SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 2-7803
MISSISSIPPI CHEMICAL CORPORATION
(Exact name of registrant as specified in its charter)
MISSISSIPPI 64-0292638
(State or other jurisdiction of incorporation or (IRS Employer Identification
organization) Number)
Highway 49 East, P.O. Box 388, Yazoo City, MS 39194
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area (601) 746-4131
code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $.01 The Nasdaq Stock Market's National Market
Preferred Stock Purchase Rights The Nasdaq Stock Market's National Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
or Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
At, September 11, 1995, Mississippi Chemical Corporation had 22,902,672 shares
of common stock, par value $.01, outstanding. The Company estimates that the
aggregate market value of the common stock on September 11,1995 (based upon the
closing price of these shares on Nasdaq) held by non-affiliates was
approximately $491,033,288.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for fiscal year ended June 30, 1995 (Items 5, 6, 7
and 8 in Part II, and Item 14 in Part IV).
Proxy Statement for annual meeting of shareholders to be held on November 14,
1995 (Items 10, 11, 12 and 13 in Part III).
PART I
ITEM 1. BUSINESS
Mississippi Chemical Corporation (the "Company") was incorporated in
Mississippi on May 23, 1994, and 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 address of the Company's
principal executive office is Owen Cooper Administration Building, Highway 49
East, Yazoo City, Mississippi 39194, and its telephone number is (601) 746-4131.
The term "Company" includes Mississippi Chemical Corporation and its wholly
owned subsidiaries, Mississippi Phosphates Corporation and Mississippi Potash,
Inc. References to the Company's operations prior to July 1, 1994, refer to the
Cooperative's operations.
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 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. As a result of the Reorganization,
the Company no longer operates as a cooperative, but as a regular business
corporation.
In June 1994, the Cooperative divested a majority of its interest in
Newsprint South, Inc., its newsprint manufacturing subsidiary. In fiscal 1995,
the Company paid approximately $9 million to a third party as the final portion
of the divestiture costs.
NITROGEN FERTILIZER
Products
The Company produces nitrogen fertilizers at its Yazoo City, Mississippi,
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. In fiscal 1995, the Company sold over 1.7 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 1995 were $240.7 million, which represented approximately 62%
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 1995, the Company produced approximately 728,000 tons of anhydrous
ammonia at its Yazoo City and Triad facilities and purchased approximately
50,000 tons. The Company sold approximately 35,000 tons of anhydrous ammonia for
direct-application fertilizer and industrial sales and used the balance as a raw
material to manufacture its other nitrogen fertilizer products. The Company's
subsidiary Mississippi Phosphates Corporation also purchased 171,000 tons of
ammonia for use in its phosphate operations. See "Phosphate Fertilizer."
In the Company's markets, ammonia is used primarily as a pre-emergent
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 application 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. 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 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 1995, the Company sold approximately 857,000 tons of solid
ammonium nitrate fertilizer, the majority of which was produced at the Company's
Yazoo City facility, and the balance of which was purchased from third parties,
primarily Air Products and Chemicals, Inc. ("Air Products"). The ammonium
nitrate produced at the Company's Yazoo City facility 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.
In September 1994, the Company and Air Products concluded arrangements
whereby the Company agreed to purchase all of the ammonium nitrate fertilizer
produced at Air Products' Pace, Florida, facility (up to 240,000 tons per year)
during the 15-year term of the agreement. Approximately 144,000 tons of
ammonium nitrate were purchased in fiscal 1995 pursuant to this agreement. Air
Products recently announced its intention to suspend ammonium nitrate production
at its Pace facility until October 1996 due to sustained high ammonia costs.
N-Sol. In fiscal 1995, the Company sold approximately 609,000 tons of
N-Sol, the vast majority of 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 1995, the Company sold approximately 171,000 tons of
prilled urea and approximately 77,000 tons of urea melt which it produces 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 used primarily 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 the sequential generation of electricity and process
steam. 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."
Trinidad. In December 1994, the Company signed a letter of intent with
Farmland Industries, Inc., to enter into a 50-50 joint venture, known as
Farmland MissChem Limited, to construct and operate a 1,900-short-ton-per-day
ammonia plant to be located on the island of Trinidad. The project is expected
to cost approximately $330 million. The joint venture is in the process of
finalizing its plant site, negotiating a construction contract, and completing
financing arrangements. Start-up of the facility is scheduled for 1998. The
Company intends to use the majority of its portion of the production from the
new facility, expected to be in excess of 300,000 tons per year, primarily as a
raw material for upgrading into finished fertilizer products at its existing
facilities.
Marketing and Distribution
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,
Oklahoma, Georgia, Florida, Tennessee and Kentucky.
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
meet. Customer service helps differentiate the Company's products and enhance
its position as a preferred supplier.
The Company transports its nitrogen products by barge, rail and truck. The
Company's distribution network is complemented by owned or leased warehouses and
terminals strategically placed in high-consumption areas.
PHOSPHATE FERTILIZER
Products
The Company produces diammonium phosphate fertilizer ("DAP") at its facility
in Pascagoula, Mississippi. In fiscal 1995, the Company sold approximately
713,000 tons of DAP, primarily into international markets. Sales of DAP by the
Company in fiscal 1995 were $117.5 million, which represented approximately 30%
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 (P205)
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's phosphate production complex in Pascagoula, Mississippi, 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
(100,000 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 with Office Cherifien des Phosphates ("OCP"), the national phosphate
company of Morocco. 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 Fertilizer &
Chemical Corporation ("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 1995, approximately two-thirds of the Company's DAP was sold into
international markets. The largest export markets in fiscal 1995 were India,
China and countries within Central and South America. 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 DAP
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 1995, the Company sold approximately
357,000 tons of potash primarily in granular form. These sales were 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 1995 were $27.4 million, which
represented approximately 7% 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. In fiscal 1994, the Company completed a $5 million
project to modernize its mining equipment, enabling it to extract a higher grade
of ore which improved 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 is then transported to the Company's nearby
compaction plant for conversion to granular form. 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% K20 or 297.9 million tons of recoverable ore
with an average grade of 14.88% K20. Since these estimates were made, ore
extracted would indicate remaining reserves of 332 million tons of in situ ore
with an average grade of 15.27% K2O or 284 million tons of recoverable ore with
an average grade of 14.88% K2O. This reserve base is estimated to be equivalent
to 56 million tons of muriate of potash. At current production rates, the
Company's reserves have a remaining life in excess of 100 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" (sales less distribution and delivery expense) 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. While the typical primary export market for the
Company's potash is Latin America, the majority of fiscal 1995 export sales were
to France and Japan. Potash for export is transported by rail to terminal
facilities in Houston, Texas, where it is loaded onto ocean-going vessels for
shipment to export markets.
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 1995, the cost
of natural gas represented approximately 73% 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 majority of the 54,000 Mcf per day natural gas requirements of the Yazoo
City facility is currently being furnished by various producers and marketers
who sell gas to the Company at various points along the pipeline system of
Southern Natural Gas Company ("Southern"). The Company continues to utilize a
long-term, interruptible transportation agreement with Southern. Although the
Southern contract provides for interruptible service, the Company believes and
experience dictates that curtailment of supply is unlikely because of the
plant's location on Southern's system. In 1995, the Company entered into a
long-term natural gas purchase agreement with Sonat Marketing Company ("Sonat"),
an affiliate of Southern. Deliveries under the Sonat agreement are scheduled to
begin on January 1, 1996. The Sonat agreement provides for market-sensitive
pricing and a firm-delivery supply commitment. In addition to being connected
to Southern, the Company has also secured long-term transportation capacity in
the Thomasville Line (described below), 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
supply of natural gas.
The balance of the natural gas requirements of the Yazoo City facility is
supplied 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. Pursuant
to its agreement with the Company, Shell constructed a 60-mile pipeline (the
"Thomasville Line") from its reserves directly to the Yazoo City facility. The
primary term of the SWEPI contract expired on March 31, 1994; however, since
that date, the Company has continued purchasing the output of the Rankin County
reserves (which is currently approximately 20,000 Mcf per day) at
market-sensitive prices. It is anticipated that this purchase arrangement will
continue for the foreseeable future.
The natural gas requirements of the Triad facility are approximately
50,000 Mcf per day. The Triad facility is located in one of the primary
gas-producing regions of the United States. The facility is currently 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. Technical
advancements in exploration, development and production are keeping supplies in
a strong position. Efficient operation of gas storage should continue to dampen
seasonal price variations, but shorter-term volatility related to minor system
disturbances is expected to continue. 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 1.2 million tons per year. As of September 15, 1991, the Company
entered into a ten-year contract with Office Cherifien des Phosphates ("OCP") to
supply all of the phosphate rock requirements of the Pascagoula facility. This
contract has been 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 depressed and its DAP operations are not
profitable. As a result, the Company has been able to sustain its operations
since reopening the Pascagoula facility in December 1991, despite a sustained
period of low prices for phosphate products during fiscal 1993 and 1992.
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 290,000 tons per
year. The location of the Company's plant at Pascagoula, Mississippi, near
major oil and gas fields which supply substantial amounts of sulfur, provides
the Company with a strategic advantage in the purchase of sulfur over its
Florida competitors.
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
former Soviet Union ("FSU"). Heavy demand from industrial and agricultural
markets continued into 1995. Ammonia prices have declined from the level
reached during spring 1995 but remain at relatively high 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 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
mining costs than the Canadian producers, this disadvantage is offset by
logistical and freight advantages in certain markets in the southwestern United
States and the lower United States corn belt. The Company competes in these
markets primarily with three other Carlsbad potash producers.
ITEM 2. OTHER PROPERTIES
The Company owns an administration building in Yazoo City which contains
approximately 65,000 square feet of office space.
The Company's plants are complete with necessary support facilities, such as
roads, railroad tracks, storage, offices, laboratories, warehouses, machine
shops and loading facilities. Adequate supplies of water and electric power are
available at all locations. In addition to the fertilizer storage facilities at
Yazoo City and Pascagoula, Mississippi; Carlsbad, New Mexico; and
Donaldsonville, Louisiana, the Company also owns or leases 19 major fertilizer
storage and distribution facilities at other locations in Alabama, Arkansas,
Florida, Georgia, Kentucky, Louisiana, Mississippi, Tennessee and Texas, with a
total system-wide storage capacity of approximately 256,000 tons.
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 62,000,000 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 four-year
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 1995, 1994 and 1993 were approximately $1.3 million,
$1.4 million, and $1.4 million, respectively.
EMPLOYEES
As of June 30, 1995, the Company employed approximately 1,000 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.
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 in
excess of $50 million on its fertilizer production facilities in order to meet
applicable federal and state pollution standards. The Company has been 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: 1995-$7,750,000; 1994-$619,000; and
1993-$7,000,000. A portion of the expenditures for fiscal 1995 relate to the
installation of a new scrubber system in two ammonium nitrate prill towers at
the Yazoo City facility. These systems will allow operators to reduce the
amount of particulate discharged from the facility. Also included in the 1995
expenditure is a portion of the cost of a project which relocates the discharge
point of the Yazoo City facility's process waste water from an intermittent
stream to the Yazoo River. Included in the foregoing expenditures for fiscal
1993 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
$11.2 million for fiscal 1996. A portion of these funds relate to the
development of a new gypsum disposal facility at Pascagoula. The estimated cost
of this facility is expected to be $16.3 million, which amount will be expended
over an estimated 16 months. The Company is currently negotiating for the
purchase of additional lands for this facility and is seeking the necessary
permits for its development.
During fiscal 1994, the Company charged to its earnings approximately $6.1
million relating to the estimated cost of the future closure of the existing
gypsum disposal facility located at Pascagoula. In fiscal 1995, the Company
charged an additional $562,000 toward this estimated cost of closure. The total
accrual of approximately $6.7 million relates to the portion of the disposal
facility utilized to date. In future years, the Company expects to record
additional charges of approximately $2.4 million related to the anticipated
closure costs of the gypsum disposal facility. These charges will be recorded
over the estimated five-year remaining life of the 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.
ITEM 3. LEGAL PROCEEDINGS
Combustion, Inc., Litigation. 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 (a 50%-owned, joint venture) 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 Chemical recently agreed with the Plaintiffs' Steering Committee in the
case to settle the tort claims against it as part of a group settlement by
certain defendant companies. Triad Chemical's share of the group settlement is
$600,000. Preliminary settlement documents have been filed with the court and
procedures are currently underway to obtain the necessary court approval of the
settlement as required in class action suits.
Cleve Reber CERCLA Site. Triad has received and responded to letters issued
by the United States Environmental Protection Agency ("EPA") under Section 104
of the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") relative to the possible disposition of Triad waste at the disposal
site identified as the Cleve Reber site in Ascension Parish, Louisiana.
It is Triad's position that, based upon available information and records,
Triad did not utilize the Cleve Reber site for the disposition of hazardous
material, and it does not appear that Triad has any responsibility for
investigation and clean-up on this site. It should be noted that the EPA is
contemplating an action under the Resource Conservation and Recovery Act,
Section 7003, as well as the CERCLA action mentioned above. The EPA has issued
Section 106 orders against the major contributors at the site for clean-up.
They are now engaged in negotiations for clean-up. In 1994, Triad received a
supplemental 104(e) request for information from the EPA, indicating the EPA's
renewed interest in pursuing Potential Responsible Persons at the site. Triad
filed a Freedom of Information Act request to investigate allegations that some
plant trash from Triad may have been disposed of at the Cleve Reber site. In
the opinion of management, the likelihood of the CERCLA investigation resulting
in a loss in a material amount is remote.
Potash Antitrust 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 has assembled these documents for production. In
addition, a number of employees and former employees of the Company have
testified before the grand jury regarding the Company's potash operations.
Terra International, Inc. On August 31, 1995, the Company filed suit in
federal court in Mississippi against Terra International, Inc. ("Terra") seeking
a declaratory judgment and other relief establishing that certain technology
relating to the design of an ammonium nitrate neutralizer which the Company
licensed to Terra is not defective and was not the cause of an explosion which
occurred in 1994 at Terra's Port Neal, Iowa, fertilizer facility. Also, on
August 31, 1995, Terra filed suit in federal court in Iowa against the Company
seeking damages on the basis of losses caused by the explosion. Terra
alleges that the Company negligently designed the ammonium nitrate
neutralizer technology licensed to Terra and that that design defect led
to the Port Neal explosion. In addition, two lawsuits have been filed in
Iowa against the Company on behalf of certain persons killed or injured
in the explosion.
Rankin County, Mississippi, vs Jackson Oil Products Company, Inc., et. al.
On September 21, 1995, the Company was served with a complaint in which it is
named as an additional defendant in the referenced action filed in federal court
in Mississippi. The plaintiff seeks to recover clean-up costs in connection
with the remediation of a former waste oil processing facility located in Rankin
County, Mississippi. The suit alleges that the Company contributed waste oil to
the site. The Company is in the process of investigating the allegations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
PART II
ITEM 5.MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The information required by this item is set forth in the Company's
1995 Annual Report to Shareholders under the caption "Quarterly Results,"
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations," which information is incorporated herein by reference.
ITEM 6.SELECTED FINANCIAL DATA
The information required by this item is set forth in the Company's 1995
Annual Report to Shareholders under the caption "Financial Highlights" which
information is incorporated herein by reference.
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is set forth in the Company's
1995 Annual Report to Shareholders under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations," which
information is incorporated herein by reference.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report thereon of
Arthur Andersen LLP dated July 28, 1995, appearing in the Company's 1995 Annual
Report to Shareholders are incorporated herein by reference.
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) The information required by this item regarding directors is set forth
in the Company's Proxy Statement for the 1995 annual meeting of shareholders
under the captions "Nominees for Election to Serve Until 1998," "Directors
Continuing to Serve Until 1997," and "Directors Continuing to Serve Until 1996,"
which information is incorporated herein by reference.
(b) Executive officers of the Registrant as of June 30, 1995, are as
follows: Executive officers are elected for a one-year term by the Board of
Directors.
OFFICE AND EMPLOYMENT DURING THE
NAME OF OFFICER AGE LAST FIVE FISCAL YEARS
Charles O. Dunn 47 President and Chief Executive Officer since
April 1 1993; Executive Vice President (1988-
1993)
William F. Hawkins 64 Senior Vice President-Finance and Administration
since April 28, 1987
David W. Arnold 58 Senior Vice President-Technical Group since
July 1, 1991; Senior Vice President-Research and
Engineering (1987-1991)
C. E. McCraw 47 Senior Vice President-Operations since July 12,
1994; Senior Vice President-Fertilizer Group
(1991-1994); Vice President-Fertilizer Group
(1991); Vice President-Operations (1987-1991)
Robert E. Jones 48 Vice President and General Counsel since
October 24, 1989
John J. Duffy 61 Vice President-Marketing since July 1, 1995;
Vice President-Sales and Marketing (1994-1995);
Director of Sales and Marketing (1991-1994);
Director, Field Sales (1988-1991)
Rosalyn B. Glascoe 51 Corporate Secretary since June 24, 1986
(c) The information called for with respect to the identification of
certain significant employees is not applicable to the Registrant.
(d) There are no family relationships between the directors and executive
officers listed above. There are no arrangements nor understandings between any
named officer and any other person pursuant to which such person was selected as
an officer.
(e) There are no legal proceedings involving directors, nominees for
directors, or officers.
The information required by this item regarding compliance with Section 16(a)
of the Exchange Act is set forth in the Company's Proxy Statement for the 1995
annual meeting of shareholders under the caption "Compliance with Section 16(a)
of the Exchange Act," which information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is set forth in the Company's Proxy
Statement for the 1995 annual meeting of shareholders under the captions
"Compensation of Executive Officers" and "Retirement Program," which information
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth in the Company's Proxy
Statement for the 1995 annual meeting of shareholders under the captions
"Security Ownership of Certain Beneficial Owners" and "Management Ownership of
the Company's Stock," which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is set forth in the Company's Proxy
Statement for the 1995 annual meeting of shareholders under the caption
"Compensation Committee Interlocks and Insider Participation," which information
is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS AND SCHEDULES
The consolidated financial statements, together with the report thereon of
Arthur Andersen LLP dated July 28, 1995, appearing in the 1995 Annual Report to
Shareholders are incorporated by reference in this Form 10-K. With the
exception of the aforementioned information and information incorporated by
reference in Items 5, 6, 7 and 8, the 1995 Annual Report to Shareholders is not
to be deemed filed as part of this Form 10-K. The following financial statement
schedule should also be read in conjunction with the financial statements in
such 1995 Annual Report to Shareholders. Financial statement schedules not
included in this Form 10-K have been omitted because they are not applicable or
the required information is shown in the financial statements or notes thereto.
Separate financial statements of 50% or less owned persons accounted for by the
equity method which are not shown herein have been omitted because, if
considered in the aggregate, they would not constitute a significant subsidiary.
(i)Financial Statements:
Report of Independent Public Accountants
Consolidated Balance Sheets, June 30, 1995 and 1994
Consolidated Statements of Income Years Ended June 30, 1995, 1994 and
1993
Consolidated Statements of Shareholders' Equity, Years Ended June 30,
1995, 1994 and 1993
Consolidated Statements of Cash Flows, Years Ended June 30, 1995, 1994
and 1993
Notes to Consolidated Financial Statements
(ii)Report of Independent Public Accountants on Financial Statement
Schedules
(iii)Exhibits:
Exhibits filed as part of this report are listed below. Certain
exhibits have been previously filed with the Commission and are
incorporated herein by reference.
SEC EXHIBIT
REFERENCE NO. DESCRIPTION
1 Shareholder Rights Plan; filed as Exhibit 1 to the Company's Report
on Form 8-A dated August 15, 1994, SEC File No. 2-7803, and
incorporated herein by reference.
3.1 Articles of Incorporation of the Company; filed as Exhibit 3.1 to
the Company's Amendment No. 1 to Form S-1 Registration Statement
filed August 2, 1994, SEC File No. 33-53119, and incorporated
herein by reference.
3.2 Bylaws of the Company; filed as Exhibit 3.2 to the Company's
Amendment No. 1 to Form S-1 Registration Statement filed August 2,
1994, SEC File No. 33-53119, and incorporated herein by reference.
4.1 Revolving Credit/Term Loan Agreement dated August , 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 Exhibit 4.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1992, SEC File No. 2-7803, and incorporated herein by
reference.
4.2 Indenture of Mortgage, Deed of Trust, Assignment and Security
Agreement dated as of September 1, 1976, among the Company, the New
Orleans Bank for Cooperatives, John H. Farrelly, as trustee for the
benefit of the New Orleans Bank for Cooperatives under certain
deeds of trust, and Deposit Guaranty National Bank); filed as
Exhibit B to Exhibit 2 to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1976, SEC File No. 2-7803, and
incorporated herein by reference.
4.3 Sixteenth Supplemental Indenture dated as of June 30, 1994, between
the Company and Deposit Guaranty National Bank.
4.4 Fifteenth Supplemental Indenture and Amendment to Series I
Revolving Credit/Term Loan Agreement dated as of June 17, 1994,
between the Company and Deposit Guaranty National Bank.
4.5 Fourteenth Supplemental Indenture dated as of June 17, 1994,
between the Company and Deposit Guaranty National Bank.
4.6 Thirteenth Supplemental Indenture dated as of July 16, 1993,
between the Company and Deposit Guaranty National Bank; filed as
Exhibit 4.1 to the Company's Current Report on Form 8-K dated
April 26, 1994, SEC File No. 2-7803, and incorporated herein by
reference.
4.7 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, SEC File No. 2-7803, and
incorporated herein by reference.
4.8 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, SEC File No. 2-7803, and incorporated
herein by reference.
4.9 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 Purchase 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 , 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, SEC File
No. 2-7803, and incorporated herein by reference.
4.10 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.
4.11 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.
4.12 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.
4.13 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.
4.14 Fifth Supplemental Indenture dated as of June 1, 1978, between 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, SEC File No. 2-7803, and incorporated herein by
reference.
4.15 Fourth Supplemental Indenture dated as of May 1, 1978, between 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.
4.16 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.
4.17 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.
4.18 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, SEC File No. 2-7803, and incorporated herein by
reference.
10.1 Mississippi Chemical Corporation 1994 Stock Incentive Plan; filed
as Appendix A to the Company's 1995 Proxy Statement and
incorporated herein by reference.
10.2 Mississippi Chemical Corporation 1995 Stock Option Plan for
Nonemployee Directors; filed as Appendix B to the Company's 1995
Proxy Statement and incorporated herein by reference.
10.3 Mississippi Chemical Corporation 1995 Restricted Stock Purchase
Plan for Nonemployee Directors; filed as Appendix C to the
Company's 1995 Proxy Statement and incorporated herein by
reference.
10.4 Purchase Agreement entered into as of September 15, 1994, by and
between the Company and Air Products and Chemicals, Inc., for the
sale and purchase of ammonium nitrate prills.1<F1>
10.5 Amendment No. 1 to Purchase Agreement entered into as of May 31,
1995, by and between the Company and Air Products and Chemicals,
Inc.
10.6 Agreement effective as of October 1, 1991, entered into 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, SEC File No. 2-7803, and incorporated herein by reference.
10.7 Amendment of Agreement, effective as of August 1, 1994, 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.
[FN]
1
<F1> Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
business information has been deleted from paragraph 1.5, paragraph 6.1,
paragraph 11.1; Exhibit A and Exhibit F of the Purchase Agreement, and an
application for confidential treatment has been filed separately with the
Commission.
10.8 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; filed as Exhibit 10.3 to the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1993,
SEC File No. 2-7803, and incorporated herein by reference.
10.9 Agreement made and entered into as of September 15, 1991, between
Office Cherifien des Phosphates and the Company's subsidiary
Mississippi Phosphates 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.
10.10 Amendment No. 3, effective as of January 1, 1995, to the Agreement
effective as of September 15, 1991, between Office Cherifien des
Phosphates and the Company's subsidiary Mississippi Phosphates
Corporation for the sale and purchase of phosphate rock.2<F2>
10.11 Amendment No. 2, effective as of July 1, 1993, to the Agreement
effective as of September 15, 1991, between Office Cherifien des
Phosphates and the Company's subsidiary Mississippi Phosphates
Corporation for the sale and purchase of phosphate rock.3<F3>
[FN]
2
<F2> Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
business information has been deleted from Schedule 1 to Amendment No. 3,
Exhibit B, and an application for confidential treatment has been filed
separately with the Commission.
3
<F3> Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
business information has been deleted from paragraphs numbered 5 and 8 of
Amendment No. 2; from the first paragraph, paragra ph numbered 1, paragraph
numbered 2, and paragraph numbered 3 of Schedule 1, Exhibit A; from Schedule 2,
Exhibit B; from Schedule 3, Exhibit C, and from Schedule 4, Exhibit D; and an
application for confidential treatment has been filed separately with the
Commission.
10.12 Amendment No. 1, effective as of July 1, 1992, to the Agreement
effective as of September 15, 1991, between Office Cherifien des
Phosphates and the Company's subsidiary Mississippi Phosphates
Corporation for the sale and purchase of phosphate rock.4<F4>
10.13 Gas Sales Agreement entered into by the Company and Sonat Marketing
Company as of July 13, 1995, for the sale and purchase of natural
gas.5<F5>
10.14 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.
10.15 Amendment to Joint Venture Agreement entered into by the Company
and First Mississippi Corporation effective as of May 28, 1993;
filed as Exhibit 10.4 to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993, SEC File No. 2-7803, and
incorporated herein by reference.
10.16 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.
10.17 Amendment to Products Withdrawal Agreement entered into by the
Company and First Mississippi Corporation effective as of May 28,
1993; filed as Exhibit 10.5 to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1993, SEC File No. 2-7803,
and incorporated herein by reference.
[FN]
4
<F4> Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
business information has been deleted from the first and second paragraphs of
paragraph numbered 1 of Amendment No. 1 and an application for confidential
treatment has been filed separately with the Commission.
5
<F5> Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
business information has been deleted from Article IV, Price, and an application
for confidential treatment has been filed separately with the Commission.
10.18 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 exhibit to Exhibit 4.2
to the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1990, SEC File No. 2-7803, and incorporated herein
by reference.
13 Excerpts from the Company's 1995 Annual Report to Shareholders.
21 List of subsidiaries of the Company.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K:
No reports were filed on Form 8-K during the three months ended June 30,
1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MISSISSIPPI CHEMICAL CORPORATION
By: /s/ Charles O. Dunn
President
Principal Executive Officer
By: /s/ William F. Hawkins
Senior Vice President-Finance and Administration
Principal Financial Officer and Chief Accounting
Officer
Date: September 28, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Charles O. Dunn Director, September 28, 1995
President and Chief Executive
Officer
(principal executive officer)
/s/ Coley L. Bailey Director, Chairman of the September 28, 1995
Board
/s/ John Sharp Howie Director, Vice Chairman of September 28, 1995
the Board
/s/ John W. Anderson Director September 28, 1995
/s/ Frank R. Burnside, Director September 28, 1995
Jr.
/s/ Robert P. Dixon Director September 28, 1995
/s/ W. R. Dyess Director September 28, 1995
/s/ Woods E. Eastland Director September 28, 1995
/s/ G. David Jobe Director September 28, 1995
/s/ George D. Penick, Jr. Director September 28, 1995
/s/ David M. Ratcliffe Director September 28, 1995
/s/ Wayne Thames Director September 28, 1995
MISSISSIPPI CHEMICAL CORPORATION
EXHIBIT INDEX
TO
FORM 10-K
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
1 Shareholder Rights Plan; filed as Exhibit 1 to the
Company's Report on Form 8-A dated August 15, 1994, SEC
File No. 2-7803, and incorporated herein by reference.
3.1 Articles of Incorporation of the Company; filed as
Exhibit 3.1 to the Company's Amendment No. 1 to Form S-1
Registration Statement filed August 2, 1994, SEC File
No. 33-53119, and incorporated herein by reference.
3.2 Bylaws of the Company; filed as Exhibit 3.2 to the
Company's Amendment No. 1 to Form S-1 Registration
Statement filed August 2, 1994, SEC File No. 33-53119,
and incorporated herein by reference.
4.1 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 Exhibit 4.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended June 30,
1992, SEC File No. 2-7803, and incorporated herein by
reference.
4.2 Indenture of Mortgage, Deed of Trust, Assignment and
Security Agreement dated as of September 1, 1976, among
the Company, the New Orleans Bank for Cooperatives,
John H. Farrelly, as trustee for the benefit of the New
Orleans Bank for Cooperatives under certain deeds of
trust, and Deposit Guaranty National Bank); filed as
Exhibit B to Exhibit 2 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1976, SEC
File No. 2-7803, and incorporated herein by reference.
4.3 Sixteenth Supplemental Indenture dated as of June 30, [ ]
1994, between the Company and Deposit Guaranty National
Bank.
4.4 Fifteenth Supplemental Indenture and Amendment to [ ]
Series I Revolving Credit/Term Loan Agreement dated as of
June 17, 1994, between the Company and Deposit Guaranty
National Bank.
4.5 Fourteenth Supplemental Indenture dated as of June 17, [ ]
1994, between the Company and Deposit Guaranty National
Bank.
4.6 Thirteenth Supplemental Indenture dated as of July 16,
1993, between the Company and Deposit Guaranty National
Bank; filed as Exhibit 4.1 to the Company's Current
Report on Form 8-K dated April 26, 1994, SEC File
No. 2-7803, and incorporated herein by reference.
4.7 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, SEC
File No. 2-7803, and incorporated herein by reference.
4.8 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, SEC File No. 2-7803, and
incorporated herein by reference.
4.9 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
Purchase 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 , 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, SEC File No. 2-7803, and incorporated herein by
reference.
4.10 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.
4.11 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.
4.12 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.
4.13 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.
4.14 Fifth Supplemental Indenture dated as of June 1, 1978,
between 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, SEC File
No. 2-7803, and incorporated herein by reference.
4.15 Fourth Supplemental Indenture dated as of May 1, 1978,
between 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.
4.16 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.
4.17 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.
4.18 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, SEC File No. 2-7803, and incorporated herein by
reference.
10.1 Mississippi Chemical Corporation 1994 Stock Incentive
Plan; filed as Appendix A to the Company's 1995 Proxy
Statement and incorporated herein by reference.
10.2 Mississippi Chemical Corporation 1995 Stock Option Plan
for Nonemployee Directors; filed as Appendix B to the
Company's 1995 Proxy Statement and incorporated herein by
reference.
10.3 Mississippi Chemical Corporation 1995 Restricted Stock
Purchase Plan for Nonemployee Directors; filed as
Appendix C to the Company's 1995 Proxy Statement and
incorporated herein by reference.
10.4 Purchase Agreement entered into as of September 15, 1994, [ ]
by and between the Company and Air Products and
Chemicals, Inc., for the sale and purchase of ammonium
nitrate prills.6<F6>
[FN]
6
<F6> Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
business information has been deleted from paragraph 1.5, paragraph 6.1,
paragraph 11.1; Exhibit A and Exhibit F of the Purchase Agreement, and a n
application for confidential treatment has been filed separately with the
Commission.
10.5 Amendment No. 1 to Purchase Agreement entered into as of [ ]
May 31, 1995, by and between the Company and Air Products
and Chemicals, Inc.
10.6 Agreement effective as of October 1, 1991, entered into
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, SEC File No.
2-7803, and incorporated herein by reference.
10.7 Amendment of Agreement, effective as of August 1, 1994, [ ]
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.
10.8 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; filed as
Exhibit 10.3 to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1993, SEC File No.
2-7803, and incorporated herein by reference.
10.9 Agreement made and entered into as of September 15, 1991,
between Office Cherifien des Phosphates and the Company's
subsidiary Mississippi Phosphates 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.
10.10 Amendment No. 3, effective as of January 1, 1995, to the [ ]
Agreement effective as of September 15, 1991, between
Office Cherifien des Phosphates and the Company's
subsidiary Mississippi Phosphates Corporation for the
sale and purchase of phosphate rock.7<F7>
10.11 Amendment No. 2, effective as of July 1, 1993, to the [ ]
Agreement effective as of September 15, 1991, between
Office Cherifien des Phosphates and the Company's
subsidiary Mississippi Phosphates Corporation for the
sale and purchase of phosphate rock.8<F8>
[FN]
7
<F7> Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
business information has been deleted from Schedule 1 to Amendment No. 3,
Exhibit B, and an application for confidential treatment has been filed
separately with the Commission.
8
<F8> Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
business information has been deleted from paragraphs numbered 5 and 8 of
Amendment No. 2; from the first paragraph, paragraph numbered 1, paragraph
numbered 2, and paragraph numbered 3 of Schedule 1, Exhibit A; from Schedule 2,
Exhibit B; from Schedule 3, Exhibit C, and from Schedule 4, Exhibit D; and an
application for confidential treatment has been filed separately with the
Commission.
10.12 Amendment No. 1, effective as of July 1, 1992, to the [ ]
Agreement effective as of September 15, 1991, between
Office Cherifien des Phosphates and the Company's
subsidiary Mississippi Phosphates Corporation for the
sale and purchase of phosphate rock.9<F9>
10.13 Gas Sales Agreement entered into by the Company and Sonat [ ]
Marketing Company as of July 13, 1995, for the sale and
purchase of natural gas.10<F10>
10.14 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.
10.15 Amendment to Joint Venture Agreement entered into by the
Company and First Mississippi Corporation effective as of
May 28, 1993; filed as Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended
June 30, 1993, SEC File No. 2-7803, and incorporated
herein by reference.
[FN]
9
<F9> Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
business information has been deleted from the first and second paragraphs of
paragraph numbered 1 of Amendment No. 1 and an application for confidential
treatment has been filed separately with the Commission.
10
<F10> Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential
business information has been deleted from Article IV, Price, and an application
for confidential treatment has been filed separately with the Commission.
10.16 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.
10.17 Amendment to Products Withdrawal Agreement entered into
by the Company and First Mississippi Corporation
effective as of May 28, 1993; filed as Exhibit 10.5 to
the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1993, SEC File No. 2-7803, and
incorporated herein by reference.
10.18 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 exhibit to Exhibit 4.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended
June 30, 1990, SEC File No. 2-7803, and incorporated
herein by reference.
13 Excerpts from the Company's 1995 Annual Report to [ ]
Shareholders.
21 List of subsidiaries of the Company. [ ]
23 Consent of Arthur Andersen LLP. [ ]
27 Financial Data Schedule.
EXHIBIT 4.3
SIXTEENTH SUPPLEMENTAL INDENTURE
This Sixteenth Supplemental Indenture dated as of June 30, 1994, between
Mississippi Chemical Corporation, a Mississippi corporation (the "Company"), and
Deposit Guaranty National Bank, as Trustee (the "Trustee"), to the Indenture of
Mortgage, Deed of Trust, Assignment and Security Agreement dated as of
September 1, 1976, among the Company, New Orleans Bank for Cooperatives (now the
National Bank for Cooperatives), John H. Farrelly, as trustee for the benefit of
the New Orleans Bank for Cooperatives (the "Old Trustee") under certain deeds of
trust specified in the Original Indenture, and the Trustee (the "Original
Indenture"), as supplemented by a First Supplemental Indenture dated as of
September 7, 1976 (the "First Supplemental Indenture"), a Second Supplemental
Indenture dated as of September 30, 1976 (the "Second Supplemental Indenture"),
a Third Supplemental Indenture dated as of June 28, 1977 (the "Third
Supplemental Indenture"), a Fourth Supplemental Indenture dated as of May 1,
1978 (the "Fourth Supplemental Indenture"), a Fifth Supplemental Indenture dated
as of June 1, 1978 (the "Fifth Supplemental Indenture"), a Sixth Supplemental
Indenture dated as of September 1, 1979 (the "Sixth Supplemental Indenture"), a
Seventh Supplemental Indenture dated as of October 1, 1979 (the "Seventh
Supplemental Indenture"), an Eighth Supplemental Indenture dated as of May 15,
1983 (the "Eighth Supplemental Indenture"), a Ninth Supplemental Indenture dated
as of February 23, 1988 (the "Ninth Supplemental Indenture"); a Tenth
Supplemental Indenture dated as of December 26, 1989 (the "Tenth Supplemental
Indenture"); an Eleventh Supplemental Indenture dated as of July 16, 1990 (the
"Eleventh Supplemental Indenture"); a Twelfth Supplemental Indenture dated as of
August 6, 1992 (the "Twelfth Supplemental Indenture"); a Thirteenth Supplemental
Indenture dated as of July 16, 1993 (the "Thirteenth Supplemental Indenture"); a
Fourteenth Supplemental Indenture dated as of June 17, 1994 (the "Fourteenth
Supplemental Indenture"); and a Fifteenth Supplemental Indenture dated as of
June 17, 1994 (the "Fifteenth Supplemental Indenture") (the Original Indenture,
as supplemented by the First through the Fifteenth Supplemental Indentures,
being hereinafter referred to as the "Indenture"),
W I T N E S S E T H T H A T:
WHEREAS, the Company's Board of Directors has recommended to the Company's
shareholders that the Company cease doing business as a cooperative and
otherwise implement the terms of the Plan described in the Company's Proxy
Statement/Prospectus dated May 27, 1994, a copy of which has heretofore been
provided to the Company's shareholders and to all Noteholders under the
Indenture; and
WHEREAS, as of July 16, 1990, the Company granted to Freeport-McMoRan
Resource Partners, Limited Partnership ("Freeport") an option to purchase the
Company's Hardee County, Florida, property and the underlying phosphate reserves
pursuant to an Agreement for Real Estate Purchase Option (the "Original
Option"); and
WHEREAS, as of July 1, 1993, the Original Option was assigned by Freeport
to IMC-Agrico Company ("IMC-Agrico"), a Delaware general partnership; and
WHEREAS, the Board has authorized the Company to convey certain property to
IMC-Agrico in partial exercise of the Original Option and to enter into the
remaining IMC-Agrico Agreements as defined below, substantially final copies of
which have been heretofore provided to the holders of the Series A Notes,
Series H Notes, Series I Notes, and Series J Notes; and
WHEREAS, the Company and Trustee desire to amend and supplement the
Indenture as hereinafter set forth; and
WHEREAS, this Sixteenth Supplemental Indenture is in substantially the form
approved by the holders of not less than 51% in aggregate unpaid principal
amount of each of the Series A Notes, the Series H Notes, the Series I Notes,
and the Series J Notes, and 51% in aggregate unpaid principal amount of all the
outstanding Notes; and
WHEREAS, this Sixteenth Supplemental Indenture witnesseth that the
Indenture is hereby amended and supplemented as follows:
ARTICLE I
SECTION 1.1. The proviso at the end of the first sentence of paragraph 3
of the Granting Clauses of the Original Indenture, and the second sentence of
such paragraph 3, are hereby deleted in their entirety and the following new
proviso and second sentence are substituted in their stead:
provided, however, that the security interests created in this
paragraph 3 in Commodity Loan Inventory are in all respects
subordinate and inferior to all security interests which the
Company has heretofore granted or may hereafter grant to secure
indebtedness in an amount not to exceed the amount of the
Permitted Lien described in Section 7.01(c). For the purposes of
this Indenture, "Commodity Loan Inventory" means all inventory of
the Company, of every description whatsoever, maintained in the
conduct of the Company's business, whether such inventory is now
existing or hereafter acquired as additional inventory, or as
replacement for existing inventory, consisting of fertilizer,
chemicals, raw materials in the manufacture of fertilizer and
fertilizer materials, fertilizer in the process of mixing, and
liquid and mixed fertilizer and fertilizer in bulk or bags, and
all proceeds and product of said inventory, which secure existing
or future indebtedness in an amount not to exceed the amount of
the Permitted Lien described in Section 7.01(c).
SECTION 1.2. The phrase numbered (ii) in the second paragraph of
exceptions following paragraph 6 of the Granting Clauses of the Original
Indenture (renumbered as paragraph 5 by Section 1.01 of the First Supplemental
Indenture) is hereby deleted in its entirety and the words "intentionally
omitted" are substituted in lieu thereof.
SECTION 1.3. Section 1.01 of the Indenture is hereby amended by including
therein the following definitions which shall be inserted after the definition
of "Florida Property":
"IMC-Agrico Agreements" shall mean (i) a General Warranty
Deed ("Deed") conveying to IMC-Agrico Company ("IMC-Agrico") a
portion equal to approximately 14/67 of the Company's property
and underlying phosphate reserves located in Hardee County,
Florida (the Company's property and underlying phosphate reserves
are hereinafter collectively referred to as the "Florida
Reserves," and the portion of the property conveyed by the Deed
is hereinafter referred to as the "Adjacent Property"), which
Florida Reserves constitute a part of the Florida Property;
(ii) the Agreement for Real Estate Purchase Option between the
Company and IMC-Agrico (the "Purchase Option") granting to
IMC-Agrico the exclusive option to purchase the balance of the
Florida Reserves; (iii) the Agreement for Real Estate Put Option
between the Company and IMC-Agrico (the "Put Option") granting to
the Company the right to put the balance of the Florida Reserves
to IMC-Agrico in the event the Purchase Option expires or is
terminated; and (iv) the Agreement for Real Estate Repurchase
Option between IMC-Agrico and the Company (the "Repurchase
Option") granting to the Company the exclusive option to
repurchase the Adjacent Property, in the event IMC-Agrico fails
to purchase the balance of Florida Reserves through the Purchase
Option or the Put Option.
SECTION 1.4. The phrase numbered (i) in Section 4.05(c) is hereby amended
by deleting the words "less than 30 nor" in the fourth line thereof.
Section 1.5. The phrase numbered (ii) in Section 4.05(c) is hereby amended
by adding the following in the last line thereof immediately after the word
"utilities" and immediately preceding the semicolon:
, and (z) certifying that no Event of Default, or event
which with notice or lapse of time or both would constitute
an Event of Default, shall have occurred and be continuing
SECTION 1.6. Section 4.06 is hereby amended by deleting the words "six
months" wherever they appear and substituting the words "two years" in their
stead.
SECTION 1.7. The period at the end of clause (b) of Section 5.08 is hereby
deleted and replaced by a semicolon and the following new clause (c) is added
immediately thereafter:
(c) notwithstanding the foregoing in this Section 5.08, the
Company shall, if so authorized by its shareholders, effect the
merger described in the Company's Proxy Statement/Prospectus
dated May 27, 1994; thereafter, the surviving company of such
merger, the name of which shall be Mississippi Chemical
Corporation, shall possess all of the rights and be subject to
all obligations of the Company set forth herein and shall
expressly assume in writing all the obligations of the Company
under the Note Purchase Agreements, the Series H Note Purchase
Agreement, the Series I Revolving Credit Loan Agreement, the
Series J Revolving Credit Agreement and this Indenture, and
thereafter all references in this Indenture to the "Company"
shall be deemed references to the surviving corporation named
Mississippi Chemical Corporation.
SECTION 1.8. Section 5.11(b)(i)(A) of the Original Indenture, as
previously amended, is hereby amended by deleting the same in its entirety and
substituting the following in its stead:
(A) create, incur, assume or suffer to exist any Lien upon
any of the Florida Property (other than Permitted Liens and any
Lien created by or resulting from the execution or performance of
the IMC-Agrico Agreements or the sale of the Florida Reserves
pursuant to the IMC-Agrico Agreements) and will promptly pay and
discharge all taxes, assessments and governmental charges or
levies and all lawful claims of whatever kind on or in respect
thereof, which if unpaid, might become or result in any Lien on
the Florida Property, or
SECTION 1.9. Section 5.11(b)(i)(B) of the Original Indenture, as
previously amended, is hereby amended by deleting the same in its entirety and
substituting the following in its stead:
(B) sell, lease, transfer, assign, convey or in any manner
dispose of any of the Florida Property, except: (1) to the
extent that the provisions of Section 4.05 of this Indenture
would so permit, were the Florida Property at the time included
in the Trust Estate and (2) pursuant to the provisions of the
IMC-Agrico Agreements.
SECTION 1.10. Section 5.11(b)(ii) of the Original Indenture, as previously
amended by the Eighth Supplemental Indenture, is hereby deleted in its entirety,
and the following new Section 5.11(b)(ii) is substituted in its stead:
(ii) at such time as the holders of 51% in aggregate
principal amount at the time outstanding of any series of Notes
then outstanding request in writing that the Company subject the
Florida Property to the Lien of this Indenture, the Company
shall, within 30 days thereafter, execute and deliver to the
Trustee (and to a co-trustee domiciled in Florida if then so
required by Florida law) in recordable form under the laws of
Florida, and record or file, such mortgages, deeds of trust,
financing statements and security agreements, each in form and
substance satisfactory to the holders of 51% of the aggregate
principal amount of the Notes then outstanding, necessary or
advisable with respect to all of its right, title and interest in
and to the Florida Property specifically subject to the rights of
IMC-Agrico under the IMC-Agrico Agreements and shall execute,
deliver and record or file all other documents (including but not
limited to an indenture supplemental to this Indenture, policies
of title insurance and/or an Opinion or Opinions of Counsel with
respect to the title of the Company thereto and such other
documents as the Trustee may require), each in form and substance
satisfactory to the holders of 51% of the aggregate principal
amount of the Notes then outstanding, in order to subject the
Florida Property to the Lien of this Indenture or, with the
consent of the holders of 51% of the aggregate principal amount
of the Notes of each series then outstanding, to subject to the
Lien of this Indenture an amount of the Florida Property equal to
the then outstanding principal amount of the Notes multiplied by
a fraction, the numerator of which shall be the then fair market
value of the Florida Property (determined in a manner
satisfactory to the holders of the aforesaid percentages of the
Notes of each series then outstanding) and the denominator of
which shall be the then fair market value (determined as
aforesaid) of all property (real, personal or mixed) then subject
to the Lien of this Indenture, subject only to Permitted Liens,
and the Trustee shall thereupon be empowered on behalf of the
Company to, and shall promptly, record or file such mortgages,
deeds of trust, financing statements and security agreements in
such offices in the State of Florida as shall be necessary or
advisable under the circumstances in order fully to subject such
property to the Lien of this Indenture, and no consent of or
further act by the Company shall be necessary in connection
therewith; and
SECTION 1.11. Sections 5.11(c) and (d), added to the Original Indenture by
the Eleventh Supplemental Indenture, are hereby deleted in their entirety.
SECTION 1.12. Section 5.16, added to the Original Indenture by the Tenth
Supplemental Indenture, is hereby amended by deleting the words "as now in
effect" in the eighth and ninth lines thereof and substituting the words "as in
effect on the effective date of the Sixteenth Supplemental Indenture" in their
stead.
SECTION 1.13. Section 5.17, added to the Original Indenture by the Twelfth
Supplemental Indenture, is hereby amended by deleting the words "as now in
effect" in the ninth line thereof and substituting the words "as in effect on
the effective date of the Sixteenth Supplemental Indenture" in their stead.
SECTION 1.14. Section 5.18, added to the Original Indenture by the
Fourteenth Supplemental Indenture, is hereby amended by deleting the words "as
now in effect" in the eleventh line thereof and substituting the words "as in
effect on the effective date of the Sixteenth Supplemental Indenture" in their
stead.
SECTION 1.15. Section 6.02 of the Original Indenture is hereby amended by
the deletion of the words "any present or future Commodity Loan Inventory" in
clause (ii) in the fourteenth line thereof and substituting the words
"intentionally omitted" in their stead.
SECTION 1.16. Section 7.01 of the Original Indenture is hereby amended by
deleting clause (c) in its entirety and substituting the following new clause
(c) in its stead:
(c) Liens on Commodity Loan Inventory securing indebtedness
of the Company in an amount not to exceed $15,000,000.
SECTION 1.17. Section 7.01 of the Original Indenture, as amended by the
Eighth Supplemental Indenture, is hereby amended by deleting clause (k) in its
entirety and substituting the following new clause (k) in its stead:
(k) Intentionally omitted;
SECTION 1.18. Section 7.05(a) of the Original Indenture, as amended by the
Eighth Supplemental Indenture, is hereby further amended by the addition of the
words "ending on or before June 30, 1994," in the second line thereof
immediately following the word "year" and immediately preceding the words "Net
Tangible Assets".
SECTION 1.19. Section 7.05(b) of the Original Indenture is hereby amended
by the addition of the words "ending on or before June 30, 1994," in the first
line thereof immediately following the words "fiscal year" and immediately
preceding the words "Net Tangible Assets".
SECTION 1.20. Section 7.05(c) of the Original Indenture is hereby amended
by the addition of the words "with respect to fiscal years ending on or before
June 30, 1994," in the second line thereof immediately following "7.05(b)" and
immediately preceding the words "the Company".
SECTION 1.21. Section 7.05 of the Original Indenture is hereby further
amended by the addition of the following new Section 7.05(d) at the end thereof:
(d) In fiscal years beginning on or after July 1, 1994, the
Company shall not directly or indirectly pay or declare a cash
dividend, or make a cash purchase of treasury stock (i) if an
Event of Default shall have occurred and be continuing, (ii) if
the payment of such a dividend or cash purchase price for
treasury stock would result in an Event of Default, or (iii) if
Net Tangible Assets do not exceed 166% of the aggregate unpaid
principal amount of Secured Funded Debt then outstanding.
SECTION 1.22. Section 7.09 of the Original Indenture is hereby deleted in
its entirety and the following new Section 7.09 is substituted in its stead:
The Company will engage primarily in the business of
manufacturing and distributing fertilizer and in such other
businesses as are reasonably related or incidental thereto,
including but not limited to operations vertically or
horizontally integrated therewith. In addition, the Company may
invest and/or engage in lines of business unrelated to fertilizer
if the sum of (a) the aggregate assets of the unrelated lines of
business on the consolidated balance sheet of the Company and its
Restricted Subsidiaries, plus (b) all contingent contractual
liabilities of the Company and its Restricted Subsidiaries for
the liabilities and other direct or indirect obligations of such
unrelated lines of business does not represent more than 10% of
the total assets of the Company and its Restricted Subsidiaries.
SECTION 1.23. Article Seven-A, added to the Original Indenture by the
Tenth Supplemental Indenture, is hereby amended by deleting the words "as in
effect on December 26, 1989" in the fifth line thereof and substituting the
words "as in effect on the effective date of the Sixteenth Supplemental
Indenture" in their stead.
SECTION 1.24. Article Seven-B, added to the Original Indenture by the
Twelfth Supplemental Indenture, is hereby amended by deleting the words "as in
effect on August 6, 1992" in the fifth line thereof and substituting the words
"as in effect on the effective date of the Sixteenth Supplemental Indenture" in
their stead.
SECTION 1.25. Article Seven-C, added to the Original Indenture by the
Fourteenth Supplemental Indenture, is hereby amended by deleting the words "as
in effect on June 9, 1994" in the fifth line thereof and substituting the words
"as in effect on the effective date of the Sixteenth Supplemental Indenture" in
their stead.
ARTICLE 2
MISCELLANEOUS PROVISIONS
SECTION 2.01. Except as supplemented and amended by this Sixteenth
Supplemental Indenture, all the covenants, agreements, terms and stipulations
contained in the Indenture, as heretofore in effect, shall continue in full
force and effect.
SECTION 2.02. This Sixteenth Supplemental Indenture 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.
IN WITNESS WHEREOF, the parties have caused this Sixteenth Supplemental
Indenture to be duly executed on and as of the date first above written.
ATTEST: MISSISSIPPI CHEMICAL CORPORATION
Signed and acknowledged
in the presence of:
By: /s/ Ethel Truly
By: /s/ Rosalyn B. Glascoe Assistant General Counsel
Corporate Secretary
(CORPORATE SEAL)
ATTEST: DEPOSIT GUARANTY NATIONAL BANK,
as Trustee
Signed and acknowledged
in the presence of:
By: /s/ Susan R. Tsimortos
By: /s/ Janice M. Powell Vice President and Trust
Assistant Trust Officer Officer
(CORPORATE SEAL)
STATE OF MISSISSIPPI
COUNTY OF YAZOO
Personally appeared before me, the undersigned authority in and for the
said county and state, on this 29th day of June, 1994, within my jurisdiction,
the within named Ethel Truly and Rosalyn B. Glascoe, who acknowledged that they
are Assistant General Counsel and Corporate Secretary, respectively, of
Mississippi Chemical Corporation, a Mississippi corporation, and that for and on
behalf of the said corporation, and as its act and deed they executed the above
and foregoing instrument, after first having been duly authorized by said
corporation so to do.
/s/ Linda G. Bentley
Notary Public
My Commission expires:
May 20, 1997
(Notarial Seal)
STATE OF MISSISSIPPI
COUNTY OF HINDS
Personally appeared before me, the undersigned authority in and for the
said county and state, on this 30th day of June, 1994, within my jurisdiction,
the within named Susan R. Tsimortos and Janice M. Powell, who acknowledged that
they are Vice President and Trust Officer and Assistant Trust Officer,
respectively, of Deposit Guaranty National Bank, a national banking association,
and that for and on behalf of the said corporation, and as its act and deed they
executed the above and foregoing instrument, after first having been duly
authorized by said corporation so to do.
/s/ Mary E. Huskey
Notary Public
My Commission expires:
Feb. 18, 1996
(Notarial Seal)
EXHIBIT 10.4
PURCHASE AGREEMENT
THIS AGREEMENT, is made and entered into as of the 15th day of September,
1994, to be effective on the 1st day of October, 1994 ("Effective Date"), by and
between MISSISSIPPI CHEMICAL CORPORATION, a Mississippi corporation, with its
principal place of business at Owen Cooper Administration Building, Highway 49E,
Yazoo City, Mississippi 39194-0388 ("MCC"), and AIR PRODUCTS AND CHEMICALS,
INC., a Delaware corporation, with its principal place of business at 7201
Hamilton Boulevard, Allentown, Pennsylvania 18195-1501 (collectively with its
affiliates referred to as "Air Products").
WHEREAS, Air Products produces ammonium nitrate prills which it sells to
agricultural users; and
WHEREAS, Air Products has made a unilateral decision to continue operating
its production facility but to exit the business of marketing its ammonium
nitrate prills; and
WHEREAS, MCC desires to purchase Air Products' ammonium nitrate prills;
NOW, THEREFORE, in consideration of the mutual benefits to be derived, the
parties agree as hereafter set forth.
1. DEFINITIONS
1.1 "Contract Year" shall mean initially a period beginning on
October 1, 1994, and running through June 30, 1995, and shall thereafter mean a
twelve (12) month period beginning July 1 of each calendar year.
1.2 "Agricultural Product" shall mean ammonium nitrate prills
produced by Air Products at its Pace, Florida, facility. This Agreement
envisions that the volume of Agricultural Product produced at Air Products'
Pace, Florida, facility will remain the same throughout the term of this
Agreement, excepting nominal and incremental production increases resulting from
increases in operating efficiencies.
1.3 "Variable Netback" with respect to ammonium nitrate prills shall
mean the excess of (i) subparagraph 1.3.1 over (ii) the sum of subparagraphs
1.3.2 and 1.3.3, as each of these are described below.
1.3.1 "Ammonium Nitrate Prills Revenue" shall mean the
revenues realized for ammonium nitrate prills sold by MCC.
1.3.2 "Direct Costs" shall mean the weighted average per-ton
costs incurred in connection with the sale of ammonium nitrate prills for such
items as, including but not being limited to, discounts; freight allowances;
customer truck fees; freight into storage; storage costs; bag costs; bagging
charges; delivery expenses; handling charges; rail delivery allowances; weighing
fees; pneumatic truck charges; direct transfer fees; special equipment fees;
wharfage; railcar lease costs and other such expenses of delivery directly
relating to the sale of ammonium nitrate prills by MCC as they may arise.
1.3.3 "Adjustments to Netback" shall mean any actual,
projected or accrued costs incurred in the normal course of business and
attributable to that month which are not Direct Costs, including but not being
limited to, shrinkage projection; interest cost resulting from extended terms or
slow-paying accounts; losses resulting from nonperforming accounts on all
ammonium nitrate prills; emergency storage costs; losses for which there is no
apparent responsible third party (examples of this include, but are not limited
to, losses occurring during transit not attributable to product quality problems
or any apparent problem with carrier's equipment and losses occurring during
storage not attributable to product quality problems or any apparent problem in
handling or storage facility); interest on ammonium nitrate prill inventory; and
taxes paid by MCC which are assessed on the sale and/or distribution of ammonium
nitrate prills.
1.3.3.1 It is agreed that storage costs and Adjustments
to Netback when calculated on a per-ton basis may be volume sensitive over a
period of time exceeding one (1) month. MCC will make every effort to
accurately project such volume-sensitive costs on a monthly basis and will use
this projection in the Variable Netback calculation. MCC will endeavor to
estimate and adjust these costs monthly. However, at the end of each Contract
Year, a final adjustment will be made based on actual costs.
1.3.3.2 Any interest costs assessed under the provisions
of this paragraph shall be at Chase Manhattan's Banker's Prime Lending Rate for
the relevant period.
1.3.4 In order to determine Variable Netback, the following
costs shall not be subtracted as an adjustment for calculating Variable Netback:
any costs which are incurred by MCC or Air Products associated with the general
administration or operation of their respective facilities, including but not
being limited to, costs incurred for such items as production; in-plant storage;
switching charges; in-plant maintenance; general and administrative expenses;
administrative staff or plant labor overhead; or taxes levied on the manufacture
of ammonium nitrate prills. A sample calculation of Variable Netback is set
forth in Exhibit A incorporated herein.
1.4 "Cash Cost" shall mean Air Products' projected cash cost of
producing Agricultural Product (raw material and conversion) provided by Air
Products to MCC for each calendar quarter, not to exceed current Price.
1.5 "Discount" shall mean the (confidential treatment has been
requsted) per-ton ($confidential treatment has been requested/Ton) reduction on
MCC's purchase price of Air Products' Agricultural Product plus escalation on
the first (confidential treatment has been requested) per-ton ($ confidential
treatment has been requested/Ton) after the end of the third Contract Year in
accordance with the annual change in the United States Consumer Price Index for
all urban consumers, using the period July 1, 1996, to June 30, 1997, as the
base year. In no event shall the Discount fall below (confidential treatment
has been requested) per-ton ($ confidential treatment has been requested/Ton).
1.6 "Price" shall mean Variable Netback calculated on a per-ton
basis minus Discount.
1.7 For the purposes of this Agreement, reference to ammonium
nitrate prills shall mean, in all cases, fertilizer grade prilled ammonium
nitrate intended for agricultural use.
1.8 "Agreement" shall mean this Purchase Agreement and all of its
Exhibits.
2. TERM
2.1 The term of this Agreement shall be a period of fifteen (15)
years beginning on the Effective Date and automatically extending thereafter for
additional five (5) year periods, unless terminated by notification from either
party to the other party not less than one (1) year before the expiration of the
initial term or one (1) year before the expiration of any five (5) year period,
unless terminated sooner by either party as provided by another provision of
this Agreement.
3. SALE AND PURCHASE OF AGRICULTURAL PRODUCT
3.1 Subject to the provisions of paragraph 3.4, during the term of
this Agreement, Air Products shall sell to MCC, and MCC shall purchase from
Air Products, all of the Agricultural Product produced by Air Products at its
Pace, Florida, facility.
3.2 Upon execution of this Agreement, Air Products agrees to
provide MCC with a forecast of Agricultural Product production for each month
through June 30, 1995. At the end of each month thereafter, Air Products will
provide a three (3) month rolling forecast. Air Products will use its
reasonable efforts to produce the quantity of Agricultural Product provided in
the month-end forecast for the following month.
3.3 On or before June 30 of each year, Air Products shall provide
MCC with a good-faith forecast of its anticipated production of Agricultural
Product in the twelve (12) month period beginning July 1. At MCC's request,
Air Products will also provide an outlook as to the direction its Agricultural
Product production is likely to take over the course of the next two (2) years.
3.4 On or before the first day of each calendar quarter, the
parties will discuss purchases hereunder and Air Products' production estimates
for the immediately following calendar quarter. In the event that MCC
determines, in its sole discretion, that it will be unable to make arrangements
for the marketing, in a commercially reasonable manner, of the entire production
of Agricultural Product for such calendar quarter, then it shall advise Air
Products of the quantity of Agricultural Product that it can efficiently market
and that it will purchase from Air Products during such calendar quarter. To
the extent that the production of Agricultural Product during a calendar quarter
exceeds MCC's commitment to purchase Agricultural Product during such calendar
quarter, MCC shall release Air Products from its obligation to sell the excess
Agricultural Product during the quarter to MCC, and Air Products shall have the
right to sell the excess Agricultural Product to parties other than MCC.
4. SHIPMENTS
4.1 Air Products will provide rail siding space for handling full
and empty railcars at no cost to MCC. MCC acknowledges that Air Products' rail
siding space is limited and is not designed for long-term storage, and will make
reasonable efforts to minimize the on-site number of railcars, in no event to
exceed forty (40) railcars without Air Products' specific approval.
4.2 Air Products will be responsible for the loading of
Agricultural Product at the Pace, Florida, facility. MCC will be responsible
for the loading of Agricultural Product at all other locations.
4.3 MCC will provide scheduling of all railcars and bulk trucks
and bills of lading for all shipments, rail and truck. Air Products agrees to
accommodate MCC's terminal and printer at the Pace, Florida, facility for this
purpose. MCC shall also provide communication with carriers and shipment
tracking. Air Products shall electronically report to MCC weights and vehicle
numbers for any shipments leaving the Pace, Florida, facility not later than the
next business day following the shipment.
4.4 The party responsible for loading under paragraph 4.2 shall be
responsible for inspection and acceptance or rejection of any railcar or truck
prior to loading. The party responsible for loading shall also be responsible
for complying with all applicable laws and regulations with respect to the
loading for shipment and shipment of the product.
5. DELIVERY
5.1 Title and risk of loss to Agricultural Product shall pass to
MCC upon Air Products' delivery of Agricultural Product into railcar or truck of
MCC or its customer at the Pace, Florida, facility.
6. PRICING AND PAYMENT
6.1 Payment to Air Products from MCC with respect to sales in any
calendar month is calculated by (i) multiplying (confidential treatment has been
requested) times the number of tons of Agricultural Product shipped from Pace,
Florida, directly to MCC's customers and shipped from MCC's inventory to MCC's
customers during the month, (ii) plus (confidential treatment has been
requested) times the number of tons of Agricultural Product shipped into MCC's
inventory during the month, and (iii) minus credit for the weighted average
(confidential treatment has been requested) previously paid on the tons of
Agricultural Product shipped from MCC's inventory to MCC's customers during the
month. An example of the payment calculation is included herein as Exhibit A
and Exhibit A-1.
6.2 Each month MCC shall pay for the previous month's purchases
by MCC of Agricultural Product based on shipments weighed out through truck or
rail from Pace, Florida. In no event shall there be more than twenty (20)
railcars loaded and on Air Products' property which have not been invoiced by
Air Products. MCC will provide to Air Products the data necessary for Air
Products to invoice MCC as soon as practical following month-end, but not later
than the twelfth (12th) day of the month. The sales to MCC for any given month
will be paid to Air Products by the fifteenth (15th) day of the month following
such sales. MCC will pay each invoice by electronic transfer of funds to Air
Products' account in accordance with Exhibit B, which is incorporated herein.
6.3 Air Products shall provide MCC with a copy of the current
calibration certificate for the truck scales on a quarterly basis, and shall
provide a photocopy of the rail scale calibration certificate twice per year.
6.4 MCC shall have the obligation once every twelve (12) months
during the term of this Agreement, and for twenty-four (24) months following
termination, to cause its independent public accountants to audit MCC's books
and records insofar as they relate to the calculation of the Variable Netback
and to express an opinion of its auditors that the Variable Netback has been
calculated in accordance with this Agreement. An adjustment shall be made as
necessary to reflect any corrections during the previous twelve (12) months, or
during the last twelve (12) months of this Agreement if terminated, as
determined by the audit.
7. TAXES
7.1 Each party shall bear and pay all federal, state and local
taxes based upon or measured by its net income or net worth, and all taxes, fees
or other charges based upon its corporate existence or its general right to
transact business.
8. TECHNOLOGY TRANSFER
8.1 MCC will provide to Air Products technical information related
to the manufacture of Agricultural Product as set forth in Exhibit E hereto and
to the extent necessary to allow Air Products to manufacture Agricultural
Product meeting the specifications set forth in Exhibit F to this Agreement. In
the event of a conflict between any provision of this Agreement and any
provision of Exhibit E, "Technology Transfer," the provisions of Exhibit E will
control with respect to the technology transferred from MCC to Air Products.
8.2 Air Products will undertake to adopt the technology
transferred by MCC pursuant to Exhibit E, "Technology Transfer," for the purpose
of achieving market compatibility between Agricultural Product and AMTRATE(R)
produced by MCC.
8.3 The implementation of the technology described in Exhibit E,
"Technology Transfer," is not anticipated to cost more than Five Hundred
Thousand and 00/100 Dollars ($500,000.00). In the event that the cost of
implementation exceeds this amount, then Air Products may choose to either
expend such amounts as are necessary to install the technology or terminate this
Agreement, at its sole and exclusive option. In the event that Air Products
chooses to terminate the Agreement, then it shall terminate effective
ninety (90) days from the date of Air Products' original notice to MCC under
this paragraph 8.3.
8.4 In the event that Air Products is unable to meet the
specifications set forth in Exhibit F following installation of the technology
described in Exhibit E, Air Products shall have the right to install additional
equipment or make such other modifications as are necessary to meet such
specifications by March 30, 1995. In the event that Air Products elects not to
make such installations or modifications as are necessary to meet the
specifications, then MCC at its sole and exclusive option may modify the
specifications or terminate this Agreement effective June 30, 1995.
8.5 During the course of this Agreement it may become necessary to
make revisions in the specifications set forth as Exhibit F. In such event, MCC
will notice Air Products of the proposed revisions and, for a period of ninety
(90) days, will discuss with Air Products the changes necessary to effectuate
such revisions. Air Products will in no event be required to install additional
equipment or make modifications to meet such revised specifications; however,
upon Air Products' decision not to adopt the revised specifications, MCC may, at
its option, terminate this Agreement and the associated Technology Transfer
effective one (1) year from the date of the original notice to Air Products of
the proposed revisions under this paragraph 8.5.
9. WARRANTY
9.1 Air Products warrants it has title to Agricultural Product
delivered hereunder and may properly sell the same and that such Agricultural
Product shall conform to the specifications set forth in Exhibit C, which is
incorporated herein until such time that MCC's proprietary coating technology is
implemented. Upon the implementation of the coating technology, the
specification attached as Exhibit F will be the specification for Agricultural
Product and is intended to be the same specification as MCC's current production
specification for AMTRATE(R). Air Products shall maintain data on any quality
testing of any Agricultural Product and shall provide certificates as to quality
to MCC upon reasonable request. Air Products shall retain daily production
samples for ninety (90) days. MCC, at its expense, shall have the right to test
the Agricultural Product for the purpose of determining compliance with the
specifications.
10. STORAGE
10.1 Air Products shall make available in-plant storage for the
Agricultural Product (consisting of not less than two thousand five
hundred (2,500) tons of bulk ammonium nitrate storage and twenty
thousand (20,000) tons of ammonium nitrate solutions storage as 100% ammonium
nitrate) at no cost to MCC, and the in-plant storage costs will not be a factor
in calculating Variable Netback. Likewise, MCC shall make available in-plant
storage for its ammonium nitrate prills at Yazoo City, Mississippi, with no
related cost factor attributable to the Variable Netback.
11. ASSIGNMENT OF CONTRACTS
11.1 In consideration for MCC's agreement to purchase Air Products'
production of Agricultural Product during the term of this Agreement,
Air Products agrees to use all reasonable efforts to assign to MCC, and MCC will
accept assignment of, each of its contracts with its customers, (confidential
treatment has been requested). In the event that any customer withholds consent
to an assignment of its contract with Air Products, Air Products will withhold
such tons under this Agreement as are necessary to supply Air Products'
obligation to such customer under its contract with such customer and shall
immediately notify the customer of Air Products' intent to terminate its
contract at the earliest allowable date.
12. FORCE MAJEURE
12.1 Neither party shall be liable for any failure or delay in
performance hereunder (except for the payment for Agricultural Product
previously delivered hereunder) which may be due to Force Majeure.
12.1.1 For the purposes hereof, the term Force Majeure means
a condition or event occurring beyond the control of the party suffering the
event which prevents performance under this Agreement. Force Majeure includes,
without limitation, any war (whether declared or undeclared), fire, flood,
lightning, earthquake, storm, or act of God; mechanical breakdown or partial or
total destruction of the manufacturing facility; any strike, lockout or other
labor difficulty, civil disturbance, riot, sabotage, accident or explosion; any
official order, directive or industry-wide request by any governmental authority
which, in the reasonable judgment of either party makes it necessary to cease or
reduce production or other performance under this Agreement; any inability to
secure necessary fuel, power, equipment, transportation or raw materials,
including the inability to secure any such item by reason of allocations
promulgated by any governmental authority; or Air Products' operating costs for
producing Agricultural Product exceeds the revenues that it receives therefor.
12.2 Performance under this Agreement may be suspended during the
period of any such Force Majeure.
12.2.1 The party affected by an event described herein shall,
promptly upon learning of such event and ascertaining that it has or will affect
its performance hereunder, give notice to the other party, stating the nature of
the event, its anticipated duration and any action being taken to avoid or
minimize its effect. Any Force Majeure event shall, so far as reasonably
possible, be remedied with all reasonable dispatch, provided that the settlement
of strikes, lockouts, industrial disputes, or disturbances shall be entirely
within the discretion of the affected party.
12.2.2 Performance under this Agreement shall resume to the
extent made possible by the end of the Force Majeure event.
13. EVENTS OF TERMINATION
13.1 Air Products may suspend this Agreement at any time during the
initial term, or during any extension thereof, on six (6) months' notice to MCC
in accordance with section 18 that it will cease production of Agricultural
Product, in which case the suspension will be effective when actual production
ceases. MCC may choose to terminate this Agreement, at its option, should Air
Products' production of Agricultural Product not resume after a period of six
(6) months. Neither party is required to submit to the provisions of section 16
regarding arbitration to exercise its options under this paragraph.
13.2 In the event that MCC is unable to earn a quarterly profit
from the sale of Agricultural Product and the condition is expected to continue,
MCC and Air Products shall negotiate in good faith to alleviate the hardship.
In the event that the parties are unable to agree within a period of ninety (90)
days on alternative arrangements which alleviate the hardship condition, the
Agreement may be terminated one (1) year following the date of the original
notice to Air Products of hardship under this subparagraph 13.2. Neither party
is required to submit to the provisions of section 16 regarding arbitration to
exercise its options under this paragraph.
13.3 Following receipt of a notice of suspension or termination
under any subparagraph of this section 13, from either Air Products or MCC, MCC
will make no commitment for sales of additional tons of Agricultural Product
beyond the anticipated suspension or termination date of this Agreement; and
Air Products hereby agrees to satisfy any Agricultural Product commitments made
by MCC prior to MCC's receipt of notice of termination, up to commitments made
for the current fertilizer year, but in no event less than a period of three (3)
months.
14. LIABILITY
14.1 Air Products' sole liability, and MCC's sole and exclusive
remedy, for Air Products' failure to deliver Agricultural Product shall be the
difference between the price of such quantity of Agricultural Product under this
Agreement and the higher price MCC necessarily pays to a third party to obtain
product required in replacement.
14.2 Air Products' sole liability, and MCC's sole and exclusive
remedy, for Air Products' failure to deliver Agricultural Product which conform
to the specifications in effect under Exhibit C or Exhibit F shall be
replacement by Air Products of a like quantity of conforming Agricultural
Product at no additional cost to MCC and reimbursement of any commercially
reasonable costs necessarily incurred by MCC in connection with the receipt,
storage, handling, reshipment, or disposal of the nonconforming Agricultural
Product. Any claim must be received by Air Products in writing within thirty
(30) days of the receipt by MCC or MCC's customer.
14.3 From and after January 1, 1995, for claims brought by
customers of MCC against Air Products where language disclaiming warranty and
limiting liability as described in Exhibit D was not provided by MCC to the
customer either by sales contract or by invoice subsequent to the sale, then MCC
agrees to defend and indemnify Air Products with respect to such claim. The
language set forth in Exhibit D is not currently in use by MCC and for purposes
of transition, this paragraph 14.3 will become effective for the language to be
included in all sales invoices from and after January 1, 1995, and for
contracts, shall be included in each new or renewed contract between MCC and
customers upon execution of any new contracts or renewal of an existing contract
as they arise from and after January 1, 1995.
15. CONFIDENTIALITY
15.1 MCC acknowledges and agrees that the provisions of the
1994 Confidential Disclosure Agreement between MCC and Air Products shall govern
the transfer of any confidential or proprietary business information by
Air Products to MCC in connection with this Agreement or the performance of any
rights or obligations contemplated hereunder.
15.2 Air Products and MCC each acknowledge and agree that the
provisions of the 1994 Secrecy Agreement between MCC and Air Products shall be
superseded by Exhibit E, "Technology Transfer," and that the provisions of
Exhibit E shall exclusively govern the transfer of any confidential or
proprietary technical information by MCC to Air Products in connection with this
Agreement or the performance of any rights or obligations contemplated
hereunder. Air Products and MCC each acknowledge and agree that the provisions
of Exhibit H, "Secrecy Agreement," govern the transfer of any confidential or
proprietary technical information by Air Products to MCC in connection with this
Agreement or the performance of any rights or obligations contemplated
hereunder.
16. DISPUTES
16.1 All disputes, controversies or differences between the
parties arising out of, in relation to or in connection with this Agreement, or
the breach thereof, which cannot be resolved through negotiations to the
satisfaction of either of the parties within sixty (60) days after the date one
party has notified the other party in writing of such dispute, controversy or
difference, shall be resolved by binding arbitration. Both parties shall submit
their respective positions with regard to the disputed matter in writing to an
arbitration panel consisting of three arbitrators, one of whom shall be
appointed by Air Products, one by MCC, and the third by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then such third arbitrator shall be a partner in one of the
"Big Six" accounting firms not employed by Air Products or MCC or any of their
respective affiliated companies (if the disputed matter is financial in nature);
an engineer or similar professional familiar with operations similar to those of
the Pace, Florida, facility (if the disputed matter is operational in nature);
or, an attorney familiar with contracts of this kind (if the disputed matter
involves an issue of contractual interpretation) appointed by the American
Arbitration Association. The arbitration shall be conducted pursuant to the
Commercial Arbitration Rules of the American Arbitration Association and shall
be held in Jackson, Mississippi. The determination of the arbitration panel
shall be final and binding on the parties hereto. Judgment upon the arbitration
panel's award may be entered in any court having jurisdiction thereof. The fees
and expenses of all arbitrators shall be paid equally by Air Products and MCC.
17. PUBLIC ANNOUNCEMENTS
17.1 Neither Air Products nor MCC or any of their respective
affiliates shall issue or make any press release, public announcement,
confirmation or other disclosure or information relating to this Agreement or
the transactions contemplated hereby, except with the prior approval of the
other party.
18. NOTICE
18.1 Any notice to be given under this Agreement shall be in
writing and shall be delivered personally or by certified mail (postage prepaid
and return receipt requested), courier or overnight delivery service (delivery
charge prepaid), or by telecopy. Any notice shall be effective only if and when
it is received by the addressee. For the purposes hereof, the addresses and
telephone and telecopier numbers of Air Products and MCC are as follows:
Air Products: Air Products and Chemicals, Inc.
Attention: Corporate Secretary
7201 Hamilton Boulevard
Allentown, PA 18195-1501
Telephone: 610/481-7071
Telecopier: 610/481-5765
MCC: Mississippi Chemical Corporation
Attention: Corporate Secretary
P. O. Box 388
Yazoo City, MS 39194-0388
Telephone: 601/746-4131
Telecopier: 601/746-9158
19. GOVERNING LAW
19.1 This Agreement shall be governed by, construed under, and
enforced in accordance with the laws of the state of Mississippi.
20. ENTIRE AGREEMENT
20.1 This Agreement and its Exhibits constitute the entire
understanding between the parties and supersedes all prior discussions,
statements, and representations, oral or written, relating to the subject matter
of this Agreement. No amendment or modification shall be valid unless in
writing specifically referencing this Agreement and signed by a duly authorized
representative of each party. All purchase orders or purchase acknowledgments
which may be used to order or acknowledge orders for delivery of Agricultural
Product shall be deemed intended for record purposes only, and any terms or
conditions contained therein shall not serve to add to or modify the terms and
conditions of this Agreement.
21. GENERAL PROVISIONS
21.1 MCC agrees to adhere to all existing and future site safety,
hygiene and environmental regulations and policies while at the Pace, Florida,
facility.
21.2 No waiver or failure to enforce any term of this Agreement
shall effect or limit a party's right thereafter to enforce or compel strict
compliance with every term of this Agreement.
21.3 If any provision of this Agreement is held invalid by any
court of law or administrative or regulatory body, all other provisions hereof
shall continue in full force and effect.
21.4 This Agreement may not be assigned by either party without the
prior written consent of the other party. This Agreement shall inure to the
benefit of and be binding upon the successors and, if properly assigned, the
assigns of both parties.
21.5 No person not a party to this Agreement shall have any
interest in or right under this Agreement as a third-party beneficiary or
otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first set forth above.
MISSISSIPPI CHEMICAL CORPORATION AIR PRODUCTS AND CHEMICALS, INC.
By: /s/ Charles O. Dunn By: /s/ Robert E. Gadomski
President Group Vice President - Chemicals
Date: September 15, 1994 Date: September 19, 1994
EXHIBIT A
EXAMPLE BILLING
Year To Date
Ammonium Nitrate Prills Revenue $16,093,509.00
(Confidential treatment has been (Confidential
requested) treatment has
been requested)
(Confidential treatment has been (Confidential
requested) treatment has
been requested)
Variable Net-Back 12,968,645.37
Total Ammonium Nitrate Prill Tons 98,509
Sold
(Confidential treatment has been (Confidential
requested) treatment has
been requested)
Confidential treatment has been (Confidential
requested) treatment has
been requested)
PRICE $122.65
Agricultural Product:
YTD Tons Sold - Direct 18,000
YTD Tons Sold from Inventory 3,337
Total Tons Sold YTD 21,337
YTD Payment Due for Agricultural $2,616,983.05
Product Sold
Credit for Previous Payments ($1,231,980.00)
Current Month Payment 1,385,003.05
Shrinkage Monthly (3,173.85) A. Exhibit A - 1
Interest Monthly (1,312.37) B. Exhibit A - 1
Payment for Tons Sold $1,380,516.83
Payment for tons Shipped to $317,385.00 C. Exhibit A - 1
Inventory
Credit for Tons Sold from Inventory ($157,239.25) D. Exhibit A - 1
Payment Due for Agricultural Product $1,540,662.58
<TABLE>
<CAPTION>
EXHIBIT A - 1
EXAMPLE INVENTORY CALCULATION
TONS
Albany Montgomery Total
<S> <C> <C> <C> <C> <C> <C>
BEGINNING INVENTORY:
MCC Product 3,619 1,664 5,283
Agricultural Product 381 665 1,046
4,000 2,329 6,329
SHIPMENTS TO INVENTORY:
MCC product 3,000 1,500 4,500
Agricultural Product 1,900 800 2,700
4,900 2,300 7,200
TOTAL TONS AVAILABLE
MCC product 6,619 74.37% 3,164 68.35% 9,783
Agricultural Product 2,281 25.63% 1,465 31.65% 3,746
8,900 4,629 13,529
SALES FROM INVENTORY
MCC product 1,885 74.37% 1,487 68.35% 3,372
Agricultural Product 649 25.63% 688 31.65% 1,337
2,534 2,175 4,709
ENDING INVENTORY
MCC product 4,734 74.37% 1,677 68.35% 6,411
Agricultural Product 1,632 25.63% 777 31.65% 2,409
6,366 2,454 8,820
DOLLAR VALUE; AGRICULTURAL PRODUCT Total
BEGINNING $ VALUE: $44,828.46 $78,303.75 $123,132.21
SHIPMENTS TO INVENTORY $223,345.00 $94,040.00 C. $317,385.00
VALUE AVAILABLE FOR SALE $268,173.46 $172,343.75 $440,517.21
SALES FROM INVENTORY $76,302.93 $80,936.32 D. $157,239.25
ENDING INVENTORY VALUE $191,874.24 $91,406.28(1)<F1> $283,280.52
PER TON AGRICULTURAL PRODUCT INVENTORY Total
BEGINNING INVENTORY VALUE $117.66 $117.75 $117.72
SHIPMENTS TO INVENTORY
Cash Cost $117.55 $117.55
Price 122.65 122.65
Lesser of Cash Cost and $117.55 $117.55 $117.55
Price
VALUE AVAILABLE FOR SALE 117.57 117.64 $117.60
VALUE SHIPPED FROM 117.57 117.64 $117.60
INVENTORY
ENDING INVENTORY VALUE $117.57 $117.64 $117.60
SHRINKAGE CALCULATION Total
Shipments to Inventory $223,345.00 $94,040.00 $317,385.00
Shrinkage Factor 1.00% 1.00%
Shrinkage $2,233.45 $940.40 A. $3,173.85
INTEREST CALCULATION Total
Chase Manhattan Prime 7.75%
Beginning Inventory $44,828.46 $78,303.75
Ending Inventory 191,874.24 91,406.28
Total 236,702.70 169,710.03
Average $118,351.35 $84,855.02
Total Interest $764.35 $548.02 B. $1,312.37
<FN>
<F1> (1) Figures may not total as ending inventory value
represents Per Ton Value Times Rounded Ton Figure
</TABLE>
EXHIBIT B
ELECTRONIC TRADE PAYMENTS
1. Company Name and Address Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
Allentown, PA 18915-1501
2. Company I.D. Number (IRS) 231274455
(IRS Taxpayer Number and (DUNS) 00-300-1070
Company DUNS Number)
3. Depository Bank Name and Address Mellon Bank, N.A.
Mellon Bank Center
Pittsburgh, PA 15258-0001
4. Depository Bank Transit 043000261
Routing Number
5. Depository Bank Operations Janice L. Pottmeyer
Contact Name and Telephone Number 412/234-2489
6. Account Name Air Products and Chemicals, Inc.
7. Account Number 115-1265
8. Type of Transaction We Want Deposited CTP [x] CT X [ ]
to Your Account
9. Company Contact Name and Ellen D. Appell, Treasury
Telephone Number 610/481-7659
EXHIBIT C
PRODUCT SPECIFICATION FOR AMMONIUM NITRATE PRILLS
PRODUCED AT PACE, FLORIDA
The properties listed below are for material sampled at the Finished Product
Belt
COMPOSITION
PROPERTY UNITS MINIMUM MAXIMUM ANALYTICAL METHOD
Total Nitrogen % 34.0 --- SD-131
Ammonium Nitrate % 97.2 --- SD-131
Magnesium % 1.6 2.0 501.13
Nitrate
Total Moisture % --- 0.45 501.12
pH SU 6.0 7.0 501.14
Amines-Oil ppm 300.0 400.0 501.09
Coating
PHYSICAL CHARACTERISTICS
Mesh
Particle Size (U.S. Standard Mesh) Range, %
Distribution +6 0-1
+8 10-25
+10 25-35
+12 35-50
+14 5-10
-14 0-2
Unpacked Bulk Density 60-63 lb/cu.ft.
Angle of Repose 25-28 degrees
Appearance near-white prills
EXHIBIT D
LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTY
A. SELLER AND MANUFACTURER MAKE NO WARRANTY, EXPRESS OR IMPLIED, EXCEPT
THAT THE PRODUCT IS OF THE QUALITY SET FORTH IN MCC'S APPLICABLE PUBLISHED
SPECIFICATIONS (IF ANY). THE AFORESAID WARRANTY RUNS ONLY TO THE BUYER.
SELLER AND MANUFACTURER WARRANT NEITHER THE RESULTS TO BE OBTAINED FROM USE OF
THE PRODUCT, ITS MERCHANTABILITY, NOR ITS FITNESS FOR ANY PARTICULAR PURPOSE.
B. The quantity of Product is deemed to be the quantity determined at the
time of shipment by shipper's scale weights or marine survey, whichever is
applicable.
C. Seller and Manufacturer disclaim all risk and liability directly or
indirectly related to unloading, discharge, storage, handling, use (whether
alone, in combination with other substances or in the operation of any process),
and/or sale of the Product, and directly or indirectly arising out of compliance
or noncompliance with the laws, ordinances, and regulations of any governmental
entity or agency. Without limiting the generality of the foregoing, Seller and
Manufacturer expressly disclaim liability for the failure of discharge or
unloading implements or material used by the Buyer (whether or not supplied by
Seller or Manufacturer) and for the infringement of patent or other proprietary
rights.
D. Any technical advice or assistance furnished Buyer, whether before or
after delivery of the Product, for use in connection with unloading, discharge,
handling, storage, shipment, processing or use of product, or in connection with
the design or operation of any machinery or equipment related thereto, will be
without charge and without warranty; Buyer shall accept such technical advice or
assistance at Buyer's sole risk.
E. In no event shall Seller or Manufacturer be liable to Buyer for loss
of profits or for consequential, special or indirect damages resulting from
delay in or failure of performance hereunder or in any way related hereto. In
no event shall Seller or Manufacturer be liable to Buyer or any other party in
connection with any claim related to or arising out of this sale, including for
negligence, in an amount exceeding so much of the purchase price as is
applicable to that portion of the Product with respect to which such claim
relates. Failure to give notice of a claim with respect to the Product within
ten (10) days after the occurrence upon which such claim is founded shall
constitute a waiver by Buyer of such claim.
F. No consent to, waiver of or excuse from a breach hereunder, whether
express or implied, shall constitute a consent to, waiver of, or excuse from any
prior, concurrent or subsequent breach of the same or any other term or
provision.
EXHIBIT E
TECHNOLOGY TRANSFER
The parties to the Agreement to which this Exhibit E is annexed agree that MCC
will provide to Air Products sufficient information to allow Air Products to
manufacture prilled ammonium nitrate in accordance with the Agreement and with
MCC specifications for the product known by the trade name AMTRATE(R), the
specifications for which are found at Exhibit F to the Agreement.
SECTION 1. DEFINITIONS.
For purposes of this Exhibit E:
(a) "Product" means fertilizer grade prilled ammonium nitrate to be
manufactured by Air Products to MCC's specifications for AMTRATE(R).
(b) "MCC Coating Technology" means the know-how, process and apparatus for
production and application of a coating agent for Product using MCC
Information and Supplemental MCC Information.
(c) "Territory" means Air Products' Pace, Florida, facility.
(d) "Effective Date" is the effective date of the Agreement to which this
Exhibit E is annexed.
(e) "MCC Information" means designs, technical experience, data and know-how
for the design and operation of ammonium nitrate plants and other valuable
information conveyed to Air Products during the Term of the Agreement
relating to (i) processes for producing particulate ammonium nitrate,
including all steps undertaken from the preparation of the feedstock
through the treatment of the end product; (ii) product specifications and
additives designed to improve the physical properties of the particulate
product; and (iii) processes for the production and use of a coating agent
which is described in U.S. Patent 4,521,239.
(f) "Supplemental MCC Information" means the inventions, specifications,
production data, specialized know-how, skill and other secret and
confidential technical information relating to the manufacture of ammonium
nitrate which is owned or controlled by MCC or under which MCC has the
royalty-free right to license others and which MCC acquires and conveys to
Air Products during the Term of the Agreement.
(g) "Term of the Agreement" means the period during which the Agreement to
which this Exhibit E is annexed is in effect.
SECTION 2. THE GRANT.
(a) For the Term of the Agreement and upon the conditions hereinafter more
specifically set forth, MCC hereby grants to Air Products, under said
MCC Information and Supplemental MCC Information, the nonexclusive right to
manufacture the Product in the Territory.
(b) Except as MCC and Air Products may hereafter agree in writing, Air Products
shall have no right (i) to permit or subcontract others to use the MCC
Information or Supplemental MCC Information, or (ii) to disclose to or
permit or sublicense others to use the MCC Information or Supplemental MCC
Information, or (iii) to use the MCC Information or Supplemental MCC
Information in connection with the manufacture, use or sale of ammonium
nitrate prills other than under the terms of the Agreement.
SECTION 3. DUTIES OF MCC.
Any translation of MCC Information or Supplemental MCC Information or conversion
of any MCC Information or Supplemental MCC Information from one numeric system
to another shall be performed by Air Products at its own expense. Nothing
contained herein shall be construed as requiring MCC to perform any act in
conflict with the laws of the Untied States of America pertaining to the export
of technical information or data.
(a) MCC shall provide basic engineering information in sufficient detail and
scope to allow Air Products to design, procure and construct additions and
modifications to the Air Products facilities as needed to allow Air
Products to manufacture Product.
(b) MCC shall review and comment on engineering drawings and design documents
prepared by Air Products in response to (a) above.
(c) MCC shall provide operating instructions, laboratory procedures for
required quality control testing, and specifications and vendor data for
procurement of raw materials for use of the MCC Coating Technology.
(d) MCC shall assist Air Products in a hazards review of the MCC Coating
Technology prior to implementation by Air Products.
(e) MCC shall, at Air Products' request, perform periodic inspections of
construction in progress at the Air Products facility.
(f) MCC shall, at Air Products' request, provide on-site consultation at Air
Products' facility during commissioning and start-up for the purpose of
assisting Air Products in the proper manufacture of the Product. MCC shall
advise Air Products of any additional modifications, additions or
adjustments necessary to facilitate manufacture of the Product.
(g) MCC shall provide quality testing in MCC's laboratories and test facilities
as MCC may deem appropriate in assessing whether Product manufactured by
Air Products meets MCC's standards for AMTRATE(R), using samples provided
by Air Products at the request of MCC.
SECTION 4. DUTIES OF AIR PRODUCTS.
(a) Promptly after receipt of the basic engineering information from MCC, Air
Products shall proceed with all reasonable diligence to design, procure and
install additions and modifications as needed to allow Air Products to
begin manufacture of the Product provided, however, that at no time shall
Air Products be compelled to install any additions or modifications or
otherwise engage in any action which is in conflict with Air Products'
safety, health or environmental standards or policies.
(b) Air Products shall provide MCC a schedule for performance of the
Air Products' duties and report progress against the same.
(c) Air Products shall provide engineering design documents and drawings for
MCC review and comment and shall make a good-faith effort to revise the
design as recommended by MCC.
(d) Air Products shall train Air Products personnel in accordance with
operating instructions and quality control procedures provided by MCC and
shall ensure that said instructions and procedures are followed.
(e) Air Products shall provide samples for testing as reasonably requested by
MCC.
(f) Air Products shall proceed with all due diligence to achieve successful
manufacture of the Product at the earliest reasonable time.
(g) Air Products will buy raw materials for preparation of the coating agent
only from MCC-approved vendors.
(h) Air Products will cooperate with MCC on the specifications and sourcing of
raw materials other than those defined in paragraph (g) above as necessary
to assure compatibility of Product with MCC's AMTRATE(R).
SECTION 5. PROTECTION AND OWNERSHIP OF MCC INFORMATION AND SUPPLEMENTAL MCC
INFORMATION.
(a) All MCC Information and Supplemental MCC Information furnished to
Air Products hereunder remains the property of MCC.
(b) Air Products agrees to keep confidential all MCC Information and
Supplemental MCC Information provided to Air Products in tangible form and
labeled "Confidential MCC." Air Products may not, without written consent
from MCC, communicate or allow to be communicated any MCC Information or
Supplemental MCC Information to anyone except to its officers, employees,
and agents, and only to such extent as may be necessary for the proper
manufacture and sale of the Product in accordance with the Agreement and
this Exhibit E.
(i) Air Products will cause said agents and employees to sign
confidentiality agreements in conformance with Air Products'
current policy and procedure, attached as Exhibit G.
(ii) Air Products shall assist in prosecution of any civil or criminal
action brought against any former Air Products agent or employee in
the event of breach of such secrecy obligations.
(c) If necessary to share information with any third party in order to practice
MCC Information or Supplemental MCC Information, Air Products must bind the
third party with a secrecy agreement no less stringent than this Exhibit E.
Air Products shall assist in the prosecution of any civil or criminal
action brought against any third party in the event of a breach of such
secrecy obligations.
(d) Except as needed to practice MCC Information or Supplemental MCC
Information for manufacture of Product, Air Products will not, without the
prior written consent of MCC, use, reproduce or copy, or permit the use,
reproduction or copying of any of said drawings, prints, data and other
documents. Air Products agrees that any reproduction, notes, summaries or
similar documents relating to the MCC Information or Supplemental MCC
Information supplied hereunder immediately upon their creation will be
marked "Confidential MCC," will be covered by the terms of this Exhibit E
and will be returned to MCC pursuant to paragraph 10(c).
(e) The obligations and restrictions imposed by Section 5(b) above shall not
apply with respect to MCC Information and Supplemental MCC Information:
(i) which at the time of disclosure is in the public domain;
(ii) which after disclosure is published or otherwise becomes part of
the public domain through no fault of Air Products;
(iii) which Air Products can show was in its possession at the time of
disclosure and is not under an ongoing obligation of
confidentiality to MCC or its affiliates or to a third party; or
(iv) which Air Products can show was received by it after the time of
disclosure hereunder from a third party who did not require
Air Products to hold it in confidence and who did not acquire it,
directly or indirectly, from MCC or its affiliates under an
obligation of confidence.
(f) It is further agreed and understood that even if relieved of the obligation
of confidentiality by the exceptions recited above in Section 5(e), or
exceptions as may otherwise be permitted by this Exhibit E, Air Products
shall not disclose or cause or permit to be disclosed, to any party any
correlation or identity which may exist between any part of the MCC
Information or Supplemental MCC Information and any other information
available or made available to Air Products from any other source.
(g) For the purposes of the foregoing paragraphs, disclosures made to Air
Products under or in connection with this Agreement which are specific,
e.g., as to engineering and design practices and techniques, equipment,
products, operating conditions, etc., shall not be deemed to be within the
exceptions stated in Section 5(e) merely because individual features are
known to the public or in the possession of Air Products. In addition, any
combination of features shall not be deemed to be within the foregoing
exceptions merely because individual features are known to the public or in
Air Products' possession, but only if the combination itself and its
principal of operation are generally known to the public or in the
possession of Air Products.
SECTION 6. PROTECTION OF INDUSTRIAL PROPERTY.
(a) Air Products expressly acknowledges and agrees that, except in the
Territory and to the extent of the grant set forth in Section 2(a) hereof,
it does not acquire under the Agreement or this Exhibit E any rights in or
to the use of the MCC Information and Supplemental MCC Information anywhere
in the world.
(b) Air Products further undertakes that it may not at any time contest
anywhere in the world ownership of any of the MCC Information and
Supplemental MCC Information rights of MCC.
SECTION 7. COSTS AND EXPENSES.
(a) MCC shall bear all costs and expenses incurred in discharging its duties
pursuant to Section 3 of this Exhibit E.
(b) Air Products shall bear all costs and expenses incurred in discharging its
duties pursuant to Section 4 of this Exhibit E plus all costs and expenses
incurred in the manufacture of the Product.
SECTION 8. INDEMNIFICATION AND RELEASE.
(a) MCC shall indemnify Air Products and hold it harmless against and from any
liability, claims or damages and expenses whatsoever in any way arising out
of a claim for misappropriation of trade secrets or infringement of a
patent owned or exclusively licensed by a third party by virtue of
Air Products' manufacture of Product.
(b) Nothing contained in the Agreement or this Exhibit E shall be construed as:
(i) requiring the filing by MCC of any patent application, the securing
of any patent or any patent in force after the maintaining of any
patent in force after the Effective Date;
(ii) conferring by implication, estoppel or otherwise upon Air Products
any license or other right under any patent except rights expressly
granted hereunder to Air Products.
(c) Air Products shall indemnify MCC for (i) third-party claims for injury or
property damage occurring at Air Product's Pace, Florida, facility which
arise in connection with Air Products' procurement, construction, and
operations relating to manufacture of Product; provided, however, that this
indemnification obligation shall not apply where such claim arises as a
consequence of the practice of MCC Information or Supplemental MCC
Information; and (ii) vendor demands for payment in connection with
Air Products' implementation of MCC Information or Supplemental MCC
Information; provided, however, that this Indemnification obligation shall
not apply where such demand arises as a consequence of MCC's unauthorized
commitments to such vendor.
SECTION 9. IMPROVEMENT.
(a) Air Products may not conduct any research into MCC Coating Technology
except that Air Products may conduct necessary safety studies relating to
MCC Coating Technology.
(b) Air Products may not patent or otherwise disclose any inventions or
improvements made or acquired by Air Products applicable to MCC Information
or Supplemental MCC Information, and the same shall be fully disclosed by
Air Products to MCC and shall be the property of MCC without obligation of
any type or kind to Air Products.
SECTION 10. EFFECT OF TERMINATION.
Upon termination or expiration of the Agreement, Air Products promises:
(a) to cease all manufacture and sale of Product;
(b) to cease the use of all MCC Information and Supplemental MCC Information;
(c) to return to MCC all documents free of charge which have been retained by
Air Products (including but not limited to any reproductions, notes or
summaries) relating to the MCC Information and Supplemental MCC Information
provided by MCC; and
(d) to disable to the extent necessary to render it unusable, all equipment
installed to facilitate the application of MCC Information and Supplemental
MCC Information.
Air Products' obligations of confidentiality shall survive the termination of
the Agreement and this Exhibit E and shall expire the later of the year 2014 or
fifteen (15) years after termination of the Agreement.
SECTION 11. NONASSIGNABILITY.
This Exhibit E and each and every covenant, term and condition herein is binding
upon and inures to the benefit of the parties hereto and their respective
successors, but neither this Exhibit E nor any rights hereunder may be assigned
or sublicensed, directly or indirectly, voluntarily or by operation of law, by
Air Products without first receiving the prior written consent of MCC.
SECTION 12. UNENFORCEABLE TERMS.
In the event any term or provision of this Exhibit E shall for any reason be
declared invalid by order of any court or administrative or regulatory body,
MCC, in its sole discretion, shall have the right to either terminate the
Agreement by giving at least one (1) year's prior notice to Air Products or
declare by notice to Air Products that such invalidity, illegality or
unenforceability shall not affect any other term or provision hereof. In the
latter event, this Exhibit E shall be interpreted and construed as if such term
or provision had never been contained herein to the extent the same shall have
been held invalid.
[MCC CONFIDENTIAL -- THIS EXHIBIT IS NOT TO BE COPIED OR
DISTRIBUTED TO OR VIEWED BY ANYONE WHO IS NOT A PARTY TO A SECRECY AGREEMENT
WITH MCC OR AIR PRODUCTS]
EXHIBIT F
Product Specifications for Agricultural Product
Following Installation of MCC Technology set forth in Exhibit E
(Confidential treatment has been requested)
EXHIBIT G
1. Employee Patent, Copyright and Confidential Information Agreement
2. Security Statement For Termination of Employment
3. Certificate of Air Products' Policy and Procedures Regarding the Maintenance
of Confidential Information and Trade Secrets
EMPLOYEE PATENT, COPYRIGHT AND CONFIDENTIAL INFORMATION AGREEMENT
In consideration of my employment by Air Products and Chemicals, Inc., its
divisions, affiliates and subsidiaries (all, collectively, referred to
hereinafter as the Company), I agree that I will:
A. Communicate to the Company promptly and fully in writing, in such format as
the Company may deem appropriate, all inventions made or conceived by me
whether alone or jointly with others from my time of entering the Company's
employee until I leave, and as requested, to assign to the Company those of
such inventions which (1) relate to a field of business, research or
investigation in which the Company has an interest, or (2) result from, or
are suggested by, any work which I may do for or on behalf of the Company;
B. Make and maintain adequate permanent records of all such inventions, in the
form of memoranda, notebook entries, drawings, print-outs, or reports
relating thereto, in keeping with then current Company procedures. I agree
that these records, as well as the inventions themselves, shall be and
remain the property of the Company at all times;
C. Cooperate with and assist the Company and its nominees, at their sole
expense, during my employment and thereafter, in securing and protecting
patent rights in which I am a named inventor or other similar rights in the
United States and foreign countries. In this connection I specifically
agree to execute all papers which the Company deems necessary to protect
its interests including the execution of assignments of invention and to
give evidence and testimony, as may be necessary, to secure and enforce the
Company's rights;
D. Except as the Company may otherwise authorize in writing, not use or
disclose to others, reproduce or copy at any time, except as my Company
duties may require, either during or subsequent to my employment, any
private information of the Company or of others as to whom the Company has
an obligation of confidentiality which may come to my attention or be
developed by me during the course of my employment other than information
which is or becomes public knowledge in a lawful manner;
E. Upon termination of my employment with the Company, deliver to it all
records, data and memoranda of any nature which are in my possession or
control and which relate to my employment or the activities of the Company,
including, for example, notebooks, diaries, reports, photographs, films,
manuals and computer software media.
F. Following termination of my employment, honor and abide by my continuing
obligation of confidentiality. I agree that, in any situation which arises
and involves a question of my freedom to disclose particular information to
a subsequent employer or anyone else, I will contact the Company in writing
and elicit its opinion on my freedom to make such a disclosure.
It is also agreed that:
G. All creative works which I produce during my employment and which relate to
the Company's business or technology shall be considered to have been
prepared for the Company as a part of and in the course of my employment.
Any such work shall be owned by the Company regardless of whether it would
otherwise be considered a work made for hire. Such works shall include,
among other things, computer programs and documentation, non-dramatic
library works (e.g., professional papers and journal articles), visual arts
(e.g., pictorial, graphic and three-dimensional), sound recordings, motion
pictures and other audiovisual works.
H. Nothing in this agreement shall bind me or the Company to any specific
period of service or employment, nor shall the termination of such
employment in any way affect the obligations assumed by me herein.
Further, this agreement replaces any and all prior agreements or
understandings between me and the Company concerning these subjects;
I. This agreement shall bind my heirs, executors, and administrators, and
shall inure to the benefit of the successors and assigns of the Company.
J. I will not disclose to any other employee of the Company any information as
to which I owe a continuing obligation of confidentiality to a previous
employer or client. Any inventions, patented or unpatented, which were
made or conceived by me prior to my employment are excluded from the
operation of this agreement, and I warrant that there are no such
inventions, other than those listed by me in the space provided on the back
of this document.
(L.S.)
----------------------------------------
Signature of the Employee
WITNESS:
DATED:
(List invention information on the back of this agreement.)
Form 4000 (REV. 3/94)
SECURITY STATEMENT
FOR
TERMINATION OF EMPLOYMENT
I, , make the
-----------------------------------------------------------------
following statement to Air Products and Chemicals, Inc., its divisions,
affiliates and subsidiaries (hereinafter referred to as Air Products) with the
understanding and intent that my statement will be used by Air Products in
carrying out its duty to protect the security of Classified Information
respecting the national defense of the United States.
As to such Classified Information:
1. I {a. [ ] have (complete items 2, 3, 4)b. [ ] have not (skip items 2, 3,
4)}
knowingly had access to such Classified Information during my employment
by Air Products.
2. I {a. [ ] do b. [ ] do not}
now have in my possession or custody or control any document or other
thing containing or incorporating Classified Information, or other matter
classified ``CONFIDENTIAL''or higher to which I obtained access during my
employment. All such material that I may have had in my possession has
been returned by me.
3. I {a. [ ] am b. [ ] am not}
retaining or taking away with me from my place of employment any document
or thing containing or incorporating Classified Information, or other
matter classified ``CONFIDENTIAL''or higher to which I obtained access
during my employment, in any manner whatsoever.
4. I {a. [ ] shall b. [ ] shall not}
hereafter in any manner reveal or divulge to any person any Classified
Information of which I have gained knowledge during my employment, except
as may be hereafter authorized by the Department of Defense.
If any of statements 2, 3, or 4 is completed with selection `a,'' attach a full
explanation of the circumstances, including the names of any persons authorizing
the particular handling of the Classified Information. If the employee refuses
to sign the statement, a full explanation of the circumstances of the refusal
shall be attached hereto. In either event, the matter shall be brought
immediately to the attention of the Security Officer, prior to the departure of
the employee if possible.
With respect to any of statements 1, 2, 3, or 4 above answered affirmatively,
the employee is advised that the penal provisions of the Espionage Laws, (Title
18, U.S. Code, Section 793, 794, 795, 796, 797, 798), provide that one who
unlawfully retains or discloses Classified Information is subject to severe
criminal penalties and that the making of a false statement pertaining to
Classified Information in this document may be punished as a felony under
Title 18, U.S. Code.
Further, with respect to other information which is covered by my Employee
Patent, Copyright, and Confidential Information Agreement with Air Products, I
recognize the property right which Air Products has in its private Company
Information, whether or not classified with a security marking and in whatever
form recorded.
In terminating my employment with Air Products, except as authorized under
circumstances explained in the statement attached, I have returned and accounted
for all material and copies, of whatever kind, containing Company Information,
received or prepared by me in connection with my employment, except for
information which is available to the public generally, and I have retained no
copies, reproductions or excerpts of such material whether written, printed,
photographed or otherwise encoded or stored.
Each of the above statements is true to the best of my knowledge and belief.
Witness: Signed:
Title: Date:
NOTE: This form when completely filled out will be filed in the employee's
personnel folder.
CERTIFICATE OF AIR PRODUCTS' POLICY AND PROCEDURES REGARDING THE MAINTENANCE OF
CONFIDENTIAL INFORMATION AND TRADE SECRETS
I, Plant Manager of Air Products and Chemicals, Inc., do hereby certify that the
following is a true and accurate summary of Air Products and Chemicals, Inc.'s,
policy and procedure regarding the maintenance of confidential information and
trade secrets:
The Air Products - Escambia Quality Management System is based on
written procedures and specifications which define the steps required
to process customer orders from receipt, through delivery of product
and services.
In the event proprietary information is to be disclosed to vendors,
executed confidentiality agreements are required in advance of
requests for quotations.
Quality Management documentation is strictly controlled to ensure that
only the appropriate, current and approved version of all
documentation is available at the point of use. Additional copies can
by made available when required only when they are identified as
noncontrolled.
Policies, procedures, specifications and work instructions affecting
the Air Products - Escambia Quality Management System are reviewed and
approved by identified and authorized persons prior to issue.
Any revisions to the documentation are controlled by the same review
and approval process, and the obsolete versions are removed from
service. Changes to the documentation are recorded so the holders of
the documents may be made aware of the nature of the revision.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of September,
1994.
/s/ Brian A. Gebbia
Plant Manager
EXHIBIT H
SECRECY AGREEMENT
The parties to the Agreement to which this Exhibit H is annexed agree as
follows: Air Products possesses technical Information, technical experience,
data and know-how for the operation of an ammonium nitrate plant at its Pace,
Florida, facility and possesses other valuable AP Information relating to the
production of coated particulate ammonium nitrate (all of the foregoing
hereinafter referred to as "AP Information"). Air Products considers the AP
Information to be proprietary to Air Products and of significant commercial
value. Air Products is willing to disclose such AP Information to MCC via
documents, discussions and visits to its Pace, Florida, facility for the sole
purpose of implementing the MCC Coating Technology, the MCC Information and
Supplemental MCC Information (as those terms are defined in Exhibit E to the
Purchase Agreement) and as necessary to facilitate the modifications to the
Pace, Florida, facility required to enable the use of the MCC Coating
Technology, MCC Information and Supplemental MCC Information.
MCC neither anticipates the need for nor expects to receive any AP
Information; however, in the event that it becomes necessary for MCC to receive
such AP Information and if the disclosure of the AP Information satisfies the
provisions of paragraph 5 of this Secrecy Agreement with respect to advance
notice and acceptance, then MCC will be bound by the terms of this Secrecy
Agreement.
IN CONSIDERATION THEREOF, it is agreed as follows:
1. MCC will not, without Air Products' consent, use or disclose to any
other person, firm or corporation any of the AP Information disclosed, and MCC
further agrees to require its employees and any others who, of necessity, shall
be given access to, or receive disclosure of, any of said AP Information to
maintain the same in confidence.
2. AP Information as used herein does not include technical AP
Information, data, designs, drawings or other material which:
(a) MCC can show was in its possession at the time of
disclosure and was not acquired, directly or indirectly,
from Air Products; or
(b) is acquired by MCC from others who have no confidential commitment
to Air Products with respect to same; or
(c) becomes, through no fault of MCC, a part of the public domain by
publication or otherwise.
3. Disclosures of AP Information by Air Products made to MCC under or in
connection with this Secrecy Agreement which are specific, e.g., as to
engineering and design practices and techniques, equipment, products, operating
conditions, compositions, formulations, etc., shall not be deemed to be within
the exceptions stated in paragraph 2 hereof merely because individual features
are known to the public or in the possession of MCC. In addition, any
combination of features shall not be deemed to be within the exceptions stated
in paragraph 2 hereof merely because individual features are known to the public
or are in MCC's possession, but only if the combination itself and its principle
of operation are generally known to the public or is in the possession of MCC.
4. Except as may otherwise by permitted by this Secrecy Agreement, MCC
shall not disclose, or cause or permit to be disclosed, to any party not subject
to this Secrecy Agreement any correlation or identity which may exist between
any part of AP Information acquired by MCC pursuant to or in connection with
this Secrecy Agreement and any other AP Information available or made available
to MCC from any other source.
5. Any disclosure of AP Information which is considered confidential
howsoever communicated whether orally, visually, in writing or by other means
shall be covered by this Secrecy Agreement, provided Air Products identified
such disclosures as confidential in advance of the communication and, if such
disclosure is communicated orally or visually, to summarize and confirm the
confidential nature of such communication in writing within ninety (90) days of
communication.
6. All drawings, prints, data and other documents disclosing such AP
Information to MCC shall remain the property of Air Products and shall be deemed
loaned to MCC only for the limited purposes specified above, and MCC will not,
without the prior written consent of Air Products, use, reproduce or copy, or
permit the use, reproduction or copying of any of said drawings, prints, data
and other documents. MCC shall return AP Information to Air Products upon
request, and MCC may not retain any copies of any documents containing such AP
Information except that one copy may be retained in MCC's Legal Department files
for archival purposes.
7. Nothing contained in this Secrecy Agreement or in any disclosure
hereunder made by Air Products shall be construed to grant to MCC any license or
other rights in or to the AP Information so disclosed or under any patent or
patent application relating thereto.
8. This Secrecy Agreement shall not be modified other than in writing and
shall be construed under the laws of the state of Mississippi.
9. This Secrecy Agreement expires in 2014.
EXHIBIT 4.5
FOURTEENTH SUPPLEMENTAL INDENTURE
This Fourteenth Supplemental Indenture dated as of June 17, 1994, between
Mississippi Chemical Corporation, a Mississippi corporation (the "Company"), and
Deposit Guaranty National Bank, as Trustee (the "Trustee"), to the Indenture of
Mortgage, Deed of Trust, Assignment and Security Agreement dated as of
September 1, 1976, among the Company, New Orleans Bank for Cooperatives (now the
National Bank for Cooperatives), John H. Farrelly, as trustee for the benefit of
the New Orleans Bank for Cooperatives (the "Old Trustee") under certain deeds of
trust specified in the Original Indenture, and the Trustee (the "Original
Indenture"), as supplemented by a First Supplemental Indenture dated as of
September 7, 1976 (the "First Supplemental Indenture"), a Second Supplemental
Indenture dated as of September 30, 1976 (the "Second Supplemental Indenture"),
a Third Supplemental Indenture dated as of June 28, 1977 (the "Third
Supplemental Indenture"), a Fourth Supplemental Indenture dated as of May 1,
1978 (the "Fourth Supplemental Indenture"), a Fifth Supplemental Indenture dated
as of June 1, 1978 (the "Fifth Supplemental Indenture"), a Sixth Supplemental
Indenture dated as of September 1, 1979 (the "Sixth Supplemental Indenture"), a
Seventh Supplemental Indenture dated as of October 1, 1979 (the "Seventh
Supplemental Indenture"), an Eighth Supplemental Indenture dated as of May 15,
1983 (the "Eighth Supplemental Indenture"), a Ninth Supplemental Indenture dated
as of February 23, 1988 (the "Ninth Supplemental Indenture"); a Tenth
Supplemental Indenture dated as of December 26, 1989 (the "Tenth Supplemental
Indenture"); an Eleventh Supplemental Indenture dated as of July 16, 1990 (the
"Eleventh Supplemental Indenture"); a Twelfth Supplemental Indenture dated as of
August 6, 1992 (the "Twelfth Supplemental Indenture"); and a Thirteenth
Supplemental Indenture dated as of July 16, 1993 (the "Thirteenth Supplemental
Indenture") (the Original Indenture, as supplemented by the First through the
Thirteenth Supplemental Indentures, being hereinafter referred to as the
"Indenture"),
W I T N E S S E T H T H A T:
WHEREAS, the Company has duly authorized the issuance of a series of New
Notes (as defined in the Indenture) limited in aggregate outstanding principal
amount to $30,000,000, to be known as its Revolving Credit Note, Series J, Final
Maturity June 30, 1997 (the "Series J Note"), having the terms hereinafter
provided; and
WHEREAS, when issued and authenticated in accordance with the provisions of
the Indenture, the Series J Note will be secured on a parity with all other
Notes outstanding under the Indenture; and
WHEREAS, all acts and things necessary to make the Series J Note issued
pursuant to this Fourteenth Supplemental Indenture, when executed by the Company
and authenticated and delivered by the Trustee as provided in the Indenture,
the valid, binding and legal obligations of the Company, and to constitute these
presents, together with the Original Indenture, a valid indenture and agreement
according to its terms, have been done and performed, and the execution of this
Fourteenth Supplemental Indenture and the issue of the Series J Note hereunder
and under the Original Indenture have in all respects been duly authorized, and
the Company in the exercise of its legal right and power, executes this
Fourteenth Supplemental Indenture and the Company proposes to make, execute,
issue and deliver a series of New Notes in substantially the form set forth
herein, in the form of one registered note without coupons; and
WHEREAS, the Company and the Trustee desire to amend the Indenture as
hereinafter set forth pursuant to Section 10.01(a) thereof for the purpose of
establishing and issuing the Series J Notes in accordance with the provisions of
Section 2.14 thereof;
NOW, THEREFORE, the Indenture is hereby amended and supplemented as
follows:
ARTICLE I
TERMS
PARAGRAPH 1.01. Table of Contents. The Table of Contents of the Indenture
is hereby amended and supplemented as follows:
(a) By adding the following in alphabetical order to the index of
Article One, Section 1.01:
Series J Revolving Credit Agreement p. 18
Series J Note p. 18
(b) By adding the following in numerical order to the index of Articles
Two and Five:
Section2.23 Series J Note p. 32
Section5.18 Covenant of the Company for the Benefit
of Series J Note p. 66
(c) By adding the following immediately following the index to Article
Seven:
Article Seven-C. Covenants of the Company in Article Seven Extended to
the holders of the Series J Note p. 73
PARAGRAPH 1.02. Definitions. Section 1.01 of the Indenture is hereby
amended and supplemented as follows:
(a) (i) by adding the words "and Series J" after the words "Series B" in
the sixth line of the definition of "Restricted Subsidiary," as amended by
the First, Tenth and Twelfth Supplemental Indentures;
(ii) by adding after the words "Article Seven-B of the Indenture" in clause
(i) of the definition of "Restricted Subsidiary," as amended by the First,
Tenth and Twelfth Supplemental Indentures, the following:
, or in such section, as incorporated in Article Seven-C of
the Indenture,
(b) by adding the following immediately after the definition of "Series I
Revolving Credit/Term Loan Agreement":
"Series J Revolving Credit Agreement" means the Revolving Credit
Agreement described in Section 2.23(c) hereof, together with any
amendments thereto delivered to the Trustee in conformity with
this Indenture.
"Series J Note" means the Revolving Credit Note, Series J, final
maturity June 30, 1997, of the Company, authorized and secured by
this Indenture pursuant to Section 2.23 hereof.
PARAGRAPH 1.03. Provision for the Series J Notes. Article Two of the
Indenture is hereby amended and supplemented by adding the following Section
2.23 thereto:
PARAGRAPH 2.23 The Series J Note
(a) There is hereby created a Note to be known as the
Revolving Credit Note, Series J, Final Maturity June 30, 1997, of
the Company (the "Series J Note"). The Series J Note shall be
issued in the form of one registered note and shall be in
substantially the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS AND MAY NOT BE RESOLD,
TRANSFERRED OR ASSIGNED WITHOUT REGISTRATION OR
WITHOUT OBTAINING AN EXEMPTION FROM SUCH REGISTRATION
MISSISSIPPI CHEMICAL CORPORATION
Revolving Credit Note, Series J
Final Maturity June 30, 1997
Date of initial advance:
---------------
$30,000,000 (Maximum advance)
FOR VALUE RECEIVED, the undersigned MISSISSIPPI CHEMICAL CORPORATION, a
Mississippi corporation (hereinafter with its successors, referred to as the
"Company"), hereby promises to pay to NationsBank of Tennessee, N.A.
(hereinafter referred to as the "Payee"), or its duly registered assigns, on
dates set forth below, the lesser of the principal sum of THIRTY MILLION DOLLARS
($30,000,000) or the aggregate unpaid principal amount of all Revolving Credit
Loans (as hereinafter defined) made by the Payee to the Company hereunder, and
to pay interest from the date hereof on the principal amounts hereof from time
to time outstanding at a rate or rates per annum as hereinafter set forth.
Revolving Credit Agreement
This Note is issued pursuant to the provisions of, inter alia, the Series J
Revolving Credit Agreement (as hereinafter defined) between the Payee and the
Company dated as of June 17, 1994, to which Agreement reference is hereby made
for a statement of the terms and conditions under which the loans evidenced
hereby were or are to be made.
Definitions
The following terms, as used in this Note, shall have the following
meanings:
"Credit Facility" means the maximum amount available to be lent by the
Payee to the Company pursuant to the Series J Revolving Credit Agreement,
initially, $30,000,000.
"Credit Facility Reduction Notice" means a written notice by the Company to
the Payee pursuant to which the Company elects to reduce the amount of the
Credit Facility which reduction shall be in minimum increments of $2,500,000.
"Eurodollar Business Day" means any day on which commercial banks are open
for domestic and international business (including dealings in U.S. Dollar
deposits) in London and New York City.
"Eurodollar Interest Period" means for each LIBOR Based Rate Loan, the
period during which interest at the LIBOR Based Rate, determined as provided in
this Note, shall be applicable, provided, however, that each such period shall
be either one (1), two (2), three (3), six (6) or twelve (12) months, which
shall be measured from the date specified by the Company in each Eurodollar Rate
Request for the commencement of the computation of interest at the LIBOR Based
Rate, to the numerically corresponding day in the calendar month in which such
period terminates; provided, however, that if there is no such numerically
corresponding day in such succeeding month, such Eurodollar Interest Period
shall end on the last Business Day of such succeeding month. If a Eurodollar
Interest Period would otherwise end on a day which is not a Business Day, such
Eurodollar Interest Period shall end on the next succeeding Business Day;
provided, however, that if such next succeeding Business Day follows in a new
month, such Eurodollar Interest Period shall end on the immediately preceding
Business Day. The Company may not elect any Eurodollar Interest Period which
ends later than the Final Maturity Date. Interest shall accrue from and
including the first day of a Eurodollar Interest Period to but excluding the
last day of such Eurodollar Interest Period.
"Eurodollar Rate Request" means telephonic notice by the Company to be
received by the Payee by 11:00 am (Nashville time) one (1) Eurodollar Business
Day (or the latest Payee Business Day prior thereto if such day is not a Payee
Business Day) prior to the date specified in the Eurodollar Rate Request for the
commencement of the Eurodollar Interest Period, and specifying the amount of the
LIBOR Based Rate Loan and the applicable Eurodollar Interest Period desired by
the Company for such LIBOR Based Rate Loan. The Company shall promptly confirm
such notice in writing.
"Final Maturity Date" means the date all of the principal of, premium, if
any and interest on the Series J Note is payable, whether by scheduled
installments, acceleration or otherwise.
"Fixed Rate" means a fixed rate of interest equal to the rate on U.S.
Treasury Notes with comparable terms and maturities approximately equal to the
Fixed Rate Interest Period plus 2.00% per annum.
"Fixed Rate Interest Period" means for each Fixed Rate Loan, the period
during which such loan bears interest at a Fixed Rate. If a Fixed Rate Interest
Period would otherwise end on a day which is not a Business Day, such Fixed Rate
Interest Period shall end on the next succeeding Business Day; provided,
however, that if such next succeeding Business Day follows in a new month, such
Fixed Rate Interest Period shall end on the immediately preceding Business Day.
The Company may not elect any Fixed Rate Interest Period which ends later than
the Final Maturity Date. Interest shall accrue from and including the first day
of a Fixed Rate Interest Period to but excluding the last day of such Fixed Rate
Interest Period.
"Fixed Rate Request" means written notice by the Company that it elects to
have all or a portion of the outstanding principal amount of this Note bear
interest at a Fixed Rate, which notice shall specify the principal amount of
such Fixed Rate Loan and the duration of the Fixed Rate Interest Period.
"LIBOR Based Rate" means a rate per annum equal to the sum of (a) the LIBOR
Rate for dollar deposits approximately equal in principal amount to the LIBOR
Based Rate Loan requested in the Eurodollar Rate Request and with a maturity
comparable to the Eurodollar Interest Period in question, plus (b) 1.25% for any
Eurodollar Interest Period or portion thereof.
"LIBOR Rate" means, with respect to any LIBOR Based Rate Loan for any
Eurodollar Interest Period, the interest rate per annum for deposits in Dollars
which currently appears on the Telerate Screen Page 3807 (as defined herein)
(rounded up to the next 1/16 of 1% if such rate appears as a fraction smaller
than 1/16 of 1%) as of 12:00 noon, Nashville time, on the day that is one (1)
Eurodollar Business Day preceding the first day of the applicable Eurodollar
Interest Period. If no such offered rate appears on the Telerate Screen Page
3807, the rate in respect of the applicable Eurodollar Interest Period will be
the rate per annum (rounded up to the next 1/16 of 1% if such rate is a fraction
smaller than 1/16 of 1%) at which deposits in Dollars are offered by the
Reference Banks (as hereinafter defined) at approximately 12:00 noon, Nashville
time, on the date that is one (1) Eurodollar Business Day preceding the
commencement of such applicable Eurodollar Interest Period to prime banks in the
London interbank market for a period of time equal to such applicable Eurodollar
Interest Period in a Representative Amount (as hereinafter defined). Payee will
request each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate in respect of such applicable
Eurodollar Interest Period will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested, the LIBOR Based Rate will
be unavailable and such loan amount shall bear interest at the Prime Rate.
"Payee Business Day" means a day on which commercial banks in Nashville,
Tennessee, are not authorized or required to close.
"Prime Rate" means the fluctuating reference or benchmark rate of interest
that is publicly announced by NationsBank of Tennessee, N.A. as its Prime Rate
to be in effect from time to time with any changes in such Prime Rate to be
effective on the date of the public announcement of such change. The Prime Rate
is not necessarily the lowest rate of interest charged by NationsBank of
Tennessee, N.A.
"Quarterly Payment Date" means the last day of each March, June, September
and December commencing on the first such day following the date of the initial
advance under the Series J Revolving Credit Agreement.
"Reference Banks" means the principal London offices of Barclays Bank PLC,
National Westminister Bank PLC, Bankers Trust International, Ltd. and Bank of
Tokyo, Ltd.
"Revolving Credit Loan" means a Prime Rate, LIBOR Based Rate or Fixed Rate
Loan made pursuant to the Series J Revolving Credit Agreement.
"Series J Revolving Credit Agreement" means the Revolving Credit Agreement
between the Company and NationsBank of Tennessee, N.A., dated as of June 17,
1994, as the same is amended or supplemented.
"Telerate Screen Page 3807" means the display designated as page 3807 on
the Telerate Screen (or such other page as may replace page 3807 on that service
for the purpose of displaying London interbank offered rates of major banks).
Interest Rate
All advances hereunder shall, unless the Company otherwise elects as
hereinafter set forth, bear interest at the Prime Rate. The Company shall have
the right at any time, on prior irrevocable written or telex notice to the Payee
not later than 11:00 a.m., Nashville time, to convert any Prime Rate, Fixed
Rate, or LIBOR Based Rate Loan into a Revolving Credit Loan of another type, or
to continue any LIBOR Based Rate Loan for a Eurodollar Interest period or any
Fixed Rate Loan for a Fixed Rate Interest Period (specifying in each case the
interest Period to be applicable thereto), subject in each instance to the
following: (a) no LIBOR Based Rate Loan shall be converted at any time other
than at the end of the Eurodollar Interest Period applicable thereto; (b) no
Fixed Rate Loan shall be converted at any time other than at the end of the
Fixed Rate Interest Period applicable thereto unless the Company also pays at
the same time the prepayment penalty, if any, due hereunder as specified in the
section on Prepayments; (c) each conversion shall be effected by applying the
proceeds of the new LIBOR Based Rate, Fixed Rate, and/or Prime Rate Loan, as the
case may be, to the Revolving Credit Loan (or portion thereof) being converted;
and (d) the number of LIBOR Based Rate Loans and Fixed Rate Loans at any time
outstanding shall not exceed an aggregate of five (5). Each Fixed Rate Request
and/or Eurodollar Rate Request shall be irrevocable and shall refer to this Note
and specify (i) the identity and principal amount of the particular Revolving
Credit Loan that the Company requests be converted or continued, (ii) if such
notice requests conversion, the date of such conversion (which shall be a
Business Day for Fixed Rate Loans and a Eurodollar Business Day for LIBOR Based
Rate Loans), and (iii) if a Revolving Credit Loan is to be converted to a LIBOR
Based Rate Loan or a Fixed Rate Loan or a LIBOR Based Rate Loan or Fixed Rate
Loan is to be continued, the Eurodollar or Fixed Rate Interest Period with
respect thereto. In the event the Company shall not give notice to continue any
LIBOR Based Rate or Fixed Rate Loan for a subsequent period, such Revolving
Credit Loan (unless repaid) shall automatically be converted into a Prime Rate
Loan. If the Company shall fail to specify in the request the type of borrowing
or, in the case of a Fixed Rate Loan, the applicable Fixed Rate Interest Period,
the Company will be deemed to have requested a Prime Rate Loan. If the Company
shall fail to specify in any Eurodollar Rate Request the applicable Eurodollar
Interest Period, the Company will be deemed to have selected a Eurodollar
Interest Period of one (1) month's duration. Notwithstanding anything to the
contrary contained above, if an Event of Default shall have occurred and be
continuing, no LIBOR Based Rate or Fixed Rate Loan may be continued and no Prime
Rate Loan may be converted into a Fixed Rate or LIBOR Based Rate Loan.
Interest Payments
All payments hereunder shall be made in lawful money of the United States
of America, with interest on the whole of said principal amount remaining from
time to time unpaid from the date hereof at a LIBOR Based Rate, the Prime Rate
or a Fixed Rate and as provided herein, until the principal hereof shall become
due and payable (whether at maturity, on a date fixed for prepayment, by
acceleration or otherwise). Interest shall be computed in all cases on the
basis of a 360-day year for the actual number of days elapsed. Interest shall
be payable as follows: with respect to any portion of this Note bearing interest
at a LIBOR Based Rate (a "LIBOR Based Rate Loan"), interest shall be payable on
the last day of each applicable Eurodollar Interest Period, unless such
Eurodollar Interest Period exceeds three (3) months, in which event interest
shall be payable with respect to the principal amount bearing interest at such
LIBOR Based Rate on each Quarterly Payment Date occurring after the first day of
the Eurodollar Interest Period through the last day of such Eurodollar Interest
Period, and on the last day of each Eurodollar Interest Period; with respect to
any portion of this Note bearing interest at the Prime Rate (a "Prime Rate
Loan"), interest shall be payable on each Quarterly Payment Date; with respect
to any portion of this Note bearing interest at a Fixed Rate (a "Fixed Rate
Loan"), interest shall be payable on each Quarterly Payment Date and on the last
day of each Fixed Rate Interest Period, in each case commencing on the first
such date following the making of such loan.
Place of Payments; Default Rate
The principal of, premium, if any, and interest on this Note shall be
payable at the principal office of NationsBank of Tennessee, N.A., or at such
other place as the registered holder may designate from time to time in writing
which designation shall be made at least ten (10) days before such principal,
premium or interest is due. Without limitation of any other rights of the
holder, overdue payments of principal (including any overdue prepayment of
principal) or premium, if any, and (to the extent permitted by applicable law)
overdue payments of interest shall bear interest at the rate applicable to such
overdue principal, plus two percent (2%) per annum.
Maximum Rate
Notwithstanding the above, in no event whatsoever shall the interest rate
applicable to this Series J Note exceed the maximum amounts collectible under
applicable laws in effect from time to time. If for any reason whatsoever the
interest rate applicable to this Series J Note exceeds the maximum permissible
rate under applicable laws in effect from time to time, then, ipso facto, the
obligation to pay such interest shall be reduced to the maximum amounts
collectible under applicable laws in effect from time to time, and any amounts
paid to the Payee that exceed such maximum amounts shall be applied to the
reduction of the principal balance of this Series J Note and/or refunded to the
Company so that at no time shall the interest rate applicable to this Series J
Note exceed the maximum amounts permitted from time to time by applicable law.
This provision shall control every other provision herein and in any and all
other agreements and instruments now existing or hereafter arising between the
Company and the Payee with respect to this Series J Note.
Principal Advances and Payments
Subject to the provisions of the Series J Revolving Credit Agreement, the
Company may request (upon one day's notice in writing) that the Payee advance an
amount in increments of $1,000,000 which, when added to the amount previously
requested and still unpaid, does not exceed the Credit Facility.
Unless sooner paid, all outstanding principal on this Note, together with
any unpaid accrued interest, shall be payable on June 30, 1997.
All borrowings evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof shall
be endorsed by the Payee on Schedule I attached hereto or on a form
substantially similar to said Schedule I attached hereto and made a part hereof,
or otherwise recorded by the Payee in its internal records; provided, however,
that the failure of the Payee to make such a notation or any error in such a
notation shall not in any manner affect the obligation of the Company to make
the payments of principal and interest in accordance with the terms of this Note
and the Series J Revolving Credit Agreement.
In the event any day on which payment of principal or interest is due is
not a Payee Business Day, such payment may be made on the next succeeding Payee
Business Day.
Change in Legality
Notwithstanding anything to the contrary herein contained, if any change in
any law or regulation or in interpretation thereof by any governmental authority
charged with the administration or interpretation thereof shall make it unlawful
for the Payee to make or maintain any LIBOR Based Rate Loan or to give effect to
its obligations as contemplated in the Series J Revolving Credit Agreement,
then, by written notice to the Company describing such changes, the Payee may
(1) declare that LIBOR Based Rate Loans will not thereafter be made by the Payee
under the Series J Revolving Credit Agreement, whereupon the Company shall be
prohibited from requesting LIBOR Based Rate Loans from the Payee unless such
changes are subsequently withdrawn or otherwise rendered ineffective, notice of
which shall be promptly provided by the Payee to the Company; and (2) require
that all outstanding LIBOR Based Rate Loans shall be converted to Prime Rate
Loans, in which event (a) all such LIBOR Based Rate Loans shall be automatically
converted without penalty or additional charge to the Company to Prime Rate
Loans as of the effective date of such notice as set forth below and (b) all
payments and prepayments of principal that would otherwise have been applied to
repay the converted LIBOR Based Rate Loans shall instead be applied to repay the
Prime Rate Loans resulting from the conversion of such LIBOR Based Rate Loans.
For purposes of the preceding paragraph, a notice to the Company by the
Payee shall be effective, if lawful, on the last day of the Eurodollar Interest
Period for each respective LIBOR Based Rate Loan; in all other cases, such
notice shall be effective on the later of (i) the date of receipt by the Company
or (ii) the date set forth in such notice.
Alternate Rate
Anything herein to the contrary notwithstanding, if, prior to the
determination of the LIBOR Based Rate in respect of any Eurodollar Rate Request
as herein provided, Payee advises the Company in writing that (i) dollar
deposits in the amount of a requested principal amount of a LIBOR Based Rate
Loan are not generally available in the London Interbank Market; (ii) the rate
at which such dollar deposits are being offered will not adequately and fairly
reflect the cost to the Payee of making or maintaining such LIBOR Based Rate
Loan during such Eurodollar Interest Period; or (iii) reasonable means do not
exist for ascertaining the LIBOR Rate, any request by the Company for a LIBOR
Based Rate Loan shall, until the circumstances giving rise to such notice no
longer exist, be deemed to be a request for a Prime Rate Loan. Each
determination by the Payee hereunder shall be conclusive absent manifest error.
If at any time subsequent to the giving of such notice Payee determines that
because of a change in circumstances the LIBOR Based Rate is again available,
Payee shall so advise the Company and the Company shall have the option to
convert the rate of interest payable hereunder from the Prime Rate to the LIBOR
Based Rate by submitting a Eurodollar Rate Request to Payee and otherwise
complying with the provisions of this Note with respect thereto.
Prepayments
The Company shall have the right to prepay (a) any Prime Rate Loan at any
time, in whole or in part, and (b) each LIBOR Based Rate Loan, in whole or in
part, on the last day of the applicable Eurodollar Interest Period for such
loan, in each case at the prepayment price of the principal amount to be prepaid
plus interest to the prepayment date, without premium or penalty; provided any
prepayments shall be in principal increments of $1,000,000 or greater.
The Company shall have the right at any time to prepay any Fixed Rate Loan,
in whole or in part, at the redemption price of 100% of the principal amount so
prepaid plus interest to the prepayment date, plus the Yield-Maintenance
Premium, if any.
As used herein, "Yield Maintenance Premium" shall mean an amount equal to
the quotient of: (A) the product of (1) the outstanding principal amount of the
Fixed Rate Loan immediately prior to prepayment, multiplied by (2) the excess of
the Fixed Rate applicable thereto over the sum of two percent (2%) per annum
plus the annual yield on a United States Treasury Bond having substantially the
same maturity as the Fixed Rate Loan (the "Treasury Bond Yield"), as such yield
is reported in The Wall Street Journal or, in the event such Treasury Bond Yield
is no longer published in The Wall Street Journal, a similar publication
acceptable to Payee, on the fifth (5th) business day preceding the date of
prepayment and (3) the number of months remaining in the Fixed Rate Loan term;
divided by (B) twelve (12). Such quotient shall be discounted to present value
as of the date of prepayment by applying a discount rate equal to the Treasury
Bond Yield.
This Note or the installments thereof so prepaid will cease to bear
interest on the specified prepayment date, provided funds for its prepayment are
on deposit with the Payee or with the Trustee at that time, and this Note or
such installments shall no longer be entitled to the benefit of the Indenture
and shall not be deemed to be outstanding under the provisions of the Indenture.
Indenture
This Note is the sole note of an authorized issue of notes of the Company,
as provided in the Indenture mentioned below and is herein called the "Series J
Note," of the series designated "Revolving Credit Notes, Series J, Final
Maturity June 30, 1997," limited to $30,000,000 in aggregate principal amount
outstanding, all issued and to be issued under and equally and ratably secured
by an Indenture of Mortgage, Deed of Trust, Assignment and Security Agreement
dated as of September 1, 1976, among the Company, the New Orleans Bank for
Cooperatives (now the National Bank for Cooperatives), John H. Farrelly, as
trustee under certain deeds of trust, and Deposit Guaranty National Bank, as
Trustee (said indenture, together with all indentures supplemental thereto,
being herein called the "Indenture" and said corporate trustee or its successor
as trustee being herein called the "Trustee"), to which Indenture reference is
hereby made for a description of the property mortgaged and pledged, the nature
and extent of the security, the rights and remedies and limitations of said
rights and remedies of the holders of the Series J Note, and of the rights,
powers, duties and immunities of the Trustee thereunder, and of the rights and
obligations of the Company thereunder, and the terms and conditions upon which
the Series J Note is, and will be, issued and secured. This Note is entitled to
the benefits of the Indenture. By accepting this Note, each holder agrees to be
bound by and subject to the provisions of the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than fifty-one percent (51%) of the
aggregate unpaid principal amount of all Notes and of not less than fifty-one
percent (51%) of the unpaid principal amount of each Series of Notes at the time
outstanding except for the Series D, E and F Pollution Control Notes, the Series
G Industrial Development Note, and any other Notes with respect to which the
Supplemental Indenture relating to the issuance of such series of Notes provides
that such series shall not have the series vote, or, if one or more but not all
of the series of Notes then outstanding would be affected by such amendment,
modification or alteration, of not less than fifty-one percent (51%) in
aggregate unpaid principal amount of the Notes of each series so affected,
evidenced as provided in the Indenture, to execute supplemental indentures
adding any provision to, or changing in any manner, or eliminating any of the
provisions of, the Indenture; provided however, that without the written consent
of the holders of one hundred percent (100%) in aggregate unpaid principal
amount of any series of Notes affected thereby at the time outstanding, no such
supplemental indenture shall (1) extend the final maturity of any Note of such
series or reduce the rate or extend the time of payment of interest thereon, or
reduce the amount of the principal thereof, or reduce any premium payable on the
prepayment thereof, or reduce the amount required to be paid as a mandatory
prepayment of any Note of such series or extend the time within which any such
prepayment is to be made or alter the manner in which any note of such series is
selected for prepayment, or (2) affect the rights of holders of some of the
Notes without similarly affecting the rights of the holders of all of the Notes
at the time outstanding, or (3) create any priority with respect to Notes of any
series over Notes of any other series, or (4) reduce the aforesaid percentages
of the principal amount of the Notes or any series thereof required to approve
any such supplemental indenture or reduce the percentage required to effectuate
a waiver as referred to in the next sentence, or (5) amend Section 10.02 of the
Indenture. The Indenture also provides that the holders of not less than
fifty-one percent (51%) in aggregate unpaid principal amount of any or each
series of Notes at the time outstanding may on behalf of the holders of all
Notes of such series or all series, respectively, waive compliance with or
failure to comply with certain covenants contained in the Indenture.
Default
If an Event of Default as defined in the Indenture shall occur and be
continuing, the principal of all Notes may be declared due and payable upon the
conditions and in the manner and with the effect provided in the Indenture. The
Trustee or the holders of the Notes shall be entitled to recover reasonable
counsel fees incurred in any action, suit or proceeding brought to enforce the
Notes or the Indenture in which judgment is recovered.
Registration
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Trustee under
the Indenture referred to herein.
Subject to the restrictions on transfer set forth in the Indenture and the
Series J Revolving Credit Agreement, transfers of this Note may be registered
upon a register maintained for such purpose by the Trustee, as provided in the
Indenture. Prior to due presentment of this Note for registration of transfer,
the Company may treat the registered holder hereof as the absolute owner of this
Note for the purpose of receiving all payments of principal, premium, if any,
and interest hereon and for all other purposes hereof, of the Series J Revolving
Credit Agreement and of the Indenture.
Liability
No recourse shall be had for the payment of the principal of, or the
interest on, this Note or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto, against any incorporator, officer, director or stockholder, as such,
past, present or future, of the Company or of any predecessor or successor
corporation, either directly or through the Company or otherwise, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty, or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
Controlling Law
This Note is made and delivered in Jackson, Mississippi, and shall be
governed by the local laws of the State of Mississippi without giving effect to
the conflicts of laws provisions thereof.
Waiver
The parties hereto, including the Company and any and all guarantors,
endorsers and pledgors, hereby waive presentment, demand, notice of dishonor,
protest and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note.
IN WITNESS WHEREOF, MISSISSIPPI CHEMICAL CORPORATION has caused this Note
to be signed in its corporate name by the manual or facsimile signature of its
President or one of its Vice Presidents and its corporate seal to be impressed
hereon or a facsimile thereof to be imprinted hereon and to be attested by a
manual or facsimile signature of its Secretary or one of its Assistant
Secretaries.
(CORPORATE SEAL) MISSISSIPPI CHEMICAL CORPORATION
By:
-----------------------------
Name:
Title:
ATTEST:
By:
---------------------------
Name:
Title:
This is the Series J Note described in the Indenture referred to herein.
DEPOSIT GUARANTY NATIONAL BANK
as Trustee
By:
-----------------------------
Authorized Officer
SCHEDULE I
[FORM OF ENDORSEMENT OF SERIES J NOTE WITH RESPECT TO ADVANCES OF
CREDIT FACILITY AND PAYMENTS ON ACCOUNT OF PRINCIPAL]
<TABLE>
ADVANCE OF CREDIT FACILITY AND
PAYMENTS ON ACCOUNT OF PRINCIPAL
<CAPTION>
Amount of Any # of Days Amount of
Credit Applicable In Credit Outstanding Unused
Facility Rate Interest Maturity Interest Facility Principal Commitment
Date Advanced Basis Rate Date Period Repaid Balance Balance
<C> <C> <C> <C> <C> <C> <C> <C> <C>
==== ========= ===== ======== ============ ========= ========== =========== ==========
==== ========= ===== ======== ============ ========= ========== =========== ==========
</TABLE>
(b) Only the Series J Note bearing thereon a certificate
substantially in the form of the Trustee's certificate of
authentication hereinbefore recited, executed by the Trustee,
shall be valid or become obligatory for any purpose or entitle
the holder thereof to any right or benefit under this Indenture,
and the certificate of authentication by the Trustee upon the
Series J Note executed on behalf of the Company as aforesaid
shall be conclusive evidence that the Series J Note so
authenticated has been duly authenticated and delivered hereunder
and that the holder is entitled to the benefits of this
Indenture.
(c) The aggregate principal amount of the Series J Note
which may be issued and outstanding under this Indenture at any
one time shall not exceed $30,000,000, exclusive of Series J
Notes executed and delivered as provided in Section 2.12 of the
Indenture. The Series J Note shall mature, shall be subject to
mandatory prepayments, shall bear interest on the unpaid
principal amount thereof, and shall be dated, shall have such
interest payment dates, and shall have such other terms and
conditions, all as provided in the Series J Notes and in the
Series J Revolving Credit Agreement (a copy of which is attached
hereto as Exhibit A and incorporated by reference herein) as the
same may be amended or supplemented.
PARAGRAPH 1.04. Covenants of the Series J Revolving Credit Agreement
Incorporated. Article Five of the Indenture is hereby amended and supplemented
by adding the following new Section 5.18 thereto:
SECTION 5.18. The Company covenants and agrees for the
benefit of the Series J Noteholders that on and after the date on
which the Series J Note is first issued hereunder and so long as
any of the Series J Note is outstanding, it will observe and
perform each of the covenants contained in the Series J Revolving
Credit Agreement previously delivered to the Trustee, which
covenants are hereby incorporated by reference herein and deemed
to be a part of this Indenture as though such covenants as now in
effect were set forth in full herein. From and after the
delivery to the Trustee of a certified copy of any amendment to
the Series J Revolving Credit Agreement, certified by an
Officer's Certificate, the Company agrees that it will observe
and perform each of the covenants contained in the Series J
Revolving Credit Agreement as so amended and such covenants shall
thereupon be incorporated by reference hereunder and deemed to be
a part of this Indenture to the same extent as those covenants
referred to in the first sentence hereof. Upon the written
consent of the holders of at least fifty one percent (51%) of the
aggregate unpaid principal amount of the Series J Notes at the
time outstanding, compliance with any of the covenants now or
hereafter incorporated pursuant to this Section 5.18 may be
waived.
PARAGRAPH 1.05. Amendment of Section 5.08(a). Section 5.08(a) of the
Indenture is hereby amended by inserting in the ninth line thereof, immediately
after the words "the Series I Revolving Credit/Term Loan Agreement" the
following: ", the Series J Revolving Credit Agreement."
PARAGRAPH 1.06. Article Seven-C. A new Article Seven-C is hereby added to
the Indenture, immediately following Article Seven-B as follows:
ARTICLE SEVEN-C
COVENANTS OF THE COMPANY IN ARTICLE SEVEN
EXTENDED TO THE HOLDERS OF THE SERIES J NOTES
The Company covenants and agrees for the benefit of the
holders from time to time of the Series J Notes that so long as
any of the Series J Note is outstanding, the Company will perform
each and every covenant set forth in Sections 7.01 through 7.09
of this Indenture, as in effect as of June 17, 1994, whether or
not such covenants are amended pursuant to Article Ten of the
Indenture, and whether or not performance thereof is waived by
the holders of the Series B Notes on any one or more occasions
pursuant to Section 7.10 of the Indenture, and such covenants are
incorporated in this Article Seven-C by reference, to the same
extent as though set forth in full herein; provided, however,
that any of such provisions, as incorporated herein, may be
amended, and performance thereof may be waived, with the written
consent of the registered holders of at least fifty-one percent
(51%) of the aggregate unpaid principal amount of the Series J
Notes at the time outstanding.
PARAGRAPH 1.07. Amendment of Section 8.01(c). Section 8.01(c) of the
Indenture is hereby amended by deleting the word "or" following the words
"Article Seven-A," and by inserting after the words "Article Seven-B," a comma
and the words "or Article Seven-C."
PARAGRAPH 1.08. Amendment of Section 8.01(d). Section 8.01(d) of the
Indenture is hereby amended by deleting the word "or" after the words "Series H
Note Purchase Agreement," in the third line thereof, and by inserting after the
words "the Series I Revolving Credit/Term Loan Agreement" a comma and the words
"or the Series J Revolving Credit Agreement."
PARAGRAPH 1.09. Amendment of Section 8.01(e). Section 8.01(e) of the
Indenture is hereby amended by inserting in the second and fourth lines thereof
after the words "Series I Revolving Credit/Term Loan Agreement" a comma and by
inserting after said comma the words "Series J Revolving Credit Agreement."
ARTICLE 2
MISCELLANEOUS PROVISIONS
PARAGRAPH 2.01. Indenture in Effect. Except as supplemented and amended
by this Fourteenth Supplemental Indenture, all the covenants, agreements, terms
and stipulations contained in the Indenture, as heretofore in effect, shall
continue in full force and effect.
PARAGRAPH 2.02. Counterparts. This Fourteenth Supplemental Indenture 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.
IN WITNESS WHEREOF, the parties have caused this Fourteenth Supplemental
Indenture to be duly executed on and as of the date first above written.
ATTEST: MISSISSIPPI CHEMICAL CORPORATION
Signed and acknowledged
in the presence of:
By: /s/ Ethel Truly
By: /s/ Rosalyn B. Glascoe Assistant General Counsel
Corporate Secretary
(CORPORATE SEAL)
ATTEST: DEPOSIT GUARANTY NATIONAL BANK,
as Trustee
Signed and acknowledged
in the presence of:
By: /s/ Susan R. Tsimortos
By: /s/ Janice M. Powell Vice President and Trust Officer
Assistant Trust Officer
(CORPORATE SEAL)
STATE OF MISSISSIPPI
COUNTY OF YAZOO
Personally appeared before me, the undersigned authority in and for the
said county and state, on this 29th day of June, 1994, within my jurisdiction,
the within named Ethel Truly and Rosalyn B. Glascoe, who acknowledged that they
are Assistant General Counsel and Corporate Secretary, respectively, of
Mississippi Chemical Corporation, a Mississippi corporation, and that for and on
behalf of the said corporation, and as its act and deed they executed the above
and foregoing instrument, after first having been duly authorized by said
corporation so to do.
/s/ Linda G. Bentley
Notary Public
My Commission expires:
May 20, 1997
(Notarial Seal)
STATE OF MISSISSIPPI
COUNTY OF HINDS
Personally appeared before me, the undersigned authority in and for the
said county and state, on this 30th day of June, 1994, within my jurisdiction,
the within named Susan R. Tsimortos and Janice M. Powell, who acknowledged that
they are Vice President and Trust Officer and Assistant Trust Officer,
respectively, of Deposit Guaranty National Bank, a national banking association,
and that for and on behalf of the said corporation, and as its act and deed they
executed the above and foregoing instrument, after first having been duly
authorized by said corporation so to do.
/s/ Mary E. Huskey
Notary Public
My Commission expires:
February 18, 1996
(Notarial Seal)
EXHIBIT A
REVOLVING CREDIT AGREEMENT
June 17, 1994
NationsBank of Tennessee, N.A. (the "Lender") hereby agrees to make to
Mississippi Chemical Corporation, a Mississippi corporation (the "Company"),
subject to the terms hereof and provided there is no default hereunder,
revolving credit loans, all such loans outstanding and unpaid at any time to be
in amount up to but not in excess of the aggregate principal amount of
$30,000,000 (such amount, or such amount reduced as hereinafter provided, being
herein called the "Commitment" of the Lender). The Commitment shall be
available from June 30, 1994, up to the close of business on June 30, 1997.
Each revolving credit borrowing under this Revolving Credit Agreement (this
"Agreement") shall be made in a principal amount of at least $1,000,000.
ARTICLE I
TERMS
SECTION 1.1. Revolving Credit Loans. (a) The Company agrees to execute
and deliver to the Lender on the first loan closing date hereunder, against the
making by the Lender of such loan to the Company, a promissory note (herein,
together with any replacement notes, sometimes called the "Series J Note"), in
substantially the form of EXHIBIT A attached hereto and incorporated by
reference herein, properly authenticated by the Trustee. Loan closing dates may
be fixed by the Company to be any Business Day from June 30, 1994, to and
including June 29, 1997. The Company shall give the Lender notice (a "Borrowing
Notice") not later than 11:00 a.m. Nashville time one (1) Business Day prior to
any requested disbursement of a loan. Each Borrowing Notice shall be written
and may be made by telecopier, overnight commercial courier, telex or cable.
Each Borrowing Notice shall specify the requested date of such disbursement, the
aggregate amount of such disbursement, the type of loan, i.e., Prime Rate, LIBOR
Based Rate or Fixed Rate; and if a LIBOR Based Rate or Fixed Rate, the
designated Eurodollar or Fixed Interest Period, as the case may be. Not later
than noon Nashville time on each disbursement date, and subject to the terms and
conditions hereof, the Lender will credit the proceeds of the loans to the
Company's deposit account with the Lender. Each such Borrowing Notice shall
obligate the Company to accept the disbursement of the loans requested thereby.
Each loan shall be recorded on a schedule substantially similar to that
appearing on the Series J Note (the "Schedule") by the Lender, shall be payable
to the Lender and shall represent the obligation of the Company to pay either
the amount of the Commitment or the aggregate unpaid principal amount of all
revolving credit loans made by the Lender as recorded on the Schedule, whichever
is less. Upon request of the Company, the Lender shall furnish to the Company a
copy of the Schedule, as updated and revised to reflect such loans and all prior
transactions under the Series J Note, in each case certified by a duly
authorized officer of the Lender to be a true, correct, and complete copy of the
Schedule, as then in effect. Revolving credit loans made by the Lender and
payments of principal with respect to the Series J Note shall be evidenced by
notations made by the Lender on the Schedule, showing the date and amount of
each such loan or payment of principal; provided, however, that the failure of
the Lender to make such a notation or any error in such a notation shall not in
any manner affect the obligation of the Company to make payments of principal
and interest in accordance with the terms of the Series J Note. The aggregate
unpaid amount of loans set forth on the Schedule shall be rebuttably presumptive
evidence of the principal amount owing and unpaid on such Series J Note. Upon
the request of the Lender, the Company will furnish a new Series J Note
(properly authenticated by the Trustee) to replace any such Series J Note, which
replaced Series J Note shall be returned simultaneously to the Company by the
Lender and marked "Cancelled" and, at such time, the first notation made on the
Schedule attached to such replacement Series J Note shall set forth the
aggregate unpaid amount of loans appearing on the Schedule of the Series J Note
being so replaced.
(b) Notwithstanding the foregoing provisions of this Agreement, the Lender
shall not be obligated to make any additional revolving credit loans during any
period (1) in which an Event of Default shall have occurred and be continuing,
or (2) in which all or substantially all of the manufacturing business of the
Company at its Yazoo City, Mississippi manufacturing facility is shut down,
closed or stopped as a direct result of both (i) any alleged or actual violation
of any Environmental Laws (as defined in Section 6.5 herein) and (ii) the
imposition by a federal or state court or federal agency of competent
jurisdiction of a cease and desist order, temporary restraining order,
preliminary injunction, permanent injunction or other equitable relief, or
(3) after the occurrence of a Material Adverse Effect, or (4) forty-four (44)
days after a lien has been filed against assets of the Company or of a
Restricted Subsidiary for federal income taxes which are in excess of $15
million dollars.
SECTION 1.2. Form of Note. Each Series J Note shall bear interest, be
payable at such time and place and be subject to mandatory and optional payment
as provided in the form of Series J Note.
SECTION 1.3. Agent's and Certain Other Fees. (a) As a consideration for
the Lender's acting as agent for itself and for any Participating Banks (as
defined in Section 10.9 herein) hereunder, the Company agrees to pay the Lender
an agent's fee of $25,000 due on the initial closing date. On each anniversary
date of the initial closing date (the "Anniversary Date"), the Company agrees to
pay in advance to the Lender an annual agent's fee of (a) $25,000 if the Lender
and its Affiliates (other than Participating Banks) collectively retain 75% or
less of the principal amount of the Series J Note or (b) $10,000 if the Lender
and its Affiliates (other than Participating Banks) collectively retain more
than 75% of the principal amount of the Series J Note. Determination of the
principal amount of the Series J Note held by the Lender and its Affiliates
shall be on the basis of the average amount of the Series J Note held by them
for the previous 12 months. A pro rata portion of the agent's fee shall be
payable for the period from the last Anniversary Date occurring prior to
June 30, 1997.
(b) In addition, if the out-of-pocket expenses of Lender and any
Participating Bank described in Section 10.7 hereof, when added to such expenses
incurred in connection with the amendment of the Revolving Credit/Term Loan
Agreement between Lender and the Company dated August 6, 1992 (the "Series I
Loan"), do not exceed $30,000, the Company agrees to pay to the Lender a
one-time closing fee equal to one-half the difference between $30,000 and such
aggregate fees and expenses of Lender and any Participating Bank with respect to
the Series I Loan and this Agreement. Such fees and expenses shall be
designated at the initial closing date.
(c) On the initial closing date and each Anniversary Date other than the
last, the Company shall also pay the Lender a facility fee equal to .0625% of
the then-existing Commitment.
SECTION 1.4. Nonusage Fee. In addition to the amounts payable pursuant to
Section 1.3 above, the Company agrees to pay to the Lender a nonusage fee of 1/4
of 1% per annum (on the basis of a year having 360 days for the actual number of
days elapsed) on the average daily unused portion of the Commitment from
June 30, 1994, to and including the earlier of the termination of the Commitment
or June 30, 1997, such amount to be payable quarterly on the last day of each
March, June, September and December hereafter commencing September 30, 1994.
SECTION 1.5. Commitment Reduction. At any time and from time to time on
or before June 30, 1997, the Company may terminate or reduce the Commitment by
an amount not less than $2,500,000. Once reduced, the Commitment may be
increased only with the written consent of the Lender. The Commitment may not
be reduced to an amount less than the principal amount of the Commitment
advanced and not repaid to the date of such reduction. Any such optional
termination or reduction shall be without premium or penalty.
SECTION 1.6. Changes in Circumstances. (a) Notwithstanding any other
provision herein, if after the date of this Agreement any change in applicable
laws or regulation or in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) shall change the basis of taxation of
payments to the Lender or to any Participating Bank under any LIBOR Based Rate
Loan made by the Lender and such Participating Bank (each of Lender and any
Participating Bank is referred to in this Section 1.6 as a "Participant" and are
collectively referred to as "Participants") or any other fees or amounts payable
hereunder (other than taxes imposed on the overall net income of such
Participant by the country in which such Participant is located, or by the
jurisdiction in which such Participant has its principal office, or by any
political subdivision or taxing authority therein), or shall impose, modify or
deem applicable any reserve requirement, special deposit, insurance charge
(including FDIC insurance on Eurodollar deposits) or similar requirement against
assets of, deposits with or for the account of, or credit extended by, such
Participant or shall impose on such Participant or the London Interbank Market
any other condition affecting this Agreement or LIBOR Based Rate Loans made by
such Participant, and the result of any of the foregoing shall be to increase
the cost to such Participant of making or maintaining its LIBOR Based Rate Loan
or to reduce the amount of any sum received or receivable by such Participant
hereunder (whether of principal, interest or otherwise) in respect thereof by an
amount deemed by such Participant to be material, then the Company will pay to
such Participant such additional amount or amounts as will compensate such
Participant for such additional costs of reduction.
(b) If either:
(1) The introduction of, or any change in, or in the interpretation
of, any United States or foreign law, rule or regulation; or
(2) Compliance with any directive, guidelines or request from any
central bank or other United States or foreign governmental authority (whether
or not having the force of law) promulgated or made after the date hereof (but
excluding, however, any law, rule, regulation, interpretation, directive,
guideline or request contemplated by or resulting from the report dated July
1988 entitled "International Convergence of Capital Measurement and Capital
Standards" issued by the Basle Committee on Banking Regulations and Supervisory
Practices), affects or would affect the amount of capital required or expected
to be maintained by any Participant (or any lending office of such Participant)
or any corporation directly or indirectly owning or controlling any Participant
(or any lending office of such Participant) based upon the existence of this
Agreement, and such Participant shall have determined that such introduction,
change or compliance has or would have the effect of reducing the rate of return
on such Participant's capital or on the capital of such owning or controlling
corporation as a consequence of its obligations hereunder (including its
Commitment) to a level below that which such Participant or such owning or
controlling corporation could have achieved but for such introduction, change or
compliance (after taking into account that Participant's policies or the
policies of such owning or controlling corporation, as the case may be,
regarding capital adequacy) by an amount deemed by such Participant (in its sole
discretion) to be material, then, from time to time, the Company shall pay to
such Participant such additional amount or amounts as will compensate such
Participant for such reduction attributable to making, funding and maintaining
its Commitment and Loans hereunder.
(c) A certificate of each Participant setting forth such amount or amounts
as shall be necessary to compensate such Participant as specified in paragraph
(a) or (b) above, as the case may be, shall be delivered to the Participant and
the Company and shall be conclusive absent manifest error. The Company shall,
subject to the provisions of Section 1.6(d) herein, pay each Participant the
amount shown as due on any such certificate within ten (10) days after its
receipt of such certificate.
(d) Each Participant claiming any amount is due pursuant to the provisions
of paragraphs (a) or (b) of this Section 1.6 shall (i) give the Company prompt
written notice upon the earlier to occur of (A) any change in, or the
promulgation of, any law, rule, regulation, interpretation, guideline, or
request described in paragraph (a) or (b) above (a "Regulatory Change in
Circumstances"), or (B) the receipt by such Participant of a notice of, or
information respecting, any Regulatory Change in Circumstances, in each case,
describing the Regulatory Change in Circumstances and the estimated costs or
charges payable by the Company under this Section 1.6 as a result thereof, and
(ii) cooperate fully with the Company and use its best efforts to mitigate the
costs and/or charges to the Company of any such Regulatory Change in
Circumstances, including, without limitation, permitting the Company, in its
sole discretion, either to compensate such Participant as provided in paragraph
(d) or to convert immediately (or at any time thereafter) any LIBOR Based Rate
Loan to a Prime Rate Loan and compensate such Participant for the full amount of
any penalties, charges, or losses resulting from such Regulatory Change in
Circumstances and such conversion.
Notwithstanding anything herein to the contrary, no amount shall be
payable by reason of any Regulatory Change in Circumstances pursuant to the
provisions of this Section 1.6 with respect to any period prior to the date the
Company is notified of such Regulatory Change in Circumstances pursuant to this
paragraph (d).
(e) Failure on the part of any Participant to give the notice specified in
subsection (d) above or to demand compensation for any increased costs or
reduction in amount received or receivable or reduction in return on capital
with respect to any Eurodollar Interest Period shall not constitute a waiver of
such Participant's rights to demand compensation for any increased costs or
reduction in amounts received or receivable or reduction in return on capital in
such Eurodollar Interest Period. The protection of this Section 1.6 shall be
available to each Participant regardless of any possible contention of
invalidity or inapplicability of the law, regulation or condition that shall
have been imposed.
ARTICLE II
PAYMENTS
SECTION 2.1. Repayment Generally. The Company may, without terminating or
reducing the Commitment, repay the amounts advanced at the time and in the
manner provided in the Series J Note.
SECTION 2.2. Required Prepayment. At the time of each reduction in the
Commitment pursuant to the provisions of Section 1.5 herein, the Company shall,
if permissible under the terms of the Series J Note, prepay the Series J Note in
the amount, if any, required to reduce the aggregate outstanding principal
thereof to an amount not in excess of the Commitment as so reduced.
SECTION 2.3. Reinstatement of Commitment. Except as provided in Section
1.5 herein, all optional prepayments made pursuant to Section 2.1 hereof prior
to June 30, 1997, shall automatically reinstate the Commitment hereunder in the
amount of such optional prepayments subject to the terms of the revolving credit
hereinabove provided.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANT OF
THE COMPANY AND LENDER
SECTION 3.1. Company Representations and Warranties. The Company
represents and warrants that, as of this date:
(a) Business and Properties; Annual Reports. The Company has heretofore
furnished the Lender with copies of its annual report on Form 10-K for its
fiscal year ended June 30, 1993, as filed with the United States Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended,
and the exhibits filed therewith (the "10-K Report"), and of its annual report
to stockholders for such fiscal year (the "Stockholders' Report" and,
collectively with the 10-K Report, the "Reports"). The Reports fairly describe
the businesses in which the Company and its Subsidiaries are engaged, and the
other matters purported to be described therein.
(b) Financial Condition.
(i) Financial Statements. The Company has heretofore furnished to
the Lender (x) a balance sheet of the Company as at June 30, 1993, and the
related statements of operations, stockholder-members' equity and changes
in financial position or statements of cash flow for the five fiscal years
then ended, all reported on by independent public accountants (the "Audited
Financial Statements"), and (y) unaudited balance sheets of the Company as
of March 31, 1994, and the related unaudited statements of operations,
stockholder-members' equity, and statements of cash flow for the
three-month period then ended (the "Unaudited Financial Statements" and,
collectively with the Audited Financial Statements, the "Financial
Statements"). The Financial Statements, including the related notes, have
been prepared in accordance with generally accepted accounting principles,
consistently applied, and present fairly the financial position of the
Company as at the respective dates of said statements and the results of
their operations for the respective periods covered thereby, except that
the Unaudited Financial Statements are subject to normal year-end audit
adjustments and lack notes thereto.
(ii) No Material Change. Since March 31, 1994, there have been no
material adverse changes in the condition, financial or otherwise, of the
Company and its Subsidiaries, other than changes in the ordinary course of
business, as anticipated in the Reports and Financial Statements, none of
which, individually or in the aggregate, have been materially adverse to
the Company and its Subsidiaries, considered as a consolidated group;
provided, however, the Company has indicated to Lender its current
intention (a) to dispose of a minimum of 51%, up to a maximum of 100%, of
the common stock of Newsprint South, Inc., such disposition to occur on
June 30, 1994, or as soon as possible thereafter, and (b) to cease
operating as a cooperative, as more particularly described in the Proxy
Statement/Prospectus dated May 27, 1994, a copy of which has heretofore
been provided to Lender.
(iii) Properties; Liens. The Company and its Subsidiaries are the
owners of the assets reflected on the audited balance sheet as of June 30,
1993, included in the Financial Statements, except for inventory sold,
accounts receivable collected, patronage refunds paid, capital equity
credits paid to shareholders and other assets replaced, retired or
otherwise disposed of since such date in the ordinary course of business;
provided, however, the Company has indicated to Lender its current
intention to dispose of a minimum of 51%, up to a maximum of 100%, of the
common stock of Newsprint South, Inc., such disposition to occur on
June 30, 1994, or as soon as possible thereafter. The Trust Estate is, and
at the Closing Date will be, free from any Liens other than the Lien of the
Indenture (in the case of assets owned by the Company) and other Liens of
the type described in Section 7.01 of the Indenture ("Permitted Liens"),
subject only to such encumbrances on or imperfections of its title thereto
as do not and would not, either with respect to any single such interest or
all such interests in the aggregate, materially detract from the value of
such assets, either individually or in the aggregate, to the Company and
its Restricted Subsidiaries. The Lien of the Indenture is, and upon the
execution, filing and recording of the Fourteenth Supplemental Indenture,
the Lien of the Indenture, as supplemented, will be, a valid and perfected
mortgage or security interest upon the Company's interest in the real
property and mineral interests located in Yazoo and Jackson Counties,
Mississippi, and in Lea and Eddy Counties, New Mexico, and described in
Annex A and Annex B to the original Indenture and, to the best of the
Company's knowledge, upon the other assets required by the Indenture to
form part of the Trust Estate, and will secure the Series J Notes equally
and ratably with the other Notes secured by the Indenture. The Trust
Estate constitutes substantially all of the real and personal assets of the
Company, excepting only (I) the stock of and the Company's interests in the
Unrestricted Subsidiaries, and (II) stock in the Bank owned by the Company,
and (III) properties and interests specifically excluded by the Indenture.
(iv) Leases. The Company and each of its Restricted Subsidiaries has
quiet enjoyment or peaceful and undisturbed possession under all leases,
subleases, easements or licenses to which it is party and pursuant to which
it holds or uses real property or tangible personal property located in
Yazoo and Jackson Counties, Mississippi or in Lea or Eddy Counties, New
Mexico, and, to the best of its knowledge, all other jurisdictions in which
it holds or uses real property or tangible personal property, except where
the failure to have such quiet enjoyment or peaceful and undisturbed
possession would not have a material adverse effect on the Company and its
Restricted Subsidiaries as a consolidated group, and none of which contains
any unusual or burdensome provision which will materially and adversely
affect the operations of the Company and its Restricted Subsidiaries, taken
as a whole.
(v) Indebtedness. Parts I and II of SCHEDULE A hereto list each
item of Short-Term Borrowing and Funded Debt to which the Company or any of
its Restricted Subsidiaries is subject, and all such Short-Term Borrowing
and Funded Debt is Indebtedness which the obligor is permitted to incur and
to which it is permitted to be subject, without any breach of the
Indenture, and Part III of SCHEDULE A lists all instruments providing for
or governing Short-Term Borrowing or Funded Debt of the Company or any
Restricted Subsidiary. Complete and correct copies of the instruments and
agreements referred to in Part III of SCHEDULE A have been delivered to
counsel to the Lender. All restrictions contained in such instruments and
agreements on the incurrence by the Company of the Indebtedness represented
by the Series J Note will have been waived, or the conditions to such
incurrence will have been satisfied, not later than the date of the initial
closing.
(c) Subsidiaries and Affiliates. The Company has no Subsidiaries or
affiliates, other than as listed on SCHEDULE B hereto.
(d) Restricted Subsidiaries. The only Restricted Subsidiaries under the
Indenture are Mississippi Phosphates Corporation, Mississippi Potash, Inc.,
Mississippi Nitrogen, Inc., and the Company's 50% equity interest in Triad
Chemical, a joint venture in which the remaining 50% equity interest is held by
First Mississippi Corporation.
(e) Due Corporate Organization and Authority. The Company (i) is a
corporation duly organized, validly existing and in good standing under the laws
of Mississippi, (ii) has all requisite corporate power and authority to own and
operate its properties and to conduct its business as now conducted, and has all
necessary licenses, permits, consents or approvals from or by, and has made all
necessary filings with, all governmental agencies or instrumentalities having
jurisdiction over its business or properties, to the extent requisite for the
ownership and operation of its properties and the conduct of its business, and
(iii) has duly qualified and is authorized to do business and is in good
standing as a foreign corporation in Alabama, Arkansas, Florida, Georgia,
Illinois, Kentucky, Louisiana, Missouri, New Mexico, Tennessee and Texas, which
states, in the opinion of the Company, comprise each and every jurisdiction
wherein its ownership or leasing of its properties or the conduct of its
business makes such qualification necessary.
(f) Judgments; Pending Litigation. Except as disclosed in SCHEDULE C
hereto, there are no judgments currently outstanding and unsatisfied against the
Company or any Subsidiary, and no action, proceeding or investigation is pending
or threatened before any court or administrative officer or agency, and to the
best of the Company's knowledge no basis exists for any such action, preceding
or investigation, which, either in any case or in the aggregate, might have a
material adverse effect on the consolidated financial condition of the Company
and its Subsidiaries, or which might call into question the validity of the
Series J Note, the other Notes currently outstanding, the Indenture, this
Agreement or any action taken or to be taken by the Company pursuant to or in
connection with this Agreement or the Indenture. The Company does not consider
that the matters listed on SCHEDULE C are likely to have a material adverse
effect on the consolidated financial condition of the Company and its
Subsidiaries.
(g) Taxes. All tax returns required to be filed by the Company in any
jurisdiction have been filed; all taxes, assessments, fees, and other
governmental charges or levies (other than those currently payable without
penalty) upon the Company or upon any of its assets, income or franchises, which
are due and payable have been paid, other than those being contested in good
faith and for which adequate provision has been made. The Internal Revenue
Service has audited the Company's Federal income tax returns for all fiscal
years through the fiscal year ended June 30, 1987, and, except as disclosed in
SCHEDULE C hereto, has not challenged the Company's calculation of its tax
liability for such years, other than challenges which have been settled, are not
material in amount, or are reflected in the 10-K Report. The charges, accruals,
and reserves on the Company's books in respect of Federal, state and local taxes
are adequate for payment of all such taxes in respect of current periods, and
the Company knows of no material additional assessments for any year for which
an audit has not yet been completed (or the statute of limitations has not yet
expired), which are not covered by such reserves.
(h) No Conflict. Neither the execution or delivery of this Agreement, the
Series J Note, the Fourteenth Supplemental Indenture or any instrument
contemplated thereby, nor compliance with the terms and provisions hereof or
thereof, nor the consummation of the transactions contemplated hereby or
thereby, will conflict with, violate or result in a breach of or default under,
or result in the creation or imposition of any Lien on any of the Company's
assets pursuant to, the terms of any provision of any contract or agreement, any
charter, by-law or other corporate restriction, any law, ordinance or rule or
any order, certificate, license, regulation or demand of any state, territory or
political subdivision thereof or any court, agency or other tribunal to which
the Company or any of its assets are subject. The Company is not in material
default under any of the foregoing.
(i) Compliance with Laws, Regulations, etc. To the best of the Company's
knowledge, neither it nor any of its Subsidiaries is in violation of any laws or
governmental rules or regulations applicable to its business or properties
(excluding any laws or governmental rules or regulations pertaining to
Environmental Matters, all of which are referenced in Article VI) or any
applicable order, writ, injunction, judgment or decree of any court, or any
order of any governmental commission, bureau or other administrative agency, the
violation of which would materially adversely affect the business, affairs,
properties, operations or condition of the Company and its Subsidiaries, taken
as a consolidated group.
(j) ERISA.
(i) Employee Benefit Plans . Each employee benefit plan which the
Company or any ERISA affiliate has established or maintained or to which
the Company or any ERISA affiliate is required to contribute (collectively,
the "Plans") is in compliance in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder (collectively and as from
time to time in effect, "ERISA"), and of the Internal Revenue Code of 1986
and the rules and regulations thereunder (collectively and as from time to
time in effect, the "Code"). No Plan which is a defined benefit plan has
been terminated since 1974 nor are there any proceedings pending for the
termination of any such Plan. There does not exist any event or condition
which would permit the institution of proceedings to terminate any Plan
pursuant to Section 4042 of ERISA. The current value of the benefit
liabilities of any Plan which is a defined benefit plan does not exceed the
current value of such Plan's assets allocable to such benefit liabilities
by any material amount. There has been no failure to meet the minimum
funding standard (whether or not waived) with respect to any Plan subject
to Section 412 of the Code or Section 302 of ERISA, and neither the
Company, any Subsidiary nor any ERISA affiliate of the Company or any
Subsidiary, has failed to make any quarterly installment payment to a Plan
required under Section 302(e) of ERISA or Section 412(m) of the Code.
Except as set forth on SCHEDULE D hereto, neither the Company, any
Subsidiary nor any ERISA affiliate of the Company or any Subsidiary has
established or maintained any Plan which is an employee pension benefit
plan. Neither the Company nor any ERISA affiliate has at any time
established or maintained, or been subject to a requirement that it make a
contribution to, a multiemployer plan. Neither the Company, nor any
Subsidiary nor any ERISA affiliate of any of them will, after issuing the
Series J Note at the initial closing, either (i) have incurred or become
liable for any tax assessed by the Internal Revenue Service for any alleged
violation of Section 4975 of the Code or any civil penalty imposed by the
Department of Labor for any alleged violation of Section 406 of the Code,
or (ii) have caused or permitted to occur any "prohibited transaction"
within the meaning of such Section 4975 of the Code or Section 406 of ERISA
with respect to any Plan or any Multiemployment Plan.
(ii) Definition of Certain Terms. As used in this Section 3.1(j),
the terms "defined benefit plan," "employee benefit plan," "employee
pension benefit plan" and multiemployment plan" shall have the respective
meanings assigned to such terms in Section 3 of ERISA, the term "benefit
liabilities" shall have the meaning assigned to such term in Section
4001(a) of ERISA, and the term "reportable event" shall mean a reportable
event described in Section 4043(b) of ERISA as to which the 30-day notice
requirement has not been waived under regulations of the PBGC.
(k) Full Disclosure. Neither this Agreement nor any financial statements
furnished by the Company to the Lender contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which they were made and
when considered as a whole, not misleading. There is no fact known to the
Company which the Company has not disclosed to the Lender in writing which
materially and adversely affects the business, operations, assets, or condition,
financial or otherwise, of the Company.
(l) Brokerage and Finder's Fees and Commissions. The Company will
indemnify the Lender and hold the Lender harmless in respect of any commissions,
fees, judgments or expenses of any nature and kind for which the Lender may
become liable to pay by reason of any claims by or on behalf of brokers, finders
or agents, based on any engagement by the Company of such broker, finder or
agent in connection with the transactions contemplated by this Agreement or any
litigation or similar proceeding arising from such claims.
(m) Private Sale. The Company hereby represents that neither it nor any
person authorized or employed by the Company as an agent, broker, dealer or
otherwise in connection with the offering of the Series J Note or any similar
security of the Company has, either directly or indirectly, sold or offered for
sale or disposed of, or attempted or offered to sell or dispose of, the Series J
Note or any similar securities of the Company, to, or solicited offers to buy
any thereof from, or otherwise approached or negotiated with in respect
thereto, any person or persons, other than the Lender, nor will the Company
hereafter take any such action with respect to the Series J Note or any similar
securities of the Company which would adversely affect the exemption of the sale
of the Series J Note from the registration provisions of the Securities Act of
1933, as amended.
(n) Margin Rules; Use of Proceeds. The net proceeds of the sale of the
Series J Note will be used to finance costs associated with the termination of
the Company's obligations with respect to Newsprint South, Inc., to finance the
redemption and/or purchase of various stock series in association with the
Company's ceasing to operate as a nonexempt cooperative in accordance with
applicable provisions of the Code, and for other general corporate purposes in
the Company's discretion. Neither the Company nor any of its Restricted
Subsidiaries owns any "margin stock" within the meaning of Regulation G (12
C.F.R. part 207) of the Board of Governors of the Federal Reserve System, or has
any present intention of acquiring any "margin stock" or of using any of the
proceeds of the sale of the Series J Note, directly or indirectly, for the
purpose of purchasing or "carrying" any "margin stock" or reducing or retiring
any indebtedness which was originally incurred to purchase or "carry" any
margin stock" or for any other purpose which might cause the transaction
contemplated hereby to constitute a "purpose credit" within the meaning of said
Regulation G, or cause this Agreement, the Fourteenth Supplemental Indenture or
the Series J Note to violate said Regulation G, Regulation T or Regulation X of
said Board of Governors (12 C.F.R., Parts 220 and 224), or any other regulation
of the said Board of Governors, as now in effect, or Section 7 of the Securities
Exchange Act of 1934, as now in effect (collectively, the "Margin Rules").
(o) Inapplicability of Specified Statutes. The Company is not, and none
of its Subsidiaries is, a "holding company" or an "affiliate" of a "holding
company," as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, or an "investment company" or a company controlled by or
acting on behalf of an "investment company," as defined in the Investment
Company Act of 1940, as amended, or a "carrier" or a person which is in control
of two or more "carriers," as defined in Sections 10102 or 11301 of Title 49,
U.S.C. Neither this Agreement nor any transaction contemplated hereby, nor the
Company's use of the proceeds of the Series J Note, is or will be in violation
of any statute, regulation or executive order restricting loans to or
investments in foreign countries or entities doing business therein.
(p) Governmental Consent, etc. Neither the nature of the Company or of
any of its Subsidiaries, nor any of its or their respective businesses or
properties, nor any relationship between the Company or any of its Subsidiaries
and any other Person, nor any circumstance in connection with the offer, issue,
sale or delivery of the Series J Note is such as to require any consent,
approval or other action by or any notice to or filing with any court or
administrative or governmental body in connection with the execution and
delivery of this Agreement or the Fourteenth Supplemental Indenture, the offer,
issue, sale or delivery of the Series J Note or fulfillment of or compliance
with the terms and provisions hereof or of the Fourteenth Supplemental Indenture
or the Series J Note. The Company is not required to obtain the authorization
for or consent to its execution and delivery of this Agreement or the Fourteenth
Supplemental Indenture, the offer, issue, sale, execution or delivery of the
Series J Note, or the compliance with the terms and provisions hereof or of the
Fourteenth Supplemental Indenture or the Series J Note from any governmental
agency or other Person, other than its officers or directors, acting as such,
and the Persons listed in SCHEDULE E hereto all of which have been, or prior to
the initial closing will be, obtained.
SECTION 3.2. Lender Representations and Warranties. The Lender hereby
represents and warrants as follows:
(a) It has sufficient knowledge and experience in financial and business
matters generally to be able to evaluate the risks and merits of the investment
represented by the purchase of the Series J Note and it is able to bear such
risks, including without limitation, the risk of loss of such investment.
(b) No offering statement, prospectus or offering circular containing
information with respect to the Series J Note, the purposes for which the
Series J Note is being issued, or the Company has been or will be prepared, and
it has made its own inquiry and analysis with respect to the Series J Note and
the security therefor, the Company and its Subsidiaries and other material
factors affecting the security and payment of the Series J Note.
(c) It has either been supplied with or has had access to all information,
including financial statements and other financial information, of the Company
and its Subsidiaries to which a reasonable investor would attach significance in
making investment decisions, and it has had the opportunity to ask questions and
receive answers from knowledgeable individuals concerning the Company and its
Subsidiaries, the Series J Note and the security therefor, so that as a
reasonable investor, it has been able to make its decision to purchase the
Series J Note.
(d) It acknowledges that the Series J Note (a) is not being registered
under the Securities Act of 1933 and is not being registered or otherwise
qualified for sale under the "Blue Sky" laws and regulations of any state, (b)
will not be listed on any stock or other securities exchange, (c) will carry no
rating from any rating service, and (d) will not be readily marketable.
(e) It is purchasing the Series J Note for its own account for investment
and with no present intention of distributing or reselling the Series J Note or
any part thereof, but subject, nevertheless, to the disposition of the Series J
Note being at all times within its control, subject to the limitations set forth
in Section 10.9 of this Agreement. The Lender agrees that the Series J Note
will not be sold by it in contravention of the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, or in contravention
of the securities laws of any state or of any other federal or state law
respecting the Series J Note.
SECTION 3.3. Covenant of the Company. The Company will at all times
maintain a ratio of current assets to current liabilities, each calculated in
accordance with Generally Accepted Accounting Principles, of not less than 1.30
to 1.00.
ARTICLE IV
EVENTS OF DEFAULT
SECTION 4.1. Defaults. The occurrence of the following shall constitute a
default (herein sometimes called a "default") by the Company hereunder:
(a) any representation or warranty made hereunder by the Company shall be
false or incorrect in any material respect as of the date hereof, unless such
falsity or incorrectness is no longer material or any adverse impact thereof has
been cured to the satisfaction of the Lender;
(b) the Company's failure to perform or observe any covenant or agreement
contained in Article I or Article II herein, or the Company's failure to perform
or observe any other covenant or agreement contained herein on its part to be
performed or observed if such failure shall remain unremedied for ten (10) days
after written notice thereof shall have been given to the Company by the Lender;
and
(c) the occurrence of an Event of Default under the Indenture.
SECTION 4.2. Remedies. If any default occurs and is continuing, then upon
the election of the Lender:
(a) the Commitment of the Lender to extend credit to the Company shall
immediately terminate; and
(b) all loans outstanding hereunder and any note evidencing the same shall
immediately become due and payable upon demand without presentment, protest or
other notice of any kind, all of which are hereby expressly waived.
ARTICLE V
INFORMATION TO BE FURNISHED SERIES J NOTEHOLDER
SECTION 5.1. Financial Statements. The Company will deliver the following
to each Participant, so long as such Participant holds any interest in the
Series J Note, from the date of this Agreement:
(a) as soon as practicable after the end of each quarterly fiscal period
in each fiscal year of the Company, and in any event within 45 days thereafter,
duplicate copies of:
(i) a consolidated and consolidating balance sheet of the Company
and its Subsidiaries as at the end of such quarter, and
(ii) consolidated and consolidating statements of operations,
stockholder-members' equity and statements of cash flow of the Company and
its Subsidiaries and (in the case of the second, third and fourth quarters)
for the portion of the fiscal year ending at the end of such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods for the prior year, all in reasonable detail and certified as complete
and correct, subject to changes resulting from normal year-end adjustments, by
the principal financial officer or the Treasurer of the Company;
(b) as soon as practicable after the end of each fiscal year of the
Company and in any event within 90 days thereafter, duplicate copies of:
(i) a consolidated balance sheet of the Company and its Subsidiaries
as at the end of such year, and
(ii) consolidated statements of income, stockholder-members equity
and statements of cash flow of the Company and its Subsidiaries for such
year,
setting forth in each case in comparative form the corresponding figures for the
prior year, all in reasonable detail and accompanied by the report thereon
(except for such consolidating statements) of a firm of independent public
accountants, as provided in Section 5.2 hereof;
(c) promptly upon their becoming available, one copy of each financial
statement, report, notice or proxy statement sent by the Company to its
shareholders generally or by any Restricted Subsidiary to its shareholders
(other than the Company) generally, and of each regular or periodic report and
any registration statement or prospectus filed by the Company or any Restricted
Subsidiary with any securities exchange or with the Securities and Exchange
Commission or any successor agency;
(d) upon request from the Lender or any other Participant, copies of each
annual report required to be filed pursuant to ERISA in connection with each
Plan for any Plan year promptly after the filing thereof, including (i) a
statement of the assets and liabilities of such Plan as of the end of such Plan
year and statements of changes in fund balance and in financial position, or a
statement of changes in net assets available for Plan benefits for such Plan
year, certified by a firm of independent public accountants of recognized
national standing and (ii) an actuarial statement of such Plan applicable to
such Plan year, certified by an enrolled actuary of recognized standing;
(e) without duplication of any other materials required by this Section
5.1 to be furnished to the holders of any interest Series J Note, copies of all
reports and financial statements furnished to the Trustee pursuant to Section
5.06 of the Indenture and copies of any financial statements or reports
furnished to the holders of any other Series of Notes; and
(f) with reasonable promptness, such other data and information as to the
business and assets of the Company and of its Restricted Subsidiaries as from
time to time may be reasonably requested by the Lender or any other Participant.
Recipients of any financial statements or reports delivered by the Company
pursuant to this Section 5.1 may furnish such statements and reports required to
be furnished to any regulatory authority having jurisdiction over them. The
Company agrees to furnish to the Participants additional copies of the materials
referred to in this Section 5.1 upon request.
SECTION 5.2. Auditors. The Company shall employ a firm of independent
public accountants of good and recognized national standing who will examine the
financial statements referred to in Section 5.1(b) hereof in accordance with
generally accepted auditing standards and accordingly will include in such
examination such tests of the accounting records and such other procedures as
they consider necessary in the circumstances. Such financial statements shall
present fairly the financial position of the Company and its Subsidiaries at the
end of, and the results of operations and statements of cash flow for the
periods specified in, Section 5.1(b) hereof in accordance with generally
accepted accounting principles. The opinion to be expressed by such firm of
independent public accountants with respect to such financial statements shall
be without qualification, except that such opinion (i) may contain
qualifications (a) resulting from changes in accounting principles and methods
agreed to by such firm of independent public accountants and (b) commonly
referred to as "subject to" qualifications relating to matters the probable
effect of which is not readily determinable and the outcome of which is
dependent upon decisions of parties other than the Company, and (ii) will not
cover consolidating financial statements.
SECTION 5.3. Officers' Certificates. Each set of financial statements
delivered to the Lender or any other Participants pursuant to Section 5.1(a) or
(b) hereof shall be accompanied by a certificate of the Chairman of the Board,
the President or a Vice President and (without duplication) the chief financial
officer of the Company, setting forth (i) in the case of statements delivered
pursuant to Section 5.1(a) or (b) hereof, the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements (a) of Sections 7.03 and 7.04 of the Indenture,
as incorporated in Article Seven-C thereof, during the most recently completed
fiscal quarter covered by the income statement then being furnished and (b) of
Section 7.08 of the Indenture, as incorporated in Article Seven-C thereof, on
the last day of the period covered by the income statement then being furnished,
(ii) in the case of statements delivered pursuant to Section 5.1(b) hereof, the
information (including detailed calculations) required in order to establish
whether the Company was in compliance with the requirements of Sections 7.05 and
7.07 of the Indenture, as incorporated in Article Seven-C thereof, during the
period covered by the income statement then being furnished and a certification
as to insurance in force at the close of the preceding fiscal year meeting the
requirements of Sections 5.03(a)(2) and 5.03(b) of the Indenture, and
(iii) whether to the knowledge of such certifying officers, there exists on the
date of such certificate any condition or event which then constitutes, or which
after notice or lapse of time or both would constitute an Event of Default, and,
if any such condition or event then exists, specifying the nature and period of
existence thereof and the action being taken and proposed to be taken with
respect thereto.
SECTION 5.4. Accountants' Certificate. The report of the firm of
independent public accountants covering the financial statements delivered
pursuant to Section 5.1(b) hereof shall state that in making their audit of such
financial statement, they have obtained no knowledge of any condition or event
which then constitutes, or which after notice or lapse of time or both would
constitute, an Event of Default or, if any such condition or event then exists,
specifying the nature and period of existence thereof.
SECTION 5.5. Notice of Reportable Events. The Company agrees to notify
the Lender and each other Participant immediately of any fact, including but not
limited to any Reportable Event, arising in connection with any Plan which might
constitute grounds for the termination thereof by the PBGC or for the
appointment by the appropriate United States district court of a trustee to
administer the Plan.
SECTION 5.6. Inspection. The Company will permit the Lender and each
Participant, so long as such party holds any interest in the Series J Note, at
the expense of the Participant requesting the same, to visit and inspect any of
the properties of the Company or any Restricted Subsidiary, to examine all their
books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers and, in the presence of a representative of the
Company, the Company's independent public accountants, all at such reasonable
times and as often as may be reasonably requested.
ARTICLE VI
ENVIRONMENTAL MATTERS
SECTION 6.1. Preamble. The parties have agreed upon the following
provisions set forth in this Article VI, as the exclusive provisions of this
Agreement, and as the exclusive remedies of the parties under this Agreement,
with respect to Environmental Laws (as herein defined). No representation,
warranty or covenant under this Agreement other than those contained in this
Article VI (except closing requirements contained in Article VIII,
Section 8.1(c)) shall apply to or be construed to include Environmental Laws.
SECTION 6.2. Company's Environmental Representations, Warranties and
Covenants. Other than as set forth in the Company's Annual Report on Form 10-K
for the fiscal year ending June 30, 1993, and except as described in SCHEDULE F
to this Agreement, the Company represents, warrants and covenants to Lender as
follows:
(a) The Company and each Restricted Subsidiary is in compliance in all
material respects with all Environmental Laws. Neither the Company nor any
Restricted Subsidiary has received notice from any third party of any existing
violation or alleged violation of any Environmental Law.
(b) There is no pending, or, to the best of the Company's knowledge,
threatened litigation or proceeding in law or in equity, by any commission,
agency or other administrative authority or by any third party with respect to
any violation or any alleged violation by the Company or any Restricted
Subsidiary of Environmental Laws.
(c) The Company covenants that it and each Restricted Subsidiary will
comply in all material respects with all Environmental Laws such that no
Material Adverse Effect results. The Company shall not be deemed to be in
default hereunder with respect to such covenant on account of any alleged or
actual violation of any Environmental Law so long as the Company is in good
faith contesting such claim; provided, however, in the event of an occurrence of
a Material Adverse Effect, the Lender shall not be obligated to make further
advances hereunder.
SECTION 6.3. Required Notices.
(a) The Company shall notify Lender promptly of the occurrence of any of
the following: (i) receipt of notice from any governmental authority regarding
an alleged violation of an Environmental Law relating to the operation of the
Company or any Restricted Subsidiary; (ii) commencement of any judicial or
administrative proceedings regarding an alleged violation of any Environmental
Law by or against or otherwise affecting the Company or any Restricted
Subsidiary; and (iii) receipt of written notice from a federal, state, foreign
or local governmental agency or private party alleging that the Company is
liable or responsible for costs associated with the response to cleanup,
stabilization or neutralization of any environmental damage.
(b) Lender shall notify the Company in writing of its determination that a
Material Adverse Effect under Section 6.2(c) has occurred. Such notice shall be
sent contemporaneously with Lender's termination of its obligation to continue
making advances hereunder, but the Company shall have thirty (30) days in which
to respond to the Lender before Lender may declare an event of default under
Article IV, Section 4.1.
SECTION 6.4. Inspection of Records and Permits. The Company shall
maintain all records and permits in force and shall provide Lender, or an
accounting firm or environmental analyst employed by the Lender acting as its
agent, access to such records and permits and the right to make copies thereof
during the normal business hours of the Company.
SECTION 6.5. Definitions.
(a) The term "Environmental Law(s)" means federal, state, or local laws,
statutes, regulations, or rules, any decree, order, award, agreement, release,
or notice from any federal, state, or local court, agency, government or
governmental authority or any permits or licenses from any courts, agencies or
other governmental authorities or any other party, including governmental
standards promulgated thereunder or with respect thereto, which relate to the
protection of the environment.
(b) The term "Material Adverse Effect" means a change or effect which, in
the reasonable determination of the Lender communicated to the Company in
writing, constitutes a material adverse change in, or a material adverse effect
upon, any of the financial condition, operations or business of the Company and
its Restricted Subsidiaries taken as a whole, which (i) results from an actual
violation of any Environmental Law, and (ii) which costs $25,000,000 or more to
remediate, excluding expenditures for the correction of violations of
Environmental Laws which can be capitalized on the balance sheet of the Company
and its Restricted Subsidiaries in accordance with Generally Accepted Accounting
Principles.
ARTICLE VII
WAIVERS
SECTION 7.1. Waivers. No delay in the exercise of, or omission of the
Lender to exercise, any right or power hereunder or under the Series J Note
shall impair such right or power or be construed to be a waiver of any default
or an acquiescence therein, and any single or partial exercise of any such
right or power shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver whatsoever shall be valid unless in
writing signed by the Lender, and then only to the extent in such writing
specifically set forth. All remedies herein or by law afforded shall be
cumulative and all shall be available to the Lender until it has been paid in
full in lawful money.
ARTICLE VIII
CLOSING REQUIREMENTS
SECTION 8.1. Closing Conditions - Initial Loan. The Lender shall not be
required to make the initial loan contemplated herein unless the Lender has been
provided with:
(a) Opinion of Counsel for the Company. An opinion of Robert E. Jones,
Esq., General Counsel of the Company, dated as of June 17, 1994 ("Closing
Date"), addressed to the Lender, substantially in the form of SCHEDULE G hereto,
and containing such further opinions, in form and substance satisfactory to the
Lender, as to such other legal matters incident to the transactions contemplated
by this Agreement as the Lender may reasonably request. In giving the foregoing
opinion, counsel for the Company may rely, to the extent he considers
appropriate, on the opinions satisfactory in form and substance to the Lender,
of local counsel satisfactory to the Lender as to matters governed by the law of
any State other than Mississippi; provided, that each opinion so relied upon
states that it may be relied upon by the Lender, and a copy thereof is delivered
to the Lender.
(b) Title Opinions and Title Reports. With respect to the real property
in Yazoo and Jackson Counties, Mississippi, and Lea and Eddy Counties, New
Mexico, constituting part of the Trust Estate:
(i) title opinions of Messrs. Henry, Barbour & DeCell, of Yazoo
County, Mississippi (in the case of property in Yazoo County, Mississippi),
Messrs. Megehee, Pitcher, Tynes, Kinard & Smith, of Pascagoula, Mississippi
(in the case of property in Jackson County, Mississippi), and of Messrs.
McCormick, Forbes, Caraway and Tabor, of Carlsbad, New Mexico (in the case
of property in Lea and Eddy Counties, New Mexico) or of other local counsel
reasonably acceptable to you, to the effect that the Company or a
Restricted Subsidiary, as the case may be, has good and marketable title to
all such property as of the Closing Date, subject to no Liens of record,
other than the Lien of the Indenture and Permitted Liens; and
(ii) copies of title reports covering the period from August 6, 1992,
to the Closing Date, supporting such opinions.
In addition, with respect to other property of the Company and of
Restricted Subsidiaries situated (or considered to have a situs) in Yazoo and
Jackson Counties, Mississippi, and Lea and Eddy Counties, New Mexico,
constituting part of the Trust Estate as to which the filing of UCC financing
statements is the correct method of perfection, the Lender shall have received
search reports of such counsel, or a search firm reasonably acceptable to the
Lender, as to searches of the UCC records in the offices of the Secretary of
State of the State of Mississippi, the Chancery Clerk of Yazoo and Jackson
Counties, Mississippi, the Secretary of State of the State of New Mexico, and
the County Clerks of Lea and Eddy Counties, New Mexico, covering the period from
August 6, 1992, to such date on or prior to the Closing Date as is satisfactory
to Lender, disclosing no liens of record against any such properties, other than
the Lien of the Indenture and Permitted Liens.
(c) Representations True. The representations and warranties of the
Company contained herein shall be true and correct in all material respects on
and as of the Closing Date with the same effect as though such representations
had been made on and as of such date, except as affected by the transactions
herein provided for and except for changes in the ordinary course of business
since the date hereof.
(d) No Event of Default. No event shall have occurred which (assuming
that the Series J Note had been issued and outstanding on and at all times after
the date hereof) would constitute an Event of Default, as defined in the
Indenture or this Agreement, or with notice or lapse of time or both would
become such an Event of Default.
(e) Fourteenth Supplemental Indenture. The Fourteenth Supplemental
Indenture shall have been duly authorized, executed and delivered by the Company
and the Trustee in substantially the form of SCHEDULE H hereto, and duly filed
and recorded in the offices of the Chancery Clerk of Jackson and Yazoo Counties,
Mississippi, and the offices of the County Clerks of Lea and Eddy Counties, New
Mexico.
(f) Trustee's Certificate. The Trustee shall deliver to the Lender a
certificate stating that it has received no notice of the occurrence of a
default or Event of Default under the Indenture, that it has not commenced any
proceedings to accelerate the maturity of any of the Notes, and that to the best
of its knowledge no such proceedings have been commenced by any holder of Notes.
(g) Insurance. There shall be in effect policies of insurance,
satisfactory in form and substance to the Lender, and issued by insurance
companies reasonably satisfactory to the Lender in an amount not less than the
outstanding principal amount of all Notes secured by the Indenture, including
the Series J Note, insuring the Company against physical damage to or theft of
the Trust Estate, and the Trustee shall be named as a mortgage loss payee and as
an additional insured, as its interests may appear, under a standard loss payee
rider, and the Lender shall have received a certificate, dated the Closing Date,
signed by the President or a Vice President of the Company, stating that all
such required insurance is then in effect together with a copy of said policy or
policies.
SECTION 8.2. Closing Conditions - Subsequent Loans. Prior to each loan
closing following the first loan closing, the Company shall submit to the Lender
a Borrowing Notice as described in Section 1.1 above.
ARTICLE IX
NOTICES
SECTION 9.1. Notices. Any notice herein required or permitted to be given
may be given in writing by depositing the same in the United States mail,
postage prepaid, or by telegraph, telecopy, telex, personal delivery or
overnight courier, addressed:
To the Company as follows:
Mississippi Chemical Corporation
P. O. Box 388
Yazoo City, Mississippi 39194
Attn: Corporate Secretary
Fax No.: 601-746-9158
To the Lender as follows:
NationsBank of Tennessee, N.A.
NationsBank Plaza
Nashville, Tennessee 37239
Attn: Large Commercial Division
Fax No.: 615-749-4762
SECTION 9.2. Change of Address. The Company and the Lender and any of its
successors in interest may change the address for service of notice upon it by a
notice in writing to the other party hereto.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Definitions. All capitalized terms used herein and not
defined herein shall have the meanings ascribed thereto in the Indenture. In
addition, for all purposes hereof, the following definitions shall apply unless
the context otherwise requires:
"Affiliate" means, with respect to the Lender, a Person (other than a
subsidiary) which directly or indirectly through one or more intermediaries
(i) controls, or is controlled by, or is under common control with, the Lender,
or (ii) owns or controls 10% or more of the issued and outstanding shares having
ordinary voting power or other rights of control of the Lender or of any Person
which controls or is under common control with the Lender. For purposes of this
definition, (x) a Person shall be deemed to own or control shares which such
Person has the right to acquire or control through the exercise of warrants or
options or the conversion of convertible securities which such Person owns or
controls, and (y) the term "control" (including, with correlative meanings, the
terms "controlled by" and "under common control with") means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
securities, by contract, or otherwise.
"Indenture" means the Indenture of Mortgage, Deed of Trust, Assignment and
Security Agreement dated as of September 1, 1976 among the Company, the New
Orleans Bank for Cooperatives, John H. Farrelly, as trustee under certain deeds
of trust, and Deposit Guaranty National Bank, as trustee, together with all
indentures supplemental thereto.
"Participants" has the meaning set forth in Section 1.6 herein.
"Participating Bank" has the meaning set forth in Section 10.9 herein.
"Reportable Event" has the meaning set forth in ERISA.
SECTION 10.2. Accounting Terms. All accounting terms used herein which
are not otherwise expressly defined shall have the meanings respectively given
to them in accordance with generally accepted accounting principles.
SECTION 10.3. Successors and Assigns. Subject to the provisions of
Sections 10.9 and 10.12 herein, the terms and provisions of this Agreement shall
inure to the benefit of the registered holder from time to time of the Series J
Note.
SECTION 10.4. Setoff. If the Company becomes insolvent, however
evidenced, or any default occurs hereunder or any attachment of any balance of
the Company is threatened, any indebtedness from the Lender to the Company, to
the extent permitted by law, may be offset and applied toward the payment of the
Series J Note held by the Lender, whether or not such Series J Note, or any part
thereof, shall then be due. Pursuant to the intent expressed in Section 6.04 of
the Indenture, the Lender hereby covenants and agrees for the benefit of the
holders of all Notes of any other series issued under or secured by the
Indenture that in case at any time it receives, by reasons of setoff, payment
upon the Series J Note, it will purchase a portion of such other Notes of other
series held by such other Noteholders so that after such purchase each
Noteholder of any Note of any series issued under or secured by the Indenture
will hold an unpaid principal balance bearing the same proportion to the total
principal amount of such Notes of all series at such time outstanding as existed
prior to such receipt through setoff by the Lender. In the event any such setoff
or purchase is disturbed by legal process or otherwise, appropriate further
adjustments shall be made among the same Noteholders.
SECTION 10.5. Purchase of Series J Note. If the Company, or any
Subsidiary or affiliate of the Company, purchases or otherwise acquires any
interest in the Series J Note, such portion of the Series J Note shall not be
considered "outstanding" for the purposes of this Agreement.
SECTION 10.6. Home Office Payment. Notwithstanding any provision to the
contrary in this Agreement or in the Indenture, the principal of, premium, if
any and interest on the Series J Note and any other amounts becoming due
hereunder shall be paid by wire transfer of immediately available funds
delivered to the account of the Lender, or in such other reasonable manner, or
to such other account or address, as may from time to time be designated in
writing by the Lender by notice to the Company.
In all cases principal, premium, if any, and interest to be paid in respect
of the Series J Note shall be paid without any presentment or notation of
payment, and the amount of principal so paid on the Series J Note shall be
regarded as having been retired and cancelled at the time of payment.
SECTION 10.7. Expenses. The Company will pay or reimburse the Lender for
reasonable out-of-pocket expenses incurred by Lender and any Participating Bank,
including, but not limited to, the legal fees and expenses of counsel in
connection with their representation through the initial closing (all of which
shall be invoiced at the initial closing), title examination, and other expenses
incurred in connection with the negotiation, preparation,and execution of this
Agreement, the Series J Note, any related loan documents, filing costs and
amendment costs; provided, however, the Company shall not be obligated to pay or
reimburse Lender more than $30,000 in total expenses incurred with respect to
said initial closing hereunder and the amendment of the Series I Loan. If it
becomes necessary to enforce payment of the Series J Note or any of the terms
hereof, the Company agrees to pay reasonable attorneys fees, court costs and all
costs of collection.
SECTION 10.8. Stamp and Other Taxes. The Company hereby covenants and
agrees that it will pay all United States and State documentary stamp and other
taxes (including any interest or penalties thereon) which may be payable in
connection with, or arising out of, the execution and delivery of this Agreement
and the Series J Note issued at the Closing (or of any Series J Note
subsequently delivered pursuant to the provisions of this Agreement or the
Indenture) or any amendment of this Agreement or the Series J Note, and will
indemnify the Lender and all other holders of any of the Series J Note from time
to time against, and save the Lender and them harmless from, any liability, cost
or expense, in respect of any such stamp or other taxes and any interest or
penalties thereon.
SECTION 10.9. Sale of Series J Note. The Company and the Lender agree
that the Lender may sell, transfer or assign the Series J Note only as a whole,
it being the intention of the parties that there shall never be more than one
registered holder of the Series J Note for all purposes including the giving of
notice or consent; provided, however, the Lender may, notwithstanding the above,
sell to one or more (not to exceed three) financial institutions (other than
Affiliates of the Lender) reasonably acceptable to the Company, participation
interests in an aggregate principal amount up to 49% of the principal amount of
the Series J Note. Notwithstanding the above, the Lender may sell participation
interests in the Series J Note to one or more Affiliates of the Lender without
limitation. The Lender shall promptly inform the Company of the identity of any
purchaser and the principal amount of such purchase. In the event of the sale
of any participation interest, the Lender shall remain the registered holder of
the Series J Note unless (a) the holders of all participation interests,
including Affiliates of the Lender (the "Participating Banks") agree with the
Lender to substitute a new agent for the holders of all interests in the
Series J Note which agent must be a financial institution in place of the Lender
and (b) the Lender sells all of its interest (subject to outstanding
participation interests) to such agent. The provisions of this Section 10.9
shall be binding upon the Lender and each successor who shall at any time become
the registered holder of the Series J Note. The interests of each Participating
Bank may be sold by such Participating Bank only as a whole.
SECTION 10.10. Special Purchase Option. If (a) the Company shall (i)
request the Lender to consent to a waiver under (1) Section 5.13 of the
Indenture or (2) Article Seven-C of the Indenture, or (ii) give notice to the
Lender that it requests, pursuant to Section 10.02 of the Indenture, its consent
to an indenture or indentures supplemental to the Indenture, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture, or any such supplemental indenture (other than a
supplemental indenture for which, under the proviso to such Section 10.02, the
consent of the holders of 100% of the Notes of every Series affected thereby is
required), or a supplemental indenture waiving or amending Section 5.17 of the
Indenture, (b) the Company shall concurrently request of the holders of all
other Series of Notes entitled to vote or act with respect thereto (i) a like
waiver of (1) such Section 5.13 of the Indenture, or (2) the provision of
Article Seven-A or Seven-B of the Indenture corresponding to the provision of
such Article Seven-C to which the waiver requested of the Lender pertains, or
(ii) its consent to such supplemental indenture or indentures, as the case may
be, (c) the Company shall have obtained the consents referred to in clause (b)
of this Section from the holders of each other Series of Notes whose consent is
required for such matters, and the Company shall give notice of such fact to the
Lender, which notice shall state that if the Lender does not consent to such
matter, the Series J Note, including any interests of Participating Banks, shall
be subject to the Company's right to purchase the Series J Note under this
paragraph, and stating the date by which such consent must be given if the
Company's purchase right is not to arise (which date shall be not less than 15
days after the expiration of 30 days from the later of the effective date of the
Company's notice of its request under clause (a) of this Section, or the
effective date of the Company's notice under this clause (c), (d) the Lender
shall not have consented to the matters requested of it by the effective date of
the Company's notice under clause (c) of this sentence, and (e) such consent
shall not be given by the date specified in the Company's notice under clause
(c) of this sentence as the date after which the Company's right to purchase the
Series J Note will arise, then, at any time within 120 days after such date, the
Company may at its option, upon at least 10 days' notice to the Lender, purchase
all, but not less than all, of the Series J Note, including any interests of
Participating Banks, at 100% of the principal amount outstanding plus interest
accrued thereon to the purchase date.
SECTION 10.11. Amendments. This Agreement may be amended only in writing
executed by the Company and the Lender.
SECTION 10.12. Representations to Survive. All representations and
warranties made herein shall survive delivery of the Series J Note and the
making of the loans.
SECTION 10.13. Entire Agreement; Counterparts. This Agreement, the
Indenture and the Fourteenth Supplemental Indenture embody the entire agreement
and understanding between the Lender and the Company with respect to the
Series J Notes and supersede all prior agreements and understandings relating to
the subject matter hereof. Except as specifically set forth herein, the
provisions of this Agreement shall be for the benefit of the Lender and not for
the benefit of the Participating Banks. Headings to this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument, and in pleading or proving any provision of this Agreement it shall
not be necessary to produce more than one of such counterparts.
SECTION 10.14. Governing Law. This Agreement shall be governed by the
local laws of the State of Mississippi, without giving effect to the conflicts
of laws provisions thereof.
MISSISSIPPI CHEMICAL CORPORATION
By: /s/ Ethel Truly
Assistant General Counsel
NATIONSBANK OF TENNESSEE, N.A.
By: /s/ Michael D. McKay
Senior Vice President
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS AND MAY NOT BE RESOLD,
TRANSFERRED OR ASSIGNED WITHOUT REGISTRATION OR
WITHOUT OBTAINING AN EXEMPTION FROM SUCH REGISTRATION
MISSISSIPPI CHEMICAL CORPORATION
Revolving Credit Note, Series J
Final Maturity June 30, 1997
Date of initial advance:
---------------
$30,000,000 (Maximum advance)
FOR VALUE RECEIVED, the undersigned MISSISSIPPI CHEMICAL CORPORATION, a
Mississippi corporation (hereinafter with its successors, referred to as the
"Company"), hereby promises to pay to NationsBank of Tennessee, N.A.
(hereinafter referred to as the "Payee"), or its duly registered assigns, on
dates set forth below, the lesser of the principal sum of THIRTY MILLION DOLLARS
($30,000,000) or the aggregate unpaid principal amount of all Revolving Credit
Loans (as hereinafter defined) made by the Payee to the Company hereunder, and
to pay interest from the date hereof on the principal amounts hereof from time
to time outstanding at a rate or rates per annum as hereinafter set forth.
Revolving Credit Agreement
This Note is issued pursuant to the provisions of, inter alia, the Series J
Revolving Credit Agreement (as hereinafter defined) between the Payee and the
Company dated as of June 17, 1994, to which Agreement reference is hereby made
for a statement of the terms and conditions under which the loans evidenced
hereby were or are to be made.
Definitions
The following terms, as used in this Note, shall have the following
meanings:
"Credit Facility" means the maximum amount available to be lent by the
Payee to the Company pursuant to the Series J Revolving Credit Agreement,
initially, $30,000,000.
"Credit Facility Reduction Notice" means a written notice by the Company to
the Payee pursuant to which the Company elects to reduce the amount of the
Credit Facility which reduction shall be in minimum increments of $2,500,000.
"Eurodollar Business Day" means any day on which commercial banks are open
for domestic and international business (including dealings in U.S. Dollar
deposits) in London and New York City.
"Eurodollar Interest Period" means for each LIBOR Based Rate Loan, the
period during which interest at the LIBOR Based Rate, determined as provided in
this Note, shall be applicable, provided, however, that each such period shall
be either one (1), two (2), three (3), six (6) or twelve (12) months, which
shall be measured from the date specified by the Company in each Eurodollar Rate
Request for the commencement of the computation of interest at the LIBOR Based
Rate, to the numerically corresponding day in the calendar month in which such
period terminates; provided, however, that if there is no such numerically
corresponding day in such succeeding month, such Eurodollar Interest Period
shall end on the last Business Day of such succeeding month. If a Eurodollar
Interest Period would otherwise end on a day which is not a Business Day, such
Eurodollar Interest Period shall end on the next succeeding Business Day;
provided, however, that if such next succeeding Business Day follows in a new
month, such Eurodollar Interest Period shall end on the immediately preceding
Business Day. The Company may not elect any Eurodollar Interest Period which
ends later than the Final Maturity Date. Interest shall accrue from and
including the first day of a Eurodollar Interest Period to but excluding the
last day of such Eurodollar Interest Period.
"Eurodollar Rate Request" means telephonic notice by the Company to be
received by the Payee by 11:00 am (Nashville time) one (1) Eurodollar Business
Day (or the latest Payee Business Day prior thereto if such day is not a Payee
Business Day) prior to the date specified in the Eurodollar Rate Request for the
commencement of the Eurodollar Interest Period, and specifying the amount of the
LIBOR Based Rate Loan and the applicable Eurodollar Interest Period desired by
the Company for such LIBOR Based Rate Loan. The Company shall promptly confirm
such notice in writing.
"Final Maturity Date" means the date all of the principal of, premium, if
any and interest on the Series J Note is payable, whether by scheduled
installments, acceleration or otherwise.
"Fixed Rate" means a fixed rate of interest equal to the rate on U.S.
Treasury Notes with comparable terms and maturities approximately equal to the
Fixed Rate Interest Period plus 2.00% per annum.
"Fixed Rate Interest Period" means for each Fixed Rate Loan, the period
during which such loan bears interest at a Fixed Rate. If a Fixed Rate Interest
Period would otherwise end on a day which is not a Business Day, such Fixed Rate
Interest Period shall end on the next succeeding Business Day; provided,
however, that if such next succeeding Business Day follows in a new month, such
Fixed Rate Interest Period shall end on the immediately preceding Business Day.
The Company may not elect any Fixed Rate Interest Period which ends later than
the Final Maturity Date. Interest shall accrue from and including the first day
of a Fixed Rate Interest Period to but excluding the last day of such Fixed Rate
Interest Period.
"Fixed Rate Request" means written notice by the Company that it elects to
have all or a portion of the outstanding principal amount of this Note bear
interest at a Fixed Rate, which notice shall specify the principal amount of
such Fixed Rate Loan and the duration of the Fixed Rate Interest Period.
"LIBOR Based Rate" means a rate per annum equal to the sum of (a) the LIBOR
Rate for dollar deposits approximately equal in principal amount to the LIBOR
Based Rate Loan requested in the Eurodollar Rate Request and with a maturity
comparable to the Eurodollar Interest Period in question, plus (b) 1.25% for any
Eurodollar Interest Period or portion thereof.
"LIBOR Rate" means, with respect to any LIBOR Based Rate Loan for any
Eurodollar Interest Period, the interest rate per annum for deposits in Dollars
which currently appears on the Telerate Screen Page 3807 (as defined herein)
(rounded up to the next 1/16 of 1% if such rate appears as a fraction smaller
than 1/16 of 1%) as of 12:00 noon, Nashville time, on the day that is one (1)
Eurodollar Business Day preceding the first day of the applicable Eurodollar
Interest Period. If no such offered rate appears on the Telerate Screen Page
3807, the rate in respect of the applicable Eurodollar Interest Period will be
the rate per annum (rounded up to the next 1/16 of 1% if such rate is a fraction
smaller than 1/16 of 1%) at which deposits in Dollars are offered by the
Reference Banks (as hereinafter defined) at approximately 12:00 noon, Nashville
time, on the date that is one (1) Eurodollar Business Day preceding the
commencement of such applicable Eurodollar Interest Period to prime banks in the
London interbank market for a period of time equal to such applicable Eurodollar
Interest Period in a Representative Amount (as hereinafter defined). Payee will
request each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate in respect of such applicable
Eurodollar Interest Period will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested, the LIBOR Based Rate will
be unavailable and such loan amount shall bear interest at the Prime Rate.
"Payee Business Day" means a day on which commercial banks in Nashville,
Tennessee, are not authorized or required to close.
"Prime Rate" means the fluctuating reference or benchmark rate of interest
that is publicly announced by NationsBank of Tennessee, N.A. as its Prime Rate
to be in effect from time to time with any changes in such Prime Rate to be
effective on the date of the public announcement of such change. The Prime Rate
is not necessarily the lowest rate of interest charged by NationsBank of
Tennessee, N.A.
"Quarterly Payment Date" means the last day of each March, June, September
and December commencing on the first such day following the date of the initial
advance under the Series J Revolving Credit Agreement.
"Reference Banks" means the principal London offices of Barclays Bank PLC,
National Westminister Bank PLC, Bankers Trust International, Ltd. and Bank of
Tokyo, Ltd.
"Revolving Credit Loan" means a Prime Rate, LIBOR Based Rate or Fixed Rate
Loan made pursuant to the Series J Revolving Credit Agreement.
"Series J Revolving Credit Agreement" means the Revolving Credit Agreement
between the Company and NationsBank of Tennessee, N.A., dated as of June 17,
1994, as the same is amended or supplemented.
"Telerate Screen Page 3807" means the display designated as page 3807 on
the Telerate Screen (or such other page as may replace page 3807 on that service
for the purpose of displaying London interbank offered rates of major banks).
Interest Rate
All advances hereunder shall, unless the Company otherwise elects as
hereinafter set forth, bear interest at the Prime Rate. The Company shall have
the right at any time, on prior irrevocable written or telex notice to the Payee
not later than 11:00 a.m., Nashville time, to convert any Prime Rate, Fixed
Rate, or LIBOR Based Rate Loan into a Revolving Credit Loan of another type, or
to continue any LIBOR Based Rate Loan for a Eurodollar Interest period or any
Fixed Rate Loan for a Fixed Rate Interest Period (specifying in each case the
Interest Period to be applicable thereto), subject in each instance to the
following: (a) no LIBOR Based Rate Loan shall be converted at any time other
than at the end of the Eurodollar Interest Period applicable thereto; (b) no
Fixed Rate Loan shall be converted at any time other than at the end of the
Fixed Rate Interest Period applicable thereto unless the Company also pays at
the same time the prepayment penalty, if any, due hereunder as specified in the
section on Prepayments; (c) each conversion shall be effected by applying the
proceeds of the new LIBOR Based Rate, Fixed Rate, and/or Prime Rate Loan, as the
case may be, to the Revolving Credit Loan (or portion thereof) being converted;
and (d) the number of LIBOR Based Rate Loans and Fixed Rate Loans at any time
outstanding shall not exceed an aggregate of five (5). Each Fixed Rate Request
and/or Eurodollar Rate Request shall be irrevocable and shall refer to this Note
and specify (i) the identity and principal amount of the particular Revolving
Credit Loan that the Company requests be converted or continued, (ii) if such
notice requests conversion, the date of such conversion (which shall be a
Business Day for Fixed Rate Loans and a Eurodollar Business Day for LIBOR Based
Rate Loans), and (iii) if a Revolving Credit Loan is to be converted to a LIBOR
Based Rate Loan or a Fixed Rate Loan or a LIBOR Based Rate Loan or Fixed Rate
Loan is to be continued, the Eurodollar or Fixed Rate Interest Period with
respect thereto. In the event the Company shall not give notice to continue any
LIBOR Based Rate or Fixed Rate Loan for a subsequent period, such Revolving
Credit Loan (unless repaid) shall automatically be converted into a Prime Rate
Loan. If the Company shall fail to specify in the request the type of borrowing
or, in the case of a Fixed Rate Loan, the applicable Fixed Rate Interest Period,
the Company will be deemed to have requested a Prime Rate Loan. If the Company
shall fail to specify in any Eurodollar Rate Request the applicable Eurodollar
Interest Period, the Company will be deemed to have selected a Eurodollar
Interest Period of one (1) month's duration. Notwithstanding anything to the
contrary contained above, if an Event of Default shall have occurred and be
continuing, no LIBOR Based Rate or Fixed Rate Loan may be continued and no Prime
Rate Loan may be converted into a Fixed Rate or LIBOR Based Rate Loan.
Interest Payments
All payments hereunder shall be made in lawful money of the United States
of America, with interest on the whole of said principal amount remaining from
time to time unpaid from the date hereof at a LIBOR Based Rate, the Prime Rate
or a Fixed Rate and as provided herein, until the principal hereof shall become
due and payable (whether at maturity, on a date fixed for prepayment, by
acceleration or otherwise). Interest shall be computed in all cases on the
basis of a 360-day year for the actual number of days elapsed. Interest shall
be payable as follows: with respect to any portion of this Note bearing interest
at a LIBOR Based Rate (a "LIBOR Based Rate Loan"), interest shall be payable on
the last day of each applicable Eurodollar Interest Period, unless such
Eurodollar Interest Period exceeds three (3) months, in which event interest
shall be payable with respect to the principal amount bearing interest at such
LIBOR Based Rate on each Quarterly Payment Date occurring after the first day of
the Eurodollar Interest Period through the last day of such Eurodollar Interest
Period, and on the last day of each Eurodollar Interest Period; with respect to
any portion of this Note bearing interest at the Prime Rate (a "Prime Rate
Loan"), interest shall be payable on each Quarterly Payment Date; with respect
to any portion of this Note bearing interest at a Fixed Rate (a "Fixed Rate
Loan"), interest shall be payable on each Quarterly Payment Date and on the last
day of each Fixed Rate Interest Period, in each case commencing on the first
such date following the making of such loan.
Place of Payments; Default Rate
The principal of, premium, if any, and interest on this Note shall be
payable at the principal office of NationsBank of Tennessee, N.A., or at such
other place as the registered holder may designate from time to time in writing
which designation shall be made at least ten (10) days before such principal,
premium or interest is due. Without limitation of any other rights of the
holder, overdue payments of principal (including any overdue prepayment of
principal) or premium, if any, and (to the extent permitted by applicable law)
overdue payments of interest shall bear interest at the rate applicable to such
overdue principal, plus two percent (2%) per annum.
Maximum Rate
Notwithstanding the above, in no event whatsoever shall the interest rate
applicable to this Series J Note exceed the maximum amounts collectible under
applicable laws in effect from time to time. If for any reason whatsoever the
interest rate applicable to this Series J Note exceeds the maximum permissible
rate under applicable laws in effect from time to time, then, ipso facto, the
obligation to pay such interest shall be reduced to the maximum amounts
collectible under applicable laws in effect from time to time, and any amounts
paid to the Payee that exceed such maximum amounts shall be applied to the
reduction of the principal balance of this Series J Note and/or refunded to the
Company so that at no time shall the interest rate applicable to this Series J
Note exceed the maximum amounts permitted from time to time by applicable law.
This provision shall control every other provision herein and in any and all
other agreements and instruments now existing or hereafter arising between the
Company and the Payee with respect to this Series J Note.
Principal Advances and Payments
Subject to the provisions of the Series J Revolving Credit Agreement, the
Company may request (upon one day's notice in writing) that the Payee advance an
amount in increments of $1,000,000 which, when added to the amount previously
requested and still unpaid, does not exceed the Credit Facility.
Unless sooner paid, all outstanding principal on this Note, together with
any unpaid accrued interest, shall be payable on June 30, 1997.
All borrowings evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof shall
be endorsed by the Payee on Schedule I attached hereto or on a form
substantially similar to said Schedule I attached hereto and made a part hereof,
or otherwise recorded by the Payee in its internal records; provided, however,
that the failure of the Payee to make such a notation or any error in such a
notation shall not in any manner affect the obligation of the Company to make
the payments of principal and interest in accordance with the terms of this Note
and the Series J Revolving Credit Agreement.
In the event any day on which payment of principal or interest is due is
not a Payee Business Day, such payment may be made on the next succeeding Payee
Business Day.
Change in Legality
Notwithstanding anything to the contrary herein contained, if any change in
any law or regulation or in interpretation thereof by any governmental authority
charged with the administration or interpretation thereof shall make it unlawful
for the Payee to make or maintain any LIBOR Based Rate Loan or to give effect to
its obligations as contemplated in the Series J Revolving Credit Agreement,
then, by written notice to the Company describing such changes, the Payee may
(1) declare that LIBOR Based Rate Loans will not thereafter be made by the Payee
under the Series J Revolving Credit Agreement, whereupon the Company shall be
prohibited from requesting LIBOR Based Rate Loans from the Payee unless such
changes are subsequently withdrawn or otherwise rendered ineffective, notice of
which shall be promptly provided by the Payee to the Company; and (2) require
that all outstanding LIBOR Based Rate Loans shall be converted to Prime Rate
Loans, in which event (a) all such LIBOR Based Rate Loans shall be automatically
converted without penalty or additional charge to the Company to Prime Rate
Loans as of the effective date of such notice as set forth below and (b) all
payments and prepayments of principal that would otherwise have been applied to
repay the converted LIBOR Based Rate Loans shall instead be applied to repay the
Prime Rate Loans resulting from the conversion of such LIBOR Based Rate Loans.
For purposes of the preceding paragraph, a notice to the Company by the
Payee shall be effective, if lawful, on the last day of the Eurodollar Interest
Period for each respective LIBOR Based Rate Loan; in all other cases, such
notice shall be effective on the later of (i) the date of receipt by the Company
or (ii) the date set forth in such notice.
Alternate Rate
Anything herein to the contrary notwithstanding, if, prior to the
determination of the LIBOR Based Rate in respect of any Eurodollar Rate Request
as herein provided, Payee advises the Company in writing that (i) dollar
deposits in the amount of a requested principal amount of a LIBOR Based Rate
Loan are not generally available in the London Interbank Market; (ii) the rate
at which such dollar deposits are being offered will not adequately and fairly
reflect the cost to the Payee of making or maintaining such LIBOR Based Rate
Loan during such Eurodollar Interest Period; or (iii) reasonable means do not
exist for ascertaining the LIBOR Rate, any request by the Company for a LIBOR
Based Rate Loan shall, until the circumstances giving rise to such notice no
longer exist, be deemed to be a request for a Prime Rate Loan. Each
determination by the Payee hereunder shall be conclusive absent manifest error.
If at any time subsequent to the giving of such notice Payee determines that
because of a change in circumstances the LIBOR Based Rate is again available,
Payee shall so advise the Company and the Company shall have the option to
convert the rate of interest payable hereunder from the Prime Rate to the LIBOR
Based Rate by submitting a Eurodollar Rate Request to Payee and otherwise
complying with the provisions of this Note with respect thereto.
Prepayments
The Company shall have the right to prepay (a) any Prime Rate Loan at any
time, in whole or in part, and (b) each LIBOR Based Rate Loan, in whole or in
part, on the last day of the applicable Eurodollar Interest Period for such
loan, in each case at the prepayment price of the principal amount to be prepaid
plus interest to the prepayment date, without premium or penalty; provided any
prepayments shall be in principal increments of $1,000,000 or greater.
The Company shall have the right at any time to prepay any Fixed Rate Loan,
in whole or in part, at the redemption price of 100% of the principal amount so
prepaid plus interest to the prepayment date, plus the Yield-Maintenance
Premium, if any.
As used herein, "Yield Maintenance Premium" shall mean an amount equal to
the quotient of: (A) the product of (1) the outstanding principal amount of the
Fixed Rate Loan immediately prior to prepayment, multiplied by (2) the excess of
the Fixed Rate applicable thereto over the sum of two percent (2%) per annum
plus the annual yield on a United States Treasury Bond having substantially the
same maturity as the Fixed Rate Loan (the "Treasury Bond Yield"), as such yield
is reported in The Wall Street Journal or, in the event such Treasury Bond Yield
is no longer published in The Wall Street Journal, a similar publication
acceptable to Payee, on the fifth (5th) business day preceding the date of
prepayment and (3) the number of months remaining in the Fixed Rate Loan term;
divided by (B) twelve (12). Such quotient shall be discounted to present value
as of the date of prepayment by applying a discount rate equal to the Treasury
Bond Yield.
This Note or the installments thereof so prepaid will cease to bear
interest on the specified prepayment date, provided funds for its prepayment are
on deposit with the Payee or with the Trustee at that time, and this Note or
such installments shall no longer be entitled to the benefit of the Indenture
and shall not be deemed to be outstanding under the provisions of the Indenture.
Indenture
This Note is the sole note of an authorized issue of notes of the Company,
as provided in the Indenture mentioned below and is herein called the "Series J
Note," of the series designated "Revolving Credit Notes, Series J, Final
Maturity June 30, 1997," limited to $30,000,000 in aggregate principal amount
outstanding, all issued and to be issued under and equally and ratably secured
by an Indenture of Mortgage, Deed of Trust, Assignment and Security Agreement
dated as of September 1, 1976, among the Company, the New Orleans Bank for
Cooperatives (now the National Bank for Cooperatives), John H. Farrelly, as
trustee under certain deeds of trust, and Deposit Guaranty National Bank, as
Trustee (said indenture, together with all indentures supplemental thereto,
being herein called the "Indenture" and said corporate trustee or its successor
as trustee being herein called the "Trustee"), to which Indenture reference is
hereby made for a description of the property mortgaged and pledged, the nature
and extent of the security, the rights and remedies and limitations of said
rights and remedies of the holders of the Series J Note, and of the rights,
powers, duties and immunities of the Trustee thereunder, and of the rights and
obligations of the Company thereunder, and the terms and conditions upon which
the Series J Note is, and will be, issued and secured. This Note is entitled to
the benefits of the Indenture. By accepting this Note, each holder agrees to be
bound by and subject to the provisions of the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than fifty-one percent (51%) of the
aggregate unpaid principal amount of all Notes and of not less than fifty-one
percent (51%) of the unpaid principal amount of each Series of Notes at the time
outstanding except for the Series D, E and F Pollution Control Notes, the Series
G Industrial Development Note, and any other Notes with respect to which the
Supplemental Indenture relating to the issuance of such series of Notes provides
that such series shall not have the series vote, or, if one or more but not all
of the series of Notes then outstanding would be affected by such amendment,
modification or alteration, of not less than fifty-one percent (51%) in
aggregate unpaid principal amount of the Notes of each series so affected,
evidenced as provided in the Indenture, to execute supplemental indentures
adding any provision to, or changing in any manner, or eliminating any of the
provisions of, the Indenture; provided however, that without the written consent
of the holders of one hundred percent (100%) in aggregate unpaid principal
amount of any series of Notes affected thereby at the time outstanding, no such
supplemental indenture shall (1) extend the final maturity of any Note of such
series or reduce the rate or extend the time of payment of interest thereon, or
reduce the amount of the principal thereof, or reduce any premium payable on the
prepayment thereof, or reduce the amount required to be paid as a mandatory
prepayment of any Note of such series or extend the time within which any such
prepayment is to be made or alter the manner in which any note of such series is
selected for prepayment, or (2) affect the rights of holders of some of the
Notes without similarly affecting the rights of the holders of all of the Notes
at the time outstanding, or (3) create any priority with respect to Notes of any
series over Notes of any other series, or (4) reduce the aforesaid percentages
of the principal amount of the Notes or any series thereof required to approve
any such supplemental indenture or reduce the percentage required to effectuate
a waiver as referred to in the next sentence, or (5) amend Section 10.02 of the
Indenture. The Indenture also provides that the holders of not less than
fifty-one percent (51%) in aggregate unpaid principal amount of any or each
series of Notes at the time outstanding may on behalf of the holders of all
Notes of such series or all series, respectively, waive compliance with or
failure to comply with certain covenants contained in the Indenture.
Default
If an Event of Default as defined in the Indenture shall occur and be
continuing, the principal of all Notes may be declared due and payable upon the
conditions and in the manner and with the effect provided in the Indenture. The
Trustee or the holders of the Notes shall be entitled to recover reasonable
counsel fees incurred in any action, suit or proceeding brought to enforce the
Notes or the Indenture in which judgment is recovered.
Registration
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Trustee under
the Indenture referred to herein.
Subject to the restrictions on transfer set forth in the Indenture and the
Series J Revolving Credit Agreement, transfers of this Note may be registered
upon a register maintained for such purpose by the Trustee, as provided in the
Indenture. Prior to due presentment of this Note for registration of transfer,
the Company may treat the registered holder hereof as the absolute owner of this
Note for the purpose of receiving all payments of principal, premium, if any,
and interest hereon and for all other purposes hereof, of the Series J Revolving
Credit Agreement and of the Indenture.
Liability
No recourse shall be had for the payment of the principal of, or the
interest on, this Note or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto, against any incorporator, officer, director or stockholder, as such,
past, present or future, of the Company or of any predecessor or successor
corporation, either directly or through the Company or otherwise, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty, or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
Controlling Law
This Note is made and delivered in Jackson, Mississippi, and shall be
governed by the local laws of the State of Mississippi without giving effect to
the conflicts of laws provisions thereof.
Waiver
The parties hereto, including the Company and any and all guarantors,
endorsers and pledgors, hereby waive presentment, demand, notice of dishonor,
protest and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note.
IN WITNESS WHEREOF, MISSISSIPPI CHEMICAL CORPORATION has caused this Note
to be signed in its corporate name by the manual or facsimile signature of its
President or one of its Vice Presidents and its corporate seal to be impressed
hereon or a facsimile thereof to be imprinted hereon and to be attested by a
manual or facsimile signature of its Secretary or one of its Assistant
Secretaries.
(CORPORATE SEAL) MISSISSIPPI CHEMICAL CORPORATION
By:
-----------------------------
Name:
Title:
ATTEST:
By:
---------------------------
Name:
Title:
This is the Series J Note described in the Indenture referred to herein.
DEPOSIT GUARANTY NATIONAL BANK
as Trustee
By:
-----------------------------
Authorized Officer
SCHEDULE I
[FORM OF ENDORSEMENT OF SERIES J NOTE WITH RESPECT TO ADVANCES OF
CREDIT FACILITY AND PAYMENTS ON ACCOUNT OF PRINCIPAL]
<TABLE>
ADVANCE OF CREDIT FACILITY AND
PAYMENTS ON ACCOUNT OF PRINCIPAL
<CAPTION>
Amount of Any # of Days Amount of
Credit Applicable In Credit Outstanding Unused
Facility Rate Interest Maturity Interest Facility Principal Commitment
Date Advanced Basis Rate Date Period Repaid Balance Balance
<C> <C> <C> <C> <C> <C> <C> <C> <C>
==== ========= ===== ======== ============ ========= ========== =========== ==========
==== ========= ===== ======== ============ ========= ========== =========== ==========
</TABLE>
SCHEDULE A
SHORT-TERM BORROWING AND
FUNDED DEBT AT 5/31/94
OUTSTANDING
I. FUNDED DEBT PRINCIPAL AMOUNT
A. NOTES SECURED BY THE INDENTURE
1. Series A Notes issued by the Bank
Note No. 6392 $12,500,000
2. Jackson County, Mississippi,
Pollution Control Notes, $ 8,105,000
Series D and F
3. Yazoo County, Mississippi,
Pollution Control Note, Series E,
and Industrial Development Note, $ 7,400,000
Series G
4. Series H Note held by John Hancock
Variable Life Insurance Company $ 3,600,000
5. Series I Note held by NationsBank
of Tennessee, N.A. $ -0-
TOTAL SECURED BY INDENTURE $31,605,000
B. OTHER FUNDED DEBT
1. Capitalized Lease, Farm Credit
Leasing (Mississippi Phosphates $ 423,203
Corporation)
2. 9.5% Subordinated Notes due July 1, $ 3,148,200
1999
TOTAL OTHER FUNDED DEBT $ 3,571,403
TOTAL FUNDED DEBT $35,176,403
OUTSTANDING
II.SHORT-TERM BORROWING PRINCIPAL AMOUNT
A. Revolving commodity loan due 11/1/94
issued by the Bank under Amended and
Restated Line of Credit Agreement No.
6871(B) dated 10/22/93 (not to exceed
$20,000,000 at any one time $ -0-
outstanding)
B. Revolving seasonal working capital loan
due 11/1/94 issued by the Bank under
Amended and Restated Line of Credit
Agreement No. 6872(B) dated 10/22/93
(not to exceed $20,000,000 at any one
time outstanding) $ -0-
C. Line of credit agreement dated 10/19/92
with Deposit Guaranty National Bank for
up to $5,000,000 for operating capital
purposes and as backup for control
disbursement $ -0-
D. Bankers Acceptances under Acceptance
Agreement dated January 1, 1994,
between Mississippi Phosphates
Corporation and NationsBank of $ 3,470,000
Tennessee, N.A.
E. Revolving Loan Note in favor of
NationsBank of Tennessee, N.A., dated
April 26, 1994, and maturing
December 1, 1994 (not to exceed
$5,000,000 at any one time outstanding) $ -0-
TOTAL SHORT-TERM BORROWING $ 3,470,000
TOTAL SHORT-TERM BORROWING AND
FUNDED DEBT $38,646,403
III. INSTRUMENTS PROVIDING FOR OR GOVERNING SHORT-TERM BORROWING AND FUNDED
DEBT
A. Indenture or Mortgage, Deed of Trust, Assignment and Security
Agreement dated as of September 1, 1976, among the Company and
New Orleans Bank for Cooperatives (now National Bank for Cooperatives)
and John H. Farrelly, as trustee under certain deeds of trust, and
Deposit Guaranty National Bank, as Trustee, as amended and
supplemented by the First through Thirteenth Supplemental Indentures.
B. Loan Agreement No. 6392 dated April 24, 1987, between the Company and
the Bank, providing for a loan in the original principal amount of
$35,000,000, represented by Note No. 6392 referred to as Item 1 of
Part I.A of this Schedule A.
C. Note Purchase Agreement dated as of December 6, 1989, among the
Company and John Hancock Variable Life Insurance Company, referred to
as Item 4 of Part I.A of this Schedule A.
D. Revolving Credit/Term Loan Agreement dated as of August 6, 1992,
between the Company and NationsBank of Tennessee, N.A., referred to as
Item 5 of Part I.A of this Schedule A.
E. Capitalized Lease Proposal Number DL05-60257 dated November 25, 1991,
between Farm Credit Leasing Services Corporation and Mississippi
Phosphates Corporation, referred to as Item 1 of Part I.B of this
Schedule A.
F. Indenture dated as of May 1, 1989, between the Company and Sunburst
Bank, as Trustee, providing for the issuance by the Company of the
Subordinated Notes referred to as Item 2 of Part I.B of this
Schedule A.
G. Amended and Restated Line of Credit Agreement No. 6871(B) dated
October 22, 1993, between the Company and the Bank, providing for a
revolving commodity loan in the maximum principal amount of
$20,000,000, represented by Note No. 6871(B) referred to as Item A of
Part II of this Schedule A.
H. Amended and Restated Line of Credit Agreement No. 6872(B) dated
October 22, 1993, between the Company and the Bank, providing for a
revolving seasonal working capital loan in the maximum principal
amount of $20,000,000, represented by Note No. 6872(B) referred to as
Item B of Part II of this Schedule A.
I. Letter agreement dated October 19, 1992, between the Company and
Deposit Guaranty National Bank, providing for an unsecured line of
credit of up to $5,000,000 for operating capital purposes and as
backup for control disbursement, referred to as Item C of Part II of
this Schedule A.
J. Acceptance Agreement dated January 1, 1994, whereby Mississippi
Phosphates Corporation appoints NationsBank of Tennessee, N.A., as
attorney-in-fact to execute, accept and discount drafts on its behalf
in an amount up to $10,000,000, referred to as Item D of Part II of
this Schedule A.
K. Revolving Loan Note of the Company in favor of NationsBank of
Tennessee, N.A., dated April 26, 1994, and maturing December 1, 1994,
in the maximum principal amount of $5,000,000.
SCHEDULE B
SUBSIDIARIES AND AFFILIATES
SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES)
Newsprint South, Inc.
NSI Land Corporation
Newsprint South Sales Corp.
(a subsidiary of Newsprint South, Inc.)
RESTRICTED SUBSIDIARIES
Triad Chemical
Mississippi Phosphates Corporation
Mississippi Potash, Inc.
Mississippi Nitrogen, Inc.
AFFILIATES
The Company has a 50% interest in Triad Chemical, a joint venture with
First Mississippi Corporation, which is considered a Restricted Subsidiary.
SCHEDULE C
JUDGMENTS AND PENDING LITIGATION
1. PROPOSED DEFICIENCIES ASSESSED AGAINST MISSISSIPPI CHEMICAL CORPORATION BY
THE INTERNAL REVENUE SERVICES FOR TAX YEARS ENDED JUNE 30, 1983, 1984, AND
1985
In connection with an Internal Revenue Service audit of fiscal years 1985
through 1987, the Company, on June 21, 1989, received an Examination Report
which proposed adjustments totaling 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 $2,920,000 through June 30,
1993. 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 case has been placed
in suspense pending further developments in a similar case, Buckeye
Countymark, Tax Court Docket No. 29412-87. The Company 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.
2. PROPOSED DEFICIENCIES ASSESSED AGAINST MISSISSIPPI CHEMICAL CORPORATION BY
THE STATE TAX COMMISSION FOR FISCAL YEARS ENDED JUNE 30, 1984 AND 1985
On October 27, 1987, the Mississippi State Tax Commission, Bureau of Audit,
assessed against the Company a deficiency for the fiscal years ended
June 30, 1984, and June 30, 1985, in income tax, franchise tax, penalty and
interest in the amount of $470,000. Interest would apply from the date of
the assessment until the matter is resolved. On January 30, 1990, the
Mississippi State Tax Commission affirmed the assessment. The principal
issues are (i) whether direct accounting should be used for operations of
the Company in Alabama, Florida, and New Mexico, and (ii) whether the
property, payroll and sales factors of the apportionment formula should be
modified by excluding from the denominator of the factor the property
accounted for by direct accounting. On May 23, 1990, the Company filed a
Complaint against the State Tax Commission in the Chancery Court of Yazoo
County, Mississippi, seeking a reversal of the Commission's order of
January 30, 1990, and a determination of no assessment in income or
franchise taxes for the years at issue. A three-day trial was held in
May 1994, and a schedule was established for filing of written briefs by
the Company and the State Tax Commission beginning July 1, 1994, and during
the following 31 days.
3. POTASH LITIGATION
On April 1, 1993, the first of 12 class action lawsuits was filed against
the Company and other United States and Canadian potash producers. These
suits were consolidated into a single action in Minnesota.
In addition, other actions containing substantially similar allegations
were filed in United States District Courts in Illinois and Virginia.
These suits were also consolidated with the Minnesota proceeding.
In these consolidated complaints, plaintiffs alleged that, beginning in
1987, the Canadian potash producers conspired to fix the price of potash
sold in the United States in violation of the federal antitrust laws,
specifically Section 1 of the Sherman Act. The conspiracy allegedly spread
to include the United States producers named as defendants. For the
violations, plaintiffs requested an injunction prohibiting the defendants
from continuing the alleged conspiracy, unspecified monetary damages, and
attorneys' fees.
A state court action was also filed against the Company and other United
States and Canadian potash producers in the Superior Court of California.
Similarly, this action alleged that a price-fixing conspiracy existed among
the defendants, which violated California Uniform Competition Statutes.
This suit was removed to Federal Court and consolidated with the Minnesota
cases.
Upon motion made by defendants, the Minnesota District Court, on December
8, 1993, disqualified certain of the plaintiffs' attorneys in the
consolidated action, finding the plaintiffs' claims were based on
privileged information improperly or illegally disclosed to plaintiffs.
The Court further ordered plaintiffs to file amended complaints, each with
an affidavit stating the basis for the allegations contained therein,
within 30 days of the date of its order.
All of the plaintiffs have now filed amended complaints. The Company has
not been named as a defendant in any of the amended Minnesota filings. In
addition, the Company has been voluntarily dismissed by the plaintiffs in
the California state action. The Company expects to enter into a Tolling
Agreement with two of the Minnesota plaintiffs whereby the Company will
agree that the running of time under any applicable statute of limitations
will be tolled for the period from the date of the Tolling Agreement
through September 30, 1994.
4. 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 the allegations of price fixing by United States and
Canadian potash producers set forth in section 3 above. 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.
5. OTHER LEGAL PROCEEDINGS
In addition to the foregoing, the Company and its subsidiaries, in the
ordinary course of business, are 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 the Trust.
SCHEDULE D
ERISA MATTERS
1. Listed below is each employee benefit plan (as defined in Section 3 of
ERISA) maintained by the Company and/or a Restricted Subsidiary, in each
case indicating the corporation(s) for whose employees' benefit the plan is
maintained:
(a) Mississippi Chemical Corporation Retirement Plan (formerly known
as the Group Pension Plan for Employees of Mississippi Chemical
Corporation);
Mississippi Chemical Corporation ("MCC")
Mississippi Potash, Inc. ("Potash")
(b) Mississippi Chemical Corporation Thrift Plan Plus
(Section 401(k));
MCC
Potash
(c) Self-Insured Weekly Indemnity;
MCC
Potash
(d) Mississippi Chemical Corporation Employees Supplemental
Unemployment Benefits (SUB) Plan;
MCC
(e) Mississippi Chemical Corporation Profit-Sharing Plan;
MCC
(f) Group Health Plan (formerly known as the Employee Health
Protection Plan for Mississippi Chemical Corporation);
MCC
Mississippi Phosphates Corporation ("Phosphates")
Potash
Newsprint South, Inc. ("NSI")
Newsprint South Sales Corp. ("NSSC")
MCC Federal Credit Union ("Credit Union")
(g) Mississippi Chemical Corporation Dental Plan;
MCC
Phosphates
Potash
NSI
NSSC
Credit Union
(h) Group Life Insurance Plan for Employees of Mississippi Chemical
Corporation;
MCC
Potash
NSI
NSSC
Credit Union
(i) Long-Term Disability Plan for Employees of Mississippi Chemical
Corporation;
MCC
Potash
NSI
NSSC
Credit Union
(j) Group Travel Accident Policy;
MCC
Phosphates
Potash
NSI
NSSC
(k) Newsprint South, Inc., Retirement Plan;
NSI
NSSC
(l) Newsprint South, Inc., Savings and Investment Plan ( Section401(k));
NSI
NSSC
(m) Mississippi Phosphates Corporation Section 401(k) Retirement Plan;
Phosphates
(n) Welfare Benefit Plan for Employees of Mississippi Phosphates
Corporation;
Phosphates
(o) Mississippi Potash, Inc. Supplemental Unemployment Plan;
Potash
(p) Mississippi Potash, Inc., Profit Sharing Plan;
Potash
(q) Flexible Benefit Plan;
MCC
Potash
NSI
NSSC
2. The Company is a 50% owner of Triad Chemical, a joint venture of which
First Mississippi Corporation is the owner of the remaining 50%. Listed
below are the employee benefit plans maintained by Triad Chemical for the
benefit of its employees (and, in some cases, of employees of other
affiliates of Triad Chemical):
(a) Pan American Group Life Insurance Policy No. 13490 for Employees
of First Mississippi Corporation and Affiliated Companies;
(b) Triad Chemical Self-Funded Health Care Plan #50221;
(c) Pan American Group Life Insurance Policy No. 22282 for Employees
of Ampro Fertilizer, Inc., Melamine Chemicals, Inc., and Triad
Chemical;
(d) UNUM Group Long Term Disability Insurance Policy No. 53527 for
Employees of First Mississippi Corporation and Named Subsidiaries
or Affiliated Companies;
(e) Home Insurance Company Business Travel Accident Policy
No. GTF 179741 for Employees of First Mississippi Corporation and
Participating Firms;
(f) Life Insurance Company of North America Supplemental AD&D Policy
No. 0K818488 for Employees of First Mississippi Corporation and
Affiliated or Subsidiary Organizations;
(g) Retirement Plan for Employees of Triad Chemical;
(h) Triad Chemical Employees 401(k) Thrift Plan;
(i) Triad Chemical Health/Dependent Care Spending Accounts;
(j) Triad Chemical Health Care Premium Payment Plan;
(k) Community Health Network;
(l) Gulf South HMO.
3. The Credit Union may be a party in interest (as defined in Section 3 of
ERISA) with respect to the Company. The Credit Union maintains an SEP-IRA
for the benefit of each Credit Union employee.
SCHEDULE E
REQUIRED CONSENTS
No consents are required to be given.
SCHEDULE F
ENVIRONMENTAL MATTERS
WITH RESPECT TO THE COMPANY AND TRIAD CHEMICAL, A RESTRICTED SUBSIDIARY, THERE
ARE THE FOLLOWING JUDGMENTS AND PENDING LITIGATION ON ENVIRONMENTAL MATTERS:
1. 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 Chemical and
approximately 80 to 90 other named defendants. An additional 211
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.,
site in Livingston Parish, Louisiana.
These cases were removed to the United States District Court for the
Middle District of Louisiana, then remanded to State Court, and have
now been removed once again to Federal Court. 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 is vigorously defending its position in these proceedings and
considers its defense meritorious.
2. 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, Compensation and Liability
Act ("CERCLA") relative to the possible disposition of Triad waste at
two disposal sites identified as the Combustion, Inc., site south of
Baton Rouge, Louisiana, and the Cleve Reber site in Ascension Parish,
Louisiana. Under CERCLA, generators of waste may be held responsible
for investigation and site cleanup costs.
3. OTHER LEGAL PROCEEDINGS
In addition to the foregoing, the Company and Triad Chemical are the
subject of, or a party to, other various pending legal or threatened
proceedings on environmental matters which the Company believes will
not result in ultimate liability with a material effect on the Trust
Estate.
SCHEDULE G
June 17, 1994
NationsBank of Tennessee, N.A.
1 NationsBank Plaza
Nashville, Tennessee 37239-1697
Attn: Large Commercial Division
RE: $20,000,000 PRINCIPAL AMOUNT AMENDED AND RESTATED REVOLVING CREDIT AND
TERM LOAN NOTE, SERIES I, FINAL MATURITY JUNE 30, 2001
AND
$30,000,000 PRINCIPAL AMOUNT REVOLVING CREDIT NOTE, SERIES J, FINAL
MATURITY JUNE 30, 1997
Gentlemen:
I refer to the following:
1. Indenture of Mortgage, Deed of Trust, Assignment and Security
Agreement dated as of September 1, 1976, among Mississippi
Chemical Corporation (the "COMPANY") and New Orleans Bank for
Cooperatives (now the National Bank for Cooperatives) and John H.
Farrelly, as Trustee under certain deeds of trust, and Deposit
Guaranty National Bank, as Trustee (the "TRUSTEE"), (the
"ORIGINAL INDENTURE") as supplemented pursuant to a First
Supplemental Indenture dated as of September 7, 1976, a Second
Supplemental Indenture dated as of September 30, 1976, a Third
Supplemental Indenture dated as of June 28, 1977, a Fourth
Supplemental Indenture dated as of May 1, 1978, a Fifth
Supplemental Indenture dated as of June 1, 1978, a Sixth
Supplemental Indenture dated as of September 1, 1979, a Seventh
Supplemental Indenture dated as of October 1, 1979, an Eighth
Supplemental Indenture dated as of May 15, 1983, a Ninth
Supplemental Indenture dated as of February 23, 1988, a Tenth
Supplemental Indenture dated as of December 26, 1989, an Eleventh
Supplemental Indenture dated as of July 16, 1990, a Twelfth
Supplemental Indenture dated as of August 6, 1992, and a
Thirteenth Supplemental Indenture dated as of July 16, 1993 (the
Original Indenture, as supplemented by each of the above
referenced Supplements is hereinafter referred to as the
"INDENTURE");
2. Series I Revolving Credit/Term Loan Agreement dated as of
August 6, 1992, between the Company and NationsBank of Tennessee
(now NationsBank of Tennessee, N.A., and hereinafter the
"PURCHASER") pursuant to which the Company issued and sold to the
Purchaser, and the Purchaser purchased from the Company, on the
terms and conditions set forth in said Agreement, the Company's
Revolving Credit and Term Loan Note, Series I, having a final
maturity of June 30, 1999;
3. Series J Revolving Credit Agreement dated as of June 17, 1994,
between the Company and the Purchaser (the "LOAN AGREEMENT")
pursuant to which the Company will issue and sell to the
Purchaser, and the Purchaser will purchase from the Company, on
the terms and conditions set forth in said Agreement, the
Company's Revolving Credit Note, Series J, having a final
maturity of June 30, 1997 (the "SERIES J NOTE");
4. the Fourteenth Supplemental Indenture dated as of even date
herewith (the "FOURTEENTH SUPPLEMENTAL INDENTURE") which
supplements and amends the Indenture; and
5. the Fifteenth Supplemental Indenture and Amendment to Series I
Revolving Credit/Term Loan Agreement dated as of even date
herewith (the "FIFTEENTH SUPPLEMENTAL INDENTURE"), pursuant to
which the Company will issue and sell to the Purchaser, and the
Purchaser will purchase from the Company, on the terms and
conditions set forth in the Fifteenth Supplemental Indenture, the
Company's amended and restated Revolving Credit and Term Loan
Note, Series I, having a final maturity of June 30, 2001 (the
"AMENDED AND RESTATED SERIES I NOTE") (the Indenture, as
supplemented by the Fourteenth and Fifteenth Supplemental
Indentures is referred to as the "INDENTURE, AS SUPPLEMENTED").
This letter is an OPINION OF COUNSEL as defined in Section 1.01 of the
Indenture and is executed and delivered pursuant to Sections 2.14(c) and 10.01
of the Indenture. Except as otherwise indicated, all terms herein shall have
the same meaning as in the Series I Revolving Credit/Term Loan Agreement, the
Loan Agreement and the Indenture, as Supplemented.
As counsel to the Company, I have reviewed the Indenture, the Fourteenth
Supplemental Indenture, the Fifteenth Supplemental Indenture, the Loan Agreement
and such other documents as I have considered necessary in order to render this
opinion. In stating my opinion, I have assumed (i) the genuineness of the
signatures of the individuals signing all documents in connection with which
this opinion is rendered on behalf of the parties thereto (other than the
Company), (ii) the authenticity of all documents submitted to the Company as
originals, and (iii) the conformity to authentic original documents of all
documents submitted to the Company as certified, conformed or photostat copies.
Based upon the foregoing and subject to the further assumptions,
qualifications and limitations hereinafter set forth, I am of the opinion that:
1. Assuming that the Fourteenth and Fifteenth Supplemental Indentures are
the legal and valid binding obligation of the Trustee, the Fourteenth and
Fifteenth Supplemental Indentures constitute the legal, valid and binding
agreements of the Company enforceable against the Company in accordance with
their terms.
2. The Loan Agreement has been duly authorized, executed and delivered by
the Company. Assuming that the same has been duly authorized, executed and
delivered by you, and that you have all requisite power and authority, corporate
and otherwise, to enter into and perform your obligations under the Loan
Agreement, the Loan Agreement constitutes the legal, valid and binding agreement
of the Company enforceable against the Company in accordance with its terms.
3. The amended and restated Series I Note and the Series J Note have been
duly authorized, executed, issued and delivered by the Company and have been
duly authenticated by the Trustee. The same constitute the legal, valid and
binding obligation of the Company in accordance with their terms, entitled to
the benefits of the Indenture, as Supplemented. Neither the execution and
delivery of the Loan Agreement, the Fourteenth and Fifteenth Supplemental
Indentures, the amended and restated Series I Note, or the Series J Note, nor
compliance with the provisions of any of them by the Company will conflict with
or result in any breach of any of the provisions of, or constitute a default
under any provision of applicable Mississippi law or the Articles of
Incorporation or Bylaws of, the Company.
4. No consents, approvals or authorizations of or filings with any
federal or state of Mississippi authorities are required in connection with the
execution and delivery by the Company of the Loan Agreement, the amended and
restated Series I Note, the Series J Note, or the Fourteenth and Fifteenth
Supplemental Indentures and the performance by the Company of its obligations
under any of them except for those which have been obtained or made.
5. It is not necessary, in connection with the offer, issue, sale and
delivery of the amended and restated Series I Note or the Series J Note, to
register either of them under the Securities Act of 1933, as amended, or to
qualify the Indenture, as Supplemented, or the Loan Agreement under the Trust
Indenture Act of 1939; provided, however, no opinion is expressed concerning
compliance with the anti-fraud provisions of any federal or state securities
laws. For the purposes of the opinion expressed in this paragraph 5, we have
assumed the accuracy of the representations set forth in Sections 3.1(m) and 3.2
of the Loan Agreement and incorporated by reference into the Series I Revolving
Credit/Term Loan Agreement.
6. All conditions precedent to the creation and issuance of the amended
and restated Series I Note and the Series J Note and to the execution of the
Fourteenth and Fifteenth Supplemental Indentures have been complied with; the
Fourteenth and Fifteenth Supplemental Indentures are in proper form for
execution by the Trustee; and, subject to the provisions of the Indenture, the
Indenture, as Supplemented, secures the amended and restated Series I Note and
the Series J Note by (i) a valid mortgage lien on all interests in the real
property described therein as subject to the lien hereof and (ii) a valid
security interest in the personal property described therein as subject to the
lien thereof.
With respect to the enforceability of any agreement referenced herein, the
opinions expressed herein are subject to the following: (i) the effect of any
applicable bankruptcy insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally; (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law); (iii) certain applicable laws or judicial decisions that may
limit, impair or delay the enforceability of certain remedies, waivers or other
provisions of the Loan Agreement, the Series I Revolving Credit/Term Loan
Agreement as amended on the date hereof, the Fourteenth and Fifteenth
Supplemental Indentures, the Series I Note and the Series J Note, but which will
not, in my opinion, substantially interfere with the practical realization of
the benefits intended to be conferred thereby; (iv) limitations on repossession
of property without judicial process requiring that such action be taken without
a breach of the peace; (v) the statutory right of redemption prior to
foreclosure as set forth in Sections 89-1-59 and 75-9-506 of the Mississippi
Code of 1972, as amended; and (vi) the voluntary or involuntary transfer of a
debtor's rights in property or collateral, notwithstanding a provision in an
agreement prohibiting any such transfer or making the transfer a default,
pursuant to Section 75-9-311 of the Mississippi Code of 1972, as amended.
I have made no examination of the title to the property described in the
Indenture, as Supplemented, or to any restrictions in underlying ownership
documents on transfer or pledge, and I express no opinion with respect to the
status of title. It is my understanding that you are relying for such purposes
upon the opinions of (i) Henry, Barbour & DeCell, with respect to the real
property of the Company located in Yazoo County, Mississippi, (ii) Megehee,
Pitcher, Tynes, Kinard & Smith, with respect to the real property of the Company
and Mississippi Phosphates Corporation located in Jackson County, Mississippi,
and (iii) McCormick, Forbes, Caraway & Tabor, with respect to title to real
property of the Company and Mississippi Potash, Inc., located in Lea and Eddy
Counties, New Mexico.
This opinion is solely for your benefit, for the benefit of your special
counsel, and for the benefit of Deposit Guaranty National Bank as Trustee under
the Indenture in connection with the transaction referred to herein and may not
be quoted or relied on by any other person or used for any other purpose or any
other transaction, without my prior written consent.
Respectfully submitted,
MISSISSIPPI CHEMICAL CORPORATION
Robert E. Jones
Vice President and General Counsel
REJ/lgb
EXHIBIT 10.4
PURCHASE AGREEMENT
THIS AGREEMENT, is made and entered into as of the 15th day of September,
1994, to be effective on the 1st day of October, 1994 ("Effective Date"), by and
between MISSISSIPPI CHEMICAL CORPORATION, a Mississippi corporation, with its
principal place of business at Owen Cooper Administration Building, Highway 49E,
Yazoo City, Mississippi 39194-0388 ("MCC"), and AIR PRODUCTS AND CHEMICALS,
INC., a Delaware corporation, with its principal place of business at 7201
Hamilton Boulevard, Allentown, Pennsylvania 18195-1501 (collectively with its
affiliates referred to as "Air Products").
WHEREAS, Air Products produces ammonium nitrate prills which it sells to
agricultural users; and
WHEREAS, Air Products has made a unilateral decision to continue operating
its production facility but to exit the business of marketing its ammonium
nitrate prills; and
WHEREAS, MCC desires to purchase Air Products' ammonium nitrate prills;
NOW, THEREFORE, in consideration of the mutual benefits to be derived, the
parties agree as hereafter set forth.
1. DEFINITIONS
1.1 "Contract Year" shall mean initially a period beginning on
October 1, 1994, and running through June 30, 1995, and shall thereafter mean a
twelve (12) month period beginning July 1 of each calendar year.
1.2 "Agricultural Product" shall mean ammonium nitrate prills
produced by Air Products at its Pace, Florida, facility. This Agreement
envisions that the volume of Agricultural Product produced at Air Products'
Pace, Florida, facility will remain the same throughout the term of this
Agreement, excepting nominal and incremental production increases resulting from
increases in operating efficiencies.
1.3 "Variable Netback" with respect to ammonium nitrate prills shall
mean the excess of (i) subparagraph 1.3.1 over (ii) the sum of subparagraphs
1.3.2 and 1.3.3, as each of these are described below.
1.3.1 "Ammonium Nitrate Prills Revenue" shall mean the
revenues realized for ammonium nitrate prills sold by MCC.
1.3.2 "Direct Costs" shall mean the weighted average per-ton
costs incurred in connection with the sale of ammonium nitrate prills for such
items as, including but not being limited to, discounts; freight allowances;
customer truck fees; freight into storage; storage costs; bag costs; bagging
charges; delivery expenses; handling charges; rail delivery allowances; weighing
fees; pneumatic truck charges; direct transfer fees; special equipment fees;
wharfage; railcar lease costs and other such expenses of delivery directly
relating to the sale of ammonium nitrate prills by MCC as they may arise.
1.3.3 "Adjustments to Netback" shall mean any actual,
projected or accrued costs incurred in the normal course of business and
attributable to that month which are not Direct Costs, including but not being
limited to, shrinkage projection; interest cost resulting from extended terms or
slow-paying accounts; losses resulting from nonperforming accounts on all
ammonium nitrate prills; emergency storage costs; losses for which there is no
apparent responsible third party (examples of this include, but are not limited
to, losses occurring during transit not attributable to product quality problems
or any apparent problem with carrier's equipment and losses occurring during
storage not attributable to product quality problems or any apparent problem in
handling or storage facility); interest on ammonium nitrate prill inventory; and
taxes paid by MCC which are assessed on the sale and/or distribution of ammonium
nitrate prills.
1.3.3.1 It is agreed that storage costs and Adjustments
to Netback when calculated on a per-ton basis may be volume sensitive over a
period of time exceeding one (1) month. MCC will make every effort to
accurately project such volume-sensitive costs on a monthly basis and will use
this projection in the Variable Netback calculation. MCC will endeavor to
estimate and adjust these costs monthly. However, at the end of each Contract
Year, a final adjustment will be made based on actual costs.
1.3.3.2 Any interest costs assessed under the provisions
of this paragraph shall be at Chase Manhattan's Banker's Prime Lending Rate for
the relevant period.
1.3.4 In order to determine Variable Netback, the following
costs shall not be subtracted as an adjustment for calculating Variable Netback:
any costs which are incurred by MCC or Air Products associated with the general
administration or operation of their respective facilities, including but not
being limited to, costs incurred for such items as production; in-plant storage;
switching charges; in-plant maintenance; general and administrative expenses;
administrative staff or plant labor overhead; or taxes levied on the manufacture
of ammonium nitrate prills. A sample calculation of Variable Netback is set
forth in Exhibit A incorporated herein.
1.4 "Cash Cost" shall mean Air Products' projected cash cost of
producing Agricultural Product (raw material and conversion) provided by Air
Products to MCC for each calendar quarter, not to exceed current Price.
1.5 "Discount" shall mean the (confidential treatment has been
requsted) per-ton ($confidential treatment has been requested/Ton) reduction on
MCC's purchase price of Air Products' Agricultural Product plus escalation on
the first (confidential treatment has been requested) per-ton ($ confidential
treatment has been requested/Ton) after the end of the third Contract Year in
accordance with the annual change in the United States Consumer Price Index for
all urban consumers, using the period July 1, 1996, to June 30, 1997, as the
base year. In no event shall the Discount fall below (confidential treatment
has been requested) per-ton ($ confidential treatment has been requested/Ton).
1.6 "Price" shall mean Variable Netback calculated on a per-ton
basis minus Discount.
1.7 For the purposes of this Agreement, reference to ammonium
nitrate prills shall mean, in all cases, fertilizer grade prilled ammonium
nitrate intended for agricultural use.
1.8 "Agreement" shall mean this Purchase Agreement and all of its
Exhibits.
2. TERM
2.1 The term of this Agreement shall be a period of fifteen (15)
years beginning on the Effective Date and automatically extending thereafter for
additional five (5) year periods, unless terminated by notification from either
party to the other party not less than one (1) year before the expiration of the
initial term or one (1) year before the expiration of any five (5) year period,
unless terminated sooner by either party as provided by another provision of
this Agreement.
3. SALE AND PURCHASE OF AGRICULTURAL PRODUCT
3.1 Subject to the provisions of paragraph 3.4, during the term of
this Agreement, Air Products shall sell to MCC, and MCC shall purchase from
Air Products, all of the Agricultural Product produced by Air Products at its
Pace, Florida, facility.
3.2 Upon execution of this Agreement, Air Products agrees to
provide MCC with a forecast of Agricultural Product production for each month
through June 30, 1995. At the end of each month thereafter, Air Products will
provide a three (3) month rolling forecast. Air Products will use its
reasonable efforts to produce the quantity of Agricultural Product provided in
the month-end forecast for the following month.
3.3 On or before June 30 of each year, Air Products shall provide
MCC with a good-faith forecast of its anticipated production of Agricultural
Product in the twelve (12) month period beginning July 1. At MCC's request,
Air Products will also provide an outlook as to the direction its Agricultural
Product production is likely to take over the course of the next two (2) years.
3.4 On or before the first day of each calendar quarter, the
parties will discuss purchases hereunder and Air Products' production estimates
for the immediately following calendar quarter. In the event that MCC
determines, in its sole discretion, that it will be unable to make arrangements
for the marketing, in a commercially reasonable manner, of the entire production
of Agricultural Product for such calendar quarter, then it shall advise Air
Products of the quantity of Agricultural Product that it can efficiently market
and that it will purchase from Air Products during such calendar quarter. To
the extent that the production of Agricultural Product during a calendar quarter
exceeds MCC's commitment to purchase Agricultural Product during such calendar
quarter, MCC shall release Air Products from its obligation to sell the excess
Agricultural Product during the quarter to MCC, and Air Products shall have the
right to sell the excess Agricultural Product to parties other than MCC.
4. SHIPMENTS
4.1 Air Products will provide rail siding space for handling full
and empty railcars at no cost to MCC. MCC acknowledges that Air Products' rail
siding space is limited and is not designed for long-term storage, and will make
reasonable efforts to minimize the on-site number of railcars, in no event to
exceed forty (40) railcars without Air Products' specific approval.
4.2 Air Products will be responsible for the loading of
Agricultural Product at the Pace, Florida, facility. MCC will be responsible
for the loading of Agricultural Product at all other locations.
4.3 MCC will provide scheduling of all railcars and bulk trucks
and bills of lading for all shipments, rail and truck. Air Products agrees to
accommodate MCC's terminal and printer at the Pace, Florida, facility for this
purpose. MCC shall also provide communication with carriers and shipment
tracking. Air Products shall electronically report to MCC weights and vehicle
numbers for any shipments leaving the Pace, Florida, facility not later than the
next business day following the shipment.
4.4 The party responsible for loading under paragraph 4.2 shall be
responsible for inspection and acceptance or rejection of any railcar or truck
prior to loading. The party responsible for loading shall also be responsible
for complying with all applicable laws and regulations with respect to the
loading for shipment and shipment of the product.
5. DELIVERY
5.1 Title and risk of loss to Agricultural Product shall pass to
MCC upon Air Products' delivery of Agricultural Product into railcar or truck of
MCC or its customer at the Pace, Florida, facility.
6. PRICING AND PAYMENT
6.1 Payment to Air Products from MCC with respect to sales in any
calendar month is calculated by (i) multiplying (confidential treatment has been
requested) times the number of tons of Agricultural Product shipped from Pace,
Florida, directly to MCC's customers and shipped from MCC's inventory to MCC's
customers during the month, (ii) plus (confidential treatment has been
requested) times the number of tons of Agricultural Product shipped into MCC's
inventory during the month, and (iii) minus credit for the weighted average
(confidential treatment has been requested) previously paid on the tons of
Agricultural Product shipped from MCC's inventory to MCC's customers during the
month. An example of the payment calculation is included herein as Exhibit A
and Exhibit A-1.
6.2 Each month MCC shall pay for the previous month's purchases
by MCC of Agricultural Product based on shipments weighed out through truck or
rail from Pace, Florida. In no event shall there be more than twenty (20)
railcars loaded and on Air Products' property which have not been invoiced by
Air Products. MCC will provide to Air Products the data necessary for Air
Products to invoice MCC as soon as practical following month-end, but not later
than the twelfth (12th) day of the month. The sales to MCC for any given month
will be paid to Air Products by the fifteenth (15th) day of the month following
such sales. MCC will pay each invoice by electronic transfer of funds to Air
Products' account in accordance with Exhibit B, which is incorporated herein.
6.3 Air Products shall provide MCC with a copy of the current
calibration certificate for the truck scales on a quarterly basis, and shall
provide a photocopy of the rail scale calibration certificate twice per year.
6.4 MCC shall have the obligation once every twelve (12) months
during the term of this Agreement, and for twenty-four (24) months following
termination, to cause its independent public accountants to audit MCC's books
and records insofar as they relate to the calculation of the Variable Netback
and to express an opinion of its auditors that the Variable Netback has been
calculated in accordance with this Agreement. An adjustment shall be made as
necessary to reflect any corrections during the previous twelve (12) months, or
during the last twelve (12) months of this Agreement if terminated, as
determined by the audit.
7. TAXES
7.1 Each party shall bear and pay all federal, state and local
taxes based upon or measured by its net income or net worth, and all taxes, fees
or other charges based upon its corporate existence or its general right to
transact business.
8. TECHNOLOGY TRANSFER
8.1 MCC will provide to Air Products technical information related
to the manufacture of Agricultural Product as set forth in Exhibit E hereto and
to the extent necessary to allow Air Products to manufacture Agricultural
Product meeting the specifications set forth in Exhibit F to this Agreement. In
the event of a conflict between any provision of this Agreement and any
provision of Exhibit E, "Technology Transfer," the provisions of Exhibit E will
control with respect to the technology transferred from MCC to Air Products.
8.2 Air Products will undertake to adopt the technology
transferred by MCC pursuant to Exhibit E, "Technology Transfer," for the purpose
of achieving market compatibility between Agricultural Product and AMTRATE(R)
produced by MCC.
8.3 The implementation of the technology described in Exhibit E,
"Technology Transfer," is not anticipated to cost more than Five Hundred
Thousand and 00/100 Dollars ($500,000.00). In the event that the cost of
implementation exceeds this amount, then Air Products may choose to either
expend such amounts as are necessary to install the technology or terminate this
Agreement, at its sole and exclusive option. In the event that Air Products
chooses to terminate the Agreement, then it shall terminate effective
ninety (90) days from the date of Air Products' original notice to MCC under
this paragraph 8.3.
8.4 In the event that Air Products is unable to meet the
specifications set forth in Exhibit F following installation of the technology
described in Exhibit E, Air Products shall have the right to install additional
equipment or make such other modifications as are necessary to meet such
specifications by March 30, 1995. In the event that Air Products elects not to
make such installations or modifications as are necessary to meet the
specifications, then MCC at its sole and exclusive option may modify the
specifications or terminate this Agreement effective June 30, 1995.
8.5 During the course of this Agreement it may become necessary to
make revisions in the specifications set forth as Exhibit F. In such event, MCC
will notice Air Products of the proposed revisions and, for a period of ninety
(90) days, will discuss with Air Products the changes necessary to effectuate
such revisions. Air Products will in no event be required to install additional
equipment or make modifications to meet such revised specifications; however,
upon Air Products' decision not to adopt the revised specifications, MCC may, at
its option, terminate this Agreement and the associated Technology Transfer
effective one (1) year from the date of the original notice to Air Products of
the proposed revisions under this paragraph 8.5.
9. WARRANTY
9.1 Air Products warrants it has title to Agricultural Product
delivered hereunder and may properly sell the same and that such Agricultural
Product shall conform to the specifications set forth in Exhibit C, which is
incorporated herein until such time that MCC's proprietary coating technology is
implemented. Upon the implementation of the coating technology, the
specification attached as Exhibit F will be the specification for Agricultural
Product and is intended to be the same specification as MCC's current production
specification for AMTRATE(R). Air Products shall maintain data on any quality
testing of any Agricultural Product and shall provide certificates as to quality
to MCC upon reasonable request. Air Products shall retain daily production
samples for ninety (90) days. MCC, at its expense, shall have the right to test
the Agricultural Product for the purpose of determining compliance with the
specifications.
10. STORAGE
10.1 Air Products shall make available in-plant storage for the
Agricultural Product (consisting of not less than two thousand five
hundred (2,500) tons of bulk ammonium nitrate storage and twenty
thousand (20,000) tons of ammonium nitrate solutions storage as 100% ammonium
nitrate) at no cost to MCC, and the in-plant storage costs will not be a factor
in calculating Variable Netback. Likewise, MCC shall make available in-plant
storage for its ammonium nitrate prills at Yazoo City, Mississippi, with no
related cost factor attributable to the Variable Netback.
11. ASSIGNMENT OF CONTRACTS
11.1 In consideration for MCC's agreement to purchase Air Products'
production of Agricultural Product during the term of this Agreement,
Air Products agrees to use all reasonable efforts to assign to MCC, and MCC will
accept assignment of, each of its contracts with its customers, (confidential
treatment has been requested). In the event that any customer withholds consent
to an assignment of its contract with Air Products, Air Products will withhold
such tons under this Agreement as are necessary to supply Air Products'
obligation to such customer under its contract with such customer and shall
immediately notify the customer of Air Products' intent to terminate its
contract at the earliest allowable date.
12. FORCE MAJEURE
12.1 Neither party shall be liable for any failure or delay in
performance hereunder (except for the payment for Agricultural Product
previously delivered hereunder) which may be due to Force Majeure.
12.1.1 For the purposes hereof, the term Force Majeure means
a condition or event occurring beyond the control of the party suffering the
event which prevents performance under this Agreement. Force Majeure includes,
without limitation, any war (whether declared or undeclared), fire, flood,
lightning, earthquake, storm, or act of God; mechanical breakdown or partial or
total destruction of the manufacturing facility; any strike, lockout or other
labor difficulty, civil disturbance, riot, sabotage, accident or explosion; any
official order, directive or industry-wide request by any governmental authority
which, in the reasonable judgment of either party makes it necessary to cease or
reduce production or other performance under this Agreement; any inability to
secure necessary fuel, power, equipment, transportation or raw materials,
including the inability to secure any such item by reason of allocations
promulgated by any governmental authority; or Air Products' operating costs for
producing Agricultural Product exceeds the revenues that it receives therefor.
12.2 Performance under this Agreement may be suspended during the
period of any such Force Majeure.
12.2.1 The party affected by an event described herein shall,
promptly upon learning of such event and ascertaining that it has or will affect
its performance hereunder, give notice to the other party, stating the nature of
the event, its anticipated duration and any action being taken to avoid or
minimize its effect. Any Force Majeure event shall, so far as reasonably
possible, be remedied with all reasonable dispatch, provided that the settlement
of strikes, lockouts, industrial disputes, or disturbances shall be entirely
within the discretion of the affected party.
12.2.2 Performance under this Agreement shall resume to the
extent made possible by the end of the Force Majeure event.
13. EVENTS OF TERMINATION
13.1 Air Products may suspend this Agreement at any time during the
initial term, or during any extension thereof, on six (6) months' notice to MCC
in accordance with section 18 that it will cease production of Agricultural
Product, in which case the suspension will be effective when actual production
ceases. MCC may choose to terminate this Agreement, at its option, should Air
Products' production of Agricultural Product not resume after a period of six
(6) months. Neither party is required to submit to the provisions of section 16
regarding arbitration to exercise its options under this paragraph.
13.2 In the event that MCC is unable to earn a quarterly profit
from the sale of Agricultural Product and the condition is expected to continue,
MCC and Air Products shall negotiate in good faith to alleviate the hardship.
In the event that the parties are unable to agree within a period of ninety (90)
days on alternative arrangements which alleviate the hardship condition, the
Agreement may be terminated one (1) year following the date of the original
notice to Air Products of hardship under this subparagraph 13.2. Neither party
is required to submit to the provisions of section 16 regarding arbitration to
exercise its options under this paragraph.
13.3 Following receipt of a notice of suspension or termination
under any subparagraph of this section 13, from either Air Products or MCC, MCC
will make no commitment for sales of additional tons of Agricultural Product
beyond the anticipated suspension or termination date of this Agreement; and
Air Products hereby agrees to satisfy any Agricultural Product commitments made
by MCC prior to MCC's receipt of notice of termination, up to commitments made
for the current fertilizer year, but in no event less than a period of three (3)
months.
14. LIABILITY
14.1 Air Products' sole liability, and MCC's sole and exclusive
remedy, for Air Products' failure to deliver Agricultural Product shall be the
difference between the price of such quantity of Agricultural Product under this
Agreement and the higher price MCC necessarily pays to a third party to obtain
product required in replacement.
14.2 Air Products' sole liability, and MCC's sole and exclusive
remedy, for Air Products' failure to deliver Agricultural Product which conform
to the specifications in effect under Exhibit C or Exhibit F shall be
replacement by Air Products of a like quantity of conforming Agricultural
Product at no additional cost to MCC and reimbursement of any commercially
reasonable costs necessarily incurred by MCC in connection with the receipt,
storage, handling, reshipment, or disposal of the nonconforming Agricultural
Product. Any claim must be received by Air Products in writing within thirty
(30) days of the receipt by MCC or MCC's customer.
14.3 From and after January 1, 1995, for claims brought by
customers of MCC against Air Products where language disclaiming warranty and
limiting liability as described in Exhibit D was not provided by MCC to the
customer either by sales contract or by invoice subsequent to the sale, then MCC
agrees to defend and indemnify Air Products with respect to such claim. The
language set forth in Exhibit D is not currently in use by MCC and for purposes
of transition, this paragraph 14.3 will become effective for the language to be
included in all sales invoices from and after January 1, 1995, and for
contracts, shall be included in each new or renewed contract between MCC and
customers upon execution of any new contracts or renewal of an existing contract
as they arise from and after January 1, 1995.
15. CONFIDENTIALITY
15.1 MCC acknowledges and agrees that the provisions of the
1994 Confidential Disclosure Agreement between MCC and Air Products shall govern
the transfer of any confidential or proprietary business information by
Air Products to MCC in connection with this Agreement or the performance of any
rights or obligations contemplated hereunder.
15.2 Air Products and MCC each acknowledge and agree that the
provisions of the 1994 Secrecy Agreement between MCC and Air Products shall be
superseded by Exhibit E, "Technology Transfer," and that the provisions of
Exhibit E shall exclusively govern the transfer of any confidential or
proprietary technical information by MCC to Air Products in connection with this
Agreement or the performance of any rights or obligations contemplated
hereunder. Air Products and MCC each acknowledge and agree that the provisions
of Exhibit H, "Secrecy Agreement," govern the transfer of any confidential or
proprietary technical information by Air Products to MCC in connection with this
Agreement or the performance of any rights or obligations contemplated
hereunder.
16. DISPUTES
16.1 All disputes, controversies or differences between the
parties arising out of, in relation to or in connection with this Agreement, or
the breach thereof, which cannot be resolved through negotiations to the
satisfaction of either of the parties within sixty (60) days after the date one
party has notified the other party in writing of such dispute, controversy or
difference, shall be resolved by binding arbitration. Both parties shall submit
their respective positions with regard to the disputed matter in writing to an
arbitration panel consisting of three arbitrators, one of whom shall be
appointed by Air Products, one by MCC, and the third by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then such third arbitrator shall be a partner in one of the
"Big Six" accounting firms not employed by Air Products or MCC or any of their
respective affiliated companies (if the disputed matter is financial in nature);
an engineer or similar professional familiar with operations similar to those of
the Pace, Florida, facility (if the disputed matter is operational in nature);
or, an attorney familiar with contracts of this kind (if the disputed matter
involves an issue of contractual interpretation) appointed by the American
Arbitration Association. The arbitration shall be conducted pursuant to the
Commercial Arbitration Rules of the American Arbitration Association and shall
be held in Jackson, Mississippi. The determination of the arbitration panel
shall be final and binding on the parties hereto. Judgment upon the arbitration
panel's award may be entered in any court having jurisdiction thereof. The fees
and expenses of all arbitrators shall be paid equally by Air Products and MCC.
17. PUBLIC ANNOUNCEMENTS
17.1 Neither Air Products nor MCC or any of their respective
affiliates shall issue or make any press release, public announcement,
confirmation or other disclosure or information relating to this Agreement or
the transactions contemplated hereby, except with the prior approval of the
other party.
18. NOTICE
18.1 Any notice to be given under this Agreement shall be in
writing and shall be delivered personally or by certified mail (postage prepaid
and return receipt requested), courier or overnight delivery service (delivery
charge prepaid), or by telecopy. Any notice shall be effective only if and when
it is received by the addressee. For the purposes hereof, the addresses and
telephone and telecopier numbers of Air Products and MCC are as follows:
Air Products: Air Products and Chemicals, Inc.
Attention: Corporate Secretary
7201 Hamilton Boulevard
Allentown, PA 18195-1501
Telephone: 610/481-7071
Telecopier: 610/481-5765
MCC: Mississippi Chemical Corporation
Attention: Corporate Secretary
P. O. Box 388
Yazoo City, MS 39194-0388
Telephone: 601/746-4131
Telecopier: 601/746-9158
19. GOVERNING LAW
19.1 This Agreement shall be governed by, construed under, and
enforced in accordance with the laws of the state of Mississippi.
20. ENTIRE AGREEMENT
20.1 This Agreement and its Exhibits constitute the entire
understanding between the parties and supersedes all prior discussions,
statements, and representations, oral or written, relating to the subject matter
of this Agreement. No amendment or modification shall be valid unless in
writing specifically referencing this Agreement and signed by a duly authorized
representative of each party. All purchase orders or purchase acknowledgments
which may be used to order or acknowledge orders for delivery of Agricultural
Product shall be deemed intended for record purposes only, and any terms or
conditions contained therein shall not serve to add to or modify the terms and
conditions of this Agreement.
21. GENERAL PROVISIONS
21.1 MCC agrees to adhere to all existing and future site safety,
hygiene and environmental regulations and policies while at the Pace, Florida,
facility.
21.2 No waiver or failure to enforce any term of this Agreement
shall effect or limit a party's right thereafter to enforce or compel strict
compliance with every term of this Agreement.
21.3 If any provision of this Agreement is held invalid by any
court of law or administrative or regulatory body, all other provisions hereof
shall continue in full force and effect.
21.4 This Agreement may not be assigned by either party without the
prior written consent of the other party. This Agreement shall inure to the
benefit of and be binding upon the successors and, if properly assigned, the
assigns of both parties.
21.5 No person not a party to this Agreement shall have any
interest in or right under this Agreement as a third-party beneficiary or
otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first set forth above.
MISSISSIPPI CHEMICAL CORPORATION AIR PRODUCTS AND CHEMICALS, INC.
By: /s/ Charles O. Dunn By: /s/ Robert E. Gadomski
President Group Vice President - Chemicals
Date: September 15, 1994 Date: September 19, 1994
EXHIBIT A
EXAMPLE BILLING
Year To Date
Ammonium Nitrate Prills Revenue $16,093,509.00
(Confidential treatment has been (Confidential
requested) treatment has
been requested)
(Confidential treatment has been (Confidential
requested) treatment has
been requested)
Variable Net-Back 12,968,645.37
Total Ammonium Nitrate Prill Tons 98,509
Sold
(Confidential treatment has been (Confidential
requested) treatment has
been requested)
Confidential treatment has been (Confidential
requested) treatment has
been requested)
PRICE $122.65
Agricultural Product:
YTD Tons Sold - Direct 18,000
YTD Tons Sold from Inventory 3,337
Total Tons Sold YTD 21,337
YTD Payment Due for Agricultural $2,616,983.05
Product Sold
Credit for Previous Payments ($1,231,980.00)
Current Month Payment 1,385,003.05
Shrinkage Monthly (3,173.85) A. Exhibit A - 1
Interest Monthly (1,312.37) B. Exhibit A - 1
Payment for Tons Sold $1,380,516.83
Payment for tons Shipped to $317,385.00 C. Exhibit A - 1
Inventory
Credit for Tons Sold from Inventory ($157,239.25) D. Exhibit A - 1
Payment Due for Agricultural Product $1,540,662.58
<TABLE>
<CAPTION>
EXHIBIT A - 1
EXAMPLE INVENTORY CALCULATION
TONS
Albany Montgomery Total
<S> <C> <C> <C> <C> <C> <C>
BEGINNING INVENTORY:
MCC Product 3,619 1,664 5,283
Agricultural Product 381 665 1,046
4,000 2,329 6,329
SHIPMENTS TO INVENTORY:
MCC product 3,000 1,500 4,500
Agricultural Product 1,900 800 2,700
4,900 2,300 7,200
TOTAL TONS AVAILABLE
MCC product 6,619 74.37% 3,164 68.35% 9,783
Agricultural Product 2,281 25.63% 1,465 31.65% 3,746
8,900 4,629 13,529
SALES FROM INVENTORY
MCC product 1,885 74.37% 1,487 68.35% 3,372
Agricultural Product 649 25.63% 688 31.65% 1,337
2,534 2,175 4,709
ENDING INVENTORY
MCC product 4,734 74.37% 1,677 68.35% 6,411
Agricultural Product 1,632 25.63% 777 31.65% 2,409
6,366 2,454 8,820
DOLLAR VALUE; AGRICULTURAL PRODUCT Total
BEGINNING $ VALUE: $44,828.46 $78,303.75 $123,132.21
SHIPMENTS TO INVENTORY $223,345.00 $94,040.00 C. $317,385.00
VALUE AVAILABLE FOR SALE $268,173.46 $172,343.75 $440,517.21
SALES FROM INVENTORY $76,302.93 $80,936.32 D. $157,239.25
ENDING INVENTORY VALUE $191,874.24 $91,406.28(1)<F1> $283,280.52
PER TON AGRICULTURAL PRODUCT INVENTORY Total
BEGINNING INVENTORY VALUE $117.66 $117.75 $117.72
SHIPMENTS TO INVENTORY
Cash Cost $117.55 $117.55
Price 122.65 122.65
Lesser of Cash Cost and $117.55 $117.55 $117.55
Price
VALUE AVAILABLE FOR SALE 117.57 117.64 $117.60
VALUE SHIPPED FROM 117.57 117.64 $117.60
INVENTORY
ENDING INVENTORY VALUE $117.57 $117.64 $117.60
SHRINKAGE CALCULATION Total
Shipments to Inventory $223,345.00 $94,040.00 $317,385.00
Shrinkage Factor 1.00% 1.00%
Shrinkage $2,233.45 $940.40 A. $3,173.85
INTEREST CALCULATION Total
Chase Manhattan Prime 7.75%
Beginning Inventory $44,828.46 $78,303.75
Ending Inventory 191,874.24 91,406.28
Total 236,702.70 169,710.03
Average $118,351.35 $84,855.02
Total Interest $764.35 $548.02 B. $1,312.37
<FN>
<F1> (1) Figures may not total as ending inventory value
represents Per Ton Value Times Rounded Ton Figure
</TABLE>
EXHIBIT B
ELECTRONIC TRADE PAYMENTS
1. Company Name and Address Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
Allentown, PA 18915-1501
2. Company I.D. Number (IRS) 231274455
(IRS Taxpayer Number and (DUNS) 00-300-1070
Company DUNS Number)
3. Depository Bank Name and Address Mellon Bank, N.A.
Mellon Bank Center
Pittsburgh, PA 15258-0001
4. Depository Bank Transit 043000261
Routing Number
5. Depository Bank Operations Janice L. Pottmeyer
Contact Name and Telephone Number 412/234-2489
6. Account Name Air Products and Chemicals, Inc.
7. Account Number 115-1265
8. Type of Transaction We Want Deposited CTP [x] CT X [ ]
to Your Account
9. Company Contact Name and Ellen D. Appell, Treasury
Telephone Number 610/481-7659
EXHIBIT C
PRODUCT SPECIFICATION FOR AMMONIUM NITRATE PRILLS
PRODUCED AT PACE, FLORIDA
The properties listed below are for material sampled at the Finished Product
Belt
COMPOSITION
PROPERTY UNITS MINIMUM MAXIMUM ANALYTICAL METHOD
Total Nitrogen % 34.0 --- SD-131
Ammonium Nitrate % 97.2 --- SD-131
Magnesium % 1.6 2.0 501.13
Nitrate
Total Moisture % --- 0.45 501.12
pH SU 6.0 7.0 501.14
Amines-Oil ppm 300.0 400.0 501.09
Coating
PHYSICAL CHARACTERISTICS
Mesh
Particle Size (U.S. Standard Mesh) Range, %
Distribution +6 0-1
+8 10-25
+10 25-35
+12 35-50
+14 5-10
-14 0-2
Unpacked Bulk Density 60-63 lb/cu.ft.
Angle of Repose 25-28 degrees
Appearance near-white prills
EXHIBIT D
LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTY
A. SELLER AND MANUFACTURER MAKE NO WARRANTY, EXPRESS OR IMPLIED, EXCEPT
THAT THE PRODUCT IS OF THE QUALITY SET FORTH IN MCC'S APPLICABLE PUBLISHED
SPECIFICATIONS (IF ANY). THE AFORESAID WARRANTY RUNS ONLY TO THE BUYER.
SELLER AND MANUFACTURER WARRANT NEITHER THE RESULTS TO BE OBTAINED FROM USE OF
THE PRODUCT, ITS MERCHANTABILITY, NOR ITS FITNESS FOR ANY PARTICULAR PURPOSE.
B. The quantity of Product is deemed to be the quantity determined at the
time of shipment by shipper's scale weights or marine survey, whichever is
applicable.
C. Seller and Manufacturer disclaim all risk and liability directly or
indirectly related to unloading, discharge, storage, handling, use (whether
alone, in combination with other substances or in the operation of any process),
and/or sale of the Product, and directly or indirectly arising out of compliance
or noncompliance with the laws, ordinances, and regulations of any governmental
entity or agency. Without limiting the generality of the foregoing, Seller and
Manufacturer expressly disclaim liability for the failure of discharge or
unloading implements or material used by the Buyer (whether or not supplied by
Seller or Manufacturer) and for the infringement of patent or other proprietary
rights.
D. Any technical advice or assistance furnished Buyer, whether before or
after delivery of the Product, for use in connection with unloading, discharge,
handling, storage, shipment, processing or use of product, or in connection with
the design or operation of any machinery or equipment related thereto, will be
without charge and without warranty; Buyer shall accept such technical advice or
assistance at Buyer's sole risk.
E. In no event shall Seller or Manufacturer be liable to Buyer for loss
of profits or for consequential, special or indirect damages resulting from
delay in or failure of performance hereunder or in any way related hereto. In
no event shall Seller or Manufacturer be liable to Buyer or any other party in
connection with any claim related to or arising out of this sale, including for
negligence, in an amount exceeding so much of the purchase price as is
applicable to that portion of the Product with respect to which such claim
relates. Failure to give notice of a claim with respect to the Product within
ten (10) days after the occurrence upon which such claim is founded shall
constitute a waiver by Buyer of such claim.
F. No consent to, waiver of or excuse from a breach hereunder, whether
express or implied, shall constitute a consent to, waiver of, or excuse from any
prior, concurrent or subsequent breach of the same or any other term or
provision.
EXHIBIT E
TECHNOLOGY TRANSFER
The parties to the Agreement to which this Exhibit E is annexed agree that MCC
will provide to Air Products sufficient information to allow Air Products to
manufacture prilled ammonium nitrate in accordance with the Agreement and with
MCC specifications for the product known by the trade name AMTRATE(R), the
specifications for which are found at Exhibit F to the Agreement.
SECTION 1. DEFINITIONS.
For purposes of this Exhibit E:
(a) "Product" means fertilizer grade prilled ammonium nitrate to be
manufactured by Air Products to MCC's specifications for AMTRATE(R).
(b) "MCC Coating Technology" means the know-how, process and apparatus for
production and application of a coating agent for Product using MCC
Information and Supplemental MCC Information.
(c) "Territory" means Air Products' Pace, Florida, facility.
(d) "Effective Date" is the effective date of the Agreement to which this
Exhibit E is annexed.
(e) "MCC Information" means designs, technical experience, data and know-how
for the design and operation of ammonium nitrate plants and other valuable
information conveyed to Air Products during the Term of the Agreement
relating to (i) processes for producing particulate ammonium nitrate,
including all steps undertaken from the preparation of the feedstock
through the treatment of the end product; (ii) product specifications and
additives designed to improve the physical properties of the particulate
product; and (iii) processes for the production and use of a coating agent
which is described in U.S. Patent 4,521,239.
(f) "Supplemental MCC Information" means the inventions, specifications,
production data, specialized know-how, skill and other secret and
confidential technical information relating to the manufacture of ammonium
nitrate which is owned or controlled by MCC or under which MCC has the
royalty-free right to license others and which MCC acquires and conveys to
Air Products during the Term of the Agreement.
(g) "Term of the Agreement" means the period during which the Agreement to
which this Exhibit E is annexed is in effect.
SECTION 2. THE GRANT.
(a) For the Term of the Agreement and upon the conditions hereinafter more
specifically set forth, MCC hereby grants to Air Products, under said
MCC Information and Supplemental MCC Information, the nonexclusive right to
manufacture the Product in the Territory.
(b) Except as MCC and Air Products may hereafter agree in writing, Air Products
shall have no right (i) to permit or subcontract others to use the MCC
Information or Supplemental MCC Information, or (ii) to disclose to or
permit or sublicense others to use the MCC Information or Supplemental MCC
Information, or (iii) to use the MCC Information or Supplemental MCC
Information in connection with the manufacture, use or sale of ammonium
nitrate prills other than under the terms of the Agreement.
SECTION 3. DUTIES OF MCC.
Any translation of MCC Information or Supplemental MCC Information or conversion
of any MCC Information or Supplemental MCC Information from one numeric system
to another shall be performed by Air Products at its own expense. Nothing
contained herein shall be construed as requiring MCC to perform any act in
conflict with the laws of the Untied States of America pertaining to the export
of technical information or data.
(a) MCC shall provide basic engineering information in sufficient detail and
scope to allow Air Products to design, procure and construct additions and
modifications to the Air Products facilities as needed to allow Air
Products to manufacture Product.
(b) MCC shall review and comment on engineering drawings and design documents
prepared by Air Products in response to (a) above.
(c) MCC shall provide operating instructions, laboratory procedures for
required quality control testing, and specifications and vendor data for
procurement of raw materials for use of the MCC Coating Technology.
(d) MCC shall assist Air Products in a hazards review of the MCC Coating
Technology prior to implementation by Air Products.
(e) MCC shall, at Air Products' request, perform periodic inspections of
construction in progress at the Air Products facility.
(f) MCC shall, at Air Products' request, provide on-site consultation at Air
Products' facility during commissioning and start-up for the purpose of
assisting Air Products in the proper manufacture of the Product. MCC shall
advise Air Products of any additional modifications, additions or
adjustments necessary to facilitate manufacture of the Product.
(g) MCC shall provide quality testing in MCC's laboratories and test facilities
as MCC may deem appropriate in assessing whether Product manufactured by
Air Products meets MCC's standards for AMTRATE(R), using samples provided
by Air Products at the request of MCC.
SECTION 4. DUTIES OF AIR PRODUCTS.
(a) Promptly after receipt of the basic engineering information from MCC, Air
Products shall proceed with all reasonable diligence to design, procure and
install additions and modifications as needed to allow Air Products to
begin manufacture of the Product provided, however, that at no time shall
Air Products be compelled to install any additions or modifications or
otherwise engage in any action which is in conflict with Air Products'
safety, health or environmental standards or policies.
(b) Air Products shall provide MCC a schedule for performance of the
Air Products' duties and report progress against the same.
(c) Air Products shall provide engineering design documents and drawings for
MCC review and comment and shall make a good-faith effort to revise the
design as recommended by MCC.
(d) Air Products shall train Air Products personnel in accordance with
operating instructions and quality control procedures provided by MCC and
shall ensure that said instructions and procedures are followed.
(e) Air Products shall provide samples for testing as reasonably requested by
MCC.
(f) Air Products shall proceed with all due diligence to achieve successful
manufacture of the Product at the earliest reasonable time.
(g) Air Products will buy raw materials for preparation of the coating agent
only from MCC-approved vendors.
(h) Air Products will cooperate with MCC on the specifications and sourcing of
raw materials other than those defined in paragraph (g) above as necessary
to assure compatibility of Product with MCC's AMTRATE(R).
SECTION 5. PROTECTION AND OWNERSHIP OF MCC INFORMATION AND SUPPLEMENTAL MCC
INFORMATION.
(a) All MCC Information and Supplemental MCC Information furnished to
Air Products hereunder remains the property of MCC.
(b) Air Products agrees to keep confidential all MCC Information and
Supplemental MCC Information provided to Air Products in tangible form and
labeled "Confidential MCC." Air Products may not, without written consent
from MCC, communicate or allow to be communicated any MCC Information or
Supplemental MCC Information to anyone except to its officers, employees,
and agents, and only to such extent as may be necessary for the proper
manufacture and sale of the Product in accordance with the Agreement and
this Exhibit E.
(i) Air Products will cause said agents and employees to sign
confidentiality agreements in conformance with Air Products'
current policy and procedure, attached as Exhibit G.
(ii) Air Products shall assist in prosecution of any civil or criminal
action brought against any former Air Products agent or employee in
the event of breach of such secrecy obligations.
(c) If necessary to share information with any third party in order to practice
MCC Information or Supplemental MCC Information, Air Products must bind the
third party with a secrecy agreement no less stringent than this Exhibit E.
Air Products shall assist in the prosecution of any civil or criminal
action brought against any third party in the event of a breach of such
secrecy obligations.
(d) Except as needed to practice MCC Information or Supplemental MCC
Information for manufacture of Product, Air Products will not, without the
prior written consent of MCC, use, reproduce or copy, or permit the use,
reproduction or copying of any of said drawings, prints, data and other
documents. Air Products agrees that any reproduction, notes, summaries or
similar documents relating to the MCC Information or Supplemental MCC
Information supplied hereunder immediately upon their creation will be
marked "Confidential MCC," will be covered by the terms of this Exhibit E
and will be returned to MCC pursuant to paragraph 10(c).
(e) The obligations and restrictions imposed by Section 5(b) above shall not
apply with respect to MCC Information and Supplemental MCC Information:
(i) which at the time of disclosure is in the public domain;
(ii) which after disclosure is published or otherwise becomes part of
the public domain through no fault of Air Products;
(iii) which Air Products can show was in its possession at the time of
disclosure and is not under an ongoing obligation of
confidentiality to MCC or its affiliates or to a third party; or
(iv) which Air Products can show was received by it after the time of
disclosure hereunder from a third party who did not require
Air Products to hold it in confidence and who did not acquire it,
directly or indirectly, from MCC or its affiliates under an
obligation of confidence.
(f) It is further agreed and understood that even if relieved of the obligation
of confidentiality by the exceptions recited above in Section 5(e), or
exceptions as may otherwise be permitted by this Exhibit E, Air Products
shall not disclose or cause or permit to be disclosed, to any party any
correlation or identity which may exist between any part of the MCC
Information or Supplemental MCC Information and any other information
available or made available to Air Products from any other source.
(g) For the purposes of the foregoing paragraphs, disclosures made to Air
Products under or in connection with this Agreement which are specific,
e.g., as to engineering and design practices and techniques, equipment,
products, operating conditions, etc., shall not be deemed to be within the
exceptions stated in Section 5(e) merely because individual features are
known to the public or in the possession of Air Products. In addition, any
combination of features shall not be deemed to be within the foregoing
exceptions merely because individual features are known to the public or in
Air Products' possession, but only if the combination itself and its
principal of operation are generally known to the public or in the
possession of Air Products.
SECTION 6. PROTECTION OF INDUSTRIAL PROPERTY.
(a) Air Products expressly acknowledges and agrees that, except in the
Territory and to the extent of the grant set forth in Section 2(a) hereof,
it does not acquire under the Agreement or this Exhibit E any rights in or
to the use of the MCC Information and Supplemental MCC Information anywhere
in the world.
(b) Air Products further undertakes that it may not at any time contest
anywhere in the world ownership of any of the MCC Information and
Supplemental MCC Information rights of MCC.
SECTION 7. COSTS AND EXPENSES.
(a) MCC shall bear all costs and expenses incurred in discharging its duties
pursuant to Section 3 of this Exhibit E.
(b) Air Products shall bear all costs and expenses incurred in discharging its
duties pursuant to Section 4 of this Exhibit E plus all costs and expenses
incurred in the manufacture of the Product.
SECTION 8. INDEMNIFICATION AND RELEASE.
(a) MCC shall indemnify Air Products and hold it harmless against and from any
liability, claims or damages and expenses whatsoever in any way arising out
of a claim for misappropriation of trade secrets or infringement of a
patent owned or exclusively licensed by a third party by virtue of
Air Products' manufacture of Product.
(b) Nothing contained in the Agreement or this Exhibit E shall be construed as:
(i) requiring the filing by MCC of any patent application, the securing
of any patent or any patent in force after the maintaining of any
patent in force after the Effective Date;
(ii) conferring by implication, estoppel or otherwise upon Air Products
any license or other right under any patent except rights expressly
granted hereunder to Air Products.
(c) Air Products shall indemnify MCC for (i) third-party claims for injury or
property damage occurring at Air Product's Pace, Florida, facility which
arise in connection with Air Products' procurement, construction, and
operations relating to manufacture of Product; provided, however, that this
indemnification obligation shall not apply where such claim arises as a
consequence of the practice of MCC Information or Supplemental MCC
Information; and (ii) vendor demands for payment in connection with
Air Products' implementation of MCC Information or Supplemental MCC
Information; provided, however, that this Indemnification obligation shall
not apply where such demand arises as a consequence of MCC's unauthorized
commitments to such vendor.
SECTION 9. IMPROVEMENT.
(a) Air Products may not conduct any research into MCC Coating Technology
except that Air Products may conduct necessary safety studies relating to
MCC Coating Technology.
(b) Air Products may not patent or otherwise disclose any inventions or
improvements made or acquired by Air Products applicable to MCC Information
or Supplemental MCC Information, and the same shall be fully disclosed by
Air Products to MCC and shall be the property of MCC without obligation of
any type or kind to Air Products.
SECTION 10. EFFECT OF TERMINATION.
Upon termination or expiration of the Agreement, Air Products promises:
(a) to cease all manufacture and sale of Product;
(b) to cease the use of all MCC Information and Supplemental MCC Information;
(c) to return to MCC all documents free of charge which have been retained by
Air Products (including but not limited to any reproductions, notes or
summaries) relating to the MCC Information and Supplemental MCC Information
provided by MCC; and
(d) to disable to the extent necessary to render it unusable, all equipment
installed to facilitate the application of MCC Information and Supplemental
MCC Information.
Air Products' obligations of confidentiality shall survive the termination of
the Agreement and this Exhibit E and shall expire the later of the year 2014 or
fifteen (15) years after termination of the Agreement.
SECTION 11. NONASSIGNABILITY.
This Exhibit E and each and every covenant, term and condition herein is binding
upon and inures to the benefit of the parties hereto and their respective
successors, but neither this Exhibit E nor any rights hereunder may be assigned
or sublicensed, directly or indirectly, voluntarily or by operation of law, by
Air Products without first receiving the prior written consent of MCC.
SECTION 12. UNENFORCEABLE TERMS.
In the event any term or provision of this Exhibit E shall for any reason be
declared invalid by order of any court or administrative or regulatory body,
MCC, in its sole discretion, shall have the right to either terminate the
Agreement by giving at least one (1) year's prior notice to Air Products or
declare by notice to Air Products that such invalidity, illegality or
unenforceability shall not affect any other term or provision hereof. In the
latter event, this Exhibit E shall be interpreted and construed as if such term
or provision had never been contained herein to the extent the same shall have
been held invalid.
[MCC CONFIDENTIAL -- THIS EXHIBIT IS NOT TO BE COPIED OR
DISTRIBUTED TO OR VIEWED BY ANYONE WHO IS NOT A PARTY TO A SECRECY AGREEMENT
WITH MCC OR AIR PRODUCTS]
EXHIBIT F
Product Specifications for Agricultural Product
Following Installation of MCC Technology set forth in Exhibit E
(Confidential treatment has been requested)
EXHIBIT G
1. Employee Patent, Copyright and Confidential Information Agreement
2. Security Statement For Termination of Employment
3. Certificate of Air Products' Policy and Procedures Regarding the Maintenance
of Confidential Information and Trade Secrets
EMPLOYEE PATENT, COPYRIGHT AND CONFIDENTIAL INFORMATION AGREEMENT
In consideration of my employment by Air Products and Chemicals, Inc., its
divisions, affiliates and subsidiaries (all, collectively, referred to
hereinafter as the Company), I agree that I will:
A. Communicate to the Company promptly and fully in writing, in such format as
the Company may deem appropriate, all inventions made or conceived by me
whether alone or jointly with others from my time of entering the Company's
employee until I leave, and as requested, to assign to the Company those of
such inventions which (1) relate to a field of business, research or
investigation in which the Company has an interest, or (2) result from, or
are suggested by, any work which I may do for or on behalf of the Company;
B. Make and maintain adequate permanent records of all such inventions, in the
form of memoranda, notebook entries, drawings, print-outs, or reports
relating thereto, in keeping with then current Company procedures. I agree
that these records, as well as the inventions themselves, shall be and
remain the property of the Company at all times;
C. Cooperate with and assist the Company and its nominees, at their sole
expense, during my employment and thereafter, in securing and protecting
patent rights in which I am a named inventor or other similar rights in the
United States and foreign countries. In this connection I specifically
agree to execute all papers which the Company deems necessary to protect
its interests including the execution of assignments of invention and to
give evidence and testimony, as may be necessary, to secure and enforce the
Company's rights;
D. Except as the Company may otherwise authorize in writing, not use or
disclose to others, reproduce or copy at any time, except as my Company
duties may require, either during or subsequent to my employment, any
private information of the Company or of others as to whom the Company has
an obligation of confidentiality which may come to my attention or be
developed by me during the course of my employment other than information
which is or becomes public knowledge in a lawful manner;
E. Upon termination of my employment with the Company, deliver to it all
records, data and memoranda of any nature which are in my possession or
control and which relate to my employment or the activities of the Company,
including, for example, notebooks, diaries, reports, photographs, films,
manuals and computer software media.
F. Following termination of my employment, honor and abide by my continuing
obligation of confidentiality. I agree that, in any situation which arises
and involves a question of my freedom to disclose particular information to
a subsequent employer or anyone else, I will contact the Company in writing
and elicit its opinion on my freedom to make such a disclosure.
It is also agreed that:
G. All creative works which I produce during my employment and which relate to
the Company's business or technology shall be considered to have been
prepared for the Company as a part of and in the course of my employment.
Any such work shall be owned by the Company regardless of whether it would
otherwise be considered a work made for hire. Such works shall include,
among other things, computer programs and documentation, non-dramatic
library works (e.g., professional papers and journal articles), visual arts
(e.g., pictorial, graphic and three-dimensional), sound recordings, motion
pictures and other audiovisual works.
H. Nothing in this agreement shall bind me or the Company to any specific
period of service or employment, nor shall the termination of such
employment in any way affect the obligations assumed by me herein.
Further, this agreement replaces any and all prior agreements or
understandings between me and the Company concerning these subjects;
I. This agreement shall bind my heirs, executors, and administrators, and
shall inure to the benefit of the successors and assigns of the Company.
J. I will not disclose to any other employee of the Company any information as
to which I owe a continuing obligation of confidentiality to a previous
employer or client. Any inventions, patented or unpatented, which were
made or conceived by me prior to my employment are excluded from the
operation of this agreement, and I warrant that there are no such
inventions, other than those listed by me in the space provided on the back
of this document.
(L.S.)
----------------------------------------
Signature of the Employee
WITNESS:
DATED:
(List invention information on the back of this agreement.)
Form 4000 (REV. 3/94)
SECURITY STATEMENT
FOR
TERMINATION OF EMPLOYMENT
I, , make the
-----------------------------------------------------------------
following statement to Air Products and Chemicals, Inc., its divisions,
affiliates and subsidiaries (hereinafter referred to as Air Products) with the
understanding and intent that my statement will be used by Air Products in
carrying out its duty to protect the security of Classified Information
respecting the national defense of the United States.
As to such Classified Information:
1. I {a. [ ] have (complete items 2, 3, 4)b. [ ] have not (skip items 2, 3,
4)}
knowingly had access to such Classified Information during my employment
by Air Products.
2. I {a. [ ] do b. [ ] do not}
now have in my possession or custody or control any document or other
thing containing or incorporating Classified Information, or other matter
classified ``CONFIDENTIAL''or higher to which I obtained access during my
employment. All such material that I may have had in my possession has
been returned by me.
3. I {a. [ ] am b. [ ] am not}
retaining or taking away with me from my place of employment any document
or thing containing or incorporating Classified Information, or other
matter classified ``CONFIDENTIAL''or higher to which I obtained access
during my employment, in any manner whatsoever.
4. I {a. [ ] shall b. [ ] shall not}
hereafter in any manner reveal or divulge to any person any Classified
Information of which I have gained knowledge during my employment, except
as may be hereafter authorized by the Department of Defense.
If any of statements 2, 3, or 4 is completed with selection `a,'' attach a full
explanation of the circumstances, including the names of any persons authorizing
the particular handling of the Classified Information. If the employee refuses
to sign the statement, a full explanation of the circumstances of the refusal
shall be attached hereto. In either event, the matter shall be brought
immediately to the attention of the Security Officer, prior to the departure of
the employee if possible.
With respect to any of statements 1, 2, 3, or 4 above answered affirmatively,
the employee is advised that the penal provisions of the Espionage Laws, (Title
18, U.S. Code, Section 793, 794, 795, 796, 797, 798), provide that one who
unlawfully retains or discloses Classified Information is subject to severe
criminal penalties and that the making of a false statement pertaining to
Classified Information in this document may be punished as a felony under
Title 18, U.S. Code.
Further, with respect to other information which is covered by my Employee
Patent, Copyright, and Confidential Information Agreement with Air Products, I
recognize the property right which Air Products has in its private Company
Information, whether or not classified with a security marking and in whatever
form recorded.
In terminating my employment with Air Products, except as authorized under
circumstances explained in the statement attached, I have returned and accounted
for all material and copies, of whatever kind, containing Company Information,
received or prepared by me in connection with my employment, except for
information which is available to the public generally, and I have retained no
copies, reproductions or excerpts of such material whether written, printed,
photographed or otherwise encoded or stored.
Each of the above statements is true to the best of my knowledge and belief.
Witness: Signed:
Title: Date:
NOTE: This form when completely filled out will be filed in the employee's
personnel folder.
CERTIFICATE OF AIR PRODUCTS' POLICY AND PROCEDURES REGARDING THE MAINTENANCE OF
CONFIDENTIAL INFORMATION AND TRADE SECRETS
I, Plant Manager of Air Products and Chemicals, Inc., do hereby certify that the
following is a true and accurate summary of Air Products and Chemicals, Inc.'s,
policy and procedure regarding the maintenance of confidential information and
trade secrets:
The Air Products - Escambia Quality Management System is based on
written procedures and specifications which define the steps required
to process customer orders from receipt, through delivery of product
and services.
In the event proprietary information is to be disclosed to vendors,
executed confidentiality agreements are required in advance of
requests for quotations.
Quality Management documentation is strictly controlled to ensure that
only the appropriate, current and approved version of all
documentation is available at the point of use. Additional copies can
by made available when required only when they are identified as
noncontrolled.
Policies, procedures, specifications and work instructions affecting
the Air Products - Escambia Quality Management System are reviewed and
approved by identified and authorized persons prior to issue.
Any revisions to the documentation are controlled by the same review
and approval process, and the obsolete versions are removed from
service. Changes to the documentation are recorded so the holders of
the documents may be made aware of the nature of the revision.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of September,
1994.
/s/ Brian A. Gebbia
Plant Manager
EXHIBIT H
SECRECY AGREEMENT
The parties to the Agreement to which this Exhibit H is annexed agree as
follows: Air Products possesses technical Information, technical experience,
data and know-how for the operation of an ammonium nitrate plant at its Pace,
Florida, facility and possesses other valuable AP Information relating to the
production of coated particulate ammonium nitrate (all of the foregoing
hereinafter referred to as "AP Information"). Air Products considers the AP
Information to be proprietary to Air Products and of significant commercial
value. Air Products is willing to disclose such AP Information to MCC via
documents, discussions and visits to its Pace, Florida, facility for the sole
purpose of implementing the MCC Coating Technology, the MCC Information and
Supplemental MCC Information (as those terms are defined in Exhibit E to the
Purchase Agreement) and as necessary to facilitate the modifications to the
Pace, Florida, facility required to enable the use of the MCC Coating
Technology, MCC Information and Supplemental MCC Information.
MCC neither anticipates the need for nor expects to receive any AP
Information; however, in the event that it becomes necessary for MCC to receive
such AP Information and if the disclosure of the AP Information satisfies the
provisions of paragraph 5 of this Secrecy Agreement with respect to advance
notice and acceptance, then MCC will be bound by the terms of this Secrecy
Agreement.
IN CONSIDERATION THEREOF, it is agreed as follows:
1. MCC will not, without Air Products' consent, use or disclose to any
other person, firm or corporation any of the AP Information disclosed, and MCC
further agrees to require its employees and any others who, of necessity, shall
be given access to, or receive disclosure of, any of said AP Information to
maintain the same in confidence.
2. AP Information as used herein does not include technical AP
Information, data, designs, drawings or other material which:
(a) MCC can show was in its possession at the time of
disclosure and was not acquired, directly or indirectly,
from Air Products; or
(b) is acquired by MCC from others who have no confidential commitment
to Air Products with respect to same; or
(c) becomes, through no fault of MCC, a part of the public domain by
publication or otherwise.
3. Disclosures of AP Information by Air Products made to MCC under or in
connection with this Secrecy Agreement which are specific, e.g., as to
engineering and design practices and techniques, equipment, products, operating
conditions, compositions, formulations, etc., shall not be deemed to be within
the exceptions stated in paragraph 2 hereof merely because individual features
are known to the public or in the possession of MCC. In addition, any
combination of features shall not be deemed to be within the exceptions stated
in paragraph 2 hereof merely because individual features are known to the public
or are in MCC's possession, but only if the combination itself and its principle
of operation are generally known to the public or is in the possession of MCC.
4. Except as may otherwise by permitted by this Secrecy Agreement, MCC
shall not disclose, or cause or permit to be disclosed, to any party not subject
to this Secrecy Agreement any correlation or identity which may exist between
any part of AP Information acquired by MCC pursuant to or in connection with
this Secrecy Agreement and any other AP Information available or made available
to MCC from any other source.
5. Any disclosure of AP Information which is considered confidential
howsoever communicated whether orally, visually, in writing or by other means
shall be covered by this Secrecy Agreement, provided Air Products identified
such disclosures as confidential in advance of the communication and, if such
disclosure is communicated orally or visually, to summarize and confirm the
confidential nature of such communication in writing within ninety (90) days of
communication.
6. All drawings, prints, data and other documents disclosing such AP
Information to MCC shall remain the property of Air Products and shall be deemed
loaned to MCC only for the limited purposes specified above, and MCC will not,
without the prior written consent of Air Products, use, reproduce or copy, or
permit the use, reproduction or copying of any of said drawings, prints, data
and other documents. MCC shall return AP Information to Air Products upon
request, and MCC may not retain any copies of any documents containing such AP
Information except that one copy may be retained in MCC's Legal Department files
for archival purposes.
7. Nothing contained in this Secrecy Agreement or in any disclosure
hereunder made by Air Products shall be construed to grant to MCC any license or
other rights in or to the AP Information so disclosed or under any patent or
patent application relating thereto.
8. This Secrecy Agreement shall not be modified other than in writing and
shall be construed under the laws of the state of Mississippi.
9. This Secrecy Agreement expires in 2014.
EXHIBIT 10.5
AMENDMENT NO. 1
TO
PURCHASE AGREEMENT
THIS Amendment No. 1 to Purchase Agreement, by and between Mississippi
Chemical Corporation ("MCC") and Air Products and Chemicals, Inc.
("Air Products"), is entered into as of the 31st day of May, 1995.
WITNESSETH:
WHEREAS, MCC and Air Products are parties to a Purchase Agreement
("Agreement") dated September 15, 1994, which became effective October 1, 1994;
and
WHEREAS, MCC and Air Products wish to modify certain provisions of that
Agreement.
NOW, THEREFORE, intending to be legally bound thereby, the parties agree as
hereafter set forth.
Paragraph 8.4 is hereby amended by deleting the paragraph in its
entirety and inserting the following paragraph in its stead:
In the event that Air Products is unable to meet the
specifications set forth in Exhibit F following installation
of the technology described in Exhibit E, Air Products shall
have the right to install additional equipment or make such
other modifications as are necessary to meet such
specifications by December 31, 1995. In the event that Air
Products elects not to make such installations or
modifications as are necessary to meet the specifications,
then MCC at its sole and exclusive option may modify the
specifications or terminate this Agreement effective March
31, 1996.
Except as amended hereby, all other terms and conditions of the Purchase
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to Purchase Agreement as of the date and year first written above, this
Amendment to be effective as of May 31, 1995.
MISSISSIPPI CHEMICAL CORPORATION
By: /s/ Charles O. Dunn
President
AIR PRODUCTS AND CHEMICALS, INC.
By: /s/ V. A. Bonanni
Vice President and General Manager
EXHIBIT 10.7
AMENDMENT OF AGREEMENT
This Amendment of Agreement ("Amendment") is effective as of the 1st day of
August, 1994, between MISSISSIPPI PHOSPHATES CORPORATION ("MPC") and ATLANTIC
FERTILIZER & CHEMICAL CORPORATION ("AFC").
WHEREAS, MPC and AFC are parties to that certain Agreement effective as of
October 1, 1991, whereby MPC appointed AFC as its exclusive distributor for DAP
produced at the Pascagoula Plant; and
WHEREAS, MPC and AFC desire to amend the Agreement as hereinafter set
forth;
NOW, THEREFORE, MPC and AFC hereby agree as follows:
Article XI, paragraph 11.1 of the Agreement is hereby amended by deleting
the first sentence thereof and by inserting in its place the following:
Subject to MPC's right of early termination, in accordance
with the provisions of paragraphs 2.3 and 7.3 above, and
paragraphs 11.2, 11.3, and 13.1 below, the primary term of
this Agreement shall commence on November 1, 1991, and shall
end on June 30, 2003.
IN WITNESS WHEREOF, MPC and AFC have caused this Amendment of Agreement to
be executed in duplicate originals as of the date first above written.
ATLANTIC FERTILIZER & CHEMICAL MISSISSIPPI PHOSPHATES CORPORATION
CORPORATION
By: /s/ James Cattano By: /s/ Charles O. Dunn
President President
EXHIBIT 10.10
AMENDMENT NO. 3 OF AGREEMENT
This Amendment No. 3 of Agreement ("Amendment No. 2") is effective as of
January 1, 1995, between OFFICE CHERIFIEN DES PHOSPHATES ("OCP") and MISSISSIPPI
PHOSPHATES CORPORATION ("MPC").
WHEREAS, MPC and OCP are parties to that certain Agreement with an
Effective Date of September 15, 1991, for the sale and purchase of all MPC's
requirements of phosphate rock at its Pascagoula Plant ("Agreement"); and
WHEREAS, the Agreement has heretofore been amended by Amendment No. 1
effective as of July 1st, 1992, and Amendment No. 2 effective as of July 1st,
1993; and
WHEREAS, OCP and MPC desire to further amend the Agreement as hereinafter
set forth;
NOW, THEREFORE, MPC and OCP hereby agree as follows:
1. Article IX of the Agreement is hereby amended by deleting the first
paragraph thereof in its entirety and inserting in its place the following:
In the event that MPC sells to a purchaser all or substantially all of
the assets of the Pascagoula Plant, OCP shall be entitled to receive
fifty percent (50%) of the excess of (i) the difference between
(x) the purchase price payable by the purchaser of all or
substantially all of the assets of the Pascagoula Plant and (y) the
"fair market value" (determined in accordance with the provisions of
Article XII) of the 1995 Unloading System Project, as described and
defined in Exhibit E hereto, determined pursuant to Article XII hereof
over (ii) the difference between (a) the then current book value of
the assets to be purchased and (b) the then current book value of the
1995 Unloading System Project.
2. The Agreement is hereby amended by adding thereto a new Article XII which
shall read in its entirety as follows:
ARTICLE XII
If the purchase and sale of phosphate rock hereunder is to be
discontinued as a result of a sale by MPC of substantially all of the
assets of the Pascagoula Plant, then MPC shall pay to 0CP an amount of
money determined by multiplying (i) the "fair market value"
(determined in accordance with the further provisions of this
Article XII) of the "1995 Unloading Systyem Project" times (ii) a
fraction, the numerator of which is the total of all principal
payments made with respect to the indebtedness incurred by MPC to
finance the 1995 Unloading System Project prior to the discontinuance
of the purchase and sale of phosphate rock hereunder, and the
denominator of which is the total aggregate principal amount of the
indebtedness incurred by MPC to finance the 1995 Unloading System
Project. The fair market value of the 1995 Unloading System Project
shall be determined based on good-faith negotiations between the
parties hereto; provided, however, if the parties are unable to reach
agreement on the fair market value of the 1995 Unloading System
Project within thirty (30) days following the day MPC first advises
OCP that the purchase and sale of phosphate rock hereunder is to be
discontinued as a result of a sale of the Pascagoula Plant, each party
shall promptly select an independent appraiser to determine on their
behalf such fair market value. The two appraisers so selected shall
render their determinations within forty-five (45) days after the day
MPC first advises OCP that the purchase and sale of phosphate rock
hereunder is to be discontinued as a result of a sale of the
Pascagoula Plant, and the arithmetic average of their respective
determinations shall be the fair market value of the 1995 Unloading
System Project for purposes of this Article XII and shall be final and
binding on both parties. The fair market value of the 1995 Unloading
System Project, whether the same shall be determined by negotiations
of by the appraisers, shall be determined on the basis of, and shall
be an amount equal to, the proportionate share of the fair market
value of the Pascagoula Plant (determined in the same manner and at
the same time that the fair market value of the 1995 Unloading System
Project is determined) which is directly attributable to and comprised
of the 1995 Unloading System Project.
3. The Agreement is hereby amended by deleting the current Exhibit B and
inserting in lieu thereof the revised Exhibit B which is attached as Schedule 1
to this Amendment No. 3.
4. The Agreement is hereby amended by adding thereto Exhibit E which is
attached as Schedule 2 to this Amendment No. 3.
5. Except as specifically set forth in this Amendment No. 3, all of the terms
and conditions of the Agreement, as heretofore amended, shall continue in full
force and effect.
6. All capitalized terms used in this Amendment No. 3 and not otherwise
defined herein shall have the meanings set forth in the Agreement.
IN WITNESS WHEREOF, MPC and OCP have caused this Amendment No. 3 to be duly
executed as of the first day of January 1995.
MADE OUT IN DUPLICATE ON FEBRUARY 22ND, 1995
MISSISSIPPI PHOSPHATES CORPORATION OFFICE CHERIFIEN DES PHOSPHATES
By: /s/ Charles O. DUNN By: /s/ Mohamed FETTAH
President Director-General
SCHEDULE 1 TO AMENDMENT NO. 3 OF AGREEMENT
EXHIBIT B
(Confidential treatment has been requested) with respect to each Contract
Year shall be determined by dividing (i) the difference between (x) the sum of
(a) (confidential treatment has been requested) and (b) the total of all
payments of principal and interest made during such Contract Year with respect
to indebtedness incurred by MPC to finance the cost of the 1995 Unloading System
Project and (y) the total aggregate dollar amount of all reductions to the
(confidential treatment has been requested) during such Contract Year calculated
under paragraph 13 of the Sale Contract Addendum for the first Contract Year
dated as of October 9, 1991, by (ii) the number of (confidential treatment has
been requested) hereunder during such Contract Year. The determination of
(confidential treatment has been requested) for each Contract Year shall be made
as soon as practicable, but not later than thirty (30) days after the end of
each Contract Year.
SCHEDULE 2 TO AMENDMENT NO. 3 OF AGREEMENT
EXHIBIT E
THE 1995 UNLOADING SYSTEM PROJECT
The 1995 Unloading System Project shall consist of all of the new equipment
and facilities and all improvements and modifications to the existing phosphate
rock unloading system at the Pascagoula Plant which are assembled, constructed
and installed in order to enable the Pascagoula Plant to receive deliveries of
phosphate rock from "PANAMAX" class vessels. The proposed installation includes
two (2) Timstar continuous unloading devices, each designed for an instantaneous
unloading rate of six hundred (600) tons per hour. The proposed installation
shall also include such additional improvements to the existing dock area as are
required in connection with the 1995 Unloading System Project.
It is anticipated that the 1995 Unloading System Project shall be acquired
and all work in connection therewith shall be performed during the Contract Year
ending June 30, 1995. The estimated cost of the 1995 Unloading System Project
is Four Million Dollars ($4,000,000). It is expected that MPC will finance the
1995 Unloading System Project with monies borrowed from MCC or from a commercial
bank. The principal sum of such indebtedness shall be repaid in twenty (20)
equal consecutive quarterly installments beginning on the first day of the
calendar quarter following completion of the 1995 Unloading System Project.
Accrued interest on such indebtedness shall be paid on the same dates as
principal payments.
EXHIBIT 10.11
AMENDMENT NO. 2 OF AGREEMENT
This Amendment No. 2 of Agreement ("Amendment No. 2") is effective as of
July 1st, 1993, between OFFICE CHERIFIEN DES PHOSPHATES ("OCP") and MISSISSIPPI
PHOSPHATES CORPORATION ("MPC").
WHEREAS, MPC and OCP are parties to that certain Agreement with an
Effective Date of September 15, 1991, for the sale and purchase of all MPC's
requirements of phosphate rock at its Pascagoula Plant ("Agreement"); and
WHEREAS, the Agreement has heretofore been amended by Amendment No. 1
effective as of July 1st, 1992; and
WHEREAS, OCP and MPC desire to further amend the Agreement as hereinafter
set forth;
NOW, THEREFORE, MPC and OCP hereby agree as follows:
1. Article I of the Agreement is hereby amended by changing the second
sentence of the first paragraph thereof to read in its entirety as follows:
"the term of this Agreement shall commence on the Effective Date
and shall continue until June 30, 2003".
2. Article III of the Agreement is hereby amended by deleting the first five
lines thereof and by inserting in their place the following:
"On or before the first day of each Contract Year, the parties will
execute a Sale Contract Addendum with respect to such Contract Year
which shall contain the following;"
3. Article III of the Agreement is hereby further amended by adding the word
"Estimated" before the words "Base Price" in the first line of Subarticle a.
4. Article III of the Agreement is hereby further amended by adding after the
word "Agreement" in the second line of the second paragraph, the words "and the
Exhibits thereto."
5. Article IV of the Agreement is hereby amended by changing the definition of
"Base Price" as set forth on page 4 to read in its entirety as follows:
"Base Price" shall be an amount per metric ton equal to the difference
between (i) the (confidential treatment has been requested) as defined
in and determined pursuant to Exhibit A hereto and (ii) (confidential
treatment has been requested) as defined in and determined pursuant to
Exhibit B hereto".
6. Article IV of the Agreement is hereby further amended by adding thereto the
following new paragraph immediately after the definition of Sales, General and
Administrative Expense:
"In the determination of Net Margins (Losses), there shall not be
included any revenues or any gains or losses on hedging transactions
involving diammonium phosphate and/or anhydrous ammonia futures
contracts".
7. Article IV of the Agreement is hereby further amended by inserting the
following language immediately after the first sentence of the last paragraph
hereof:
"If the actual Purchase Price for a Contract Year exceeds the
Estimated Base Price (as defined in Article VI) that MPC paid OCP for
phosphate rock delivered in said Contract Year, OCP shall promptly
issue MPC a debit memo for the difference for each metric ton of
phosphate rock delivered during such Contract Year. If the Purchase
Price for such Contract Year is less than the Estimated Base Price
that MPC paid to OCP for phosphate rock delivered in said Contract
Year, OCP shall promptly issue MPC a credit memo for the difference
for each metric ton of phosphate rock delivered to MPC during such
Contract Year. Such debit or credit memo shall be paid in accordance
with the provisions of Article VI hereof".
8. Article VI of the Agreement is hereby amended by deleting the second
paragraph thereof and inserting in its place the following paragraph:
"OCP shall invoice MPC for each shipment as of the date of the bill of
lading. Such invoice shall be priced at the "Estimated Base Price"
which shall be an amount per metric ton equal to the difference
between (i) the (confidential treatment has been requested) as defined
in and determined pursuant to Exhibit C hereto and (ii) (confidential
treatment has been requested) as defined in and determined pursuant to
Exhibit D hereto.
9. Article VI of the Agreement is hereby further amended by deleting the first
sentence of the last paragraph thereof and by inserting in its place the
following sentence:
"All payments of debit or credit memos issued pursuant to the last
paragraph of Article IV hereof shall be made within ten (10) days
following the issuance of such debit or credit memos in accordance
with Article IV hereof".
10. The Agreement is amended by attaching thereto Exhibits A, B, C, and D,
which are attached as Schedules 1, 2, 3 and 4, respectively, to this Amendment
No. 2.
11. Except as specifically set forth in this Amendment No. 2, all of the terms
and conditions of the Agreement, as heretofore amended, shall continue in full
force and effect.
12. All capitalized terms used in this Amendment No. 2 and not otherwise
defined herein shall have the meanings set forth in the Agreement and in its
Addendum No. 1.
IN WITNESS WHEREOF, MPC and OCP have caused this Amendment No. 2 to be duly
executed as of the date first hereinabove written.
MADE OUT IN DUPLICATE ON MARCH 21ST, 1994
MISSISSIPPI PHOSPHATES CORPORATION, OFFICE CHERIFIEN DES PHOSPHATES,
By: /s/ Charles O. DUNN By: /s/ Mohamed FETTAH
President General Manager
SCHEDULE 1 TO AMENDMENT NO. 2 OF AGREEMENT
EXHIBIT A
The (confidential treatment has been requested) per metric ton of rock with
respect to each Contract Year shall be determined in accordance with the
following:
1) It is intended by parties that, subject to the adjustments described
in paragraph (2) below, the (confidential treatment has been requested) shall be
an amount equal to the cash cost per metric ton on a dry basis of phosphate rock
incurred by the (confidential treatment has been requested).
2) In order to equalize the above (confidential treatment has been
requested) against phosphate rock delivered by OCP to MPC hereunder, such
(confidential treatment has been requested) shall be adjusted for BPL content on
a rise/fall basis of (confidential treatment has been requested) per metric ton
per unit (proportionately for fractions) of dry basis BPL content above or below
68% BPL. Such (confidential treatment has been requested) shall also be
adjusted to reflect reduced sulfur consumption (confidential treatment has been
requested). This adjustment shall be calculated based on a differential sulfur
usage factor of (confidential treatment has been requested) hereunder and a
(confidential treatment has been requested) during the Contract Year.
3) Not later than ten (10) days after each Contract Year, MPC and OCP
shall meet and shall attempt to determine by agreement the (confidential
treatment has been requested). If no agreement is reached prior to such tenth
day after the end of the Contract Year, each party shall, on or before such
tenth day after the end of the Contract Year, appoint an individual or firm
knowledgeable about the phosphate industry to determine on its behalf such
(confidential treatment has been requested). Within twenty (20) days after the
end of the Contract Year, the two appointed industry consultants shall meet and
attempt to agree on such (confidential treatment has been requested). If no
agreement is reached prior to such twentieth day after the end of such Contract
Year, then, on or before such twentieth day after the end of the Contract Year,
the two appointed industry consultants shall jointly appoint a third industry
consultant. Prior to thirty (30) days after the end of such Contract Year, the
three industry consultants shall meet to determine such (confidential treatment
has been requested). If no two consultants reach the same decision, then the
mathematical average of the two closest determinations shall constitute the
decision of the three consultants. The decision of the consultants reached in
accordance with the foregoing shall be final and binding on MPC and OCP. Each
party shall be responsible for paying the fees and expenses of the industry
consultant appointed by it, and the parties shall share equally the fees and
expenses of any third industry consultant appointed.
SCHEDULE 2 TO AMENDMENT NO. 2 OF AGREEMENT
EXHIBIT B
(Confidential treatment has been requested) with respect to each Contract
Year shall be determined by dividing (i) the difference between
(x) (confidential treatment has been requested) and (y) the total aggregate
dollar amount of all reductions to the (confidential treatment has been
requested) during such Contract Year calculated under paragraph 13 of the Sale
Contract Addendum for the first Contract Year dated as of October 9, 1991, by
(ii) the number of (confidential treatment has been requested) hereunder during
such Contract Year. The determination of (confidential treatment has been
requested) for each Contract Year shall be made as soon as practicable, but not
later than thirty (30) days after the end of each Contract Year.
SCHEDULE 3 TO AMENDMENT NO. 2 OF AGREEMENT
EXHIBIT C
At least (10) days prior to the first day of each Contract Year, MPC and
OCP shall meet to determine by mutual agreement the (confidential treatment has
been requested) for such Contract Year.
SCHEDULE 4 TO AMENDMENT NO. 2 OF AGREEMENT
EXHIBIT D
At least (10) days prior to the first day of each Contract Year, MPC and
OCP shall meet to determine by mutual agreement (confidential treatment has been
requested) for the Contract Year.
EXHIBIT 10.12
AMENDMENT NO. 1 OF AGREEMENT
This Amendment No. 1 of Agreement ("Amendment No. 1") is effective as of
July 1, 1992, between OFFICE CHERIFIEN DES PHOSPHATES ("OCP") and MISSISSIPPI
PHOSPHATES CORPORATION ("MPC").
WHEREAS, MPC and OCP are parties to that certain Agreement with an
Effective Date of September 15, 1991, for the sale and purchase of all of MPC's
requirements of phosphate rock at its Pascagoula Plant ("Agreement"); and
WHEREAS, OCP and MPC desire to amend the Agreement as hereinafter set
forth;
NOW, THEREFORE, MPC and OCP hereby agree as follows:
1. Article IV of the Agreement is hereby amended by changing the second
sentence of the definition of "Sales, General and Administrative Expense" as set
forth on page 5 to read in its entirety as follows:
Subject to the adjustments hereafter described, expenses shall include an
annual payment of (confidential treatment has been requested) to MCC for
certain services to be provided by MCC to MPC.
and by inserting the following immediately thereafter:
The annual payment by MPC to MCC for services shall be reduced by
(confidential treatment has been requested) with respect to the Contract
Year commencing on July 1, 1992. Threafter, with respect to subsequent
Contract Year(s), the annual payment(s) may be increased by amounts not
exceeding (confidential treatment has been requested) in the aggregate.
Payment of any such increases in the annual payment(s) to MCC for services
and payments of the `Deferred Portion'' (as defined in Addendum No. 1 to
Sale Contract Addendum No. 2) shall be made in the same amounts and at the
same time.
2. Except as specifically set forth in this Amendment, all of the terms and
conditions of the Agreement shall continue in full force and effect.
3. All capitalized terms used in this Amendment and not otherwise defined
herein shall have the meanings set forth in the Agreement.
IN WITNESS WHEREOF, MPC and OCP have caused this Amendment to be duly
executed as of the 12 day of April, 1993.
MISSISSIPPI PHOSPHATES CORPORATION OFFICE CHERIFIEN DES PHOSPHATES
By: /s/ C. E. McCraw By: /s/ Mohamed Fettah
Vice President of Operations General Manager
EXHIBIT 10.13
GAS SALES AGREEMENT
This Gas Sales Agreement ("Agreement"), made and entered into as of the
13th day of July, 1995, by and between SONAT MARKETING COMPANY, a Delaware
corporation ("Seller") and MISSISSIPPI CHEMICAL CORPORATION, a Mississippi
corporation ("Buyer").
WITNESSETH:
WHEREAS, Seller desires to sell and deliver to Buyer, and Buyer desires to
purchase and receive from Seller, natural gas in the quantities and on the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, Seller and Buyer agree as follows:
ARTICLE I
DEFINITIONS
1.1 The term "gas" shall mean natural gas consisting primarily of methane.
1.2 The term "day" shall mean a period commencing at 7:00 a.m. Central
time and extending until 7:00 a.m. Central time on the following day or any
other twenty-four (24) hour period mutually agreeable to the parties. The date
of a day shall be that of its beginning.
1.3 The term "business day" shall mean a day commencing on Monday through
Friday of any week of the year, excluding holidays recognized by Seller's
transporter.
1.4 The term "month" shall mean a period of time commencing on the first
day of a calendar month and ending on the first day of the next calendar month.
1.5 The term "year" shall mean a period of time commencing on the first
day of a calendar year and ending on the first day of the next calendar year.
1.6 The term "Btu" shall mean a British thermal unit measured at an
absolute pressure of 14.73 psi at 60.F on a dry basis.
1.7 The term "MMBtu" shall mean one million (1,000,000) British thermal
units.
1.8 The term "Index Price" shall mean, for each month during the term
hereof, the price of gas as reported in the first issue for such month of the
periodical, Inside F.E.R.C.'s Gas Market Report, under the heading "Prices of
Spot Gas Delivered to Pipelines-Southern Natural Gas Company/Louisiana." In the
event Inside F.E.R.C.'s Gas Market Report should cease publication, the parties
shall negotiate in good faith to define a substitute index. If no agreement on
a substitute index is reached within ten (10) days after negotiations to
determine a substitute index have commenced, then either party may, by written
notice ("Arbitration Notice") to the other party require that the matter of the
selection of a substitute index be submitted to arbitration. If the parties are
unable to agree upon a single arbitrator within ten (10) days after the date of
the Arbitration Notice, they shall jointly apply to the American Arbitration
Association for the purpose of appointing an independent arbitrator. The
independent arbitrator shall identify a substitute index which shall regularly
quote the spot market price of gas delivered into the facilities of Southern
Natural Gas Company in Louisiana. The decision of the arbitrator regarding the
substitute index shall be final and binding on the parties.
ARTICLE II
QUANTITY
2.1 Commencing on January 1, 1996, and continuing through the entire term
hereof, Seller agrees to sell and deliver to Buyer on each day the quantity of
gas requested by Buyer up to fifty-five thousand (55,000) MMBtu's per day, and
Buyer agrees to purchase and receive from Seller on each day a minimum of
twenty-five thousand (25,000) MMBtu's per day.
2.2 At least ten (10) business days prior to the first day of each month,
Buyer shall advise Seller of the daily quantity of gas that Buyer requests
during such month ("Buyer's Nomination"). Buyer shall use reasonable efforts to
take quantities of gas hereunder at, as nearly as practicable, a uniform rate of
flow.
2.3 Seller shall immediately notify Buyer of any notice received from its
transporter that indicates the existence of any imbalance or other circumstances
which may give rise to a penalty in connection with gas deliveries hereunder.
The parties agree to cooperate in taking such action as may be necessary to
ensure that penalties are avoided or minimized as much as possible. If, on any
day, Buyer shall take a quantity of gas which exceeds the greater of (i) one
hundred ten percent (110%) of Buyer's Nomination or (ii) the sum of (x) Buyer's
Nomination and (y) four thousand (4,000) MMBtu's (such excess shall be
hereinafter referred to as "Excess Gas"), Buyer shall be liable for and shall
remit payment to Seller in accordance with Article X (Billing and Payment) of
this Agreement for any scheduling imbalance or other transportation-related
penalties, cash-out cost fees, forfeitures or charges imposed upon Seller by
Seller's transporter which are directly attributable to Buyer's taking Excess
Gas; provided, however, except with respect to periods when "limitation notices"
applicable to firm shippers have been issued pursuant to the prevailing F.E.R.C.
Gas Tariff of Southern Natural Gas Company, Buyer shall in no event be liable to
Seller for penalties or other charges in excess of Ten Cents (10 cents) per
MMBtu of Excess Gas. During periods when limitation notices applicable to firm
shippers have been issued pursuant to the prevailing F.E.R.C. Gas Tariff of
Southern Natural Gas Company, Buyer shall reimburse Seller for any penalties
imposed upon Seller by Southern Natural Gas Company as a direct result of
Buyer's either taking deliveries of gas or failing to take deliveries of gas in
violation of such limitation notice, provided that Seller shall have promptly
notified Buyer of the issuance of such limitation notice and provided further
that Seller was unable to avoid such penalties through its then-prevailing
pooling arrangements. In no case, shall Buyer's responsibility for penalties
during periods when limitation notices have been issued exceed those that Buyer
would have been liable for if Buyer had contracted with Southern Natural Gas
Company for fifty-five thousand (55,000) MMBtu's per day of firm transportation.
ARTICLE III
POINT OF DELIVERY
3.1 The "Primary Delivery Point" for the sale and purchase of gas under
this Agreement shall be at the existing interconnection between the pipeline
facilities of Southern Natural Gas Company and Buyer's Yazoo City, Mississippi,
plant ("Buyer's Plant").
3.2 Title to gas delivered hereunder shall pass from Seller to Buyer at
the point of delivery. As between Buyer and Seller, Seller shall be deemed to
be in exclusive control and possession of gas until such gas has been delivered
to Buyer at the point of delivery and Seller shall be responsible for any
losses, damages, injuries, claims and liabilities arising out of the gas. Buyer
shall be deemed to be in exclusive control and possession of gas after it has
been delivered to Buyer at the point of delivery and Buyer shall be responsible
for any losses, damages, injuries, claims and liabilities arising out of the
gas.
3.3 The parties recognize that, from time to time, it may be advantageous
to Seller if deliveries of gas to Buyer hereunder are made at the
interconnection between the pipeline facilities of Koch Gateway Pipeline Company
("Koch") and the pipeline facilities of Shell Western E&P Inc., which connect
the Rankin County, Mississippi, gas processing plant of Shell Western E&P Inc.
and Buyer's Plant (the "Alternate Delivery Point"). Buyer is willing to accept
deliveries at the Alternate Delivery Point unless Buyer determines, in its sole
discretion, that the delivery and receipt of gas at the Alternate Delivery Point
would be detrimental to Buyer or to the operations of any third party whose
operations may be directly affected by the delivery and receipt of gas hereunder
at the Alternate Delivery Point. During periods when Seller is delivering to
Buyer at the Alternate Delivery Point, the terms of this Agreement shall
continue in full force and effect except the point of delivery shall be the
Alternate Delivery Point and the price determined in accordance with Article IV
hereof shall be reduced by Buyer's cost of transporting gas from the Alternate
Delivery Point to Buyer's Plant.
ARTICLE IV
PRICE
The price payable by Buyer to Seller for each MMBtu of gas sold hereunder
during each month shall be the sum of (i) the Index Price per MMBtu for such
month, (ii) (confidential treatment has been requested) per MMBtu, and (iii) a
fuel charge per MMBtu which shall be determined by multiplying (x) the
then-applicable percentage (currently 1.5%) of fuel retention for forward-haul,
firm transportation service from the most proximate source of gas available to
Seller (Production Zone or Zone 1) for delivery hereunder to the point of
delivery as set forth in the prevailing F.E.R.C. Gas Tariff of Southern Natural
Gas Company times (y) the Index Price for such month.
ARTICLE V
QUALITY
The quality of the gas shall be the quality prevailing from time to time at
the point of delivery. Buyer and Seller expressly recognize that gas which
conforms to the quality specifications of the F.E.R.C. Gas Tariff of Southern
Natural Gas Company (Koch, if deliveries are made at the Alternate Delivery
Point) may be unsuitable for use in Buyer's Plant. Therefore, Buyer shall have
the right to refuse to accept delivery of any gas tendered for delivery
hereunder, the quality of which Buyer reasonably determines would be detrimental
to the operation of Buyer's Plant.
ARTICLE VI
PRESSURE
All gas delivered for sale hereunder shall be delivered to Buyer at the
pressure prevailing from time to time at the point of delivery.
ARTICLE VII
GAS MEASUREMENT
The measurement of gas delivered hereunder shall be in accordance with the
prevailing F.E.R.C. Gas Tariff of Southern Natural Gas Company (Koch, if
deliveries are made at the Alternate Delivery Point).
ARTICLE VIII
TERM
This Agreement shall become effective on the date hereinabove first written
and shall remain in full force and effect for a primary term which ends on
January 1, 2000. This Agreement shall be automatically extended for renewal
terms of one (1) year each until canceled by either party by written notice to
the other party given not later than six (6) months prior to the end of the
primary term or any renewal term hereof.
ARTICLE IX
LIABILITY
9.1 As between the parties hereto, Buyer and Seller shall be responsible
for the installation, operation and maintenance of their respective facilities,
and each party agrees to indemnify and hold harmless the other party from and
against any and all claims, demands, actions, suits, costs damages, expenses,
compensation, or liabilities of every kind or character, either direct or
consequential, at law or in equity, for or on account of damage or destruction
of property or injury or death of persons, resulting from or arising out of, or
in connection with the installation, operation, or maintenance of said
facilities and equipment.
9.2 Notwithstanding anything to the contrary contained herein, in no event
shall either party be liable or otherwise responsible to the other party for any
consequential, incidental or punitive damages, or for lost profits, arising out
of or relating to any action in contract or in tort, at law or in equity, based
upon transactions pursuant to this Agreement, or the performance or breach
thereof, or associated activities of either party.
ARTICLE X
BILLING AND PAYMENT
10.1 On or before the tenth (10th) day of each calendar month or within
ten (10) days after the date of a billing statement from Seller (or its
designee), whichever is the later, Buyer shall make payment of the amount due
for all gas delivered during the preceding calendar month, as well as any
payment pursuant to Article 2.2 hereof by electronic funds transfer to Seller's
Account Number 69756619 at AmSouth Bank N.A., Birmingham, Alabama, ABA Routing
Number 0620-0001-9. The billing statement shall be based on Buyer's
Nominations, which shall be subject to adjustments by Seller on subsequent
billing statements, if necessary.
10.2 Should Buyer fail to pay an amount when due, interest thereon shall
accrue at an annual rate of interest equal to the lesser of (i) two percent (2%)
above the prime interest rate set by the Chase Manhattan Bank (NA), or (ii) the
maximum rate allowed by the applicable law, from the date when due until paid.
The provisions herein for accrual of interest, however, shall not apply if such
party's failure to pay is the result of a bona fide dispute, provided that such
party has, within the period provided for payment, notified the other party of
the existence of and basis for such dispute and has paid all amounts under this
Agreement not in dispute. Should it be necessary for Seller to bring legal
action to enforce its right to payment, Buyer shall pay all expenses and costs
thereof including court costs and attorneys' fees.
10.3 Each party shall have the right at reasonable hours to examine the
charts, if any, measurement data, books and records of the other party to the
extent necessary to verify the accuracy of any statements, charge or computation
hereunder. If such examination reveals an error or inaccuracy, the necessary
adjustment shall be promptly made; provided, however that all such statements,
charges and computations shall be deemed correct unless objected to within
two (2) years after the date of such statements, charges, and computations.
10.4 Notwithstanding anything to the contrary contained herein, the parties
to this Agreement recognize that there may be mutual obligations between the
parties arising from this Agreement and from independent agreements that the
parties may enter into from time to time. In addition to the rights of
recoupment and setoff (offset) existing at law and equity, the parties hereto
expressly agree and provide that the rights of recoupment and setoff (offset)
are, by the terms of this Agreement, available to each party hereto.
ARTICLE XI
FINANCIAL RESPONSIBILITY
Should either party reasonably and in good faith determine that the
creditworthiness or financial responsibility of the other party has become
unsatisfactory, such party shall be entitled to require satisfactory security
before further deliveries or receipts are made. In the event either party shall
(i) make an assignment or any general arrangement for the benefit of creditors;
(ii) default in the payment or performance of any obligation to the other party
under this Agreement; (iii) file a petition or otherwise commence, authorize, or
acquiesce in the commencement of a proceeding or cause under any bankruptcy or
similar law for the protection of creditors or have such petition filed or
proceeding commenced against it; (iv) otherwise become bankrupt or insolvent
(however evidenced); (v) be unable to pay its debts as they fall due; or (vi)
fail to give adequate security for or assurance of its ability to perform its
further obligations under this Agreement within seventy-two (72) hours of a
reasonable request by the other party, then the other party shall, upon written
notice, have the right to withhold or suspend deliveries or receipts or
terminate this Agreement effective three (3) days from the date of such notice,
or the beginning of the next month, whichever is earlier, in addition to any and
all other remedies available hereunder or pursuant to law.
ARTICLE XII
WARRANTY OF TITLE AND INDEMNIFICATION
Seller warrants the title to all gas delivered hereunder. Seller further
represents and warrants that it will pay and satisfy, or make provision for the
payment and satisfaction of, any and all claims of every nature whatsoever in,
to or in respect of gas delivered hereunder; and Seller hereby agrees to defend
at its cost, and when notified by Buyer to indemnify Buyer against, all suits,
judgments, claims, demands, causes of action, costs, losses and expenses arising
out of or in any way connected with any claims to the gas delivered hereunder.
ARTICLE XIII
FORCE MAJEURE
In the event of either party hereto being rendered unable, wholly or in
part, by force majeure to carry out its obligations under this Agreement, other
than to make payments due hereunder, it is agreed that the obligations of the
party giving such notice, so far as they are affected by such force majeure,
shall be suspended during the continuation of any inability so caused but for no
longer period; and such cause shall as far as possible be remedied with all
reasonable dispatch; provided, however, that no party hereto shall be required
against its will to adjust any labor dispute.
The term "force majeure" shall mean acts of God, strikes, lockouts, or
other industrial disturbances, acts of the public enemy, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
storms, floods, washouts, arrests and restraints of governments and people,
orders or requirements of any government, civil disturbances, explosions,
breakage or accident to machinery or lines of pipe, the necessity for
maintenance of or making repairs or alterations to machinery or lines of pipe,
freezing of wells or lines of pipe, partial or entire failure of wells,
scheduled shutdowns of Buyer's Plant for maintenance or repairs not exceeding
twenty-one (21) days in any year, and any other causes, whether of the kind
herein enumerated or otherwise, not within the control of the party claiming
suspension and which by the exercise of due diligence such party is unable to
prevent or overcome; such terms shall likewise include the inability of either
party to acquire, or delays on the part of such party in acquiring at reasonable
cost and by the exercise of reasonable diligence, servitudes, rights-of-way
grants, permits, permissions, licenses, materials or supplies which are required
to enable such party to fulfill its obligations hereunder.
ARTICLE XIV
TAXES
In addition to the price payable under Article III of this Agreement, Buyer
agrees to reimburse Seller for any sales, use, utility, city license or similar
tax imposed by any taxing authority upon the sale or use by Buyer of the gas
sold pursuant to this Agreement. In the event that Buyer is exempt from the
payment of any such tax, Buyer shall, upon Seller's request, provide evidence of
such exemption in a form satisfactory to Seller. Absent such documentation,
Buyer shall be responsible for such tax as set forth herein.
Seller shall pay or cause to be paid any royalty payments, severance or
other taxes due or levied on the production or transportation of the gas prior
to the point of delivery and shall indemnify and hold Buyer harmless from any
liability or obligation for the payment of same.
ARTICLE XV
MISCELLANEOUS
15.1 This Agreement shall be subject to all present and future applicable
laws, rules, orders and regulations of any federal, state, or local governmental
authority having jurisdiction over the parties, their facilities, or the
transactions contemplated.
15.2 No waiver by either party of any default of the other party under this
Agreement shall operate as a waiver of any future default, whether of like or
different character or nature.
15.3 The headings throughout this Agreement are inserted for reference
purposes only and shall not be construed or considered in interpreting the terms
and provisions of any article.
15.4 This Agreement shall be interpreted and construed in accordance with
the laws of the state of Alabama.
15.5 Any notice, request, demand or statement provided for in this
Agreement shall be in writing and deemed given when delivered by hand or
deposited in the U.S. mail, postage prepaid, directed to the following post
office addresses:
BUYER: Mississippi Chemical Corporation
Attn.: Corporate Secretary
P.O. Box 388
Yazoo City, MS 39194
SELLER: Notices:
Sonat Marketing Company
Attn.: Ranny Kittinger
P.O. Box 2563
Birmingham, AL 35202
Billing:
Sonat Marketing Company
Attn.: Allen Carter
P.O. Box 2563
Birmingham, AL 35202
or at such other address as either party may, from time to time, designate;
provided, however, any dispatching notice of the quantities of gas to be
delivered and purchased hereunder shall be given by telephone.
15.6 The terms and conditions of this Agreement shall remain confidential
and neither party shall disclose such terms and conditions to any third party
absent the express written permission of the other party except where necessary
to comply with regulatory reporting requirements.
15.7 This Agreement shall not be construed to create any third-party
beneficiary relationship in favor of anyone not a party to this Agreement. In
addition, the parties waive and disclaim any third-party beneficiary status as
to any of the contracts of the other party.
15.8 This Agreement shall be binding upon and inure to the benefit of, and
be enforceable by, the parties hereto and their respective representatives,
successors, and assigns; provided, however, that this Agreement may not be
assigned in whole or in part, by either party without the prior written consent
of the other party, which shall not be unreasonably withheld.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate originals as of the date hereinabove first written.
BUYER:
ATTEST: MISSISSIPPI CHEMICAL CORPORATION
By: /s/ Rosalyn B. Glascoe By: /s/ Charles O. Dunn
Corporate Secretary President
SELLER:
ATTEST: SONAT MARKETING COMPANY
By: /s/ Myra W. McAbee By: /s/ K. R. Kittinger, Jr.
Assistant Secretary Vice President
EXHIBIT 13
<TABLE>
Mississippi Chemical Corporation
Financial Highlights
(In thousands, except per share data)
Fiscal Year Ended June 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales $388,154 $309,360 $289,125 $239,657 $214,990
Operating income $ 80,969 $ 37,905 $ 29,180 $ 40,804 $ 54,973
Income from continuing
operations before
cumulative effect of
change in accounting
principle $ 52,230 $ 26,912 $ 22,681 $ 31,349 $ 48,037
Net income $ 52,230 $ 36,523 $ 4,790 $ 13,003 $ 39,384
Income from continuing
operations assuming
conversion from a
cooperative to a
regular business
corporation as of
July 1, 1990 (1) n/a $ 21,415 $ 17,533 $ 22,821 $ 33,999
Earnings per share (2) $ 2.34 $ 1.10 $ 0.92 $ 1.23 $ 1.90
Weighted average
common shares
outstanding (3) 22,365 19,454 19,035 18,521 17,885
June 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital $ 70,790 $ 34,931 $ 22,802 $ 35,225 $ 54,926
Total assets $302,215 $298,430 $296,053 $303,158 $287,835
Long-term debt,
excluding long-term
debt due within one
year $ 2,478 $ 57,217 $ 52,357 $ 59,333 $ 67,489
Shareholders' equity $227,307 $142,956 $119,574 $128,195 $138,762
Cash dividends declared
per common share (4) $ 0.16 $ - $ - $ - $ -
(1) For 1994, 1993, 1992 and 1991, 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, 1990, income taxes would
have been increased by the following approximate amounts: $5.5 million, $5.1
million, $8.5 million and $14.0 million for fiscal 1994, 1993, 1992 and 1991,
respectively.
(2) For 1994, 1993, 1992 and 1991, earnings per share reflect the
reorganization of the Company from a cooperative to a regular business
corporation as if it had occurred July 1, 1990, and is based on income from
continuing operations.
(3) For 1994, 1993, 1992 and 1991, weighted average common shares outstanding
reflect the reorganization of the Company from a cooperative to a regular
business corporation as if it had occurred July 1, 1990.
(4) For 1994, 1993, 1992 and 1991, the Company operated as a cooperative and
paid cash patronage refunds in lieu of cash dividends.
</TABLE>
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 former Soviet Union ("FSU").
In fiscal 1995, fertilizer industry conditions improved significantly as
strong demand and prices for all products prevailed throughout much of the year.
Nitrogen fertilizer prices responded favorably to the reduced negative impact of
exports from the FSU, where nitrogen producers have historically benefited from
subsidized natural gas and transportation. As part of the continuing transition
to a free-market economy, government subsidies in the FSU have been reduced or
eliminated, and export prices have risen in response to increased production and
transportation costs. During the year, prices for nitrogen products reached
their highest levels in 15 years. The U.S. nitrogen industry also benefited
from favorable natural gas prices. During fiscal 1995, the phosphate fertilizer
market reacted positively to strong export demand, principally from China and
India and to declining exports from the FSU. Diammonium phosphate ("DAP")
prices reached their highest levels since the late 1980s. Potash prices
remained stable throughout fiscal 1995.
Although weather conditions adversely affected fertilizer movement late in
the year, market fundamentals remain strong, and the outlook for the upcoming
fiscal year is positive. Current low grain inventories and increasing grain
consumption should translate into strong fertilizer usage for fiscal 1996. Many
industry analysts also predict a continuation of soft natural gas prices.
The Company realized a significant improvement in results of operations in
fiscal 1995 with net sales increasing 25.5% to $388.2 million from $309.4
million in 1994 and operating income increasing 113.6% to $81.0 million from
$37.9 million in 1994. Reflecting improved market conditions, the Company
realized substantially higher prices for nitrogen products and DAP in fiscal
1995. The average sales price per ton of nitrogen fertilizer increased to $138
in fiscal 1995 from $122 in fiscal 1994. For fiscal 1995, the average sales
price of DAP was $165 per ton as compared to $131 per ton for fiscal 1994. The
average sales price of potash in fiscal 1995 was $77 per ton as compared to $73
per ton for fiscal 1994.
Effective July 1, 1994, the Company converted from a cooperative (the
"Cooperative") to a regular business corporation. 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 no
longer grants preferred patronage rights or pays patronage refunds, the Company
has retained the majority of its customer base and nitrogen fertilizer sales
volumes and profitability have not been nor are they expected to be adversely
affected by the conversion.
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 fiscal 1994 income by $6.1
million.
RESULTS OF OPERATIONS
Following are summaries of the Company's sales results by product
categories:
<TABLE>
Fiscal Year Ended June 30
---------------------------
1995 1994 1993
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Net Sales:
Nitrogen $240,692 $199,918 $189,127
DAP 117,495 83,367 78,906
Potash 27,433 24,084 20,149
Other 2,534 1,991 943
-------- -------- --------
Net Sales $388,154 $309,360 $289,125
======== ======== ========
Fiscal Year Ended June 30
---------------------------
1995 1994 1993
-------- ------- -------
(in thousands)
<S> <C> <C> <C>
Tons Sold:
Nitrogen 1,748 1,643 1,602
DAP 713 638 692
Potash 357 330 283
Fiscal Year Ended June 30
----------------------------
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Average Price
Per Ton:
Nitrogen $ 138 $ 122 $ 118
DAP $ 165 $ 131 $ 114
Potash $ 77 $ 73 $ 71
</TABLE>
FISCAL 1995 COMPARED TO FISCAL 1994
NET SALES. Net sales increased 25.5% from $309.4 million for fiscal 1994
to $388.2 million for fiscal 1995, primarily as a result of higher sales prices
and increased sales volumes for nitrogen and DAP fertilizers. Nitrogen
fertilizer sales increased 20.4% as a result of a 6.4% increase in tons sold and
a 12.8% increase in prices. In fiscal 1995, the Company agreed to purchase the
ammonium nitrate fertilizer (up to approximately 240,000 tons per year) produced
by Air Products and Chemicals, Inc. at its Pace, Florida, manufacturing
facility. The Company purchased 143,674 tons of ammonium nitrate from Air
Products during fiscal 1995. The Pace ammonium nitrate facility has suspended
production due to sustained high ammonia prices. Subject to future changes in
the price relationship between ammonia and ammonium nitrate, the Company does
not anticipate purchasing material quantities of ammonium nitrate from Air
Products during fiscal 1996. Sales of DAP increased 40.9% as a result of a
26.1% increase in prices and an 11.8% increase in tons sold. Potash sales
increased 13.9% as a result of an 8.2% increase in tons sold and a 5.2% increase
in prices.
COST OF PRODUCTS SOLD. Cost of products sold increased from $216.2 million
for fiscal 1994 to $254.6 million for fiscal 1995. As a percentage of net
sales, cost of products sold decreased from 69.9% in fiscal 1994 to 65.6% in
fiscal 1995. This decrease reflects increases in sales prices for all products
and a reduction in the production cost per ton for nitrogen fertilizers and
potash offset by increases in the production cost per ton of DAP. During the
current fiscal year, the Company incurred higher costs related to its nitrogen
products due to increased purchases of finished products. Nitrogen fertilizer
production cost per ton decreased due to lower prices paid for natural gas
during the current year and lower maintenance and labor costs due to a scheduled
biennial maintenance turnaround at the Company's Yazoo City facility during the
prior year.
DAP costs per ton increased during fiscal 1995 as a result of higher raw
material costs, primarily for ammonia and sulfur. Phosphate rock costs also
increased during the year due to the operation of the Company's phosphate rock
supply contract which bases the price of phosphate rock on the phosphate rock
costs incurred by certain domestic phosphate producers and on the financial
performance of the Company's phosphate operations.
Potash production costs per ton decreased as a result of increased
production volume during the current fiscal year resulting from an expansion
which was completed in May 1994. This expansion increased potash production
capacity from approximately 300,000 tons to approximately 420,000 tons per year.
SELLING EXPENSES. Selling expenses decreased from $29.3 million for fiscal
1994, to $29.2 million for fiscal 1995. As a percentage of net sales, selling
expenses decreased from 9.5% in fiscal 1994 to 7.5% in fiscal 1995. Factors
contributing to this decrease were increased sales prices for all products and
an increase in DAP sales which bore no delivery expense. Also, the Company sold
more of its nitrogen products directly from production facilities, thereby
eliminating delivery and storage expense on those sales.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased from $19.9 million for fiscal 1994, to $23.3 million for fiscal 1995.
This increase was primarily due to increased expenses related to the purchase of
a new computer system and an increase in the Company's reserve for uncollectible
accounts. As a percentage of net sales, general and administrative expenses
decreased from 6.4% in fiscal 1994 to 6.0% in fiscal 1995. This decrease was
primarily the result of increased sales prices for all products.
OPERATING INCOME. As a result of the above factors, operating income
increased from $37.9 million for fiscal 1994, to $81.0 million for fiscal 1995,
a 113.6% increase.
INTEREST, NET. Net interest decreased from $4.0 million for fiscal 1994,
to $52,000 for fiscal 1995. This decrease is primarily a reflection of lower
levels of borrowings due to the repayment of debt from the proceeds of a stock
offering in August 1994. The Company also had higher earnings due to higher
levels of investments and higher rates earned on these investments during fiscal
1995.
INCOME TAX EXPENSE. Income tax expense increased from $6.0 million for
fiscal 1994, to $29.2 million for fiscal 1995. The Company's effective tax rate
increased significantly in the current fiscal year as a result of the conversion
from a cooperative to a regular business corporation on July 1, 1994. As a
cooperative, earnings on business done with shareholders were distributed to
shareholders as patronage refunds which were deductible for income tax purposes.
INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE. As a result of the foregoing, income from continuing
operations before the cumulative effect of a change in accounting principle
increased from $26.9 million for fiscal 1994, to $52.2 million for fiscal 1995.
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 $212.5 million
for fiscal 1993, to $216.2 million for fiscal 1994. As a percentage of net
sales, cost of products sold decreased from 73.5% to 69.9%. 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 related 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.
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 $18.6 million for fiscal 1993, to $19.9 million for fiscal 1994,
primarily as a result of increases in legal fees and information processing
costs. General and administrative expenses were 6.4% of net sales in fiscal
1993 and 1994.
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.
INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE. As a result of the foregoing, income 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, income from continuing operations before cumulative
effect of a change in accounting principle for the period was $34.4 million.
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 $28.9 million for the period.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1995, the Company had cash and cash equivalents of $29.6
million, compared to $23.2 million at June 30, 1994, an increase of $6.4
million. At June 30, 1994, cash and cash equivalents had increased to $23.2
million from $22.0 million at June 30, 1993, an increase of $1.2 million.
OPERATING ACTIVITIES. For fiscal 1995 and fiscal 1994, net cash provided
by operating activities was $78.7 million and $39.8 million, respectively.
INVESTING ACTIVITIES. Net cash used by investing activities was $26.9
million, $25.4 million and $29.6 million, respectively, for fiscal 1995, 1994
and 1993, primarily reflecting capital expenditures in those periods. In
addition to capital expenditures, cash flows from investing activities for the
three years combined included an aggregate of $17.4 million in payments required
under a newsprint purchase contract with Newsprint South, Inc. ("NSI"). As a
result of the disposition of NSI, the Company is no longer obligated to make
these payments. Also included in cash flows from investing activities for
fiscal 1994 was $10.8 million in payments made to settle certain obligations in
connection with the disposition of NSI.
Capital expenditures were $22.3 million during fiscal 1995. These
expenditures were for improvements and modifications to the Company's
facilities, including approximately $3.3 million for the purchase of a new
computer system, approximately $7.1 million for an emission control system for
the ammonium nitrate prill towers at the Yazoo City nitrogen production
facility, and approximately $3.8 million for a phosphate rock unloading system
at the Pascagoula DAP facility.
FINANCING ACTIVITIES. Net cash used by financing activities was $45.4
million, $13.2 million, and $36.2 million, respectively, for fiscal 1995, 1994
and 1993. During fiscal 1995, the amounts provided by financing activities
included $47.4 million in proceeds received from a stock offering in August
1994. These proceeds were subsequently used to prepay approximately $29.0
million of the Company's long-term debt and a portion of the Company's revolving
credit facility. The Company also paid $5.7 million to its shareholders related
to the reorganization of the Company, $3.7 million in cash dividends and $4.8
million to purchase treasury stock. In addition, the Company paid $14.8 million
in cash patronage refunds related to fiscal 1994, when the Company operated as a
cooperative.
For fiscal 1994 and 1993, the amounts used by financing activities included
cash patronage payments of $13.4 million and $22.5 million, respectively.
During fiscal 1994, the Company prepaid $12.2 million of long-term debt with the
National Bank for Cooperatives ("CoBank") which had maturities through fiscal
1998. During fiscal 1993, the Company prepaid $8.9 million of 9.5% secured
notes which had maturities scheduled through fiscal 1997. In addition, the
Company paid $11.2 million and $10.9 million, respectively, on long-term debt
that matured during fiscal 1995 and 1994.
The Company and its subsidiaries have commitments for short-term borrowings
up to $20.0 million, which includes $15.0 million from NationsBank. At June 30,
1995, there were no short-term borrowings outstanding on these commitments as
compared to $7.0 million and $4.6 million for fiscal 1994 and 1993,
respectively.
In addition to its short-term lines, the Company also has a $50.0 million
long-term revolving credit facility with NationsBank that bears interest at the
prime rate or for fixed periods at interest rates related to the London
Interbank Offered Rates or U.S. Treasury notes. At June 30, 1995, there was no
balance outstanding on this facility. 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 1995 was $16.2 million.
In December 1994, the Company signed a letter of intent with Farmland
Industries to enter into a 50-50 joint venture to construct and operate a 1,900
short-ton-per-day anhydrous ammonia plant to be located near La Brea, Trinidad.
The project is expected to cost approximately $330 million. It is anticipated
that a substantial portion of the cost will be financed on a nonrecourse project
basis. The Company's equity contribution will be financed with internally
generated cash flows and available lines of credit.
The Company believes that existing cash, cash generated from operations,
and available lines of credit will be sufficient to satisfy its financing needs
for the foreseeable future.
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. 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 1995 and fiscal 1994.
<TABLE>
(In thousands, except per share data)
Year Ending June 30, 1995
----------------------------------------
1st Q 2nd Q 3rd Q 4th Q
----------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 72,751 $ 83,713 $ 114,677 $ 117,013
Operating income $ 10,876 $ 16,129 $ 27,457 $ 26,507
Income from continuing
operations $ 5,776 $ 10,439 $ 17,198 $ 18,817
Earnings per share (1) $ 0.27 $ 0.46 $ 0.75 $ 0.82
Weighted average common
shares outstanding 21,125 22,920 22,934 22,855
Dividends paid per
share $ - $ - $ 0.08 $ 0.08
Common stock price range
- high $ 19.25 $ 19.00 $ 19.88 $ 20.13
- low $ 15.00 $ 14.75 $ 16.50 $ 15.38
Year Ending June 30, 1994
----------------------------------------
1st Q 2nd Q 3rd Q 4th Q
----------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 45,220 $ 61,105 $ 104,158 $ 98,877
Operating income (2) $ 2,071 $ 4,044 $ 11,707 $ 20,083
Income 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 (3) $ 639 $ 1,878 $ 7,235 $ 11,663
Earnings per share (4) $ 0.03 $ 0.10 $ 0.37 $ 0.60
(1) For 1995, quarterly amounts do not add to the annual earnings per share
because of changes in the number of outstanding shares during the year.
(2) Includes a non-cash charge of $5.9 million in the third quarter of fiscal
1994 relating to the estimated cost of the gypsum disposal facility at the
Company's Pascagoula facility. The fourth quarter of fiscal 1994 also includes
a restructuring charge of $1.4 million.
(3) During fiscal 1994, 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 for 1994 as
if it had operated as a regular business corporation in that year.
(4) For 1994, earnings per share reflect the reorganization of the Company from
a cooperative to a regular business corporation effective July 1, 1994.
Weighted average shares outstanding for each of the quarters in fiscal 1994 is
assumed to be equal to the weighted average shares outstanding for the year of
19,454,354.
</TABLE>
The Company's common stock is listed on the NASDAQ Stock Market's National
Market (the "Nasdaq Market") under the symbol "MISS." As of June 30, 1995,
shareholders of record numbered approximately 11,785.
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
did not retain any voting interest in NSI. The disposition of NSI allows 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 common stock for $4.0 million. This stock is scheduled for redemption at
the face amount by CoBank during the next four 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.
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED JUNE 30, 1995, 1994 AND 1993
TOGETHER WITH AUDITORS' REPORT
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,
1995 and 1994, and the related consolidated statements of income, shareholders'
equity and cash flows for the three years ended June 30, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our 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, 1995 and 1994, and the results of
their operations and their cash flows for the three years ended June 30, 1995,
in conformity with generally accepted accounting principles.
As further explained in Note 1 to the consolidated financial statements as of
July 1, 1993, the Company has given cumulative effect to the change in
accounting for income taxes under Statement of Financial Accounting Standards
No. 109.
Memphis, Tennessee, Arthur Andersen LLP
July 28, 1995.
<TABLE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) June 30
--------------------------
ASSETS 1995 1994
CURRENT ASSETS: --------- ----------
<S> <C> <C>
Cash and cash equivalents $ 29,617 $ 23,219
Accounts receivable
(less allowances of $1,000 and $500) 30,424 28,659
Inventories 50,315 33,990
Prepaid expenses and other current assets 3,012 3,981
Deferred income taxes 1,929 9,682
-------- ---------
Total current assets 115,297 99,531
INVESTMENTS AND OTHER ASSETS:
Investments 4,087 7,441
Other 10,275 9,813
-------- ---------
Total investments and other assets 14,362 17,254
PROPERTIES HELD FOR SALE 52,919 66,928
PROPERTY, PLANT AND EQUIPMENT, at cost,
less accumulated depreciation, depletion
and amortization 119,637 114,717
-------- --------
$302,215 $298,430
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C>
Long-term debt due within one year $ 775 $ 2,948
Notes payable - 7,030
Accounts payable 31,520 28,569
Accrued liabilities 8,799 8,325
Income taxes payable 3,413 2,972
Patronage refunds payable - 14,756
-------- --------
Total current liabilities 44,507 64,600
LONG-TERM DEBT 2,478 57,217
OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS 15,167 24,704
DEFERRED INCOME TAXES 12,756 8,953
COMMITMENTS AND CONTINGENCIES (see Notes 8 and 13)
SHAREHOLDERS' EQUITY 227,307 142,956
-------- --------
$302,215 $298,430
======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
<TABLE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
Year Ended June 30
------------------------------------
1995 1994 1993
-------- --------- --------
<S> <C> <C> <C>
NET SALES $388,154 $309,360 $289,125
OPERATING EXPENSES:
Cost of products sold 254,629 216,204 212,452
Provision for closure of gypsum
disposal area - 6,055 -
Selling 29,212 29,339 28,940
General and administrative 23,344 19,857 18,553
-------- -------- --------
307,185 271,455 259,945
-------- -------- --------
OPERATING INCOME 80,969 37,905 29,180
Other (Expense) Income:
Interest, net (52) (3,991) (3,569)
Restructuring - (1,402) -
Other 491 421 767
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 81,408 32,933 26,378
INCOME TAX EXPENSE 29,178 6,021 3,697
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 52,230 26,912 22,681
DISCONTINUED OPERATIONS:
Loss from discontinued operations
(less applicable income tax credits
of $5,314 and $4,555 for fiscal 1994
and 1993) - (23,987) (17,891)
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 INCOME $ 52,230 $ 36,523 $ 4,790
======== ======== ========
EARNINGS PER SHARE (see Note 1) $ 2.34
========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
<TABLE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands)
Cooperative Additional Capital Retained
Common Common Paid-in Equity Earnings Treasury
Stock Stock Capital Credits (Deficit) Stock Total
---------- ------ ----------- ------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
June 30, 1992 $ 27,835 $ - $ 65,381 $ 62,352 $(27,373) $ - $128,195
Net income - - - - 4,790 - 4,790
Cash patronage - - - - (13,820) - (13,820)
Stock issued 100 - 315 - - - 415
Stock retired (2) - (4) - - - (6)
-------- ------- -------- -------- -------- ------- --------
Balances,
June 30, 1993 27,933 - 65,692 62,352 (36,403) - 119,574
Net income - - - - 36,523 - 36,523
Cash patronage - - - - (14,756) - (14,756)
Stock issued 459 - 1,156 - - - 1,615
-------- ------- -------- -------- ------- ------- --------
Balances,
June 30, 1994 28,392 - 66,848 62,352 (14,636) - 142,956
Conversion of
cooperative
stock (26,375) 155 26,220 - - - -
Conversion of
capital equity
credits and
allocated
surplus
accounts - 41 42,723 (62,352) 19,588 - -
Redemptions (2,017) (1) (4,095) - - - (6,113)
-------- ------- ------- -------- ------- ------- --------
Subtotal - 195 131,696 - 4,952 - 136,843
Stock issued - 34 46,636 - - - 46,670
Cash dividends
paid - - - - (3,662) - (3,662)
Net income - - - - 52,230 - 52,230
Treasury stock
purchased - - - - - (4,774) (4,774)
-------- ----- -------- -------- ------- ------- --------
Balances,
June 30, 1995 $ - $ 229 $178,332 $ - $53,520 $(4,774)$227,307
======== ===== ======== ======== ======= ======= ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
<TABLE> MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Year Ended June 30
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 52,230 $ 36,523 $ 4,790
Loss from discontinued operations - 23,987 17,891
Gain on disposal of discontinued operations - (39,747) -
-------- -------- --------
Net income from continuing operations 52,230 20,763 22,681
Reconciliation of net income from continuing
operations to net cash provided by
operating activities:
Depreciation, depletion and amortization 17,058 16,967 14,444
Net change in operating assets and
liabilities (3,241) (5,820) 2,702
Deferred income taxes 11,556 3,302 -
Deferred raw material cost - 23 1,977
Accrual for closure of gypsum disposal area 562 6,055 -
Other 555 (1,478) (655)
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 78,720 39,812 41,149
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (22,305) (11,232) (26,448)
Payments for newsprint contract obligations (8,751) (4,338) (4,350)
Proceeds received from option holder 3,000 - -
Disposition of Newsprint South, Inc. - (10,848) -
Other 1,132 1,039 1,189
-------- -------- --------
NET CASH USED BY INVESTING ACTIVITIES (26,924) (25,379) (29,609)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt payments (118,567) (162,183) (111,606)
Debt proceeds 54,625 161,160 97,933
Cash patronage paid (14,756) (13,405) (22,480)
Proceeds from issuance of common stock 47,401 1,200 -
Cash dividends paid (3,662) - -
Conversion of common stock (5,665) - -
Purchase of treasury stock (4,774) - -
-------- -------- --------
NET CASH USED BY FINANCING ACTIVITIES (45,398) (13,228) (36,153)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 6,398 1,205 (24,613)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 23,219 22,014 46,627
-------- -------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 29,617 $ 23,219 $ 22,014
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1995
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. On July 1, 1994, Mississippi Chemical
Corporation converted from a cooperative to a regular business corporation (see
Note 2). The Company is a major producer and supplier of nitrogen fertilizers
in the southern United States. 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 primarily for use 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.
The Company has the right to withdraw, at cost, approximately one-half of
the production of the Triad facilities and is obligated to withdraw certain
minimum quantities as specified by the Products Withdrawal Agreement. The
venture's assets constitute approximately 2.6% of total assets at June 30, 1995
and 1994.
On June 30, 1994, the Company disposed of a majority of its interest in its
newsprint manufacturing subsidiary, Newsprint South, Inc. ("NSI") (see Note
18).
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.
Investments
The Company's investments consist of an investment in the National Bank for
Cooperatives (`CoBank'') and a 50-50 joint venture with Farmland Industries
(see Note 13). The investment in CoBank 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 four
years as CoBank redeems its equity in the normal course of its operations.
Properties Held for Sale
Assets are classified as properties 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. Depletion of mineral properties is provided using the units-of-
production 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.
Income Taxes
During fiscal 1995, the Company operated as a regular business corporation;
therefore, the provision for income taxes was based on earnings reported in the
financial statements. For fiscal 1994 and 1993, the provision for income taxes
was based on all income not distributed to patrons as patronage refunds since
the Company operated as a cooperative in those years.
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 net income by $6,149,000 for fiscal
1994.
Hedging Activities
The Company enters into futures contracts to protect against price
fluctuations of natural gas. At the time the futures contracts are closed and
the related natural gas is purchased, the Company records a gain or loss from
the change in market value of such contracts.
Earnings Per Share
Earnings per share is computed on the basis of the weighted average number
of common shares outstanding during the period plus dilutive common share
equivalents arising from stock options using the treasury stock method. Shares
used in the calculation were 22,365,246 shares for the year ended June 30, 1995.
Fully diluted earnings per share are not significantly different from primary
earnings per share and, accordingly, are not presented.
Earnings per share for fiscal 1994 and 1993 are not meaningful and are not
presented since the Company operated as a cooperative in those years.
Reclassifications
The Company has reclassified certain prior year information to conform with
the current year's presentation.
NOTE 2 - EFFECTS OF REORGANIZATION:
The Company operated as a cooperative during fiscal years 1994 and 1993.
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:
<TABLE>
Inventories consisted of the following:
(Dollars in thousands) June 30
----------------------
1995 1994
------- -------
<S> <C> <C>
Finished products $19,817 $ 7,518
Raw materials and supplies 6,740 2,851
Replacement parts 23,758 23,621
------- -------
$50,315 $33,990
======= =======
</TABLE>
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following:
<TABLE>
(Dollars in thousands) June 30
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Mineral properties $ 18,574 $ 18,574
Land 8,079 8,092
Buildings 22,345 23,089
Machinery and equipment 321,511 311,698
Construction in progress 13,822 5,539
-------- --------
384,331 366,992
Less accumulated depreciation,
depletion and amortization (264,694) (252,275)
-------- --------
$119,637 $114,717
======== ========
</TABLE>
NOTE 5 - CREDIT AGREEMENTS AND LONG-TERM DEBT:
The Company has commitments from various banks which allow the Company to
borrow up to $20,000,000 on a short-term basis. There were no outstanding
borrowings under these commitments at June 30, 1995. At June 30, 1994,
outstanding borrowings under these commitments were $7,030,000 with a weighted
average interest rate of 5.45%.
In addition to its short-term lines, the Company also has a $50,000,000 long-
term revolving credit facility with NationsBank Corporation (`NationsBank'')
that bears interest at the prime rate or for fixed periods at interest rates
related to the London Interbank Offered Rates or U.S. Treasury notes. There
were no outstanding borrowings under this commitment at June 30, 1995. At June
30, 1994, outstanding borrowings under this commitment were $25,000,000.
Long-term debt consisted of the following:
<TABLE>
(Dollars in thousands) June 30
--------------------
1995 1994
------- -------
<S> <C> <C>
Note payable to financial institution (9.97%) $ 3,000 $ 3,600
Capitalized lease obligations - 15,917
NationsBank Revolving Facility - 25,000
CoBank Term Loan - 12,500
Subordinated debentures - 3,148
Other 253 -
------- -------
3,253 60,165
Long-term debt due within one year (775) (2,948)
------- -------
$ 2,478 $57,217
======= =======
</TABLE>
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>
(Dollars in thousands)
<S> <C>
Year Ending June 30
1996 $ 775
1997 678
1998 600
1999 600
2000 600
-------
$ 3,253
=======
</TABLE>
NOTE 6 - SHAREHOLDERS' EQUITY:
At June 30, 1995, the Company had 100,000,000 authorized shares of common
stock at a par value of $0.01.
Common stock issued and outstanding consisted of the following:
<TABLE>
Cooperative
Common Common
Stock Stock
----------- ----------
<S> <C> <C>
Shares outstanding,
June 30, 1992 4,063,713 -
Retirements (122) -
Issues 6,634 -
Transfers 8,526 -
---------- ----------
Shares outstanding,
June 30, 1993 4,078,751 -
Issues 30,643 -
Transfers 10,514 -
---------- ----------
Shares outstanding,
June 30, 1994 4,119,908 -
Redemptions (134,466) -
Conversion of cooperative stock (3,985,442) 15,524,746
Conversion of capital equity
credits and allocated surplus
accounts - 4,133,628
Redemptions - (158,049)
Stock issued - 3,397,928
Purchase of treasury shares - (300,000)
---------- ----------
Shares outstanding,
June 30, 1995 - 22,598,253
========== ==========
</TABLE>
As a cooperative, the Company periodically reserved a certain percentage of
earnings from business with its shareholders. These reserves were reflected in
`Allocated Surplus Accounts'' as a component of retained earnings. As a
cooperative, the Company also, from time to time, paid a portion of patronage
refunds in the form of capital equity credits. As part of the Reorganization of
the Company (see Note 2), these holders of Allocated Surplus Accounts and
capital equity credits, which totaled $38,920,000 and $62,352,000 at June 30,
1994, were offered the right to exchange those interests for common shares. At
June 30, 1995, substantially all of these accounts had been exchanged for common
shares.
On May 23, 1995, the Board of Directors authorized the repurchase of up to
1,500,000 shares of the Company's common stock in the open market or in
privately negotiated transactions. During June 1995, the Company repurchased
300,000 shares of its common stock in open market transactions at prices that
ranged from $15.75 to $16.00 per common share or approximately $4,774,000 in the
aggregate. These treasury stock repurchases were funded from cash provided by
operations.
The Company's Articles of Incorporation authorize the Board of Directors, at
its discretion, to issue up to 500,000 shares of Preferred Stock, par value $.01
per share. The stock is issuable in classes or series which may vary as to
certain rights and preferences. As of June 30, 1995, none of these shares were
outstanding.
NOTE 7 - RETIREMENT PLANS:
The Company maintains non-contributory defined benefit pension plans which
provide benefits to a majority of its 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.
<TABLE>
Net periodic pension expense includes the following components:
Year Ended June 30
(Dollars in thousands) ----------------------------------
1995 1994 1993
----- - ------ ------
<S> <C> <C> <C>
Service cost - benefits
earned during the period $1,860 $1,532 $1,489
Interest cost on projected
benefit obligations 4,515 4,035 3,767
Actual gain on plan assets (5,528) (3,059) (5,824)
Net amortization and deferral
of transition assets (459) (750) (390)
Unrecognized gain (loss) on
plan assets 392 (1,982) 1,176
------ ------ ------
Net periodic pension
expense (credit) $ 780 $ (224) $ 218
====== ====== ======
The following table sets forth the plans' funded status and the amounts
included in the Company's consolidated balance sheets:
June 30
(Dollars in thousands) ----------------------
1995 1994
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $54,423 $49,017
Non-vested benefit obligation 74 56
------- -------
Accumulated benefit obligation 54,497 49,073
Increase in benefits due to future
compensation increases 11,803 11,588
------- -------
Projected benefit obligation 66,300 60,661
Estimated fair value of plan assets 65,238 61,281
------- -------
Plan assets (less than) in excess of projected
benefit obligation (1,062) 620
Contributions after measurement date 289 303
Remaining unrecognized transition assets (3,703) (4,232)
Unrecognized prior service cost 904 -
Unrecognized net loss 10,732 9,850
------- -------
Prepaid pension cost at end of period $ 7,160 $ 6,541
======= =======
</TABLE>
The following assumptions were used to measure net periodic pension cost
for the plans for fiscal 1995, 1994 and 1993:
<TABLE>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.5% 7.5% 7.5%
Expected long-term rate of return on assets 8.5% 8.5% 8.5%
Average increase in compensation levels 5.0% 6.5% 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 totaled approximately $812,000 in 1995, $811,000 in 1994 and
$670,000 in 1993.
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. The total for these commitments was $2,900,000 at
June 30, 1995. Rental expense for all operating leases was $1,332,000 for 1995,
$1,218,000 for 1994 and $1,144,000 for 1993.
NOTE 9 - INCOME TAXES:
<TABLE>
The following is a summary of the components of the provision for income
taxes:
(Dollars in thousands) Year Ended June 30
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal $16,245 $ 8,862 $ 3,408
State and local 1,377 223 289
------- ------- -------
17,622 9,085 3,697
Deferred:
Federal 9,504 (3,423) -
State and local 2,052 359 -
------- ------- -------
11,556 (3,064) -
------- ------- -------
$29,178 $ 6,021 $ 3,697
======= ======= =======
</TABLE>
<TABLE>
The tax effects of the significant temporary differences and tax credit
carryforwards at June 30, 1995 follows:
(Dollars in thousands) Current Non-current
------- -----------
<S> <C> <C>
Employee benefit obligations $ 1,230 $ -
Reserve for bad debts 380 -
Employee retirement 71 904
Accrual for closure of gypsum disposal
area - 2,514
Investment in CoBank - 499
Capital loss carryforwards - 253
Other 248 205
------- ---------
Deferred tax assets 1,929 4,375
Depreciation and amortization - (14,217)
Pension - (2,914)
------- ---------
Deferred tax liabilities - (17,131)
------- ---------
Net deferred tax
asset (liability) $ 1,929 $ (12,756)
======= =========
</TABLE>
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>
(Dollars in thousands) 1995 1994 1993
----------------- --------------- -----------------
% of % of % of
Earnings Earnings Earnings
Before Before Before
Amount Taxes Amount Taxes Amount Taxes
------- -------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Income taxes computed at
statutory rate $28,493 35.0% $11,427 34.7% $ 8,969 34.0%
Increase (decrease) in
taxes resulting from:
State taxes, net 3,429 4.2 (582) (1.8) 194 0.7
Deduction for cash
patronage refunds - - (5,017) (15.2) (4,873)(18.5)
Alternative minimum
tax (2,822) (3.5) - - - -
Other, net 78 0.1 193 0.6 (435) (1.6)
------- ----- ------ ----- ------ ----
29,178 35.8 6,021 18.3 3,855 14.6
Non-deductible loss
of subsidiaries - - - - (158) (0.6)
------- ----- ------- ----- ------- ----
$29,178 35.8% $ 6,021 18.3% $ 3,697 14.0%
======= ===== ======= ===== ======= ====
</TABLE>
In connection with its audits of the Company for fiscal years 1985 through
1987, the Internal Revenue Service proposed adjustments to the Company's tax
liability related to Section 277 of the Internal Revenue Code which the Internal
Revenue Service contended prohibits non-exempt cooperatives from carrying back
losses incurred on patronage business. The Company took the position that, as a
matter of law, Section 277 did not apply to the Company. During fiscal 1995,
the Internal Revenue Service advised that the loss carrybacks filed by the
Company for fiscal years 1986 and 1987 would be allowed.
NOTE 10 - RAW MATERIAL CONTRACTS:
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
$117,495,000, $32,270,000 and $16,745,000 for 1995; $83,366,000, $33,513,000 and
$13,696,000 for 1994; and $79,150,000, $32,957,000 and $13,860,000 for 1993.
Export sales were less than 10% of sales in 1995, 1994 and 1993.
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 - HEDGING ACTIVITIES:
During fiscal 1995 and 1994, natural gas hedging activities resulted in
average cost increases of approximately $0.52 and $0.09 per MMBTU on volumes
hedged of 4,850,000 and 6,150,000 MMBTU's, respectively .
At June 30, 1995, the Company had futures contracts covering a total volume
of 2,340,000 MMBTU's, with some contracts extending through May 1996. As of
June 30, 1995, the Company had neither received nor made any payments related to
these contracts. Based on current market prices, the fair value of these
contracts at June 30, 1995, was approximately $370,000. The risk associated
with outstanding futures positions is directly related to increases or decreases
in the prices of natural gas in relation to the contract prices.
NOTE 13 - 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 in Hardee
County, Florida. 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. The third party's option will expire
on January 16, 1998. The Company's put option will expire six months after the
third party's option expires, and its repurchase option will expire one year
after the Company's put option expires. These properties are classified as
properties held for sale at June 30, 1995 and 1994.
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, a 50%-owned, unincorporated joint venture, 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 Chemical recently agreed with the
Plaintiffs' Steering Committee in the case to settle the tort claims against it
as part of a group settlement by certain main defendant companies. Triad's
share of the group settlement is $600,000. Preliminary settlement documents
have been filed with the court and procedures are currently underway to obtain
the necessary court approval of the settlement as required in a class action
suit.
In September 1994, the Company and Air Products and Chemicals, Inc. ("Air
Products") concluded arrangements whereby the Company agreed to purchase all of
the ammonium nitrate fertilizer (approximately 240,000 tons per year) produced
at Air Products' Pace, Florida, facility during the fifteen-year term of the
agreement. Approximately 143,674 tons of ammonium nitrate were purchased in
fiscal 1995. During late fiscal 1995, production of ammonium nitrate at Pace
was suspended.
In December 1994, the Company signed a letter of intent with Farmland
Industries, Inc., to enter into a 50-50 joint venture to construct and operate a
1,900 short-ton-per-day anhydrous ammonia plant to be located near La Brea, The
Republic of Trinidad and Tobago. The project is expected to cost approximately
$330 million. Startup of the facility is scheduled for 1998. The Company
intends to use the majority of its portion of the production from the new
facility, expected to be in excess of 300,000 tons per year, primarily as a raw
material for upgrading into finished fertilizer products at its existing
facilities. The Company is accounting for this investment using the equity
method.
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 financial position or the future earnings
of the Company.
NOTE 14 - SUPPLEMENTAL CASH FLOW INFORMATION:
The Company considers its holdings of highly liquid money market debt
securities to be cash equivalents if the securities mature within 90 days from
the date of acquisition. These short-term investments were $27,587,000 and
$21,500,000 at June 30, 1995 and 1994, respectively.
The (decrease) increase in cash due to the changes in operating assets and
liabilities consisted of the following:
<TABLE>
(Dollars in thousands) June 30
------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Accounts receivable $ 9,095 $(2,265) $(2,052)
Inventories (16,325) 754 740
Prepaid expenses and other
current assets 569 (295) 1,949
Accounts payable 2,505 (6,407) 3,764
Accrued interest - (284) (483)
Accrued liabilities 915 2,677 (1,216)
------- ------- -------
$(3,241) $(5,820) $ 2,702
======= ======= =======
</TABLE>
During fiscal 1995, the Company had net payments of income taxes of
$16,675,000. During fiscal 1994 and 1993, the Company had net refunds of
$149,000 and $180,000, respectively. Payments of interest (net of amounts
capitalized) were $2,415,000 in 1995, $4,705,000 in 1994 and $5,266,000 in 1993.
Supplemental disclosures regarding non-cash financing and investing
activities include the following:
<TABLE>
(Dollars in thousands) Year Ended June 30
-------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Conveyance of phosphate rock
property $14,000 $ - $ -
Conversion of capital equity
credits $62,352 $ - $ -
Conversion of cooperative stock $26,375 $ - $ -
Capital expenditures made from
restricted funds $ - $ 1,000 $ 1,000
Net option proceeds deposited
in restricted funds $ - $ 1,000 $ 1,000
Note payable converted to
long-term debt $ - $ - $10,000
</TABLE>
NOTE 15 - OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS:
Other long-term liabilities and deferred credits are comprised of the following:
<TABLE>
(Dollars in thousands) June 30
----------------------
1995 1994
------- -------
<S> <C> <C>
Option proceeds $ 2,967 $13,967
Accrual for closure of gypsum
disposal area 6,617 6,055
Other 5,583 4,682
------- -------
$15,167 $24,704
======= =======
</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, Mississippi. During fiscal 1995, MPC recorded additional
charges of $562,000. The total amount of the accrual, $6,617,000, relates to
the portion of the disposal facility utilized to date. In future years, MPC
expects to record additional charges of approximately $2,438,000 related to the
future closure of the facility. These charges will be accrued over the
estimated five-year remaining life of the facility.
NOTE 16 - 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:
Cash and Cash Equivalents
The carrying amounts approximate 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, 1995, is $3,399,000. The carrying amount of the long-term debt,
including current maturities, at June 30, 1995, is $3,253,000.
NOTE 17 - INTEREST EXPENSE, NET:
Interest expense, net of interest income, consisted of the following:
<TABLE>
(Dollars in thousands) Year Ended June 30
---------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Interest expense $ 2,021 $ 4,655 $ 5,994
Interest capitalized (231) (2) (1,027)
Interest income (1,738) (662) (1,398)
------- ------- -------
$ 52 $ 3,991 $ 3,569
======= ======= =======
</TABLE>
NOTE 18 - 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
did 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 four years.
The disposition of NSI allows 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 had no further obligations with respect 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 was zero at June 30, 1995
and 1994.
To facilitate analysis, the accompanying summarized financial information
of NSI for fiscal 1994 and 1993 was as follows:
<TABLE>
(Dollars in thousands)
BALANCE SHEET: 1994
--------
<S> <C>
Current Assets $ 27,735
========
Total Assets $ 49,950
========
Current Liabilities $ 33,551
========
Total Liabilities $ 95,301
========
Net Deficit $(45,351)
========
STATEMENTS OF OPERATIONS: 1994 1993
-------- --------
<S> <C> <C>
Net Sales $ 94,617 $ 96,963
======== ========
Net Loss $(23,987) $(17,891)
======== ========
</TABLE>
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
The Company and its subsidiaries as of September 29, 1995, are as follows:
STATE OF PERCENTAGE OF VOTING
NAME OF COMPANY INCORPORATION SECURITIES OWNED
Mississippi Phosphates Corporation Delaware 100%
Mississippi Potash, Inc. Mississippi 100%
NSI Land Corporation Delaware 100%
Farmland MissChem Limited Trinidad 50%
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 10-K of our report dated July 28, 1995 included in the
Mississippi Chemical Corporation 1995 Annual Report to Shareholders. It should
be noted that we have not audited any financial statements of the Company
subsequent to June 30, 1995 or performed any audit procedures subsequent to the
date of our report.
/s/ Arthur Andersen LLP
Memphis, Tennessee
September 26, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's 1995 Annual Report to shareholders and is qualified in its entirety
to such Annual Report.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 29,617
<SECURITIES> 0
<RECEIVABLES> 31,424
<ALLOWANCES> 1,000
<INVENTORY> 50,315
<CURRENT-ASSETS> 115,297
<PP&E> 384,331
<DEPRECIATION> 264,694
<TOTAL-ASSETS> 302,215
<CURRENT-LIABILITIES> 44,507
<BONDS> 0
<COMMON> 229
0
0
<OTHER-SE> 227,078
<TOTAL-LIABILITY-AND-EQUITY> 302,215
<SALES> 388,154
<TOTAL-REVENUES> 388,645
<CGS> 254,629
<TOTAL-COSTS> 307,185
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 500
<INTEREST-EXPENSE> 52
<INCOME-PRETAX> 81,408
<INCOME-TAX> 29,178
<INCOME-CONTINUING> 52,230
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,230
<EPS-PRIMARY> 2.34
<EPS-DILUTED> 0
</TABLE>
