<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 2, 1994
REGISTRATION NO. 33-54573
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MISSISSIPPI CHEMICAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
MISSISSIPPI 2898 64-0292638
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
P.O. BOX 388
YAZOO CITY, MISSISSIPPI 39194
(601) 746-4131
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
ROBERT E. JONES
VICE PRESIDENT AND GENERAL COUNSEL
MISSISSIPPI CHEMICAL CORPORATION
P.O. BOX 388
YAZOO CITY, MISSISSIPPI 39194
(601) 746-4131
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
FREDERICK W. AXLEY, P.C. LEONARD M. LEIMAN, ESQ.
MCDERMOTT, WILL & EMERY FULBRIGHT & JAWORSKI L.L.P.
227 WEST MONROE STREET 666 FIFTH AVENUE
CHICAGO, ILLINOIS 60606-5096 NEW YORK, NEW YORK 10103
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (par value 5,520,000
$.01 per share)................. shares $15.50 $85,560,000 $29,504(3)
Preferred Share Purchase Rights
which are attached to and trade 5,520,000
with the Common Stock........... Rights -- -- --
- --------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Includes 720,000 shares subject to an over-allotment option granted to the
Underwriters.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a).
(3) $28,552 of this fee has been previously paid.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 2, 1994
4,800,000 SHARES
LOGO
COMMON STOCK
($.01 PAR VALUE)
Of the 4,800,000 shares of Common Stock offered hereby, 3,200,000 are being
issued and sold by the Company and 1,600,000 are being sold by the Selling
Shareholders. The Company will not receive any of the proceeds from the sale of
shares of Common Stock by the Selling Shareholders. See "Principal and Selling
Shareholders." It is currently estimated that the public offering price will be
between $13.50 and $15.50 per share. See "Underwriting" for information
relating to the method of determining the public offering price.
Prior to this offering there has been no established trading market for the
Common Stock. Application has been made to approve the Common Stock for
quotation in the Nasdaq Stock Market's National Market (the "Nasdaq National
Market") under the symbol "MISS."
FOR INFORMATION CONCERNING CERTAIN FACTORS RELATING TO THIS OFFERING, SEE
"INVESTMENT CONSIDERATIONS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO COMMISSIONS PROCEEDS TO SELLING
PUBLIC (1) COMPANY (2) SHAREHOLDERS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share......... $ $ $ $
- ------------------------------------------------------------------------------
Total (3)......... $ $ $ $
</TABLE>
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- --------------------------------------------------------------------------------
(1) See "Underwriting" for indemnification arrangements.
(2) Before deducting estimated expenses of $500,000 payable by the Company.
(3) The Company and certain Selling Shareholders have granted to the
Underwriters a 30-day option to purchase up to an additional 720,000 shares
of Common Stock at the Price to Public, less the Underwriting Discounts and
Commissions shown above, solely to cover over-allotments, if any. If this
option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions, Proceeds to Company and Proceeds to Selling
Shareholders will be $ , $ , $ and $ ,
respectively. See "Underwriting."
The shares of Common Stock offered hereby are being offered by the several
Underwriters named herein, subject to prior sale and acceptance by the
Underwriters and subject to their right to reject any order in whole or in
part. It is expected that the Common Stock will be available for delivery on or
about August , 1994 at the offices of Wertheim Schroder & Co. Incorporated,
New York, New York.
Wertheim Schroder & Co. The Robinson-Humphrey
INCORPORATED Company, Inc.
August , 1994
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY SELLING SHAREHOLDER OR ANY OF THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, ANY SECURITY OTHER THAN THE SECURITIES COVERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH AN OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS
FURNISHED OR THE DATE HEREOF.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-1 (together with all
amendments, schedules and exhibits thereto, the "Registration Statement") under
the Securities Act with respect to the Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith files
reports, proxy statements and other information with the Commission. For
further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement. Statements made in
this Prospectus as to the contents of any contract, agreement or other document
are not necessarily complete; with respect to each such contract, agreement or
other document filed as an exhibit to the Registration Statement, reference is
made to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such
reference. Reports and proxy and other information statements filed by the
Company and the Registration Statement and the exhibits thereto may be
inspected, without charge, at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661, and 7 World
Trade Center, Suite 1300, New York, NY 10048. Copies of such material can also
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................ 3
Investment Considerations......... 7
The Company....................... 10
The Reorganization................ 11
Disposition of NSI................ 12
Use of Proceeds................... 13
Dilution.......................... 14
Capitalization.................... 15
Dividend Policy................... 15
Selected Financial Data........... 16
Pro Forma Balance Sheet........... 18
Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ 20
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fertilizer Industry Overview........ 27
Business............................ 29
Management.......................... 40
Certain Relationships and Related
Transactions....................... 45
Principal and Selling Shareholders.. 47
Description of Capital Stock........ 49
Shares Eligible for Future Sale..... 52
Underwriting........................ 53
Legal Matters....................... 54
Experts............................. 54
Index to Financial Statements....... F-1
</TABLE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Financial Statements and Notes thereto, appearing elsewhere
in this Prospectus. Except as otherwise noted, all information in this
Prospectus assumes no exercise of the Underwriters' over-allotment option.
Fiscal year references refer to years ending June 30.
THE COMPANY
Mississippi Chemical Corporation (the "Company") is a major producer and
supplier of nitrogen fertilizers in the southern United States, and believes it
is one of the nation's lowest-cost nitrogen fertilizer producers. The Company
also manufactures phosphate and potash fertilizers, making it a full product
line fertilizer supplier. The Company sells its nitrogen and potash fertilizer
products to farmers, fertilizer dealers and distributors for ultimate use
primarily in the southern farming regions of the United States and areas served
by the Mississippi River system. The Company's phosphate fertilizers are sold
primarily in international markets.
Nitrogen, phosphorous (contained in phosphate fertilizer) and potassium
(contained in potash fertilizer) constitute the three major nutrients required
for plant growth. Nitrogen is an essential nutrient for most plants.
Phosphorous aids in the photosynthesis process, and potassium is an important
regulator of the physiological functions of plants. These elements are all
naturally present in soil but need to be replaced through the use of
fertilizers as crops exhaust them. There are no viable substitutes for
nitrogen, phosphate or potash fertilizers in the development and maintenance of
high-yield crops.
Nitrogen Fertilizer. The Company produces nitrogen fertilizers at facilities
located in Yazoo City, Mississippi, and Donaldsonville, Louisiana. In fiscal
1994, the Company sold over 1.6 million tons of nitrogen fertilizers to
farmers, fertilizer dealers and distributors located primarily in the southern
United States. Sales of nitrogen products by the Company in fiscal 1994 were
$199.9 million, which represented approximately 65% of net sales. Nitrogen
products manufactured by the Company include anhydrous ammonia, fertilizer-
grade ammonium nitrate, urea/ammonium nitrate ("UAN") solutions and urea. The
Company is the largest U.S. manufacturer of ammonium nitrate fertilizer, which
is marketed under the trade name Amtrate(R). Amtrate(R) has established
significant brand name recognition and a reputation as a high-quality product.
Phosphate Fertilizer. The Company produces diammonium phosphate fertilizer
("DAP") at its facility in Pascagoula, Mississippi. In fiscal 1994, the Company
sold approximately 638,000 tons of DAP, which is the most widely used phosphate
fertilizer. Sales of DAP by the Company in fiscal 1994 were $83.4 million,
which represented approximately 27% of net sales. Substantially all of the
Company's phosphate fertilizer sales are made through Atlantic Fertilizer &
Chemical Corporation ("Atlantic"), which was appointed the Company's exclusive
distributor of DAP when the Company started production of DAP in December 1991.
In fiscal 1994, approximately two-thirds of the Company's DAP production was
sold into international markets, primarily to customers in India, China and
Mexico. Phosphate rock, the primary raw material for the production of
phosphate fertilizer, is provided under a long-term contract with Office
Cherifien des Phosphates ("OCP"), the national phosphate company of Morocco,
which is the world's largest producer of phosphate rock. The continued
viability and competitiveness of the Company's phosphate operations are
dependent on this strategic alliance with OCP. See "Business--Raw Materials."
Potash Fertilizer. The Company produces potash fertilizer at its facility
located near Carlsbad, New Mexico. In fiscal 1994, the Company sold
approximately 330,000 tons of granular 60% K/2/O muriate of potash. Sales of
potash fertilizer by the Company in fiscal 1994 were $24.1 million, which
represented approximately 8% of net sales. In May 1994, the Company completed
an expansion of its Carlsbad facility, which has increased granular potash
production capacity from approximately 300,000 tons to approximately 420,000
tons per year. The Company controls the single largest reserve of potash in the
U.S., with an estimated remaining life, at current production rates, of
approximately 140 years.
3
<PAGE>
Business Strategy. The Company's products are global commodities which are
available from multiple sources; therefore, the Company competes primarily on
the basis of price. As a result, the Company stresses low cost and high
efficiency in every aspect of its operations. Unlike many of its competitors,
the Company maintains a large and experienced field sales force strategically
located throughout its trade area. Through its sales force, the Company
provides extensive, cost-effective services to its customers to differentiate
its products, enhance competitiveness and establish the Company as a preferred
supplier. The Company's marketing efforts are focused on geographically
proximate markets where lower transportation and distribution costs increase
"net backs" (sales less distribution and delivery expenses) and result in
improved margins. The Company's recent change in corporate status from a
cooperative to a regular business corporation should present additional
opportunities to improve net backs and enhance profit margins. Finally, the
Company continuously monitors opportunities to expand its operations through
capacity additions, acquisitions, joint ventures and strategic alliances in the
fertilizer business.
THE REORGANIZATION
The Company is the successor by merger, effective July 1, 1994, to a business
which was formed in 1948 as the first fertilizer cooperative in the United
States (the "Cooperative"). The principal business of the Cooperative was to
provide fertilizer products to its shareholders pursuant to preferred patronage
rights which gave the shareholders the right to purchase fertilizer products
and receive a patronage refund on fertilizer purchases. On June 28, 1994, the
shareholders of the Cooperative approved a plan of reorganization (the
"Reorganization"), pursuant to which the Cooperative was merged into the
Company. Pursuant to the Reorganization, the capital stock of the Cooperative
was converted into Common Stock and/or cash. In addition, holders of Capital
Equity Credits and Allocated Surplus Accounts of the Cooperative (the "Special
Accounts") were offered the right to exchange the Special Accounts for Common
Stock. Since July 1, 1994, the Company has operated as a regular business
corporation. References in this Prospectus to the Company's operations prior to
July 1, 1994, refer to the Cooperative's operations.
The Board of Directors of the Cooperative decided to implement the
Reorganization because it believed that the Company needed greater flexibility
in marketing its products than was possible under its cooperative structure.
Following the Reorganization, the Company believes that it will be able to be
more responsive to its customers' needs and be better able to promote its
position as a preferred supplier of fertilizer products in its core markets in
the southern U.S. The Company also believes that its new corporate structure
will increase opportunities for market expansion and growth of operations. The
Company expects to retain the majority of the Cooperative's customer base and
expects that its sales and profitability will not be adversely affected by the
Reorganization. In addition, following the Reorganization, the Company expects
to have enhanced access to capital markets and increased options in connection
with potential business combinations. See "The Reorganization."
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the 3,200,000 shares
Company...........................
Common Stock offered by the Selling 1,600,000 shares
Shareholders......................
Common Stock to be outstanding 22,654,354 shares (1)
after the Offering................
Use of proceeds.................... To retire indebtedness and for general
corporate purposes. See "Use of Proceeds."
Proposed Nasdaq National Market MISS
symbol............................
Dividend policy.................... The Company expects to pay a quarterly cash
dividend of $0.08 per share, commencing
with a payment in February 1995 with
respect to the quarter ending December 31,
1994. See "Dividend Policy."
</TABLE>
- --------
(1)Assumes conversion of all Special Accounts into shares of Common Stock. Up
to an additional 128,880 shares may be issued if certain small shareholders of
the Cooperative elect not to receive cash in the Reorganization.
4
<PAGE>
SUMMARY FINANCIAL DATA
For the periods presented, the Company operated as a cooperative. The
following table, which sets forth certain financial information, in summary
form, with respect to the Cooperative, including certain assumptions to show
the effect on results if the Company had operated as a regular business
corporation, is qualified in its entirety by, and should be read in conjunction
with, the consolidated financial statements and related notes appearing
elsewhere herein.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales.................... $309,360 $289,125 $239,657 $214,990 $180,316
Operating expenses:
Cost of products sold...... 217,809 213,715 152,324 112,622 110,832
Provision for closure of
gypsum disposal
area (1).................. 6,055 -- -- -- --
Selling, general and
administrative............ 47,591 46,230 46,529 47,395 38,536
-------- -------- -------- -------- --------
271,455 259,945 198,853 160,017 149,368
-------- -------- -------- -------- --------
Operating income............. 37,905 29,180 40,804 54,973 30,948
Other (expense) income:
Interest, net.............. (3,991) (3,569) (3,930) (4,307) (4,246)
Restructuring (2).......... (1,402) -- -- -- --
Other...................... 421 767 (531) 777 2,062
-------- -------- -------- -------- --------
Margins from continuing
operations before income
taxes....................... 32,933 26,378 36,343 51,443 28,764
Income tax expense (credit).. 6,021 3,697 4,994 3,406 (294)
-------- -------- -------- -------- --------
Margins from continuing
operations.................. $ 26,912 $ 22,681 $ 31,349 $ 48,037 $ 29,058
======== ======== ======== ======== ========
Income from continuing
operations assuming
conversion from a
cooperative to a regular
business corporation as of
July 1, 1989 (3)............ $ 21,415 $ 17,533 $ 22,821 $ 33,999 $ 20,826
======== ======== ======== ======== ========
Earnings per share (4)....... $ 1.10 $ 0.92 $ 1.23 $ 1.90 $ 1.18
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
JUNE 30, 1994
-------------
<S> <C>
PRO FORMA INCOME STATEMENT DATA:
Operating income.................................................. $ 37,905
Interest expense, net (5)......................................... (460)
Other income...................................................... 421
--------
Income from continuing operations before income taxes............. 37,866
Income tax expense (6)............................................ 13,056
--------
Income from continuing operations................................. $ 24,810
========
Earnings per share (7)............................................ $ 1.10
========
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING DATA:
Net sales:
Nitrogen........................................ $199,918 $189,127 $176,835
DAP............................................. 83,367 78,906 36,034(8)
Potash.......................................... 24,084 20,149 25,482
Other........................................... 1,991 943 1,306
-------- -------- --------
Net sales..................................... $309,360 $289,125 $239,657
======== ======== ========
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Tons sold:
Nitrogen........................................ 1,643 1,602 1,544
DAP............................................. 638 692 262(8)
Potash.......................................... 330 283 339
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1994
----------------------
ACTUAL PRO FORMA (9)
-------- -------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital......................................... $ 34,931 $ 28,695
Total assets............................................ 298,430 298,430
Long-term debt, excluding long-term debt due within one
year................................................... 57,217 15,965
Shareholders' equity.................................... 142,956 177,972
</TABLE>
- --------
(1) During fiscal 1994, the Company recorded a non-cash charge of approximately
$6.1 million relating to the estimated cost of the closure of the gypsum
disposal facility located at its Pascagoula facility. This charge relates
to the portion of the disposal facility utilized to date and it is
estimated that future charges aggregating approximately $3.0 million will
be accrued over the six-year estimated remaining life of the disposal
facility.
(2) Reflects expenses of the Reorganization.
(3) For the periods presented, the Company operated as a cooperative and
realized deductions for income taxes for amounts paid in cash as patronage
refunds to its shareholder-members. If the conversion from a cooperative to
a regular business corporation had occurred as of July 1, 1989, income
taxes would have been increased by the following approximate amounts: $5.5
million, $5.1 million, $8.5 million, $14.0 million and $8.2 million for
fiscal 1994, 1993, 1992, 1991 and 1990, respectively.
(4) Earnings per share reflect the Reorganization as if it had occurred July 1,
1989. Weighted average shares outstanding would have been 19,454,354,
19,035,276, 18,521,287, 17,885,416 and 17,723,107 for fiscal 1994, 1993,
1992, 1991 and 1990, respectively.
(5) Interest expense, net, reflects a reduction in interest expense of $3.5
million related to the reduction in long-term debt from the net proceeds of
the Offering.
(6) Reflects taxation as a C corporation as a result of the Reorganization, as
well as the reduction in interest expense from the application of the net
proceeds from the Offering.
(7) Earnings per share is calculated based on the weighted average shares
outstanding assuming the Reorganization had occurred prior to the periods
presented (see Note 4 above), plus the estimated number of shares to be
sold by the Company in the Offering.
(8) The Company began production of DAP in December 1991.
(9) Reflects the Reorganization and the sale by the Company of 3,200,000 shares
of Common Stock in the Offering, assuming a public offering price of $14.50
per share, and the application of the net proceeds thereof. See "The
Reorganization," "Use of Proceeds" and "Pro Forma Balance Sheet," including
the notes thereto.
6
<PAGE>
INVESTMENT CONSIDERATIONS
In addition to the other information set forth in this Prospectus, the
following investment considerations should be considered carefully in
evaluating the Company and its business before purchasing any shares of Common
Stock offered hereby.
Effect of Reorganization on Operations. Until July 1, 1994, the Company
operated as a cooperative. As a cooperative, the substantial majority of the
Cooperative's sales of nitrogen fertilizers were made to its shareholders, who
purchased products pursuant to preferred patronage rights and received
patronage refunds with respect to their purchases. The Cooperative paid to its
shareholder-customers a patronage refund consisting of the excess of the sales
price of products over the cost of manufacturing, distributing and selling the
products ("patronage refunds"). It is expected that the Company will maintain
its nitrogen fertilizer customer base even though the Company will no longer
grant preferred patronage rights or pay patronage refunds, although there can
be no assurance that the Reorganization will not have a material adverse effect
on the Company's results of operations. DAP and virtually all potash fertilizer
have historically been sold by the Company outside the cooperative structure.
Factors Affecting Fertilizer Demand and Prices. With virtually all of its
nitrogen fertilizer net sales and approximately 82% of its total net sales in
fiscal 1994 derived from domestic markets, the Company's operating results are
highly dependent upon conditions in the U.S. agricultural industry. A variety
of factors beyond the Company's control can materially affect domestic
fertilizer demand and pricing. These factors include U.S. planted acreage,
government agricultural policies (including subsidy and acreage set-aside
programs), projected grain stocks, crop failure, weather and changes in
agricultural production methods.
International market conditions also significantly influence the Company's
business. The market for fertilizers is influenced by such factors as the
relative value of the U.S. dollar and its impact upon the cost of importing
fertilizers, foreign agricultural policies, the existence of, or changes in,
import or foreign currency exchange barriers in certain foreign markets,
changes in the hard currency demands of certain countries, such as the former
Soviet Union ("FSU"), and other regulatory policies of foreign governments, as
well as the laws and policies of the U.S. affecting foreign trade and
investment. The Company is also subject to the risks of doing business abroad,
including risks associated with economic or political instability, risks
associated with the value of the U.S. dollar and potential import restrictions
or quotas.
In the recent past, fertilizer prices have been extremely volatile, with
significant price changes from one growing season to the next. The Company
believes that world supply and demand for nitrogen fertilizers are currently in
a more favorable balance than in certain prior years. However, nitrogen
fertilizer is a global commodity and can be subject to intense price
competition from domestic and foreign sources. Between 1987 and 1993, phosphate
fertilizer prices declined to their lowest levels since 1977 as a result of an
acute supply surplus. During late 1993, the price of phosphate fertilizer
increased significantly, primarily in response to increased purchases by China
and India, the primary export markets for the U.S. phosphate fertilizer
industry. Potash fertilizer prices have remained relatively stable since 1988.
No assurance can be given, however, that average realized prices paid for the
Company's fertilizer products will continue at current levels.
Seasonality. The usage of fertilizer is highly seasonal, and the Company's
quarterly results reflect the fact that, in the Company's markets,
significantly more fertilizer is purchased in the spring. Significant portions
of the Company's net sales and operating income are generated in the last four
months of the Company's fiscal year (March through June). Since interim period
operating results reflect the seasonal nature of the Company's business, they
are not indicative of results expected for the full fiscal year. In addition,
quarterly results can vary significantly from one year to the next due
primarily to weather-related shifts in planting schedules and purchase
patterns. The Company incurs substantial expenditures for fixed costs
throughout the year and substantial expenditures for inventory in advance of
the spring planting season.
7
<PAGE>
Dependence on Natural Gas. Natural gas is the primary raw material used in
the manufacture of nitrogen fertilizer products. Natural gas is used as both a
chemical feedstock and a fuel to produce anhydrous ammonia, which is then used
in the production of all other nitrogen fertilizers. Anhydrous ammonia is also
a raw material in the production of DAP. Accordingly, the Company's
profitability may be affected by the price and availability of natural gas. A
significant increase in the price of natural gas that is not recovered through
an increase in the price of the Company's fertilizer products, or an extended
interruption in the supply of natural gas to the Company's production
facilities, could have a material adverse effect on the Company's results of
operations and financial condition. Natural gas is currently available in ample
quantities; however, the excess deliverability ("gas bubble") that existed
several years ago has dissipated. In recent years, natural gas prices have
become increasingly subject to seasonal volatility.
Environmental Regulations. The Company is subject to various environmental
laws and regulations of U.S. federal, state and local governments. Significant
capital expenditures and operating costs have been incurred and will continue
to be incurred as a result of these laws and regulations. The Company cannot
predict or quantify the impact of new or changed laws or regulations. In the
normal course of business, the Company is exposed to risks such as possible
release of hazardous substances into the environment. Such releases could cause
substantial damage or injuries. See "Business--Compliance With Environmental
Regulations."
Dependence on Phosphate Rock Supplier. Phosphate rock is the principal raw
material used in the manufacture of DAP. The Company has a long-term
requirements contract with OCP, the world's leading phosphate rock supplier.
The continued viability and competitiveness of the Company's phosphate
fertilizer operations are dependent upon the continuance of this supply
contract. See "Business--Raw Materials--Phosphate Rock."
Competition. Fertilizer products are global commodities and customers base
their purchasing decisions principally on the delivered price of the product.
As a result, markets for the Company's products are highly competitive. A
number of U.S. producers compete with the Company in domestic and export
markets, and producers in other countries, including state-owned and
government-subsidized entities, compete with the Company in the U.S. and in
foreign markets to which the Company exports. Many of the Company's competitors
are significantly larger and have greater financial resources than the Company.
Shares Eligible for Future Sale. Sales of substantial amounts of Common Stock
in the public market following the Offering could adversely affect the market
price of the Common Stock. Prior to the Reorganization, the Cooperative's
common stock lacked liquidity due to certain transfer and sales restrictions.
The shares of Common Stock issued in the Reorganization are freely transferable
and available for sale in the public market. All shares of Common Stock that
will be outstanding following the Offering will be freely tradable. The
Company, as well as holders of 6,228,346 shares of Common Stock (following the
Offering), including the Selling Shareholders and all officers and directors of
the Company, have agreed that they will not offer to sell, contract to sell or
dispose of shares of Common Stock for a period of 180 days after the date of
this Prospectus, without the prior written consent of Wertheim Schroder & Co.
Incorporated.
No Prior Public Market; Volatility. Prior to the Offering, there has been no
established trading market for the Common Stock. Although the Company has
applied to have the Common Stock approved for quotation on the Nasdaq National
Market, there can be no assurance that an active trading market will develop or
be sustained following the Offering. The public offering price of the Common
Stock offered hereby has been determined in negotiations among the Company, the
Selling Shareholders and the Representatives of the Underwriters. The trading
price of the Common Stock could be subject to significant fluctuations in
response to variations in quarterly operating results and other factors. In
addition, in recent years the stock market in general, and the market for
shares of newly registered stocks in particular, has experienced price
fluctuations which have often been unrelated to the operating performance of
the affected companies. General market price declines or market volatility in
the future could affect the market price of the Common Stock and the public
offering price may not be indicative of future market prices.
8
<PAGE>
Anti-takeover Provisions. Certain provisions of the Company's Articles of
Incorporation and Mississippi corporate law could have the effect of
discouraging, delaying or making more difficult a change in control of the
Company not approved by the Board of Directors of the Company. Among other
things, the Articles of Incorporation provide for a classified Board of
Directors, require a supermajority vote of the directors or the shareholders on
major transactions, and allow the Board of Directors to issue up to 500,000
shares of Preferred Stock and fix the rights, privileges and preferences of
those shares without any further vote or action by the shareholders. The rights
of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be
issued in the future. While the Company has no present intention to issue
shares of Preferred Stock, any issuance of Preferred Stock could have the
effect of making it more difficult for a third party to acquire a majority of
the outstanding voting stock of the Company. In addition, the Company, in its
Articles of Incorporation, has chosen to be subject to the Mississippi Control
Share Act, which allows shareholders to decide whether a potential acquiror's
shares may exercise voting rights when such a potential acquiror reaches
certain thresholds of stock ownership, and has chosen to be subject to the
Mississippi Shareholder Protection Act, which prevents business combinations
with 20% or greater shareholders unless certain conditions are met. The Company
has also adopted a Preferred Stock Rights Plan which may have anti-takeover
effects. See "Description of Capital Stock--Certain Statutory Provisions," "--
Certain Charter Provisions," and "--Rights to Purchase Preferred Stock."
9
<PAGE>
THE COMPANY
The Company is a major producer and supplier of nitrogen fertilizers in the
southern United States, and believes it is one of the nation's lowest-cost
nitrogen fertilizer producers. The Company also manufactures phosphate and
potash fertilizers, making it a full product line fertilizer supplier. The
Company sells its nitrogen and potash fertilizer products to farmers,
fertilizer dealers and distributors for ultimate use primarily in the southern
farming regions of the United States and areas served by the Mississippi River
system. The Company's phosphate fertilizers are sold primarily in
international markets.
Nitrogen, phosphorous (contained in phosphate fertilizer) and potassium
(contained in potash fertilizer) constitute the three major nutrients required
for plant growth. Nitrogen is an essential nutrient for most plants.
Phosphorous aids in the photosynthesis process, and potassium is an important
regulator of the physiological functions of plants. These elements are all
naturally present in soil but need to be replaced through the use of
fertilizers as crops exhaust them. There are no viable substitutes for
nitrogen, phosphate or potash fertilizers in the development and maintenance
of high-yield crops.
Nitrogen Fertilizer. The Company produces nitrogen fertilizers at facilities
located in Yazoo City, Mississippi, and Donaldsonville, Louisiana. In fiscal
1994, the Company sold over 1.6 million tons of nitrogen fertilizers to
farmers, fertilizer dealers and distributors located primarily in the southern
United States. Sales of nitrogen products by the Company in fiscal 1994 were
$199.9 million, which represented approximately 65% of net sales. Nitrogen
products manufactured by the Company include anhydrous ammonia, fertilizer-
grade ammonium nitrate, UAN solutions and urea. The Company is the largest
U.S. manufacturer of ammonium nitrate fertilizer which is marketed under the
trade name Amtrate(R). Amtrate(R) has established significant brand name
recognition and a reputation as a high-quality product.
Phosphate Fertilizer. The Company produces DAP at its facility in
Pascagoula, Mississippi. In fiscal 1994, the Company sold approximately
638,000 tons of DAP, which is the most widely used phosphate fertilizer. Sales
of DAP by the Company in fiscal 1994 were $83.4 million, which represented
approximately 27% of net sales. Substantially all of the Company's phosphate
fertilizer sales are made through Atlantic, which was appointed the Company's
exclusive distributor of DAP when the Company started production of DAP in
December 1991. In fiscal 1994, approximately two-thirds of the Company's DAP
production was sold into international markets, primarily to customers in
India, China and Mexico. Phosphate rock, the primary raw material for the
production of phosphate fertilizer, is provided under a long-term contract
with OCP, the national phosphate company of Morocco, which is the world's
largest producer of phosphate rock. The continued viability and
competitiveness of the Company's phosphate operations are dependent on this
strategic alliance with OCP. See "Business--Raw Materials."
Potash Fertilizer. The Company produces potash fertilizer at its facility
located near Carlsbad, New Mexico. In fiscal 1994, the Company sold
approximately 330,000 tons of granular 60% K/2/O muriate of potash. Sales of
potash fertilizer by the Company in fiscal 1994 were $24.1 million, which
represented approximately 8% of net sales. In May 1994, the Company completed
an expansion of its Carlsbad facility at a cost of approximately $1.6 million,
which has increased granular potash production capacity from approximately
300,000 tons to approximately 420,000 tons per year. The Company controls the
single largest reserve of potash in the U.S., with an estimated remaining
life, at current production rates, of approximately 140 years.
The Company was incorporated in Mississippi on May 23, 1994, and is the
successor to the Cooperative, which was incorporated in 1948 as the first
fertilizer cooperative in the U.S. The address of its principal executive
office is Owen Cooper Administration Building, Highway 49 East, Yazoo City,
Mississippi 39194, and its telephone number is (601) 746-4131. As used in this
Prospectus, the term "Company" includes Mississippi Chemical Corporation and
its wholly-owned subsidiaries, Mississippi Phosphates Corporation and
Mississippi Potash, Inc. References in this Prospectus to the Company's
operations prior to July 1, 1994, refer to the Cooperative's operations.
10
<PAGE>
THE REORGANIZATION
The Cooperative was incorporated in Mississippi in September 1948 and
operated as a cooperative in accordance with the applicable provisions of the
Internal Revenue Code. The principal business of the Cooperative was to provide
fertilizer products to its shareholders pursuant to preferred patronage rights
which gave the shareholders the right to purchase fertilizer products and
receive a patronage refund on fertilizer purchases.
On June 28, 1994, the shareholders of the Cooperative approved the
Reorganization, pursuant to which the Cooperative was merged, effective July 1,
1994, into the Company, a wholly-owned subsidiary of the Cooperative. Pursuant
to the Reorganization, the issued and outstanding shares of capital stock of
the Cooperative were converted into shares of Common Stock and/or cash and
holders of Special Accounts were offered the right to exchange those Special
Accounts for Common Stock. As of July 1, 1994, an aggregate of 18,773,212
shares of Common Stock had been issued pursuant to the Reorganization and it is
estimated that approximately $7.6 million of cash will be paid pursuant to the
Reorganization. Up to an additional 681,142 shares of Common Stock may be
issued upon the exchange of Special Accounts, including Special Accounts
arising from 1994 patronage and up to a further 128,880 shares may be issued if
certain small shareholders of the Cooperative elect not to receive cash in the
Reorganization. As a result of the Reorganization, the Company no longer
operates as a cooperative, but as a regular business corporation.
REASONS FOR THE REORGANIZATION
The Cooperative was formed during a period of severe fertilizer shortages
following World War II in order to provide farmers with a reliable source of
quality nitrogen fertilizer products at reasonable prices. Farmers and
fertilizer dealers purchased stock from the Cooperative in order to secure
preferred rights to obtain fertilizer. Shareholders received a patronage refund
on fertilizer purchases to the extent of any excess of the sales price over the
cost to manufacture, distribute and sell the fertilizer. The cooperative
structure initially served the Cooperative and its shareholders well, with the
Cooperative providing high-quality fertilizer products at competitive prices.
The value of the Cooperative's stock in the hands of fertilizer users was
primarily a function of the prevailing supply/demand relationship for
fertilizer and the Cooperative's net cost of producing, distributing and
selling its products.
Worldwide fertilizer production expansions in the late 1970's and early
1980's resulted in an oversupply of fertilizer products. With competitively
priced fertilizer products readily available, fertilizer users no longer had
the incentive to purchase the Cooperative's stock in order to obtain fertilizer
supplies. During the 1980's and 1990's, the business environment for fertilizer
manufacturers changed as a result of intensified foreign competition from
government-controlled entities, supply/demand imbalances, increased
environmental regulations, industry consolidation resulting in fewer, but
better capitalized competitors and increases in the cost of capital equipment.
Over the years, the needs of the Cooperative's shareholders were also changing,
with a resulting divergence in the stock ownership and customer base of the
Cooperative. The restrictions on ownership of the Cooperative's stock made
transfers of shares difficult for a shareholder no longer requiring fertilizer
and depressed the value of those shares.
The Cooperative believed it needed to grow in order to adjust to changing
markets, but the cooperative structure provided little flexibility for growth
or expansion. The Cooperative's ability to raise capital was limited because it
could only sell stock to those who used its products. The Cooperative needed
access to capital markets in order to modernize and expand production
facilities, take advantage of technological developments and respond to growth
opportunities.
The Cooperative's Board of Directors believed that conversion from a
cooperative would address these business needs, while also providing its
shareholders with a broader and more liquid market for their shares. Although
the Cooperative believed it was one of the most successful fertilizer
cooperatives, a year-long study convinced the Board that the rigid, highly
regulated cooperative structure limited its ability to operate in the most
effective manner. As part of its study, the Board investigated the Company's
ability to operate as a
11
<PAGE>
regular business corporation and to sell its products without patronage
refunds. The Cooperative had developed an excellent reputation with its
customers, suppliers and competitors as a high-quality, dependable supplier of
nitrogen, phosphate and potash fertilizers at competitive prices. Field surveys
by Company personnel indicated that sales volumes would not be adversely
affected by the change from the cooperative structure. The Company anticipates
that the strong relationships that the Cooperative developed with its customer-
shareholders will help the Company retain a substantial portion of its existing
customer base. In addition, the Company will also be able to sell its products
to new customers and in new markets. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--General."
The Company believes that access to broader based capital markets will assist
it in expanding its operations, financing required capital expenditures and
remaining competitive in its markets. The ability to issue securities not
subject to the restrictions of a cooperative should also provide the Company
with greater flexibility in connection with potential acquisitions,
partnerships and alliances in the fertilizer industry.
DISPOSITION OF NSI
GENERAL
On June 30, 1994, the Cooperative divested a majority of its interest in
Newsprint South, Inc. ("NSI"), its newsprint manufacturing subsidiary. As a
result of NSI's significant losses, which were expected to continue, and
continuing negative newsprint industry trends, the Cooperative's Board of
Directors authorized the disposition of NSI. NSI, which was organized in 1986,
completed the construction of a 225,000 ton-per-year newsprint mill near
Grenada, Mississippi, in 1989. NSI markets its products to newspapers and
commercial printers located primarily in the southern United States.
BACKGROUND
The Cooperative's involvement with newsprint production began in the late
1970's, when the Cooperative's founder and former president identified the need
for a timber-based industry in north Mississippi, an area abundant in timber
resources. Due to a lack of local pulp and paper mills, timber prices realized
by north Mississippi growers lagged those prevailing in other regions. Since
many farmers in the Cooperative's market were also timber growers, the
Cooperative and its shareholders became interested in a proposed project to
build a newsprint mill in north Mississippi. After thorough analysis, the
Cooperative concluded that the project could materially benefit its
shareholders and that the project could be financed with a modest equity
investment and non-recourse debt.
OPERATIONS
For the three fiscal years prior to the disposition, NSI's sales were $97.0
million for 1993; $95.5 million for 1992; and $106.1 million for 1991. During
the last three fiscal years, NSI incurred losses of $17.9 million for 1993;
$18.3 million for 1992; and $8.7 million for 1991. For fiscal 1994, NSI's sales
were $94.6 million and it incurred a loss of $24.0 million.
NSI's losses are directly attributable to depressed conditions in the
newsprint industry, since per-unit volume production costs have been
continually reduced as a result of increased production volume and improved
mill performance. The construction and start-up of NSI's facility coincided
with a massive capacity build-up in newsprint during the late 1980's and early
1990's. Concurrently, the 1991-1992 recession produced an unprecedented decline
in newsprint consumption. The resulting supply/demand imbalance caused a
collapse in the price of newsprint. Newsprint prices fell by over 30% during
the period from 1988 to mid-1992, causing record losses for the newsprint
industry. Following a brief, modest improvement in prices during late 1992 and
early 1993, prices returned to mid-1992 levels and remain at depressed levels.
12
<PAGE>
THE DISPOSITION OF NSI
On June 24, 1994, the Cooperative and the principal parties (the mill owner
and the primary lender) to the leveraged lease transaction pursuant to which
the NSI facilities are financed concluded a restructuring of NSI, which
involved a transfer by the Cooperative on June 30, 1994 of 70% of the
outstanding stock of NSI. The Cooperative retained a 30% nonvoting interest in
NSI. Under the terms of the restructuring, (i) the Cooperative paid $19.0
million to NSI in various forms, including a capital contribution, payments in
liquidation of the Cooperative's obligations under a newsprint purchase
contract and certain tax-compensating payments pursuant to a tax-sharing
agreement, (ii) loans of approximately $13.7 million made by the Cooperative to
NSI were converted to capital, and (iii) the Cooperative purchased from NSI its
National Bank for Cooperatives ("CoBank") stock for $4.0 million. The CoBank
stock is scheduled for redemption at the face amount by CoBank during the next
five years. The Company has also agreed to continue to provide management
services to NSI for a fee during a transition period of up to nine months. The
Cooperative was released from its obligations under all contracts to which it
was a party related to the NSI project and the leveraged lease financing of the
NSI project.
EFFECT OF DISPOSITION
Although NSI's debts were non-recourse to the Cooperative and the Cooperative
was not responsible for NSI's continuing losses, since it was a wholly owned
subsidiary, NSI's financial results were consolidated with those of the
Cooperative. As a result of the divestiture, NSI's financial results will no
longer be consolidated with those of the Company. With respect to periods prior
to the disposition, NSI's results will be reflected as discontinued operations.
Subsequent to the disposition, the Company will account for its continuing
interest in NSI using the cost method of accounting for investments. In
connection therewith, the Company will write up to zero its investment in NSI
as it will have no continuing obligation to fund any of NSI's future losses.
USE OF PROCEEDS
The net proceeds from the sale of 3,200,000 shares of Common Stock offered by
the Company (after deducting estimated underwriting discounts and estimated
offering expenses) are expected to be approximately $42.7 million ($45.3
million if the Underwriters' over-allotment option is exercised in full),
assuming a public offering price of $14.50 per share. The Company will not
receive any proceeds from the sale of the shares by the Selling Shareholders.
The net proceeds will be used to repay amounts outstanding under the
Company's revolving line of credit with NationsBank Corporation due June 30,
1997, its term loan agreement with CoBank due June 30, 1997 and its 9.5%
Subordinated Notes due July 1, 1999 (the "Subordinated Notes"). The revolving
line of credit bears interest at an adjustable rate, equal to 7.25% per annum
on June 30, 1994, the term loan bears interest at an adjustable rate, equal to
9.75% per annum on June 30, 1994. The Company expects to use the remaining
proceeds from the Offering, expected to be approximately $5.0 million, and its
credit availability under the revolving line of credit for working capital and
general corporate purposes, including expansion and efficiency enhancements of
the Company's operations. Pending such uses, the net proceeds of the Offering
will be invested in investment-grade, short-term, interest-bearing obligations.
13
<PAGE>
DILUTION
The pro forma net tangible book value of the Company at June 30, 1994, was
approximately $6.90 per share of Common Stock, assuming the Reorganization had
occurred as of such date. After giving effect to the sale of 3,200,000 shares
of Common Stock offered by the Company hereby at an assumed public offering
price of $14.50 per share, and the application by the Company of the estimated
net proceeds therefrom, the pro forma net tangible book value of the Company as
of June 30, 1994, would have been $7.81 per share. This represents an immediate
increase in pro forma net tangible book value of $0.91 per share to existing
shareholders and an immediate dilution of $6.69 per share to new investors
purchasing shares of Common Stock in the Offering. The following table
illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed public offering price per share........................ $14.50
Pro forma net tangible book value per share before the
Offering.................................................... $6.90
Increase in net tangible book value per share attributable to
price paid by investors in the Offering..................... 0.91
-----
Pro forma net tangible book value per share after the Offering. 7.81
------
Dilution in net tangible book value per share to investors in
the Offering.................................................. $ 6.69
======
</TABLE>
14
<PAGE>
CAPITALIZATION
The following table sets forth as of June 30, 1994, (i) the capitalization of
the Company, adjusted to reflect the Reorganization, and (ii) the
capitalization of the Company adjusted to reflect the Reorganization and the
sale by the Company of 3,200,000 shares of Common Stock in the Offering,
assuming a public offering price of $14.50 per share and the application of the
net proceeds therefrom. See "The Reorganization," "Use of Proceeds," and "Pro
Forma Balance Sheet," including the notes thereto. This table should be read in
conjunction with the consolidated financial statements of the Company,
including the notes thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
ADJUSTED ADJUSTED FOR THE
FOR THE REORGANIZATION
REORGANIZATION AND THE OFFERING
-------------- ----------------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt due within one year............. $ 2,948 $ 1,548
Notes payable.................................. 7,030 7,030
-------- --------
$ 9,978 $ 8,578
======== ========
Long-term debt (excluding amounts due within
one year)..................................... $ 57,217 $ 15,965
Shareholders' equity:
Preferred stock, $.01 par value, 500,000
shares authorized; none outstanding......... -- --
Common stock, $.01 par value, 100,000,000
shares authorized; 19,454,354 Adjusted for
the Reorganization; 22,654,354 (estimated)
shares issued and outstanding following the
Offering.................................... 194 226
Additional paid-in capital................... 130,061 172,681
Retained earnings............................ 5,065 5,065
-------- --------
Total shareholders' equity................. 135,320 177,972
-------- --------
Total capitalization..................... $192,537 $193,937
======== ========
</TABLE>
DIVIDEND POLICY
The Company currently anticipates that it will pay regular quarterly
dividends following the Offering, commencing with a payment that is expected to
be made in February 1995, with respect to the quarter ending December 31, 1994.
It is currently expected that the initial quarterly dividend will be $0.08 per
share. However, the amount and timing of the payment of any dividends will be
based on a number of factors, including the future earnings and capital
requirements of the Company, the financial condition of the Company, the
dividend policies of similar publicly traded companies and other factors the
Board of Directors considers relevant. There can be no assurance that dividends
will be paid in any minimum amounts or at any particular times. In the future,
it is possible that agreements with lenders may restrict or prohibit the
Company's ability to pay dividends and/or limit the amount of dividends that
may be paid.
15
<PAGE>
SELECTED FINANCIAL DATA
The following tables present certain selected consolidated financial data
with respect to the Company for each of the fiscal years in the five-year
period ended June 30, 1994. The selected consolidated financial data in the
table are derived from the consolidated financial statements of the Company,
which, in the case of fiscal 1994, 1993, 1992 and 1991, have been audited by
Arthur Andersen & Co., independent public accountants, as indicated in their
report included elsewhere herein. These tables should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations," "Pro Forma Balance Sheet," including the notes thereto, "Use of
Proceeds," and the consolidated financial statements of the Company, including
the notes thereto, all appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................... $309,360 $289,125 $239,657 $214,990 $180,316
Operating expenses:
Cost of products sold..... 217,809 213,715 152,324 112,622 110,832
Provision for closure of
gypsum disposal area (1). 6,055 -- -- -- --
Selling................... 29,339 28,940 27,731 28,036 25,038
General and
administrative........... 18,252 17,290 18,798 19,359 13,498
-------- -------- -------- -------- --------
271,455 259,945 198,853 160,017 149,368
-------- -------- -------- -------- --------
Operating income............ 37,905 29,180 40,804 54,973 30,948
Other (expense) income:
Interest, net............. (3,991) (3,569) (3,930) (4,307) (4,246)
Restructuring (2)......... (1,402) -- -- -- --
Other..................... 421 767 (531) 777 2,062
-------- -------- -------- -------- --------
Margins from continuing
operations before income
taxes and cumulative effect
of change in accounting
principle.................. 32,933 26,378 36,343 51,443 28,764
Income tax expense (credit). 6,021 3,697 4,994 3,406 (294)
-------- -------- -------- -------- --------
Margins from continuing
operations before
cumulative effect of change
in accounting principle.... 26,912 22,681 31,349 48,037 29,058
Loss from discontinued
operations, net of income
taxes...................... (23,987) (17,891) (18,346) (8,653) (21,833)
Gain on disposal of
discontinued operations
(including applicable
income tax credits of
$4,030).................... 39,747 -- -- -- --
Cumulative effect to July 1,
1993, of change in
accounting for income
taxes...................... (6,149) -- -- -- --
-------- -------- -------- -------- --------
Net margins................. $ 36,523 $ 4,790 $ 13,003 $ 39,384 $ 7,225
======== ======== ======== ======== ========
Income from continuing
operations assuming
conversion from a
cooperative to a regular
business corporation as of
July 1, 1989 (3)........... $ 21,415 $ 17,533 $ 22,821 $ 33,999 $ 20,826
======== ======== ======== ======== ========
Earnings per share (4)...... $ 1.10 $ 0.92 $ 1.23 $ 1.90 $ 1.18
======== ======== ======== ======== ========
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JUNE 30, 1994
-----------------
<S> <C>
PRO FORMA INCOME DATA:
Operating income.............................................. $37,905
Interest expense, net (5)..................................... (460)
Other income.................................................. 421
-------
Income from continuing operations before income taxes......... 37,866
Income tax expense (6)........................................ 13,056
-------
Income from continuing operations............................. $24,810
=======
Earnings per share (7)........................................ $ 1.10
=======
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1994 JUNE 30,
---------------------- -----------------------------------
ACTUAL PRO FORMA (8) 1993 1992 1991 1990
-------- ------------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 34,931 $ 28,695 $ 22,802 $ 35,225 $ 54,926 $ 57,845
Total assets............ 298,430 298,430 296,053 303,158 287,835 248,235
Long-term debt,
excluding long-term
debt due within one
year................... 57,217 15,965 52,357 59,333 67,489 64,332
Shareholders' equity.... 142,956 177,972 119,574 128,195 138,762 138,255
</TABLE>
- --------
(1) During fiscal 1994, the Company recorded a non-cash charge of approximately
$6.1 million relating to the estimated cost of the closure of the gypsum
disposal facility located at its Pascagoula facility. This charge relates
to the portion of the disposal facility utilized to date and it is
estimated that future charges aggregating approximately $3.0 million will
be accrued over the six-year estimated remaining life of the disposal
facility.
(2) Reflects expenses of the Reorganization.
(3) For the periods presented, the Company operated as a cooperative and
realized deductions for income taxes for amounts paid in cash as patronage
refunds to its shareholder-members. If the conversion from a cooperative to
a regular business corporation had occurred as of July 1, 1989, income
taxes would have been increased by the following approximate amounts: $5.5
million, $5.1 million, $8.5 million, $14.0 million and $8.2 million for
fiscal 1994, 1993, 1992, 1991 and 1990, respectively.
(4) Earnings per share reflects the Reorganization as if it had occurred July
1, 1989. Weighted average shares outstanding would have been 19,454,354,
19,035,276, 18,521,287, 17,885,416 and 17,723,107 for fiscal 1994, 1993,
1992, 1991 and 1990, respectively.
(5) Interest expense, net, reflects a reduction in interest expense of $3.5
million related to the reduction in long-term debt from the net proceeds
from the Offering.
(6) Reflects taxation as a C corporation as a result of the Reorganization, as
well as the reduction in interest expense from the application of the net
proceeds from the Offering.
(7) Earnings per share is calculated based on the weighted average shares
outstanding assuming the Reorganization had occurred prior to the periods
presented (see Note 4 above), plus the estimated number of shares to be
sold by the Company in the Offering.
(8) Reflects the Reorganization and the sale by the Company of 3,200,000 shares
of Common Stock in the Offering, assuming a public offering price of $14.50
per share and the application of the net proceeds thereof. See "The
Reorganization," "Use of Proceeds" and "Pro Forma Balance Sheet," including
the notes thereto.
17
<PAGE>
PRO FORMA BALANCE SHEET
JUNE 30, 1994
<TABLE>
<CAPTION>
REORGANIZATION OFFERING PRO
ACTUAL ADJUSTMENTS SUBTOTAL ADJUSTMENTS FORMA
-------- -------------- -------- ----------- --------
(IN THOUSANDS)
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents........... $ 23,219 $ $ 23,219 $ 42,652 (7) $ 23,219
(42,652)(8)
Accounts receivable.... 28,659 28,659 28,659
Inventories............ 33,990 33,990 33,990
Prepaid expenses and
other current assets.. 3,981 3,981 3,981
Deferred income tax
benefit............... 9,682 9,682 9,682
-------- -------- -------- -------- --------
Total current assets. 99,531 99,531 99,531
Investments and other
assets:
National Bank for
Cooperatives.......... 7,441 7,441 7,441
Other.................. 9,813 9,813 9,813
-------- -------- -------- -------- --------
Total investments and
other assets........ 17,254 17,254 17,254
Properties held for
sale................... 66,928 66,928 66,928
Property, plant and
equipment, at cost,
less accumulated
depreciation, depletion
and amortization....... 114,717 114,717 114,717
-------- -------- -------- -------- --------
Total assets............ $298,430 $ -- $298,430 $ -- $298,430
======== ======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt due
within one year....... $ 2,948 $ $ 2,948 $ (1,400)(8) $ 1,548
Notes payable.......... 7,030 7,030 7,030
Accounts payable....... 28,569 28,569 28,569
Accrued liabilities.... 11,297 1,460 (1) 18,933 18,933
3,424 (2)
2,752 (3)
Dividends payable...... 14,756 14,756 14,756
-------- -------- -------- -------- --------
Total current
liabilities......... 64,600 7,636 72,236 (1,400) 70,836
Long-term debt.......... 57,217 57,217 (41,252)(8) 15,965
Other long-term
liabilities and
deferred credits....... 24,704 24,704 24,704
Deferred income tax
payable................ 8,953 8,953 8,953
-------- -------- -------- -------- --------
Total liabilities.... 155,474 7,636 163,110 (42,652) 120,458
Shareholders' equity:
Preferred stock, $.01
par value, 500,000
shares authorized;
none outstanding......
Cooperative capital
stock................. 28,392 (26,375)(4)
(1,460)(1)
(557)(3)
Common stock, $.01 par
value, 100,000,000
shares authorized;
22,654,000
(estimated) shares
issued and
outstanding........... 155 (4) 194 32 (7) 226
28 (5)
13 (6)
(2)(2)
-------- -------- -------- -------- --------
Total stock.......... 28,392 (28,198) 194 32 226
Additional paid-in
capital............... 66,848 26,220 (4) 130,061 42,620 (7) 172,681
(2,195)(3)
42,623 (5)
(3,422)(2)
(13)(6)
Capital equity
credits............... 62,352 (62,352)(5) --
Retained earnings
(deficit)............. (14,636) 19,701 (5) 5,065 5,065
-------- -------- -------- -------- --------
Total shareholders'
equity.............. 142,956 (7,636) 135,320 42,652 177,972
-------- -------- -------- -------- --------
Total liabilities and
shareholders' equity... $298,430 $ -- $298,430 $ -- $298,430
======== ======== ======== ======== ========
</TABLE>
18
<PAGE>
PRO FORMA BALANCE SHEET SUMMARY OF GENERAL ASSUMPTIONS AND ACCOUNTING POLICIES
The pro forma balance sheet has been prepared on the assumption that as of
June 30, 1994, the Reorganization had occurred and the Offering contemplated
hereby had been completed. Adjustments have been made to reflect the merger of
the Cooperative into the Company and the exchange of Capital Equity Credits and
Allocated Surplus Accounts and to reflect the other assumptions described in
the ensuing notes.
The significant accounting policies followed by the Cooperative have been
used in the preparation of the Company's Pro Forma Balance Sheet. These
policies, together with additional information, are included in the Notes to
Consolidated Financial Statements (see the Index to Financial Statements on F-
1) and should be read in conjunction with the accompanying pro forma balance
sheet.
NOTES
(1) Reflects the conversion of the Cooperative's outstanding shares of Mixed
Series IV and Mixed Series V Capital Stock into cash pursuant to the
Reorganization.
(2) Reflects the redemption of Common Stock at $15.00 per share from
shareholders who own fractional shares and who own fewer than 100 shares
after the Reorganization.
(3) Reflects the conversion of the Cooperative's outstanding shares of Potash
Series VI Capital Stock into cash pursuant to the Reorganization.
(4) Reflects the conversion of the Cooperative's outstanding shares of
Nitrogen Series I, Nitrogen Series II and Nitrogen Series III Stock into
Common Stock, pursuant to the Reorganization.
(5) Reflects the assumption that all holders of Capital Equity Credits elect to
convert those Capital Equity Credits into Common Stock at a rate of one
share for each $15.00 in present value of the Capital Equity Credits.
(6) Reflects the assumption that all holders of Allocated Surplus Accounts
elect to convert 1992, 1993 and 1994 Allocated Surplus Accounts into Common
Stock at a rate of one share for each $15.00 in present value of the
Allocated Surplus Accounts.
(7) Reflects net proceeds from the issuance of 3,200,000 shares of Common Stock
in the Offering at an assumed public offering price of $14.50 per share.
(8) Reflects the reduction in long-term debt and long-term debt due within one
year from the application of the net proceeds from the Offering.
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's results of operations have historically been influenced by a
number of factors beyond the Company's control which have, at times, had a
significant effect on the Company's operating results. Fertilizer demand and
prices are highly dependent upon conditions in the agricultural industry and
can be affected by a variety of factors, including planted acreage, United
States government agricultural policies (including subsidy and acreage set-
aside programs), projected grain stocks, weather and changes in agricultural
production methods. The Company's results can be affected by such factors as
the relative value of the U.S. dollar, foreign agricultural policies (in
particular the policies of the governments of India and China regarding
subsidies of fertilizer imports) and the hard currency demands of countries
such as the FSU, whose fertilizer export activities have proved disruptive to
world fertilizer pricing in recent years. See "Fertilizer Industry Overview."
The Company realized a significant improvement in results of operations in
fiscal 1994 with net sales increasing 7.0% to $309.4 million from $289.1
million in fiscal 1993 and operating income increasing 29.9% to $37.9 million
from $29.2 million in fiscal 1993. Before taking into account the $6.1 million
non-cash charge for the closure of the gypsum disposal facility, operating
income for fiscal 1994 would have increased 50.7% to $44.0 million. The Company
experienced strong demand and improved prices for its nitrogen fertilizer
products in fiscal 1994. The average sales price per ton of nitrogen fertilizer
increased to $122 in fiscal 1994 from $118 in fiscal 1993. After declining to
extremely depressed levels in early fiscal 1994, DAP prices recovered
materially in the second half of the year in response to production cutbacks by
major U.S. producers, reduced phosphate fertilizer exports from the FSU, and
the reinstitution of subsidies and increased demand in China and India. For
fiscal 1994, the average sales price of DAP was $131 per ton as compared to
$114 per ton for fiscal 1993. The DAP operations realized positive operating
income in fiscal 1994.
From fiscal 1991 through fiscal 1993, the Company experienced a 34.5%
increase in net sales from $215.0 million to $289.1 million. However, over the
same period, operating income fell from $55.0 million to $29.2 million. This
decline in operating income between fiscal 1991 and fiscal 1993 was primarily
caused by fluctuations in nitrogen fertilizer prices and lower DAP prices.
Nitrogen fertilizer prices "spiked" during the fall of 1990 and the spring of
1991 due to the invasion of Kuwait and subsequent war in the Persian Gulf,
which caused concerns about fertilizer shortages. This spike in nitrogen
fertilizer prices caused fiscal 1991 to be a particularly strong year for the
Company. In fiscal 1991, the Company's average selling price for nitrogen
fertilizer was $120 per ton compared to average selling prices of $110 per ton
and $115 per ton in fiscal 1990 and 1992, respectively. In December 1991, the
Company started production of DAP at its Pascagoula plant. Fiscal 1993 was the
first full year of DAP production after the restart of the plant. Although DAP
production significantly increased the Company's net sales between fiscal 1991
and fiscal 1993, the DAP operations experienced operating losses in fiscal 1992
and 1993 because the Company's entry into the DAP market coincided with a
significant fall in DAP prices, primarily as a result of an increase in DAP
exports by the FSU and a sharp fall in demand from the world's two largest
fertilizer importers, India and China. The Company's average selling price for
DAP was $137 per ton and $114 per ton in fiscal 1992 and 1993, respectively.
Effects of the Reorganization. Effective July 1, 1994, the Company converted
from a cooperative into a regular business corporation pursuant to the
Reorganization. The substantial majority of the Cooperative's sales of nitrogen
fertilizers were made to its shareholders who purchased such products pursuant
to preferred patronage rights based on their stock ownership and who received
patronage refunds with respect to such purchases based on the difference
between the sales price and the cost of manufacturing, distributing and selling
the product. Although the Company will no longer grant preferred patronage
rights or pay patronage refunds, it is expected that the Company will retain
the majority of its current customer base and that nitrogen fertilizer sales
volumes and profitability will not be adversely affected by the Reorganization.
20
<PAGE>
The Company generally absorbs much of the cost of distributing its nitrogen
and potash fertilizer products to its customers. The Company's cost of
distributing its products is affected by the location of its customers.
Therefore, profitability is optimized by achieving the highest net back for its
products. As a cooperative, the Company sold substantially all of its nitrogen
fertilizer products to its shareholders pursuant to preferred patronage rights.
After the Reorganization, the Company will be able to increase its focus on
more geographically proximate markets where higher net backs should be
realized.
After the Reorganization, the Company will not be eligible for new financing
from CoBank, which was a traditional source of financing for the Cooperative.
To replace this historic financing, the Company has significantly increased its
credit facility with NationsBank, which prior to the Reorganization had been a
lender to the Cooperative. See "Liquidity and Capital Resources." In addition,
as a cooperative, the Company had few options for raising capital. The
Reorganization should provide the Company with greater access to capital
markets than was previously available.
After the 1994 fiscal year, the Company will no longer distribute its
earnings on business done with shareholders as patronage refunds. As a
cooperative, these distributions were deductible for income tax purposes. The
Company will now be taxed as a regular business corporation and income tax
expense should increase.
Change in Accounting Principle. Effective July 1, 1993, the Company adopted
SFAS No. 109, "Accounting for Income Taxes." The cumulative effect of this
change in accounting principle decreased current period margins by $6.1
million.
RESULTS OF OPERATIONS
Following are summaries of the Company's sales results by product categories:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales:
Nitrogen........................................ $199,918 $189,127 $176,835
DAP............................................. 83,367 78,906 36,034
Potash.......................................... 24,084 20,149 25,482
Other........................................... 1,991 943 1,306
-------- -------- --------
Net sales..................................... $309,360 $289,125 $239,657
======== ======== ========
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Tons sold:
Nitrogen........................................ 1,643 1,602 1,544
DAP............................................. 638 692 262
Potash.......................................... 330 283 339
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Average price per ton:
Nitrogen........................................ $122 $118 $115
DAP............................................. $131 $114 $137
Potash.......................................... $ 73 $ 71 $ 75
</TABLE>
21
<PAGE>
Fiscal 1994 Compared to Fiscal 1993
Net Sales. Net sales increased 7.0% from $289.1 million for fiscal 1993, to
$309.4 million for fiscal 1994, primarily as a result of higher sales prices
for nitrogen and DAP fertilizers and increased sales volumes of potash.
Nitrogen fertilizer sales increased 5.7% as a result of a 2.6% increase in tons
sold and a 3.1% increase in prices. Sales of DAP increased 5.7% as a result of
a 14.6% increase in prices offset by a 7.8% decrease in tons sold. Potash sales
increased 19.5% as a result of a 16.5% increase in tons sold and a 2.6%
increase in prices.
Cost of Products Sold. Cost of products sold increased from $213.7 million
for fiscal 1993, to $217.8 million for fiscal 1994. As a percentage of net
sales, cost of products sold decreased from 73.9% to 70.4%. This decrease
reflects an increase in the cost per ton of nitrogen fertilizers, offset by
decreases in the cost per ton of both DAP and potash. Nitrogen fertilizer costs
increased partially as a result of increased maintenance and labor costs
related to a scheduled biennial maintenance turnaround at the Company's Yazoo
City nitrogen production facility during September 1993. Also contributing to
the increase in costs were higher natural gas costs and increased depreciation
expense related to a new nitric acid plant at Yazoo City which began operating
in January 1993. DAP costs per ton declined as a result of lower raw material
costs. Potash production costs per ton decreased as a result of increased
production volume for fiscal 1994.
During fiscal 1994, the Company recorded a non-cash charge of $6.1 million
relating to the estimated cost of the closure of the gypsum disposal facility
located at its Pascagoula facility. This charge relates to the portion of the
disposal facility utilized to date and it is estimated that future charges of
approximately $3.0 million will be accrued over the estimated six year
remaining life of the facility. See "Business--Compliance with Environmental
Regulations."
Selling Expenses. Selling expenses increased from $28.9 million for fiscal
1993, to $29.3 million for fiscal 1994, reflecting higher sales volumes. As a
percentage of net sales, however, selling expenses decreased from 10.0% to 9.5%
primarily as a result of lower delivery costs per ton.
General and Administrative Expenses. General and administrative expenses
increased from $17.3 million for fiscal 1993, to $18.3 million for fiscal 1994,
primarily as a result of increases in legal fees and information processing
costs. General and administrative expenses decreased from 6.0% of net sales to
5.9% of net sales.
Operating Income. As a result of the above factors, operating income
increased from $29.2 million for fiscal 1993, to $37.9 million for fiscal 1994.
Before the effect of the non-cash charge for gypsum disposal costs, operating
income for fiscal 1994 was $44.0 million, a 50.7% increase over fiscal 1993.
Interest, Net. Net interest increased from $3.6 million for fiscal 1993, to
$4.0 million for fiscal 1994, reflecting a $1.0 million decrease in capitalized
interest related to the construction of a new nitric acid plant at the Yazoo
City facility in fiscal 1993. Also increasing net interest expense in the
current period was lower interest income due to lower levels of cash. Partially
offsetting this increase were lower levels of borrowings and lower interest
rates paid.
Restructuring. Fiscal 1994 results include $1.4 million of Reorganization
expenses.
Income Tax Expense. Income tax expense increased from $3.7 million for fiscal
1993, to $6.0 million for fiscal 1994. The increase in income tax expense in
the current year was due to increased non-member income.
Margins from Continuing Operations Before Cumulative Effect of Change in
Accounting Principle. As a result of the foregoing, margins from continuing
operations before the cumulative effect of a change in accounting principle
increased from $22.7 million for fiscal 1993, to $26.9 million for fiscal 1994.
Before the effect of the non-cash charge for gypsum disposal costs and the
restructuring expense, margins from continuing operations before cumulative
effect of a change in accounting principle for the period were $34.2 million.
22
<PAGE>
Effect of Reorganization. If the Company had not operated as a cooperative,
income taxes would have been $11.5 million for fiscal 1994, and $8.8 million
for fiscal 1993. Income from continuing operations before cumulative effect of
a change in accounting principle assuming conversion from a cooperative to a
regular business corporation would have been $21.4 million for fiscal 1994, and
$17.5 million for fiscal 1993. Before the effect of the non-cash charge for
gypsum disposal costs and the restructuring expense, income from continuing
operations before the cumulative effect of the change in accounting principle
would have been $28.7 million for the period.
Fiscal 1993 Compared to Fiscal 1992
Net Sales. Net sales increased 20.6% from $239.7 million for fiscal 1992 to
$289.1 million for fiscal 1993, as a result of increased sales of nitrogen
fertilizer and the operation of the Pascagoula DAP facility for all of fiscal
1993. The Pascagoula facility began production of DAP in December 1991.
Nitrogen fertilizer sales increased 7.0% as a result of a 3.8% increase in tons
sold and a 3.1% increase in prices. Sales of DAP increased 119.0% as a result
of a 163.7% increase in tons sold partially offset by a 17.0% decrease in
prices. Potash sales decreased 20.9% as a result of a 16.5% decrease in tons
sold and a 5.3% decrease in prices.
Cost of Products Sold. Cost of products sold increased from $152.3 million
for fiscal 1992 to $213.7 million for fiscal 1993. Cost of products sold
increased from 63.6% to 73.9% of net sales. This increase reflects an increase
in the cost per ton of nitrogen fertilizers, a decrease in the cost per ton of
DAP and an increase in the cost per ton of potash. Nitrogen fertilizer costs
increased due to increased depreciation resulting from a newly constructed
nitric acid plant, and higher natural gas costs. DAP production costs per ton
declined due to higher production volumes and lower raw material costs. Potash
costs per ton increased due to higher labor costs and lower production volumes
in fiscal 1993.
Selling Expenses. Selling expenses increased from $27.7 million for fiscal
1992 to $28.9 million for fiscal 1993 due to increased delivery expenses
resulting from higher volumes of nitrogen fertilizer sold. As a percentage of
net sales, however, selling expenses decreased from 11.6% to 10.0% as a result
of a higher percentage of DAP sales in fiscal 1993 for which the Company did
not absorb delivery expense.
General and Administrative Expenses. General and administrative expenses
decreased from $18.8 million for fiscal 1992 to $17.3 million for fiscal 1993.
The decrease was due to the inclusion of overhead costs for the Company's DAP
plant for a portion of fiscal 1992 before the facility had reached full
operation. For fiscal 1993, these costs were included in cost of products sold.
As a percentage of net sales, general and administrative expenses decreased
from 7.8% to 6.0%.
Operating Income. As a result of the above factors, operating income
decreased from $40.8 million for fiscal 1992 to $29.2 million for fiscal 1993.
Interest, Net. Net interest decreased from $3.9 million for fiscal 1992 to
$3.6 million for fiscal 1993, reflecting a $363,000 increase in capitalized
interest related to the construction of a new nitric acid plant. Net interest
expense also decreased in the current period as a result of lower interest
rates partially offset by higher levels of borrowings and lower interest
income.
Income Tax Expense. Income tax expense decreased from $5.0 million for fiscal
1992 to $3.7 million for fiscal 1993.
Margins from Continuing Operations Before Cumulative Effect of Change in
Accounting Principle. As a result of the foregoing, margins from continuing
operations before cumulative effect of change in accounting principle decreased
from $31.3 million for fiscal 1992 to $22.7 million for fiscal 1993.
Effect of Reorganization. If the Company had not operated as a cooperative,
income taxes would have been $8.8 million for fiscal 1993 and $13.5 million for
fiscal 1992. Income from continuing operations before cumulative effect of
change in accounting principle assuming conversion from a cooperative to a
regular business corporation would have been $17.5 million for fiscal 1993 and
$22.8 million for fiscal 1992.
23
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has traditionally financed its operations with retained patronage
earnings through the issuance of Capital Equity Credits and Allocated Surplus
Accounts, and borrowings from CoBank and commercial banks.
At June 30, 1994, the Company had cash and cash equivalents of $23.2 million,
compared to $22.0 million at June 30, 1993, an increase of $1.2 million. At
June 30, 1993, cash and cash equivalents had decreased $24.6 million from June
30, 1992, primarily as a result of the repayment of borrowings.
Operating Activities. For fiscal 1994 and fiscal 1993, net cash provided by
operating activities was $39.8 million and $41.1 million, respectively. This
decrease was primarily due to an increase in accounts receivable and a decrease
in accounts payable, partially offset by higher non-cash charges for
depreciation, deferred taxes and the accrual for closure of the gypsum disposal
area. For fiscal 1992, net cash provided by operating activities was $47.2
million. Net cash provided by operating activities declined in 1993 because of
lower margins from continuing operations, partially offset by increased
depreciation.
Investing Activities. Net cash used by investing activities was $25.4
million, $29.6 million and $27.3 million, respectively, for fiscal 1994, 1993
and 1992, primarily reflecting capital expenditures in those periods. In
addition to capital expenditures, cash flow from investing activities in the
above periods also included an aggregate of $11.8 million for payments required
under a newsprint purchase contract with NSI. As a result of the disposition of
NSI, the Company is no longer obligated to make these payments. Also included
in cash flow from investing activities were $10.8 million in payments to settle
certain obligations in connection with the disposition of NSI. See "Disposition
of NSI."
Capital expenditures were $11.4 million during fiscal 1994. These
expenditures were for improvements and modifications to the Company's
facilities, including expenditures for an emission control system for its
ammonium nitrate prill towers at its Yazoo City nitrogen production facility
and the purchase of a new computer system.
Financing Activities. Net cash used by financing activities was $13.2
million, $36.2 million and $28.1 million, respectively, for fiscal 1994, 1993
and 1992 . The amounts used by financing activities included cash patronage
payments of $13.4 million, $22.5 million and $27.1 million, respectively, in
fiscal 1994, 1993 and 1992. In December 1992, the Company prepaid $8.9 million
of 9.5% secured notes which had maturities scheduled through fiscal 1997.
During fiscal 1994, the Company prepaid $12.2 million of long-term debt with
CoBank which had maturities through fiscal 1998. In addition, the Company paid
$11.2 million and $10.9 million, respectively, on long-term debt that matured
during fiscal 1994 and 1993.
The Company and its subsidiaries have commitments from various banks for
short-term borrowings up to $55.0 million, which includes $35.0 million from
CoBank. The lines of credit available through CoBank expire in October 1994,
and will not be renewed. Short-term borrowings outstanding at June 30, 1994,
1993 and 1992, were $7.0 million, $4.6 million and $13.5 million, respectively.
In addition to its short-term lines, the Company also has a loan agreement
with NationsBank which was increased from $20.0 million to $50.0 million on
June 17, 1994. This agreement is a long-term revolving credit facility that
bears interest at the prime rate (7.25% at July 1, 1994) or for fixed periods
at interest rates related to the London Interbank Offered Rates ("LIBOR") or
U.S. Treasury notes. At June 30, 1994, the balance outstanding on this loan was
$25.0 million. The amounts borrowed under the Company's credit lines vary based
on the Company's seasonal requirements. The maximum combined amount outstanding
under the short-term lines and the revolving credit facility at any month-end
for fiscal 1994 was $25.0 million.
The Company believes that existing cash, cash generated from operations, the
proceeds of the Offering and available lines of credit will be sufficient to
satisfy its financing needs for the foreseeable future.
24
<PAGE>
QUARTERLY RESULTS
The usage of fertilizer is highly seasonal, and the Company's quarterly
results reflect the fact that in the Company's markets significantly more
fertilizer is purchased in the spring. Significant portions of the Company's
net sales and operating income are generated in the last four months of the
Company's fiscal year (March through June). Since interim period operating
results reflect the seasonal nature of the Company's business, they are not
indicative of results expected for the full fiscal year. In addition, quarterly
results can vary significantly from one year to the next primarily as a result
of weather-related shifts in planting schedules and purchase patterns. Portions
of the Company's primary market area have experienced abnormally high rainfall
levels during June and July 1994. If these rainfall levels were to continue for
the remainder of the summer of 1994, the Company's results of operations for
the quarter ending September 30, 1994 could be adversely affected. The Company
incurs substantial expenditures for fixed costs throughout the year and
substantial expenditures for inventory in advance of the spring planting
season. The following table presents selected unaudited quarterly results of
operations for fiscal 1994 and fiscal 1993.
<TABLE>
<CAPTION>
FISCAL 1994 QUARTER ENDED
---------------------------------------------
JUNE
SEPTEMBER 30 DECEMBER 31 MARCH 31(1) 30(1)
------------ ----------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales........................ $45,220 $61,105 $104,158 $ 98,877
======= ======= ======== ========
Operating income................. $ 2,071 $ 4,044 $ 11,707 $ 20,083
======= ======= ======== ========
Margins from continuing
operations before cumulative
effect of change in accounting
principle....................... $ 799 $ 1,660 $ 9,467 $ 14,986
======= ======= ======== ========
Income from continuing operations
assuming conversion to a regular
business corporation for the
periods presented (2)........... $ 639 $ 1,878 $ 7,235 $ 11,663
======= ======= ======== ========
Earnings per share (3)........... $ 0.03 $ 0.10 $ 0.37 $ 0.60
======= ======= ======== ========
<CAPTION>
FISCAL 1993 QUARTER ENDED
---------------------------------------------
SEPTEMBER 30 DECEMBER 31 MARCH 31 JUNE 30
------------ ----------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales........................ $55,157 $54,653 $ 79,261 $100,054
======= ======= ======== ========
Operating income................. $ 3,828 $ 3,359 $ 10,708 $ 11,285
======= ======= ======== ========
Margins from continuing
operations...................... $ 2,757 $ 2,694 $ 10,041 $ 7,189
======= ======= ======== ========
Income from continuing operations
assuming conversion to a regular
business corporation for the
periods presented (2)........... $ 1,958 $ 1,975 $ 6,526 $ 7,074
======= ======= ======== ========
Earnings per share (3)........... $ 0.10 $ 0.10 $ 0.34 $ 0.37
======= ======= ======== ========
</TABLE>
- --------
(1) Includes a non-cash charge of $5.9 million in the quarter ended March 31,
1994 and $133,000 in the quarter ended June 30, 1994 relating to the
estimated cost of the closure of the gypsum disposal facility at the
Company's Pascagoula facility. The quarter ended June 30, 1994 also
includes a restructuring charge of $1.4 million.
(2) For periods presented, the Company operated as a cooperative and realized
deductions for income taxes for amounts paid in cash as patronage refunds
to its shareholder-members. This reflects the Company's quarterly results
as if it had operated as a regular business corporation.
(3) Earnings per share reflect the Reorganization. Weighted average shares
outstanding for each of the quarters is assumed to be equal to the weighted
average shares outstanding for the applicable year, 19,454,354 and
19,035,276 for fiscal 1994 and 1993, respectively.
25
<PAGE>
DISCONTINUED OPERATIONS
On June 30, 1994, the Company disposed of a majority of its interest in NSI.
This action was taken due to substantial losses incurred to date by NSI and the
expectation of continuing losses. The transaction involved a transfer by the
Company of 70% of its economic interest in NSI to various individuals
designated by the lessor of the newsprint facility leveraged lease. The Company
will not retain any voting interest in NSI. The disposition of NSI will also
allow the Company to focus its attention on its core fertilizer business.
Under the terms of the transaction, the Company paid $19.0 million to NSI in
various forms including capital contributions, payments in liquidation of the
Company's obligations under a newsprint purchase contract and certain tax-
compensating payments pursuant to a tax-sharing agreement. Prior loans in the
amount of approximately $13.7 million made by the Company to NSI pursuant to a
newsprint purchase contract between the Company and NSI were converted to
capital. Pursuant to the transaction, the Company also purchased from NSI its
CoBank stock for $4.0 million. This stock is scheduled for redemption at the
face amount by CoBank during the next five years.
Subsequent to this transaction, the Company is accounting for its continuing
interest in NSI using the cost method of accounting for investments. In
connection therewith, the Company wrote up to zero its negative investment in
NSI of $39.7 million as it will have no continuing obligation to fund any of
NSI's future losses.
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FERTILIZER INDUSTRY OVERVIEW
GENERAL
Fertilizer products are primarily used by the agricultural industry to
enhance the natural fertility of soil. Nitrogen, phosphorous (contained in
phosphate fertilizer) and potassium (contained in potash fertilizer) constitute
the three major nutrients required for plant growth. These elements are all
naturally present in soil but need to be replaced through the use of
fertilizers as crops exhaust them. There are no viable substitutes for
nitrogen, phosphate or potash in the development and maintenance of high-yield
crops.
The primary determinants of fertilizer demand in the U.S. are total planted
acres, fertilizer application rates and crop mix, which in turn are influenced
by government agricultural policies (including subsidy and acreage set-aside
programs), projected grain stocks, crop failure, weather and changes in
agricultural production methods. Worldwide supply/demand relationships are
impacted by currency exchange rates, prevailing import and currency exchange
barriers, changes in hard currency demand and economic, political and
regulatory policies of foreign governments, decisions relating to production of
fertilizer by foreign state-owned and/or state-subsidized entities, and the
laws and policies of the U.S. affecting foreign trade and investment. The
supply/demand balance for fertilizer can have a dramatic effect on the market
price of fertilizers.
NITROGEN FERTILIZER
Nitrogen is one of three primary nutrients essential for plant growth.
Nitrogen fertilizer needs to be reapplied each year in areas of extensive
agricultural usage because of absorption by crops and its tendency to evaporate
from the soil. There are no substitutes for nitrogen fertilizer in the
cultivation of high-yield crops. Ammonia is the simplest form of nitrogen
fertilizer and is the primary raw material for the production of upgraded
nitrogen fertilizers. Ammonia is a gas under normal conditions and requires
special handling and application equipment and procedures. Ammonia is reacted
with other compounds to produce solid and liquid fertilizers, primarily urea,
ammonium nitrate and nitrogen solutions, which are easier to transport, store
and apply than ammonia. The type of nitrogen fertilizer applied is dependent on
the crop, soil type, weather conditions, available application equipment,
regional farming practices and fertilizer prices.
From 1980 through 1992 total nitrogen consumption in the U.S. varied from
10.5 million tons to 11.9 million tons. The Company has forecast total nitrogen
consumption in the U.S. to range between 11.4 million tons and 11.6 million
tons per year for the years 1994 to 1998. Over the same period, the acreage
dedicated to the principal crops that are dependent on nitrogen fertilizer
(corn, sorghum, wheat, rice and cotton) is expected to range between 234
million and 240 million acres. In contrast to the relative stability of
nitrogen fertilizer usage, total U.S. nitrogen production capacity has declined
by approximately 17% since 1980 due to plant shutdowns and conversions to other
products. Substantial construction lead time, capital demands and environmental
regulations have deterred the construction of new nitrogen fertilizer
production facilities. The Company does not believe that any new nitrogen
fertilizer facilities are presently planned for North America.
Imports supplied approximately 19% of U.S. demand for nitrogen fertilizers in
1993. The Company believes a favorable world nitrogen fertilizer supply/demand
balance has developed in recent years. With world consumption expected to grow
in line with world population growth at a rate of approximately 1.6% per year
for the next several years, an oversupply is not expected to occur in the near
term. In western Europe, ammonia capacity and production have been on the
decline since 1970, and imports of nitrogen fertilizers have risen. Exports
from the FSU have declined recently as a result of political instability,
reduced production capacity, higher natural gas and transportation costs and
increased local consumption. Despite a continuing need for hard currency, FSU
exporting activities are expected to remain at depressed levels for several
years because of internal demand for fertilizers and because of production and
delivery costs that are not competitive with U.S. and certain other producers.
Except in limited periods, nitrogen fertilizer prices have been relatively
stable in the past ten years. During the fall of 1990, nitrogen fertilizer
prices temporarily surged as a result of the Gulf War. During
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early 1994, shortages of ammonia developed and ammonia prices increased by
approximately 60%. Once spring seasonal demand pressures subsided, the market
price of ammonia declined but remains substantially above 1993 levels.
PHOSPHATE FERTILIZER
Phosphate plays a direct role in many of the physiological processes of
plants, such as the utilization of sugar and starch, photosynthesis, and the
transfer of energy. It increases the strength of cereal straw, stimulates root
development, promotes flower formation, and hastens the maturity of crops grown
in soils low in phosphorus. Phosphate fertilizers are manufactured from
phosphate rock obtained from surface mining operations. DAP is the most widely
used form of phosphate fertilizer.
From 1975 through 1989, worldwide phosphate fertilizer consumption increased
from approximately 28 million tons to approximately 42 million tons per year.
This increase was primarily a result of significant increases in demand from
the developing world, particularly China and India. Between 1989 and 1993,
worldwide phosphate demand fell sharply. In addition, starting in 1990, the
FSU, which historically had been a significant importer of phosphate
fertilizer, became a major exporter resulting in a material disruptive impact
on world phosphate trade. More recently, purchases by India and China, the
world's largest phosphate fertilizer importing nations, have dropped
dramatically in response to the termination of state fertilizer subsidies in
both countries. As a result of these factors, phosphate fertilizer consumption
in 1993 declined to less than 31 million tons, the lowest level since 1977.
While consumption was falling, DAP production remained relatively consistent.
As a result, an acute supply imbalance developed and DAP prices fell to their
lowest levels since 1977.
During the spring of 1994, industry conditions improved markedly. The
supply/demand relationship has responded to (i) production cutbacks by major
U.S. producers, (ii) reduced phosphate fertilizer exports from the FSU, and
(iii) the reinstitution of subsidies and increased demand in China and India.
DAP prices in the world market have risen significantly since the first half of
1993.
For the longer term, worldwide phosphate fertilizer consumption has been
projected by industry sources to approach 40 million tons per year by the year
2000. These projections are based on an assumed partial recovery of internal
demand in the FSU, as well as growth in demand of approximately 5% per year in
Africa, Asia and Latin America. Demand in the U.S. and western Europe is
expected to be flat or to decline slightly.
POTASH FERTILIZER
Potash, as a source of potassium, is a vital plant nutrient. Plants cannot
achieve maximum growth and yield without potash, nor can the functions that
potash performs be carried out by other nutrients. Potash is essential for
protein synthesis, overcoming effects of diseases, tolerance of water stress
and winter hardiness. Nearly every aspect of plant growth, development, yield
and quality is dependent upon an adequate potash supply. Potash ore, the source
of potash fertilizer, is extracted from both below surface and surface mines.
Potash is also precipitated from potassium rich brines.
In recent years, potash fertilizer markets worldwide have generally been
characterized by excess capacity and falling usage. From a base of 57 million
tons in 1988, worldwide consumption fell to approximately 39 million tons in
1993. In 1992 and 1993, demand was dampened by reduced usage in the developing
world, particularly in India, China and Brazil. Concurrently, exports from the
FSU increased, driven by hard currency demands and falling internal
consumption.
Potash fertilizer usage, both domestically and abroad, increased in the 1994
crop season and, as a result, prices have increased. Industry reports have
forecasted significant growth in potash fertilizer consumption in developing
countries over the next ten years as economic reforms in China, India and Latin
America boost crop production.
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BUSINESS
GENERAL
The Company is a major producer and supplier of nitrogen fertilizers in the
southern United States and believes it is one of the nation's lowest-cost
nitrogen fertilizer producers. The Company also manufactures phosphate and
potash fertilizers, making it a full product line fertilizer supplier. The
Company sells its nitrogen and potash fertilizer products to farmers,
fertilizer dealers and distributors for ultimate use primarily in the southern
farming regions of the United States and areas served by the Mississippi River
system. Phosphate fertilizers are sold primarily in international markets.
The Company's operations are managed from its corporate headquarters in Yazoo
City, Mississippi. The Company produces nitrogen fertilizers at its production
facility in Yazoo City, Mississippi, and through a 50%-owned production
facility at Donaldsonville, Louisiana. The Louisiana facility ("Triad") is
operated as a joint venture by the Company and First Mississippi Corporation.
The Company produces DAP fertilizer at its Pascagoula, Mississippi, facility.
Potash fertilizer is mined and processed at the Company's facility near
Carlsbad, New Mexico.
EFFECTS OF THE REORGANIZATION
The Company is the successor by merger to the Cooperative, which was formed
in 1948 as the first fertilizer cooperative in the United States. Effective
July 1, 1994, the Cooperative was merged into the Company and cooperative
operations ceased. The primary business of the Cooperative was to provide
nitrogen fertilizer to its shareholders. The Cooperative built an excellent
reputation with its customers, suppliers and competitors as a high-quality,
dependable source of fertilizers. Field surveys conducted by Company personnel
have indicated that sales volumes should not be adversely affected by the
change from the cooperative structure. Further, the Company anticipates that
the strong relationships that the Cooperative developed with its customer-
shareholders will have a positive carryover effect and enable the Company to
retain a substantial portion of its existing customer base, while also being
able to sell its products to new customers and in new markets.
While the Cooperative had few options for raising capital, the Company
believes the Reorganization will provide it with access to broader-based
capital markets. This access will assist it in expanding operations, financing
required capital expenditures and becoming even more competitive in its
markets. The ability to issue securities not subject to the restrictions of the
cooperative structure should also provide the Company with greater flexibility
in connection with the financing of potential acquisitions, partnerships and
alliances in the fertilizer industry.
BUSINESS STRATEGY
The Company's business and operating strategy is to supply quality fertilizer
products at competitive prices while increasing the Company's long-term
profitability. This strategy focuses on the following elements:
Low Cost/High Efficiency Operations. The Company stresses low cost and high
efficiency in every aspect of its operations. The Company's products are global
commodities that are available from multiple sources; therefore, the Company
competes primarily on the basis of price. Accordingly, the Company is committed
to maintaining its position as one of the lowest-cost U.S. nitrogen fertilizer
producers. The Company maintains an experienced technical staff that
aggressively seeks cost-reduction opportunities in its production processes.
Customer Service and Product Quality. Unlike many of its competitors, the
Company maintains a large and experienced field sales force strategically
located throughout its market area. This sales force provides extensive, cost-
effective, value-added services and programs to the Company's customers. These
efforts help to differentiate the Company's products, enhance competitiveness
and establish the Company as a preferred supplier of fertilizer products.
Improvements to product quality are also continually addressed to assure that
products offered by the Company remain well-accepted in the marketplace.
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Distribution System. The Company has strategically located production and
distribution facilities throughout the United States' mid-South. All of the
Company's warehouses and terminals are accessible by either rail or water. The
flexibility to ship its products by these low-cost modes of transportation
enhances the Company's competitive position.
Increase in Net Backs. The Company seeks to achieve the greatest return for
each sale based on the net back to the Company. The Company's marketing efforts
are focused on geographically proximate markets where lower transportation and
distribution costs increase net backs and improve margins.
Implementation of Advantages of the Reorganization. The Company believes that
its new corporate status will increase opportunities for the growth of its
operations. In addition to enhancing its ability to improve net backs, the
greater flexibility of operations and access to capital markets resulting from
the Reorganization will assist the Company in expanding its operations,
financing capital expenditures and seeking opportunities for acquisitions,
joint ventures and other strategic alliances in the fertilizer business.
NITROGEN FERTILIZER
Products
The Company produces nitrogen fertilizers at its Yazoo City, Mississippi,
production facility and at the Triad facility. In fiscal 1994, the Company sold
over 1.6 million tons of nitrogen fertilizers to farmers, fertilizer dealers
and distributors located primarily in the southern United States. Sales of
nitrogen fertilizer products by the Company in fiscal 1994 were $199.9 million,
which represented approximately 65% of net sales.
The Company's principal nitrogen products include ammonia, fertilizer-grade
ammonium nitrate, which is sold under the Company's trade name Amtrate(R), UAN
solutions, which are sold under the Company's trade name N-Sol, and urea.
Although, to some extent, the various nitrogen fertilizers are
interchangeable, each has its own distinct characteristics which produce
agronomic preferences among end users. Farmers decide which type of nitrogen
fertilizer to apply based on the crop planted, soil and weather conditions,
regional farming practices and relative nitrogen fertilizer prices.
Ammonia. The basic nitrogen product is anhydrous ammonia, which is the
simplest form of nitrogen fertilizer. Anhydrous ammonia, which is 82% nitrogen,
is the most concentrated form of nitrogen fertilizer available. It is
synthesized as a gas under high temperature and pressure. The raw materials
used to produce anhydrous ammonia are natural gas, atmospheric nitrogen and
steam.
In fiscal 1994, the Company produced approximately 719,000 tons of anhydrous
ammonia at its Yazoo City and Triad facilities and purchased approximately
45,000 tons. The Company sold approximately 45,500 tons of anhydrous ammonia as
direct-application fertilizer and used the balance as a raw material to
manufacture its other nitrogen fertilizer products.
In the Company's markets, ammonia is used primarily as a preemergent
fertilizer for most row crops. Although anhydrous ammonia is the least
expensive form of nitrogen, its use as a primary fertilizer has gradually
declined because of the difficulties of applying and the high cost of
application equipment.
Ammonium Nitrate. The Company is the largest manufacturer and marketer of
ammonium nitrate fertilizer in the United States and believes it is one of the
lowest-cost U.S. producers. Ammonium nitrate, which is 34% nitrogen, is
produced by reacting anhydrous ammonia and nitric acid. Ammonium nitrate is
less subject to volatilization (evaporation) losses than other nitrogen
fertilizer forms. Due to its stable nature, ammonium nitrate is the product of
choice for such uses as pastures and no-till row crops where fertilizer is
spread upon the surface and is subject to volatilization losses. Although the
consumption of ammonium
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nitrate in the U.S. has been stable in recent years, the use of conservation
tillage, which reduces soil erosion, is increasing in the U.S. and should have
a positive impact on ammonium nitrate demand.
In fiscal 1994, the Company sold approximately 768,000 tons of solid ammonium
nitrate fertilizer, which it produces at its Yazoo City facility. The Company's
ammonium nitrate is sold under the registered trade name Amtrate(R). Due to its
superior shipping and storage characteristics, Amtrate(R) has established
excellent brand name recognition and a reputation as a high-quality product.
N-Sol. In fiscal 1994, the Company sold approximately 563,000 tons of N-Sol,
which it produces at its Yazoo City facility. N-Sol is a 32% nitrogen product
that is made by mixing urea liquor and ammonium nitrate liquor. N-Sol is used
in direct application to cotton, corn, grains and pastures as well as for use
in liquid fertilizer blends. Over the past 20 years, there has been a
substantial shift in product preference from directly applied ammonia to UAN
solutions because of the difficulties of applying and the high cost of
application equipment for ammonia.
Urea. In fiscal 1994, the Company sold approximately 200,500 tons of prilled
urea and approximately 66,000 tons of urea melt which it produces primarily at
its Triad facility. Under a long-term contract with Melamine Chemicals, Inc.
("Melamine"), the Company is obligated to sell up to 75,000 tons per year of
urea melt at prevailing market prices to Melamine's facility located adjacent
to the Triad facility. Urea is synthesized by the reaction of ammonia and
carbon dioxide and then solidified in prill form. At 46% nitrogen by weight,
urea is the most concentrated form of dry nitrogen. Because urea undergoes a
complex series of changes within the soil before the nitrogen it contains is
ultimately converted into a form which can be used by plants, it is considered
a long-lasting form of nitrogen. As a fertilizer product, urea is acceptable as
both a direct-application material and as an ingredient in fertilizer blends.
Urea consumption has increased modestly in recent years. In the Company's trade
area, prilled urea is the nitrogen product of choice for topdressing rice. Most
of the Company's prilled urea is aerially broadcast on rice crops in Arkansas,
Louisiana, Mississippi and Texas.
Production and Properties
Yazoo City, Mississippi. The Yazoo City facility is a closely integrated,
multi-plant nitrogen fertilizer production complex located on approximately
1,180 acres. The complex includes an anhydrous ammonia plant, four nitric acid
plants, an ammonium nitrate plant and a UAN solutions plant. In 1993, the
Company spent $32 million to expand its nitrogen production capacity at its
Yazoo City facility, which increased nitric acid production capacity by
approximately 300 tons per day and ammonium nitrate capacity by approximately
375 tons per day.
The Yazoo City ammonia plant has been continuously retrofitted to incorporate
energy-saving technology and improve efficiencies. The Yazoo City facility
includes a 20.5 megawatt cogeneration facility, which produces significant
savings by sequentially using steam for electricity generation and process
heat. The Yazoo City plant has direct access to water, rail and truck
transportation and is strategically located for the purchase of competitively
priced natural gas. See "--Raw Materials--Natural Gas."
Donaldsonville, Louisiana. The Triad facility is a closely integrated, multi-
plant nitrogen fertilizer complex located on approximately 46 acres fronting
the Mississippi River. At the Triad plant, the Company produces anhydrous
ammonia and urea. The Company is entitled to one-half of the production from
the Donaldsonville facility as the co-owner of Triad with First Mississippi
Corporation. The Triad ammonia plant has been retrofitted on several occasions
to increase production and enhance operating efficiency.
Triad has ready access to rail and truck transportation. The plant is also
equipped with a deep-water port facility on the Mississippi River, allowing
access to economical barge and ship transport for its urea and ammonia
products. The Triad facility is well positioned for the purchase of natural
gas. See "--Raw Materials--Natural Gas."
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Marketing and Distribution
Prior to the Reorganization, over 90% of the Cooperative's sales of nitrogen
fertilizers were made to its shareholders who purchased products pursuant to a
quantity entitlement based on their stock ownership and who received patronage
refunds on such purchases. Competitive factors in the sale of nitrogen
fertilizers include price, proximity to markets and customer service. The
Company believes that it can successfully compete based on these criteria and
anticipates that its nitrogen customer base will be substantially similar to
that of the Cooperative. See "The Reorganization--Reasons for the
Reorganization."
The Company sells its nitrogen fertilizer products to farmers, dealers and
distributors located primarily in the southern farming regions of the United
States where its facilities are located. In the three-tiered fertilizer
distribution chain, distributors operate as wholesalers supplying dealers who,
in turn, sell directly to farmers. Larger customers (distributors and large
multi-location dealers) arrange for distribution, storage and financing of
nitrogen fertilizer. The majority of the Company's sales are made to
distributors and large dealers.
The ten states which make up the Company's primary trade area are
Mississippi, Alabama, Arkansas, Texas, Louisiana, Missouri, Georgia, Florida,
Tennessee and Kentucky. Based on published fertilizer consumption figures, the
Company believes that its sales of nitrogen fertilizers in Mississippi,
Alabama, Arkansas and Louisiana substantially exceed those of any other
producer.
The Company maintains a large and experienced field sales force strategically
located throughout the southern United States. This sales force maintains close
communications with the customer base and plays an important role in the
marketing and distribution of the Company's products. Through regular, personal
contact with its customers, the Company is able to ascertain local demand for
fertilizer products and arrange to have those products available from the most
cost-effective source. The Company's field sales force is also able to identify
specific customer service needs which the Company can provide. Customer service
helps differentiate the Company's products and enhance its position as a
preferred supplier.
The Company transports its nitrogen products by water, rail and truck. The
Company's distribution network is complemented by 23 owned or leased warehouses
and terminals strategically placed in high-consumption areas.
PHOSPHATE FERTILIZER
Products
The Company produces DAP at its Pascagoula, Mississippi, facility. In fiscal
1994, the Company sold approximately 638,000 tons of DAP, primarily into
international markets. Sales of DAP by the Company in fiscal 1994 were $83.4
million, which represented approximately 27% of net sales.
DAP is the most common form of phosphate fertilizer. DAP is produced by
reacting phosphate rock with sulfuric acid to produce phosphoric acid, which is
then combined with ammonia. DAP contains 18% nitrogen and 46% phosphate
(P/2/0/5/) by weight. DAP is an important fertilizer product for both direct
application and for use in blended fertilizers applied to all major types of
row crops.
Production and Properties
The Company returned the Pascagoula facility to full operation and began
producing DAP in December 1991 after entering into its phosphate rock supply
contract with OCP. In April 1988, the Company sold its Pascagoula, Mississippi,
fertilizer manufacturing facility where it produced mixed fertilizer products.
The purchaser operated the facility for approximately two years, after which it
filed a voluntary Chapter 7 bankruptcy petition and the U.S. bankruptcy trustee
took control of the facility for liquidation. On December 7, 1990, the trustee
conveyed the Pascagoula facility to the Company in lieu of foreclosure of the
Company's security interest in the facility.
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The Company's phosphate production complex is located on approximately 1,500
acres. The Pascagoula facility is a closely integrated, multi-plant phosphatic
fertilizer complex where the primary facilities are a phosphoric acid plant,
two sulfuric acid plants and a DAP granulation plant. The plant has storage
facilities for finished product (45,000 tons), as well as for the primary raw
materials, phosphate rock (80,000 tons), sulfur (10,000 tons) and ammonia
(25,000 tons). All of the phosphate rock used by the Company is purchased
pursuant to a single supply contract. See "--Raw Materials--Phosphate Rock."
The plant site fronts a deep-water channel that provides direct access to the
Gulf of Mexico. The complex contains docks and off-loading facilities for
receiving shipload quantities of phosphate rock, sulfur and ammonia, and for
outloading DAP. The plant's location on deep water provides the Company with an
outbound freight cost advantage over central Florida DAP producers with respect
to international shipments and domestic shipments along the Mississippi River
system.
Marketing and Distribution
The Company sells substantially all of its DAP to Atlantic, the exclusive
distributor of its DAP products. Atlantic maintains a network of sales agents
in the major phosphate fertilizer consuming nations around the world. Sales to
Atlantic are made on an FOB Pascagoula basis at a price which reflects the
price Atlantic charges its customers, adjusted to reflect Atlantic's
commission. Sales to Atlantic for the export market are backed by standby
letters of credit.
In fiscal 1994, approximately two-thirds of the Company's DAP was sold into
international markets. The three largest export markets in fiscal 1994 were
India, China and Mexico. Most domestic sales are made in barge-lot quantities
to major fertilizer distributors and dealers located on the Mississippi River
system. The vast majority of the Company's product is transported by ship and
barge, although truck and rail access is also available.
POTASH FERTILIZER
Products
The Company produces potash at its mine and related facilities near Carlsbad,
New Mexico. In fiscal 1994, the Company sold approximately 330,000 tons of
granular potash primarily to customers located west of the Mississippi River.
In May 1994, the Company completed an expansion of its Carlsbad facility for
$1.6 million, bringing its capacity for granular product to approximately
420,000 tons per year. Sales of potash fertilizer by the Company in fiscal 1994
were $24.1 million, which represented approximately 8% of net sales.
The Company's potash is mined from subterranean salt deposits containing a
mixture of potassium chloride and sodium chloride. The Carlsbad, New Mexico,
potash deposits are located from 800 to 1,200 feet below the surface. Potash is
produced in a refining process whereby the potassium chloride is separated from
the sodium chloride.
The Company produces red granular potash. The three principal grades of
potash fertilizer are granular, coarse and standard, with granular being the
largest particle size. Granular potash is used as a direct-application
fertilizer and, among the various grades, is particularly well suited for use
in fertilizer blends. Potash is an important fertilizer product for both direct
application and for use in blended fertilizer applied to all major types of row
crops.
Production and Properties
The Company's potash mine and refinery are located approximately 25 miles
east of Carlsbad, New Mexico. The Company recently completed a $5 million
project to modernize its mining equipment, enabling it to extract a higher
grade of ore that will improve overall facility efficiencies. The mine supplies
ore to an above ground refinery which separates the potassium chloride from the
ore. The run-of-mine refined product
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is then transported to the Company's nearby compaction plant for conversion to
granular form. The Company recently increased compaction capacity from
approximately 300,000 tons to approximately 420,000 tons per year. Located
contiguous to the compaction facility are storage and shipping facilities from
which the finished product is transported by rail and truck into domestic and
export markets.
The Company's potash reserves are controlled under long-term federal and
state potassium leases on approximately 60,000 acres. In addition, the Company
holds mineral title to approximately 4,400 acres and fee title to approximately
10,000 acres. Revised estimates of potash ore reserves underlying the Carlsbad
properties were compiled in 1981 and 1983. According to these estimates, the
Company's reserves were estimated to contain 346.2 million tons of in situ ore
with an average grade of 15.25% K/2/0 or 297.9 million tons of recoverable ore
with an average grade of 14.88% K/2/0. Since these estimates were made, ore
extracted would indicate remaining reserves of 334.4 million tons of in situ
ore with an average grade of 15.25% K/2/O or 297.9 million tons of recoverable
ore with an average grade of 14.88% K/2/O. This reserve base is estimated to be
equivalent to 57.2 million tons of muriate of potash. At current production
rates, the Company's reserves have a remaining life of approximately 140 years.
Marketing and Distribution
The substantial majority of the Company's potash sales are in domestic
markets in the southern states west of the Mississippi River where it and other
Carlsbad potash producers enjoy freight cost advantages over Canadian and
overseas potash producers. Consistent with the Company's strategy to maximize
net backs and increase profit margins, domestic sales are targeted for
locations along the freight route of the Santa Fe Railroad. Domestic potash
marketing is performed by the Company's sales staff. The Company's export sales
are made through Potash Corporation of Saskatchewan Sales Limited. The primary
export markets for the Company's potash are Mexico and Brazil. Potash for
export is transported by rail to terminal facilities in Houston.
RAW MATERIALS
Natural Gas
Natural gas is the primary raw material used by the Company in the
manufacture of nitrogen fertilizer products. Natural gas is used both as a
chemical feedstock and as a fuel to produce anhydrous ammonia which is then
upgraded into other nitrogen fertilizer products. During fiscal 1994, the cost
of natural gas represented approximately 74% of the Company's cost of producing
ammonia. Because there are no commercially feasible alternatives for natural
gas in the production of ammonia, the economic viability of the Company's
nitrogen business depends upon the availability of competitively priced natural
gas.
In today's natural gas market, the Company's total natural gas cost generally
consists of two components--the market price of the natural gas in the
producing area at the point of delivery into a pipeline and the fee charged by
the pipeline for transporting the natural gas to the Company's plants. The cost
of the transportation component can vary substantially depending on whether or
not the pipeline has to compete for the business. Therefore, it is extremely
important to the Company's competitiveness that it have access to multiple
natural gas transportation services. In addition to the impact on transmission
costs, access alternatives enable the Company to benefit from natural gas price
differences that may exist from time to time in the various natural gas-
producing areas. In recent years, the Company has improved the natural gas
purchasing logistics of its nitrogen facilities.
The natural gas requirements of the Yazoo City facility (approximately 54,000
Mcf per day) are supplied in part by Shell Western E&P Inc. ("SWEPI"), a
subsidiary of Shell Oil Company ("Shell"). In 1972, the Company and Shell
entered into a gas purchase and sale agreement whereby Shell agreed to supply
natural gas to the Yazoo City plant from its natural gas reserves located in
Rankin County, Mississippi. To facilitate this agreement, Shell constructed a
60-mile pipeline (the "Thomasville Line") from its reserves directly to
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the Yazoo City facility. The original Shell contract was superseded by a new
contract with SWEPI on January 1, 1986. The 1986 contract provided for the
delivery of 30,000 Mcf per day under arrangements providing for fixed prices on
certain quantities and market-related prices on other specified quantities. The
arrangements with SWEPI provided the Company with natural gas supplies priced
below the prevailing market. The primary term of the SWEPI contract expired on
March 31, 1994. SWEPI continues to furnish gas for a 180-day "renegotiation
period" to allow for the opportunity for structuring a new contract. The
Company anticipates that it will reach an agreement with SWEPI to continue
purchasing the output of the Rankin County reserves, which is presently
approximately 20,000 Mcf per day. The Company expects that the gas will be
subject to market-sensitive pricing. Although the expiration of the SWEPI
contract has resulted in higher natural gas costs, the Company believes that it
remains one of the lowest-cost nitrogen producers in the U.S.
The balance of the requirements of the Yazoo City facility are presently
being furnished by an intrastate pipeline that is connected to the plant by the
Thomasville Line and by various producers and marketers who sell gas to the
Company at various points along the pipeline systems that are directly
connected to the Yazoo City plant. The Yazoo City plant is also directly
connected to the interstate pipeline system of Southern Natural Gas Company
("Southern"). The Company and Southern have entered into a long-term,
interruptible transportation agreement. Although the Southern contract provides
for interruptible service, the Company believes that curtailment of supply is
unlikely because of the plant's location on the system. In addition to being
connected to Southern, the plant is located within a mile of the Texas Eastern
Transmission Corporation pipeline system. The Company has also secured long-
term transportation capacity in the Thomasville Line, which provides the plant
with access to an additional interstate pipeline and a large intrastate
gathering and transmission system in southern Mississippi. As a result of this
multiple source access, the Company benefits from competition for the
transportation and its supply of natural gas.
The natural gas requirements of the Triad facility are approximately 51,000
Mcf per day. The Triad facility is located in one of the primary gas-producing
regions of the United States. The facility is presently connected to five
intrastate pipeline systems and benefits from intense competition among those
suppliers. Currently, the plant's requirements are being supplied by three of
the intrastate lines under various pricing arrangements. Generally, these
contracts impose firm delivery obligations at market-sensitive prices. In
addition, the Company purchases gas for Triad on the spot market pursuant to
30- to 90-day fixed-price contracts. As a result of Triad's favorable access to
natural gas supplies, the Company believes that the loss of any particular
supplier would not have a material impact on plant operations. There have been
no significant supply interruptions at the Triad facility.
Natural gas is currently available in ample quantities, but the excess
deliverability ("gas bubble") which existed in the late 1980's and early 1990's
has dissipated. Producer deliveries are now approaching full capacity. As a
result of the narrowing gap between supply and demand, natural gas prices have
become increasingly volatile and subject to seasonal volatility. The Company
uses natural gas futures contracts to hedge against the risk of short-term
market fluctuations in the cost of natural gas.
Phosphate Rock
Phosphate rock is one of the primary raw materials for the manufacture of
DAP. The Pascagoula facility's requirements for phosphate rock are
approximately 1.1 million tons per year. As of September 15, 1991, the Company
entered into a ten-year contract with OCP to supply all of the phosphate rock
requirements of the Pascagoula facility. This contract was recently amended and
its term extended to June 30, 2003. OCP, the national phosphate company of
Morocco, is the world's largest producer and exporter of phosphate rock and
upgraded phosphates as a company. The contract price for phosphate rock is
based on phosphate rock costs incurred by certain domestic competitors of the
Company and on the long-term financial performance of the Company's phosphate
operations. Under this formula, the Company realizes favorable phosphate rock
prices and is afforded significant protection during periods when market
conditions are
35
<PAGE>
depressed and its DAP operations are not profitable. As a result, the Company
was able to sustain its operations since reopening the Pascagoula facility in
December 1991, despite historically low prices for phosphate products.
Conversely, in favorable markets, when the Company's DAP operations are
profitable, the contract price of phosphate rock will escalate based on the
profitability of its DAP operations. Pursuant to this contract, the Company and
OCP are required to negotiate further adjustments as needed to maintain the
viability and economic competitiveness of the Pascagoula plant. The strategic
alliance with OCP has functioned effectively since inception, and the Company
considers its relations with OCP to be good.
Sulfur
Sulfur is used in the manufacture of sulfuric acid at the Pascagoula plant.
Sulfur is in adequate supply and is available on the open market in quantities
sufficient to satisfy the Company's current requirements of 300,000 tons per
year.
Ammonia
Until recently, ammonia has been in adequate supply at depressed prices. In
early 1994, intermittent shortages of ammonia, which caused a surge in ammonia
prices, developed as a result of increased consumption in agricultural and
industrial markets, several unplanned plant outages and reduced imports from
the FSU. However, in the past few months, ammonia prices have returned to more
moderate levels.
COMPETITION
Since fertilizers are global commodities which are available from multiple
sources, the primary competitive factor is price. Other competitive factors
include product quality, customer service and availability of product. In each
product category, the Company competes with a broad range of domestic
producers, including farmer cooperatives, subsidiaries of larger companies,
integrated energy companies and independent fertilizer companies. Many of the
Company's domestic competitors have larger financial resources and sales than
the Company. The Company also competes with foreign producers. Foreign
competitors are often owned or subsidized by their governments and, as a
result, may have cost advantages over domestic companies. Additionally, foreign
competitors are frequently motivated by non-market factors such as the need for
hard currency.
The Company produces and sells nitrogen fertilizer products primarily in the
southern United States. Because competition is based largely on price,
maintaining low production costs is critical to competitiveness. The Company
believes it is one of the lowest-cost producers of nitrogen fertilizers in the
United States. Natural gas comprises the majority of the raw materials cost of
nitrogen fertilizers. Competitive natural gas purchasing is essential to
maintaining of the Company's low-cost position. Equally important is efficient
use of this gas because of the energy-intensive nature of the nitrogen
fertilizer business. Therefore, cost-competitive production facilities that
allow flexible upgrading of ammonia to other finished products are critical to
a low-cost competitive position. In the highly fragmented nitrogen fertilizer
market, product quality and customer service can also be sources of product
differentiation.
Through Atlantic, the Company sells approximately two-thirds of its DAP in
international markets. The United States phosphate industry has become more
concentrated as a result of recent consolidations and joint ventures, and the
Company is significantly smaller than most of its competitors in terms of
resources and sales. Most of the Company's principal competitors have captive
sources of some or all of the raw materials and this may provide them with cost
advantages. The Company's long-term phosphate rock contract with its flexible
pricing mechanism is a key element to the Company's ability to compete.
Most potash consumed in the United States is provided by large Canadian
producers, who have economies of scale and lower variable costs than their U.S.
counterparts. Over 80% of United States potash production capacity is located
in the Carlsbad, New Mexico, area. While the Carlsbad producers have higher
36
<PAGE>
mining costs than the Canadian producers, this disadvantage is offset by
logistical and freight advantages in certain markets in the United States
southwest and the lower United States corn belt. The Company competes in these
markets primarily with three other Carlsbad potash producers. The Company
believes that its reserve position gives it a competitive edge and that it will
be a long-term participant in the United States potash industry.
OTHER PROPERTIES
The Company owns an administration building in Yazoo City which contains
approximately 65,000 square feet of office space.
The Company has a total systemwide storage capacity of approximately 393,000
tons. In addition to the fertilizer storage facilities in Yazoo City and
Pascagoula, Mississippi, Carlsbad, New Mexico, and Donaldsonville, Louisiana,
the Company also owns or leases 23 fertilizer storage and distribution
facilities at other locations in Alabama, Arkansas, Florida, Georgia,
Louisiana, Mississippi, Missouri, Tennessee and Texas.
In 1980, the Company completed the purchase of phosphate rock property in
Hardee County, Florida. This property, containing approximately 12,000 acres,
is estimated by the Company to contain approximately 62 million recoverable
tons of phosphate rock of commercial quality. During 1990, the Company entered
into an agreement granting a third party the exclusive option, for a period of
four years, to purchase this undeveloped phosphate rock property. The Company
received an aggregate of $14 million in option payments during this period. As
of July 12, 1994, the Company and the option holder entered into new agreements
with respect to this property whereby (i) the Company conveyed approximately
2,500 acres of this property to the third party; (ii) for aggregate additional
option payments of $7 million to be paid during the option period, the Company
granted to the third party the exclusive option, for a period of three and one-
half years, to purchase the remaining 9,500 acres; (iii) the Company was
granted a put option pursuant to which the Company has the right to sell the
9,500 acres to the third party if the third party does not exercise its prior
option to purchase the property; and (iv) the Company was granted an exclusive
option to repurchase the previously conveyed 2,500 acres in the event the third
party does not exercise its option to purchase the 9,500 acres and the Company
does not exercise its put option on the 9,500 acres.
RESEARCH AND DEVELOPMENT
The Company has a research and development staff of 13 full-time professional
employees whose activities relate primarily to the improvement of existing
products. The expenditures on research activities sponsored by the Company
during fiscal 1994, 1993 and 1992 were approximately $1.4 million, $1.4 million
and $1.7 million, respectively.
EMPLOYEES
As of June 30, 1994, the Company employed approximately 960 persons at all
locations. The Company considers its employee relations to be satisfactory.
COMPLIANCE WITH ENVIRONMENTAL REGULATIONS
The Company's operations are subject to federal, state and local laws and
regulations pertaining to the environment, among which are: the Clean Air Act,
the Clean Water Act, the Resource Conservation and Recovery Act, the
Comprehensive Emergency Response Compensation and Liability Act, the Toxic
Substances Control Act and the Mississippi State Pollution Prevention Act. The
Company's facilities require operating permits that are subject to review by
governmental agencies. The Company believes that its policies and procedures
now in effect are generally in compliance with applicable laws and with the
permits relating to the facilities.
37
<PAGE>
In the past, significant capital and operating costs related to environmental
laws have been incurred. The majority of the Company's environmental capital
expenditures have been in response to the requirements of the Clean Air Act and
the Clean Water Act. Since 1967, the Company has spent approximately $50.0
million on its fertilizer production facilities in order to meet applicable
federal and state pollution standards. The Company is involved in certain
litigation involving a Louisiana waste disposal site. See "--Legal
Proceedings--Combustion, Inc. Litigation."
Capital expenditures related to environmental obligations for the past three
fiscal years were approximately as follows: 1994--$619,000; 1993--$7.0 million;
and 1992--$10.0 million. Included in the foregoing expenditures for fiscal 1993
and 1992 is a portion of the cost of a new nitric acid plant and related
facilities in Yazoo City. which was completed in early 1993. This facility
increased capacity and also replaced existing production from other plants that
were closed. Enhanced environmental protection under the Clean Air Act was a
primary factor in the Company's decision to construct the plant.
Environmental capital expenditures are expected to be approximately $6.0
million for fiscal 1995. A portion of this amount will be used for a recently
approved expenditure of approximately $7.0 million relating to the replacement
of a scrubber system at Yazoo City that will reduce particulate emissions from
fertilizer prill towers, and a portion of this amount will be used for a
recently approved $1.3 million expenditure relating to the relocation of the
discharge point of the Yazoo City facility's combined storm and process water
to the Yazoo River.
During fiscal 1994, the Company charged to its earnings approximately $6.1
million relating to the estimated cost of the future closure of the gypsum
disposal facility located at Pascagoula. This charge relates to the portion of
the disposal facility utilized to date, and it is estimated that future charges
of approximately $3.0 million will be accrued over the estimated six-year
remaining life of the disposal facility.
In the normal course of its business, the Company is exposed to risks
relating to possible releases of hazardous substances into the environment.
Such releases could cause substantial damage or injuries. Environmental
expenditures have been and will continue to be significant. It is impossible to
predict or quantify the impact of future environmental laws and regulations.
LEGAL PROCEEDINGS
Combustion, Inc. Litigation. On July 15, 1986, the first of 17 lawsuits was
filed by numerous plaintiffs in the Twenty-first Judicial District Court,
Parish of Livingston, State of Louisiana, against Triad, the Company and
approximately 90 other named defendants. Additionally, approximately 200
parties have been added as third-party defendants. The plaintiffs' claims are
based on alleged personal injuries and property damages as a result of exposure
to hazardous waste from the Combustion, Inc. waste disposal site in Livingston
Parish, Louisiana.
These cases were removed to the U.S. District Court for the Middle District
of Louisiana, then remanded to State Court, and have now been removed once
again to Federal Court. The plaintiffs have filed a motion to have the cases
remanded to State Court.
The plaintiffs moved for certification of a class for the purpose of
consolidating the pending litigation as one class action suit, and in January
1991, a state class was certified by the District Court judge. The Louisiana
First Circuit Court of Appeal affirmed the certification of the class, but
reversed the definition of the class and remanded the issue to the trial court
for further determination.
Triad and the Company are vigorously defending their position in these
proceedings and consider their defense meritorious.
CERCLA Sites. Triad has received and responded to letters issued by the
United States Environmental Protection Agency ("EPA") under Section 104 of the
Comprehensive Environmental Response
38
<PAGE>
Compensation and Liability Act ("CERCLA") relative to the possible disposition
of Triad waste at the Combustion, Inc. site and the Cleve Reber disposal site
in Ascension Parish, Louisiana. Under CERCLA, generators of waste may be held
responsible for investigation and site cleanup costs.
Potash Litigation. In actions filed in April 1993, the Company was named as a
defendant, along with other United States and Canadian potash producers, in
several complaints that alleged a conspiracy among the defendants to fix the
price of potash in violation of the United States antitrust laws. Following the
disqualification of certain of the plaintiff's counsel, amended complaints were
filed, none of which name the Company as a defendant. With respect to two of
the plaintiffs, the Company has entered into an agreement whereby any
applicable statute of limitation is tolled from the date of the agreement
through September 30, 1994.
Potash Investigation. On November 24, 1993, the Antitrust Division of the
Department of Justice served the Company with a grand jury subpoena in
connection with its investigation of allegations of price fixing by United
States and Canadian potash producers. The subpoena requests that the Company
produce certain documents relating to its potash business in the United States
and Canada. The Company is in the process of assembling these documents for
production.
Other Legal Proceedings. In addition to the foregoing, the Company, in the
ordinary course of business, is the subject of, or a party to, other various
pending or threatened legal proceedings. The Company believes that any ultimate
liability arising from these actions would not have a material effect on its
financial position or results of operations.
39
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
----------------------- --- -------------------------------------------------
<S> <C> <C>
Charles O. Dunn (1) 46 President, Chief Executive Officer and Director
William F. Hawkins 63 Senior Vice President--Finance and Administration
David W. Arnold 57 Senior Vice President--Technical Group
C. E. McCraw 46 Senior Vice President--Operations
Robert E. Jones 46 Vice President and General Counsel
John J. Duffy 60 Vice President--Sales and Marketing
Rosalyn B. Glascoe 49 Corporate Secretary
Coley L. Bailey (1) 43 Chairman of the Board
John Sharp Howie (1)(2) 54 Vice Chairman of the Board
John W. Anderson (1)(3) 59 Director
Frank R. Burnside, Jr.
(2) 45 Director
Woods E. Eastland (2) 49 Director
Robert P. Dixon (1)(2) 50 Director
W. R. Dyess (3)(4) 55 Director
G. David Jobe (3) 51 Director
George Penick (4) 46 Director
David M. Ratcliffe (3) 46 Director
Wayne Thames (4) 58 Director
Tom C. Parry 66 Director Emeritus
</TABLE>
- --------
(1) Member of Executive Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
(4) Member of Directors Affairs Committee
Charles O. Dunn has been employed by the Company since 1978, was elected
President and Chief Executive Officer of the Company in April 1993 and has
served as a director of the Company since 1993. Prior to becoming President,
Mr. Dunn served in various positions within the Company, including Attorney and
Executive Vice President.
William F. Hawkins has been employed by the Company since 1966. He was
appointed Senior Vice President--Finance and Administration in 1987. Prior to
1987, Mr. Hawkins served in various positions with the Company, including
Senior Vice President--Finance and Vice President--Finance.
David W. Arnold has been employed by the Company since 1966. He was appointed
as Senior Vice President--Technical Group in July 1991. Mr. Arnold served as
Senior Vice President--Engineering from 1981 to 1987 and as Senior Vice
President--Research & Engineering from 1987 to 1991.
C. E. McCraw has been employed by the Company since 1974. He was appointed
Senior Vice President--Fertilizers Group in 1991. Prior to 1991, Mr. McCraw
served as Vice President--Operations, Vice President--Nitrogen Development and
in various other positions with the Company.
40
<PAGE>
Robert E. Jones has been employed by the Company since 1974. He was appointed
Vice President and General Counsel in 1989. Prior to 1989, Mr. Jones served in
various positions with the Company, including Associate General Counsel and
General Counsel.
John J. Duffy has been employed by the Company since 1988. He was appointed
Vice President--Sales and Marketing in 1994. Prior to 1994, Mr. Duffy served as
Director of Sales and Marketing.
Rosalyn B. Glascoe has been employed by the Company since 1981. She was
appointed Corporate Secretary in 1986. Prior to 1986, Ms. Glascoe served as
Stock Department Manager and Assistant Secretary.
Coley L. Bailey has been a director of the Company since 1978 and has served
as Chairman of the Board since 1988. For more than the past five years, he has
been engaged in farming activities in Yalobousha County, Mississippi.
John Sharp Howie has been a director of the Company since 1966 and has served
as Vice Chairman of the Board since 1988. For more than the past five years, he
has been engaged in farming activities in Yazoo County, Mississippi.
John W. Anderson has been a director of the Company since 1989. In May 1989,
he was named Chief Executive Officer of Alabama Farmers Cooperative, Inc. Prior
to 1989, Mr. Anderson was Manager of the Anderson's Peanuts Division of Alabama
Farmers Cooperative. He had been affiliated with Anderson's Peanut Division
since 1984.
Frank R. Burnside, Jr. has been a director of the Company since 1985. For
more than the past five years, he has been a farm supply dealer and Vice
President and Manager of Newellton Elevator Company, Inc., Newellton,
Louisiana.
Robert P. Dixon has been a director of the Company since 1986. For more than
the past five years, he has been the President and Chief Executive Officer of
SF Services, Inc., a North Little Rock, Arkansas, agricultural cooperative.
W. R. Dyess has been a director of the Company since 1991. Since 1972, he has
served as President of Dyess Farm Center, Inc., in Bardwell, Texas, and ABC Ag
Center, Inc., in Corsicana, Texas.
Woods E. Eastland has been a director of the Company since July 1994. Since
1986, he has been President and Chief Executive Officer of Staplcotn &
Stapldiscount, a cotton marketing and financing cooperative located in
Greenwood, Mississippi.
G. David Jobe has been a director of the Company since 1989. Since 1981 he
has been affiliated with, and currently serves as Senior Vice President of
Corporate Operations of, MFA Incorporated, a regional agricultural cooperative.
George Penick has been a director of the Company since July 1994. He is
President of the Foundation for the Mid South, a private philanthropic
foundation, and has served in that position since 1990. From 1986 until 1990,
he was the first executive director of the Jessie Ball duPont Fund.
David M. Ratcliffe has been a director of the Company since July 1994. Since
1991, he has served as President and Chief Executive Officer of Mississippi
Power Company, an electric utility. From 1989 until 1991, he was Executive Vice
President of Southern Company Services.
Wayne Thames has been a director of the Company since 1973. For more than the
past five years, he has been a cattleman in Evergreen, Alabama.
Tom C. Parry was President of the Company and a member of the Board of
Directors from 1972 until 1993. Mr. Parry was appointed in 1994 by the Board of
Directors as Director Emeritus.
41
<PAGE>
TERM OF OFFICE
The Board of Directors is classified into three classes, the first class
serving until the annual meeting of shareholders to be held in 1995 ("Class I
Directors"), the second class serving until the annual meeting of shareholders
to be held in 1996 ("Class II Directors") and the third class serving until the
annual meeting of shareholders to be held in 1997 ("Class III Directors").
Messrs. Burnside, Anderson, Dixon and Penick serve as Class I Directors,
Messrs. Thames, Dyess, Jobe and Ratcliffe serve as Class II Directors and
Messrs. Dunn, Bailey, Howie and Eastland serve as Class III Directors. All
officers serve at the pleasure of the Board of Directors.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Articles of Incorporation contain provisions eliminating the
personal liability of its directors for monetary damages resulting from
breaches of their fiduciary duty to the extent permitted by the Mississippi
Business Corporation Act. Each director will continue to be subject to
liability for the amount of financial benefit received by a director to which
he or she is not entitled, for any intentional infliction of harm on the
Company or its shareholders, for improper distributions to shareholders and for
intentional violations of criminal law. This provision does not affect a
director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
BOARD COMMITTEES
The Board of Directors has established four standing committees: the Audit
Committee, the Compensation Committee, the Directors Affairs Committee and the
Executive Committee. The Audit Committee recommends the appointment of
independent auditors and oversees the accounting and audit functions of the
Company. The Compensation Committee determines executive officers' salaries and
bonuses. No member of the Compensation Committee or the Audit Committee is or
has been an employee of the Company. The Directors Affairs Committee operates
as a nominating committee for the slate of directors and officers, recommends
directors' compensation to the full Board and periodically reviews the
performance of the Board. The Executive Committee has the authority to take all
actions which the Board of Directors as a whole would be able to take.
DIRECTOR COMPENSATION
All directors, other than Coley L. Bailey, John Sharp Howie and Charles O.
Dunn, are paid an annual retainer of $12,000 and $1,000 per meeting, plus
expenses. Coley L. Bailey, as Chairman of the Board, receives a salary of
$40,000 a year, plus expenses. John Sharp Howie, as Vice Chairman of the Board,
receives an annual retainer of $18,000 and $1,000 per meeting, plus expenses.
Charles O. Dunn, as President and Chief Executive Officer, receives no
additional remuneration for serving as a director.
42
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to all compensation
paid or earned for services rendered to the Company in fiscal 1994, 1993 and
1992 by the Company's Chief Executive Officer and the Company's four highest
paid executive officers other than the Chief Executive Officer (together, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------------------
(A) (B) (C) (D) (E)
OTHER ANNUAL
NAME AND PRINCIPAL SALARY BONUS COMPENSATION
POSITION YEAR ($) ($) ($)(1)
- ------------------ ---- ------- ------- ------------
<S> <C> <C> <C> <C>
Charles O. Dunn 1994 280,008 89,603 4,562
President and Chief 1993 243,319 64,612 4,427
Executive Officer 1992 216,600 65,846 4,303
William F. Hawkins 1994 223,260 47,331 4,562
Senior Vice President-- 1993 212,628 45,077 4,427
Finance and Administration 1992 198,720 55,344 4,303
C. E. McCraw 1994 209,760 47,406 4,562
Senior Vice President-- 1993 195,132 41,758 4,427
Operations 1992 175,008 46,377 4,303
Robert E. Jones 1994 174,840 111,683 4,562
Vice President and 1993 162,648 32,123 4,427
General Counsel 1992 152,016 34,584 4,303
David W. Arnold 1994 168,312 30,666 4,562
Senior Vice President-- 1993 159,540 30,711 4,427
Technical Group 1992 149,100 33,920 4,303
</TABLE>
- --------
(1) The amounts disclosed in column (e) of the Summary Compensation Table
represent employee salary deferrals under the Company's 401(k) plan which
would otherwise be payable during the relevant fiscal year.
BASE SALARIES
Base salaries of the President and other executive officers are based on
internal equity and external competitiveness. The Company has retained W.M.S.
Management Consultants, a compensation consulting firm, to assist in the
establishment of salary ranges for each executive officer. Individual salaries
are set within the established range based on subjective individual performance
evaluations. It is the objective of the Compensation Committee of the Company
to develop salary programs that attract and maintain qualified key employees.
ANNUAL BONUSES
Annual bonuses for executive officers are intended to reward key employees
who have a material impact on the Company's operating results. Bonuses are not
paid unless the Company's financial performance, as measured by specified
ratios, ranks in the top 50% of an industry survey. The Chief Executive
Officer's bonus is based on corporate performance. Other executive officers'
bonuses are based in part on corporate performance, as measured by specific
financial measurements, and in part on management's evaluation of each
executive officer's performance. These criteria are reviewed and approved by
the Compensation Committee. Under this plan, the Chief Executive Officer's
bonus can range as high as 33% of base salary.
43
<PAGE>
Other executive officers can achieve bonuses up to a maximum percentage
established by the Compensation Committee. For 1994, maximum bonus potential
for the Company's four most highly compensated executive officers, other than
the Chief Executive Officer, ranged between 15% and 21%. In addition, executive
officers participate in a bonus plan in which all Company employees
participate. This plan is effective only in years in which 7.5% of Company
profits exceed 3% of base payroll. The exact individual pay out percentage is
determined by the ratio that 7.5% of profits has to total base payroll, to a
minimum of 3% but not to exceed 10%. In 1994 the plan will pay the full 10%
bonus to all employees.
STOCK INCENTIVE PLAN
The Company recently adopted the Mississippi Chemical Corporation 1994 Stock
Incentive Plan (the "Stock Plan"). On August 2, 1994, the Compensation
Committee granted options to acquire an aggregate of 201,941 shares of Common
Stock to eleven executive officers and key employees. All options were granted
at an exercise price per share to be equal to the price per share of the Common
Stock offered hereby and vest within a period of eight years in accordance with
a formula based on the price performance of the Common Stock. A total of
1,800,000 shares of Common Stock are reserved for issuance under the Stock Plan
pursuant to options, stock appreciation rights and stock awards. Benefits under
the Stock Plan may be granted to officers and key employees of the Company
selected by the Compensation Committee based on the special importance of their
services to the Company. Under the terms of the Stock Plan, participants may
receive incentive stock options or non-qualified stock options in such amounts,
with such vesting provisions and with such exercise prices (not less, however,
than the fair market value of the Common Stock on the date of grant) as may be
established by the Compensation Committee. The terms of options will not exceed
ten years. To the extent permitted by the Compensation Committee, the exercise
price of an option may be paid in shares of Common Stock valued at their then
fair market value. Stock appreciation rights may be granted independently or in
conjunction with options. A stock appreciation right entitles the recipient to
receive, in cash or Common Stock, the excess of the fair market value of a
share of Common Stock on the exercise date over the fair market value on the
date of grant. Stock awards consist of Common Stock transferred to participants
without payment therefor as additional compensation. Stock awards may be
subject to forfeiture or vesting based upon the achievement of Company
performance goals established by the Compensation Committee. At this time, the
Company does not plan to grant stock appreciation rights or stock awards.
PENSION PLAN
The Company provides a "Defined Benefit" retirement plan for all regular
employees meeting established age and employment service requirements. Benefits
are determined based on average pay and years of credited service. Annual
Company contributions on behalf of individual specified participants cannot be
calculated by plan actuaries. Only an employee's "base pay" is covered by the
plan. Plan compensation does not include bonuses, overtime or shift
differentials. The following table shows estimated annual benefits payable at
age 65 to newly hired persons in specified compensation and years of service
categories. Listed benefits are not subject to deductions for social security
or other offset amounts.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------
REMUNERATION 15 20 25 30 35
------------ ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 25,000.......................... $ 4,688 $ 6,250 $ 7,813 $ 9,375 $ 10,938
50,000.......................... 10,005 12,500 15,625 18,750 21,875
100,000.......................... 25,005 32,440 39,763 47,175 54,880
150,000.......................... 40,005 52,440 64,763 77,175 89,880
200,000.......................... 55,005 72,440 89,763 104,077 104,077
250,000 and above................ 65,757 86,776 104,077 104,077 104,077
</TABLE>
Years of service for the Named Executive Officers are: Charles O. Dunn--16;
William F. Hawkins--28; C. E. McCraw--20; Robert E. Jones--20; and David W.
Arnold--28.
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<PAGE>
SUPPLEMENTAL BENEFIT PLAN
In fiscal 1984, the Company established a nonqualified "Defined Benefit"
Supplemental Benefit Plan for any employee who is a participant in the Pension
Plan and whose benefits from that Plan will, at his retirement, be limited by
the operation of Section 415 of the Internal Revenue Code and/or, effective for
fiscal 1991, Section 407(a)(17) of the Code. The purpose of the supplemental
plan is to make up the difference between the defined pension benefit permitted
under Section 415 of the Code and what would otherwise be payable but for the
Section 415 limit.
Benefits from this Plan will be payable to any participant designated by the
Plan Administrator on a monthly basis beginning at the time and under the terms
that would have applied if such benefits had been payable from the Pension
Plan.
The following table shows estimated annual benefits payable under the Plan to
persons in specified compensation and years of service categories. (The actual
benefit paid under the supplemental plan is the supplemental benefit minus the
allowable pension plan benefit.)
SUPPLEMENTAL BENEFIT PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------
REMUNERATION 15 20 25 30 35
------------ ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000 or less.................. $ -- $ -- $ -- $ -- $ --
200,000.......................... -- -- -- 3,098 20,803
250,000.......................... 4,248 5,664 10,686 33,098 55,803
300,000.......................... 19,248 25,664 35,686 63,098 90,803
350,000.......................... 34,248 45,664 60,686 93,098 125,803
400,000.......................... 49,248 65,664 85,686 123,098 160,803
450,000.......................... 64,248 85,664 110,686 153,098 195,803
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN RELATIONSHIPS WITH CUSTOMERS
The primary business of the Cooperative was to provide fertilizer products to
its shareholders pursuant to preferred patronage rights to purchase fertilizer
products in proportion to the type and amount of Common Stock they owned.
Certain directors of the Company were either direct customers of the
Cooperative or were affiliated in some capacity with direct customers of the
Cooperative. All sales of product to directors and their affiliates have been
and are made in the ordinary course of business at prices and terms which are
determined based on prevailing competitive conditions and which are no less
favorable to the Company than the prices and terms of transactions with other
customers and shareholders.
During fiscal 1994 and 1993, sales to SF Services, Inc. ("SFS"), were
approximately $34 million and $33 million representing approximately 10.8% and
11.4% of the Company's net sales and approximately 8.7% and 8.6% of SFS's
consolidated gross revenues, respectively. Robert P. Dixon, a director of the
Company, is an executive officer of SFS. During fiscal 1994 and 1993, sales to
Alabama Farmers Cooperative, Inc. ("AFC"), were approximately $13.7 million and
$14.0 million, respectively. These sales represent 6.5% and 6.6%, respectively,
of the gross revenues of AFC. John W. Anderson, a director of the Company, is
an executive officer of AFC. Sales to SFS and AFC were on terms and conditions
comparable to transactions with other shareholders.
The Cooperative paid its shareholders patronage refunds. In fiscal 1993, the
Cooperative paid its largest shareholder, SFS, patronage refunds in the
aggregate amount of $1.9 million and paid AFC $1.7 million. As
45
<PAGE>
a result of the Reorganization, the Company will not pay patronage refunds
after fiscal 1994. It is currently expected that patronage refunds with respect
to fiscal 1994 will be calculated and paid in October 1994.
OTHER TRANSACTIONS
SFS has agreed to buy the Company's storage facility located in North Little
Rock, Arkansas, for approximately $600,000. Robert P. Dixon, a director of the
Company, is an executive officer of SFS.
On August 30, 1993, the Company sold a storage facility located in Decatur,
Alabama, to AFC for $115,000. John W. Anderson, a director of the Company, is
the President and Chief Executive Officer of AFC.
In the opinion of the Company, the transactions described are on terms as
favorable to the Company as if transacted with unaffiliated third parties.
46
<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information as of July 1, 1994,
regarding the beneficial ownership of the Common Stock by (i) the Selling
Shareholders, (ii) each shareholder known by the Company to be the beneficial
owner of more than five percent of the outstanding shares of the Company's
Common Stock, (iii) each director of the Company, (iv) each Named Executive
Officer of the Company and (v) all directors and executive officers of the
Company as a group. Except as otherwise indicated, the Company believes that
the beneficial owners of the Common Stock listed below, based on information
provided by the named persons, have sole investment and sole voting power with
respect to such shares, subject to community property laws where applicable.
The address of SF Services, Inc., is 824 North Palm Street, P.O. Box 5489,
North Little Rock, Arkansas 72119. Except as set forth in the preceding
sentence, the address of each of the shareholders named below is the Company's
principal executive office.
<TABLE>
<CAPTION>
NUMBER OF
OWNERSHIP PRIOR TO SHARES OWNERSHIP AFTER
OFFERING BEING OFFERED THE OFFERING(1)
-------------------- ------------- --------------------
SHARES OF SHARES OF SHARES OF
NAME OF BENEFICIAL OWNER COMMON STOCK PERCENT COMMON STOCK COMMON STOCK PERCENT
- ------------------------ ------------ ------- ------------- ------------ -------
<S> <C> <C> <C> <C> <C>
SF Services, Inc........ 2,956,175 15.2% 598,000 2,358,175 10.4%
Alabama Farmers
Cooperative Inc........ 1,098,660 5.6 55,000 1,043,660 4.6
Mapco Inc............... 192,701 1.0 68,000 124,701 *
Missouri Farmers
Association, Inc....... 726,108 3.7 376,309 349,799 1.5
Voluntary Purchasing
Groups, Inc............ 334,011 1.7 169,988 164,023 *
Gold Kist, Inc.......... 235,203 1.2 235,203 0 --
Jimmy Sanders Seed
Company................ 154,933 * 77,500 77,433 *
Delta Purchasing
Federation (AAL)....... 301,264 1.5 20,000 281,264 1.2
Charles O. Dunn......... -- -- -- -- --
William F. Hawkins...... -- -- -- -- --
David W. Arnold......... -- -- -- -- --
C. E. McCraw............ -- -- -- -- --
Robert E. Jones......... -- -- -- -- --
John J. Duffy........... -- -- -- -- --
Coley L. Bailey......... 4,663 * -- 4,663 *
John Sharp Howie (2).... 3,857 * -- 3,857 *
John W. Anderson........ 448 * -- 448 *
Frank R. Burnside, Jr.
(3).................... 21,015 * -- 21,105 *
Robert P. Dixon (4)..... 380 * -- 380 *
W. R. Dyess (5)......... 43,932 * -- 43,932 *
Woods E. Eastland (6)... 3,440 * -- 3,440 *
G. David Jobe........... -- -- -- -- --
George Penick........... -- -- -- -- --
David M. Ratcliffe...... -- -- -- -- --
Wayne Thames............ 4,825 * -- 4,825 *
All directors and
executive officers
as a group (17
persons)............... 82,750 * -- 82,750 *
</TABLE>
- --------
*Less than 1%.
(1) Assumes no exercise of the over-allotment option. If the over-allotment
option is exercised in full, additional shares will be sold by the
Company and the following Selling Shareholders will sell the following
additional shares: Alabama Farmers Cooperative Inc.--8,250 shares; Missouri
Farmers Association, Inc.--349,799 shares; and Voluntary Purchasing Groups,
Inc.--164,023 shares.
(2) Mr. Howie owns 1,971 shares individually and is the beneficial owner of
1,886 shares owned by Pauline W. Howie and John Sharp Howie d/b/a Cedar
Grove Plantation.
(3) Mr. Burnside owns 3,187 shares individually and is the beneficial owner of
17,828 shares owned by Newellton Elevator Company, Inc.
47
<PAGE>
(4) Mr. Dixon owns 26 shares individually and is the beneficial owner of 354
shares owned by Robert P. Dixon d/b/a Benchmark Farms.
(5) Mr. Dyess owns 474 shares individually and is the beneficial owner of
29,238 shares owned by Dyess Farm Center, Inc., and 14,220 shares owned by
ABC Ag Center, Inc.
(6) Mr. Eastland is the beneficial owner of 3,440 shares owned by the Elizabeth
C. Eastland Trust.
48
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 100,500,000 shares,
of which 100,000,000 shares are Common Stock, par value $.01 per share, and
500,000 shares are Preferred Stock, par value $.01 per share. At July 1, 1994,
there were 18,773,212 shares of Common Stock outstanding and held of record by
14,217 shareholders and no shares of Preferred Stock outstanding. Up to an
additional 681,142 shares of Common Stock may be issued upon the conversion of
Special Accounts, including Special Accounts arising from 1994 patronage and up
to a further 128,880 shares may be issued if certain small shareholders of the
Cooperative elect not to receive cash in the Reorganization.
COMMON STOCK
The issued and outstanding shares of Common Stock are, and the shares being
offered hereby will, upon payment therefor, be validly issued, fully paid and
nonassessable. Subject to the rights of holders of Preferred Stock, the holders
of outstanding shares of Common Stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as the
Board of Directors may from time to time determine. See "Dividend Policy." The
shares of Common Stock are neither redeemable nor convertible, and the holders
thereof have no preemptive or subscription rights to purchase any securities of
the Company. Upon liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to receive, pro rata, the assets of the
Company that are legally available for distribution, after payment of all debts
and other liabilities, including Special Accounts which, pursuant to the
Articles of Incorporation of the Company, may be established by the Company's
Board of Directors only to represent capital allocations to shareholders of the
Company of a portion of earnings on business done with such shareholders made
by the Cooperative, and subject to the prior rights of any holders of Preferred
Stock then outstanding. Each outstanding share of Common Stock is entitled to
one vote on all matters submitted to a vote of shareholders. There is no
cumulative voting in the election of Directors.
Each of the items described in "--Preferred Stock," "--Certain Statutory
Provisions" and "--Certain Charter Provisions" hereafter, could result in the
Company being less attractive to a potential acquiror and could result in
shareholders receiving less for their shares of Common Stock than otherwise
might be available in the event of a takeover attempt.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the Board of Directors to
issue the Preferred Stock in classes or series and to establish the
designations, preferences, qualifications, limitations or restrictions of any
class or series with respect to the rate and nature of dividends, the price and
terms and conditions on which shares may be redeemed, the terms and conditions
for conversion or exchange into any other class or series of the stock, voting
rights and other terms. The Company may issue, without the approval of the
holders of Common Stock, Preferred Stock that has voting, dividend or
liquidation rights superior to the Common Stock and that may adversely affect
the rights of holders of Common Stock. The issuance of Preferred Stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, adversely affect the voting
power of the holders of Common Stock and could have the effect of delaying,
deferring or preventing a change in control of the Company.
RIGHTS TO PURCHASE PREFERRED STOCK
The Company declared a dividend of one preferred share purchase right (a
"Right") payable on August 15, 1994 to shareholders of record as of August 5,
1994 for each share of Common Stock. Each Right entitles its holder to purchase
one one-hundredth of a share of the Company's Preferred Stock, Series A, $0.01
par value per share (the "Series Preferred Stock"), at an exercise price of
$50.00 per share (the "Purchase Price"). The Rights will expire on August 15,
2004, unless earlier redeemed or exchanged by the Company.
49
<PAGE>
The Rights are exercisable upon the earlier to occur of (i) 10 days following
the date of public disclosure that a person or group, together with persons
affiliated or associated with it (an "Acquiring Person"), has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding Common Stock and (ii) 10 days following commencement of or
disclosure of an intention to commence a tender offer or exchange offer if,
upon consummation of the offer, such person or group, together with persons
affiliated or associated with it, could acquire beneficial ownership of 25% or
more of the outstanding Common Stock (the earlier of such dates being called
"Separation Date").
If the Company is acquired in a merger or other business combination in which
the Common Stock does not remain outstanding or is changed or 50% or more of
the Company's consolidated assets or earning power is sold, leased, pledged or
otherwise transferred or disposed of, the Rights will "flip over" and entitle
each holder of a Right to purchase at the then-current Purchase Price, common
stock of the acquiring company with a market value of two times the Purchase
Price.
If (i) a person acquires 20% of the Common Stock, (ii) the Company is the
surviving corporation in a merger with an Acquiring Person and the Common Stock
remains outstanding and unchanged, or (iii) an Acquiring Person engages in one
of certain "self-dealing" transactions, the Rights will "flip in" and entitle
each holder to purchase at the then-current Purchase Price, Common Stock with a
market value of two times the Purchase Price. Any of these events is a
"Triggering Event." Any Rights owned by an Acquiring Person become null and
void upon the occurrence of the earlier of the Board of Directors' decision to
"exchange" the Rights and a Triggering Event. Under certain circumstances, the
disinterested directors can approve a transaction with a specific shareholder
that would otherwise be a Triggering Event, and freeze the Rights in connection
with that specific transaction.
At any time any person becomes an Acquiring Person and prior to such time as
such person, together with its affiliates, becomes the beneficial holder of at
least 50% of the Company's outstanding Common Stock, the Company may, provided
that all necessary regulatory approvals have been obtained, exchange the Rights
(other than Rights owned by such Acquiring Person which become null and void),
in whole or in part, at a ratio of one share of Common Stock per Right, subject
to adjustment.
Prior to ten days after it has become public that an Acquiring Person has
become such (with the possibility for the Board of Directors to extend that
period for an additional ten days), the Company may redeem the Rights at a
price of $0.01 per Right. The Company may, without the approval of any holder
of the Rights, but only if at that time the Board of Directors consists of a
majority of disinterested directors, supplement or amend any provision of the
Rights Agreement, except the redemption window, the Purchase Price or the
redemption price.
Series Preferred Stock issued upon exercise of the Rights will not be
redeemable. Each share of Series Preferred Stock will be entitled to a minimum
preferential quarterly dividend of $25.00 per share, but will be entitled to an
aggregate dividend of 100 times the dividend declared per share of Common
Stock, if it is greater. In the event of liquidation, the holders of the Series
Preferred Stock will be entitled to a minimum preferential liquidation payment
of $100.00 per share, but will be entitled to an aggregate payment of 100 times
the payment made per share of Common Stock, if it is greater. In the event of
any merger or other business combination in which Common Stock is exchanged,
each share of Series Preferred Stock will be entitled to receive 100 times the
amount received per share of Common Stock.
The Rights have certain anti-takeover effects. The Rights may deter takeover
attempts because they may cause substantial dilution to a person or group that
attempts to acquire the Company on terms not approved by the Company's Board of
Directors, except pursuant to an offer conditioned upon a substantial number of
Rights being acquired. The Rights should not interfere with any merger or
business combination approved by the Board of Directors because the Rights are
redeemable.
50
<PAGE>
While the Company has no knowledge that any person or group intends to
acquire the Company, the Company believes that the advantages arising from the
issuance of Rights, particularly during the period following the Offering,
outweigh any discouragement of certain business combinations.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
CERTAIN STATUTORY PROVISIONS
Mississippi Control Share Act
The Company has chosen to be subject to the Mississippi Control Share Act,
which provides, in the case of a public company which has more than 500 of its
shareholders resident in Mississippi or more than 10 percent of its shares
owned by Mississippi residents, that once a potential acquiror notifies a
company of the intention to purchase 20%, 33 1/3% or more than 50% of the
company's shares and requests a special meeting, a shareholders' meeting must
be held within 50 days, at the acquiror's expense, to vote on whether the
control shares (those held by the acquiring entity) may exercise voting rights.
If a request is not made, shareholders will vote on whether to restore voting
rights at the next shareholder's meeting. Without the approval of a majority of
the outstanding shares, excluding shares owned by the acquiror and company
officers and employee-directors, the control shares do not receive voting
rights until three years have passed.
Mississippi Shareholder Protection Act
The Company has chosen to be subject to the Mississippi Shareholder
Protection Act. By the terms of the act, a corporation may not enter into any
business combination with a 20%-shareholder unless: (a) 80% of the outstanding
shares and two-thirds of the shares not owned by the 20%-shareholder approve
the combination; (b) 80% of the continuing directors approve the combination;
or (c) the aggregate amount of the offer meets certain fair price criteria.
CERTAIN CHARTER PROVISIONS
The Articles of Incorporation provide for the Board of Directors to be
divided into three classes, with staggered three-year terms. As a result, only
one class of directors will be elected at each annual meeting of shareholders
of the Company, with the other classes continuing for the remainder of their
respective terms.
The Articles of Incorporation also provide that directors may be removed from
office only for cause and only at a shareholders' meeting called for the
purpose of removing such directors with notice stating such purpose. Vacancies
on the Board of Directors, including those resulting from an increase in the
number of directors, may be filled by the remaining directors or by the
shareholders and the term of any director filling a vacancy shall be for the
balance of the term of the retiring director's class.
Certain provisions contained in the Articles of Incorporation, including
those relating to the size and classification of the Board of Directors, the
indemnification of directors, the removal of directors, the election to be
subject to the Mississippi Shareholders Protection Act and the Mississippi
Control Share Act, the power of the Board of Directors to increase the
percentage of voting shares necessary to call a special meeting of shareholders
and the required vote necessary to approve the transactions may only be amended
by the affirmative vote of the holders of at least two-thirds of the total
outstanding voting power of the Company.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Harris Trust and
Savings Bank.
51
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
All of the outstanding shares of Common Stock, including the 3,200,000
shares to be sold by the Company in this Offering, and all of the shares which
may be issued upon the conversion of Special Accounts, will be freely tradable
without restriction or further registration under the Securities Act, unless
acquired by "affiliates" (as defined in Rule 144 of the Securities Act) in
which case their shares will be subject to the resale limitations of Rule 144.
The Company, its officers, directors, the Selling Shareholders and certain
other shareholders, holding an aggregate 6,228,346 shares of Common Stock
after the Offering (27.5% of the shares of Common Stock then outstanding) have
agreed not to offer, sell or otherwise dispose of any shares of Common Stock
or any securities convertible into or exchangeable or exercisable for Common
Stock for a period of 180 days after the date of this Prospectus without the
prior consent of Wertheim Schroder & Co. Incorporated.
Prior to the Offering, there has been no established trading market for the
Common Stock. The Company can make no prediction as to the effect, if any,
that sales of shares of its Common Stock, or the availability of shares for
future sale, will have on the market price of the Common Stock prevailing from
time to time. Sales of substantial amounts of Common Stock in the public
market, or the perception that such sales could occur, could depress the
prevailing market price for the Common Stock.
52
<PAGE>
UNDERWRITING
The Underwriters named below have severally agreed, subject to certain
conditions, to purchase from the Company and the Selling Shareholders the
aggregate number of shares of Common Stock set forth below opposite their
respective names:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Wertheim Schroder & Co. Incorporated...........................
The Robinson-Humphrey Company, Inc.............................
---------
Total...................................................... 4,800,000
=========
</TABLE>
The Underwriting Agreement provides that the several Underwriters are
obligated to purchase all the 4,800,000 shares of Common Stock offered hereby,
if any are purchased. Wertheim Schroder & Co. Incorporated and The Robinson-
Humphrey Company, Inc., as representatives (the "Representatives") of the
several Underwriters, have advised the Company and the Selling Shareholders
that the Underwriters propose to offer the shares to the public initially at
the public offering price set forth on the cover page of this Prospectus; that
the Underwriters propose initially to allow a concession not in excess of $
per share to certain dealers, including the Underwriters; that the Underwriters
and such dealers may initially allow a discount not in excess of $ per share
to other dealers; and that the public offering price and the concession and
discount to dealers may be changed by the Representatives after the initial
public offering.
The Company and certain Selling Shareholders have granted to the Underwriters
an option, expiring at the close of business on the 30th day after the date of
the Underwriting Agreement, to purchase up to an additional 720,000 shares of
Common Stock, at the public offering price less underwriting discounts and
commissions, all as set forth on the cover page of this Prospectus. Of the
shares subject to the over-allotment option, 197,928 shares will be Company
shares and 522,072 shares will be shares owned by certain Selling Shareholders.
The Underwriters may exercise the option only to cover over-allotments, if any,
in the sale of shares of Common Stock in the Offering. To the extent that the
Underwriters exercise this option, each Underwriter will be committed, subject
to certain conditions, to purchase a number of the additional shares
proportionate to such Underwriter's initial commitment.
The Company, the Selling Shareholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.
The Company, its officers and directors, the Selling Shareholders and certain
other shareholders have agreed not to sell or otherwise dispose of any shares
of Common Stock for a period of 180 days after the date of this Prospectus
without the prior written consent of Wertheim Schroder & Co. Incorporated.
Following the Offering, an aggregate of 6,228,346 shares, 27.5% of the total
shares outstanding, will be subject to these restrictions.
53
<PAGE>
Prior to the Offering, there has been no established public market for the
Common Stock. Consequently, the initial public offering price of the Common
Stock has been determined by negotiations among the Company, the Selling
Shareholders and the Representatives. Among the factors considered in such
negotiations were the Company's results of operations and financial condition,
the prospects for the Company and for the industry in which the Company
operates, the Company's capital structure and prevailing conditions in the
securities market. The estimated offering price set forth on the cover of this
Prospectus is subject to change as a result of market conditions and other
factors.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed upon
for the Company by McDermott, Will & Emery, Chicago, Illinois. Certain legal
matters will be passed upon for the Underwriters by Fulbright & Jaworski
L.L.P., New York, New York.
EXPERTS
The consolidated financial statements, including the related notes and
schedules thereto as of June 30, 1994 and 1993 and for each of the three years
in the period ended June 30, 1994, included in this Prospectus and elsewhere in
the registration statement of which this Prospectus is a part have been audited
by Arthur Andersen & Co., independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
54
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................................. F-2
Consolidated Balance Sheets as of June 30, 1994 and 1993.................. F-3
Consolidated Statements of Operations for the Years Ended June 30, 1994,
1993 and 1992............................................................ F-4
Consolidated Statements of Shareholder-Members' Equity as of June 30,
1992, 1993 and 1994...................................................... F-5
Consolidated Statements of Cash Flows for the Years Ended June 30, 1994,
1993 and 1992............................................................ F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
the Shareholders of
Mississippi Chemical Corporation:
We have audited the accompanying consolidated balance sheets of Mississippi
Chemical Corporation (a Mississippi corporation) and subsidiaries as of June
30, 1994 and 1993, and the related consolidated statements of operations,
shareholder-members' equity and cash flows for each of the three years ended
June 30, 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 financial position of Mississippi Chemical
Corporation and subsidiaries as of June 30, 1994 and 1993, and the results of
their operations and their cash flows for each of the three years ended June
30, 1994, in conformity with generally accepted accounting principles.
As further explained in Note 1 to the consolidated financial statements, the
Company has given cumulative effect to the change in accounting for income
taxes under Statement of Financial Accounting Standards No. 109.
/s/ Arthur Andersen & Co.
Memphis, Tennessee,
July 29, 1994.
F-2
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30
-----------------
1994 1993
-------- --------
(DOLLARS IN
ASSETS THOUSANDS)
<S> <C> <C>
Current assets:
Cash and cash equivalents...................................... $ 23,219 $ 22,014
Accounts receivable............................................ 28,659 26,394
Inventories.................................................... 33,990 34,744
Prepaid expenses and other current assets...................... 3,981 3,686
Deferred income tax benefit.................................... 9,682 --
-------- --------
Total current assets......................................... 99,531 86,838
Investments and other assets:
National Bank for Cooperatives................................. 7,441 4,813
Other.......................................................... 9,813 16,960
-------- --------
Total investments and other assets........................... 17,254 21,773
Properties held for sale......................................... 66,928 66,928
Property, plant and equipment, at cost, less accumulated
depreciation, depletion and amortization........................ 114,717 120,514
-------- --------
$298,430 $296,053
======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDER-MEMBERS' EQUITY
<S> <C> <C>
Current liabilities:
Long-term debt due within one year............................. $ 2,948 $ 11,237
Notes payable.................................................. 7,030 4,625
Accounts payable............................................... 28,569 24,225
Accrued liabilities............................................ 11,297 10,129
Patronage refunds payable...................................... 14,756 13,820
-------- --------
Total current liabilities.................................... 64,600 64,036
Long-term debt................................................... 57,217 52,357
Other long-term liabilities and deferred credits................. 24,704 18,623
Deferred income tax payable...................................... 8,953 --
Net liabilities of discontinued operations....................... -- 41,463
Commitments and contingencies (see Note 12)...................... -- --
Shareholder-members' equity...................................... 142,956 119,574
-------- --------
$298,430 $296,053
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
F-3
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
----------------------------
1994 1993 1992
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales........................................ $309,360 $289,125 $239,657
Operating expenses:
Cost of products sold.......................... 217,809 213,715 152,324
Provision for closure of gypsum disposal area.. 6,055 -- --
Selling........................................ 29,339 28,940 27,731
General and administrative..................... 18,252 17,290 18,798
-------- -------- --------
271,455 259,945 198,853
-------- -------- --------
Operating income................................. 37,905 29,180 40,804
Other (expense) income:
Interest, net.................................. (3,991) (3,569) (3,930)
Restructuring.................................. (1,402) -- --
Other.......................................... 421 767 (531)
-------- -------- --------
Margins from continuing operations before income
taxes and cumulative effect of change in
accounting principle............................ 32,933 26,378 36,343
Income tax expense............................... 6,021 3,697 4,994
-------- -------- --------
Margins from continuing operations before
cumulative effect of change in accounting
principle....................................... 26,912 22,681 31,349
Discontinued operations:
Loss from discontinued operations (less
applicable income tax credits of $5,314,
$4,555 and $5,898 for fiscal 1994, 1993 and
1992)......................................... (23,987) (17,891) (18,346)
Gain on disposal of discontinued operations
(including applicable income tax credits of
$4,030)....................................... 39,747 -- --
Cumulative effect to July 1, 1993, of change in
accounting for income taxes..................... (6,149) -- --
-------- -------- --------
Net margins...................................... $ 36,523 $ 4,790 $ 13,003
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
F-4
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER-MEMBERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
---------------------- ADDITIONAL CAPITAL
NITROGEN MIXED POTASH PAID-IN EQUITY RETAINED
SERIES SERIES SERIES CAPITAL CREDITS DEFICIT TOTAL
-------- ------ ------ ---------- ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
June 30, 1991.......... $26,015 $1,460 $568 $65,731 $62,469 $(17,481) $138,762
Net margins............ -- -- -- -- -- 13,003 13,003
Cash patronage refunds. -- -- -- -- -- (22,895) (22,895)
Stock issued........... 161 -- -- 511 -- -- 672
Stock retired.......... -- -- (369) (861) -- -- (1,230)
Other.................. -- -- -- -- (117) -- (117)
------- ------ ---- ------- ------- -------- --------
Balances,
June 30, 1992.......... 26,176 1,460 199 65,381 62,352 (27,373) 128,195
Net margins............ -- -- -- -- -- 4,790 4,790
Cash patronage refunds. -- -- -- -- -- (13,820) (13,820)
Stock issued........... 100 -- -- 315 -- -- 415
Stock retired.......... -- -- (2) (4) -- -- (6)
------- ------ ---- ------- ------- -------- --------
Balances,
June 30, 1993.......... 26,276 1,460 197 65,692 62,352 (36,403) 119,574
Net margins............ -- -- -- -- -- 36,523 36,523
Cash patronage refunds. -- -- -- -- -- (14,756) (14,756)
Stock issued........... 99 -- 360 1,156 -- -- 1,615
------- ------ ---- ------- ------- -------- --------
Balances,
June 30, 1994.......... $26,375 $1,460 $557 $66,848 $62,352 $(14,636) $142,956
======= ====== ==== ======= ======= ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
F-5
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
---------------------------
1994 1993 1992
-------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net margins..................................... $ 36,523 $ 4,790 $13,003
Loss from discontinued operations............... 23,987 17,891 18,346
Gain on disposal of discontinued operations..... (39,747) -- --
-------- -------- -------
Net margins from continuing operations.......... 20,763 22,681 31,349
Reconciliation of net margins from continuing
operations to net cash provided by operating
activities:
Depreciation, depletion and amortization...... 16,967 14,444 12,094
(Gain) loss on sale of property, plant and
equipment.................................... 43 (277) (440)
Deferred raw material cost.................... 23 1,977 --
Accrual for closure of gypsum disposal area... 6,055 -- --
Deferred income tax payable................... 3,302 -- --
Net change in operating assets and
liabilities.................................. (5,820) 2,702 6,205
Other......................................... (1,521) (378) (2,035)
-------- -------- -------
Net cash provided by operating activities......... 39,812 41,149 47,173
Cash flows from investing activities:
Payments for newsprint contract obligations..... (4,338) (4,350) (3,138)
Purchase of property, plant and equipment....... (11,232) (26,448) (24,045)
Proceeds from sale of property, plant and
equipment...................................... 341 543 838
Disposition of Newsprint South, Inc............. (10,848) -- --
Other........................................... 698 646 (943)
-------- -------- -------
Net cash used by investing activities............. (25,379) (29,609) (27,288)
Cash flows from financing activities:
Debt payments................................... (162,183) (111,606) (20,541)
Debt proceeds................................... 161,160 97,933 28,580
Payment of patronage refunds.................... (13,405) (22,480) (27,120)
Redemption of capital equity credits............ -- -- (7,785)
Proceeds from issuance of common stock.......... 1,200 -- --
Purchase of common stock........................ -- -- (1,230)
-------- -------- -------
Net cash used by financing activities............. (13,228) (36,153) (28,096)
-------- -------- -------
Net increase (decrease) in cash and cash
equivalents...................................... 1,205 (24,613) (8,211)
Cash and cash equivalents--beginning of period.... 22,014 46,627 54,838
-------- -------- -------
Cash and cash equivalents--end of period.......... $23,219 $22,014 $46,627
======== ======== =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these financial statements.
F-6
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Financial Statements
The accompanying consolidated financial statements include the accounts of
Mississippi Chemical Corporation, its subsidiaries and its proportionate share
of the assets and liabilities of Triad Chemical, a 50% owned, unincorporated
joint venture (collectively, the "Company"). All material intercompany
transactions and balances have been eliminated.
Prior to July 1, 1994, Mississippi Chemical Corporation was organized and
operated as a cooperative to manufacture and distribute chemical fertilizer
primarily to its shareholder-members. The chemical fertilizer products are
primarily used as agricultural fertilizers. Effective July 1, 1994, the Company
will no longer operate as a cooperative (see Note 2).
The Company has the right to withdraw, at cost, one-half of the production of
the Triad facilities and is obligated to withdraw certain minimum quantities as
specified by the Production Withdrawal Agreement. The venture's assets
constitute approximately 2.6% of total assets at June 30, 1994, and 2.8% at
June 30, 1993.
On June 30, 1994, the Company disposed of a majority of its interest in
Newsprint South, Inc. ("NSI"), the Company's newsprint manufacturing
subsidiary.
Inventories
Inventories are stated at the lower of cost or market. Cost has been
determined under an average cost method for finished products and raw materials
and under a moving average method for replacement parts.
Investment
Investment in the National Bank for Cooperatives is stated at its net present
value determined by applying a discount factor to an assumed redemption
schedule. The value of this investment will be realized over a period of
approximately five years since the National Bank for Cooperatives redeems its
equity in the normal course of its operations.
Property Held for Sale
Assets are classified as property held for sale if the Company is actively
engaged in trying to dispose of the assets. These assets are valued at the
lower of cost or net realizable value.
Property, Plant and Equipment
Depreciation of property, plant and equipment is provided over the estimated
useful lives of the related assets using primarily the declining-balance
method.
Interest costs attributable to major construction and other projects under
development are capitalized in the appropriate property account and amortized
over the life of the related asset.
The Company is obligated under certain leases which for accounting purposes
are considered to be equivalent to installment purchases. The costs of such
properties are included in property, plant and
F-7
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
equipment. The related lease obligations, less amounts due within one year, are
set forth separately in long-term debt.
Income Taxes
The provision for income taxes relates to margins from non-member business
and such other earnings as may not be currently taxable to members. A provision
for income taxes is made on margins from member business as they relate to
nonqualified capital equity credits and reserves. No provision for income taxes
has been made on margins from member business distributed as cash patronage
refunds which are deductible in determining taxable income.
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 109, "Accounting for Income Taxes", which
the Company adopted effective July 1, 1993. The cumulative effect of this
change in accounting principle decreased margins by $6,149,000 for fiscal 1994.
Hedging Activities
From time to time, the Company enters into futures contracts to protect
against price fluctuations of natural gas and diammonium phosphate. At the time
the futures contracts are closed and the related natural gas is purchased or
diammonium phosphate is sold, the Company records the change in market value of
such contracts.
Reclassifications
The Company has reclassified the presentation of certain prior year
information to conform with the current year's presentation.
NOTE 2--EFFECTS OF REORGANIZATION:
On June 28, 1994, the shareholder-members of the Company voted to adopt a
plan of reorganization (the "Reorganization") which became effective July 1,
1994. Pursuant to the Reorganization, the Company was merged into a newly
created wholly owned subsidiary ("New Company") which is a noncooperative
Mississippi business corporation. In the merger, the common stock of the
Company was converted into New Company common stock and/or cash. In addition,
holders of Capital Equity Credits and Allocated Surplus Accounts of the Company
were offered the right to exchange those interests for New Company common
stock. Pursuant to the Reorganization, New Company changed its name to
Mississippi Chemical Corporation.
NOTE 3--INVENTORIES:
Inventories consisted of the following:
<TABLE>
<CAPTION>
JUNE 30
---------------
1994 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Finished products........................................ $ 7,518 $ 8,596
Raw materials and supplies............................... 2,851 3,281
Replacement parts........................................ 23,621 22,867
------- -------
$33,990 $34,744
======= =======
</TABLE>
F-8
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4--PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
JUNE 30
--------------------
1994 1993
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Mineral properties................................. $ 18,574 $ 18,574
Land............................................... 8,092 8,094
Buildings.......................................... 23,089 23,835
Machinery and equipment............................ 311,698 301,633
Construction in progress........................... 5,539 5,887
--------- ---------
366,992 358,023
Less accumulated depreciation, depletion and
amortization...................................... (252,275) (237,509)
--------- ---------
$ 114,717 $ 120,514
========= =========
</TABLE>
The Company leases certain machinery and equipment with a cost of
approximately $9,967,000 and accumulated depreciation of $9,668,000 for periods
ranging from 5 to 25 years. These leases have been capitalized and the
amortization of these assets is included in depreciation expense. These assets
were financed primarily by industrial revenue bond issues. At the expiration of
the leases, the Company has the option to buy the property or renew the leases
at nominal amounts.
NOTE 5--CREDIT AGREEMENTS AND LONG-TERM DEBT:
The Company has commitments from various banks which allow the Company to
borrow up to $55,000,000 on a short-term basis. Outstanding borrowings under
these commitments were $7,030,000 at June 30, 1994 and $4,625,000 at June 30,
1993. Lines of credit totaling $35,000,000 available through the National Bank
for Cooperatives will expire in October 1994, and will not be renewed since the
Company is no longer an eligible borrower.
The Company also has a $50,000,000 revolving credit facility with
NationsBank, a portion of which converts to term debt on June 30, 1996. Any
outstanding balance on this facility bears interest at the prime rate or for
fixed periods at interest rates related to the London Interbank Offered Rates
("LIBOR") or U.S. Treasury notes. Outstanding borrowings under this commitment
were $25,000,000 at June 30, 1994 and $5,000,000 at June 30, 1993.
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
JUNE 30
----------------
1994 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C> <C>
NationsBank Revolving Facility (7.3%).......... $25,000 $ 5,000
National Bank for Cooperatives Term Loan
(9.8%)........................................ 12,500 32,800
Capitalized lease obligations (7.0%)........... 15,917 17,607
Subordinated debentures (9.5%)................. 3,148 3,148
Other notes payable............................ 3,600 5,039
------- -------
60,165 63,594
Long-term debt due within one year............. (2,948) (11,237)
------- -------
$57,217 $52,357
======= =======
</TABLE>
F-9
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Substantially all of the assets of the Company are pledged as collateral
under various loan and lease agreements.
The various loan agreements have covenants that require, among other things,
that the Company maintain specified levels of tangible assets to long-term
debt, long-term debt to equity and current assets to current liabilities. The
Company is in compliance with all covenants under its various loan agreements.
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
LONG-TERM CAPITALIZED LEASES
YEAR ENDING JUNE 30 OBLIGATIONS (INCLUDING INTEREST)
------------------- ----------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
1995..................................... $ 1,400 $ 2,568
1996..................................... 6,600 2,478
1997..................................... 31,300 2,161
1998..................................... 600 1,997
1999..................................... 600 1,919
Thereafter............................... 3,748 10,721
------- -------
44,248 21,844
Less interest............................ -- (5,927)
------- -------
$44,248 $15,917
======= =======
</TABLE>
NOTE 6--SHAREHOLDER-MEMBERS' EQUITY:
Common stock authorized consisted of the following at June 30, 1994:
<TABLE>
<CAPTION>
COMMON STOCK PAR VALUE AUTHORIZED SHARES
------------ --------- -----------------
<S> <C> <C>
Nitrogen Series I............................. $30 50,000
Nitrogen Series II............................ 15 2,500,000
Nitrogen Series III........................... 2 2,750,000
Mixed Series IV............................... 15 1,500,000
Mixed Series V................................ 15 1,000,000
Potash Series VI.............................. 15 150,000
Potash Series VII (None Issued)............... 15 450,000
</TABLE>
Common stock issued and outstanding consisted of the following:
<TABLE>
<CAPTION>
POTASH
NITROGEN SERIES MIXED SERIES SERIES
--------------------------- ------------ -------
I II III IV V VI
------ --------- --------- ------ ----- -------
<S> <C> <C> <C> <C> <C> <C>
Shares outstanding, June 30,
1991....................... 12,159 1,369,812 2,551,301 94,537 2,773 37,878
Retirements................ -- -- -- -- -- (24,601)
Issues..................... -- 10,768 -- -- -- --
Transfers.................. (649) -- 9,735 -- -- --
------ --------- --------- ------ ----- -------
Shares outstanding, June 30,
1992....................... 11,510 1,380,580 2,561,036 94,537 2,773 13,277
Retirements................ -- -- -- -- -- (122)
Issues..................... -- 6,634 -- -- -- --
Transfers.................. (609) -- 9,135 -- -- --
------ --------- --------- ------ ----- -------
Shares outstanding, June 30,
1993....................... 10,901 1,387,214 2,570,171 94,537 2,773 13,155
Issues..................... -- 6,642 -- -- -- 24,001
Transfers.................. (751) -- 11,265 -- -- --
------ --------- --------- ------ ----- -------
Shares outstanding, June 30,
1994....................... 10,150 1,393,856 2,581,436 94,537 2,773 37,156
====== ========= ========= ====== ===== =======
</TABLE>
F-10
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
During June 1994 and 1993, the Board of Directors voted to reserve 40% and
50%, respectively, of the earnings from business with shareholders. These
reserves are reflected in "Allocated Surplus Accounts" maintained by the
Company, and amounts set aside in these accounts are allocated to individual
shareholders in the same proportion that the earnings from business with such
shareholders bears to total earnings from business with all shareholders. The
holders of Allocated Surplus Accounts, which totalled $38,920,000 and
$29,083,000 at June 30, 1994 and 1993, respectively, were offered the right to
exchange those accounts for common shares in the Reorganization (see Note 2).
The allocated surplus is a component of retained deficit which is included in
the consolidated statements of shareholder-members' equity.
Nonqualified capital equity credits issued in 1981 were redeemed in fiscal
1992. The redemption of capital equity credits was at the discretion of the
Board of Directors and was based on the financial condition and capital
requirements of the Company, the availability of funds under restrictive
covenants in the Company's financing arrangements, tax considerations and other
factors. The Board of Directors did not elect to redeem capital equity credits
in fiscal 1993 or fiscal 1994. The holders of Capital Equity Credits were
offered the right to exchange those interests for common shares in the
Reorganization (see Note 2).
NOTE 7--RETIREMENT PLANS:
The Company maintains non-contributory defined benefit pension plans which
provide benefits to substantially all full-time employees. Under the plans,
retirement benefits are primarily a function of both the average annual
compensation and number of years of credited service. The plans are funded
annually by the Company, subject to the full funding limitation.
Net periodic pension (credit) expense includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-------------------------
1994 1993 1992
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the period.. $ 1,532 $ 1,489 $ 1,354
Interest cost on projected benefit obligations... 4,035 3,767 3,515
Actual gain on plan assets....................... (3,059) (5,824) (5,119)
Net amortization and deferral of transition
assets.......................................... (750) (390) (335)
Unrecognized gain (loss) on plan assets.......... (1,982) 1,176 807
------- ------- -------
Net periodic pension (credit) expense............ $ (224) $ 218 $ 222
======= ======= =======
</TABLE>
F-11
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table sets forth the plans' funded status and the amounts
included in the Company's consolidated balance sheets:
<TABLE>
<CAPTION>
JUNE 30
----------------
1994 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation............................... $49,017 $45,988
Non-vested benefit obligation........................... 56 72
------- -------
Accumulated benefit obligation.......................... 49,073 46,060
Increase in benefits due to future compensation
increases.............................................. 11,588 8,991
------- -------
Projected benefit obligation.............................. 60,661 55,051
Estimated fair value of plan assets....................... 61,281 60,304
------- -------
Plan assets in excess of projected benefit obligation..... 620 5,253
Contributions after measurement date...................... 303 --
Remaining unrecognized transition assets.................. (4,232) (4,761)
Unrecognized net loss..................................... 9,850 4,394
------- -------
Prepaid pension cost at end of period..................... $ 6,541 $ 4,886
======= =======
</TABLE>
The following assumptions were used to measure net periodic pension cost for
the plans for fiscal 1994, 1993 and 1992:
<TABLE>
<S> <C>
Discount rate........................................................ 7.5%
Expected long-term rate of return on assets.......................... 8.5%
Average increase in compensation levels.............................. 6.5%
</TABLE>
The plans' assets consist primarily of guaranteed investment contracts and
marketable equity securities.
The Company also has contributory thrift plans covering substantially all
employees who have completed minimum service requirements. Company
contributions totalled approximately $811,000 in 1994, $670,000 in 1993, and
$590,000 in 1992.
The Company has no material post-retirement benefit obligations.
NOTE 8--LEASE COMMITMENTS:
The Company has commitments under operating leases for plant rolling stock
items and storage warehouses.
F-12
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following is a schedule of the future minimum rental payments required
under operating leases that have noncancellable lease terms in excess of one
year as of June 30, 1994:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Year Ending June 30:
1995............................................. $ 771
1996............................................. 276
1997............................................. 93
1998............................................. 6
1999............................................. 6
Thereafter....................................... 93
------
$1,245
======
</TABLE>
Rental expense for all operating leases was $1,218,000 for 1994, $1,144,000
for 1993, and $1,036,000 for 1992.
NOTE 9--INCOME TAXES:
The following is a summary of the components of the provision for income
taxes:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
---------------------
1994 1993 1992
------ ------ ------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C>
Current:
Federal........................................... $8,862 $3,408 $4,697
State and local................................... 223 289 297
------ ------ ------
$9,085 3,697 4,994
Deferred:
Federal........................................... (3,423) -- --
State and local................................... 359 -- --
------ ------ ------
(3,064) -- --
------ ------ ------
$6,021 $3,697 $4,994
====== ====== ======
</TABLE>
The tax effects of the significant temporary differences and tax credit
carryforwards at June 30, 1994 follows:
<TABLE>
<CAPTION>
CURRENT NON-CURRENT
------- -----------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Federal and state net operating loss carryforwards....... $1,842 $ 400
Alternative minimum tax credit........................... 2,542 1,647
Employee benefit obligations............................. 1,666 --
Accrual for closure of gypsum disposal area.............. -- 2,301
Settlement of future newsprint contract obligations...... 3,326 --
Other.................................................... 306 656
------ -------
Deferred tax assets.................................... 9,682 5,004
Depreciation and amortization............................ -- (12,135)
Pension.................................................. -- (1,822)
------ -------
Deferred tax liabilities............................... -- (13,957)
------ -------
Net deferred tax asset (liability)................... $9,682 $(8,953)
====== =======
</TABLE>
F-13
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A reconciliation, as of June 30, of the benefit for income taxes and the
effective tax rate with the amount computed by applying the statutory federal
income tax rate follows:
<TABLE>
<CAPTION>
1994 1993 1992
----------------- ---------------- -----------------
% OF % OF % OF
EARNINGS EARNINGS EARNINGS
BEFORE BEFORE BEFORE
AMOUNT TAXES AMOUNT TAXES AMOUNT TAXES
------- -------- ------ -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income taxes computed at
statutory rate.......... $11,427 34.7% $8,969 34.0% $12,357 34.0%
Increase (decrease) in
taxes resulting from:
Deduction for cash
patronage refunds..... (5,017) (15.2) (4,873) (18.5) (7,784) (21.4)
State taxes, net....... (582) (1.8) 194 0.7 211 0.6
Other, net............. 193 0.6 (435) (1.6) 10 --
------- ----- ------ ----- ------- -----
6,021 18.3 3,855 14.6 4,794 13.2
Non-deductible loss of
subsidiaries.......... -- -- (158) (0.6) 200 0.6
------- ----- ------ ----- ------- -----
$ 6,021 18.3% $3,697 14.0% $ 4,994 13.8%
======= ===== ====== ===== ======= =====
</TABLE>
In connection with an Internal Revenue Service audit of fiscal years 1985
through 1987, the Company, on June 11, 1990, received an Examination Report
which proposed adjustments totalling approximately $3,300,000 to the Company's
tax liability for tax years 1983, 1984 and 1985. Interest on the proposed
deficiencies would be approximately $3,503,000 through June 30, 1994. It is the
Service's position that Section 277 of the Internal Revenue Code prohibits non-
exempt cooperatives from carrying back losses incurred on patronage business.
It is the Company's position that, as a matter of law, Section 277 does not
apply to the Company. On July 9, 1990, the Company filed with the District
Director of the Internal Revenue Service its protest of the proposed
deficiency. The Company believes it has meritorious defenses against the
claimed assessments and intends to vigorously defend its position in this
matter. If the Company is unsuccessful, the relevant losses may be carried
forward to succeeding tax years.
NOTE 10--RAW MATERIAL CONTRACTS:
During 1987, the Company entered into a contract to purchase natural gas for
the Yazoo City plant. Payments for gas deliveries under the contract were based
on certain fixed and market-related components. On March 31, 1994, this
contract expired; however, the supplier continues to furnish natural gas under
the terms of the contract for a 180-day "renegotiation period" to allow the
opportunity for structuring a new contract. The Company and the supplier are
currently discussing a new arrangement for the supply of gas to the Yazoo City
plant.
Mississippi Phosphates Corporation ("MPC"), a wholly owned subsidiary of the
Company, has entered into a contract to purchase from a third party its full
requirement of phosphate rock. The contract will expire on June 30, 2003. The
purchase price for phosphate rock is based on the phosphate rock costs incurred
by certain domestic phosphate producers and the operating performance of MPC.
NOTE 11--MAJOR CUSTOMERS AND EXPORT SALES:
Sales to the Company's three largest customers were approximately
$83,366,000, $33,513,000 and $13,696,000 for 1994; $79,150,000, $32,957,000 and
$13,860,000 for 1993; and $36,034,000, $32,080,000 and $13,879,000 for 1992.
Export sales were less than 10% of sales in 1994, 1993 and 1992.
F-14
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Substantially all of MPC's sales are made to a third party which has been
appointed the exclusive distributor of diammonium phosphate fertilizer produced
by MPC. Sales to the distributor are recorded net of the distributor's
commission. The distributor sells primarily in international markets.
NOTE 12--COMMITMENTS AND CONTINGENCIES:
A significant portion of the Company's trade receivables are due from
entities which operate in the chemical fertilizer and farm supply industry. A
severe downturn in the agricultural economy could have an adverse impact on the
collectibility of those receivables.
During 1990, the Company entered into an agreement granting a third party the
exclusive option, for a period of four years, to purchase the Company's
undeveloped phosphate rock property of approximately 12,000 acres. As of July
12, 1994, the Company and the option holder entered into new agreements with
respect to this property whereby the Company conveyed a portion of the property
to the third party and granted to the third party the exclusive option to
purchase the remaining portion of the property. In addition, the Company was
granted a put option whereby the Company has the right and option to sell the
remaining portion of the property to the third party if the third party does
not exercise its option to purchase the remaining property and was granted an
exclusive option to repurchase the previously conveyed portion in the event the
third party does not exercise its option and the Company does not exercise its
put option. These properties are classified as property held for sale at June
30, 1994 and 1993.
On July 15, 1986, the first of 17 lawsuits was filed in the Twenty-first
Judicial District Court, Parish of Livingston, State of Louisiana, against
Triad Chemical and approximately 90 other named defendants by numerous
plaintiffs. The plaintiffs' claims are based on alleged personal injuries and
property damages as a result of exposure to hazardous waste allegedly
contributed by the defendants to the Combustion, Inc. site in Livingston
Parish, Louisiana. Triad is vigorously defending its position in these
proceedings and considers its defenses meritorious. No provision for claims
being made is included in the accompanying financial statements because
management is of the opinion that the ultimate disposition of this matter will
not involve a material loss to the Company.
Additionally, the Company, in the ordinary course of its business, is the
subject of, or a party to, other various pending or threatened legal actions.
The Company believes that any ultimate liability arising from these actions
will not have a significant impact on the future earnings of the Company.
NOTE 13--SUPPLEMENTAL CASH FLOW INFORMATION:
The Company considers its holdings of highly liquid money market debt
instruments to be cash equivalents if the securities mature within 90 days from
the date of acquisition. These short-term investments were $21,500,000 at June
30, 1994, and $18,347,000 at June 30, 1993.
Net refunds of income taxes were $149,000 in 1994, $180,000 in 1993 and
$480,000 in 1992. Payments of interest (net of amounts capitalized) were
$4,705,000 in 1994, $5,266,000 in 1993 and $5,755,000 in 1992.
F-15
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The increase in cash due to the changes in operating assets and liabilities
consisted of the following:
<TABLE>
<CAPTION>
JUNE 30
-------------------------
1994 1993 1992
-------- ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Accounts receivable............................... $ (2,265) $(2,052) $1,914
Inventories....................................... 754 740 (7,736)
Prepaid expenses and other current assets......... (295) 1,949 3,386
Accounts payable.................................. (6,407) 3,764 7,983
Accrued interest.................................. (284) (483) (130)
Accrued liabilities............................... 2,677 (1,216) 788
-------- ------- ------
$(5,820) $ 2,702 $6,205
======== ======= ======
</TABLE>
Supplemental disclosures regarding non-cash financing and investing
activities include the following:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
---------------------
1994 1993 1992
------ ------- ------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C>
Capital expenditures made from restricted funds....... $1,000 $ 1,000 $7,790
Net option proceeds deposited in restricted funds..... $1,000 $ 1,000 $2,000
Capital expenditures financed by issuance of long-term
debt.................................................. -- -- $ 980
Stock issued for consideration other than cash........ $ 99 $ 411 $ 672
Note payable converted to long-term debt.............. -- $10,000 --
Accrued liability transferred to long-term liability.. $1,258 -- --
Long-term liability transferred to accounts payable... $2,000 -- --
</TABLE>
NOTE 14--OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS:
Other long-term liabilities and deferred credits are comprised of the
following:
<TABLE>
<CAPTION>
JUNE 30
---------------
1994 1993
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Option proceeds.......................................... $13,967 $12,967
Accrual for closure of gypsum disposal area.............. 6,055 --
Other.................................................... 4,682 5,656
------- -------
$24,704 $18,623
======= =======
</TABLE>
During fiscal 1994, MPC charged to earnings $6,055,000 relating to the
estimated cost of the future closure of the phosphogypsum disposal facility
located at Pascagoula. In future years, MPC expects to record additional
charges of approximately $3,000,000 related to the future closure of the
facility. The current charge of $6,055,000 relates to the portion of the
disposal facility utilized to date, and the estimated future charges of
approximately $3,000,000 will be accrued over the estimated six-year remaining
life of the facility.
NOTE 15--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:
F-16
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Cash and Cash Equivalents
The carrying amount approximates fair value because of the short maturity of
those instruments.
Accounts Receivable and Payable
The carrying amounts approximate fair value because of the short settlement
periods of these instruments.
Long-Term Debt
The fair value of the Company's long-term debt is estimated based on the
current rates offered to the Company for debt of the same remaining maturities.
The estimated fair value of the Company's long-term debt instruments at June
30, 1994 is $56,130. The carrying amount of the long-term debt is $57,217.
NOTE 16--INTEREST EXPENSE, NET:
Interest expense, net of interest income, consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
----------------------
1994 1993 1992
------ ------ ------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C>
Interest expense.................................. $6,356 $5,994 $6,523
Interest capitalized.............................. (2) (1,027) (664)
Interest income................................... (2,363) (1,398) (1,929)
------ ------ ------
$3,991 $3,569 $3,930
====== ====== ======
</TABLE>
NOTE 17--DISCONTINUED OPERATIONS:
On June 30, 1994, the Company disposed of a majority of its interest in NSI.
This action was taken due to substantial losses incurred to date by NSI and the
expectation of continuing losses. The transaction involved a transfer by the
Company of 70% of its economic interest in NSI to various individuals
designated by the lessor of the newsprint facility leveraged lease. The Company
will not retain any voting interest in NSI.
Under the terms of the transaction, the Company paid $19,000,000 to NSI in
various forms including capital contributions, payments in liquidation of the
Company's obligations under a newsprint purchase contract and certain tax-
compensating payments pursuant to a tax-sharing agreement. Prior loans in the
amount of approximately $13,700,000 made by the Company to NSI pursuant to a
newsprint purchase contract between the Company and NSI were converted to
capital. Pursuant to the transaction, the Company also purchased from NSI its
CoBank common stock for $4,000,000. This stock is scheduled for redemption at
the face amount by CoBank during the next five years.
The disposition of NSI will allow the Company to focus its attention on its
core fertilizer business.
Prior to the disposition, the Company had consolidated the financial results
of NSI which had a capital deficit of $39,747,000 at the time of disposition.
Since the Company has no further obligations with respect
F-17
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
to NSI, the previously recorded deficit was eliminated which resulted in a gain
on disposition of $39,747,000. Subsequent to the disposition, the remaining 30%
economic interest will be accounted for at cost which is zero at June 30, 1994.
To facilitate analysis, the accompanying summarized financial information of
NSI for fiscal 1994, 1993 and 1992 was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance sheets:
Current assets............................. $ 27,735 $ 20,416 $ 18,698
======== ========= =========
Total assets............................... $ 49,950 $ 33,938 $ 32,753
======== ========= =========
Current liabilities........................ $ 33,551 $ 15,048 $ 13,896
======== ========= =========
Total liabilities.......................... $ 95,301 $ 75,401 $ 56,325
======== ========= =========
Net deficit................................ $(45,351) $(41,463) $(23,572)
======== ========= =========
Statements of operations:
Net sales.................................. $ 94,617 $ 96,963 $ 95,472
======== ========= =========
Net loss................................... $(23,987) $(17,891) $(18,346)
======== ========= =========
</TABLE>
F-18
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
All fees and expenses will be paid by the Company. The following expenses
(other than the SEC and NASD fees) are estimated:
<TABLE>
<S> <C>
SEC registration fee............................................ $ 29,504
NASD filing fee................................................. 9,056
Nasdaq Stock Market's National Market application fee........... 50,000
Printing expenses............................................... 70,000
Fees and expenses of counsel.................................... 150,000
Fees and expenses of accountants................................ 130,000
Transfer agent and registrar fees............................... 5,000
Blue sky fees and expenses...................................... 15,000
Miscellaneous................................................... 41,440
--------
Total....................................................... $500,000
========
</TABLE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
1. Underwriting Agreement.
3.1 Articles of Incorporation of the Company.
3.2 By-laws of the Company.
4.7 Specimen of the Company's 9 1/2% Subordinated Note Due July
1, 1999 (incorporated herein by reference to Exhibit 4.7 to
the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1993, File No. 2-7803).
4.8 Term Loan Agreement Number 6420 dated August 25, 1987, be-
tween the Company's subsidiary, Newsprint South, Inc., and
Jackson Bank for Cooperatives (now National Bank for Cooper-
atives) in an amount not to exceed $4,700,000, as amended
and restated by Amendment to Loan Agreement Number 6420(A)
dated February 2, 1989 (incorporated herein by reference to
Exhibit 4.8 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1993, File No. 2-7803).
4.9 Line of Credit Agreement Number 6899 dated December 13,
1991, between the Company's subsidiary, Newsprint South,
Inc., and National Bank for Cooperatives, for a revolving
line of credit in an amount equal to the lesser of the Bor-
rowing Base (as defined in Section 6 thereof) or
$10,680,000, as amended by Amendment Number 6899(A) dated
June 12, 1992, and Amendment Number 6899(B) dated December
18, 1992, which increased the line of credit to $10,992,000
(incorporated herein by reference to Exhibit 4.9 to the
Company's Annual Report on Form 10-K for the fiscal year
ended on June 30, 1993, File No. 2-7803).
4.10 Term Loan Agreement Number 6939 dated October 19, 1992, be-
tween the Company's subsidiary, Mississippi Phosphates Cor-
poration, and National Bank for Cooperatives and the Company
as co-maker in an aggregate principal amount not to exceed
$10,000,000 (incorporated herein by reference to Exhibit
4.10 to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1993, File No. 2-7803).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
4.11 Line of Credit Agreement Number 6871 dated September 30,
1991, between the Company and National Bank for Coopera-
tives for a revolving line of credit in the amount of
$10,000,000, as amended by Amendment Number 6871(A) dated
October 20, 1992, which increases the line of credit to
$15,000,000 (incorporated herein by reference to Exhibit
4.11 to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1993, File No. 2-7803).
4.12 Amendment Number 6392(A) dated November 2, 1987, and
Amendment Number 6392(B) dated April 20, 1988, to Loan
Agreement Number 6392 dated as of April 24, 1987, between
the Company and the Jackson Bank for Cooperatives (now the
National Bank for Cooperatives) (incorporated herein by
reference to Exhibit 4.12 to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1993, File
No. 2-7803).
4.13 Loan Agreement Number 6392 dated as of April 24, 1987, be-
tween the Company and Jackson Bank for Cooperatives (now
the National Bank for Cooperatives) in a principal amount
not to exceed $35,000,000 (incorporated herein by refer-
ence to Exhibit 4.13 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1987, File
No. 2-7803).
4.14 Revolving Credit/Term Loan Agreement dated August 6, 1992,
between the Company and NationsBank of Tennessee, pur-
chaser of the Company's Series I Secured Note, Due June
30, 1999, in the aggregate principal amount of
$20,000,000; filed as Exhibit 4.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30,
1992, File No. 2-7803, and incorporated herein by refer-
ence thereto.
4.15 Note Purchase Agreement dated as of December 26, 1989, be-
tween the Company and John Hancock Variable Life Insurance
Company, purchaser of the Company's 9.97% Secured Notes,
Series H, Due 1999, in the aggregate principal amount of
$6,000,000; filed as an exhibit to Exhibit 4.3 to the
Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1990, File No. 2-7803, and incorporated
herein by reference thereto.
4.16 Twelfth Supplemental Indenture dated as of August 6, 1992,
between the Company and Deposit Guaranty National Bank;
filed as Exhibit 4.3 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1992, File
No. 2-7803, and incorporated herein by reference thereto.
4.17 Eleventh Supplemental Indenture dated as of July 16, 1990,
between the Company and Deposit Guaranty National Bank,
together with Exhibit A thereto, being an Agreement for
Real Estate Purchase Option dated July 16, 1990, for the
sale of the Company's Hardee County, Florida, property and
underlying phosphate reserves; filed as Exhibit 4.2 to
Amendment No. 1 of the Company's Report on Form 8 dated
November 7, 1990, File No. 2-7803, and incorporated herein
by reference thereto.
4.18 Tenth Supplemental Indenture dated as of December 26,
1989, between the Company and Deposit Guaranty National
Bank, together with Exhibit A thereto, being a Note Pur-
chase Agreement dated as of December 26, 1989, between the
Company and John Hancock Variable Life Insurance Company,
purchaser of the Company's 9.97% Secured Notes, Series H,
Due 1999, in the aggregate principal amount of $6,000,000;
filed as Exhibit 4.3 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1990, File
No. 2-7803, and incorporated herein by reference thereto.
4.19 Ninth Supplemental Indenture dated as of February 23,
1988, between the Company and Deposit Guaranty National
Bank; filed as Exhibit 4.1 to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1988, File
No. 2-7803, and incorporated herein by reference thereto.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
4.20 Eighth Supplemental Indenture dated as of May 15, 1983,
between the Company and Deposit Guaranty National Bank;
filed as Exhibit 4.1 to Post-Effective Amendment No. 3 to
Registration Statement No. 2-71827 and incorporated herein
by reference thereto.
4.21 Seventh Supplemental Indenture dated as of October 1,
1979, between the Company and Deposit Guaranty National
Bank; filed as Exhibit 2 to Post-Effective Amendment No. 3
to Registration Statement No. 2-57390 and incorporated
herein by reference thereto.
4.22 Sixth Supplemental Indenture dated as of September 1,
1979, between the Company and Deposit Guaranty National
Bank, filed as Exhibit 3 to Post-Effective Amendment No. 3
to Registration Statement No. 2-57390 and incorporated
herein by reference thereto.
4.23 Fifth Supplemental Indenture dated as of June 1, 1978, be-
tween the Company and Deposit Guaranty National Bank;
filed as Exhibit 7 to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1979, File No. 2-
7803, and incorporated herein by reference thereto.
4.24 Fourth Supplemental Indenture dated as of May 1, 1978, be-
tween the Company and Deposit Guaranty National Bank;
filed as Exhibit 9 to Post-Effective Amendment No. 2 to
Registration Statement No. 2-57390 and incorporated herein
by reference thereto.
4.25 Third Supplemental Indenture dated as of June 28, 1977,
between the Company and Deposit Guaranty National Bank;
filed as Exhibit 6 to Post-Effective Amendment No. 1 to
Registration Statement No. 2-57390 and incorporated herein
by reference thereto.
4.26 Second Supplemental Indenture dated as of September 30,
1976, among the Company, New Orleans Bank for Coopera-
tives, John H. Farrelly and Deposit Guaranty National
Bank; filed as Exhibit 6 to Registration Statement No. 2-
57390 and incorporated herein by reference thereto.
4.27 First Supplemental Indenture, dated as of September 7,
1976, among the Company, New Orleans Bank for Coopera-
tives, John H. Farrelly and Deposit Guaranty National
Bank; filed as Exhibit 3 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1976, File
No. 2-7803, and incorporated herein by reference thereto.
4.28 Note Purchase Agreement effective as of September 1, 1976,
between the Company and the Purchasers of the Company's 9
1/2% Secured Notes, Series B, Due 1996, in the aggregate
principal amount of $35,000,000, together with Exhibits A
and B thereto; filed as Exhibit 2 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30,
1976, File No. 2-7803, and incorporated herein by refer-
ence thereto.
4.29 Indenture dated as of May 1, 1989, between the Company and
Sunburst Bank, as Trustee, for the issuance by the Company
and 9 1/2% subordinated notes, due July 1, 1999, in the
aggregate principal amount of $11,061,000; filed as Ex-
hibit 4.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1989, File No. 7-2803, and
incorporated herein by reference thereto.
4.30 Mississippi Chemical Corporation 1994 Stock Incentive
Plan.
4.31 Form of Preferred Stock Rights Plan.
5. Opinion re Legality.
10.1 First Supplement to Lease Agreement dated as of June 30,
1992, to the Lease Agreement dated as of September 28,
1989, among Newsprint South, Inc., The First National Bank
of Boston, and G. Patrick McEnroe, as Trustees (incorpo-
rated herein by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended June
30, 1993, File No. 2-7803).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
10.2 Second Supplement to Lease Agreement dated as of July 15,
1992, to the Lease Agreement dated as of September 28,
1989, among Newsprint South, Inc., The First National Bank
of Boston, and G. Patrick McEnroe, as Trustees (incorpo-
rated herein by reference to Exhibit 10.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended June
30, 1993, File No. 2-7803).
10.3 Amendment of Agreement, effective as of July 1, 1993, to
the Agreement entered into as of October 1, 1991, by the
Company's subsidiary, Mississippi Phosphates Corporation,
for the exclusive distribution of diammonium phosphate
produced by Mississippi Phosphates Corporation (incorpo-
rated herein by reference to Exhibit 10.3 to the Company's
Annual Report on Form 10-K for the fiscal year ended June
30, 1993, File No. 2-7803).(1)
10.4 Amendment to Joint Venture Agreement entered into by the
Company and First Mississippi Corporation effective as of
May 28, 1993 (incorporated herein by reference to Exhibit
10.4 to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1993, File No. 2-7803).
10.5 Amendment to Products Withdrawal Agreement entered into by
the Company and First Mississippi Corporation effective as
of May 28, 1993 (incorporated herein by reference to Ex-
hibit 10.5 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1993, File No. 2-7803).
10.6 Agreement effective as of October 1, 1991, by the
Company's subsidiary, Mississippi Phosphates Corporation
for the exclusive distribution of diammonium phosphate
produced by Mississippi Phosphates Corporation; filed as
Exhibit 10.1 to Amendment No. 1 to the Company's Report on
Form 8 dated January 7, 1993, File No. 2-7803, and incor-
porated herein by reference thereto.(2)
10.7 Agreement made and entered into as of September 15, 1991,
between Office Cherifien des Phosphates and Mississippi
Phosphates Corporation for the sale and purchase of phos-
phate rock; filed as Exhibit 10.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30,
1991, File No. 2-7803, and incorporated herein by refer-
ence thereto.(3)
10.8 Lease Agreement dated as of September 28, 1989, among
Newsprint South, Inc., The First National Bank of Boston,
and G. Patrick McEnroe, as Trustees; filed as Exhibit 10.1
to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1990, File No. 2-7803, and incorpo-
rated herein by reference thereto.
10.9 Agreement for Real Estate Purchase Option dated July 16,
1990, for the sale of the Company's Hardee County, Flori-
da, property and underlying phosphate reserves; filed as
an exhibit to Exhibit 4.2 to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1990, File
No. 2-7803, and incorporated herein by reference there-
to.(4)
10.10 Power Contract dated as of June 27, 1988, between the
Company's subsidiary, Newsprint South, Inc., and Tennessee
Valley Authority, as supplemented by letter agreement
dated June 27, 1988, filed as Exhibit 10.3 to the
Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1989, File No. 2-7803, and incorporated
herein by reference thereto.
10.11 Gas Purchase and Sale Contract between the Company and
Shell Western E&P Inc., dated as of January 1, 1986; filed
as Exhibit 10.6 to Amendment No. 1 of the Company's Report
on Form 8 dated January 7, 1993, File No. 2-7803, and in-
corporated herein by reference thereto.(5)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
10.12 Triad Chemical Joint Venture Agreement; filed as Exhibit
G1 to Post-Effective Amendment No. 6 to Registration
Statement No. 2-25041 and incorporated herein by reference
thereto.
10.13 Products Withdrawal Agreement dated June 3, 1968, between
First Mississippi Corporation and MisCoa covering with-
drawal of product from Triad Chemical; filed as Exhibit H
to Post-Effective Amendment No. 7 to Registration State-
ment No. 2-25041 and incorporated herein by reference
thereto.
18.1 Preferability letter dated July 31, 1992, issued by Arthur
Andersen & Co. to the Company to fulfill the requirements
of Regulation S-K in connection with the Company's change
in the method of reporting patronage refunds; filed as Ex-
hibit 18.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1993, File No. 2-7803, and
incorporated herein by reference thereto.
21.1 List of subsidiaries of the Company, filed as Exhibit 21.1
to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1993, File No. 2-7803, and incorpo-
rated herein by reference thereto.
23.1 Consent of McDermott, Will & Emery (included in Exhibit
5).
23.2 Consent of Arthur Andersen & Co.
24 Power of Attorney.
</TABLE>
- --------
(1) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.3 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(2) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.6 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(3) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.7 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(4) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.9 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(5) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.11 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(b) FINANCIAL STATEMENT SCHEDULES.
Report of Independent Public Accountants
<TABLE>
<C> <S>
Schedule V Property, Plant and Equipment
Schedule VI Accumulated Depreciation, Depletion and Amortization of
Property, Plant and Equipment
Schedule IX Short-Term Borrowings
Schedule X Supplementary Income Statement Information
</TABLE>
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF YAZOO CITY, STATE OF
MISSISSIPPI ON AUGUST 2, 1994.
Mississippi Chemical Corporation
/s/ Charles O. Dunn
By __________________________________
Charles O. Dunn, President and
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Charles O. Dunn President, Chief Executive August 2,1994
____________________________________ Officer and Director (Principal
Charles O. Dunn Executive Officer)
/s/ William F. Hawkins* Senior Vice President--Finance August 2,1994
____________________________________ and Administration (Principal
William F. Hawkins Financial Officer and Principal
Accounting Officer)
/s/ Coley L. Bailey* Chairman of the Board and August 2,1994
____________________________________ Director
Coley L. Bailey
/s/ John Sharp Howie* Vice Chairman of the Board and August 2,1994
____________________________________ Director
John Sharp Howie
/s/ John W. Anderson* Director August 2,1994
____________________________________
John W. Anderson
/s/ Frank R. Burnside, Jr.* Director August 2,1994
____________________________________
Frank R. Burnside, Jr.
/s/ W. R. Dyess* Director August 2,1994
____________________________________
W. R. Dyess
/s/ Woods E. Eastland* Director August 2,1994
____________________________________
Woods E. Eastland
/s/ G. David Jobe* Director August 2,1994
____________________________________
G. David Jobe
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ George Penick* Director August 2,1994
____________________________________
George Penick
/s/ David M. Ratcliffe* Director August 2,1994
____________________________________
David M. Ratcliffe
/s/ Wayne Thames* Director August 2,1994
____________________________________
Wayne Thames
/s/ Charles O. Dunn
August 2, 1994
*By: _____________________
Charles O. Dunn,
Attorney-in-Fact
</TABLE>
II-7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Mississippi Chemical Corporation:
We have audited in accordance with generally accepted auditing standards, the
accompanying financial statements included in this Form S-1, and have issued
our report thereon dated July 29, 1994. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The schedules on pages
II-9 through II-12 are the responsibility of the Company's management and are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the audit
of the basic financial statements, and in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen & Co.
Memphis, Tennessee,
July 29, 1994.
II-8
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES
SCHEDULE V--PROPERTY, PLANT AND EQUIPMENT
THREE YEARS ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
BALANCE OTHER BALANCE
AT CHARGES-- AT END
BEGINNING ADDITIONS RETIREMENTS ADD OF
CLASSIFICATION OF PERIOD AT COST OR SALES (DEDUCT) PERIOD
-------------- --------- --------- ----------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1992: (1)
Mineral properties..... $ 18,735 $ -- $ 161 $ -- $ 18,574
Land................... 7,237 566 -- -- 7,803
Buildings.............. 22,289 42 3 249 (2) 22,577
Machinery and
equipment............. 250,093 6,661 2,583 5,462 (2) 259,633
Construction in
progress.............. 2,941 25,443 4 (5,711)(2) 22,669
-------- ------- ------- ------- --------
$301,295 $32,712 $ 2,751 $ -- $331,256
======== ======= ======= ======= ========
1993: (1)
Mineral properties..... $ 18,574 $ -- $ -- $ -- $ 18,574
Land................... 7,803 350 59 -- 8,094
Buildings.............. 22,577 18 -- 1,240 (2) 23,835
Machinery and
equipment............. 259,633 3,767 622 38,855 (2) 301,633
Construction in
progress ............. 22,669 23,313 -- (40,095)(2) 5,887
-------- ------- ------- ------- --------
$331,256 $27,448 $ 681 $ -- $358,023
======== ======= ======= ======= ========
1994:
Mineral properties..... $ 18,574 $ -- $ -- $ -- $ 18,574
Land................... 8,094 15 17 -- 8,092
Buildings.............. 23,835 7 1,016 263 (2) 23,089
Machinery and
equipment............. 301,633 2,989 1,425 8,501 (2) 311,698
Construction in
progress.............. 5,887 8,416 -- (8,764)(2) 5,539
-------- ------- ------- ------- --------
$358,023 $11,427 $ 2,458 $ -- $366,992
======== ======= ======= ======= ========
</TABLE>
DEPRECIATION AND AMORTIZATION
The annual provisions to depreciation have been computed based on the
following estimated useful lives:
<TABLE>
<S> <C>
Buildings............................. 12-33 years
Machinery and equipment............... 3-20 years
</TABLE>
- --------
(1) Amounts have been restated to exclude discontinued operations.
(2) Transfer construction in progress.
II-9
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES
SCHEDULE VI--ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
THREE YEARS ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED OTHER BALANCE
AT TO COSTS CHARGES-- AT END
BEGINNING AND ADD OF
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS (DEDUCT) PERIOD
----------- --------- --------- ----------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1992: (1)
Mineral properties......... $ 1,729 $ 118 $ 119 $ -- $ 1,728
Buildings.................. 15,547 775 3 -- 16,319
Machinery and equipment.... 196,650 11,139 2,230 -- 205,559
-------- ------- ------ ------ --------
$213,926 $12,032 $2,352 $ -- $223,606
======== ======= ====== ====== ========
1993: (1)
Mineral properties......... $ 1,728 $ 117 $ 8 $ -- $ 1,837
Buildings.................. 16,319 662 -- -- 16,981
Machinery and equipment.... 205,559 13,547 415 -- 218,691
-------- ------- ------ ------ --------
$223,606 $14,326 $ 423 $ -- $237,509
======== ======= ====== ====== ========
1994:
Mineral properties......... $ 1,837 $ 126 $ -- $ -- $ 1,963
Buildings.................. 16,981 669 899 -- 16,751
Machinery and equipment ... 218,691 16,046 1,177 1 233,561
-------- ------- ------ ------ --------
$237,509 $16,841 $2,076 $ 1 $252,275
======== ======= ====== ====== ========
</TABLE>
- --------
(1) Amounts have been restated to exclude discontinued operations.
II-10
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES
SCHEDULE IX--SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
MAXIMUM AVERAGE WEIGHTED
BALANCE WEIGHTED AMOUNT AMOUNT AVERAGE
AT END AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE OF INTEREST AT ANY DURING THE DURING THE
SHORT-TERM BORROWINGS PERIOD RATE MONTH END PERIOD (2) PERIOD (3)
--------------------- ------- -------- ----------- ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
June 30, 1992 (1)
Notes payable to banks
(4).................. $13,500 6.63% $15,565 $7,012 6.61%
June 30, 1993 (1)
Notes payable to banks
(4).................. $ 4,625 4.30% $13,500 $8,402 5.20%
June 30, 1994
Notes payable to banks
(4).................. $ 7,030 5.45% $10,000 $6,002 4.45%
</TABLE>
- --------
(1) Amounts have been restated to exclude discontinued operations.
(2) Average amount outstanding during the period is computed by dividing the
total of daily outstanding principle balances by 365.
(3) Weighted average interest rate during the period is computed by dividing
the actual short-term interest expense by the average short-term debt
outstanding during the period.
(4) Notes payable were related to borrowings for the Company's wholly owned
subsidiary, Mississippi Phosphates Corporation.
II-11
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
COLUMN A COLUMN B
-------- -----------------------
CHARGED TO COSTS AND
EXPENSES
FISCAL YEAR ENDED
-----------------------
1993 1992
ITEM 1994 (1) (1)
---- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Maintenance and repairs................................ $18,230 $18,548 $17,150
Depreciation, depletion and amortization of property,
plant and equipment and other intangible assets....... $16,967 $14,444 $12,094
Property taxes......................................... $ 1,865 $ 1,555 $ 1,523
Other taxes--other than income taxes and payroll taxes
...................................................... $ 1,267 $ 1,218 $ 1,190
</TABLE>
- --------
(1) Amounts have been restated to exclude discontinued operations.
II-12
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
EXHIBIT INDEX
TO
AMENDMENT NO. 1
TO
FORM S-1
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
1 Underwriting Agreement. [ ]
3.1 Articles of Incorporation of the Company. [ ]
3.2 By-laws of the Company. [ ]
4.7 Specimen of the Company's 9 1/2% Subordinated Note Due July
1, 1999, (incorporated herein by reference to Exhibit 4.7 to
the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1993, File No. 2-7803)
4.8 Term Loan Agreement Number 6420 dated August 25, 1987, be-
tween the Company's subsidiary, Newsprint South, Inc., and
Jackson Bank for Cooperatives (now National Bank for Coopera-
tives) in an amount not to exceed $ 4,700,000, as amended and
restated by Amendment to Loan Agreement Number 6420(A) dated
February 2, 1989, (incorporated herein by reference to Ex-
hibit 4.8 to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1993, File No. 2-7803).
4.9 Line of Credit Agreement Number 6899 dated December 13, 1991,
between the Company's subsidiary, Newsprint South, Inc., and
National Bank for Cooperatives, for a revolving line of
credit in an amount equal to the lesser of the Borrowing Base
(as defined in Section 6 thereof) or $10,680,000, as amended
by Amendment Number 6899(A) dated June 12, 1992, and Amend-
ment Number 6899(B) dated December 18, 1992, which increased
the line of credit to $10,992,000, (incorporated herein by
reference to Exhibit 4.9 to the Company's Annual Report on
Form 10-K for the fiscal year ended on June 30, 1993, File
No. 2-7803).
4.10 Term Loan Agreement Number 6939 dated October 19, 1992, be-
tween the Company's subsidiary, Mississippi Phosphates Corpo-
ration, and National Bank for Cooperatives and the Company as
co-maker in an aggregate principal amount not to exceed
$10,000,000, (incorporated herein by reference to Exhibit
4.10 to the Company's Annual Report on Form 10-K for the fis-
cal year ended June 30, 1993, File No. 2-7803).
4.11 Line of Credit Agreement Number 6871 dated September 30,
1991, between the Company and National Bank for Cooperatives
for a revolving line of credit in the amount of $10,000,000,
as amended by Amendment Number 6871(A) dated October 20,
1992, which increases the line of credit to $15,000,000, (in-
corporated herein by reference to Exhibit 4.11 to the
Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1993, File No. 2-7803).
4.12 Amendment Number 6392(A) dated November 2, 1987, and Amend-
ment Number 6392(B) dated April 20, 1988, to Loan Agreement
Number 6392 dated as of April 24, 1987, between the Company
and the Jackson Bank for Cooperatives (now the National Bank
for Cooperatives), (incorporated herein by reference to Ex-
hibit 4.12 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1993, File No. 2-7803).
4.13 Loan Agreement Number 6392 dated as of April 24, 1987, be-
tween the Company and Jackson Bank for Cooperatives (now the
National Bank for Cooperatives) in a principal amount not to
exceed $35,000,000; (incorporated herein by reference to Ex-
hibit 4.13 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1987, File No. 2-7803).
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
4.14 Revolving Credit/Term Loan Agreement dated August 6, 1992,
between the Company and NationsBank of Tennessee, purchaser
of the Company's Series I Secured Note, Due June 30, 1999, in
the aggregate principal amount of $20,000,000; filed as Ex-
hibit 4.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1992, File No. 2-7803, and incor-
porated herein by reference thereto.
4.15 Note Purchase Agreement dated as of December 26, 1989, be-
tween the Company and John Hancock Variable Life Insurance
Company, purchaser of the Company's 9.97% Secured Notes, Se-
ries H, Due 1999, in the aggregate principal amount of
$6,000,000; filed as an exhibit to Exhibit 4.3 to the
Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1990, File No. 2-7803, and incorporated herein
by reference thereto.
4.16 Twelfth Supplemental Indenture dated as of August 6, 1992,
between the Company and Deposit Guaranty National Bank; filed
as Exhibit 4.3 to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1992, File No. 2-7803, and
incorporated herein by reference thereto.
4.17 Eleventh Supplemental Indenture dated as of July 16, 1990,
between the Company and Deposit Guaranty National Bank, to-
gether with Exhibit A thereto, being an Agreement for Real
Estate Purchase Option dated July 16, 1990, for the sale of
the Company's Hardee County, Florida, property and underlying
phosphate reserves; filed as Exhibit 4.2 to Amendment No. 1
of the Company's Report on Form 8 dated November 7, 1990,
File No. 2-7803, and incorporated herein by reference there-
to.
4.18 Tenth Supplemental Indenture dated as of December 26, 1989,
between the Company and Deposit Guaranty National Bank, to-
gether with Exhibit A thereto, being a Note Purchase Agree-
ment dated as of December 26, 1989, between the Company and
John Hancock Variable Life Insurance Company, purchaser of
the Company's 9.97% Secured Notes, Series H, Due 1999, in the
aggregate principal amount of $6,000,000; filed as Exhibit
4.3 to the Company's Annual Report on Form 10-K for the fis-
cal year ended June 30, 1990, File No. 2-7803, and incorpo-
rated herein by reference thereto.
4.19 Ninth Supplemental Indenture dated as of February 23, 1988,
between the Company and Deposit Guaranty National Bank; filed
as Exhibit 4.1 to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1988, File No. 2-7803, and
incorporated herein by reference thereto.
4.20 Eighth Supplemental Indenture dated as of May 15, 1983, be-
tween the Company and Deposit Guaranty National Bank; filed
as Exhibit 4.1 to Post-Effective Amendment No. 3 to Registra-
tion Statement No. 2-71827 and incorporated herein by refer-
ence thereto.
4.21 Seventh Supplemental Indenture dated as of October 1, 1979,
between the Company and Deposit Guaranty National Bank; filed
as Exhibit 2 to Post-Effective Amendment No. 3 to Registra-
tion Statement No. 2-57390 and incorporated herein by refer-
ence thereto.
4.22 Sixth Supplemental Indenture dated as of September 1, 1979,
between the Company and Deposit Guaranty National Bank, filed
as Exhibit 3 to Post-Effective Amendment No. 3 to Registra-
tion Statement No. 2-57390 and incorporated herein by refer-
ence thereto.
4.23 Fifth Supplemental Indenture dated as of June 1, 1978, be-
tween the Company and Deposit Guaranty National Bank; filed
as Exhibit 7 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1979, File No. 2-7803, and in-
corporated herein by reference thereto.
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
4.24 Fourth Supplemental Indenture dated as of May 1, 1978, be-
tween the Company and Deposit Guaranty National Bank; filed
as Exhibit 9 to Post-Effective Amendment No. 2 to Registra-
tion Statement No. 2-57390 and incorporated herein by refer-
ence thereto.
4.25 Third Supplemental Indenture dated as of June 28, 1977, be-
tween the Company and Deposit Guaranty National Bank; filed
as Exhibit 6 to Post-Effective Amendment No. 1 to Registra-
tion Statement No. 2-57390 and incorporated herein by refer-
ence thereto.
4.26 Second Supplemental Indenture dated as of September 30, 1976,
among the Company, New Orleans Bank for Cooperatives, John H.
Farrelly and Deposit Guaranty National Bank; filed as Exhibit
6 to Registration Statement No. 2-57390 and incorporated
herein by reference thereto.
4.27 First Supplemental Indenture, dated as of September 7, 1976,
among the Company, New Orleans Bank for Cooperatives, John H.
Farrelly and Deposit Guaranty National Bank; filed as Exhibit
3 to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1976, File No. 2-7803, and incorporated
herein by reference thereto.
4.28 Note Purchase Agreement effective as of September 1, 1976,
between the Company and the Purchasers of the Company's 9
1/2% Secured Notes, Series B, Due 1996, in the aggregate
principal amount of $35,000,000, together with Exhibits A and
B thereto; filed as Exhibit 2 to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1976, File
No. 2-7803, and incorporated herein by reference thereto.
4.29 Indenture dated as of May 1, 1989, between the Company and
Sunburst Bank, as Trustee, for the issuance by the Company
and 9 1/2% subordinated notes, due July 1, 1999, in the ag-
gregate principal amount of $11,061,000; filed as Exhibit 4.1
to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1989, File No. 7-2803, and incorporated
herein by reference thereto.
4.30 Mississippi Chemical Corporation 1994 Stock Incentive Plan. [ ]
4.31 Form of Preferred Stock Rights Plan. [ ]
5 Opinion re Legality. [ ]
10.1 First Supplement to Lease Agreement dated as of June 30,
1992, to the Lease Agreement dated as of September 28, 1989,
among Newsprint South, Inc., The First National Bank of Bos-
ton, and G. Patrick McEnroe, as Trustees, (incorporated
herein by reference to Exhibit 10.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1993,
File No. 2-7803).
10.2 Second Supplement to Lease Agreement dated as of July 15,
1992, to the Lease Agreement dated as of September 28, 1989,
among Newsprint South, Inc., The First National Bank of Bos-
ton, and G. Patrick McEnroe, as Trustees, (incorporated
herein by reference to Exhibit 10.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1993,
File No. 2-7803).
10.3 Amendment of Agreement, effective as of July 1, 1993, to the
Agreement entered into as of October 1, 1991, by the
Company's subsidiary, Mississippi Phosphates Corporation, for
the exclusive distribution of diammonium phosphate produced
by Mississippi Phosphates Corporation, (incorporated herein
by reference to Exhibit 10.3 to the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1993, File
No. 2-7803).(1)
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
10.4 Amendment to Joint Venture Agreement entered into by the Com-
pany and First Mississippi Corporation effective as of May
28, 1993, (incorporated herein by reference to Exhibit 10.4
to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1993, File No. 2-7803).
10.5 Amendment to Products Withdrawal Agreement entered into by
the Company and First Mississippi Corporation effective as of
May 28, 1993, (incorporated herein by reference to Exhibit
10.5 to the Company's Annual Report on Form 10-K for the fis-
cal year ended June 30, 1993, File No. 2-7803).
10.6 Agreement effective as of October 1, 1991, by the Company's
subsidiary, Mississippi Phosphates Corporation for the exclu-
sive distribution of diammonium phosphate produced by Missis-
sippi Phosphates Corporation; filed as Exhibit 10.1 to Amend-
ment No. 1 to the Company's Report on Form 8 dated January 7,
1993, File No. 2-7803, and incorporated herein by reference
thereto.(2)
10.7 Agreement made and entered into as of September 15, 1991, be-
tween Office Cherifien des Phosphates and Mississippi Phos-
phates Corporation for the sale and purchase of phosphate
rock; filed as Exhibit 10.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1991, File No.
2-7803, and incorporated herein by reference thereto.(3)
10.8 Lease Agreement dated as of September 28, 1989, among News-
print South, Inc., The First National Bank of Boston, and G.
Patrick McEnroe, as Trustees; filed as Exhibit 10.1 to the
Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1990, File No. 2-7803, and incorporated herein
by reference thereto.
10.9 Agreement for Real Estate Purchase Option dated July 16,
1990, for the sale of the Company's Hardee County, Florida,
property and underlying phosphate reserves; filed as an ex-
hibit to Exhibit 4.2 to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1990, File No. 2-
7803, and incorporated herein by reference thereto.(4)
10.10 Power Contract dated as of June 27, 1988, between the
Company's subsidiary, Newsprint South, Inc., and Tennessee
Valley Authority, as supplemented by letter agreement dated
June 27, 1988, filed as Exhibit 10.3 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1990,
File No. 2-7803, and incorporated herein by reference there-
to.
10.11 Gas Purchase and Sale Contract between the Company and Shell
Western E&P Inc., dated as of January 1, 1986; filed as Ex-
hibit 10.6 to Amendment No. 1 of the Company's Report on Form
8 dated January 7, 1993, File No. 2-7803, and incorporated
herein by reference thereto.(5)
10.12 Triad Chemical Joint Venture Agreement; filed as Exhibit G1
to Post-Effective Amendment No. 6 to Registration Statement
No. 2-25041 and incorporated herein by reference thereto.
10.13 Products Withdrawal Agreement dated June 3, 1968, between
First Mississippi Corporation and MisCoa covering withdrawal
of product from Triad Chemical; filed as Exhibit H to Post-
Effective Amendment No. 7 to Registration Statement No. 2-
25041 and incorporated herein by reference thereto.
18.1 Preferability letter dated July 31, 1992, issued by Arthur
Andersen & Co. to the Company to fulfill the requirements of
Regulation S-K in connection with the Company's change in the
method of reporting patronage refunds; filed as Exhibit 18.1
to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1992, File No. 2-7803, and incorporated
herein by reference thereto.
</TABLE>
E-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
21.1 List of subsidiaries of the Company, filed as Exhibit 21.1 to
the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1993, File No. 2-7803, and incorporated herein
by reference thereto.
23.1 Consent of McDermott, Will & Emery (included in Exhibit 5). [ ]
23.2 Consent of Arthur Andersen & Co. [ ]
24 Power of Attorney*
</TABLE>
- --------
(1) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.3 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(2) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.6 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(3) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.7 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(4) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.9 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
(5) Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
portions of Exhibit 10.11 have been deleted and filed separately with the
Commission pursuant to a request for confidential treatment.
*Previously Filed.
E-5
<PAGE>
GRAPHICS APPENDIX
1. Item 1 is a map of Southern United States, titled "Facilities Locations,"
with solid triangles and circles indicating the locations of the production
facilities of the Company (specifically those at Carlsbad, Donaldsonville,
Pascagoula and Yazoo City) and the locations of the distribution facilities
of the Company, respectively.
2. Item 2 is a flowchart, titled "Products and Markets," with four columns
showing the interrelationship between fertilizer types and the locations of
the Company's production facilities (first column titled "Fertilizer Types
and Plant Locations"), the principle raw materials used at those plants
("second column titled "Principal Raw Materials"), the products formed by
combination of the raw materials and the tonnage of products sold (third
column titled "Products"), and the principal markets where these products
are applied (fourth column titled "Principal End Markets").
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
4,800,000 SHARES
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
New York, New York
, 1994
Wertheim Schroder & Co. Incorporated
The Robinson-Humphrey Company, Inc.
As Representatives of the several Underwriters
named in Schedule I hereto
c/o Wertheim Schroder & Co. Incorporated
Equitable Center
787 Seventh Avenue
New York, New York 10019-6016
Dear Sirs:
Mississippi Chemical Corporation, a Mississippi corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters"), an
aggregate of 3,200,000 shares of Common Stock, par value $.01 per share (the
"Common Stock"), and certain securityholders of the Company named in Schedule
II hereto (the "Selling Securityholders"), propose, subject to the terms and
conditions stated herein, to sell to the Underwriters an aggregate of 1,600,000
shares of Common Stock. The 4,800,000 shares of Common Stock to be sold by the
Company and the Selling Securityholders are herein referred to as the "Firm
Securities." In addition, the Company and certain Selling Securityholders
propose to grant to the Underwriters an option to purchase up to an additional
720,000 shares of Common Stock (the "Option Securities"), on the terms and for
the purposes set forth in Section 2 hereof. The Firm Securities and the Option
Securities are herein collectively referred to as the "Securities."
1A. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-1 (File No. 33-54573), and as a part
thereof a preliminary prospectus, in respect of the Securities, has been filed
with the Securities and Exchange Commission (the "Commission") in the form
heretofore delivered to you and, with the exception of exhibits to the
registration statement, to you for each of the other Underwriters; if such
registration statement has not become effective, an amendment (the "Final
Amendment") to such registration statement, including a form of final
prospectus, necessary to permit such registration statement to become
effective, will promptly be filed by the Company with the Commission; if such
registration statement has become effective and any post-effective amendment to
such registration statement has been filed with the Commission prior to the
execution and delivery of this Agreement, which amendment or amendments shall
be in form acceptable to you, the most recent such amendment has been declared
effective by the Commission; if such registration statement has become
effective, a final prospectus (the "Rule 430A Prospectus") relating to the
Securities containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the rules and regulations of the
<PAGE>
Commission under the Securities Act of 1933, as amended (the "Act"), will
promptly be filed by the Company pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Act (any preliminary prospectus filed
as part of such registration statement being herein called a "Preliminary
Prospectus," such registration statement as amended at the time that it becomes
or became effective, or, if applicable, as amended at the time the most recent
post-effective amendment to such registration statement filed with the
Commission prior to the execution and delivery of this Agreement became
effective (the "Effective Date"), including all exhibits thereto (whether filed
or incorporated by reference) and all information deemed to be a part thereof
at such time pursuant to Rule 430A of the rules and regulations of the
Commission under the Act, being herein called the "Registration Statement" and
the final prospectus relating to the Securities in the form first filed
pursuant to Rule 424(b)(1) or (4) of the rules and regulations of the
Commission under the Act or, if no such filing is required, the form of final
prospectus included in the Registration Statement, being herein called the
"Prospectus");
(b) No order preventing or suspending the use of any Preliminary Prospectus
has been issued by the Commission, and each Preliminary Prospectus, at the time
of filing thereof, conformed in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder, and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through you
expressly for use therein;
(c) On the Effective Date and the date the Prospectus is filed with the
Commission, the Registration Statement and the Prospectus, respectively, did,
and when any further amendment or supplements thereto become effective or are
filed with the Commission, as the case may be, the Registration Statement and
the Prospectus, as amended by such amendment or supplements, will, conform in
all material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not and will not, as the case
may be, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company by an
Underwriter through you expressly for use therein;
(d) The documents incorporated by reference in the Registration Statement,
when they were filed with the Commission, conformed in all material respects to
the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder,
and none of such documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading;
(e) The Company has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Company of its obligations under this Agreement have been
duly and validly authorized by all requisite corporate action of the Company;
and this Agreement constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms;
(f) Neither the Company nor any of its subsidiaries has sustained since June
30, 1994, any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, which loss or
interference is material to the Company and its subsidiaries, taken as a whole;
and, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been, and prior to the
Time of Delivery (as defined in Section 4 hereof) there will not be, any
material change in the capital stock or short-term debt or long-term debt of
the Company or any of its subsidiaries, or any material
2
<PAGE>
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated in
the Prospectus;
(g) The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in or contemplated by the Registration
Statement or the Prospectus, or such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries, and any real property and
buildings held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
real property and buildings by the Company and its subsidiaries;
(h) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Mississippi, with
power and authority (corporate and other) to own its properties and to conduct
its business as described in the Registration Statement and the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction in
which it owns or leases property, or conducts any business, so as to require
such qualification (except where the failure to so qualify would not have a
material adverse effect on the Company or the Company and its subsidiaries
considered as a whole); and each of the Company's subsidiaries listed in
Exhibit 21.1 to the Registration Statement has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases property, or
conducts any business, so as to require such qualification (except where the
failure to so qualify would not have a material adverse effect on the Company
and its subsidiaries considered as a whole); and the Company has all necessary
corporate power and all material government authorizations, permits and
approvals required to conduct its business as described in the Registration
Statement and in the Prospectus;
(i) The Company has an authorized, issued and outstanding capitalization as
set forth in the Registration Statement, and all the issued shares of Common
Stock have been duly and validly authorized and issued, are fully paid and non-
assessable, are free of any statutory preemptive rights, contractual preemptive
rights, rights of first refusal or similar rights, were issued and sold in
compliance with applicable federal and state securities laws and conform in all
material respects to the description in the Prospectus; except as described in
the Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of, and there are no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or any
security convertible or exchangeable or exercisable for capital stock of the
Company; there are no holders of securities of the Company who, by reason of
the filing of the Registration Statement, have the right (and have not waived
such right) to request the Company to include in the Registration Statement
securities owned by them; and all of the issued and outstanding shares of
capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned by the
Company free and clear of all liens, encumbrances, equities or claims; and
there are no outstanding options, warrants or other rights calling for the
issuance of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of any subsidiary or any security convertible or
exchangeable or exercisable for capital stock of any subsidiary;
(j) Triad Chemical ("Triad"), an unincorporated joint venture that is owned
50% by the Company and 50% by First Mississippi Corporation, has not sustained
since June 30, 1994, any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree, which
loss or interference is material to Triad; and, since the respective dates as
of which information is given in the Registration Statement and the Prospectus,
there has not been, and prior to the Time of Delivery (as defined in Section 4
hereof) there will not be, any material change in the short-term debt or long-
term debt of Triad, or any material adverse change, or any
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development involving a prospective material adverse change, in or affecting
the general affairs, management, financial position or results of operations of
Triad, otherwise than as set forth or contemplated in the Prospectus; the
Company owns a 50% equity interest in Triad free and clear of all liens,
encumbrances, equities or claims; Triad has good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by it in each case free and clear of all liens, encumbrances and
defects except such as are described or contemplated by the Registration
Statement or the Prospectus; Triad has all necessary power and authority, and
all material government authorizations, permits and approvals, required to
conduct its business as described in the Registration Statement and in the
Prospectus; and there are no outstanding options, warrants or other rights
calling for the issuance of, and there are no commitments, plans or
arrangements to issue, any other equity interest in Triad;
(k) The Securities to be issued and sold by the Company to the Underwriters
hereunder have been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued,
fully paid and non-assessable, will conform in all material respects to the
description of the Common Stock in the Registration Statement and in the
Prospectus and will be included for quotation on the Nasdaq Stock Market's
National Market (the "Nasdaq National Market") as of the Effective Date, and
the Securities to be sold by the Selling Securityholders to the Underwriters
hereunder have been duly and validly issued and are fully paid and non-
assessable and will also be quoted on the Nasdaq National Market as of the
Effective Date;
(l) The performance of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of the
Certificate of Incorporation or the By-Laws, in each case as amended to the
date hereof, of the Company or the provisions of the similar corporate
constituent documents, in each case as amended to the date hereof, of any of
its subsidiaries, or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation of the other transactions contemplated by this
Agreement, except the registration under the Act and the Exchange Act of the
Securities, and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by the
Underwriters;
(m) There are no legal or governmental proceedings pending to which the
Company, any of its subsidiaries or Triad is a party or of which any property
of the Company, any of its subsidiaries or Triad is the subject, other than
litigation or proceedings disclosed in the Prospectus or incident to the
business conducted by the Company, its subsidiaries and Triad, none of which
will individually or in the aggregate have a material adverse effect on the
financial position, stockholders' equity or results of operations of the
Company, its subsidiaries and Triad considered as a whole; and, to the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened or contemplated by others; and neither
the Company nor any of its subsidiaries nor Triad is involved in any material
labor dispute, nor, to the Company's knowledge, is any labor dispute
threatened;
(n) The Company and its subsidiaries have obtained such material licenses,
permits and other approvals or authorizations of and from governmental or
regulatory authorities ("Permits") as are necessary under applicable law to own
their respective properties and to conduct their respective businesses in the
manner now being conducted and as described in the Registration Statement and
in the Prospectus; and the Company and its subsidiaries have fulfilled and
performed in all material respects all of their respective obligations with
respect to such Permits, and no event has occurred which allows, or after
notice or lapse of time or both
4
<PAGE>
would allow, revocation or termination thereof or result in any other material
impairment of the rights of the holder of any such Permits;
(o) Arthur Andersen & Co., who have certified certain consolidated financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(p) The consolidated financial statements of the Company and its subsidiaries
included in the Registration Statement and the Prospectus (which include the
Company's proportionate share of 50% of the assets and liabilities of Triad)
present fairly the financial condition, the results of operations and the cash
flows of the Company and its subsidiaries as of the dates and for the periods
therein specified in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except as otherwise
stated therein; and the other financial and statistical information and data
set forth in the Registration Statement and the Prospectus is accurately
presented in all material respects and, to the extent such information and data
is derived from the financial statements and books and records of the Company
and its subsidiaries, is prepared on a basis consistent with such financial
statements and the books and records of the Company and its subsidiaries; no
other financial statements are required to be included in the Registration
Statement and the Prospectus; the pro forma financial statements included in
the Registration Statement and the Prospectus have been properly compiled and
comply in form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X of the Commission;
(q) There are no statutes or governmental regulations, or any contracts or
other documents that are required to be described in or filed as exhibits to
the Registration Statement which are not described therein or filed as exhibits
thereto or incorporated by reference therein;
(r) The Company and its subsidiaries own or possess adequate patent rights or
licenses or other rights to use patent rights, inventions, trademarks, service
marks, trade names and copyrights necessary to conduct the general business now
operated by them and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any patent, patent rights, inventions, trademarks,
service marks, trade names or copyrights which, singly or in the aggregate,
could materially adversely affect the business, operations, financial
condition, income or business prospects of the Company and its subsidiaries
considered as a whole;
(s) Neither the Company nor any of its subsidiaries is in violation of any
term or provision of its Certificate of Incorporation or By-Laws (or similar
corporate constituent documents), in each case as amended to the date hereof,
or any law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of its subsidiaries, or of any decree of any
court or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries, the violation of which either individually or together
with all such other violations would have a material adverse effect on the
Company and its subsidiaries considered as a whole;
(t) No default exists, and no event has occurred which with notice or lapse
of time, or both, would constitute a material default in the due performance
and observance of any term, covenant or condition of any indenture, mortgage,
deed of trust, bank loan or credit agreement, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which any of them is bound;
(u) The Company and its subsidiaries have timely filed all necessary tax
returns and notices and have paid all federal, state, county, local and foreign
taxes of any nature whatsoever for all tax years through June 30, 1994, to the
extent such taxes have become due. Except as disclosed in the Registration
Statement and in the Prospectus, the Company has no knowledge of any tax
deficiencies which would have a material adverse effect on the Company or any
of its subsidiaries, considered as a whole, or of any further liability
(whether or not disclosed on such returns) or assessments for any such taxes,
and no interest or penalties accrued or accruing with respect thereto, except
as may be set forth or adequately reserved for in the financial statements
5
<PAGE>
included in the Registration Statement; the amounts currently set up as
provisions for taxes or otherwise by the Company and its subsidiaries on their
respective books and records are sufficient for the payment of all their unpaid
federal, foreign, state, county and local taxes accrued through the dates as of
which they speak, and for which the Company and its subsidiaries may be liable
in their own right, or as a transferee of the assets of, or as successor to,
any other corporation, association, partnership, joint venture or other entity;
(v) The Company will not, during the period of 180 days after the date
hereof, except pursuant to this Agreement, offer, sell or otherwise dispose of
any capital stock of the Company, directly or indirectly, without the prior
written consent of Wertheim Schroder & Co. Incorporated;
(w) The Company and its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
(x) Neither the Company nor any of its subsidiaries is in violation of any
foreign, federal, state or local law or regulation relating to the protection
of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants, nor any federal or state law relating to
discrimination in the hiring, promotion or paying of employees nor any
applicable federal or state wages and hours laws, nor any provisions of the
Employee Retirement Income Security Act of 1974, as amended, or the rules and
regulations promulgated thereunder, the violation of which either individually
or together with all such other violations would have a material adverse effect
on the Company and its subsidiaries considered as a whole;
(y) Neither the Company nor any of its subsidiaries, nor, to the Company's
knowledge, any employee or agent of the Company or any of its subsidiaries has
made any payment of funds of the Company or any of its subsidiaries or received
or retained any funds in violation of any law, rule or regulation, which
payment, receipt or retention of funds is of a character required to be
disclosed in the Prospectus;
(z) The Company has not taken, directly or indirectly, any action designed to
or which has constituted or that might reasonably be expected to cause or
result in, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities, in each case as
defined under the Exchange Act and the rules and regulations of the Commission
thereunder;
(aa) The Company's Registration Statement on Form S-4 (Reg. No. 33-53119) and
the Proxy Statement/Prospectus, dated May 27, 1994, utilized in connection with
the Company's Special Meeting of Shareholders held on June 28, 1994 conformed
in all material respects to the requirements of the Act and the Exchange Act,
and the rules and regulations of the Commission thereunder, and did not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading;
(bb) The Company is the surviving corporation resulting from the merger of
Mississippi Chemical Corporation, a Mississippi corporation operated as a
cooperative in accordance with the applicable provisions of the Internal
Revenue Code (the "Cooperative"), with and into the Company pursuant to a Plan
of Reorganization (the "Plan of Reorganization"), dated May 23, 1994, which
merger became effective July 1, 1994. Such merger was consummated in accordance
with the provisions of the Plan of Reorganization, which has been duly
authorized by the Company and the Cooperative and their respective shareholders
and complied in all respects with applicable law;
(cc) The Company has no liability to any of its or the Cooperative's
securityholders in connection with the Plan of Reorganization and the
transactions contemplated thereby, except for those securityholders (the
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"Dissenters") named in Schedule III hereto, who have elected to exercise their
dissenters' rights in accordance with Article 13 of the Mississippi Business
Corporation Act (the "MBCA"). Schedule III is complete and correct in all
respects and the Dissenters are the only securityholders of the Company or the
Cooperative who have validly preserved any rights under Article 13 of the MBCA
with respect to the Plan of Reorganization. The Company and certain other
parties have entered into a Joint and Mutual Release and Agreement, dated July
11, 1994, a true and correct copy of which has been delivered to counsel for
the Underwriters, with Mulberry Phosphates, Inc. ("Mulberry Phosphates"),
pursuant to which Mulberry Phosphates has released the Company from any and all
liability to it in connection with Mulberry Phosphates' ownership of capital
stock of the Corporation, the Plan of Reorganization and the transactions
contemplated thereby;
(dd) The Company has made all filings required to be made by it under the
Exchange Act; and
(ee) The Company has executed and delivered an Omnibus Transfer, Receipt and
Release dated June 24, 1994 (the "Release Agreement") among the Company,
General Electric Capital Corporation ("GECC"), National Bank for Cooperatives
("CoBank"), Newsprint South, Inc. ("Newsprint South"), and other interested
parties, and all other documents and agreements referred to in the Release
Agreement (collectively, the "Settlement Documents"). The Settlement Documents
have released the Company from all of its obligations and liabilities to
Newsprint South, GECC and CoBank, as well as its obligations and liabilities
under all agreements related to the Project (as defined in the Release
Agreement), provided that the Company performs all of the actions required to
be performed by it pursuant to the terms of the Release Agreement. The Company
has no further obligations or liabilities to Newsprint South, GECC or CoBank,
or under any agreement related to the Project, except as set forth in the
Settlement Documents.
1B. Each of the Selling Securityholders, severally and not jointly,
represents and warrants to, and agrees with, each of the Underwriters and the
Company that:
(a) Such Selling Securityholder has duly executed and delivered a power of
attorney (a "Power of Attorney"), an executed copy of which has been delivered
to Fulbright & Jaworski L.L.P., counsel to the several Underwriters, appointing
Charles O. Dunn and Robert E. Jones, or either of them (the "Selling
Securityholder Attorneys"), as attorney-in-fact with authority to execute and
deliver this Agreement on behalf of such Selling Securityholder and to take
certain other action with respect thereto; and all authorizations and consents
necessary for the execution and delivery by such Selling Securityholder of the
Power of Attorney, and for the execution and delivery of this Agreement by or
on behalf of such Selling Securityholder, have been given;
(b) Certificates for the Securities to be sold by each Selling Securityholder
have been placed in custody for delivery under this Agreement with the Selling
Securityholder Attorneys pursuant to the custody provisions contained in the
Power of Attorney. Each Selling Securityholder agrees that the Securities
represented by the certificates so held in custody are subject to the interests
of the several Underwriters, the Company and the other Selling Securityholders
hereunder, that the arrangements made for such custody are irrevocable, and
that the obligations of such Selling Securityholder hereunder shall not be
terminated by any act of such Selling Securityholder or by operation of law,
whether by death, incapacity, dissolution or winding up of any Selling
Securityholder or the occurrence of any other event. If any such death,
incapacity, dissolution, winding up or other event should occur before the
delivery of the Securities to be sold by a Selling Securityholder hereunder,
certificates for the Securities of such Selling Securityholder shall be
delivered by the Selling Securityholder Attorneys in accordance with the terms
and conditions of this Agreement as if such death, incapacity, dissolution or
winding up or other event has not occurred, regardless of whether the Selling
Securityholder Attorneys shall have received notice of such death, incapacity,
dissolution, winding up or other event;
(c) Such Selling Securityholder has, and at the Time of Delivery (as defined
in Section 4 hereof) will have, good and marketable title to the Securities to
be sold by such Selling Securityholder hereunder, free
7
<PAGE>
and clear of any liens, encumbrances, equities, security interests, claims and
other restrictions of any nature whatsoever, and such Selling Securityholder
has the full right, power and authority to sell, assign, transfer and deliver
such Securities hereunder subject to the rights of the Selling Securityholder
Attorneys and to make the representations, warranties, covenants and agreements
made by it in this Agreement; and upon the delivery of and payment for such
Securities as herein provided, the several Underwriters will acquire good and
marketable title thereto, free and clear of all liens, encumbrances, equities,
security interests, claims and other restrictions of any nature whatsoever;
(d) The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not result in a breach by such Selling
Securityholder of any of the terms or provisions of, or constitute a default by
it under, any material agreement or instrument to which it is a party or by
which it is bound, or any statute, ruling, decree, judgment, order or
regulation known to it of any governmental authority having jurisdiction over
it or its property;
(e) Such Selling Securityholder has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of
the Securities, in each case as defined under the Exchange Act and the rules
and regulations of the Commission thereunder; and
(f) To the extent that any statements or omissions are made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by such Selling Securityholder
specifically for use therein, such Preliminary Prospectus did, and the
Registration Statement and the Prospectus and any amendments or supplements
thereto, when they become effective or are filed with the Commission, as the
case may be, will, conform in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder and did not and
will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and
2. Subject to the terms and conditions herein set forth, the Company agrees
to issue and sell to the several Underwriters an aggregate of 3,200,000 Firm
Securities, each Selling Securityholder agrees to sell to the several
Underwriters the number of Firm Securities set forth on Schedule II opposite
the name of each such Selling Securityholder and each of the Underwriters
agrees to purchase from the Company and the Selling Securityholders, at a
purchase price of $ per share, the respective aggregate number of Firm
Securities determined in the manner set forth below. The obligation of each
Underwriter to the Company and each of the Selling Securityholders,
respectively, shall be to purchase that portion of the number of shares of
Common Stock to be sold by the Company or such Selling Securityholder pursuant
to this Agreement as the number of Firm Securities set forth opposite the name
of such Underwriter on Schedule I bears to the total number of Firm Securities
to be purchased by the Underwriters pursuant to this Agreement, in each case
adjusted by you such that no Underwriter shall be obligated to purchase Firm
Securities other than in 100-share amounts. In making this Agreement, each
Underwriter is contracting severally and not jointly.
In addition, subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the several Underwriters an aggregate of
197,928 Option Securities and each of the Selling Securityholders agrees to
sell to the Underwriters up to the number of Option Securities set forth
opposite its name on Schedule II, as required (for the sole purpose of covering
over-allotments in the sale of the Firm Securities), at the purchase price per
share of the Firm Securities being sold by the Company and the Selling
Securityholders as stated in the preceding paragraph. The right to purchase the
Option Securities may be exercised by your giving 48 hours' prior written
notice to the Company and to the Selling Securityholder Attorneys of your
determination to purchase all or a portion of the Option Securities. Such
notice may be given at any time within a period of 30 days following the date
of this Agreement. Option Securities shall be purchased severally for the
account of each Underwriter in proportion to the number of Firm Securities set
8
<PAGE>
forth opposite the name of such Underwriter in Schedule I hereto. If the
Underwriters elect to purchase less than the full amount of 720,000 Option
Securities, the Company and each Selling Securityholder shall sell a
proportional amount based on the number of Option Securities to be sold by the
Company as set forth in this paragraph and each Selling Securityholder as set
forth on Schedule II. No Option Securities shall be delivered to or for the
accounts of the Underwriters unless the Firm Securities shall be simultaneously
delivered or shall theretofore have been delivered as herein provided. The
respective purchase obligations of each Underwriter shall be adjusted by you so
that no Underwriter shall be obligated to purchase Option Securities other than
in 100 share amounts. The Underwriters may cancel any purchase of Option
Securities at any time prior to the Option Securities Delivery Date (as defined
in Section 4 hereof) by giving written notice of such cancellation to the
Company and to the Selling Securityholder Attorneys.
3. Upon the authorization by you of the release of the Securities, the
Underwriters propose to offer the Securities for sale upon the terms and
conditions set forth in the Prospectus.
4. Certificates in definitive form for the Firm Securities to be purchased by
each Underwriter hereunder shall be delivered by or on behalf of the Company
and the Selling Securityholders to you for the account of such Underwriter,
against payment by such Underwriter or on its behalf of the purchase price
therefor by certified or official bank check or checks, payable in New York
Clearing House funds, to the order of the Company, for the purchase price of
the Firm Securities being sold by the Company, and to the order of the Selling
Securityholder Attorneys for the Selling Securityholders, for the purchase
price of the Firm Securities being sold by the Selling Securityholders, in New
York, New York, at 9:30 A.M., New York City time, on , 1994, or at
such other time, date and place as you and the Company may agree upon in
writing, such time and date being herein called the "Time of Delivery."
Certificates in definitive form for the Option Securities to be purchased by
each Underwriter hereunder shall be delivered by or on behalf of the Company
and the Selling Securityholders named in Schedule II to you for the account of
such Underwriter, against payment by such Underwriter or on its behalf of the
purchase price thereof by certified or official bank check or checks, payable
in New York Clearing House funds, to the order of the Company and the Selling
Securityholder Attorneys, as the case may be, for the purchase price of the
Option Securities, in New York, New York, at such time and on such date (not
earlier than the Time of Delivery nor later than ten business days after giving
of the notice delivered by you to the Company and the Selling Securityholders
named in Schedule II with reference thereto) and in such denominations and
registered in such names as shall be specified in the notice delivered by you
to the Company and the Selling Securityholders named in Schedule II with
respect to the purchase of such Option Securities. The date and time of such
delivery and payment are herein sometimes referred to as the "Option Securities
Delivery Date." The obligations of the Underwriters shall be subject, in their
discretion, to the condition that there shall be delivered to the Underwriters
on the Option Securities Delivery Date opinions and certificates, dated such
Option Securities Delivery Date, referring to the Option Securities instead of
the Firm Securities, but otherwise to the same effect as those required to be
delivered at the Time of Delivery pursuant to Sections 7(d), 7(e), 7(f), 7(g)
and 7(j).
Certificates for the Firm Securities and the Option Securities so to be
delivered will be in good delivery form, and in such denominations and
registered in such names as you may request not less than 48 hours prior to the
Time of Delivery and the Option Securities Delivery Date, respectively. Such
certificates will be made available for checking and packaging in New York, New
York, at least 24 hours prior to the Time of Delivery and Option Securities
Delivery Date.
5. The Company agrees with each of the Underwriters:
(a) If the Registration Statement has not become effective, to file promptly
the Final Amendment with the Commission and use its best efforts to cause the
Registration Statement to become effective; if the Registration Statement has
become effective, to promptly file the Rule 430A Prospectus with the
Commission; to make no further amendment or any supplement to the Registration
Statement or the Prospectus which
9
<PAGE>
shall be reasonably disapproved by you after reasonable notice thereof; to
advise you, promptly after it receives notice thereof of the time when the
Registration Statement, or any amendment thereto, or any amended Registration
Statement has become effective or any supplement to the Prospectus or any
amended Prospectus has been filed, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information; and in the event of the issuance
of any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such qualification,
to use promptly its best efforts to obtain withdrawal of such order;
(b) To promptly from time to time take such action as you may reasonably
request to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as you may request and to comply with such laws so
as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Registration Statement
(two of which will be signed and will include all exhibits), each Preliminary
Prospectus, the Prospectus and all amendments or supplements thereto in such
quantities and in such form or forms as you may from time to time reasonably
request, and if the delivery of a prospectus is required by law in connection
with sales of Securities at any time prior to the expiration of nine months
after the time of issue of the Prospectus and if at such time any event shall
have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make statements therein, in the
light of the circumstances under which they were made when such Prospectus is
delivered, not misleading, or if for any other reason it shall be necessary to
amend or supplement the Prospectus in order to comply with the Act, to notify
you and, if the Company so determines or upon your request, to prepare and
furnish without charge to each Underwriter and to any dealer in securities as
many copies as you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such statement
or omission or effect such compliance (which each Underwriter and dealer shall
thereafter be obligated to use); and in case any Underwriter is required to
deliver a prospectus in connection with sales of any of the Securities at any
time nine months or more after the time of issue of the Prospectus, upon your
request but at the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its stockholders as soon as practicable,
but in any event not later than 45 days after the close of the period covered
thereby, an earnings statement in form complying with the provisions of Section
11(a) of the Act and Rule 158 of the rules promulgated thereunder covering a
period of 12 consecutive months beginning not later than the first day of the
Company's fiscal quarter next following the Effective Date;
(e) To file promptly all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act subsequent to the
Effective Date and during any period when the Prospectus is required to be
delivered;
(f) For a period of five years from the Effective Date, to furnish to its
stockholders after the end of each fiscal year an annual report (including a
consolidated balance sheet and statements of income, cash flow and
stockholders' equity of the Company and its subsidiaries certified by
independent public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the Effective Date), consolidated summary financial
information of the Company and its subsidiaries for such quarter in reasonable
detail;
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(g) For a period of three years from the Effective Date, to furnish to you
copies of all reports or other communications (financial or other) furnished to
its stockholders, and deliver to you (i) as soon as they are available, copies
of any reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of securities
of the Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as you may from time to time
reasonably request in connection with your obligations as an Underwriter
hereunder;
(h) To apply the net proceeds from the sale of the Securities hereunder
substantially in accordance with the description set forth in the Prospectus;
(i) That it will not take, directly or indirectly, any action designed to or
that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Securities;
(j) That prior to the Time of Delivery, there will not be any change in the
capital stock or short-term debt or long-term debt of the Company or any of its
subsidiaries, or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations
of the Company or any of its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus;
(k) That it will not, during the period of 180 days after the date hereof
(other than pursuant to this Agreement), offer, sell or otherwise dispose of
any capital stock of the Company, directly or indirectly, without the prior
written consent of the Representatives; and
(l) That it has caused the Securities to be included for quotation on the
Nasdaq National Market as of the Effective Date.
6. The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid: (i) the fees, disbursements and expenses
of counsel and accountants for the Company, and all other expenses, in
connection with the preparation, printing and filing of the Registration
Statement and the Prospectus and (except as otherwise provided in Section 5(c)
hereof) amendments and supplements thereto and the furnishing of copies
thereof, including charges for mailing, air freight and delivery and counting
and packaging thereof and of any Preliminary Prospectus and related offering
documents to the Underwriters and dealers; (ii) the cost of printing this
Agreement, the Agreement Among Underwriters, the Selling Agreement,
communications with the Underwriters and selling group and the Preliminary and
Supplemental Blue Sky Memoranda; (iii) all expenses in connection with the
qualification of the Securities for offering and sale under state securities
laws as provided in Section 5(b) hereof, including filing and registration fees
and the fees, disbursements and expenses for counsel for the Underwriters in
connection with such qualification and in connection with Blue Sky surveys;
(iv) the filing fees incident to securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; and (v) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section 6, including the fees of the Company's Transfer Agent and
Registrar, the cost of any stock issue or transfer taxes on sale of the
Securities to the Underwriters, the cost of the Company's personnel and other
internal costs, the cost of printing and engraving the certificates
representing the Securities, and all expenses and taxes incident to the sale
and delivery of the Securities to be sold by the Company and by the Selling
Securityholders to the Underwriters hereunder.
It is understood, however, that, except as provided in this Section, Section
8 and Section 11 hereof, the Underwriters will pay all their own costs and
expenses, including the fees of their counsel, stock transfer taxes on resale
of any of the Securities by them, and any advertising expenses connected with
any offers they may make.
7. The obligations of the Underwriters hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company and the Selling Securityholders
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herein are, at and as of the Time of Delivery, true and correct, the condition
that the Company and the Selling Securityholders shall have performed all their
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Registration Statement shall have become effective, and you shall
have received notice thereof not later than 10:00 P.M., New York City time, on
the date of execution of this Agreement, or at such other time as you and the
Company may agree; if required, the Prospectus shall have been filed in
accordance with Rule 424(b)(1) or (4) of the rules and regulations of the
Commission under the Act not later than 24 hours following the execution of
this Agreement; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to your
reasonable satisfaction;
(b) All corporate proceedings and related legal and other matters in
connection with the organization of the Company and the registration,
authorization, issue, sale and delivery of the Securities shall have been
reasonably satisfactory to Fulbright & Jaworski L.L.P., counsel to the
Underwriters, and Fulbright & Jaworski L.L.P. shall have been furnished with
such papers and information as they may reasonably have requested to enable
them to pass upon the matters referred to in this subsection;
(c) You shall not have advised the Company or any Selling Securityholder that
the Registration Statement or Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact or omits to state a fact which in
your judgment is in either case material and in the case of an omission is
required to be stated therein or is necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(d) McDermott, Will & Emery, counsel to the Company, shall have furnished to
you their written opinion, dated the Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly and validly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Mississippi, and is qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which its ownership or leasing
of properties or the conduct of its business requires such qualification
(except where the failure to so qualify would not have a material adverse
effect on the Company and its subsidiaries as a whole); and the Company has
all necessary corporate power and all material governmental authorizations,
permits and approvals required to own, lease and operate its properties and
conduct its business as described in the Prospectus;
(ii) Each of the Company's subsidiaries has been duly and validly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, and is qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which its ownership or leasing of properties or the conduct
of its business requires such qualification (except where the failure to so
qualify would not have a material adverse effect on the Company and its
subsidiaries as a whole); and each such subsidiary has all necessary
corporate power to own its properties and to conduct its business as
described in the Prospectus, except as otherwise described in the
Prospectus;
(iii) All the outstanding shares of capital stock of each of the
Company's subsidiaries are validly issued and outstanding and are owned by
the Company of record and, to the knowledge of such counsel, free and clear
of all liens, charges or encumbrances of any nature whatsoever; and, to the
knowledge of such counsel, neither the Company nor any of its subsidiaries
has granted any outstanding options, warrants or commitments with respect
to any shares of its capital stock, whether issued or unissued, except as
otherwise described in the Prospectus;
(iv) The authorized, issued and outstanding capital stock of the Company
is as set forth under the caption "Capitalization" in the Prospectus; all
outstanding shares of Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable, are free of any statutory
preemptive rights, and were issued and sold in compliance with all
applicable federal and state securities laws; except
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as described in the Prospectus, to the knowledge of such counsel, there are
no outstanding options, warrants, or other rights calling for the issuance
of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of the Company or any security convertible into or
exchangeable or exercisable for capital stock of the Company;
(v) The Securities being sold by the Company have been duly and validly
authorized and, when duly countersigned by the Company's Transfer Agent and
Registrar and issued, delivered and paid for in accordance with the
provisions of this Agreement, will be validly issued, fully paid and
nonassessable and free of any statutory preemptive and, to the best
knowledge of such counsel, contractual preemptive rights, rights of first
refusal or similar rights; the Securities conform to the description of the
Common Stock in the Prospectus; and the Securities have been included for
quotation on the Nasdaq National Market as of the Effective Date;
(vi) This Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as enforceability of the
same may be limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and except as enforceability of those
provisions relating to indemnity may be limited by the federal securities
laws and principles of public policy;
(vii) The Company has full corporate power and authority to execute,
deliver and perform this Agreement, and the execution, delivery and
performance of this Agreement, the consummation of the transactions herein
contemplated and the issue and sale of the Securities and the compliance by
the Company with all the provisions of this Agreement will not conflict
with, or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon, any of the property or assets of the
Company or its subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement, lease or other material agreement
or instrument known to such counsel to which the Company or any of its
subsidiaries is a party and by which the Company or any of its subsidiaries
is bound or to which any of the property or assets of the Company or any of
its subsidiaries is subject, nor will such action result in any violation
of the provisions of the Certificate of Incorporation or the By-Laws (or
similar corporate constituent documents) of the Company or any of its
subsidiaries, in each case as amended to the date hereof, or, to such
counsel's knowledge, any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties;
(viii) No consent, approval, authorization, order, registration or
qualification of or with any court or any regulatory authority or other
governmental body is required for the issue and sale of the Securities or
the consummation of the other transactions contemplated by this Agreement,
(x) except such as have been obtained under the Act and (y) such as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Underwriters, as to
which no opinion is expressed;
(ix) To such counsel's knowledge, neither the Company nor any of its
subsidiaries is currently in breach of, or in default under, any indenture,
mortgage, deed of trust, lease, bank loan or credit agreement or any other
material agreement or instrument of which such counsel has knowledge to
which the Company or any of its subsidiaries is a party or by which any of
them or any of their property may be bound or affected (in any respect that
is material in light of the financial condition of the Company and its
subsidiaries, taken as a whole);
(x) There are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any
Securities pursuant to the Company's Certificate of Incorporation or By-
Laws, in each case as amended to the date hereof, or any agreement or other
instrument known to such counsel; and, to such counsel's knowledge, no
holders of securities of the Company have rights to the registration
thereof under the Registration Statement;
(xi) To the extent summarized therein, all contracts and loan agreements
summarized in the Registration Statement and the Prospectus are fairly
summarized therein, conform in all material
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<PAGE>
respects to the descriptions thereof contained therein, and are filed as
exhibits thereto or incorporated by reference therein; and to such
counsel's knowledge, there is no contract or document concerning the
Company or any of its subsidiaries of a character required to be described
in the Prospectus or to be filed as an exhibit or incorporated by reference
to the Registration Statement, which is not so described, filed or
incorporated by reference;
(xii) To such counsel's knowledge, there is no litigation or governmental
or other action, suit, proceeding or investigation before any court or
before or by any public, regulatory or governmental agency or body pending
or threatened against, or involving the properties or business of, the
Company, any of its subsidiaries or Triad, which, if resolved against the
Company, any of its subsidiaries or Triad, individually or, to the extent
involving related claims or issues, in the aggregate, is of a character
required to be disclosed in the Prospectus which has not been properly
disclosed therein;
(xiii) The Registration Statement was declared effective under the Act on
August , 1994, the Prospectus was filed in accordance with Rule 424(b) of
the rules and regulations of the Commission under the Act on August ,
1994, and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened under the Act; and the Registration Statement, the Prospectus
and each amendment or supplement thereto, as of their respective effective
or issue dates, complied as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder; it being
understood that such counsel need express no opinion as to the financial
statements and schedules or other financial, pro forma and statistical data
contained in the Registration Statement or the Prospectus;
(xiv) The Company has authorized, executed and delivered the Settlement
Documents, and to such counsel's knowledge, the Company has no further
obligations or liabilities to Newsprint South, GECC or CoBank under any
agreement related to the Project, except as set forth in the Settlement
Documents; and
(xv) The Company complied with all requirements of Article 13 of the MBCA
relating to the Plan of Reorganization and, to such counsel's knowledge,
the only securityholders of the Cooperative who have preserved dissenter's
rights with respect to the Plan of Reorganization in accordance with said
Article 13 are set forth in Schedule III hereto. The Company and certain
other parties have entered into a Joint and Mutual Release and Agreement,
dated July 11, 1994, with Mulberry Phosphates, which agreement has been
duly authorized, executed and delivered by the Company.
McDermott, Will & Emery shall also state that nothing has come to their
attention that causes them to believe that either the Registration Statement or
the Prospectus contains any untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (except for the financial statements and related schedules and
other financial, pro forma and statistical information included therein, as to
which no statement need be made).
In rendering their opinions set forth in Section 7(d) above, McDermott, Will
& Emery (i) may rely (a) upon certificates of state officials, (b) as to
factual matters, on certificates of the officers of the Company, and (c) upon
opinions of counsel (provided, however, that you shall have received a copy of
each of such opinions which shall be dated the Time of Delivery, addressed to
you or otherwise authorizing you to rely thereon, and that McDermott, Will &
Emery, in their opinion to you delivered pursuant to this subsection, shall
state that such counsel are satisfactory to them and that McDermott, Will &
Emery has no reason to believe that you and they are not entitled to so rely),
and (ii) may assume that Triad is not a "subsidiary" for purposes of their
opinion.
(e) McDermott, Will & Emery, counsel to the Selling Securityholders, or other
counsel satisfactory to the Underwriters, shall have furnished to you their
written opinion with respect to each Selling Securityholder, dated the Time of
Delivery, in form and substance satisfactory to you, to the effect that:
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<PAGE>
(i) Such Selling Securityholder has full corporate power to enter into
this Agreement and the Power of Attorney and to sell, transfer and deliver
the Securities being sold by such Selling Securityholder hereunder; each of
this Agreement and the Power of Attorney has been duly authorized, executed
and delivered by or on behalf of each such Selling Securityholder; and is a
legal, valid and binding agreement of each such Selling Securityholder,
enforceable in accordance with its terms, except as enforcement of the same
may be limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and except as enforceability of those provisions relating
to indemnity and contribution may be limited by the federal securities laws
and principles of public policy, and the performance of this Agreement and
the Power of Attorney and the consummation of the transactions herein and
therein contemplated will not result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement, lease, license
agreement or other agreement or instrument known to such counsel to which
any such Selling Securityholder is bound; or any statute or any order, rule
or regulation known to such counsel of any court or governmental agency or
body having jurisdiction over any such Selling Securityholder or the
property of any such Selling Securityholder;
(ii) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the consummation of the transactions contemplated by this
Agreement or the Power of Attorney in connection with the Securities being
sold by such Selling Securityholders, except (x) such as have been obtained
under the Act and (y) such as may be required under the rules of the NASD
and state securities or Blue Sky laws in connection with the purchase and
distribution of such Securities by the Underwriters as to which no opinion
is expressed; and
(iii) Upon delivery of and payment for the Securities being sold by such
Selling Securityholders, the several Underwriters will receive valid and
unencumbered title to such Securities, assuming they purchased such
Securities without actual knowledge of any lien, encumbrance, equity claim
or other adverse claim (as such term is defined in the New York Uniform
Commercial Code).
In rendering such opinions, McDermott, Will & Emery may rely (a) as to
factual matters, on certificates of the Selling Securityholders and of officers
of the Company, (b) upon certificates of state officials, (c) upon opinions of
counsel (provided, however, that you shall have received a copy of each of such
opinions which shall be dated the Time of Delivery, addressed to you or
otherwise authorizing you to rely thereon, and that McDermott, Will & Emery, in
their opinion to you delivered pursuant to this subsection, shall state that
such counsel are satisfactory to them and that McDermott, Will & Emery has no
reason to believe that you and they are not entitled to so rely), and (d) upon
representations of such Selling Securityholders as to matters of fact in their
respective Powers of Attorney;
(f) Fulbright & Jaworski L.L.P., counsel to the Underwriters, shall have
furnished to you their written opinion or opinions, dated the Time of Delivery,
in form and substance satisfactory to you, with respect to the incorporation of
the Company, the validity of the Securities, the Registration Statement, the
Prospectus and other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(g) At the time this Agreement is executed and also at the Time of Delivery,
Arthur Andersen & Co. shall have furnished to you a letter or letters, dated
the date of this Agreement and the Time of Delivery, in form and substance
satisfactory to you, to the effect, that:
(i) They are independent accountants with respect to the Company and its
subsidiaries within the meaning of the Act and the applicable published
rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements of the
Company and its subsidiaries (including the related schedules and notes)
included in the Registration Statement and Prospectus and covered by their
reports included therein comply as to form in all material respects with
the applicable accounting requirements of the Act and the published rules
and regulations thereunder;
(iii) On the basis of specified procedures as of a specified date not
more than five days prior to the date of their letter (which procedures do
not constitute an examination made in accordance with
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generally accepted auditing standards), consisting of a reading of the
latest available unaudited interim financial statements of the Company and
its subsidiaries (with an indication of the date or dates of each such
latest available financial statements), a reading of the latest available
minutes of any meeting of the Board of Directors and stockholders of the
Company and its subsidiaries since June 30, 1994, inquiries of officials of
the Company who have responsibility for financial and accounting matters
subsequent to June 30, 1994, respectively, and such other procedures or
inquiries as are specified in such letter, nothing came to their attention
that caused them to believe that:
(A) the information relating to the Company and its subsidiaries for
the fiscal years ended June 30, 1990, 1991, 1992, 1993, and 1994, and
any unaudited information relating to the Company, included in the
Prospectus under the caption "Selected Financial Data" does not agree
with corresponding amounts in the audited consolidated balance sheets
and the audited consolidated statements of income and the audited
statements of cash flows as of and for the periods then ended;
(B) Any unaudited consolidated balance sheets, any unaudited
consolidated statements of operations, any unaudited consolidated
statements of shareholder-members' equity, and any unaudited
consolidated statements of cash flow, included in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder, or were not prepared on a basis substantially
consistent with that of the audited financial statements for the year
ended June 30, 1994, included in the Prospectus;
(C) as of a specified date not more than five days prior to the date
of their letter, there was any change in the long-term debt or short-
term debt of the Company and its subsidiaries on a consolidated basis,
or any decreases in shareholders' equity, inventory, working capital or
total assets of the Company, as compared with the amounts shown in the
consolidated balance sheets as of June 30, 1994, included in the
Prospectus, except in each case for changes which the Prospectus
discloses have occurred or may occur or which are described in their
letter;
(D) for the period from June 30, 1994, to a specified date not more
than five days prior to the date of such letter, there was any
decrease, as compared with the corresponding period of the preceding
fiscal year, in the following consolidated amounts: net sales,
operating income, income from continuing operations before income
taxes, net income, and earnings per share of the Company and its
subsidiaries, except in all instances for decreases which the
Registration Statement discloses have occurred or may occur; or if
there was any decrease, setting forth the amount of such decrease; or
if the Company and its subsidiaries have no financial statements for
any period subsequent to June 30, 1994, and other sufficient
information is not available to management in order to enable
management to comment on net sales, operating income, margins from
continuing operations before income taxes and cumulative effect of
change in accounting principle, margins from continuing operations
before cumulative change in accounting principle, net margins, pro
forma income from continuing operations and pro forma earnings per
share of the Company and its subsidiaries subsequent to June 30, 1994,
stating that management believes that there was no decrease in net
sales, operating income, margins from continuing operations before
income taxes and cumulative effect of change in accounting principle,
margins from continuing operations before cumulative change in
accounting principle, net margins, pro forma income from continuing
operations and pro forma earnings per share of the Company and its
subsidiaries for the period subsequent to June 30, 1994, as compared
with the corresponding period of the preceding fiscal year;
(iv) in addition to the examination referred to in their reports included
in the Registration Statement and the Prospectus and the limited procedures
referred to in clause (iii) above, they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentages and financial information which are derived from the general
accounting records of the Company and its subsidiaries which appear in the
Prospectus under the captions "Prospectus Summary," "Investment
Considerations," "The Company," "Use of Proceeds," "Dividend Policy,"
"Historical and Pro Forma Capitalization," "Dilution," "Selected Financial
Data," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business," "Management," "Certain Relationships
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and Related Transactions", "Principal and Selling Shareholders,"
"Description of Capital Stock," and "Shares Eligible for Future Sale," and
have compared such amounts and financial information with the accounting
records of the Company and its subsidiaries and have found them to be in
agreement and have proved the mathematical accuracy of certain specified
percentages; and
(v) On the basis of a reading of the pro forma consolidated financial
statements included in the Registration Statement and the Prospectus,
carrying out certain specified procedures that would not necessarily reveal
matters of significance with respect to the comments set forth in this
clause (v), inquiries of certain officials of the Company who have
responsibility for financial and accounting matters and proving the
arithmetic accuracy of the application of the pro forma adjustments to the
historical amounts in the pro forma consolidated financial statements,
nothing came to their attention that caused them to believe that the pro
forma consolidated financial statements do not comply in form in all
material respects with the applicable accounting requirements of Rule 11-02
of Regulation S-X or that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of such statements;
(h) (i) Neither the Company nor any of its subsidiaries shall have sustained
since June 30, 1994, any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree; and
(ii) since the respective dates as of which information is given in the
Prospectus, there shall not have been any change in the capital stock or short-
term debt or long-term debt of the Company or any of its subsidiaries nor any
change or any development involving a prospective change, in or affecting the
general affairs, management, financial position, shareholder-members' equity or
results of operations of the Company or any of its subsidiaries, otherwise than
as set forth or contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is in your judgment so material and
adverse as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities on the terms and in the manner
contemplated in the Prospectus;
(i) Between the date hereof and the Time of Delivery there shall have been no
declaration of war by the Government of the United States; at the Time of
Delivery there shall not have occurred any material adverse change in the
financial or securities markets in the United States or in political, financial
or economic conditions in the United States or any outbreak or material
escalation of hostilities or other calamity or crisis, the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the resale of Securities and
no event shall have occurred resulting in (i) trading in securities generally
on the New York Stock Exchange or the Nasdaq National Market being suspended or
limited or minimum or maximum prices being generally established on the Nasdaq
National Market or on such exchange, or additional material governmental
restrictions, not in force on the date of this Agreement, being imposed upon
trading in securities generally by the Nasdaq National Market or such exchange
or by order of the Commission or any court or other governmental authority or
(ii) a general banking moratorium being declared by either Federal or New York
authorities;
(j) The Company and each of the Selling Securityholders shall have furnished
or caused to be furnished to you at the Time of Delivery certificates signed by
the Chief Executive Officer and the Chief Financial Officer, on behalf of the
Company, and such Selling Securityholder or the Selling Securityholder
Attorneys, on behalf of each Selling Securityholder, satisfactory to you as to
such matters as you may reasonably request and as to (i) the accuracy of its
respective representations and warranties herein at and as of the Time of
Delivery and (ii) the performance by the Company and each Selling
Securityholder of all its respective obligations hereunder to be performed at
or prior to the Time of Delivery; the Company shall have furnished or caused to
be furnished to you at the Time of Delivery certificates signed by the Chief
Executive Officer and the Chief Financial Officer, on behalf of the Company, as
to (i) the fact that they have examined the Registration Statement and the
Prospectus and, (a) as of the Effective Date, the statements contained or
incorporated by reference in the Registration Statement and the Prospectus were
true and correct and neither the Registration Statement nor the Prospectus
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (b) since the Effective Date, no
event has
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occurred that is required by the Act or the rules and regulations of the
Commission thereunder to be set forth in an amendment of, or a supplement to,
the Prospectus that has not been set forth in such an amendment or supplement;
and (ii) the matters set forth in subsection (a) of this Section 7;
(k) Each director, officer, and Selling Securityholder shall have delivered
to you an agreement not to offer, sell or otherwise dispose of any shares of
Common Stock (or securities convertible into shares of Common Stock), directly
or indirectly, for a period of 180 days without the prior written consent of
Wertheim Schroder & Co. Incorporated; and
(l) The Company shall have delivered to you evidence that the Securities have
been included for quotation on the Nasdaq National Market as of the Effective
Date.
8. (a) The Company and each Selling Securityholder, jointly and severally,
will indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement made by the Company in Section
1A of this Agreement, (ii) any untrue statement or alleged untrue statement of
a material fact contained or incorporated by reference in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or in any Blue Sky application or other document executed
by the Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify any or all of the Securities under the securities laws thereof or filed
with the Commission or any securities association or securities exchange (each,
an "Application"), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made or incorporated by reference therein not misleading, or (iii) the
employment by the Company of any device, scheme or artifice to defraud, or the
engaging by the Company in any act, practice or course of business which
operates or would operate as a fraud or deceit, or any conspiracy with respect
thereto, in which the Company shall participate, in connection with the
issuance and sale of any of the Securities, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating, preparing to defend, defending or appearing as a
third-party witness in connection with any such action or claim; provided,
however, that the Company and each of such Selling Securityholders shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission relating to an Underwriter made in
any Preliminary Prospectus, the Registration Statement, the Prospectus or such
amendment or supplement or any Application in reliance upon and in conformity
with written information furnished to the Company by such Underwriter through
you expressly for use therein; provided, further, that the indemnity agreement
contained in this Section 8(a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter (or any persons controlling such
Underwriter) on account of any losses, claims, damages, liabilities or
litigation arising from the sale of Securities to any person, if such
Underwriter fails to send or give a copy of the Prospectus, as the same may be
then supplemented or amended, to such person, within the time required by the
Act and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Preliminary Prospectus was
corrected in the Prospectus, unless such failure is the result of noncompliance
by the Company with Section 5(c) hereof. Notwithstanding anything to the
contrary in this Section 8(a), including the joint and several nature of the
obligations of the Company and the Selling Securityholders, each Underwriter
and each person who controls such Underwriter agrees not to assert its rights
to indemnity under this Section 8(a) against the Selling Securityholders for
losses, claims, damages or liabilities (or actions in respect thereof) unless
and until (i) such Underwriter or controlling person has requested
indemnification and reimbursement from the Company for such losses, claims,
damages or liabilities (including any legal or other expenses reasonably
incurred) and (ii) the Company does not within 45 days of such request (A)
agree to so indemnify such Underwriter or controlling person and (B) reimburse
in full such Underwriter or controlling person for any such losses, damages or
liabilities (including legal and other expenses) incurred. In the event that
litigation between the parties with respect to this Section 8(a) results in a
joint or joint and several judgment against the Company and the Selling
18
<PAGE>
Securityholders, each Underwriter, and each person who controls such
Underwriter, agrees that it will not attempt to enforce such judgment against
any Selling Securityholder unless and until any part of such judgment shall
remain unsatisfied by the Company for more than 30 days.
(b) Each Selling Securityholder, severally and not jointly, will indemnify
and hold harmless each Underwriter, the Company and the other Selling
Securityholders against any losses, claims, damages or liabilities to which
such Underwriter, the Company or such Selling Securityholders may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement made by such Selling
Securityholder in Section 1B of this Agreement, or (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Prospectus, the Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Preliminary Prospectus, the Registration Statement,
the Prospectus or such amendment or supplement in reliance upon and in
conformity with written information furnished to such Underwriter or the
Company by such Selling Securityholder expressly for use therein, and will
reimburse such Underwriter, the Company or such Selling Securityholders for any
legal or other expenses reasonably incurred by such Underwriter, the Company or
such Selling Securityholders in connection with investigating, preparing to
defend, defending or appearing as a third-party witness in connection with any
such action or claim; provided, however, that the indemnity agreement contained
in this Section 8(b) with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter (or any persons controlling such Underwriter)
on account of any losses, claims, damages, liabilities or litigation arising
from the sale of Securities to any person, if such Underwriter fails to send or
give a copy of the Prospectus, as the same may be then supplemented or amended,
to such person, within the time required by the Act and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus,
unless such failure is the result of noncompliance by the Company with Section
5(c) hereof.
(c) In addition to any obligations of the Company and each of the Selling
Securityholders under Section 8(a) and 8(b), the Company and each of the
Selling Securityholders agree that they shall perform their indemnification
obligations under Section 8(a) and Section 8(b) (as modified by the last
paragraph of this Section 8(c)) with respect to counsel fees and expenses and
other expenses reasonably incurred by making payments within 45 days to the
Underwriter in the amount of the statements of the Underwriter's counsel or
other statements which shall be forwarded by the Underwriter, and that it shall
make such payments notwithstanding the absence of a judicial determination as
to the propriety and enforceability of the obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court until such time as a court
orders return of such payments.
The indemnity agreement in Section 8(a) and Section 8(b) shall be in addition
to any liability which the Company or any of the Selling Securityholders may
otherwise have and shall extend upon the same terms and conditions to each
person, if any, who controls any Underwriter within the meaning of the Act or
the Exchange Act.
In no event shall any Selling Securityholder be required pursuant to the
indemnity agreement under Section 8(a) and 8(b) to pay a total amount in excess
of the net amount received by such Selling Securityholder hereunder for the
sale of Securities to the Underwriters.
(d) Each Underwriter will indemnify and hold harmless the Company and the
Selling Securityholders against any losses, claims, damages or liabilities to
which the Company or such Selling Securityholder may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or any Application, or arise out of or are based upon the
omission or
19
<PAGE>
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement, the Prospectus or such amendment or
supplement or any Application in reliance upon and in conformity with written
information furnished to the Company or such Selling Securityholder by such
Underwriter relating to such Underwriter through you expressly for use therein,
and will reimburse the Company or such Selling Securityholder for any legal or
other expenses reasonably incurred by the Company or such Selling
Securityholder in connection with investigating or defending any such action or
claim.
The indemnity agreement in this Section 8(d) shall be in addition to any
liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company or of any Selling Securityholder and to each person, if any, who
controls the Company or any Selling Securityholder within the meaning of the
Act or the Exchange Act.
(e) Promptly after receipt by an indemnified party under Section 8(a), 8(b)
or 8(d) of notice of the commencement of any action (including any governmental
investigation), such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party under Section 8(a), 8(b) or 8(d) except to
the extent it was unaware of such action and has been prejudiced in any
material respect by such failure or from any liability which it may have to any
indemnified party otherwise than under such Section 8(a), 8(b) or 8(d). In case
any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. If, however, (i)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party or (ii) an
indemnified party shall have reasonably concluded that representation of such
indemnified party and the indemnifying party by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them and the indemnified party so
notifies the indemnifying party, then the indemnified party shall be entitled
to employ counsel different from counsel for the indemnifying party at the
expense of the indemnifying party and the indemnifying party shall not have the
right to assume the defense of such indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to local counsel) for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same set of allegations or circumstances. The
counsel with respect to which fees and expenses shall be so reimbursed shall be
designated in writing by Wertheim Schroder & Co. Incorporated in the case of
parties indemnified pursuant to Section 8(a) and Section 8(b) and by the
Company in the case of parties indemnified pursuant to Section 8(d).
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(f) In order to provide for just and equitable contribution under the Act in
any case in which (i) any Underwriter (or any person who controls any
Underwriter within the meaning of the Act or the Exchange Act) makes claim for
indemnification pursuant to Section 8(a) or Section 8(b) hereof, but is
judicially
20
<PAGE>
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that Section 8(a) or Section 8(b) provides for
indemnification in such case or (ii) contribution under the Act may be required
on the part of any Underwriter or any such controlling person in circumstances
for which indemnification is provided under Section 8(d), then, and in each
such case, the Company, the Selling Securityholders and such Underwriter shall
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject as an indemnifying party hereunder (after contribution from
others) in such proportion so that such Underwriter is responsible for the
portion represented by the percentage that the underwriting discount appearing
on the cover page of the Prospectus bears to the public offering price
appearing thereon, the Selling Securityholders are responsible for the portion
represented by the percentage that the total net proceeds of the offering
received by the Selling Securityholders bears to the total public offering
price appearing on the cover page of the Prospectus and the Company is
responsible for the remaining portion; provided, however, that, in any such
case, (x) no Underwriter shall be required to contribute any amount in excess
of the underwriting discount applicable to the Securities purchased by such
Underwriter, (y) no Selling Securityholder shall in any case be required to
contribute an amount in excess of the proceeds of the offering received by such
Selling Securityholder, and (z) no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to a contribution from any person who was not guilty of such
fraudulent misrepresentation. The amount paid or payable by an Underwriter as
result of this Section 8(f) shall be deemed to include any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating, preparing to defend or defending any such claim.
(g) Promptly after receipt by any party to this Agreement of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party (the
"contributing party"), notify the contributing party of the commencement
thereof; but the omission so to notify the contributing party will not relieve
it from any liability which it may have to any other party for contribution
under the Act except to the extent it was unaware of such action and has been
prejudiced in any material respect by such failure or from any liability which
it may have to any other party other than for contribution under the Act. In
case any such action, suit or proceeding is brought against any party, and such
party notifies a contributing party of the commencement thereof, the
contributing party will be entitled to participate therein with the notifying
party and any other contributing party similarly notified.
9. (a) If any Underwriter shall default in its obligation to purchase the
Firm Securities which it has agreed to purchase hereunder, you may in your
discretion arrange for you or another party or other parties to purchase such
Firm Securities on the terms contained herein. If the aggregate number of Firm
Securities as to which Underwriters default is more than one-eleventh of the
aggregate number of all the Firm Securities and within 36 hours after such
default by any Underwriter you do not arrange for the purchase of such Firm
Securities, then the Company shall be entitled to a further period of 36 hours
within which to procure another party or other parties satisfactory to you to
purchase such Firm Securities on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so arranged
for the purchase of such Firm Securities, or the Company notifies you that it
has so arranged for the purchase of such Firm Securities, you or the Company
shall have the right to postpone the Time of Delivery for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which it or you
determine may thereby be made necessary. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Firm Securities.
(b) If, after giving effect to any arrangements for the purchase of the Firm
Securities of such defaulting Underwriter or Underwriters by you or the Company
or both as provided in subsection (a) above, the aggregate number of such Firm
Securities which remain unpurchased does not exceed one-eleventh of the
aggregate number of all the Firm Securities, then the Company shall have the
right to require each non-
21
<PAGE>
defaulting Underwriter to purchase the number of the Firm Securities which such
Underwriter agreed to purchase hereunder and, in addition, to require each non-
defaulting Underwriter to purchase its pro rata share (based on the number of
Firm Securities which such Underwriter agreed to purchase hereunder) of the
Firm Securities of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the Firm
Securities of a defaulting Underwriter or Underwriters by you or the Company as
provided in subsection (a) above, the aggregate number of such Firm Securities
which remain unpurchased exceeds one-eleventh of the aggregate number of all
the Firm Securities, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Underwriters to purchase Firm
Securities of a defaulting Underwriter or Underwriters, then this Agreement
shall thereupon terminate without liability on the part of any non-defaulting
Underwriter, the Company or any Selling Securityholders, except for the
expenses to be borne by the Company and the Underwriters as provided in Section
6 hereof and the indemnity agreement in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company, each of the Selling Securityholders and the
several Underwriters, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company, or an officer or director or controlling
person of the Company or any of the Selling Securityholders, and shall survive
delivery of and payment for the Securities.
11. This Agreement shall become effective (a) if the Registration Statement
has not heretofore become effective, at the earlier of 12:00 Noon, New York
City time, on the first full business day after the Registration Statement
becomes effective, or at such time after the Registration Statement becomes
effective as you may authorize the sale of the Securities to the public by
Underwriters or other securities dealers, or (b) if the Registration Statement
has heretofore become effective, at the earlier of 24 hours after the filing of
the Prospectus with the Commission or at such time as you may authorize the
sale of the Securities to the public by Underwriters or securities dealers,
unless, prior to any such time you shall have received notice from the Company
that it elects that this Agreement shall not become effective, or you, or
through you such of the Underwriters as have agreed to purchase in the
aggregate fifty percent or more of the Firm Securities hereunder, shall have
given notice to the Company that you or such Underwriters elect that this
Agreement shall not become effective; provided, however, that the provisions of
this Section 11 and Section 6 and Section 8 hereof shall at all times be
effective.
If this Agreement shall be terminated pursuant to Section 9 hereof, or if
this Agreement, by election of you or the Underwriters, shall not become
effective pursuant to the provisions of this Section, the Company and the
Selling Securityholders shall not then be under any liability to any
Underwriter except as provided in Section 6 and Section 8 hereof, but if this
Agreement becomes effective and is not so terminated but the Securities are not
delivered by or on behalf of the Company or any of the Selling Securityholders
as provided herein because the Company or any of the Selling Securityholders
has been unable for any reason beyond its control and not due to any default by
it to comply with the terms and conditions hereof, the Company will reimburse
the Underwriters through you, for all out-of-pocket expenses approved in
writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Securities, but the Company and the Selling Securityholders
shall then be under no further liability to any Underwriter except as provided
in Section 6 and Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter, if the
same shall have been made or given by you, and in all dealings with the Selling
Securityholders hereunder, you and the Company shall be entitled to act and
rely upon any statement, request, notice or agreement furnished in writing by
or on behalf of such Selling Securityholder or by the Selling Securityholder
Attorneys.
22
<PAGE>
All statements, requests, notices and agreements hereunder shall be in
writing or by written telecommunication, and shall be sufficient in all
respects if delivered or sent by registered mail, if to the Underwriters, to
the Representatives, in care of Wertheim Schroder & Co. Incorporated at 787
Seventh Avenue, New York, New York 10019, Attention: Syndicate Department;
provided, however, that any notice to any Underwriter pursuant to Section 8(d)
hereof shall be delivered or sent by registered mail to such Underwriter at its
address set forth in its Underwriters' Questionnaire delivered to the Company;
and if to the Company or the Selling Securityholders, to Mississippi Chemical
Corporation, Post Office Box 388, Yazoo City, MS 39194-0388, Attention: Charles
O. Dunn, President and Chief Executive Officer.
13. This Agreement shall be binding upon, and inure solely to the benefit of,
the Underwriters, the Company and each of the Selling Securityholders and, to
the extent provided in Section 8 and Section 10 hereof, the officers and
directors of the Company and each person who controls the Company or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Securities from any
Underwriters shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be construed in accordance with the laws of the
State of New York.
16. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us a counterpart hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the
Company and each of the Selling Securityholders. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement Among Underwriters, manually or
facsimile executed counterparts of which, to the extent practicable and upon
request, shall be submitted to the Company for examination, but without
warranty on your part as to the authority of the signers thereof.
Very truly yours,
Mississippi Chemical Corporation
By: _________________________________
Selling Securityholders
By: _________________________________
As Attorney-in-Fact for each of
the
Selling Securityholders listed in
Schedule II
Accepted as of the date hereof:
Wertheim Schroder & Co. Incorporated
The Robinson-Humphrey Company Inc.
as Representatives of the several Underwriters
By: Wertheim Schroder & Co. Incorporated
By: _________________________________
Managing Director
23
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Wertheim Schroder & Co. Incorporated..................................
The Robinson-Humphrey Company, Inc....................................
---------
Total............................................................. 4,800,000
=========
</TABLE>
24
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
NUMBER OF FIRM MAXIMUM NUMBER OF
SELLING SECURITYHOLDER SECURITIES TO BE SOLD OPTION SECURITIES TO BE SOLD
---------------------- --------------------- ----------------------------
<S> <C> <C>
SF Services, Inc............ 598,000 --
Alabama Farmers Cooperative
Inc........................ 55,000 8,250
Mapco Inc................... 68,000 --
Missouri Farmers
Association, Inc........... 376,309 349,799
Voluntary Purchasing Groups,
Inc........................ 169,988 164,023
Gold Kist, Inc.............. 235,203 --
Jimmy Sanders Seed Company.. 77,500 --
Delta Purchasing Federation
(AAL)...................... 20,000 --
--------- -------
Total................... 1,600,000 522,072
========= =======
</TABLE>
25
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
DISSENTING NUMBER (AND SERIES) REORGANIZATION VALUE*
SECURITYHOLDER OF DISSENTING SHARES OF DISSENTING SHARES
-------------- ----------------------------- ---------------------
<S> <C> <C>
Bright Future Seeds, Inc... 207 (Series II) $ 24,840
John A. Dean............... 24 (Series II) 2,880
Bobby Hemphill Farms, Inc.. 52 (Series II) 6,240
250 (Series III) 6,000
J. R. Bradley.............. 802 (Series III) 19,248
John W. Ryan............... 5 (Series II) 600
25 (Series IV) 375
Farmers Cooperative
Elevator.................. 19 (Series II) 2,280
220 and 411/1,500 (Series IV) 3,304.11
----------------------------- ----------
Total.................. -- $65,767.11
============================= ==========
</TABLE>
- --------
* Value is based on the following assumptions:
Value of 1 Series II share: $120
Value of 1 Series III share: $24
Value of 1 Series IV share: $15
26
<PAGE>
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
MISSISSIPPI CHEMICAL CORPORATION
The undersigned natural persons, having capacity to contract and each being
of the age of twenty-one years or more and acting as incorporators of a
corporation pursuant to Section 79-4-2.02 of the Mississippi Business
Corporation Act, adopt the following Articles of Incorporation for such
corporation:
1. Name. The name of the Company is MISSISSIPPI CHEMICAL CORPORATION (the
"Company").
2. Registered Agent. The name and address of the initial registered agent
of the Company is Rosalyn B. Glascoe, Highway 49 East, P. O. Box 388, Yazoo
City, Mississippi 39194-0388.
3. Registered Office. The initial registered office of the Company is:
Highway 49 East, P. O. Box 388, Yazoo City, Mississippi 39194-0388.
4. Board of Directors.
(a) Initial Board. The number of directors constituting the initial
Board of Directors is twelve (12), and the names and addresses of the persons
who are to serve as directors until the first annual meeting of shareholders or
until their successors are elected and shall qualify are:
John W. Anderson Woods E. Eastland
P.O. Box 2227 P.O. Box 547
Decatur, Alabama 35609 Greenwood, Mississippi 38930
Coley L. Bailey John Sharp Howie
691 Air Industrial Park Road 23 Woodlawn Drive
Grenada, Mississippi 38901 Yazoo City, Mississippi 39194
Frank R. Burnside, Jr. G. David Jobe
<PAGE>
P.O. Box 535 615 Locust Street
Newellton, Louisiana 71357 Columbia, Missouri 65201
Robert P. Dixon George Penick
P.O. Box 5489 138 Highland Hills Lane
North Little Rock, Arkansas 72119 Flora, Mississippi 39071
Charles O. Dunn David M. Ratcliffe
P.O. Box 388 P.O. Box 4079
Yazoo City, Mississippi 39194 Gulfport, Mississippi 39502-4079
W. R. Dyess Wayne Thames
103 North 7th Street Route 2, Box 194-A
Corsicana, Texas 75110 Evergreen, Alabama 36401
(b) Number of Directors. The number of members of the Board of
Directors of the Company following the initial Board shall be not less than nine
(9) or more than fifteen (15), the exact number to be fixed and determined from
time to time by resolution of a majority of the Board of Directors.
(c) Classification of Board. At the first annual meeting of
shareholders, the directors shall be divided into three classes, as nearly equal
in number as may be, the term of office of those of the first class to expire at
the first annual meeting of shareholders after their election, the term of
office of those in the second class to expire at the second annual meeting of
shareholders after their election, and the term of office of those of the third
class to expire at the third annual meeting of shareholders after their
election. At each annual election held after the initial classification and
election, directors chosen to succeed those whose terms expire shall be elected
for a term of office to expire at the third annual meeting of shareholders after
their election.
(d) Vacancies. Any vacancy arising from the earlier retirement of a
director may be filled by vote of the remaining
2
<PAGE>
directors or the shareholders and the term of the new director shall be for the
balance of the term of the retiring director's class.
(e) Increase in the size of the Board. A vote of at least two-thirds
of the outstanding voting power of the Company is required to increase the
maximum number of the members of the Board of Directors if the Board of
Directors does not recommend an increase in the maximum number of members of the
Board.
(f) Removal of Directors. Shareholders may remove one or more
director(s) only for "cause," defined for purposes of this Article 4 as final
conviction of a felony, unsound mind, adjudication of bankruptcy or conduct
determined by a majority of the other directors to constitute conduct
prejudicial to the interests of the Company. A director may be removed for
cause only at a meeting called for the purpose of removing the director and the
notice of the meeting must state that the purpose, or one of the purposes, of
the meeting is the removal of the director.
(g) Cumulative Voting. Shareholders shall have no right to
cumulate their votes in the election of directors.
5. Authorized Shares. The maximum number of shares which the Company
shall have the authority to issue is:
(a) Common Stock. One hundred million (100,000,000) shares of Common
Stock, $.01 par value per share, with each share entitled to one (1) vote per
share. The shares of Common Stock shall be entitled to receive the remaining
net assets of the Company upon dissolution after all distributions to holders of
Capital Equity Credits and Allocated Surplus Accounts established
3
<PAGE>
by the Company on its books and after all distributions to holders of Preferred
Stock having a liquidation preference over the Common Stock; and
(b) Preferred Stock. Five hundred thousand (500,000) shares of
Preferred Stock which shares shall be entitled to such preferences in the
distribution of dividends and assets, and shall be divided into such series, as
the Board of Directors of the Company shall determine, with full authority in
the Board of Directors to determine, prior to issuance, from time to time, the
relative preferences, limitations and relative rights of the shares of any
series of Preferred Stock, with respect to par value, if any, dividends,
redemption, payments on liquidation, sinking fund provisions, conversion
privileges and voting rights.
6. Preemptive Rights Denied. No holder of any of the shares of any class
of the Company shall be entitled to preemptive rights to subscribe for,purchase
or otherwise acquire the Company's securities.
7. Period of Existence. The period of existence of the Company is
perpetual.
8. Purpose. The purpose of the Company is to engage in any lawful
business permitted by Mississippi law.
9. Liability and Indemnification.
(a) The liability of the directors and officers of the Company for
money damages for any action taken, or any failure to take any action, as a
director or officer, is eliminated to the fullest extent permitted by the
provisions of the Mississippi Business Corporation Act, as the same may be
amended and
4
<PAGE>
supplemented (the "Act"); except that liability shall not be eliminated for:
(i) the amount of a financial benefit received by a director or officer to which
he or she is not entitled; (ii) an intentional infliction of harm on the Company
or its shareholders; (iii) a violation of Section 79-4-8.33 of the Act; or (iv)
an intentional violation of criminal law.
(b) The Company shall, to the fullest extent permitted by the
provisions of the Act, indemnify any director, officer, employee and agent
against any and all of the expenses, liabilities, or other matters referred to
in or covered by any provisions of the Act, and the indemnification provided for
herein shall not be deemed exclusive of any other rights to which those
indemnified directors, officers, employees and/or agents may be entitled under
any Bylaw, vote of shareholders or disinterested directors, or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office, and the indemnification provided for herein
shall continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such person.
10. Shareholder Protection Act; Control Share Act. The provisions of the
Mississippi Shareholder Protection Act, Sections 79-25-1 through 79-25-9,
Mississippi Code 1972 Annotated, shall apply to this Company as if the Company
were a "Corporation" as defined in that statute. The Company elects to be
subject to the provisions of the Mississippi Control Share
5
<PAGE>
Act, Sections 79-27-1 through 79-27-11, Mississippi Code 1972 Annotated, and
that statute shall apply to this Company as if the Company were an "issuing
corporation" as defined in that statute.
11. Amendments. Any amendments to Articles 4, 9, 10, 11, 12 or 13 of these
Articles of Incorporation shall require the affirmative vote of at least two-
thirds of the outstanding voting power of the Company (in addition to, and not
in lieu of, any other vote required under the Act). All other Articles of these
Articles of Incorporation may be amended by the majority vote of the outstanding
voting power of the Company (in addition to, and not in lieu of, any other vote
required under the Act).
12. Special Meetings. The Board of Directors is authorized to adopt, and
amend from time to time, a Bylaw that increases, over the percentage otherwise
required by the Act, the percentage of the outstanding voting power that is
necessary to call a special meeting of shareholders, and the percentage set
forth in that Bylaw shall be deemed to be set forth herein.
13. Approval of Major Transactions. Any merger, consolidation, share
exchange, combination of shares, sale of substantially all of the Company's
assets other than in the regular course of business or adoption of a plan of
dissolution of the Company (a "Major Transaction") shall require the affirmative
vote of at least two-thirds of the outstanding Common Stock as well as the
affirmative vote of at least two-thirds of the outstanding voting power entitled
to be cast on the transaction by each voting group entitled to vote separately
thereon unless the Major Transaction has been approved and
6
<PAGE>
recommended to the shareholders by two-thirds of the directors then in office,
in which case the Major Transaction shall require the affirmative vote of a
majority of the outstanding voting power entitled to be cast on the Major
Transaction by each voting group entitled to vote separately thereon.
14. Capital Equity Credits and Allocated Surplus Accounts. If approved by
the Board of Directors, the Company may establish "Capital Equity Credits" and
"Allocated Surplus Accounts" ("Special Accounts"). Special Accounts may be
established only to represent capital allocations to shareholders of a portion
of earnings on business done with such shareholders made by a predecessor
corporation which is merged into the Company. Any Special Accounts, if
established, shall have a preference upon liquidation over the Company's Common
and Preferred Stock.
Executed on May 23, 1994.
/s/ Charles O. Dunn
---------------------------------------
(Incorporator)
Charles O. Dunn
Highway 49 East
P.O. Box 388
Yazoo City, Mississippi 39194-0388
/s/ Robert E. Jones
---------------------------------------
(Incorporator)
Robert E. Jones
Highway 49 East
P.O. Box 388
Yazoo City, Mississippi 39194-0388
7
<PAGE>
Exhibit 3.2
BYLAWS
------
OF
MISSISSIPPI CHEMICAL CORPORATION
--------------------------------
(a Mississippi corporation)
---------
ARTICLE I.
----------
Identification
--------------
Section 1.01. Name. The name of this corporation is MISSISSIPPI CHEMICAL
CORPORATION. The corporation may conduct operations under such other names as
the Board of Directors may designate.
Section 1.02. Seal. The corporation shall be authorized, but not
required, to use a corporate seal, which if used shall be circular in form and
contain the name of the corporation and the words "Corporate Seal, Mississippi."
The corporate seal shall be affixed by the Secretary upon such instruments or
documents as may be deemed necessary. The presence or absence of such seal on
any instrument shall not, however, affect its character or validity or legal
effect in any respect.
Section 1.03. Offices. The address of the principal office of the
corporation shall be Highway 49 East, P. O. Box 388, Yazoo City, Mississippi
39194-0388. The corporation may also have offices at such other places as the
Board of Directors may from time to time determine or the business of the
corporation may require.
ARTICLE II.
-----------
Capital Stock
-------------
Section 2.01. Consideration for Shares. Except as otherwise permitted by
law, capital stock of the corporation may be issued for such consideration as
shall be fixed from time to time by the Board of Directors.
Section 2.02. Payment for Shares. The consideration for the issuance of
shares may be paid, in whole or in part, in money, in other property, tangible
or intangible, or in other benefit to the corporation, including promissory
notes, labor or services already performed, contracts for services to be
performed or other
<PAGE>
securities of the corporation. Before the corporation issues shares, the Board
of Directors shall determine that the consideration is adequate, which
determination is conclusive insofar as the adequacy of consideration for the
issuance of shares relates to whether the shares are validly issued, fully paid
and nonassessable. When the corporation receives the consideration for which
the Board authorized the issuance of shares, the shares issued therefor are
fully paid and nonassessable. The corporation may place in escrow shares issued
for a contract for future services or benefits or a promissory note, or make
other arrangements to restrict transfer of the shares, and may credit
distributions in respect of the shares against their purchase price until the
services are performed, the note is paid or the benefits received. Such escrow
arrangements may provide that if the services are not performed, the note is not
paid or the benefits are not received, then the shares escrowed or restricted
and the distributions credited may be cancelled in whole or in part.
Section 2.03. Certificates Representing Shares. The certificates of stock
of the corporation shall be numbered consecutively and entered in the books of
the corporation as they are issued. The Board of Directors may authorize the
issuance of some or all of the shares without certificates. Such authorization
shall not affect shares already represented by certificates. Each certificate
issued shall be signed, either manually or by facsimile, by two officers of the
corporation and may bear the corporate seal or its facsimile. If the
corporation is authorized to issue different classes of shares or different
series within a class, then each certificate shall have noted thereon a summary
of the designations, relative rights, preferences, rights and limitations
applicable to each class and the variations in rights, preferences and
limitations determined for each series. Certificates evidencing shares of the
corporation shall set forth thereon the statements prescribed by Section 79-4-
6.25 of the Mississippi Business Corporation Act and by any other applicable
provision of law. If a person who signed, either manually or in facsimile, a
share certificate no longer holds office when the certificate is issued, the
certificate is nevertheless valid.
Section 2.04. Share Transfers. Upon compliance with any provisions
restricting the transferability of shares that may be set forth in the Articles
of Incorporation, these Bylaws, or any written agreement in respect thereof,
transfers of shares of the corporation shall be made only on the books of the
corporation by the registered holder thereof, or by his or her attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the corporation, or with a transfer agent or a registrar and on
surrender of the certificate or certificates for such shares properly endorsed
and the payment of all taxes thereon, if any. Except as may be otherwise
provided by law or these Bylaws, the person in whose name shares stand on the
books of the corporation shall be deemed the owner thereof for all purposes as
regards the corporation; provided that whenever any transfer of
2
<PAGE>
shares shall be made for collateral security, and not absolutely, such fact, if
known to the Secretary of the corporation, shall be so expressed in the entry of
transfer.
ARTICLE III.
------------
Meetings of Shareholders
------------------------
Section 3.01. Place of Meetings. Meetings of the shareholders of the
corporation shall be held at the principal office of the corporation or at such
other place in or out of the state of Mississippi as shall be determined by the
Board of Directors.
Section 3.02. Annual Meetings. The annual meeting of the shareholders
shall be held at such time and place as the Board of Directors shall designate,
at which annual meeting the shareholders shall elect a number of members of the
Board of Directors equal to the number of directors whose terms expire at such
meeting, and transact such other business as may properly come before the
meeting. Failure to hold the annual meeting at the designated time shall not
affect the validity of any corporate action.
Section 3.03. Special Meetings. Special meetings of the shareholders
shall be held on such call as may be specified in the Articles of Incorporation,
on call of the Board of Directors or on call of the holders of at least ten
percent (10%) of all the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting if such holders sign, date and
deliver to the Secretary one or more written demand(s) for the meeting. Any
written demand for a meeting shall state the purpose(s) of the proposed meeting
and only business within such purpose(s) described in the notice may be
conducted at such meeting.
Section 3.04. Notice of Meetings - Waiver. Written notice stating the
place, date and time of the meeting, and in case of a special meeting, the
purpose(s) for which the meeting is called, shall be delivered not less than ten
(10) days or more than sixty (60) days before the date of the meeting, either
personally or by mail, to each shareholder entitled to vote at such meeting.
Only the shareholders whose names appear on the stock transfer books at the
close of business the day before the first notice is delivered to shareholders
shall be entitled to notice of and to vote at such meeting, notwithstanding the
transfer of shares thereafter.
The corporation shall give notice to shareholders not entitled to vote in
any instance where such notice is required by the provisions of the Mississippi
Business Corporation Act. A shareholder may waive notice before or after the
date and time stated in the notice. The waiver must be in writing, must be
3
<PAGE>
signed by the shareholder entitled to notice and must be delivered to the
corporation for inclusion in the minutes or filing with the corporate records.
A shareholder's attendance at a meeting waives objection to lack of notice or
defective notice of the meeting unless at the beginning of the meeting (or
promptly upon arrival) the shareholder objects to holding the meeting or
transacting business at the meeting. A shareholder's attendance at a meeting
also waives objection to consideration of a particular matter which is not
within the purpose(s) described in the notice unless the shareholder objects
when the matter is presented.
Section 3.05. Record Date. The Board of Directors may fix a record date
for one (1) or more voting groups in order to determine the shareholders
entitled to notice of a shareholders' meeting, to demand a special meeting, to
vote, or to take any other action; provided, that a record date fixed under this
sentence may not be more than seventy (70) days before the meeting or action
requiring a determination of shareholders. The stock transfer books of the
corporation need not be closed. The record date may precede the date on which
the record date is established. A determination of shareholders entitled to
notice of or to vote at a shareholders' meeting is effective for any adjournment
of the meeting unless the Board of Directors fixes a new record date, which it
must do if the meeting is adjourned to a date more than one hundred twenty (120)
days after the date fixed for the original meeting.
Section 3.06. Shares Held by Nominees. The corporation may establish a
procedure by which the beneficial owner of shares that are registered in the
name of a nominee is recognized by the corporation as the shareholder. The
extent of this recognition may be determined in the procedure.
Section 3.07. Shareholders' List. After fixing a record date for a
meeting, the corporation shall prepare an alphabetical list of the names of all
its shareholders who are entitled to notice of shareholders' meeting. The list
shall be arranged by voting group, and within each voting group by class or
series of shares, and show the address of and number of shares held by each
shareholder. The shareholders' list must be available for inspection by any
shareholder, beginning two (2) business days after notice of the meeting is
given for which the list was prepared and continuing through the meeting, at the
corporation's principal office or at a place identified in the meeting notice in
the city where the meeting will be held. A shareholder, his or her agent or
attorney is entitled on written demand to inspect and, subject to the
requirements of Section 79-4-16.02(c) of the Mississippi Business Corporation
Act, to copy the list during regular business hours and at his or her expense,
during the period it is available for inspection. The corporation shall make
the shareholders' list available at the meeting, and any shareholder, his or her
agent or attorney, is entitled to inspect the list at any time during the
meeting or any adjournment.
4
<PAGE>
Section 3.08. Quorum. Unless otherwise required by law or the Articles of
Incorporation, a majority of the votes entitled to be cast on the matter by a
voting group, represented in person or by proxy, shall constitute a quorum at a
meeting of shareholders for action on that matter. Holders of shares entitled
to vote as a separate voting group may take action on a matter at a meeting only
if a quorum of those shares exists with respect to that matter. Once a share is
represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and any adjournment thereof unless a
new record date is or must be set for the adjourned meeting of shareholders for
action on that matter. The shareholders present at a duly organized meeting may
continue to do business until adjournment, notwithstanding the withdrawal of a
number of shareholders so that less than a quorum remains. A meeting may be
adjourned despite the absence of a quorum.
Section 3.09. Meaning of Certain Terms. As used herein in respect to the
right to notice of a meeting of shareholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the term "share" or "shares" or "shareholder" or
"shareholders" refers to an outstanding share or shares and to a holder or
holders of record of outstanding shares when the corporation is authorized to
issue only one (1) class of shares, and said reference is also intended to
include any outstanding share or shares and any holder or holders of record of
outstanding shares of any class upon which or upon whom the Articles of
Incorporation confer such rights where there are two (2) or more classes or
series of shares or upon which or upon whom the Mississippi Business Corporation
Act confers such rights notwithstanding that the Articles of Incorporation may
provide for more than one (1) class or series of shares, one (1) or more of
which are limited or denied such rights thereunder.
Section 3.10. Proxies and Voting. Except as otherwise provided by law or
the Articles of Incorporation, each outstanding share, regardless of class, is
entitled to one (1) vote on each matter voted on at a shareholders' meeting. A
shareholder may vote either in person or by proxy. A shareholder may appoint a
proxy by signing an appointment form, either personally or by his attorney-in-
fact, and delivering it to the Secretary or other officer of the corporation who
is authorized to tabulate votes. An appointment of a proxy is revocable unless
the appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest. Such an appointment becomes revocable
when the interest is extinguished. No proxy shall be valid after eleven (11)
months from the date of its execution, unless otherwise provided in the proxy.
Unless the Articles of Incorporation provide otherwise, directors shall be
elected by a plurality of the votes cast by the shares entitled to vote in the
election at a meeting in which a quorum is present.
5
<PAGE>
Section 3.11 Conduct of Meeting. Meetings of the shareholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting - the Chairman of the Board, if any, the Vice Chairman of the
Board, if any, the President, a Vice President, if any, or, if none of the
foregoing is in office and present and acting, by a chairman to be chosen by the
shareholders. The Secretary of the corporation, or in his or her absence, an
Assistant Secretary, shall act as secretary of every meeting, but, if neither
the Secretary nor an Assistant Secretary is present, the chairman of the meeting
shall appoint a secretary of the meeting.
Section 3.12. Action Without a Meeting. Action required or permitted by
the Mississippi Business Corporation Act to be taken at a shareholders' meeting
may be taken without a meeting if the action is taken by all the shareholders
entitled to vote on the action. The action must be evidenced by one (1) or more
written consents describing the action taken, signed by all the shareholders
entitled to vote on the action, and delivered to the corporation for inclusion
in the minutes or filing with the corporate records. The corporation must give
any required notice to nonvoting shareholders, if any.
ARTICLE IV.
-----------
Board of Directors
------------------
Section 4.01. Number and Qualifications. A director need not be a
shareholder, a citizen of the United States, or a resident of the state of
Mississippi. The business and affairs of the corporation shall be managed under
the direction of, and all corporate powers shall be exercised by or under the
authority of, its Board of Directors. The Board of Directors of the corporation
shall, effective as of the date of adoption of these Bylaws, consist of twelve
(12) members and thereafter shall consist of such number of members not less
than nine (9) or more than fifteen (15) as determined from time to time by
resolution of a majority of the Board of Directors.
As long as the size of the Board of Directors shall be fixed at twelve (12)
members, the Board shall be divided in three (3) classes of four (4) directors
each, with the Board of Directors designating nominees for each class and the
shareholders of the Company electing the initial directors serving in such
classes to initial terms expiring in the three (3) successive years following
such initial election (Class I-1995, Class II-1996 and Class III-1997). In the
event a different number of directors is established but is nine (9) or more,
the Board of Directors shall be divided into three (3) classes consisting of
equal numbers of directors to the extent possible. The Board of Directors may
fill any vacancies on the Board of Directors, pursuant to Section 4.04 hereof,
designating new directors to one (1) of the three (3)
6
<PAGE>
classes of directors. At each annual meeting of the shareholders following such
initial election, the number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office until
the third succeeding annual meeting after their election or until their earlier
retirement from the Board. Any vacancy arising from the earlier retirement of a
director shall be filled by vote of the Board, and the term of any such director
shall be for the balance of the term of the retiring director.
Section 4.02. Election. At each annual meeting at which directors are
elected, directors shall be elected by a plurality of the votes cast by the
shares entitled to vote in the election. Each director shall hold office for
the term for which he or she is elected and until his or her successor shall be
elected and qualified.
Section 4.03. Removal of Directors. The directors or the shareholders may
remove one (1) or more director(s) only for cause, as defined in the Articles of
Incorporation. A director may be removed only if the number of votes cast to
remove the director exceeds the number of votes cast not to remove the director.
A director may be removed by the shareholders or directors only at a meeting
called for the purpose of removing the director, and the meeting notice must
state that the purpose or one of the purposes of the meeting is the removal of
directors.
Section 4.04. Vacancies. Unless the Articles of Incorporation provide
otherwise, if a vacancy occurs in the Board of Directors, including a vacancy
resulting from an increase in the number of directors:
(a) the Board of Directors may fill the vacancy; or
(b) if the directors remaining in office constitute fewer than a
quorum of the Board, they may fill the vacancy by the affirmative
vote of a majority of all the directors remaining in office.
A decrease in the number of directors does not shorten an incumbent director's
term. A vacancy that will occur at a specified later date may be filled before
the vacancy occurs, but the new director may not take office until the vacancy
occurs.
Section 4.05. Place of Meeting. Meetings of the Board of Directors,
regular or special, may be held either in or out of the state of Mississippi.
Section 4.06. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice of the date, time, place or purpose of the
meeting.
7
<PAGE>
Section 4.07. Special Meetings. Special meetings of the Board of
Directors may be held upon notice. Unless the Articles of Incorporation provide
for a longer or shorter period, special meetings of the Board of Directors must
be preceded by a least two (2) days' notice of the date, time and place of the
meeting. The notice need not describe the purpose of the special meeting unless
required by the Articles of Incorporation. Attendance in person at or
participation in a special meeting waives any required notice of the meeting
unless at the beginning of the meeting (or promptly upon arrival) the director
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote for or assent to action taken at the meeting. Notice of any
meeting of the Board of Directors may be waived before or after the date and
time stated in the notice if in writing, signed by the director entitled to the
notice, and filed with the minutes or corporate records.
Section 4.08. Quorum and Voting. A quorum of the Board shall consist of a
majority of the directors in office immediately before the meeting begins. If a
quorum is present when a vote is taken, the affirmative vote of a majority of
directors present is the act of the Board. A director who is present at a
meeting of the Board when corporate action is taken is deemed to have assented
to the action taken unless:
(a) he or she objects at the beginning of the meeting (or promptly
upon arrival) to holding the meeting or transacting business at
the meeting;
(b) his or her dissent or abstention from the action taken is entered
in the minutes of the meeting; or
(c) he or she delivers written notice of dissent or abstention to the
presiding officer of the meeting before its adjournment or to the
corporation immediately after adjournment of the meeting.
The right of dissent or abstention is not available to a director who votes in
favor of the action taken.
Section 4.09. Conduct of Meetings. The Board of Directors may permit any or
all directors to participate in a regular or special meeting by, or conduct the
meeting through use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. A director
who so participates in a meeting is deemed to be present in person at the
meeting.
Section 4.10. Committees of the Board. Unless the Articles of Incorporation
provide otherwise, the Board of Directors may create one or more committees and
appoint members of the Board of Directors to serve on them. Each committee must
have two (2) or more members, who shall serve at the pleasure of the Board of
8
<PAGE>
Directors. The creation of a committee and appointment of members to it must be
approved by a majority of all the directors in office when the action is taken.
The requirements applicable to the Board of Directors with regard to meetings,
action without meetings, notice and waiver of notice, and quorum and voting
requirements apply to committees and their members as well. The Board of
Directors may delegate to such committee(s) all such authority of the Board that
it deems desirable except the authority to:
(a) authorize distributions;
(b) approve or propose to the shareholders action required to be
approved by shareholders;
(c) fill vacancies on the Board of Directors or on any of its
committees;
(d) amend the Articles of Incorporation;
(e) adopt, amend or repeal Bylaws;
(f) approve a plan of merger not requiring shareholder approval;
(g) authorize or approve reacquisition of shares, except according to
a formula or method prescribed by the Board of Directors; or
(h) authorize or approve the issuance or sale or contract for sale of
shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares,
except that the Board of Directors may authorize a committee to
do so within limits specifically prescribed by the Board of
Directors.
Section 4.11. Action Without Meeting. Action required or permitted
by the Mississippi Business Corporation Act to be taken at a Board of Directors'
meeting may be taken without a meeting if the action is taken by all members of
the Board. The action must be evidenced by one (1) or more written consents
describing the action taken, signed by each director, and included in the
minutes or filed with the corporate records reflecting the action taken. Action
taken under this paragraph is effective when the last director signs the
consent, unless the consent specifies a different prior or subsequent effective
date.
ARTICLE V.
----------
Officers
--------
9
<PAGE>
Section 5.01. Officers. The officers of the corporation shall consist of a
Chairman of the Board, Vice Chairman of the Board, President and Secretary and,
as deemed appropriate by the Board of Directors, a Chief Executive Officer,
Chief Operating Officer, Chief Financial Officer, General Counsel, Treasurer,
one (1) or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and
such other officers and assistant officers and agents as may be deemed necessary
by the Board of Directors. Any two (2) or more offices may be held by the same
person. The Board of Directors shall delegate to one (1) of the officers the
responsibility of preparing minutes of directors' and shareholders' meetings and
of authenticating records of the corporation. Officers need not be directors or
shareholders of the corporation.
Section 5.02. Vacancies. Vacancies occurring in any office shall be filled
by the Board of Directors at any regular or special meeting.
Section 5.03. The Chairman and Vice Chairman of the Board. The Chairman of
the Board shall preside at all meetings of the Board of Directors. The Vice
Chairman shall act as chairman in the absence of or in the capacity of the
Chairman.
Section 5.04. The President. The President shall be responsible for the
active, executive management and supervision of the operations of the
corporation and shall perform such duties as the Board of Directors may
prescribe or his or her capacity as President by custom may provide.
Section 5.05. The Vice President. Vice Presidents shall perform such duties
as the Board of Directors may prescribe. Each Vice President shall report to the
President or his or her delegate who shall be responsible for the Vice
President's actions.
Section 5.06. The Secretary. The Secretary shall attend all meetings of the
shareholders and of the Board of Directors, and shall keep a true and complete
record of the proceedings of these meetings. The Secretary shall be custodian of
the records of the corporation and shall attend to the giving of all notices,
attest, when requested, to the authority of the President or other officers, as
revealed by the minutes or these Bylaws, to execute legal documents binding the
corporation, and shall perform such other duties as these Bylaws may provide or
the Board of Directors may prescribe.
Section 5.07. The Chief Financial Officer. The Chief Financial Officer
shall keep correct and complete records of account, showing accurately at all
times the financial condition and results of operations of the corporation. The
Chief Financial Officer shall be the legal custodian of all moneys, notes,
securities and other valuables that may from time to time come into the
possession of the corporation. The Chief Financial Officer shall immediately
deposit all funds of the corporation coming into
10
<PAGE>
his or her hands in some reliable bank or other depository to be designated by
the Board of Directors, and shall keep this bank account in the name of the
corporation. The Chief Financial Officer shall furnish at meetings of the Board
of Directors, or whenever requested, a statement of the financial condition and
results of operations of the corporation, and shall perform such other duties as
these Bylaws may provide or the Board of Directors may prescribe. The Chief
Financial Officer may be required to furnish bond in such amount as shall be
determined by the Board of Directors.
Section 5.08. Other Officers. The duties of other officers elected by the
Board of Directors shall be such as are customary to their respective offices
and as shall be assigned to them by the President.
Section 5.09. Resignation and Removal. An officer may resign at any time by
delivering notice to the corporation. A resignation is effective when the notice
is delivered unless the notice specifies a later effective date. If a
resignation is made effective at a later date and the corporation accepts the
future effective date, the Board of Directors may fill the pending vacancy
before the effective date provided the successor does not take office until the
effective date. The Board of Directors may remove any officer at any time with
or without cause and any officer or assistant officer, if appointed by another
officer, may likewise be removed by such officer.
ARTICLE VI.
-----------
Registered Office And Agent
---------------------------
The address of the initial registered office of the corporation and the
name of the initial registered agent of the corporation are set forth in the
original Articles of Incorporation.
ARTICLE VII.
------------
Fiscal Year
-----------
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE VIII.
-------------
Amendments
----------
These Bylaws may be altered, amended or repealed and new Bylaws adopted by
the affirmative vote of the holders of a majority
11
<PAGE>
of the outstanding stock at any regular meeting of the shareholders or special
meeting called for the purpose, or by the affirmative vote of a majority of the
entire Board of Directors at any regular or special meeting of the Board, unless
the shareholders in amending or repealing a particular Bylaw provide expressly
that the Board of Directors may not amend or repeal that Bylaw; provided,
however, that the Board of Directors may not amend these Bylaws to take any
action which is reserved exclusively by the shareholders pursuant to the
Mississippi Business Corporation Act. If any shareholder or director, as the
case may be, should object to the consideration of any proposed amendment, the
proposal may not be voted upon unless notice of the proposed amendment was given
at least ten (10) days prior to the meeting at which such objecting shareholder
or director is entitled to vote. Any amendment, modification, repeal or
addition to these Bylaws adopted by the Board of Directors may be amended or
repealed by the shareholders.
A Bylaw that fixes a greater quorum or voting requirement for the Board of
Directors may be amended or repealed:
(a) if originally adopted by the shareholders, only by the shareholders;
or
(b) if originally adopted by the Board of Directors, either by the
shareholders or the Board of Directors.
Action by the Board of Directors to adopt or amend a Bylaw originally
adopted by the Board of Directors fixing a greater quorum or voting requirement
must meet the same quorum requirement and be adopted by the same vote required
to take action under the quorum and voting requirement then in effect or
proposed to be adopted, whichever is greater. The Board is without authority to
amend this Article VIII.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of
the Bylaws of MISSISSIPPI CHEMICAL CORPORATION, a corporation of the state of
Mississippi, as in effect on the date hereof.
Dated: May 23, 1994
/s/ Rosalyn B. Glascoe
--------------------------------
Secretary of
MISSISSIPPI CHEMICAL CORPORATION
(SEAL)
12
<PAGE>
Exhibit 4.30
MISSISSIPPI CHEMICAL CORPORATION
1994 STOCK INCENTIVE PLAN
-------------------------
1. Purpose. The purpose of the 1994 Stock Incentive Plan the
("Plan") is to enable Mississippi Chemical Corporation (the "Company") to offer
officers and other key employees of the Company and its subsidiaries
performance-based incentives and other equity interests in the Company, thereby
attracting, retaining and rewarding such employees and strengthening the
mutuality of interest between the Employees and the Company's shareholders.
2. Administration. The Plan shall be administered by a committee
(the "Committee") which shall be the Compensation Committee of the Board of
Directors or another committee consisting of not less than two directors of the
Company appointed by the Board of Directors, none of whom shall be eligible to
participate in this Plan and all of whom shall qualify as disinterested persons
within the meaning of Securities and Exchange Commission Regulation Section
240.16b-3 or any successor regulation. The Committee may delegate to the Chief
Executive Officer of the Company the administration of benefits granted to non-
officer participants.
3. Eligibility. Benefits under the Plan shall be granted only to
officers and other key employees of the Company
<PAGE>
and its subsidiaries selected initially and from time-to-time thereafter by the
Committee on the basis of the special importance of their services in the
management, development and operations of the Company and its subsidiaries. For
these purposes, any corporation, partnership or other entity in which the
Company has a significant financial interest may qualify as a subsidiary.
4. Benefits. The benefits awarded under the Plan shall consist of
(a) stock options, (b) stock appreciation rights, and (c) stock awards.
5. Shares Reserved. There is hereby reserved for issuance under the
Plan an aggregate of 1,800,000 shares of common stock of the Company which may
be authorized but unissued or Treasury shares. All of such shares may, but need
not, be issued pursuant to the exercise of incentive stock options. The maximum
number of option shares which may be awarded to any participant in any fiscal
year during the term of the Plan is 200,000 shares. No more than 160,000 shares
may be issued as stock awards during the term of the Plan. If there is a lapse,
expiration, termination or cancellation of any option prior to the issuance of
shares thereunder or if shares are issued and thereafter are reacquired by the
Company pursuant to rights reserved upon issuance thereof, those shares may
again be used for new awards under this Plan.
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<PAGE>
6. Stock Options. Stock options shall consist of options to purchase
shares of common stock of the Company and shall be either incentive stock
options or non-qualified stock options as determined by the Committee. The
option price shall be not less than 100% of the fair market value of the shares
on the date the option is granted and the price may be paid by check or, in the
discretion of the Committee, by the delivery of shares of common stock of the
Company then owned by the participant. Stock options shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Committee at grant; provided, however, that no stock option
shall be exercisable prior to six months after the option grant date nor later
than ten years after the grant date. The aggregate fair market value
(determined as of the time the option is granted) of the shares of common stock
with respect to which incentive stock options are exercisable for the first time
by a participant during any calendar year (under all option plans of the Company
and its subsidiaries) shall not exceed $100,000.
7. Stock Appreciation Rights. Stock appreciation rights may be
granted to the holder of any stock option granted hereunder and shall be subject
to such terms and conditions consistent with the Plan as the Committee shall
impose from time to time, including the following:
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<PAGE>
(a) A stock appreciation right may be granted with respect to a stock
option at the time of its grant or at any time thereafter up to six months
prior to its expiration.
(b) Stock appreciation rights will permit the holder to surrender any
related stock option or portion thereof which is then exercisable and elect
to receive in exchange therefor cash in an amount equal to:
(i) The excess of the fair market value on the date of such
election of one share of common stock over the option price,
multiplied by
(ii) The number of shares covered by such option or portion
thereof which is so surrendered.
(c) The Committee shall have the discretion to satisfy a participant's
right to receive the amount of cash determined under paragraph (b) hereof
in whole or in part by the delivery of common stock of the Company valued
as of the date of the participant's election.
(d) In the event of the exercise of a stock appreciation right, the
number of shares reserved for
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<PAGE>
issuance hereunder shall be reduced by the number of shares covered by the
stock option or portion thereof surrendered.
8. Stock Awards. Stock awards will consist of common stock
transferred to participants without other payment therefor as additional
compensation for their services to the Company or one of its subsidiaries. A
stock award shall be subject to such terms and conditions as the Committee
determines appropriate including, without limitation, restrictions on the sale
or other disposition of such shares, the right of the Company to reacquire such
shares upon termination of the participant's employment within specified periods
and conditions requiring that the shares be earned in whole or in part upon the
achievement of performance goals established by the Committee over a designated
period of time. The goals established by the Committee may include earnings per
share, total return on shareholder equity, or such other goals as may be
established by the Committee in its discretion.
9. Non-transferability. Stock options and other benefits granted
under this Plan shall not be transferable other than by will or the laws of
descent and distribution and each stock option and stock appreciation right
shall be exercisable during the participant's lifetime only by the participant
or the participant's guardian or legal representative.
-5-
<PAGE>
10. Change in Control. In the event of a change in control of the
Company, all outstanding stock options and stock appreciation rights shall
become immediately exercisable and all stock awards shall immediately vest with
all performance goals deemed fully achieved. For these purposes, change in
control shall mean the occurrence of any of the following events, as a result of
one transaction or a series of transactions:
(a) any "person" (as that term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, but excluding the Company, its
affiliates and any qualified or non-qualified plan maintained by the
Company or its affiliates) becomes the "beneficial owner" (as defined in
Rule 13d-3 promulgated under such Act), directly or indirectly, of
securities of the Company representing more than 20% of the combined voting
power of the Company's then outstanding securities;
(b) individuals who constitute a majority of the Board of Directors of
the Company immediately prior to a contested election for positions on the
Board cease to constitute a majority as a result of such contested
election;
-6-
<PAGE>
(c) the Company is combined (by merger, share exchange, consolidation,
or otherwise) with another corporation and as a result of such combination,
less than 75% of the outstanding securities of the surviving or resulting
corporation are owned in the aggregate by the former shareholders of the
Company; or
(d) the Company sells, leases, or otherwise transfers all or
substantially all of its properties or assets to another person or entity.
11. Other Provisions. The award of any benefit under the Plan may
also be subject to other provisions (whether or not applicable to the benefit
awarded to any other participant) as the Committee determines appropriate,
including such provisions as may be required to comply with federal or state
securities laws and stock exchange requirements and understandings or conditions
as to the participant's employment.
12. Fair Market Value. The fair market value of the Company's common
stock at any time shall be determined in such manner as the Committee may deem
equitable or as required by applicable law or regulation.
-7-
<PAGE>
13. Adjustment Provisions.
---------------------
(a) If the Company shall at any time change the number of issued
shares of common stock without new consideration to the Company (such as by
stock dividend or stock split), the total number of shares reserved for
issuance under this Plan and the number of shares covered by each
outstanding benefit shall be adjusted so that the aggregate consideration
payable to the Company, if any, shall not be changed.
(b) Notwithstanding any other provision of this Plan, and without
affecting the number of shares reserved or available hereunder, the Board
of Directors may authorize the issuance or assumption of benefits in
connection with any merger, consolidation, acquisition of property or
stock, or reorganization upon such terms and conditions as it may deem
appropriate.
(c) In the event of any merger, consolidation or reorganization of the
Company with any other corporation, there shall be substituted, on an
equitable basis as determined by the Committee, for each share of common
stock then reserved for issuance under the Plan and for each share of
common stock then subject to a benefit granted under the Plan, the number
-8-
<PAGE>
and kind of shares of stock, other securities, cash or other property to
which holders of common stock of the Company will be entitled pursuant to
the transaction.
14. Taxes. The Company shall be entitled to withhold the amount of
any tax attributable to any shares deliverable under the Plan after giving the
person entitled to receive the shares notice as far in advance as practicable
and the Company may defer making delivery as to any benefit if any such tax is
payable until indemnified to its satisfaction. The Committee may, in its
discretion and subject to rules which it may adopt, permit a participant to pay
all or a portion of the taxes arising in connection with any benefit under the
Plan by electing to have the Company withhold shares of common stock from the
shares otherwise deliverable to the participant, having a fair market value
equal to the amount to be withheld.
15. Term of Program; Amendment, Modification or Cancellation of
Benefits. No benefit shall be granted more than ten years after the date of the
approval of this Plan by the shareholders of the Company; provided, however,
that the terms and conditions applicable to any benefits granted prior to such
date may at any time be amended or cancelled by mutual agreement between the
Committee and the participant or any other persons as may then have an interest
therein and may be unilaterally
-9-
<PAGE>
modified by the Committee whenever such modification is deemed necessary to
protect the Company or its shareholders.
16. Amendment or Discontinuation of Plan. The Board of Directors may
amend the Plan at any time, provided that no such amendment shall be effective
unless approved within 12 months after the date of the adoption of such
amendment by the affirmative vote of a majority of the shareholders entitled to
vote if such shareholder approval is required for the Plan to continue to comply
with the requirements of Securities and Exchange Commission Regulation Section
240.16b-3. The Board of Directors may suspend the Plan or discontinue the Plan
at any time; provided, however, that no such action shall adversely affect any
outstanding benefit.
17. Shareholder Approval. The Plan was adopted by the Board of
Directors on August 2, 1994, subject to shareholder approval. The Plan and any
benefits granted thereunder shall be null and void if shareholder approval is
not obtained at the next annual meeting of shareholders.
-10-
<PAGE>
===============================================================================
MISSISSIPPI CHEMICAL CORPORATION
and
HARRIS TRUST AND SAVINGS BANK
Rights Agent
---------------------
Rights Agreement
Dated as of August 2, 1994
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
1. Certain Definitions.................................................. 1
2. Appointment of Rights Agent.......................................... 6
3. Issue of Rights Certificates......................................... 6
4. Form of Rights Certificates.......................................... 7
5. Countersignature and Registration.................................... 8
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates............ 8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights........ 9
8. Cancellation and Destruction of Rights Certificates.................. 11
9. Reservation and Availability of Preferred Stock...................... 11
10. Preferred Stock Record Date.......................................... 13
11. The Flip-In.......................................................... 13
12. The Flip-Over........................................................ 16
13. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights.............................................................. 19
14. Fractional Rights and Fractional Shares.............................. 24
15. Rights of Action..................................................... 25
16. Agreement of Rights Holders.......................................... 25
17. Rights Holder Not Deemed a Shareholder............................... 26
18. Concerning the Rights Agent.......................................... 26
19. Merger or Consolidation or Change of Name of Rights Agent............ 26
20. Duties of Rights Agent............................................... 27
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
21. Change of Rights Agent............................................... 29
22. Issuance of New Rights Certificates.................................. 30
23. Redemption and Termination........................................... 30
24. Exchange............................................................. 31
25. Notice of Certain Events............................................. 32
26. Notices.............................................................. 33
27. Supplements and Amendments........................................... 34
28. Successors........................................................... 34
29. Benefits of this Agreement........................................... 34
30. Severability......................................................... 34
31. Governing Law........................................................ 34
32. Counterparts......................................................... 35
33. Descriptive Headings................................................. 35
</TABLE>
EXHIBITS
--------
EXHIBIT A -- Form of Certificate of Designation, Preferences and
Rights
EXHIBIT B -- Forms of Rights Certificates
EXHIBIT C -- Form of Rights Summary
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<PAGE>
RIGHTS AGREEMENT
Rights Agreement, dated as of _______________, 1994 (the "Agreement"),
between MISSISSIPPI CHEMICAL CORPORATION, a Mississippi corporation (the
"COMPANY"), and HARRIS TRUST AND SAVINGS BANK, (the "RIGHTS AGENT").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on August 2, 1994, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) payable on August 15, 1994 for each outstanding share of common stock,
par value $0.01 per share, of the Company (the "COMMON STOCK") outstanding on
August 5, 1994 (the "Record Date"), and the issuance of one Right for each share
of Common Stock of the Company issued between the Record Date and the Separation
Date (as hereinafter defined) and one Right for each share of Common Stock of
the Company issued upon exercise of stock options granted prior to the
Separation Date or under any employee plan or arrangement established prior to
the Separation Date, each Right representing the right to purchase one one-
hundredth of a share of Preferred Stock, Series A of the Company having the
rights, powers and preferences set forth in the form of Certificate of
Designation, Preferences and Rights attached hereto as Exhibit A, upon the terms
and subject to the conditions hereinafter set forth (the "RIGHTS");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as hereinafter
defined) and Associates (as hereinafter defined) of such Person, shall be the
Beneficial owner (as hereinafter defined) of 15% or more of the shares of Common
Stock then outstanding and shall include all Affiliates and Associates of such
Person, but shall not include the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company or any
entity holding shares of Common Stock organized, appointed or established by the
Company for or pursuant to the terms of any such plan.
(b) "AFFILIATE" shall mean, with respect to a specified Person, a
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the Person specified.
<PAGE>
(c) "APPROVED ACQUIRING PERSON" shall mean an Acquiring Person who
becomes such by virtue of the acquisition of Common Stock directly from the
Company, and an Approved Acquiring Person shall cease to be such if thereafter
the Approved Acquiring Person (i) ceases to be the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding, or (ii) takes any
affirmative action to increase its proportionate share of the outstanding Common
Stock in one transaction or a series of transactions by more than 5% of the
aggregate number of shares of Common Stock then outstanding without the prior
approval of a majority of the Continuing Directors; provided that except as
provided in clause (i) hereof, an Approved Acquiring Person shall not lose its
status as such as a result of any actions taken by the Company which change the
number of shares of Common Stock outstanding.
(d) "ASSOCIATE" shall mean, with respect to a specified Person, (i)
any corporation or organization (other than the Company or a Subsidiary of the
Company) of which such Person is an officer, director or partner or is, directly
or indirectly, the beneficial owner of 10% or more of any class of equity
security as defined in Rule 3a-11 of the General Rules and Regulations under the
Exchange Act, (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity, and (iii) any relative or spouse of such
Person, or any relative of such spouse, who has the same home as such Person, or
is an officer or director of any corporation controlling or controlled by such
Person.
(e) "BENEFICIAL OWNERSHIP" shall be determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Securities Exchange Act of 1934
(or any successor rule or statutory provision) or, if Rule 13d-3 shall be
rescinded and there shall be no successor rule or statutory provision thereto,
pursuant to Rule 13d-3 as in effect on the date hereof; provided, however, that
a Person shall, in any event, also be deemed to be the "Beneficial Owner" of any
securities:
(i) which such Person or any Affiliate or Associate thereof
beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate thereof,
directly or indirectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by or on behalf of
such Person or any Affiliate or Associate thereof until the tendered
securities are accepted for purchase or exchange, or (B) securities
issuable upon exercise of the Rights;
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<PAGE>
(iii) which such Person or any Affiliate or Associate thereof,
directly or indirectly, has sole or shared voting or investment power with
respect thereto pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall not be
deemed the "Beneficial Owner' of, or to "beneficially own," any security
under this subparagraph (iii) as a result of an agreement, arrangement or
understanding to vote such security if the agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in response to
a public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the General Rules and Regulations under
the Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act; or
(iv) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate or Associate thereof with which such Person
or any Affiliate or Associate thereof has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in
subparagraph (iii) of this paragraph (e)) or disposing of any voting
securities of the Company.
Nothing in this Section 1(e) shall cause a Person engaged in business
as an underwriter to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired through such Person's participation in good faith in a firm
commitment underwriting until the expiration of 40 days after the date of such
acquisition.
(f) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of Mississippi are
authorized or obligated by law or executive order to close.
(g) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M.,
Jackson, Mississippi time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Jackson, Mississippi time, on the
next succeeding Business Day.
(h) "CLOSING PRICE" of any security on any given day shall be the
last sale price, regular way, of such security or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
on the principal trading market on which such security is then traded.
(i) "COMMON STOCK" shall mean the common stock, par value $0.01 per
share, of the Company, and "common stock" when used with reference to any Person
other than the Company shall mean the capital stock with the greatest voting
power, or the equity securities or other equity interest having power to control
or direct the management, of such Person.
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<PAGE>
(j) "CONTINUING DIRECTOR" shall mean any director of the Company who
is not an Acquiring Person or a representative or nominee of an Acquiring
Person, and (i) who was elected by the stockholders or appointed by the Board of
Directors of the Company prior to the date as of which the Acquiring Person
became an Acquiring Person, or (ii) who was designated (before his initial
election or appointment as a director) as a Continuing Director by a majority of
the Continuing Directors.
(k) "CURRENT MARKET PRICE" of any security on any given day shall be
deemed to be the average of the daily Closing Prices per share or other trading
unit of such security for 10 consecutive Trading Days (as hereinafter defined)
immediately preceding such date; provided, however, that with respect to shares
of capital stock, in the event that the current market price per share of the
capital stock is determined during a period following the announcement of (i) a
dividend or distribution on the capital stock payable in shares of such capital
stock or securities convertible into shares of such capital stock (other than
the Rights), or (ii) any subdivision, combination or reclassification of the
capital stock, and prior to the expiration of the requisite 10 Trading Day
period, as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then and in each such case, the Current Market Price, shall be
properly adjusted to take into account ex-dividend trading; and provided further
that if the security is not publicly held or not so listed or traded, Current
Market Price per share or other trading unit shall mean the fair value per share
or other trading unit as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(l) "EQUIVALENT PREFERRED STOCK" shall mean any class or series of
capital stock of the Company, other than the Preferred Stock, which is entitled
to participate on a proportional basis with the Preferred Stock in dividends and
other distributions, including distributions upon the liquidation, dissolution
or winding up of the Company. In calculating the number of shares any class or
series of Equivalent Preferred Stock for purposes of Section 13 of this
Agreement, the number of shares or fractions of Equivalent Preferred Stock that
are entitled to the same dividend or distribution as a whole share of Preferred
Stock shall be deemed to be one share.
(m) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement, and all references to any
rule or regulation of the General Rules and Regulations under the Exchange Act
shall be, except as otherwise specifically provided herein, to such rule or
regulation as was in effect on the date of this Agreement.
(n) "EXCHANGE DATE" shall mean the date at which the rights are
exchanged as provided in Section 24 of this Agreement.
(o) "EXPIRATION DATE" shall mean the Close of Business on August 15,
2004 subject to extension as provided in Section 12(c) of this Agreement.
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<PAGE>
(p) "FLIP-IN EVENT" shall mean any of the events described in Section
11(a) of this Agreement.
(q) "FLIP-OVER EVENT" shall mean any of the events described in
Section 12(a) of this Agreement.
(r) "PERSON" shall mean any individual, firm, corporation,
partnership or other entity and shall include any "group" as that term is used
in Rule 13d-5(b) under the Exchange Act.
(s) "PURCHASE PRICE" shall mean with respect to each Right, the price
set forth in Section 7(b) of this Agreement.
(t) "PREFERRED STOCK" shall mean shares of Preferred Stock, Series A
par value $0.01 per share, of the Company.
(u) "REDEMPTION DATE" shall mean the time at which the Rights are
ordered to be redeemed pursuant to Section 23 of this Agreement.
(v) "SEPARATION DATE" shall mean the earlier of (i) the tenth day
after the Stock Acquisition Date (as hereinafter defined) or (ii) the tenth day
after the date of the commencement of, or first public announcement of the
intent to commence, a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any Subsidiary of the Company or any entity holding shares of Common Stock
organized, appointed or established by the Company for or pursuant to the terms
of any such plan), if upon consummation thereof, such Person would be the
Beneficial Owner of 25% or more of the shares of Common Stock then outstanding
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights).
(w) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement by the Company, an Acquiring Person or otherwise, that an Acquiring
Person, other than an Approved Acquiring Person, has become such.
(x) "SUBSIDIARY" shall mean, with reference to any Person, any
corporation of which a majority of any class of equity security is Beneficially
Owned, directly or indirectly, by such Person.
(y) "TRADING DAY," with respect to any security shall mean a day on
which the principal national securities exchange on which the security is listed
or admitted to trading is open for the transaction of business or, if the
security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(z) "TRIGGERING EVENT" shall mean a Flip-In Event or a Flip-Over
Event.
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<PAGE>
(aa) "WHOLE BOARD" shall mean the total number of directors which the
Company would have if there were no vacancies.
Any determination required by the definitions contained in this Section 1
shall be made by the Board of Directors of the Company in its good faith
judgment, which determination shall be final and binding on the Rights Agent.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 of this Agreement, shall prior to the
Separation Date also be the holders of the Common Stock) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the Separation Date, (i) the Rights will be evidenced by
the certificates for the Common Stock registered in the names of the holders of
the Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (ii) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company).
(b) As soon as practicable after the Separation Date, the Rights
Agent will send by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the Separation Date,
at the address of such holder shown on the records of the Company, a Rights
certificate (the "RIGHTS CERTIFICATE"), evidencing one Right (as adjusted from
time to time prior to the Separation Date pursuant to this Agreement) for each
share of Common Stock so held. As of and after the Separation Date, the Rights
will be evidenced solely by Rights Certificates.
(c) As soon as practicable after the Record Date, the Company will
send a copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit C (the "SUMMARY OF RIGHTS"), by first-class, postage prepaid mail to
each record holder of the Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the Company.
(d) Certificates for the Common Stock issued after the Record Date
but prior the earlier of the Separation Date or the Expiration Date (as
hereinafter defined), shall be deemed also to be certificates for Rights, and
shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Mississippi
Chemical Corporation (the "Company") and Harris Trust and Savings
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<PAGE>
Bank, dated as of August 2, 1994 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which is on
file at the principal offices of the Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written request
therefor. Under certain circumstances, Rights beneficially owned by
Acquiring Persons (as defined in the Rights Agreement) become null and void
and the holder of such Rights (including any subsequent holder) shall not
have any right to exercise the Rights.
(e) After the Separation Date but prior to the Expiration Date,
Rights shall be issued in connection with the issuance of Common Stock upon the
exercise of stock options granted prior to the Separation Date or pursuant to
other benefits under any employee plan or arrangement established prior to the
Separation Date; provided, however, that if, pursuant to the terms of any option
or other benefit plan, the number of shares issuable thereunder is adjusted
after the Separation Date, the number of Rights issuable upon issuance of the
shares shall be equal only to the number of shares which would have been
issuable prior to the adjustment.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to purchase
shares and form of assignment) shall be in substantially the form attached
hereto as Exhibit B and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed or to conform to
usage. Subject to the provisions of this Agreement, the Rights Certificates,
whenever issued, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of shares of Preferred Stock
which shall be set forth therein at the Purchase Price set forth therein,
subject to adjustment as provided in this Agreement.
(b) Any Rights Certificate issued pursuant to Section 3(a) of this
Agreement that represents Rights beneficially owned by an Acquiring Person or
that represents any Rights owned on or after the Separation Date by any Person
who subsequently becomes an Acquiring Person and any Rights Certificate issued
at any time upon the transfer of any Rights to an Acquiring Person or to any
nominee of such Acquiring Person and any Rights Certificate issued pursuant to
Section 6 or Section 13 of this Agreement upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to in this sentence, may
contain the following legend:
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The Rights represented by this Rights Certificate were issued to a
Person who was or became an Acquiring Person. This Rights Certificate and
the Rights represented hereby may become void in the circumstances
specified in Section 7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by the Chairman of its Board of Directors, its President or any Vice
President, either manually or by facsimile signature and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. Each Rights Certificate shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Separation Date, the Rights Agent will keep or
cause to be kept, at one of its offices, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced by each of the Rights Certificates, and the certificate number
and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 14 of this Agreement, at any
time after the Close of Business on the Separation Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate or Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase a like
number of shares of Preferred Stock (or other securities, cash or other
property, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the
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principal office of the Rights Agent designated for such purpose. Thereupon,
the Rights Agent shall countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Separation Date and prior to the earliest of the Expiration Date, the Exchange
Date and the Redemption Date, one one-hundredth share of Preferred Stock,
subject to adjustment from time to time as provided in Section 13 of this
Agreement, payable in lawful money of the United States of America in accordance
with Paragraph (c) below.
(b) Subject to Section 7(e), Section 23(a) and Section 24 of this
Agreement, the registered holder of any Rights Certificate may exercise the
Rights evidenced thereby in whole or in part at any time after the Separation
Date upon surrender of the Rights Certificate, with the form of election to
purchase on the reverse side thereof including the certificate contained therein
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth share of
Preferred Stock as to which the Rights are exercised prior to the earliest of
the Expiration Date, the Exchange Date and the Redemption Date.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase including the certificate
contained therein duly executed, accompanied by payment of the Purchase Price
for the shares (or cash or other assets as the case may be) to be purchased and
an amount equal to any applicable transfer tax in cash, or by certified check or
bank draft payable to the order of the Company, the Rights Agent shall thereupon
promptly:
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(i)(A) requisition from any transfer agent for the Preferred Stock
certificates for the number of one one-hundredths of a share of Preferred
Stock to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) requisition from
the depositary agent depositary receipts representing such number of one
one-hundredths of a share of Preferred Stock as are to be purchased (in
which case certificates for the shares of Preferred Stock represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with such
request;
(ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section 14 of this
Agreement;
(iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be
designated by such holder; and
(iv) after receipt, deliver such cash, if any, to or upon the order of
the registered holder of such Rights Certificate.
In the event that the Company is obligated to issue other securities (including
shares of Common Stock) of the Company, pay cash and/or distribute other
property pursuant to this Agreement, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 6 and Section 14 of this Agreement.
(e) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence of the earlier of (x) the date on which the Board of Directors of
the Company decides to exchange the Rights pursuant to Section 24 of this
Agreement and (y) a Triggering Event, any unexercised Rights that are or were,
at any time on or after the earlier to occur of (i) the Separation Date and (ii)
the Stock Acquisition Date, beneficially owned by an Acquiring Person (other
than an Approved Acquiring Person who is not a party to the Triggering Event) or
owned by any Person who subsequently becomes an Acquiring Person (other than an
Approved Acquiring Person who is not a party to the Triggering Event) shall
immediately become permanently null and void without any further action, and no
holder of such Rights shall have any right whatsoever with respect to such
Rights under this Agreement or otherwise. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and Section 4(b)
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of this Agreement are complied with, but shall have no liability to any holder
of Rights Certificates or to any other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Rights Certificate upon the
occurrence of any purported exercise thereof unless such registered holder shall
have (i) completed and signed the certificate contained in the form of election
to purchase set forth on the reverse side of the Rights Certificate surrendered
for such exercise and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former or proposed Beneficial Owner) or Affiliates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificates purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available at all times out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury, free from preemptive rights or any right of first refusal, the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all Rights from time to time outstanding.
(b) So long as the shares of Preferred Stock issuable upon the
exercise of the Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after the time the Rights
become exercisable, all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to:
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(i) file, as soon as practicable following the earlier of the
Separation Date or as soon as is required by law, a registration statement
under the Securities Act of 1933 (the "Act"), with respect to the Preferred
Stock purchasable upon exercise of the Rights on an appropriate form;
(ii) cause such registration statement to become effective as soon as
practicable after the filing; and
(iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
earliest of (A) the date as of which Rights are no longer exercisable for
such securities, (B) the Expiration Date and (C) the Redemption Date.
The Company will also take all action necessary to ensure compliance with
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statements and permit them to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in that jurisdiction shall have been obtained and, if
applicable, until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
and of any shares of Preferred Stock upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, the issuance or delivery of the shares of Preferred Stock, in respect of a
name other than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or the issuance or delivery of any
certificates for shares of Preferred Stock in a name other than that of, the
registered holder, upon the exercise of any Rights, until such tax shall have
been paid (any such tax being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
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Section 10. Preferred Stock Record Date. Each Person in whose name
any certificate for shares of Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the shares of Preferred Stock represented thereby on, and such certificate shall
be dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock transfer books of the Company are open.
Section 11. The Flip-In. (a) In the event:
(i) any Acquiring Person, directly or indirectly, shall merge into
the Company or otherwise combine with the Company and the Company shall be
the continuing or surviving corporation of such merger or combination and
the Common Stock of the Company shall remain outstanding and unchanged,
except pursuant to a merger or other combination involving an Approved
Acquiring Person which was approved by a majority of the Continuing
Directors; or
(ii) any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any entity organized, appointed or established pursuant to
the terms of such plan) shall become the Beneficial Owner of 20% or more of
the shares of Common Stock then outstanding (except pursuant to an offer
for all outstanding shares of Common Stock at a price and upon such terms
and conditions as a majority of the Continuing Directors determine to be in
the best interests of the Company and its stockholders, other than such
Acquiring Person); or
(iii) any Acquiring Person shall, in one or a series of related
transactions, directly or indirectly, transfer any assets to the Company or
any of its Subsidiaries in exchange (in whole or in part) for shares of
Common Stock or for securities exercisable or exchangeable for, or
convertible into, shares of Common Stock or otherwise obtain from the
Company or any of its Subsidiaries, with or without consideration, any
additional Common Stock or other securities of the Company or securities of
any of its subsidiaries or securities exercisable or exchangeable for, or
convertible into, shares of Common Stock or other securities of the Company
or securities of any of its Subsidiaries (other than an issuance upon
conversion of convertible securities of the Company or any such Subsidiary
that were not acquired from the Company or any such Subsidiary) except
pursuant to a transaction or series of transactions approved by a majority
of the Continuing
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Directors at a time when there are no Acquiring Persons other than Approved
Acquiring Persons; or
(iv) any Acquiring Person shall sell, purchase, lease, exchange,
mortgage, pledge, otherwise transfer or dispose or acquire, from, to, with
or of, the Company or any of its Subsidiaries, assets (including
securities) on terms and conditions less favorable to the Company or such
Subsidiary than the Company or such Subsidiary would be able to obtain in
an arm's-length transaction with an unrelated third party, unless those
transactions are approved by a majority of the Continuing Directors; or
(v) during the time when there is an Acquiring Person, there shall be
any reclassification of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other transaction or series of
transactions involving the Company (whether or not with or into or
otherwise involving an Acquiring Person) which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity securities of the Company or any
of its Subsidiaries which is directly or indirectly owned by any Acquiring
Person, except pursuant to a transaction or series of transactions approved
by a majority of the Continuing Directors at a time when there are no
Acquiring Persons other than Approved Acquiring Persons; or
(vi) any Acquiring Person shall, directly or indirectly, sell,
purchase, lease, exchange, mortgage, pledge, otherwise transfer or acquire
or dispose, in one transaction or a series of related transactions, from,
to, with or of, the Company or any of its Subsidiaries, assets having an
aggregate fair market value (as determined in good faith by a majority of
the Continuing Directors) in excess of 10% or more of the total assets of
the Company as shown on its consolidated balance sheet as of the end of the
most recent fiscal quarter ending prior to the time the determination is
being made to the stockholders of the Company, unless such sale or lease
has been approved by a majority of the Continuing Directors; or
(vii) during the time when there is an Acquiring Person, there shall
be any distribution of assets or securities of the Company or of any of its
Subsidiaries, in one transaction or a series of transactions, having an
aggregate fair market value (as determined in good faith by a majority of
the Continuing Directors) in excess of 10% or more of the total assets of
the Company as shown on its consolidated balance sheet as of the end of the
most recent fiscal quarter ending prior to the time the determination is
being made to the stockholders of the Company, unless the distribution is
approved by a majority of the Continuing Directors; or
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(viii) any Acquiring Person, directly or indirectly, shall receive
management fees or other compensation from the Company or any of its
Subsidiaries other than compensation for full-time employment as a regular
employee or directors' fees on the same basis as the other directors of the
Company or any of its Subsidiaries, or receive the benefit of guarantees or
other financial assistance or tax credits or other tax advantages from the
Company or any of its Subsidiaries, unless those transactions are approved
by a majority of the Continuing Directors; or
(ix) during the time when there is an Acquiring Person, (1) there
shall be any reduction in the annual rate of dividends paid on the Common
Stock (except as necessary or appropriate, in the opinion of a majority of
the Continuing Directors, for valid business reasons, to reflect any
subdivision of the Common Stock or as required under the laws of the
jurisdiction of incorporation of the Company) or (2) there shall be a
failure to increase the annual rate of dividends as necessary to reflect
any reclassification (including any reverse stock split), recapitalization,
combination, reorganization or any similar transaction which has the effect
of reducing the number of shares of outstanding Common Stock (except as
necessary or appropriate, in the opinion of a majority of the Continuing
Directors, for valid business reasons or to the extent such increase in the
rate of dividends would be prohibited under the laws of the jurisdiction of
incorporation of the Company);
then, and in each case, subject to the provisions of Section 24 of this
Agreement, each holder of a Right, except as provided below and in Section 7(e)
of this Agreement, shall thereafter have a right to receive, upon exercise of
the Right at the then current Purchase Price, in accordance with the terms of
this Agreement, in lieu of shares of Preferred Stock, such number of shares of
Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of one one-
hundredths of a share of Preferred Stock for which a Right is then exercisable
and dividing that product by (y) 50% of the Current Market Price per share of
the Common Stock on the date on which the first of the events listed above in
this subparagraph (a) occurs (such number of shares being herein referred to as
the "ADJUSTMENT SHARES").
(b) In the event that there shall not be sufficient treasury shares
or authorized but unissued shares of Common Stock to permit the exercise in full
of the Rights in accordance with the foregoing subparagraph (a), the Company
shall take all such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exercise of the Rights; provided, however, that
if the Company is unable to cause the authorization of a sufficient number of
additional shares of Common Stock, then, in the event the Rights become so
exercisable, the Company, with respect to each Right and to the extent necessary
and permitted by applicable law and any agreements or instruments in effect on
the date hereof to which the Company is a party, shall, upon the exercise of
such Rights,
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(i) pay an amount in cash equal to the excess of (A) the product of
(1) the number of Adjustment Shares, multiplied by (2) the Current Market
Price of the Common Stock (such product being herein referred to as the
"CURRENT VALUE"), over (B) the Purchase Price, in lieu of issuing shares of
Common Stock and requiring payment therefor, or
(ii) issue debt or equity securities, or a combination thereof,
having a value equal to the Current Value, where the value of such
securities shall be determined by a nationally recognized investment
banking firm selected by the Board of Directors of the Company, and require
the payment of the Purchase Price, or
(iii) deliver any combination of cash, property, Common Stock
and/or other securities having the requisite value, and require payment of
all or any requisite portion of the Purchase Price.
To the extent that the Company determines that some action need be
taken pursuant to clauses (i), (ii), or (iii) of the proviso of this Section
11(b), a majority of the Continuing Directors may suspend the exercisability of
the Rights for a period of up to 45 days following the date on which the first
of the events listed in Section 11(a)(i), (ii) or (iii) of this Agreement shall
have occurred, in order to decide the appropriate form of distribution to be
made pursuant to the above proviso and to determine the value thereof. In the
event of any suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at the time the suspension is no longer in effect.
Section 12. The Flip-Over
(a) In the event that, following the Separation Date, directly or
indirectly:
(w) the Company shall consolidate with, or merge with and into, any
other Person; or
(x) any Person shall consolidate with the Company, or merge with and
into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part
of the shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other Person or cash or any other property; or
(y) the Company shall effect a share exchange in which all or part of
the Common Stock of the Company shall be changed into (including, without
limitation, any conversion into or exchange for) securities of any other
Person, cash or any other property; or
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(z) the Company shall sell, lease, exchange, mortgage, pledge or
otherwise transfer (or one or more of its Subsidiaries shall sell, lease,
exchange, mortgage, pledge or otherwise transfer), in one or more
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons
then, and in each such case, subject to the provisions of Section 24 of this
Agreement, except where the Person involved in the transaction is an Approved
Acquiring Person and the transaction was approved by a majority of the
Continuing Directors,
(i) each holder of a Right, except as provided in Section 7(e) of
this Agreement, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, such number of shares of freely tradeable common
stock of the Principal Party, free and clear of any lien, encumbrance or
other adverse claim, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one one-
hundredths of a share of Preferred Stock for which a Right is then
exercisable (or the number of one one-hundredths of a share of Preferred
Stock for which a Right was exercisable immediately prior to the occurrence
of the Flip-In Event if a Flip-In Event has previously occurred) and
dividing that product by (2) 50% of the Current Market Price per share of
the common stock of such Principal Party on the date of consummation of the
Flip-Over Event;
(ii) all common stock of any Person for which any Right may be
exercised after consummation of a Business Combination as provided in this
Section 12(a) shall, when issued upon exercise thereof in accordance with
this Agreement, be duly and validly authorized and issued and fully paid
and nonassessable;
(iii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of the Flip-Over Event, all the obligations and duties of
the Company pursuant to this Agreement;
(iv) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 13 hereof shall apply to such Principal Party;
(v) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its common
stock) in connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of common stock thereafter
deliverable upon the exercise of the Rights; and
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(vi) the provisions of Section 11 of this Agreement shall be of no
effect following the first occurrence of any Flip-Over Event.
(b) "PRINCIPAL PARTY" shall mean:
(i) in the case of any transaction described in (w), (x) or (y) of
the first sentence of this Section 12, the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted
or exchanged in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to the merger or consolidation;
and
(ii) in the case of any transaction described in (z) of the first
sentence in this Section 12, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (1) if the common stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under the Securities Exchange Act of 1934, as then in effect,
and such Person is a direct or indirect Subsidiary of another Person the common
stock of which is and has been so registered, "Principal Party" shall refer to
such other Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the common stocks of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the common stock having the greatest aggregate
market value.
(c) The Company shall not consummate any Flip-Over Event unless prior
thereto the Company and each Principal Party and each other Person who may
become a Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 12 and further providing that, as soon as practicable after
the date of any Flip-Over Event, the Principal Party will:
(i) prepare and file at its own expense a registration statement
under the Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, will use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and will use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earliest of the Expiration
Date, the Exchange Date and the Redemption Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
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in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The Principal Party shall temporarily suspend, for a period of time not to
exceed 90 days following the occurrence of a Flip-Over Event, the exercisability
of the Rights in order to prepare an file the registration statement referred to
in clause (i) above, and the Expiration Date shall be extended by the number of
days of such suspension. The provisions of this Section 12 shall similarly
apply to successive Flip-Over Events. In the event that a Flip-Over Event shall
occur at any time after the occurrence of a Flip-In Event, the Rights which have
not theretofore been exercised shall thereafter become exercisable in the manner
described in Section 12(a).
Section 13. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 13.
(a) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend or make a distribution on the Preferred Stock
payable in shares of Preferred Stock into a larger number of shares, (B)
subdivide the outstanding Preferred Stock into a larger number of shares, (C)
combine the outstanding Preferred Stock into a smaller number of shares, or (D)
issue any shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), then in
each such event, except as otherwise provided in this Section 13(a), the
Purchase Price in effect at the time of the record date for such dividend or
distribution, or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock or
capital stock issuable on such date, shall be proportionately adjusted so that
the holder of any Rights (except as provided in Section 7(e) of this Agreement)
exercised on or after such time shall be entitled to receive upon payment of the
Purchase Price in effect immediately prior to such date, the aggregate number
and kind of shares of Preferred Stock or capital stock which, if such Rights had
been exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, distribution,
subdivision, combination or reclassification. If an event occurs which would
require an adjustment under both Section 11(a) of this Agreement and this
Section 13(a), the adjustment provided for in this Section 13(a) shall be in
addition to, and shall be made prior to any adjustment required pursuant to
Section 11(a).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase Preferred Stock (or Equivalent Preferred Stock) or
securities convertible into Preferred Stock or Equivalent Preferred Stock at a
price per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a
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security convertible into Preferred Stock or Equivalent Preferred Stock) of less
than the Current Market Price per share of Preferred Stock on such record date,
the Purchase Price to be in effect after the record date shall be determined by
multiplying the Purchase Price in effect immediately prior to the record date by
a fraction,
(1) the numerator of which shall be the number of shares of Preferred
Stock and Equivalent Preferred Stock (if any) outstanding on the record
date, plus the number of shares of Preferred Stock and Equivalent Preferred
Stock which the aggregate exercise price of the total number of shares of
Preferred Stock and/or Equivalent Preferred Stock which are obtainable upon
the exercise of the rights, options or warrants (and/or the aggregate
initial conversion price of the convertible securities so offered) would
purchase at the current market price; and
(2) the denominator of which shall be the number of shares of
Preferred Stock and Equivalent Preferred Stock (if any) outstanding on the
record date, plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock which may be obtained upon exercise of the
rights, options or warrants (or into which the convertible securities so
offered are initially convertible).
If the subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent. Shares of Preferred Stock or Equivalent
Preferred Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that rights, options or warrants are not issued following an adjustment,
the Purchase Price shall again be adjusted to be the Purchase Price which would
be in effect if the record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the surviving
corporation) of evidences of indebtedness, cash (other than a regular periodic
cash dividend at an annual rate not in excess of 125% of the annual rate of the
cash dividend paid on the Preferred Stock during the immediately preceding
fiscal year), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 13(b)),
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction,
(1) the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value
(as determined
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in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of the
portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
share of Preferred Stock; and
(2) the denominator of which shall be such current market price per
share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would be in effect
if such record date had not been fixed.
(d) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 13(d) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 13 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock or other share
of one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 13(d), any adjustment
required by this Section 13 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates the adjustment or (ii) the
earliest of the Expiration Date, the Exchange Date and the Redemption Date.
(e) If as a result of an adjustment made pursuant to Section 11(a),
the holder of any Rights thereafter exercised shall become entitled to receive
any securities of the Company other than shares of Preferred Stock, thereafter
the number of such other securities so receivable upon exercise of any Rights
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the shares
contained in Section 13(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 12 and 14 of this Agreement with respect to the Preferred
Stock shall apply on like terms to any such other securities.
(f) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided in this Agreement.
(g) Unless the Company shall have exercised its election as provided
in Section 13(h), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 13(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted
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Purchase Price, that number of one one-hundredths of a share of Preferred Stock
(calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share of
Preferred Stock covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(h) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one-millionth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 13(h), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the number of
shares which were expressed in the initial Rights Certificates issued hereunder.
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(j) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par value of the shares of Preferred Stock issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Preferred Stock
at such adjusted Purchase Price.
(k) In any case in which this Section 13 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Rights exercised after such record date
the shares of Preferred Stock and other capital stock or securities, cash or
property of the Company, if any, issuable upon such exercise over and above the
shares of Preferred Stock and other capital stock or securities, cash or
property of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares and other
capital stock or securities, cash or property upon the occurrence of the event
requiring such adjustment.
(l) Anything in this Section 13 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 13, as and to
the extent that in its sole discretion the Company shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less
than the Current Market Price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable or exercisable for shares of Preferred Stock, (iv) stock dividends,
or (v) issuance of rights, options or warrants referred to in this Section 13,
hereafter made by the Company to holders of its Preferred Stock shall, if
practicable, not be taxable to such stockholders.
(m) The Company covenants and agrees that it shall not (i)
consolidate with, (ii) merge with or into, or (iii) directly or indirectly sell,
lease or otherwise transfer or dispose of, in one or more transactions, assets
or earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries taken as a whole, to any other Person, if at the
time of or immediately after such consolidation, merger, sale, lease, transfer
or disposition there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
(n) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Section 23 or Section 27
of this Agreement, take any action the purpose or effect of which is to diminish
substantially or otherwise
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eliminate the benefits intended to be afforded by the Rights, unless such action
is approved by a majority of the Continuing Directors.
(o) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time prior to the Separation Date (i)
declare a dividend or distribution on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock, or (iii) combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter but prior to
the Separation Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction, (1) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to the occurrence of the event and
(2) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(p) Whenever an adjustment is made as provided in Sections 11, 12 and
13 of this Agreement, the Company shall (a) promptly prepare a certificate
setting forth such adjustment and a brief statement of the facts accounting for
such adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Stock a copy of such Certificate
and (c) mail a brief summary thereof to each holder of a Rights Certificate in
accordance with Section 26 of this Agreement. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractional Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the Current Market
Price of a whole Right as of the date on which such fractional Rights would have
been otherwise issuable.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates, at the
time such Rights are exercised as herein provided, an amount in cash
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equal to the same fraction of the Current Market Price of one one-hundredth of a
share of Preferred Stock as of the date of such exercise.
(c) The holder of a Right by its acceptance thereof expressly waives
any right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Separation Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Separation Date, of the Common Stock) without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Separation Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his rights
pursuant to this Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach of
this Agreement and shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Separation Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Separation Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal corporate trust office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name a Rights Certificate (or, prior to the Separation Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree
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<PAGE>
or ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned.
Section 17. Rights Holder Not Deemed a Shareholder. Except as
otherwise expressly provided in this Agreement, no holder, as such, of any
Rights Certificate shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the shares of Preferred Stock or any other securities
of the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders, or to
receive dividends or subscription rights, or otherwise, until and only to the
extent that the Right or Rights evidenced by such Rights Certificate shall have
been exercised in accordance with the provisions of this Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in
the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises. The indemnification provided for hereunder shall survive the
expiration of the Rights and the termination of this Agreement.
The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor Rights
Agent may be
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merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 of this Agreement. In case at
the time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent, for any action
taken
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<PAGE>
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of facts or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Sections 11
or 13 of this Agreement or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to
whether.any shares of Common Stock or Preferred Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company
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may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) The Rights Agent shall not be required to take notice or be
deemed to have notice of any fact event or determination under the Rights
Agreement unless and until the Rights Agent shall be specifically notified in
writing by the Company of such fact, event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the State of Mississippi (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the State of Mississippi), in good standing, which is authorized
under such laws to exercise corporate trust powers and is subject to supervision
or
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examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price per share and the number or kind or class of
shares or other securities or property purchasable under the Rights Certificates
made in accordance with the provision of this Agreement.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at any
time prior to 5:00 P.M., Jackson, Mississippi time, on the earlier of (i) the
tenth day following the Stock Acquisition Date, subject to extension by the
Board of Directors for a period of time up to, but not exceeding, ten additional
days, or (ii) the Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $0.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "REDEMPTION PRICE"); provided, however, that at the time of
the redemption the Company's Board of Directors consists of a majority of
Continuing Directors. Notwithstanding anything in this Agreement to the
contrary, no Rights may be exercised at any time that the Rights are subject to
redemption in accordance with the terms of this Agreement.
(b) Immediately upon the action of the Board of Directors of the
Company extending the redemption period pursuant to Section 23(a)(i), evidence
of which shall have been filed with the Rights Agent, the Company shall issue a
press release indicating the date to which the Board of Directors has extended
its right to redeem the Rights.
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<PAGE>
(c) Notwithstanding the provisions of Section 23(a) of this
Agreement, following the expiration of the Company's right to redeem the Rights
due to the occurrence of a Stock Acquisition Date, and prior to the occurrence
of a Triggering Event, the right of redemption may be reinstated by the Board of
Directors of the Company to allow the Rights to be redeemed in connection with a
merger or other business combination involving the Company which has been
approved by the affirmative vote of 67% of the total number of outstanding
shares of Common Stock which are not beneficially owned by any Acquiring Person;
provided that at the time of the reinstatement the Board of Directors consists
of a majority of Continuing Directors. Once reinstated, the redemption shall be
effected in the manner provided for in Sections 23(b) and (d) of this Agreement
for the purpose of effectuating the approved merger or other business
combination.
(d) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
Within 10 days after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or prior to the Separation Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made. In any case,
failure to give such notice to any particular holder of Rights shall not affect
the sufficiency of the notice to other holders of Rights. Neither the Company
nor any of its Affiliates or Associates may redeem for value any Rights at any
time, in any manner, other than that specifically set forth in this Section 23,
and neither the Company nor any of its Affiliates or Associates may acquire or
purchase for value any Rights at any time, in any manner, other than in
connection with the purchase of shares of associated Common Stock prior to the
Separation Date.
Section 24. Exchange.
(a) The Company may, at its option but subject to receipt of any
required regulatory approvals, by action of the Board of Directors, at any time
after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e)) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being herein referred to as
the "EXCHANGE RATIO"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after
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<PAGE>
any Person (other than the Company, any Subsidiary of the Company any employee
plan of the Company or of a Subsidiary of the Company or any Person holding
Common Shares for or pursuant to the terms of any such employee plan), together
with all Affiliates and Associates of such Person, becomes the Beneficial Owner
of 50 percent or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon
the registry books of Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e)) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred (or Equivalent Preferred Stock) for shares of
Common Stock exchangeable for Rights, at the initial rate of one one-hundredth
of a share of Preferred Stock (or Equivalent Preferred Stock) for each share of
Common Stock, as appropriately adjusted to reflect adjustments in the voting
rights of the Preferred Stock pursuant to the terms thereof, so that the
fraction of a share of Preferred Stock delivered in lieu of each share of Common
Stock shall have at least the same voting rights as one share of Common Stock.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional Common
Stock. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the Current Market Value of a whole share of Common Stock.
Section 25. Notice of Certain Events.
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<PAGE>
(a) In case the Company shall propose (i) to pay any dividend payable
in stock of any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular quarterly
cash dividend at a rate not in excess of $20 per share), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any reclassification of
its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect any
Flip-Over Event, or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, in accordance with Section 26, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, Flip-Over Event, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the holders of the shares of
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 20
days prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock
whichever shall be the earlier.
(b) Upon the occurrence of a Flip-In Event or a Flip-Over Event, the
Company or Principal Party, as the case may be, shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26, a notice of the occurrence of such event and
the consequences thereof to holders of Rights under Sections 11(a) or 12(a) of
this Agreement, as the case may be.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Mississippi Chemical Corporation
P.O. Box 388
Yazoo City, Mississippi 39194-0388
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
delivered by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
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<PAGE>
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
Attention: Secretary
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company. The Company shall deliver a copy of any notice or demand
it delivers to the holder of any Rights Certificate to the Rights Agent and the
Rights Agent shall deliver a copy of any notice or demand it deliver to the
holder of any Rights Certificate to the Company.
Section 27. Supplements and Amendments. The Company and the Rights
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order to cure any ambiguity,
to correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein or to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
rights Certificates other than an Acquiring Person; provided, however, that this
Agreement may not be supplemented or amended in any way unless the Company's
Board of Directors consists of a majority of Continuing Directors at the time of
such amendment or supplement and provided further that no amendment or
supplement may be made if the effect would be to extend or shorten the
redemption period after the Stock Acquisition Date or change the Purchase Price
or the Redemption Price.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Separation Date, the Common Stock) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Separation Date, the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
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<PAGE>
Section 31. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Mississippi and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
* * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: HARRIS TRUST MISSISSIPPI CHEMICAL CORPORATION
AND SAVINGS BANK
By: By:
Name: Name:
Title: Secretary Title:
Attest: ___________________________
By: By:
-------------------------- -------------------------
Name: Name:
Title: Title:
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<PAGE>
Exhibit A
----------
FORM OF
CERTIFICATE OF DESIGNATIONS
OF PREFERRED STOCK
of
MISSISSIPPI CHEMICAL CORPORATION
Pursuant to Section 79-4-6.02 of the
Mississippi Business Corporation Act
We, Coley L. Bailey, Chairman of the Board of Directors and Rosalyn B.
Glascoe, Secretary, of Mississippi Chemical Corporation, a corporation organized
and existing under the Mississippi Business Corporation Act, in accordance with
the provisions of Section 79-4-6.02 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the said Corporation, the said Board of
Directors on August 2, 1994, adopted the following resolution creating a series
of ________ shares of Preferred Stock designated as "Preferred Stock, Series A":
RESOLVED, that pursuant to the authority vested in the Board of Directors of
this Corporation in accordance with the provisions of its Certificate of
Incorporation a series of Preferred Stock of the Corporation be, and it hereby
is, created, and that the designation and amount thereof and the voting powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations or restrictions
thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Preferred Stock, Series A" (the "Preferred Stock") and the number
of shares constituting such series shall be ________.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of preferred stock ranking prior and superior to the shares of
Preferred Stock with respect to dividends, the holders of shares of Preferred
Stock, in preference to the holders of common stock, $.01 par value per share,
of the Corporation (the "Common Stock") and of any other junior stock, shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the
A-1
<PAGE>
purpose, quarterly dividends payable in cash on the fifteenth day of March,
June, September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $25.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions
other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Preferred Stock. In the event the Corporation shall at any time on or after
August 15, 1994 declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision of combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $25.00 per share on the
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares of Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid
A-2
<PAGE>
dividends shall not bear interest. Dividends paid on the shares of Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a share-by-
share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to
the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Preferred Stock shall
have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Preferred Stock shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the stockholders of the Corporation. In the
event the Corporation shall at any time on or after August 15, 1994 declare or
pay any dividend on Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which holders
of shares of Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event, and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares of
Preferred Stock and the holders of shares of Common Stock shall vote together
as one class on all matters submitted to a vote of stockholders of the
Corporation.
(C) Except as set forth herein, holders of Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
A-3
<PAGE>
(i) declare or pay dividends on, or make any other distributions on, any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Preferred Stock, except
dividends paid ratably on the Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Preferred Stock, or any shares of stock ranking on a parity with the
Preferred Stock, except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. All such shares shall
upon their cancellation become authorized but unissued shares of preferred stock
and may be reissued as part of a new series of preferred stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Preferred Stock unless, prior
thereto, the holders of
A-4
<PAGE>
shares of Preferred Stock shall have received $100.00 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders of shares of
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Preferred
Stock, except distributions made ratably on the Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Corporation shall at any time on or after August 15, 1994 declare
or pay any dividend on Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of shares of
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Preferred Stock then outstanding shall at the same time be similarly exchanged
or changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time on or after August 15, 1994
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Preferred Stock shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Preferred Stock shall not be
redeemable.
A-5
<PAGE>
Section 9. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of two-thirds or more
of the outstanding shares of Preferred Stock, voting together as a single class.
A-6
<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury as of this ____ day
of __________, 1994.
----------------------------------
Coley L. Bailey
Chairman of the Board of Directors
ATTEST:
- -------------------------------
Rosalyn B. Glascoe, Secretary
A-7
<PAGE>
Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- ____________ Rights
NOT EXERCISABLE AFTER AUGUST 15, 2004 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
[THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY
A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECAME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.]
RIGHTS CERTIFICATE
MISSISSIPPI CHEMICAL CORPORATION
This certifies that ________________________________ or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of August 2, 1994 (the "RIGHTS AGREEMENT") between
Mississippi Chemical Corporation, a Mississippi corporation (the "COMPANY"), and
Harris Trust and Savings Bank (the "RIGHTS AGENT"), unless notice of redemption
shall have been previously given by the Company, to purchase from the Company at
any time after the Separation Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (Jackson , Mississippi time) on August 15,
2004 at the principal corporate trust office of the Rights Agent, or at the
office of its successor as Rights Agent, one one-hundredth of a fully paid
nonassessable share of the Preferred Stock, Series A (the "PREFERRED STOCK"),
par value $0.01 per share, of the Company, at a purchase price of $50.00 per one
one-hundredth share (the "PURCHASE PRICE") upon presentation and surrender of
this Rights Certificate with the Form of Election to Purchase duly executed.
The Purchase Price may be paid in cash or by certified bank check or money order
payable to the order of the Company.
B-1
<PAGE>
The number of Rights evidenced by this Rights Certificate (and the number of
shares of Preferred Stock which may be purchased upon exercise thereof) and the
Purchase Price set forth above have been determined as of August 15, 1994, based
on the Common Stock of the Company as constituted at such date. As provided in
the Rights Agreement, the Purchase Price and the number of shares of Preferred
Stock or other securities, cash or other property which may be purchased upon
the exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events.
If the Rights evidenced by this Rights Certificate are or were formerly
beneficially owned, on or after the earlier of the Separation Date and the Stock
Acquisition Date, by an Acquiring Person or an Affiliate, Associate or direct or
indirect transferee of an Acquiring Person, such Rights may become null and void
and the holder of any such Right (including any subsequent holder) shall not
have any right with respect to such Right.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used in this Rights Certificate have the same meanings as such
terms are defined in the Rights Agreement. Copies of the Rights Agreement are
on file at the principal executive offices of the Company and the above-
mentioned office of the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal corporate trust office of the Rights Agent, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $0.01 per Right at any time prior to the earlier of (i) the close of
business on the tenth day following the time it becomes public that an Acquiring
Person has become such (with the possibility of an extension for an additional
ten (10) days) and (ii) the Expiration Date.
No fractional shares of Preferred Stock (other than fractions that are
integral multiples of one one-hundredth of share of Preferred Stock, which may,
at the election of the Company, be evidenced by depository receipts) are
required to be issued upon
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<PAGE>
the exercise of any Right or Rights evidenced hereby, but in lieu thereof the
Company may elect to make a cash payment, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
to receive dividends or shall be deemed, for any purpose, the holder of
Preferred Stock or of any other securities, cash or property which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or this Certificate be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company, including,
without limitation, any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or to institute, as a holder of
Preferred Stock or other securities issuable on the exercise of the Rights
represented by this Certificate, any derivative action, or otherwise, until and
only to the extent the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of __________, 19__.
MISSISSIPPI CHEMICAL CORPORATION
By:
--------------------------------
Title:
ATTEST:
- ------------------------------
Secretary
Countersigned:
- ------------------------------
By
----------------------------
Authorized Signature
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<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Rights Certificates.)
FOR VALUE RECEIVED, _________________________________ hereby sells, assigns
and transfers unto ____________________________ (Please print name and address
of transferee) this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
_____________________ Attorney to transfer the within Rights Certificate on the
books of the within-named Company, with full power of substitution.
Dated: __________________, 19__
------------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
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<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: _________________, 19__ Signature _____________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment is
not completed, the Company will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and, in the case of an
Assignment, will affix a legend to that effect on any Rights Certificate issued
in exchange for this Rights Certificate.
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<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights represented by this
Rights Certificate)
To: Mississippi Chemical Corporation
The undersigned hereby irrevocably elects to exercise __________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock, Series A or other securities, cash or other property issuable
upon the exercise of such Rights and requests that certificates for such shares
or other securities be issued in the name of, and such cash or other property be
paid to:
Please insert social security or other identifying number
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the remaining balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
Dated:__________________,19__
Signature ____________________________________
(Signature must conform in all respects
to name of holder as specified on the face
of this Rights Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
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<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being exercised by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: _______________, 19__ Signature ___________________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
NOTICE
The signature on the foregoing Form of Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Election is
not completed, the Company will deem the beneficial owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and, in the case of an
Assignment, will affix a legend to that effect on any Rights Certificate issued
in exchange for this Rights Certificate.
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<PAGE>
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On August 2, 1994, the Board of Directors of Mississippi Chemical Corporation,
a Mississippi corporation (the "COMPANY"), declared a dividend of one preferred
share purchase right (a "RIGHT") for each share of Common Stock, $0.01 par
value, of the Company (the "COMMON STOCK"). The dividend is payable on August
15, 1994 to shareholders of record at the close of business on August 5, 1994
(the "RECORD DATE") and with respect to all shares of Common Stock that become
outstanding after the Record Date and prior to the earliest of the Separation
Date (as defined below), the redemption of the Rights, the exchange of the
Rights and the expiration of the Rights. Except as set forth below and subject
to adjustment as provided in the Rights Agreement (as defined below), each Right
entitles the registered holder to purchase from the Company one one-hundredth of
a share of the Company's Preferred Stock, Series A, $0.01 par value per share
(the "PREFERRED STOCK"), at an exercise price of $50.00 per share (the "PURCHASE
PRICE"). The description and terms of the Rights are set forth in a Rights
Agreement dated as of August 2, 1994 (the "RIGHTS AGREEMENT"), between the
Company and Harris Trust and Savings Bank, as Rights Agent (the "RIGHTS AGENT").
The Rights will be evidenced by Common Stock certificates and not separate
certificates until the earlier to occur of (i) 10 days following the date of
public disclosure that a person or group, together with persons affiliated or
associated with it (an "ACQUIRING PERSON"), has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding Common Stock
(the "STOCK ACQUISITION DATE") and (ii) 10 days following commencement or
disclosure of an intention to commence a tender offer or exchange offer by a
person other than the Company and certain related entities if, upon consummation
of the offer, such person or group, together with persons affiliated or
associated with it, could acquire beneficial ownership of 25% or more of the
outstanding Common Stock (the earlier of such dates being called "SEPARATION
DATE"). Until the Separation Date (or earlier redemption or expiration of the
Rights), the transfer of Common Stock will also constitute transfer of the
associated Rights. Following the Separation Date, separate certificates will
evidence the Rights.
The Rights will first become exercisable on the Separation Date (unless sooner
redeemed). The Rights will expire at the close of business on August 15, 2004
(the "EXPIRATION DATE"), unless earlier redeemed or exchanged by the Company as
described below.
The Purchase Price and the number of shares of Preferred Stock or other
securities, cash or other property issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend or distribution on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights, options, warrants to subscribe for Preferred
Stock or securities convertible into Preferred Stock at less than the current
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<PAGE>
market price of the Preferred Stock, or (iii) upon the distribution to holders
of the Preferred Stock of other securities, cash (excluding regular periodic
cash dividends at an annual rate not in excess of 125% of the annualized rate of
cash dividends paid during the preceding fiscal year), property, evidences of
indebtedness, or assets.
In the event that, following the Separation Date, the Company is acquired in a
merger or other business combination in which the Common Stock does not remain
outstanding or is changed or 50% or more of its consolidated assets or earning
power is sold, leased, exchanged, mortgaged, pledged or otherwise transferred or
disposed of (in one transaction or a series of transactions) the Rights will
"FLIP OVER" and entitle each holder of a Right to purchase, upon the exercise of
the Right at the then-current Purchase Price, that number of shares of common
stock of the acquiring company (or, in certain circumstances, one of its
affiliates) which at the time of such transaction would have a market value of
two times the Purchase Price.
If (i) a person acquires beneficial ownership of 20% or more of the Common
Stock, (ii) the Company is the surviving corporation in a merger with an
Acquiring Person and the Common Stock remains outstanding and unchanged, or
(iii) an Acquiring Person engages in a "SELF-DEALING" transaction specified in
the Rights Agreement, the Rights will "FLIP IN" and entitle each holder of a
Right, except as provided below, to purchase, upon exercise at the then-current
Purchase Price, that number of shares of Common Stock having a market value of
two times the Purchase Price.
Any "flip over" event or "flip in" event is a "TRIGGERING EVENT."
Any Rights beneficially owned at any time on or after the Separation Date by
an Acquiring Person or an affiliate or associate of an Acquiring Person (whether
or not such ownership is subsequently transferred) will become null and void
upon the occurrence of the earlier of the Board of Directors decision to
exchange the rights and a Triggering Event, and any holder of such Rights will
have no right to exercise such Rights.
Under certain circumstances, the disinterested directors can approve a
transaction with a specific shareholder and freeze the Rights in connection with
that specific transaction.
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at least 1% in such
Purchase Price. Holders will have no right to receive fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock) upon the exercise of Rights. In lieu
of such fractional shares, an adjustment in cash may be made based on the market
price of the Preferred Stock on the last trading date prior to the date of
exercise.
The number of outstanding Rights and the number of one one-hundredths of a
share of Preferred Stock issuable upon exercise of each Right and the Purchase
Price are also subject to adjustment in the event of a stock split of the Common
Stock or
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<PAGE>
distributions, subdivisions, consolidations or combinations of the Common Stock
occurring, in any such case, prior to the Separation Date.
At any time prior to the earlier of (i) the closing of business on the tenth
day following the time that it becomes public that an Acquiring Person has
become such (with the possibility for the Board of Directors to extend this time
for an additional 10 days) and (ii) the Expiration Date, the Company may redeem
the Rights in whole, but not in part, at a price of $0.01 per Right.
Immediately upon the action of the Company's Board of Directors electing to
redeem the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights thereafter will be to receive the applicable
redemption price.
At any time any person becomes an Acquiring Person and prior to such time as
such person, together with its affiliates of at least 50% of the Company's
outstanding Common Stock, the Company may, provided that all necessary
regulatory approvals have been obtained, exchange the Rights (other than Rights
owned by such Acquiring Person which become null and void), in whole or in part,
at a ratio of one share of Common Stock per Right, subject to adjustment.
Until a Right is exercised, the holder has no rights as a shareholder of the
Company, including, without limitation, the right to vote or to receive
dividends or distributions.
The Company may, without the approval of any holder of the Rights, but only if
at that time the Board of Directors consists of a majority of disinterested
directors, supplement or amend any provision of the Rights Agreement, except the
redemption window, the Purchase Price or the redemption price.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $25.00 per share but will be entitled
to an aggregate dividend of 100 times the dividend declared per share of Common
Stock, if it is greater. In the event of liquidation, the holders of the
Preferred Stock will be entitled to a minimum preferential liquidation payment
of $100.00 per share, but will be entitled to an aggregate payment of 100 times
the payment made per share of Common Stock, if it is greater. In the event of
any merger or other business combination in which Common Stock is exchanged,
each share of Preferred Stock will be entitled to receive 100 times the amount
received per share of Common Stock. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one one-hundredth of a share of Preferred Stock
purchasable upon exercise of each Right is intended to approximate the value of
one share of Common Stock.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned upon a substantial number of Rights being acquired. The
Rights should not interfere
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<PAGE>
with any merger or other business combination approved by the Board of Directors
prior to the time a person or group has acquired beneficial ownership of 15% or
more of the Common Stock, because until such time, the Rights may be redeemed by
the Company at $0.01 per Right.
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission and is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby incorporated
herein by reference.
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<PAGE>
EXHIBIT 5
[MWE Letterhead]
August 2, 1994
Mississippi Chemical Corporation
P.O. Box 388
Yazoo City, Mississippi 39194
Re: Mississippi Chemical Corporation
Registration Statement on Form S-1
File No. 33-54573
----------------------------------
Ladies and Gentlemen:
This opinion is rendered in connection with the filing by Mississippi
Chemical Corporation (the "Company") of its Registration Statement on Form
S-1 (the "Registration Statement") with the Securities and Exchange Commission
with respect to the registration under the Securities Act of 1933, as amended,
of 5,520,000 shares of its common stock, $.01 par value (the "Registered
Stock"). Of the Registered Stock, 3,200,000 shares are being offered for sale by
the Company, 1,600,000 shares are being offered for sale by certain shareholders
of the Company and 720,000 shares are subject to an over-allotment option
granted to the Underwriters by the Company and certain shareholders.
In arriving at the opinion expressed below, we have examined the
Registration Statement and such other documents as we have deemed necessary to
enable us to express the opinion hereinafter set forth. In addition, we have
examined and relied upon, to the extent we deemed proper, certificates of
officers of the Company as to factual matters, and on the originals or copies,
certified or otherwise identified to our satisfaction, of all such corporate
records of the Company and such other instruments and certificates of public
officials and other persons as we have deemed appropriate. In our examination,
we have assumed the authenticity of all documents submitted to us as originals,
the conformity to the original documents of all documents submitted to us as
copies, the genuineness of all signatures on documents reviewed by us and the
legal capacity of natural persons.
Our opinion herein is limited to United States Federal law, the
internal laws of the State of Illinois and New York and
<PAGE>
Mississippi Chemical Corporation
August 2, 1994
Page 2
the Mississippi Business Corporation Act. We express no opinion with respect to
the applicability thereto, or the effect thereon, of any other laws.
Based upon and subject to the foregoing, we are of the opinion that
the Registered Stock, upon issuance and sale in accordance with the terms
and conditions set forth in the Registration Statement, will be validly issued,
fully paid and non-assessable.
We hereby consent to the reference to our firm under the caption
"Legal Matters" in the Registration Statement and to the use of this opinion as
an exhibit to the Registration Statement.
Very truly yours,
/s/ McDermott, Will & Emery
FWA/LMK
<PAGE>
EXHIBIT 23.2
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our reports
included herein and to all references to our Firm included in or made a part of
this registration statement.
/s/ ARTHUR ANDERSEN & CO.
Memphis, Tennessee,
August 2, 1994.
