during
the first quarter of 1995. The restructuring charges taken in 1993 and 1992
relate to costs associated with the consolidation of the Company's two smokeless
tobacco plants which was completed during the first quarter of 1993. Additional
information regarding the restructuring charges is included in Note 12 of Notes
to Consolidated Financial Statements.
Prior to restructuring charges, operating profits increased from $18,411,000 in
1992 to $19,046,000 in 1993 and to $29,386,000 in 1994. The higher sales and
operating profits in 1994 were principally due to higher selling prices and
sales volumes for cigars and moist snuff products as well as lower selling,
general and administrative expenses. The cost savings achieved from the merger
of the cigar and smokeless tobacco businesses, completed during the second
quarter of 1994, was the principal reason for the decrease in selling, general
and administrative expenses.
The increase in operating profits, before restructuring charges, from
$18,411,000 in 1992 to $19,046,000 in 1993 was principally due to increased
sales volumes and prices for little cigars and moist snuff. These increases more
than offset sales volume declines in other tobacco product categories and higher
levels of selling, general and administrative expenses. The increase in selling,
general and administrative expenses was due in part to a $1,062,000 increase in
expense related to retiree health care costs.
Other Income and Expense
INTEREST EXPENSE
Interest expense was $10,639,000 in 1994 compared to $13,960,000 in 1993 and
$12,698,000 in 1992. The lower level of interest expense in 1994 was due to
lower average rates and debt levels as well as an increase in the amount of
capitalized interest. The increase in interest expense in 1993 compared to 1992
was due to both higher average rates and debt levels.
INTEREST INCOME
The decrease in interest income from $2,288,000 in 1992 to $809,000 in 1993 and
$369,000 in 1994 was principally due to declining levels of investments and also
to lower available rates.
Income Taxes
As of December 31, 1992 the Company had available, for federal income tax
purposes, regular tax operating loss carryforwards of $16,432,000 and investment
tax credit carryforwards of $2,841,000. During 1993, regular tax operating loss
carryforwards of $13,739,000 and $1,321,000 of investment tax credit
carryforwards were utilized, leaving carryforward balances of $2,693,000 and
$1,520,000, respectively, at December 31, 1993. The remaining carryforward
balances at December 31, 1993 were utilized during 1994.
Benefit Plans
Pension and Savings Plans
The Company has defined benefit pension plans which cover substantially all
employees. As of December 31, 1994, plan assets exceeded the projected benefit
obligations by $15,902,000. Operating results for the years 1994, 1993 and 1992
include negative expense, or noncash income, associated with these overfunded
plans of $371,000, $1,512,000 and $2,483,000, respectively.
In addition to the qualified defined benefit plans, the Company also provides
benefits under a supplemental retirement plan and a directors retirement plan.
Both of these plans are currently unfunded. Operating results for 1994, 1993 and
1992 include charges of $1,864,000, $1,158,000 and $1,061,000, respectively,
associated with these plans.
The Company also sponsors a 401(k) savings plan to provide employees with
additional income upon retirement. Related expense was $1,495,000 in 1994,
$1,482,000 in 1993 and $1,383,000 in 1992.
OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
Effective January 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions". The accounting standard requires employers to recognize in their
financial statements, during their employees' active service, the obligation to
provide health care benefits for retirees and their eligible dependents.
Previously, employers generally accounted for these benefits as paid. The
Company also adopted, effective January 1, 1993, Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits". This standard requires that the estimated cost of benefits to former
employees after employment but before retirement be recorded on an accrual
basis.
A one time noncash charge of $48,500,000 ($27,200,000 net of tax, or $2.82 per
share) was recorded to recognize the cumulative effect of these accounting
changes through January 1, 1993. Under the newly adopted standards, 1993
operating results were charged $5,721,000 compared to approximately $1,300,000
charged in 1992 under the previous accounting method. The charge under the
standards in 1994 was $4,934,000.
<PAGE>
Liquidity and Capital Resources
CAPITAL STRUCTURE
Net debt (current and long-term debt less cash and restricted cash) at December
31, 1994 was $129,411,000 compared to $142,317,000 at December 31, 1993.
Restricted cash of $26,325,000 as of December 31, 1994 represents the unused
proceeds of debt incurred for the purpose of financing a portion of the Hammond
modernization and expansion project currently underway. These funds are
available to finance the construction and installation of certain sewage and
solid waste disposal facilities at Hammond during 1995 and early 1996.
Stockholders' equity at December 31, 1994 was $236,683,000 compared to
$215,666,000 at year-end 1993. The ratio of net debt to equity at December 31,
1994 was .55 to 1 compared to .66 to 1 at December 31, 1993.
CASH FLOW
Consolidated operating cash flow increased from $21,299,000 in 1993 to
$82,856,000 in 1994. The principal reason for the $61,557,000 increase was
significantly higher operating profits in both the corn and tobacco businesses.
CAPITAL SPENDING
Consolidated capital spending was $63,721,000 in 1994 compared to $43,633,000 in
1993. Of the total spending in 1994, approximately $45,700,000 was attributable
to the expansion and modernization of the Hammond, Indiana corn plant.
Capital spending in 1995 is expected to approximate $112,000,000, most of which
will be related to the Hammond plant expansion and modernization. The 1995
capital program will be financed by available cash resources, cash flow from
operations and available credit facilities, as needed.
CREDIT RESOURCES
Currently, the Company has available $125,000,000 under a revolving credit
facility which expires on December 31, 1998, and open lines of credit with banks
aggregating $10,000,000. At December 31, 1994 there were no borrowings
outstanding under these facilities.
INFLATION
The impact of general inflation on both the Company's financial position and
results of operations has been minimal and is not expected to adversely affect
1995 results.
<PAGE>
Item 8 Financial Statements and Supplementary Data
Report of Independent Accountants
To the Board of Directors and Stockholders,
American Maize-Products Company:
We have audited the accompanying consolidated balance sheets of American
Maize-Products Company and its Subsidiaries as of December 31, 1994 and 1993,
and the related consolidated statements of operations and retained earnings and
consolidated statements of cash flows for each of the years in the three year
period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of American
Maize-Products Company and its Subsidiaries as of December 31, 1994 and 1993,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles.
As discussed in Notes 7 and 8 to the consolidated financial statements,
effective January 1, 1993, the Company changed its methods of accounting for
postretirement benefits other than pensions, and postemployment benefits.
As discussed in Note 14 to the consolidated financial statements, the
accompanying financial statements include an accrual related to a patent
infringement claim. The Company's ultimate liability for this action is not
presently determinable. In addition, the Company is a defendant in an
environmental civil action, the ultimate financial effect of which is not
presently determinable, and, accordingly, no amounts have been recorded in the
accompanying financial statements.
COOPERS & LYBRAND L.L.P.
One Canterbury Green
Stamford, Connecticut
February 28, 1995.
<PAGE>
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
At December 31, 1994 1993
- --------------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 9,957 $ 2,862
Accounts receivable, trade, less allowance
for doubtful accounts of $3,834 in 1994
and $3,609 in 1993 52,549 53,529
Inventories 86,855 86,133
Other current assets 11,901 11,117
--------- ---------
Total current assets 161,262 153,641
--------- ---------
Restricted cash 26,325 -
Property, plant and equipment:
Land 5,544 3,004
Buildings and improvements 74,897 72,757
Machinery and equipment 381,511 378,382
Construction in progress 52,692 10,874
--------- ---------
514,644 465,017
Less, Accumulated depreciation 202,821 180,593
--------- ---------
311,823 284,424
Excess of cost over net assets of acquired
companies, less accumulated amortization
of $4,245 in 1994 and $3,504 in 1993 22,543 23,284
Prepaid pension costs 16,600 14,732
Other assets 13,419 12,977
--------- ---------
$ 551,972 $ 489,058
--------- ---------
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt $ - $ 5,000
Long-term debt, current installments 944 885
Accounts payable, trade 29,268 16,278
Accrued payroll and employee benefits 13,035 12,709
Accrued income taxes 1,259 4,837
Accrued interest 3,405 3,304
Other accrued expenses 13,153 5,382
--------- ---------
Total current liabilities 61,064 48,395
Long-term debt, less current installments 164,749 139,294
Deferred income taxes 31,663 30,775
Accrued postretirement and postemployment
benefits 52,562 50,027
Other liabilities 5,251 4,901
--------- ---------
315,289 273,392
--------- ---------
Stockholders' equity:
Capital stock:
Common, Class A, $.80 par value; authorized
15,000,000 shares; issued 8,872,653 shares in
1994 and 8,848,903 shares in 1993; 7,098 7,079
Common, Class B, $.80 par value; authorized
2,500,000 shares; issued 1,809,282 shares in
1994 and 1993 1,447 1,447
Capital in excess of par value of common stock 124,380 123,836
Retained earnings 110,506 90,221
--------- ---------
243,431 222,583
Less, Common stock in treasury, at cost:
Class A, 348,148 shares in 1994 and 366,990
shares in 1993;
Class B, 67,225 shares in 1994 and 1993 6,748 6,917
--------- ---------
Total stockholders' equity 236,683 215,666
--------- ---------
$ 551,972 $ 489,058
--------- ---------
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Consolidated Statements of Operations and Retained Earnings
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the years ended December 31, 1994 1993 1992
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 603,988 $ 538,534 $ 542,172
Cost of sales 449,746 417,215 410,156
------------------------------------------------------
Gross profit 154,242 121,319 132,016
Selling, administrative & general expenses 88,654 93,447 84,094
Restructuring charges 5,400 12,323 3,593
Provision for patent litigation 4,000 - -
------------------------------------------------------
Operating profit 56,188 15,549 44,329
------------------------------------------------------
Other income (expenses):
Interest expense (10,639) (13,960) (12,698)
Interest income 369 809 2,288
Other, net (1,465) (1,362) (1,027)
------------------------------------------------------
(11,735) (14,513) (11,437)
------------------------------------------------------
Income before income taxes, minority interest,
extraordinary losses and cumulative effect of
accounting changes 44,453 1,036 32,892
------------------------------------------------------
Income tax benefit (provision):
Current:
Federal (12,640) (4,031) (12,342)
State and local (3,980) (1,290) (2,236)
Deferred (888) 4,170 1,677
------------------------------------------------------
(17,508) (1,151) (12,901)
------------------------------------------------------
Income (loss) before minority interest,
extraordinary losses and cumulative
effect of accounting changes 26,945 (115) 19,991
Minority interest in loss (earnings)
of subsidiary - 329 (9,996)
------------------------------------------------------
Income before extraordinary losses and
cumulative effect of accounting changes 26,945 214 9,995
Extraordinary losses from early extinguishment
of debt - (4,182) -
Cumulative effect of change in accounting for
postretirement benefits other than pensions
and other postemployment benefits - (27,200) -
Cumulative effect of change in accounting for
income taxes - - 3,016
------------------------------------------------------
Net income (loss) 26,945 (31,168) 13,011
Retained earnings, beginning of year 90,221 127,324 118,437
Less: Cash dividends paid ($.65 per share in
1994 and $.64 per share in 1993 and 1992) 6,660 5,935 4,124
------------------------------------------------------
Retained earnings, end of year $ 110,506 $ 90,221 $ 127,324
------------------------------------------------------
Earnings (loss) per share of common stock:
Income before extraordinary losses and
cumulative effect of accounting changes $ 2.63 $ .02 $ 1.55
Extraordinary losses from early extinguishment
of debt - (.43) -
Cumulative effect of change in accounting for
postretirement benefits other than pensions
and other postemployment benefits - (2.82) -
Cumulative effect of change in accounting for
income taxes - - .47
------------------------------------------------------
Net income (loss) $ 2.63 $ (3.23) $ 2.02
------------------------------------------------------
Weighted average number of common shares
outstanding 10,245,112 9,634,622 6,442,065
------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
For the years ended December 31, 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 26,945 $ (31,168) $ 13,011
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 32,577 32,083 26,434
Amortization of original issue discount on
subordinated debentures - 229 459
Deferred income taxes 888 (4,170) (1,677)
Extraordinary losses from early extinguishment of debt - 4,182 -
Cumulative effect of accounting changes - 27,200 (3,016)
Restructuring charges 5,400 12,323 3,593
Provision for patent litigation 4,000 - -
Minority interest in (loss) earnings of subsidiary,
net of dividends - (941) 7,546
Loss on disposal of property, plant and equipment 2,320 1,506 3,081
Changes in assets and liabilities:
Accounts receivable, trade, net 980 (7,727) 1,783
Inventories (722) (4,666) 464
Other current assets (784) 159 1,960
Prepaid pension cost (1,868) (1,954) (2,879)
Accounts payable and accrued expenses 7,805 (2,517) (3,094)
Cash flows of discontinued operation - - (1,182)
Other, net 5,315 (3,240) 1,029
---------------------------------------------
Net cash provided by operating activities 82,856 21,299 47,512
---------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (63,721) (43,633) (32,266)
Purchase of minority interest in subsidiary - (32,992) -
Proceeds from disposal of property, plant and equipment 431 - 1,188
---------------------------------------------
Net cash used in investing activities (63,290) (76,625) (31,078)
---------------------------------------------
Cash flows from financing activities:
Cash dividends paid (6,660) (5,935) (4,124)
Change in short-term debt (5,000) (4,200) (800)
Borrowings on long-term debt 73,000 145,835 54,000
Payments of long-term debt (47,486) (146,692) (42,086)
Increase in restricted cash (26,325) - -
Treasury stock acquired - - (127)
---------------------------------------------
Net cash provided by (used in) financing activities (12,471) (10,992) 6,863
---------------------------------------------
Net increase (decrease) in cash and cash equivalents 7,095 (66,318) 23,297
Cash and cash equivalents, beginning of year 2,862 69,180 45,883
---------------------------------------------
Cash and cash equivalents, end of year $ 9,957 $ 2,862 $ 69,180
---------------------------------------------
Supplemental Cash Flow Information
Cash paid during the year for:
Interest (net of amount capitalized) $ 9,105 $ 10,268 $ 13,095
Income taxes (net of refunds) $ 13,856 $ 4,391 $ 15,691
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share amounts)
1. Summary of Significant Accounting Policies
Principles of Consolidation: The consolidated financial statements of American
Maize-Products Company include the accounts of its wholly owned subsidiaries and
American Fructose Corporation ("AFC"), over which the Company had effective
voting control prior to February 26, 1993, collectively referred herein as the
"Company." On February 26, 1993, AFC was merged with and into the Company (see
Note 2).
By-Product Revenues: Certain by-products are produced from the Company's corn
processing operations. Revenues from by-products are included in net sales and
aggregated $73,482, $71,903, and $78,454, in 1994, 1993 and 1992, respectively.
Consolidated Statements of Cash Flows: For presentation purposes in the
Consolidated Statements of Cash Flows, all highly liquid short-term investments,
with maturities of three months or less, are considered cash equivalents.
Concentration of Credit Risk: Financial instruments which potentially subject
the Company to a concentration of credit risk principally consist of cash, cash
equivalents and trade receivables.
The Company sells its principal products to a large number of customers
in many different industries and geographies. As of December 31, 1994 and 1993,
approximately 15% (with 17 customers) and 10% (with 11 customers), respectively,
of recorded trade receivables were concentrated in the soft drink industry. To
reduce credit risk, the Company performs ongoing credit evaluations of its
customers' financial conditions but does not generally require collateral.
The Company invests available cash in money market securities of
various banks, commercial paper of industrial and other companies with high
credit ratings and securities backed by the United States government.
Inventories: Inventories are stated at the lower of cost or market. The last-in,
first-out (LIFO) method is predominantly used to determine the cost of corn and
tobacco content in inventory. The average cost and the first-in, first-out
(FIFO) methods are used to value the remaining inventories.
Futures Contracts: The Company periodically enters into corn futures contracts
to hedge against sales commitments of corn-derived products. The Company
utilizes the corn futures market to minimize the inherent risk potential
resulting from significant fluctuations in the cost of corn. The Company does
not enter into corn futures contracts for trading or speculative purposes. In
accordance with its hedging policy, the Company only enters into corn futures
contracts to cover the corn requirements to manufacture products covered by
fixed price, fixed quantity contracts with customers and near term production
commitments. Futures contract quantities are matched with approximate
requirements under customer contracts by using the futures contract dates
closest to expected shipment dates to customers. The corn futures contracts
outstanding at December 31, 1994 and December 31, 1993 expire at various dates
and various prices through December, 1995. At December 31, 1994 and December 31,
1993, the Company had corn futures contracts of $24,841 (10,350,000 bushels) and
$33,173 (11,765,000 bushels), respectively. Unrealized gains and losses
associated with these contracts are deferred and are accounted for as part of
the hedged transaction. Based upon market rates, these contracts had a deferred
contract loss of $20 at December 31, 1994, and a deferred contract gain of
$1,634 at December 31, 1993. Settlement gains and losses on corn futures
contracts are matched to specific inventory purchases and credited or charged to
cost of sales at the time such inventory is sold. Based upon daily margin
account activity, including contract purchases, contract sales and market
fluctuations in the value of open contracts, cash settlement is made on a daily
basis to maintain margin accounts at specified levels.
Restricted Cash: Unused proceeds of debt incurred for the purpose of financing a
portion of the costs of acquisition, construction and installation of certain
sewage and solid waste disposal facilities at the Company's Hammond, Indiana
plant are presented as a long-term asset in the accompanying consolidated
financial statements.
These funds have been invested in highly liquid interest bearing
deposits, U.S. Treasury bills and commercial paper of industrial and other
companies with high credit ratings, having maturities of three months or less,
and are carried at cost which approximates market.
Property, Plant and Equipment: Property, plant and equipment is stated at cost
and includes expenditures for new facilities and those which increase the useful
lives of existing plant and equipment. Maintenance, repairs and minor renewals
are expensed as incurred. When property, plant and equipment is sold or retired,
the cost and accumulated depreciation applicable to assets retired, are removed
from the balance sheet and any gain or loss on the transaction is included in
income.
<PAGE>
Plant and equipment is depreciated over its estimated useful life,
using the straight-line method. Depreciation is based on the following useful
lives: buildings and improvements, 3 to 45 years; machinery and equipment, 3 to
20 years. Assets recorded under capital leases are amortized over the lease term
or, if title ultimately passes to the Company, over their estimated useful
lives. Accelerated depreciation methods are used for tax purposes.
Excess of Purchase Cost Over Net Assets of Companies Acquired: The excess of
purchase cost over net assets of companies acquired prior to November 1, 1970
($208 at December 31, 1994) is not being amortized since, in management's
opinion, its value has not diminished. The excess purchase cost relating to
companies acquired after November 1, 1970 is being amortized over either 40
years or 20 years. At each balance sheet date, management evaluates whether
there has been a permanent impairment in the value of goodwill by assessing the
carrying value of goodwill against anticipated future cash flows from related
operating activities. Factors which management considers in performing this
assessment include current operating results, trends and prospects and, in
addition, demand, competition and other economic factors.
Investment Tax Credits: Investment tax credits are recognized in the year that
the credits are utilized.
Fair Value of Financial Instruments: The following methods and assumptions were
used to estimate the fair value disclosures for financial instruments:
Cash and Cash Equivalents - The carrying amounts reported in the Consolidated
Balance Sheets approximate fair value.
Short-term debt - The carrying amounts reported in the Consolidated Balance
Sheets approximate fair value because of the short maturity of these
instruments.
Long-term debt - Fair market value is estimated based on current market
quotations, where available, for publicly traded debt securities, or based on
rates currently available to the Company for nonpublicly traded debt with
similar terms.
The estimated fair value of the Company's long-term debt is as follows:
At December 31, 1994 1993
- -------------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------------------------------------------------------
Long-term debt $165,693 $154,777 $140,179 $144,057
Environmental Matters: Accruals for environmental matters are recorded when it
is probable that a liability has been incurred and the amount of the liability
can be reasonably estimated, or if an amount is likely to fall within a range
and no amount within that range can be determined to be the better estimate, the
minimum amount of the range is recorded. Accruals for environmental matters
exclude claims for recoveries from insurance carriers and other third parties.
Accruals for such recoveries are recorded only when it is probable that the
recovery will be realized.
Earnings Per Share: Earnings per share of common stock has been computed based
upon the weighted average number of shares outstanding during each year.
Reclassifications: Certain reclassifications have been made in the prior years'
financial statements to conform with the 1994 presentation.
2. Business Changes
On February 26, 1993, upon the satisfaction of various conditions, including,
among other things, the approval of the stockholders of the Company and AFC, AFC
was merged with and into the Company. In accordance with the terms of the merger
agreement, 3,738,483 AFC shares were converted into a like number of the
Company's Class A Common Stock and 1,371,190 AFC shares were exchanged for a
total of $30,817 in cash. In addition, in accordance with the terms of the
merger agreement, 129,350 outstanding AFC options were converted into stock
options outstanding of the Company. The issuance of the Company's Class A Common
Stock (in the amount of $84,022) was a noncash transaction and was excluded from
the accompanying Consolidated Statements of Cash Flows.
Prior to the merger, the portion of AFC held by the public and earnings
or losses allocated thereto have been presented as "minority interest" in the
Consolidated Financial Statements. The merger has been treated as a purchase of
the minority interest for accounting purposes; accordingly consolidated results
include the entire amount of AFC's operations for periods subsequent to the
effective date of the merger.
In accordance with purchase accounting, the purchase price and direct
expenses associated with the merger were allocated to the proportionate fair
value of the assets purchased and liabilities assumed. These costs exceeded the
fair value of the net assets acquired in the merger by $9,710 and are being
amortized over a twenty year period.
<PAGE>
The following sets forth the unaudited proforma results of operations of the
Company as if the merger had occurred on January 1, 1992:
Years ended December 31, 1993 1992
- --------------------------------------------------------------------------------
Net sales $ 538,534 $ 542,172
Income (loss) before extraordinary losses and
cumulative effect of accounting changes $ (694) $ 16,478
Net income (loss) $ (32,076) $ 19,494
Earnings (loss) per share of common stock:
Income (loss) before extraordinary losses and
cumulative effect of accounting changes $ (.07) $ 1.62
Net income (loss) $ (3.14) $ 1.91
3. Inventories
Inventories consisted of the following:
At December 31, 1994 1993
- --------------------------------------------------------------------------------
Finished goods $ 28,904 $ 25,074
Work-in-process 4,154 4,344
Raw materials 37,625 38,882
Stores and supplies 16,172 17,833
------------------------------
$ 86,855 $ 86,133
------------------------------
At December 31, 1994 and 1993, inventories of $44,426 and $49,553, respectively,
were valued using the LIFO method of accounting. These amounts are less than the
corresponding replacement values by $12,998 at December 31, 1994 and $15,744 at
December 31, 1993. In 1994 and 1992, the carrying value of certain LIFO
inventories were reduced by $702 and $1,259, respectively, to replacement cost
(market).
4. Short-Term and Long-Term Debt
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
At December 31, 1994 1993
- -----------------------------------------------------------------------------------------
Current Long-term Current Long-term
-------------------------------------------------
<C> <C> <C> <C> <C>
7.875% Senior notes (a) $ - $125,000 $ - $125,000
8.0% Tax exempt revenue bonds (b) - 39,000 - -
Revolving credit borrowings (c) - - - 12,600
Capital lease obligation (d) 944 749 885 1,694
-------------------------------------------------
$ 944 $164,749 $ 885 $139,294
-------------------------------------------------
</TABLE>
(a) During 1993, the Company issued and sold at par $125,000 of 7.875% of Senior
notes. The notes require payments of $25,000 on March 3 of each year from 1999
through 2002 with the balance due on March 3, 2003.
(b) During December 1994, the Company issued and sold at par $39,000 of sewage
and solid waste disposal revenue bonds. The bonds mature on December 1, 2024.
Unused proceeds of the bonds are presented as restricted cash in the
accompanying Consolidated Balance Sheets (see Note 1).
(c) At December 31, 1993, the Company's revolving credit facility with various
banks provided for a commitment of $75,000 through June 30, 1995. Interest on
the facility is at a prime or a cost of funds based formula, at the Company's
option. The facility provides for the payment of a nominal commitment fee on the
unused portion of the facility during the revolving credit period. The facility
can be cancelled at any time by the Company without cost. At December 31, 1993,
the weighted average interest rate of borrowings under the facility was 3.75%.
Effective March 31, 1994, the Company entered into a new $125,000
revolving credit facility with various banks and the $75,000 facility was
cancelled. Interest on the new facility is at prime, LIBOR plus a variable
margin, or a cost of funds based formula, at the Company's option. The new
facility provides for the payment of a nominal commitment fee and a facility
fee. The new facility expires on December 31, 1998. The facility can be
cancelled at any time by the Company without cost.
(d) The Company leases certain land, buildings and equipment under the terms of
a capital lease. At December 31, 1994 and 1993, property, plant and equipment
included $1,834 and $2,461 (net of accumulated depreciation of $6,322 and
$5,695), respectively, related to the assets covered by this lease.
<PAGE>
The following is a schedule by year of future minimum capital lease payments as
of December 31, 1994:
Year ending December 31,
- ----------------------------------------------------
1995 $1,032
1996 773
-------
Total minimum lease payments 1,805
Less, amount representing interest 112
-------
Present value of minimum lease payments $1,693
-------
At December 31, 1994, total long-term debt maturing in each of the next five
years was as follows:
Year ending December 31,
- ----------------------------------------------------
1995 $ 944
1996 749
1997 -
1998 -
1999 25,000
The Company's borrowing agreements contain various covenants which, among other
things, require the Company to maintain specific levels of tangible net worth
and leverage (as defined), and limits the sale of property (as defined).
The Company also has open lines of credit with banks, which are
renewable on an annual basis, aggregating $10,000. The Company is required to
pay a nominal commitment fee on certain of these open lines of credit.
Outstanding borrowings under these lines of credit are classified as short-term
debt. At December 31, 1994, there were no borrowings under these lines of credit
while at December 31, 1993, $5,000 of the lines were used. At December 31, 1993,
the weighted average interest rate for line of credit borrowings was 3.4%.
At December 31, 1994, the Company had standby letters of credit in the
amount of $6,350 outstanding which related principally to an insurance program.
5. Income Taxes
The following reconciles the statutory federal income tax rate to the effective
tax rate:
Years ended December 31, 1994 1993 1992
- -------------------------------------------------------------------------------
Federal statutory rate 35.0% 35.0% 34.0%
State and local income taxes, net of federal
income tax benefit 4.9 49.9 3.5
Amortization of difference in tax and book basis
of certain assets .3 63.0 .9
Tax-exempt Foreign Sales Corporation income (1.2) (51.3) (.2)
Non-deductibility of meals and entertainment
expenses .5 8.5 .2
Other, net (.1) 6.0 .8
-------------------------------
Effective tax rate 39.4% 111.1% 39.2%
-------------------------------
<PAGE>
5. Income Taxes (continued)
The components of net deferred tax assets and liabilities at December 31, 1994
and 1993 are as follows:
At December 31, 1994 1993
- --------------------------------------------------------------
Deferred taxes:
Short-term deferred tax assets:
Restructuring reserves $ 3,993 $ 2,511
Vacation 331 331
Workers' compensation 653 623
- --------------------------------------------------------------
$ 4,977 $ 3,465
- --------------------------------------------------------------
Noncurrent deferred tax assets:
Postretirement and postemployment benefit
accruals $23,300 $22,350
Deferred compensation 1,891 1,362
Net operating loss carryforwards - 2,693
Minimum tax credit carryforwards 4,357 6,014
Net investment tax credit carryforwards - 1,520
- --------------------------------------------------------------
$29,548 $33,939
- --------------------------------------------------------------
Total $34,525 $37,404
- --------------------------------------------------------------
Noncurrent deferred tax liabilities:
Depreciation $34,224 $36,145
Step-up of certain fixed assets 18,750 20,741
Pension 8,669 6,536
Interest capitalization, net 2,780 2,196
Other 1,765 2,561
- --------------------------------------------------------------
Total $66,188 $68,179
- --------------------------------------------------------------
Deferred income taxes $31,663 $30,775
- --------------------------------------------------------------
As of December 31, 1994, the Company has available $4,357 of alternative minimum
tax credit carryforwards.
6. Pension and Savings Plans
The Company has several non-contributory defined benefit pension plans which
cover substantially all employees. Pension benefits are generally based on
either years of service and employee compensation during the last years of
employment or years of service times a multiplier. The funding policy is to
contribute annually amounts sufficient to meet the minimum requirements set
forth in applicable employee benefit and tax laws and such additional amounts as
the Company may determine, from time to time, to be appropriate. The vested
benefit obligation is determined based upon the expected date of retirement for
participants. To the extent that these requirements are fully covered by assets
on hand, a contribution, although not required, may be made in a particular
year.
During 1994, the Company recognized a pension curtailment loss of $737
which related to a plant consolidation in the tobacco business.
During 1993, the Company recognized a pension curtailment gain of $939
which related to a plant consolidation in the tobacco business.
Actuarially determined pension costs are accrued currently and include
amounts for current service and prior service costs which are amortized on a
straight-line basis over the participants' remaining service period.
<PAGE>
Negative pension expense for 1994, 1993 and 1992 included the following
components:
<TABLE>
<CAPTION>
Years ended December 31, 1994 1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $(4,242) $(3,851) $(3,051)
Interest cost on projected benefit obligations (8,251) (7,961) (7,235)
Curtailment (loss) gain (737) 939 -
Return on plan assets:
Actual income (loss) (2,116) 17,957 3,884
Deferred (loss) income 14,963 (6,351) 7,735
Amortization of:
Initial unrecognized net asset 1,198 1,198 1,198
Unrecognized prior service cost (269) (356) (356)
Unrecognized net (loss) gain (175) (63) 308
---------------------------------------
$ 371 $ 1,512 $ 2,483
---------------------------------------
Assumed rates of return on plan assets 10.0% 10.0% 10.0%
Assumed discount rates (used to measure year-
end projected benefit obligation) 8.5% 7.0% 8.0%
Assumed long-term rates of compensation
increases 4.8%-6.8% 4.8%-6.8% 5%-7.1%
</TABLE>
At December 31, 1994, the plans' assets were primarily invested in equity and
fixed income securities. The plans' funded status and amounts recognized in the
Company's Consolidated Balance Sheets for 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
At December 31, 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
Over- Under- Over- Under-
funded funded funded funded
Plans Plans Plans Plans
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation $ 70,750 $ 17,263 $ 76,850 $ 19,782
Non-vested benefit obligation 2,053 500 2,502 540
Additional amounts related to
projected pay increases 14,558 1,678 19,933 2,787
-----------------------------------------------------------
Projected benefit obligation $ 87,361 $ 19,441 $ 99,285 $ 23,109
-----------------------------------------------------------
Plan assets at fair value $ 105,028 $ 17,676 $ 110,282 $ 20,523
-----------------------------------------------------------
Projected benefit obligation (over)
under plan assets $ 17,667 $ (1,765) $ 10,997 $ (2,586)
Unrecognized net loss 4,558 2,498 8,554 5,073
Unrecognized prior service cost 734 1,037 1,525 926
Adjustment for additional liability - (2,903) - (3,389)
Balance of unrecognized net
(asset) obligation existing from date
of initial application (5,362) 136 (6,256) (112)
-----------------------------------------------------------
Prepaid (accrued) pension cost $ 17,597 $ (997) $ 14,820 $ (88)
-----------------------------------------------------------
</TABLE>
The decrease in the projected benefit obligation in 1994 compared to 1993, is
primarily due to the 1994 change in the assumed discount rate. Effective January
1, 1993, revisions to certain actuarial assumptions relating to mortality,
withdrawal, retirement and future salary increases were adopted by the Company.
<PAGE>
In addition to benefits provided under the Company's qualified pension
plans, the Company also provides pension benefits under a non-contributory
supplemental retirement plan ("Supplemental Plan") and a non-contributory
directors retirement plan ("Directors Plan"). The Supplemental Plan, which
covers certain executives and other key employees, restores the benefits of the
funded plans for limitations under the Employee Retirement Income Security Act
of 1974 and the Internal Revenue Code and maintains the pre-1989 benefit levels
for service prior to that date. Benefits under the Directors Plan are based upon
years of non-employee service on the Board of Directors and the directors'
remuneration during the last years of service on the Board of Directors.
Net pension expense under these other pension plans included the
following components:
<TABLE>
<CAPTION>
Years ending December 31, 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
Supple- Supple- Supple-
mental Directors mental Directors mental Directors
Plan Plan Plan Plan Plan Plan
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 520 $112 $241 $ 74 $263 $ 85
Interest cost on projected benefit
obligation 523 100 360 95 308 91
Amortization of:
Unrecognized prior service cost 402 90 238 106 195 114
Unrecognized net loss 100 17 44 - - 5
------------------------------------------------------------------------------
$1,545 $319 $883 $275 $766 $295
------------------------------------------------------------------------------
Assumed discount rates (used
to measure year end projected
benefit obligation) 5.7% 8.5% 4.7% 7.0% 5.3% 8.0%
Assumed long-term rates of
compensation increases 6.1% 6.0% 6.1% 6.0% 6.1% 6.0%
</TABLE>
The amounts recognized in the Company's Consolidated Balance Sheets regarding
these other pension plans are as follows:
<TABLE>
<CAPTION>
At December 31, 1994 1993
- ------------------------------------------------------------------------------------------------------------
Supplemental Directors Supplemental Directors
Plan Plan Plan Plan
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation $ 4,503 $ 1,212 $ 5,188 $ 1,284
Non-vested benefit obligation 1 147 5 148
Additional amounts related to
projected pay increases 5,128 68 2,775 2
--------------------------------------------
Projected benefit obligation $ 9,632 $ 1,427 $ 7,968 $ 1,434
--------------------------------------------
Plan assets at fair value $ - $ - $ - $ -
--------------------------------------------
Projected benefit obligation over plan
assets $(9,632) $(1,427) $(7,968) $(1,434)
Unrecognized net loss 210 125 2,080 291
Unrecognized prior service cost 6,165 136 3,805 226
Balance of unrecognized net obligation
from date of initial application - - - -
Adjustment for additional liability (1,246) (193) (3,110) (515)
--------------------------------------------
Accrued pension cost $(4,503) $(1,359) $(5,193) $(1,432)
--------------------------------------------
</TABLE>
In addition to benefits under the Company's pension plans, the Company sponsors
a savings plan ("Plan"), under Section 401(k) of the Internal Revenue Code, to
provide its eligible employees with additional income upon retirement. The Plan
requires specified contributions by the Company in either cash or the Company's
Class A Common Stock. Specified cash contributions must be invested by the
Plan's trustee in the Company's Class A Common Stock. Discretionary
contributions, by the Company, are also permitted. Expense under the Plan was
$1,495, $1,482 and $1,383 in 1994, 1993 and 1992, respectively.
<PAGE>
7. Postretirement Benefits Other Than Pensions
The Company provides certain health care benefits for retired employees and
their eligible dependents. A significant number of the Company's employees may
become eligible for these benefits if they are employed until retirement age and
have fulfilled certain service requirements.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions" ("SFAS 106"). Under the statement, postretirement benefits
are required to be recognized over the employees' active years of service. The
Company previously accounted for these costs on a cash basis. The adoption of
the statement created a transition obligation for previously unrecognized prior
years' costs. As permitted under SFAS 106, the Company elected to record the
transition obligation on the immediate recognition basis. Accordingly, the
Company recorded as a cumulative effect of an accounting change a charge of
$47,370 ($26,566, net of tax), or $2.75 per share.
Postretirement benefit expense for 1994 and 1993 included the following
components:
Year Ended December 31, 1994 1993
- ------------------------------------------------------------------------
Service cost $ 1,330 $ 1,379
Interest cost 3,028 3,642
------------------------
$ 4,358 $ 5,021
------------------------
The amount recognized in the Company's Consolidated Balance Sheets for
postretirement benefits other than pensions is as follows:
At December 31, 1994 1993
- --------------------------------------------------------------------------------
Actuarial present value of accumulated
postretirement benefit obligation:
Retirees $19,205 $ 24,493
Fully eligible active participants 7,163 11,065
Other active participants 13,707 18,915
Unrecognized gain (loss) 12,452 (4,405)
---------------------
$52,527 $ 50,068
---------------------
The assumed discount rate used to determine the accumulated postretirement
benefit obligation was 8.75% for 1994 and 7.25% for 1993. The assumed health
care cost trend rate used to measure the accumulated postretirement benefit
obligation was 13.0% initially, decreasing gradually to 5.5% in 2001 and
thereafter. A one percentage point increase in the assumed health care cost
trend rate in each year would increase the accumulated postretirement benefit
obligation as of December 31, 1994, by $5,615 and the aggregate of the service
cost and interest cost by $726 for the year ended December 31, 1994.
8. Postemployment Benefits Other Than To Retirees
The Company provides certain postemployment benefits to former or inactive
employees after employment but before retirement. Effective January 1, 1993, the
Company adopted Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" which requires that these benefits be
recorded on an accrual basis. The Company had previously recorded a portion of
these costs on an accrual basis; however, the adoption of this statement created
a transition obligation for previously unrecognized prior years' costs. As a
result of the adoption of the statement, the Company recorded a charge of $1,130
($634 net of tax), or $.07 per share, as a cumulative effect of an accounting
change.
9. Capital Stock
Class A and Class B Common Stock are identical in all respects except that
voting power of the Class A Common Stock is limited to the election of 30% of
the Board of Directors, to matters involving stock options and, under certain
circumstances, to the acquisition of the stock or assets of another company. All
other voting rights are vested in the Class B Common Stock (one vote per share)
and the Company's 7% Cumulative Preferred Stock (45 votes per share).
On February 10, 1993, the Company's stockholders approved proposals
which, among other things, increased the total number of the Company's Class A
Common Stock authorized by 6,250,000 shares and deleted the Cumulative Preferred
Stock from the authorized capital stock of the Company.
The Company's authorized stock includes 2,500,000 shares of Series
Preferred Stock, without par value. No Series Preferred Stock has been issued.
Changes in common stock, capital in excess of par value and treasury
stock for 1992, 1993 and 1994 were as follows:
<PAGE>
<TABLE>
<CAPTION>
Common Stock Capital Treasury Stock
---------------------------------------- in excess -------------------------------
Class A Class B of Par Class A Class B
Shares Amount Shares Amount Value Shares Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991 5,091,320 $4,073 1,809,282 $1,447 $ 41,932 409,485 67,225 $ 7,224
Exercise of stock options 19,100 15 - - 325 - - -
Purchase of treasury stock - - - - - 5,876 - 127
Treasury shares contributed
to employee savings plan - - - - 286 (21,080) - (189)
------------------------------------------------------------------------------------------
Balance at December 31, 1992 5,110,420 4,088 1,809,282 1,447 42,543 394,281 67,225 7,162
Issuance of Common Stock 3,738,483 2,991 - - 81,031 - - -
Treasury shares contributed
to employee savings plan - - - - 262 (27,291) - (245)
------------------------------------------------------------------------------------------
Balance at December 31, 1993 8,848,903 7,079 1,809,282 1,447 123,836 366,990 67,225 6,917
Exercise of stock options 23,750 19 - - 340 - - -
Treasury shares contributed
to employee savings plan - - - - 204 (18,842) - (169)
------------------------------------------------------------------------------------------
Balance at December 31, 1994 8,872,653 $7,098 1,809,282 $1,447 $124,380 348,148 67,225 $ 6,748
------------------------------------------------------------------------------------------
</TABLE>
10. Stock Option Plans
Under the Company's 1994 Stock Plan and 1985 Stock Option Plan, as amended,
options for 800,000 shares and 850,000 shares, respectively, of the Company's
Class A Common Stock may be granted to officers and other key employees of the
Company and its affiliates. Stock options granted under the plans may be either
incentive stock options or non-qualified options at exercise prices not less
than the fair market value per share at the date of grant. With respect to
options granted under the 1994 Stock Plan, a Committee of the Board of Directors
("Committee") determines the time or times at which an option may be exercised,
including the term of the option which may not exceed ten years; however, except
as otherwise provided under the plan, an option will not be exercisable during
the first year from the date of grant. Options granted under the 1985 Stock
Option Plan may be exercised at any time within ten years. Payment for options
exercised under the plans can be made in cash, or, if approved by the Committee,
in Class A Common Stock of the Company. Additionally, under the 1994 Stock Plan,
payment for options exercised can also be made, if approved by the Committee, by
surrender of outstanding awards under the plan.
Option activity for 1994, 1993 and 1992 was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
Optioned Optioned Optioned
Shares Price Range Shares Price Range Shares Price Range
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance outstanding at January 1, 478,948 $ 6.63-$22.88 230,898 $ 13.88-$22.88 204,098 $13.88-$23.24
Exercised (23,750) $ 6.63-$16.88 - - (19,100) $13.88-$21.25
Granted 168,500 $20.00 120,000 $16.25 57,000 $22.88
AFC option conversion - - 129,350 $ 6.63-$20.63 - -
Expired (21,750) $13.88-$22.88 (1,300) $ 20.94-$21.25 (11,100) $13.88-$23.24
----------------------------------------------------------------------------------------------
Balance outstanding
at December 31, 601,948 $ 6.63-$22.88 478,948 $ 6.63-$22.88 230,898 $13.88-$22.88
----------------------------------------------------------------------------------------------
Exercisable 562,948 478,948 230,898
----------------------------------------------------------------------------------------------
Available for grant 788,702 135,452 254,152
----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
11. Supplementary Information
Research and development expenditures for the development of new products and
for improvements of existing products were $3,702 in 1994, $3,890 in 1993 and
$3,147 in 1992. Interest costs incurred during 1994, 1993 and 1992 were $12,111,
$14,708 and $13,234, respectively. Interest capitalized in those years was
$1,472, $748 and $536, respectively.
12. Restructuring
During 1994, 1993 and 1992, the Company recorded restructuring charges of
$5,400, $12,323 and $3,593, respectively. The charges during 1994 and 1993
relate principally to costs of consolidation and reorganization of its business
units, divestiture of non-performing assets and other organizational changes.
The charge incurred during 1992 related to a plant consolidation in the
Company's tobacco business which was completed by the end of the second quarter
of 1993. Major items of the restructuring charges in 1993 and 1994 and the
reserve balances at December 31, 1993 and 1994 are as follows:
<TABLE>
<CAPTION>
Reserve Reserve
Provision Charges December 31, Provision Charges December 31,
1993 1993 1993 1994 1994 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Asset write-downs (1) $ 8,663 $ (8,663) $ - $ 1,910 $ (1,910) $ -
Organizational changes
- tobacco (2) - - - 1,215 (1,215) -
Organizational changes
- corporate (3) 2,000 (1,045) 955 - (429) 526
Litigation provision (4) 600 - 600 (600) - -
Plant consolidation - tobacco (5) - - - 2,489 (652) 1,837
Other (6) 1,060 (1,060) - 386 (238) 148
-----------------------------------------------------------------------------
Total $12,323 $ (10,768) $ 1,555 $ 5,400 $ (4,444) $ 2,511
-----------------------------------------------------------------------------
<FN>
(1) Asset write-downs of $8,663 in 1993 and $1,910 in 1994 were a noncash expense.
(2) The charge of $1,215 includes cash and noncash expenses of $800 and $415, respectively.
(3) Includes cash expenses of $1,045 and $429 in 1993 and 1994, respectively.
(4) During 1994, $600 was reclassified to the provision for plant consolidation - tobacco and is included in the $2,489.
(5) Includes cash expenses of $52 and noncash expenses of $600.
(6) Includes noncash expenses of $238.
The reserve balances of $1,555 at December 31, 1993 and $2,511 at December 31, 1994 are
included in other accrued expenses in the accompanying Consolidated Balance Sheets.
</TABLE>
13. Commitments
At December 31, 1994, the Company and its subsidiaries were committed under
long-term operating leases expiring through 2005. Minimum annual rental
commitments were as follows:
Transportation
Year ending December 31, Equipment Other Total
- --------------------------------------------------------------------
1995 $10,036 $883 $10,919
1996 8,960 318 9,278
1997 5,416 236 5,652
1998 4,081 55 4,136
1999 2,638 33 2,671
2000 and thereafter 788 - 788
Rent expense was $13,726, $13,992 and $12,657 in 1994, 1993 and 1992,
respectively.
The Company is committed to sell some of its products under short-term (two
to three months) and long-term (up to one year) contracts. At December 31, 1994,
long-term commitments approximated $90,041.
Sales to the Coca-Cola Company accounted for 14%, 12% and 11% of net sales in
1994, 1993 and 1992, respectively.
Until December 31, 1996, the Company has a guaranteed handling and storage
agreement with an outside party. Total expenses under this agreement were $2,364
in 1994, $2,199 in 1993 and $2,281 in 1992.
<PAGE>
14. Contingent Liabilities
The Company has certain contingent liabilities regarding existing or
potential claims, lawsuits and other proceedings, including those involving a
certain patent infringement claim and an environmental civil action.
With respect to the patent infringement claim, on May 12, 1981, Grain
Processing Corporation (-GPC-) brought a lawsuit against the Company in the
United States District Court for the Northern District of Indiana alleging
infringement of a patent owned by GPC relating to certain kinds of waxy starch
maltodextrins. The trial court in 1987 found infringement as to one small-volume
product, which had been discontinued by the time of the decision. On appeal by
GPC, the Court of Appeals in 1988 found that another product also had infringed,
in some instances. The case was sent back to trial court to determine how much
of the accused product was infringing, to assess what damages should be paid to
GPC, and to rule on GPC's claims for increased damages and attorney fees. GPC is
contending that it should receive damages based on its lost profits on products
it would have sold except for the infringement. The Company contends that any
damages awarded should be based on a reasonable royalty rather than lost
profits, because GPC never sold the patented product. The law on that issue is
in conflict at present. A hearing date of July 10, 1995 has been set to
determine the amount of damages the Company will be required to pay to GPC. On
June 27, 1994, the U.S. District Court for the Northern District of Indiana
denied the Company's motion seeking a reconsideration of the court's previous
ruling that the patent owned by GPC was valid. The Company then established a
reserve in the amount of $4,000 based on its contention that damages should be
based on a reasonable royalty. However, the Company's ultimate liability for
this action is not presently determinable. The GPC patent expired in 1991 and
has no present effect on the Company's activities.
With respect to the environmental civil action, on August 2, 1993, the United
States, on behalf of the U.S. Environmental Protection Agency (-EPA-), filed
suit against the Company, four other industrial companies and four
municipalities for alleged violations of the Clean Water Act and the Rivers and
Harbors Act. The issue in the suit involves discharges of industrial and
municipal wastewater by the defendants into the sewage treatment facilities of
the City of Hammond, Indiana and from there into the Grand Calumet River. The
Government is seeking civil penalties in an unspecified amount for alleged
violations of discharge permit limitations, injunctive relief to require
compliance with permit terms, and, from the Company and the other industrial
defendants and the City of Hammond, additional injunctive relief requiring the
development and implementation of a plan to remediate allegedly contaminated
sediments in the Grand Calumet River. The Company does not believe that its
discharges have caused or contributed to any sedimentation problem in the Grand
Calumet River, and it has already taken measures to ensure continued compliance
with the terms of its discharge permits. The Company intends to contest the
Government's allegations vigorously; however, management is unable to predict
the final outcome of this matter or the ultimate effect, if any, on its
operations or financial condition.
The Company has certain other contingent liabilities with respect to
litigation, claims and contractual agreements arising in the ordinary course of
business. In the opinion of management, such contingent liabilities are not
likely to result in any loss that would have a material adverse effect on the
Company's operating results or financial condition.
In addition, the Company is primarily liable for certain leases of a
discontinued operation which, by their terms, call for lease payments which
aggregate a maximum amount of approximately $4,800 at December 31, 1994.
15. Subsequent Events
On January 6, 1995, the Company announced that it had received a proposal from
Eridania Beghin-Say, S.A. (-EBS-) to acquire the Company for $32 per share and
that its Board of Directors had determined that such price was inadequate.
On January 20, 1995, the Company announced that it had received a revised
proposal from EBS to acquire the Company for $37 per share in cash and that the
Company had engaged CS First Boston Corporation to act as its financial advisor
in connection with its consideration of the proposal.
Three purported class action lawsuits were filed shortly after the
Company's January 6, 1995 announcement regarding the EBS proposal. The Company
and each individual director are named as defendants. The complaints allege that
the directors breached their fiduciary duties to the shareholders with respect
to the EBS proposal. The plaintiffs seek injunctive relief, including
appointment of an independent committee to evaluate the proposal, and monetary
relief in an unspecified amount. The Company believes that the allegations in
the complaints are without merit and will contest these actions vigorously.
On February 22, 1995, the Company announced that it entered into a definitive
merger agreement providing for the acquisition of the Company by EBS. The
agreement, which was approved by the Company's Board of Directors, provides that
EBS will commence a tender offer for all outstanding shares of common stock of
the Company at a purchase price of $40 per share. Following the successful
completion of the tender offer, a subsidiary of EBS will merge with the Company
and each remaining share of the Company will be converted into the right to
receive $40. The Company's Board is recommending that its stockholders accept
the offer and approve the merger.
In connection with the merger agreement, the parties entered into a stock
purchase agreement, pursuant to which EBS will purchase, at a price of $40 per
share, all authorized but unissued shares of Class B common stock of the Company
(an aggregate of 757,943 shares) which remain available for purchase following
the exercise by holders of the Class B common stock of preemptive rights. In
this connection, the Company intends to distribute rights to its Class B
stockholders which will entitle such stockholders to purchase, at $40 per share,
their proportionate share of the Class B common stock available for purchase by
EBS.
The tender offer is subject to a number of conditions including, among
others, the receipt by EBS of a number of the Company's shares following the
tender offer which, together with the shares that EBS is then obligated to
purchase under the stock purchase agreement, constitutes a majority of the
outstanding shares of each class of the Company's stock. The stock purchase
agreement is conditioned upon, among other things, the completion of the tender
offer and the preemptive rights offering.
In addition, William Ziegler, III, Chairman of the Board, and GIH Corp., a
Delaware corporation that Mr. Ziegler claims to control, have commenced
litigation in Superior Court, Cumberland County, Maine seeking injunctive relief
against the merger agreement and the stock purchase agreement. The complaint
names as defendants the remaining members of the Company's Board of Directors
and asserts they wrongfully approved the merger agreement and stock purchase
agreement and states that a -break-up- fee payable to EBS under certain
conditions is illegal. The complaint also alleges that the Board wrongfully
approved certain severance contracts for its employees. The Company believes
this litigation is without merit and intends to vigorously defend it.
<PAGE>
16. Industry Segments
Information about the Company's operations in different industries is as
follows:
<TABLE>
<CAPTION>
Corn Tobacco
Business Business Consolidated
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fiscal year 1994:
Net sales $ 440,703 $ 163,285 $ 603,988
----------------------------------
Operating profit $ 43,669 $ 23,986 $ 67,655
----------------------
Corporate expenses (11,467)
Interest expense (10,639)
Interest income 369
Other expense, net (1,465)
Income before income taxes, minority ---------
interest, extraordinary losses and
cumulative effect of accounting changes $ 44,453
---------
Identifiable assets $ 367,504 $ 116,737 $ 484,241
----------------------
Corporate assets 67,731
---------
Total assets $ 551,972
---------
Depreciation and amortization $ 28,064 $ 4,513 $ 32,577
---------
Capital expenditures $ 59,007 $ 4,714 $ 63,721
Fiscal year 1993: ---------
Net sales $ 380,315 $ 158,219 $ 538,534
----------------------------------
Operating profit $ 16,958 $ 13,846 $ 30,804
----------------------
Corporate expenses (15,255)
Interest expense (13,960)
Interest income 809
Other expense, net (1,362)
---------
Income before income taxes, minority
interest, extraordinary losses and
cumulative effect of accounting changes $ 1,036
---------
Identifiable assets $ 339,748 $ 121,364 $ 461,112
----------------------
Corporate assets 27,946
---------
Total assets $ 489,058
---------
Depreciation and amortization $ 27,603 $ 4,480 $ 32,083
---------
Capital expenditures $ 39,125 $ 4,508 $ 43,633
---------
Fiscal year 1992:
Net sales $ 391,513 $ 150,659 $ 542,172
----------------------------------
Operating profit $ 37,995 $ 14,818 $ 52,813
----------------------
Corporate expenses (8,484)
Interest expense (12,698)
Interest income 2,288
Other expense, net (1,027)
---------
Income before income taxes, minority
interest, extraordinary losses and
cumulative effect of accounting changes $ 32,892
---------
Identifiable assets $ 265,071 $ 126,160 $ 391,231
----------------------
Corporate assets 92,772
---------
Total assets $ 484,003
---------
Depreciation and amortization $ 21,855 $ 4,579 $ 26,434
---------
Capital expenditures $ 28,072 $ 4,194 $ 32,266
---------
</TABLE>
The Corn Business segment involves the production and sale of a number of
corn-derived products, including corn sweeteners, corn starches and by-products
to companies in various industries.
The Tobacco Business segment involves principally the manufacture and sale of
cigars, dry snuff, chewing tobacco and moist snuff products.
Identifiable assets are those assets used in operations in each segment.
Corporate assets are principally cash, short-term investments, prepaid pension
costs and certain other noncurrent assets.
17. Quarterly Results of Operations-(Unaudited)
Quarterly results of operations for the years ended December 31, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31 June 30 September 30 December 31
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fiscal year 1994:
Net sales $ 137,839 $ 160,941 $ 163,409 $ 141,799
----------------------------------------------------
Gross profit $ 33,238 $ 40,181 $ 39,997 $ 40,826
----------------------------------------------------
Income before extraordinary
losses and cumulative effect of
accounting changes $ 683(1) $ 6,100(2) $ 9,478 $ 10,684
Extraordinary losses from early
extinguishment of debt - - - -
Cumulative effect of accounting changes - - - -
----------------------------------------------------
Net income (loss) $ 683 $ 6,100 $ 9,478 $ 10,684
----------------------------------------------------
Earnings (loss) per share:
Income (loss) before extraordinary
losses and cumulative effect of
accounting changes $ .07 $ .60 $ .92 $ 1.04
Extraordinary losses from early
extinguishment of debt - - - -
Cumulative effect of accounting changes - - - -
----------------------------------------------------
Net income $ .07 $ .60 $ .92 $ 1.04
----------------------------------------------------
Fiscal year 1993:
Net sales $ 115,006 $ 135,847 $ 151,825 $ 135,856
----------------------------------------------------
Gross profit $ 22,838 $ 30,625 $ 36,041 $ 31,815
----------------------------------------------------
Income (loss) before extraordinary
losses and cumulative effect of
accounting changes $ (4,966)(3) $ (3,621)(3) $ 5,428 $ 3,373
Extraordinary losses from early
extinguishment of debt (2,862)(4) - - (1,320)(4)
Cumulative effect of accounting changes (27,200) - - -
----------------------------------------------------
Net income (loss) $(35,028) $ (3,621) $ 5,428 $ 2,053
----------------------------------------------------
Earnings (loss) per share:
Income (loss) before extraordinary
losses and cumulative effect of
accounting changes $ (.63) $ (.35) $ .53 $ .33
Extraordinary losses from early
extinguishment of debt (.36) - - (.13)
Cumulative effect of accounting changes (3.45) - - -
----------------------------------------------------
Net income (loss) $ (4.44) $ (.35) $ .53 $ .20
----------------------------------------------------
<FN>
(1) Includes a restructuring charge of $3,294 (net of tax), or $.32 per share, related to consolidation
of the Company's tobacco businesses.
(2) Includes a charge of $2,600 (net of tax), or $.25 per share, related to the establishment of a
reserve for ongoing patent infringement litigation.
(3) Includes restructuring charges of $7,720 (net of tax), or $.82 per share, related to cost of consolidation
and modernization programs in the Company's business units, divestiture of non-performing assets and
organizational changes.
(4) As a result of these early extinguishments, extraordinary losses of $4,182 (after income tax benefits
of $2,155) were incurred.
</TABLE>
<PAGE>
Exhibit 21
SUBSIDIARIES
(a) Swisher International, Inc., a Delaware corporation which is wholly
owned by the Company;
(b) Martin Brothers International, Inc., a New York corporation which is
wholly owned by Swisher International, Inc.;
(c) Swisher International, Ltd., a corporation formed under the laws of the
United Kingdom, which is wholly owned by Martin Brothers International,
Inc.;
(d) Lloyd Home & Building Centers, Inc., a Delaware corporation which is
wholly owned by the Company;
(e) AMPCO Holding Corporation, a Texas corporation which is wholly owned by
American Maize-Products Decatur Inc.;
(f) AMP International Exporting, Inc., a corporation formed under the laws
of Barbados, which is wholly owned by American Maize-Products Decatur
Inc.;
(g) American Maize Technology, Inc., a Texas corporation, which is owned by
the Company (17%) and Swisher International, Inc. (83%);
(h) American Maize-Products Decatur Inc., a Delaware corporation which is
wholly owned by the Company; and
(i) American Maize-Products Dimmitt Inc., a Delaware corporation which is
wholly owned by the Company.
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
American Maize-Products Company:
We consent to the incorporation by reference in the Registration Statements of
American Maize-Products Company on Form S-8 (File Nos. 33-54893, 33-69794,
33-69796, 2-90927, 33-664 and 33-22943) and Form S-3 (File No. 33-57863) of our
report dated February 28, 1995 on our audits of the consolidated financial
statements and financial statement schedules of American Maize-Products Company
as of December 31, 1994 and 1993 and for each of the three years in the period
ended December 31, 1994, which report is included in this Annual Report on Form
10-K.
COOPERS & LYBRAND L.L.P.
Stamford, Connecticut
March 6, 1995.
<PAGE>
<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
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<PERIOD-END> DEC-31-1994
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0
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<PAGE>
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